AGL to close South Australia’s main gas power station, citing new grid link and cheaper renewables
AGL Energy will close its main gasfired power station in South Australia by 2026, citing the completion of a new grid link to NSW that will give the state more access to low-cost renewable energy.
The energy giant, which has been under siege from billionaire activist Mike Cannon-Brookes over its decarbonisation pace, told the ASX on Thursday it would close the remaining three units of the 600 megawatt Torrens Island B gas-fired power station on 30 June 2026.
The closure plan was driven “in part” by the construction of a new transmission line between NSW and SA that is due to begin operating by mid-2026, AGL said.
The decision was not influenced by the recent expansion of the company’s board to add four members proposed by Cannon-Brookes. Discussions between AGL and the SA government have been going on for some time.
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The Australian Energy Market Operator had listed Torrens B as operating until 2035, but an accelerated closure date had been expected.
AGL mothballed one of the plant’s four units last year and the remaining three will have operated for 50 years by the time of the station’s new intended closure date.
The rise of renewables in the state played a role in the decision. During the day time in SA, wind and solar commonly meet most or all of the state’s electricity demand. Rooftop solar panels alone were providing more than four-fifths of the supply by mid-afternoon, the OpenNEM website showed.
The ageing Torrens B plant was less capable of firing up and shutting down to meet the market’s fluctuating needs. AGL’s 210MW Barker Inlet gas-fired station, completed in 2019, is better able to cope with supply demands.
However, recent orders by Aemo for
AGL to turn on the Torrens B plant to meet the need for synchronicity and supply demonstrated its ongoing usefulness.
An AGL spokesperson said it is common for two of the plants units to be operated at minimum levels of output to provide stability to the grid. It is “very rare” to have them dispatched any more than that.
AGL received stern opposition from the Turnbull government in 2015 went it gave seven years’ notice of closing its 1680MW coal-fired power station in the NSW Hunter Valley. It extended the scheduled shutdown by a year to April 2023, just after the March state elections.
In the Torrens B case, AGL has given the required 42 months’ notice of plans to close the gas plant. The company has not said whether it will extend the plant’s life if the NSW-SA transmission line, known as Project Energy Connect, is delayed.
Debate over energy prices has flared in the past month after the Albanese government’s first budget forecast that electricity prices could rise as much as 56% over two years from last June.
The extent of rises so far will be revealed next Wednesday, when the Australian Energy Regulator is scheduled to release its annual retail markets report.
About 100 employees will be affected by the Torrens B decision. In its statement, AGL said it was “strongly committed to working with its people, unions and the government” to assist the transition to a low-carbon future for the energy system. Investors were little moved by the news, with AGL’s shares down about 1% in late afternoon trade. The overall market was up about 0.1%.