Origin Energy open to investor for green funding push

Origin Energy would be open to striking a deal with an external investor to help fund its pipeline of projects and move into renewable energy.

Origin plans to develop several gigawatts of renewable energy generation as it replaces coal output from its Eraring plant in NSW.

Origin Energy would be open to striking a deal with an external investor to help fund its pipeline of projects and move into renewable energy amid speculation over the next move of billionaire Mike Cannon-Brookes and his investment partner Brookfield.

The electricity and gas operator laid out plans to develop “multi” gigawatts of renewable energy this decade and a 2GW virtual power plant as part of a bid to bring on new green supplies once its giant Eraring coal plant closes as early as mid-2025.

Asked if it would be open to a $10bn-$20bn investment, a pot of money the consortium pledged to sink into AGL, Origin said it had “an ambition that has some scale attached to it. And so would we partner with one party across a range of opportunities? Yes, we would consider that for sure,” chief financial officer Lawrie Tremaine told analysts.

Origin chief executive Frank Calabria said partnering with one investor rather than multiple partners on separate projects was ­attractive to the company.

“If there was a large source of funds that wanted to go on that journey with Origin, we would certainly be open to that and that may be the appropriate way to execute that strategy by the introduction of one partner that could go on that journey to all the development of those renewables,” Mr Calabria told The Australian.

The company disclosed a series of new targets as part of its strategy day, including 600,000 broadband customers by 2026, from about 50,000 currently, and 5000 electric vehicles under management by the same time.

Origin Energy CEO Frank Calabria. Picture: AAP

A virtual power plant – where a network of small-scale solar and battery systems can be controlled and fed into the electricity grid – would also contribute 2GW, a 10-fold increase on 205MW currently connected.

Origin will also buy $250m of shares and flagged further buybacks as its 27.5 per cent stake in APLNG boosts earnings, while higher wholesale prices in NSW and Queensland will also buoy its energy markets business.

The company has said that committed and expected power supply across the sector would be in place by the summer of 2026 including its own giant 700MW battery planned for the Eraring site, more than covering the coal plant’s shuttered capacity.

Origin’s 700MW battery, which can send power into the grid for up to four hours, will be developed in three phases, with the initial 460MW capacity expected online by late this year. An expression of interest for its supply and installation was issued to industry players a year ago and the facility is said is be well advanced. The battery is the largest under consideration in Australia but still requires sign-off from Origin’s board.

The company remains in talks with coal suppliers, with its Centennial Coal Eraring contract due to expire in the next few months, and Mr Calabria stating that a rapid rise in thermal coal prices may influence final deal negotiations.

“We’re buying coal and therefore that’s the one we need to contract for,” he said. “You’ve got coal that has escalated – and there’s a whole range of reasons we negotiate for term contracts that are on a particular grade of coal which is not the same as export. But we would not put ourselves in a position where we’re ever buying coal you couldn’t recover in the price and market.

“You wouldn’t do that if you couldn’t recover it in the wholesale electricity price.”

The share of coal power generation in Australia’s power grid fell slightly to 60.4 per cent in the fourth quarter of last year after plunging to a record low in the prior three-month period, while gas power generation dropped to an all-time low of 4.2 per cent, consultancy EnergyQuest said this week.

Two rejected takeover bids for AGL Energy by a consortium fronted by Mr Cannon-Brookes included a pledge to cut the company’s giant coal plants by 2030, more than a decade earlier than planned in the case of Victoria’s Loy Yang A station.

EnergyQuest said the AGL play along with Origin’s decision to consider closing Australia’s largest coal plant, Eraring, by mid-2025 underscored an acceleration in the move to renewables.