By Nick Toscano
Power giant AGL has struck a deal to buy an Australian big battery and solar farm developer as it races to add renewable energy sources to replace the polluting coal-fired generators it plans to close over the next decade.
AGL, Australia’s largest electricity provider, on Wednesday reported a better-than-expected full-year profit, which it will use to accelerate its transformation from the country’s heaviest polluter of planet-warming emissions into a major renewable energy supplier.
In line with its push into renewables, the company also announced that renewable energy veteran Miles George, a former head of the Clean Energy Council, will take over from Patricia McKenzie as its chairman in February.
Australia’s transition to renewable energy is running behind schedule.Credit: Getty
AGL remains the nation’s dominant coal-fired power station operator, but is pursuing a strategy to fast-track its exit from the fossil fuel following an investor uprising led by tech billionaire Mike Cannon-Brookes in 2022.
The company is planning to plough billions of dollars into building 12 gigawatts of renewable energy generators and having “firming” assets – such as batteries and pumped hydro – to support them at times of low wind and sunlight.
On Wednesday, AGL chief executive Damien Nicks revealed the company had struck a $250 million deal to buy Firm Power – a developer of 21 grid-scale battery systems across the country – and its affiliated Terrain Solar, which is planning six solar farm projects and one onshore wind farm.
Nicks said: “We believe this high-quality development pipeline presents strong optionality for AGL, focusing on firming capacity which will be used to firm renewable energy generation for our customer base and portfolio as thermal baseload generation exits the national electricity market.”
Australia’s coal-fired power stations, the backbone of the electricity sector for more than half a century, are increasingly bringing forward closure dates as their ageing equipment becomes less reliable and less competitive against cheaper renewables.
At least half of the 14 remaining coal plants on the eastern seaboard are scheduled to shut before 2035.
Under AGL’s new timelines, its Bayswater coal-fired power plant in NSW is due to shut no later than 2033, while the retirement of Loy Yang A in Victoria’s Latrobe Valley has been brought forward by up to 10 years from 2045 to 2035.
Grid-scale batteries, with near-zero start-up time, are seen as particularly critical to Australia’s energy transition because of their ability to soak up surplus renewable energy in the daytime to plug gaps in supply and stabilise the system when weather conditions are unfavourable for renewables.
Tom Allen, an analyst with UBS, said AGL’s deal to buy Firm Power and Terrain Solar would add about eight gigawatts of development options to AGL’s pipeline of renewable energy and firming assets, with most project sites located in Queensland and NSW.
The appointment of George as AGL chair from February would also bring “considerable renewable energy development experience” and support the acquisition, he said.
AGL’s net profit soared to $711 million in the 12 months to June 30, a stunning turnaround from the $1.2 billion loss the company posted a year earlier, during which it had suffered from wild swings in electricity prices and costly breakdowns curtailing its ageing coal fleet at critical times.
Nicks said the company’s improved financial performance and stronger balance sheet this year would help support the company’s “ongoing investment in our transition” and deliver better returns to shareholders.
“Today’s announcement demonstrates our commitment to grow and accelerate our development pipeline, which is already 6.2 gigawatts,” he said.
On an underlying basis, AGL’s profit more than tripled in the past financial year to $812 million, beating expectations.
Gordon Ramsay, an analyst at the Royal Bank of Canada, said the full-year result had been underpinned by higher wholesale electricity prices and margins, and the start-up of AGL’s Torrens Island grid-scale battery in South Australia.
Although AGL forecasts a decline in earnings, the outlook for the 2025 financial year was better than most analysts’ expectations, Ramsay said.
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