Cannon-Brookes lays out AGL renewable plan

Mike Cannon-Brookes has a strategy for the power giant should he be successful at defeating a demerger which includes making customer homes 100 per cent renewable.

Mike Cannon-Brookes is in a race to defeat a demerger of AGL Energy ahead of a shareholder vote on June 15.

Mike Cannon-Brookes has laid out a vision for the future of AGL Energy if a demerger fails, with coal to be phased out by 2035 and green loans made to customers to switch households to 100 per cent renewable electricity.

The billionaire, the largest shareholder in AGL, has been criticised by the power giant for failing to share his strategy should he win a high stakes battle to defeat the demerger.

Mr Cannon-Brookes has nominated 2035 for the closure of AGL‘s Loy Yang A and Bayswater coal plants, five years later than the target he set during several takeover bids rejected by AGL’s board earlier this year.

“The energy transition will take time. We believe AGL can shut down Bayswater and Loy Yang A by 2035 to align with the goals of the Paris Climate Accords. We want to see a safe and responsible replacement plan that ensures affordable renewable energy for all AGL’s customers,” Mr Cannon-Brookes’ Grok Ventures said in an investment memo.

The five-year delay reflects the fact that it would take longer for a publicly-listed company to achieve the transition than if it had been successful with its bid to take the business private, Mr Cannon-Brookes said at a press conference on Friday.

Grok also wants AGL to back “customer decarbonisation journeys” by offering financing products that help retail customers fund the capital expenditures as they convert their homes to renewable electricity

“Moving to 100 per cent electric could cost the average Australian home approximately $100,000. We believe converting this capital expenditure into operating expenditure is a challenge AGL can solve for customers.

“AGL could also offer energy management software to help customers optimise and monetise their generation, storage and connected devices, to minimise customer operating expenditure.”

The Grok camp reiterated that AGL’s board were not up to the task of finding more value for shareholders via the demerger.

“We do not believe that the current AGL board has the leadership or vision to execute on the energy transition opportunity. AGL’s board has overseen an almost 70 per cent share price decline, spent $0 on direct development of renewable generation, and lost market share to more forward thinking retailers over the last 5 years,” Grok said.

“We believe AGL needs world-class renewable operators to manage the transition and technologists to solve the behind the meter opportunity. Management incentives need to be realigned to deliver on the accelerated transition opportunity.”

Mr Cannon-Brookes also said former AGL Energy boss, Andy Vesey, was against the company‘s demerger after the billionaire held talks with the US businessman to gain support for his campaign against the split.

“He is broadly supportive of what we are trying to do and he does believe very much in the opportunities for these assets to go in a different direction,” Mr Cannon-Brookes said at a press conference on Friday.

Mr Vesey re-emerged this week as a new hire for Andrew Forrest‘s Fortescue Future Industries, nearly four years after his abrupt exit from AGL where he clashed with government ministers.

Mr Cannon-Brookes said the two had a conversation and said that he was personally “very sad” at Mr Vesey’s early departure from the top AGL job.

“I think it’s very sad what happened in that chapter in this company’s history. That’s not a proud period. Ironically, we are almost just five years behind implementing the exact plan that Andy had.”

“It’s not like we’re just adopting his plan, but we certainly spend time with him on what do you think and how does this work.”

The power giant plans to split off AGL Australia, with its 4.5 million customer base, into a newly listed retail-focused company with the current AGL to be rebadged as a coal-dominated generator called Accel Energy.

The demerger needs approval from 75 per cent of shares voted to proceed.