AGL has Loy Yang coal closure in fast lane
AGL will need to find up to $20bn to decarbonise its generation portfolio and accelerate its exit from coal-fired generation, with the company on Thursday pulling forward the closure of its Loy Lang A power station by up to 10 years in a move that may put additional pressure on the National Electricity Market.
The power generator and retailer released the reset to its strategy on Thursday, saying it plans to exit coal by the middle of 2035, and has an interim target of owning 5 gigawatt of renewable and firming assets by the end of the decade.
Its plan includes the closure of Loy Lang A by 2035, up to a decade ahead of schedule, and the construction of a massive portfolio of renewable energy and battery assets capable of replacing the company’s coal-fired fleet.
But the company says it will need to find up to $20bn in capital spending to realise its decarbonisation plans over the next 12 years, as the company seeks 12GW of renewable energy assets by the time it finally exits coal in 2035.
The 12GW renewable energy plants would include 6.5GW of primary generation, such as wind and solar farms, plus 5.5GW of firming capacity – including batteries and pumped hydro.
To achieve that target, AGL says it would need to build 12 new wind farms the size of its 453 megawatt Coopers Gap operation, and another eight new solar plants the size of its 102MW Nyngan solar farm. In addition, it would need 14 new 250MW grid-scale battery stations, support by at least eight other long-duration energy storage plants – such as pumped hydro operations, hydrogen plants or bio-fuelled firming projects.
AGL currently has 3.2GW of firming capacity in its development pipeline and under construction, including a 250MW battery at Torrens Island in South Australia, due for completion in mid-2023.
It has also planned a 50MW battery in Broken Hill and the 500MW Liddell battery, the 200MW Loy Yang battery and the 250MW Muswellbrook Pumped Hydro project.
The company appointed chief financial officer Damien Nicks as its interim chief executive from October 1.
In a presentation to investors on Monday, Mr Nicks said the early closure of Loy Yang A would avoid the emission of about 200 million tonnes of greenhouse gas, with the company’s emissions profile to hit net zero after its closure.
AGL already plans the closure of its remaining coal-fired units at Liddell in the NSW Hunter Valley by April 2023 and will mothball the nearby Bayswater power station by the end of 2033.
But, while AGL’s strategy reset may relieve some of the pressure over its green credentials, the early closure of Loy Yang A may put additional pressure on the NEM, amid warnings this week any further acceleration of the exit of coalfired generation could place strain on the east coast grid’s stability and drive up costs.