AGL outlines early-exit pathways from coal power
AGL Energy would consider the early shutdown of its coal power plants but only if all of its customers demand green power.
AGL Energy would consider the early shutdown of its coal power plants but only if all of its customers demand green power and a leap in technology allows cheaper alternative forms of electricity to replace the fossil fuel in the nation’s energy mix.
Australia’s largest electricity generator, which runs the biggest coal fleet in the country, has issued a plan to reach net zero carbon emissions by 2050. That raises the question of whether it would bring forward the planned exit in 2048 of Victoria’s Loy Yang A coal-fired power station, along with the 2035 timeline for NSW’s Bayswater plant to shut down.
AGL said while it planned to run its three coal plants to the end of their lives, there were a range of scenarios which could accelerate their retirement that hinged on customers, technology and government decisions.
“If our customers demand more low-carbon products, then we’re in the business of meeting customer demand, not forcing our products on the customers, so that may create a shift,” AGL chief executive Brett Redman told journalists.
“If technology gallops forward and suddenly we see the costs of new technology plummet, that can be a reason why the pace of transition changes.
“Or if the community asks us to do something different as it does from time to time, that can change the pathway of transition.”
The country’s biggest polluter has modelled four emissions-reduction scenarios, under which renewable generation would provide 80 per cent of power grid needs by 2050, with every coal plant in Australia likely to be closed by that point.
Coal accounts for 84 per cent of AGL’s electricity generation. That will fall to 79 per cent in 2025 and half of supply in 2037 under a national targets plan to cut emissions in line with Paris targets.
Should Australia move to limit global warming to a 1.5C scenario under an immediate decarbonisation approach, coal would move from 76 per cent of generation in 2025 to zero by 2037.
AGL will issue closure dates for each scenario along with the financial impacts and net present value of its coal assets as part of its annual report on August 13, after talks with stakeholders and investors. KPMG and Aurora Energy Research modelled the scenarios on AGL’s behalf.
“We provide investors and others with different scenario information that they ask for so that they can think about the future and make their own judgment about where they think the market and AGL is going as well,” Mr Redman said.
The power provider said its 2.3 million electricity customers were not currently prepared to pay the higher price of having coal disappear as an electricity source.
“If universally our customers tomorrow said we want nothing but green power and we’re prepared to pay the price of that, then we would meet that customer demand,” Mr Redman said.
“But what our customers are telling us today is they want to get to a low-carbon future but they want to do it in a way that balances cost, so we are continuing to play out the plants to the end of their economic life while moving to firmed renewables.”
AGL will also link executive pay to its carbon goals, with one-third of a four-year incentive based on emissions intensity and the amount of customer sales derived from green energy.
The world‘s biggest sovereign wealth fund, Norway‘s central bank Norge, ousted AGL from its investment portfolio in May after introducing new coal thresholds.
The Australasian Centre for Corporate Responsibility said the climate plan failed to bring forward the closure of coal plants, despite investor pressure. “AGL will continue to feel investor pressure until it brings forward the closure of its coal-fired power stations,’’ climate director Dan Gocher said.
“Closing Bayswater in 2035 and Loy Yang in 2048 at their use-by dates is not consistent with the Paris Agreement, with which AGL claims it is aligned.” AGL shares rose 3.33 per cent to $17.05.
More Coverage
