Coal can’t compete with renewables: AGL chief Andy Vesey

AGL chief Andy Vesey has said that coal can’t compete with renewables, which he believes will dominate baseload power.

AGL managing director and chief executive Andy Vesey with South Australia’s Treasurer Tom Koutsantonis and Air Liquide managing director Michele Gritti. (Kelly Barnes/The Australian)

AGL Energy chief Andy Vesey, who runs one of the nation’s biggest coal-fired power businesses, says coal cannot compete with renewables, where prices are falling and which he sees dominating baseload power.

The comments, made to the Australian Energy Week conference in Melbourne this morning, come a day after Malcolm Turnbull flagged potential government-backed investment in new coal-fired power plants.

“The new baseload for us is going to be large scale renewables, firmed up by open-cycle gas and, eventually, when storage comes down, that’s what it will be,” Mr Vesey, who has said AGL will exit coal but only as plants reach the end of their scheduled lives over the next 30 years, said.

“Technology is driving this — we don’t see any baseload other than renewables.”

He said the economics of renewables would continue to come down because of economies of scale.

“You’ll hear people say, ‘no coal can compete’,” Mr Vesey said.

“But I’ve looked at the numbers and come to decisions (that) are going to direct billions of dollars of investment. I’ve looked at it pretty hard.”

The energy boss said the more wind and solar components that were made, the faster the price would continue to fall.

“Large coal plants, super critical and even carbon capture and storage, the more you make, the cheaper you get, but guess how many you have to make?” he said, adding the cost of coal plants had hardly moved in the past 20 years.

Wind power had fallen 20 per cent and solar 80 per cent in that period.

Mr Vesey, who has previouslybacked an emissions trading scheme, conceded batteries remained high cost, which was why some sort of transition scheme was needed.

He said AGL (AGL) was very supportive of the Finkel Review’s blueprint, despite disagreeing with some pieces.

“To get bipartisan support would be an amazing way to start to unleash energy and investmet people want to make in the system and that is the thing that will ultimately drive down prices,” Mr Vesey said.

“This is just getting something that people can agree on, and say ‘we’re done with this now, these are the rules, invest.’ What we are doing here is not sustainable and if we let it go on you will get bad reactions.”

He did not take questions or speak to reporters after his speech.