EnergyAustralia pledges $5bn spend to rapidly develop renewable pipeline

The group will spend $5bn to establish 3GW of renewable energy, easing market jitters that the country’s third-largest retailer is falling behind its rivals in planning for life after coal.

EnergyAustralia will spend $5bn by 2030 to rapidly develop renewable energy generation assets to replace coal power generation, which Australia’s third-largest retailer said will drive it to be net-zero by 2050.

The $5bn spend, which EnergyAustralia said will be spent both individually and with partners, comes as the retail giant struggles to accelerate its transition plan in contrast to rivals such as AGL Energy and Origin.

AGL said last year it would develop a $20bn pipeline of 12GW in renewables and storage, while Brookfield – which is hoping to complete its $18bn deal for Origin – has pledged to spend between $20-$30bn to accelerate the transition away from fossil fuels.

EnergyAustralia said it intends to commit to 3GW of renewable energy projects by 2030, which would be a substantial increase on the just over 850MW it currently has in development.

Chief executive Mark Collette said the plan was the first step in a challenging transition.

“The energy transition is really big. The targets that Australia has set, 82 per cent renewables by 2030 relative to about 35 per cent, well that level of ambition requires the whole industry to accelerate,” Mr Collette told The Australian,

“Our approach is very much to take actions that help accelerate the industry.”

EnergyAustralia will close its Yallourn coal power station in 2028 after a deal with the Victorian government ends, which will leave the company with just one additional coal generator.

Mr Collette said EnergyAustralia also intends to switch the way it uses its last remaining Mt Piper coal power station, where the retailer leaves the generator idle and only firing it up during periods of renewable drought when the sun is not shining or the wind is not blowing.

Mt Piper is scheduled to close by 2040.

EnergyAustralia boss Mark Collette.

EnergyAustralia did not reveal how much of the $3bn it intends to finance from its balance sheet, and there remains some concern about how the retailer intends to fund the transition.

Mr Collette said the company was focused on improving on its financial performance that would aid its ability to invest in the renewable pipeline.

“Unambiguously last year was a poor financial result for us and our operational performance was not in line with our plans and we can do better. Our results this year have shown improvements on last year and we expect to deliver continuing improvements,” Mr Collette said.

“Good operational performance means better and ultimately good financial performance, which builds a bridge to the future that we can invest by our own balance sheet. Even given last year, we are still able to invest in the future.”

EnergyAustralia has endured a difficult couple of years amid a global energy crisis that saw it post an annual loss of more than $1bn in 2022.

While the fortunes of Australia’s energy retailers have been significantly improved by recent increases to household and business bills – which allows companies to recoup heavy losses – EnergyAustralia posted a half-year loss earlier this month of more than $100m as a result of interest payments on debt.

The losses have clouded EnergyAustralia’s capacity to invest in renewable energy generation assets, and efforts by parent company CLP to sell a stake in Australia’s third-largest retailer to fund the transition appear to have stalled.

Hong-based company CLP had been in talks with Macquarie about a sale of 50 per cent in EnergyAustralia and a deal appeared close before falling over.

CLP said it remains in talks with potential investors, but said there is scope for a project-by-projects agreements.

EnergyAustralia said it is focused on large-scale wind generation, and the transition plans came just hours after the retailer was confirmed to be part of the Elanora Offshore venture, which wants to develop a 5GW wind project off the Gippsland coast.

The consortium also includes Australian renewables developer Polpo Investments, Polish Respect Energy, Boskalis and KIMAenergy.

Competition, however, is fierce and 37 applications for a so-called feasibility licence to develop in Gippsland have been lodged.

EnergyAustralia did not provide any additional detail on projects under consideration.

The company said it will update its climate transition action plan again in 18 months’ time to inform the market and investors how it plans to curtail Scope 3 emissions.

Originally published as EnergyAustralia pledges $5bn spend to rapidly develop renewable pipeline