Techie comes ‘clean’, blackouts will generate billions

Tech billionaire Mike Cannon-Brookes. Picture: Toby Zerna

Thank you Mike for so promptly demonstrating the truth of what I wrote about Origin’s proposed closure of a real power station, Eraring.

That it would have a cascading impact on all the other real – coal-fired – power stations; forcing their accelerated closures, because the totally destructive and destabilising impact of ever-increasing so-called renewables in the grid rendered the real stations unable to function.

You and your Canadian partners are really only proposing upfront to do what AGL would have ended up being forced to do anyway: bring forward the planned closure dates.

This would be both exactly the same as, and also accelerated by, what Origin is doing with Eraring - bringing it forward from ‘over the horizon’ in 2032 to an all-too immediate 2025.

Even a Green loon like NSW’s laughingly titled ‘Energy’ Minister, Matt Kean, can see that 2025 is all-too close to now for comfort; heck, it’s even possible that he could still be in the job when the blackouts and brownouts start.Thank you Mike for also announcing that – at least, you think - there are big dollars to be made in Australia’s blackout and brownout future, off the back of real pain for 26m Australians. You and Brookfield are not putting - or more accurately, being prepared to put - $8bn on the table, to play Father Christmas to Aussie consumers.

You want to and intend to take more dollars out of their pockets for the same amount of electricity they’d be getting – when of course the wind is blowing and the batteries haven’t run flat, and they can actually get it – not fewer dollars.

The bid by got-lucky-techie Cannon-Brookes and Brook-field (no relation, other than intelligence-challenged wokeness) is best judged on two levels.

On both levels it’s a joke.

Tech billionaire Mike Cannon-Brookes. Picture: Toby Zerna

The first is as just another opportunistic corporate play: launching at AGL when it’s vulnerable with its de-merger proposal. AGL needs 75 per cent shareholder approval to break itself into two packages – the ongoing, heading for the business cemetery, coal-fired stations, and the ‘new-age’ energy player plus retailer.

Brookes, Cannon and Field, want the same 75 per cent to vote for their $7.50 cash a share upfront and not have to worry about what the package going forward will be worth.

The simple counter is that they think that package going forward can be made to be worth more, much more, than $7.50. Current holders should say thanks but no thanks, as indeed the AGL board has promptly done. We’ll keep the extra dollars from Australia’s blackouts and brownouts future, if you don’t mind.

In the context of both corporate realities and the seemingly unstoppable sleep-walk to Australia’s energy future disaster, the demerger makes sense.

The two most recent examples have been value-accretive for holders. That was Wesfarmers hiving off the Coles supermarket business, and Woolworths separating its Endeavour grog and pokies business. And it should be also with BHP selling its oil and gas business to Woodside, with BHP holders retaining their equity pro-rata in the merged entity.

On the second level, AGL and Australia’s energy future, the bid is an even bigger – and thoroughly sick – joke. The bidding duo’s core proposal is to replace 7GW (7000MW) of existing AGL real 24/7 coal and gas generation, with “a build-out of at least 8 GW of clean energy and storage (batteries)”. Let’s say, for example, that’s 6GW of wind/solar and 2GW of batteries.

When the wind don’t blow and the sun don’t shine – for at least 8 hours every night and often 24 hours through a full day – that 6GW could and will drop close to zero; the 2GW of batteries will run flat in a couple of hours. Hullo blackouts; hullo brownouts. And very expensive power, as in even crazier Europe.