AGL Energy sells $750m Tilt Renewables stake to fund major renewables push
The deal is a boost to AGL, which is under mounting pressure to decarbonise while protecting shareholder returns.
AGL Energy has sold its near 20 per cent stake in Tilt Renewables for $750m, bolstering its balance sheet as it faces rising pressure to accelerate the closure of its ageing coal fleet.
The company sold the stake to existing Tilt shareholders QIC and the Future Fund.
The sale, flagged for months as part of a broader capital recycling strategy, will help fund AGL’s multibillion-dollar push into renewable and firming assets.
The company said all proceeds from the transaction will be directed toward developing its pipeline of clean-energy projects as it seeks to transform one of Australia’s biggest carbon emitters into a major renewables operator.
Chief executive Damien Nicks the transaction was another step in refocusing the business for a low-carbon future while maintaining balance sheet strength.
“We look forward to continuing to work with Tilt, QIC and the Future Fund as Tilt delivers its development pipeline,” he said.
“The transaction demonstrates our commitment to realising value in our portfolio and recycling capital to invest in flexible, dispatchable capacity as we work towards our expanded 6GW target of new firming and renewable projects by FY30.”
AGL, Australia’s second-largest electricity and gas retailer, has been under intensifying scrutiny from investors and activists over the pace of its transition. The company remains the country’s single largest emitter of carbon dioxide, with its coal-fired power stations in NSW and Victoria accounting for a significant share of national power sector emissions.
Its biggest shareholder, billionaire tech entrepreneur Mike Cannon-Brookes, has used his near 12 per cent holding to push for faster closures of AGL’s coal plants, arguing that the company’s future depends on a rapid shift to renewables and storage. But other investors have warned that accelerating the timetable could deepen financial strain and erode shareholder returns.
AGL has responded by seeking to streamline operations and contain costs as it channels capital into new generation.
The Australian revealed that the company recently began consultation on plans to cut around 300 roles – about 7 per cent of its workforce – as it works to offset rising development expenses and maintain profitability through its transition.
While AGL has ambitious renewable energy goals, it has signalled that its focus will remain on owning and developing “firming” assets such as large-scale batteries and pumped hydro projects to back up intermittent wind and solar output.
Firming assets are typically more lucrative and have a quicker payback period. Like main rival Origin Energy, the company plans to rely on power purchase agreements with developers to supplement its portfolio rather than directly owning all renewable capacity.
Analysts said the sale of the Tilt stake underscored AGL’s strategy of redeploying capital from passive holdings into higher-return assets that provide reliable supply.
Its expanded 6GW target, announced earlier this year, envisages roughly half that capacity coming from battery storage.
Even as battery costs continue to fall, the upfront investment remains substantial. AGL has cautioned that higher capital expenditure will weigh on near-term profitability, guiding for underlying profit in the 2026 financial year between $500m and $700m, implying a softer result than the $640m expected in 2024-25.
Longer term, the company plans to spend up to $20bn by 2035 to develop about 12 gigawatts of new generation and storage capacity. Meeting that goal will require tight financial discipline at a time of volatile energy markets and thin retail margins.
Shares in AGL rose in morning trade, up about 2.5 per cent shortly after the announcement.
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