Electricity giant will build ‘a whole range of assets’, but not nuclear reactors, to support closure of 50-year-old coal power plants. Electricity giant AGL Energy is standing firm on replacing ageing coal-fired power stations with renewable energy, as it rejects a federal opposition plan to add nuclear energy to the nation’s network. “Both time and cost won’t allow nuclear to be done on time ... the question right now is about getting on and getting this done as soon as we can,” AGL chief executive Damien Nicks told AAP on Wednesday.
“Our strategy is about building a whole range of assets, not one or the other. It’s going to be renewables, batteries, pumped hydro, gas peakers to support what this market needs,” he said. Sign up for Guardian Australia’s breaking news email. The opposition leader, Peter Dutton, plans to build seven nuclear reactors on former coal sites across the nation, including sites owned by AGL in NSW and Victoria, if the Coalition is elected.
“We’re making 20-year decisions that will outlive changes in politics every three or four years,” Nicks said. On the Liddell site in the NSW Upper Hunter region, AGL was one-third of the way through construction of a major battery – a $750m, 500MW project that was on track for commencing operations in 2026, he said. AGL was also seeing demand growth for the first time in six years as underlying demand from electrification starts to kick in, Nicks said.
“We’re flexing our assets a lot more in the marketplace as the market transitions but also we expect to take FID [final investment decision] on 1.4GW of new batteries over the next 12 to 18 months,” he said. Big batteries allow energy companies to store excess solar energy generated in the middle of the day and shift it to other times to meet peak demand. More broadly, the development pipeline had grown to 7GW after recent acquisitions.
The home will also play a huge role in shifting the load to different times of the day – whether it’s home batteries added to rooftop solar, electric vehicles or hot water systems – so customers can share the benefit, Nicks said. The generator and energy retailer on Wednesday reported a half-year statutory net profit of $97m, down $479m. Underlying profit was $373m, down 6.5% on a year earlier, on higher operating costs to maintain generation and as consumers swapped products to try to reduce sky-high power bills.
Moody’s Ratings said the upcoming closure of AGL’s large coal-fired generators by 2035, which contributed to its “solid” half-year result, underscored the need for continued large investment program to maintain long-term earnings momentum. Coal fuel costs rose 7.4% driven by an increase in generation at Bayswater power station in NSW, and gas costs for electricity generation rose 42.6% as the market operator directed the Torrens Island plant to support South Australia.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) eased 1% to $1.068bn in the half. The range for underlying full-year EBITDA narrowed to $1.935bn to $2.35bn, while underlying net profit was expected to be $580m to $710m. But UBS energy analyst Tom Allen said AGL’s indication of a significant earnings contribution from new batteries at Torrens in South Australia and Liddell added upside to expectations for the 2026-27 financial year.
