The Origin Energy Ltd (ASX: ORG) share price is marching higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) energy provider closed yesterday trading for $10.16. In morning trade on Thursday, shares are changing hands for $10.23 apiece, up 0.7%.
For some context, the ASX 200 is down 0.9% at this same time.
This outperformance comes after Origin announced that the Eraring Power Station will keep producing electricity for much longer than previously targeted.
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What's happening with Eraring?
The Origin share price is in the green after the ASX 200 utility reported it has agreed to delay the retirement of Eraring by two years.
The agreement with the New South Wales government is intended to support the security of the state's electricity supply through the ongoing energy transition.
The freshly inked Generator Engagement Project Agreement (GEPA) will see Eraring remain operational until at least 19 August 2027.
Eraring commenced full scale power generation in 1984. Origin had previously targeted closing the 2,880 MW black coal plant as early as August 2025, subject to market conditions.
The Origin share price could be getting some support with the company reporting New South Wales could offer compensation to help cover operating costs. Origin could recover a portion of any Eraring operating losses over the extension period, capped at $225 million a year.
If Eraring turns a profit rather than running at a loss, Origin will pay the NSW government 20% of that profit, capped at $40 million a year.
The coal-fired power plant could potentially remain in operation through to April 2029, the final closure date.
Commenting on the extended operations, Origin CEO Frank Calabria said:
We believe this agreement strikes the right balance, with an extension to operations enabling Eraring to continue supporting security of electricity supply in New South Wales through the energy transition, while making compensation available to Origin in the event economic conditions for the plant are challenging…
Importantly, today we can give our Eraring employees, our suppliers and the local community greater certainty around the future of the plant as we transition towards its retirement.
With a nod to the potential environmental impact, Calabria added, "Origin does not shy away from the need to exit coal generation as soon as there is sufficient renewable energy, firming and transmission capacity available."
The ASX 200 utility has committed to constructing a large-scale battery at Eraring. The first phase of the project consists of a 460 MW two-hour battery located next to the power station. The battery is planned to begin operating in late 2025.
Origin share price snapshot
With today's intraday moves factored in, the Origin share price is up 24% in 12 months.
