The Eraring power station at Lake Macquarie in the coal-rich Hunter region will be closed in August 2025, up to seven years earlier than previously planned and will be replaced with a large-scale battery.

"We've been clear on our strategy and ambition to lead the energy transition," chief executive Frank Calabria said on Thursday.

Mr Calabria told reporters on a conference call there was "more than enough" supply coming into the electricity market to compensate for the exit of Eraring.

"This is a market in rapid transition."

Federal Energy Minister Angus Taylor says the decision is bitterly disappointing for all energy users - from households to small businesses to heavy industry - who rely on affordable, reliable energy to prosper.

"It is also bitterly disappointing for the 400 workers and communities in the Lake Macquarie region," he said.

Unions said hundreds of local workers have been blindsided by Origin's announcement this morning that the power station could close in 2025, not 2032.

The Origin boss said the 240 workers on site would get individual support to reskill or enhance skills, redeploy across Origin, and be first in line for a role in the plant's decommissioning and battery operations.

Origin will also work with contractors, is in talks with unions and also plans to set up a local community fund.

The Lock the Gate Alliance of farmers and environmentalists said Origin must also abandon the "folly" of fracking in the Northern Territory Beetaloo basin, Queensland's Lake Eyre Basin and the Kimberley's Canning Basin in Western Australia.

"Origin chief executive Frank Calabria can talk up batteries and renewable generation all he wants, but Origin's actions don't match his words," spokeswoman Carmel Flint said.

The Eraring power station cannot close earlier than 2025, because of the requirement to provide adequate notice to the market operator.

Mr Calabria said the federal energy minister, who he spoke to last night, was aware of the plans.

"We both have common objectives to make sure that the transition is navigated successfully," he said.

"We're very much focused on what we think is the right think to do over time for customers and Origin."

He said the influx of renewable sources of energy has changed the market and the traditional baseload coal plant brought online in the early 1980s will no longer be suitable.

A world beyond Eraring will see a lower cost of energy, cleaner and lower-cost generation, including solar, wind and batteries, and it will also be less capital intensive to supply, he said.

Sam Mella at Beyond Zero Emissions said the announcement highlights the urgency to ensure energy jobs are protected.

"The Hunter has so much expertise in energy and a Renewable Energy Industrial Precinct is the right vehicle to keep the Hunter thriving through the massive changes," he said.

"All levels of government should be focused on this."

The Eraring site will remain in the hands of Origin, and will host the battery designed to support the growth of renewables.

The battery plans are "well advanced" but the timing is not yet certain.

Origin says it is working closely with the NSW Government on how it will fit into the state's energy transition roadmap.

Mr Taylor warned the early and sudden closure would leave a considerable gap in reliable generation in the National Electricity Market, representing more than 20 per cent of NSW generation output.

"This risks higher prices, like the 85 per cent increase we saw after the closure of the Hazelwood Power Station, and a less reliable grid," he said.

Ariel Liebman at the Monash Energy Institute said higher energy prices as a result of the closure are not likely to last long as the announcement would bring forward several large wind and solar projects.

"It may even finally kick off an Australian offshore wind revolution," Professor Liebman said.

"The shutdown is unlikely to impact power supply to customers as energy supply will be bolstered by Origin Energy's proposed new big battery, the Marinus Link and Snowy Hydro 2.0."

Eraring, a 2880MW black coal plant with four units became fully operational in 1984.

It is the biggest of 16 remaining coal-fired power plants supplying the National Energy Market, with seven of those already scheduled to close by 2035 and the last planned to shut by 2051.

Origin expects the cost of restoring and rehabilitating the Eraring site will be about $240 million.

Australian Associated Press