AGL has slightly brought forward the closure date for two coal-fired power stations, but green groups are unimpressed, saying the electricity and gas supplier “doesn’t even get a golf clap”.
Australia’s biggest carbon emitter last year announced a massive plan to move away from coal and towards renewables, splitting the business into an energy retailer named AGL Australia and electricity generator dubbed Accel Energy.
Delivering its half-year results on Thursday, AGL announced it had brought forward the closure dates for its Bayswater coal-fired power plant in NSW from 2035 to no later than 2033 and for the Loy Yang A power station in Victoria from 2048 to 2045.
At the same time, the closure of unit 3 at its Liddell coal-fired poxjmtzywwer station in NSW is expected to be completed in April and the remaining units in April next year, while the final unit at the natural gas-burning Torrens Island power station near Adelaide is scheduled to close in September.
At Torrens Island, AGL broke ground on a new grid battery in November, with completion expected by early 2023, while planning approval has been received for a battery at Loy Yang.
Chief executive Graeme Hunt said the moves demonstrated AGL was taking “decisive action to accelerate our pathway to decarbonisation”, noting that improving its green credentials was of course making it “better placed to attract investors, access capital”.
Greenpeace Australia Pacific senior campaigner Glenn Walker described the closure timeline changes as “a timid token effort”, saying Loy Yang A and Bayswater should be replaced with renewables by 2030.
“The UN and International Energy Agency have both warned that Australia’s coal power stations must close by 2030 to ensure a safer climate and economic future for our country,” he said.
“In addition, the Australia Energy Market Operator forecasts that it is likely that brown coal will exit Australia’s energy system by 2032 at the latest, meaning that AGL’s announcement today puts it significantly behind the pace of the energy transition.”
Mr Walker said market and investor pressures around AGL’s “tardy approach … have seen the company’s fortunes plummet”.
Indeed, AGL’s shares were more than $26 in April 2017 but had slumped to just above $5 in November. They were $7.53 in intraday trade.
The half-year results showed a 41 per cent plunge in underlying profit to $194m, while the interim dividend was slashed to 16 cents per share, down from 31 cents per share plus a special dividend of 10 cents per share a year prior.
Nicholas Chapman, vice-president of ratings agency Moody’s Investors Service, said the results were weak but in line with expectations given subdued market conditions.
“The company’s performance will likely stabilise on the back of rising wholesale energy prices,” Mr Chapman said.
“However, the improved near-term outlook is overshadowed by persistent longer-term challenges, including the continued entry of low-cost renewables and structurally lower consumer energy demand.
“In addition, the company’s planned demerger of its retail business in the face of ESG (environmental, social and governance) pressures will reduce diversification and increase its exposure to carbon transition risk.”
But Ord Minnett was rather impressed, saying underlying net profit was stronger than anticipated, net debt was well below expectations, there was no need for an equity raising and AGL had provided a “modest” full-year guidance upgrade.
