AGL takeover bid: Cannon-Brookes has the numbers wrong, Graeme Hunt says

Tech billionaire Mike Cannon-Brookes has been accused of massively underestimating the new renewable energy capacity required to replace AGL’s coal-fired generators.

Tech billionaire Mike Cannon-Brookes has massively underestimated the new renewable energy capacity required to replace AGL’s coal-fired generators, the power giant’s boss says.

On the weekend, the Atlassian co-founder and Canadian investment firm Brookfield lobbed a $7.50-a-share bid for AGL, promising to substitute seven gigawatts of existing coal-fired power capacity with 8GW of wind and solar by the end of the decade.

The AGL board rejected the offer, arguing that its own plan to split the company in two was a better option.

That split would create a retailing arm with renewable assets and a separate unit housing the thermal generator fleet, which wouldn’t fully close until 2044.

AGL CEO Graeme Hunt on Tuesday derided the Cannon-Brookes proposal as “not responsible or considered”, declaring that it would lead to higher prices, more outages and unnecessary hardship in regional areas where the coal-fired generators are located.

AGL CEO Graeme Hunt has derided the Cannon-Brookes proposal as “not responsible or considered”.

Atlassian CEO Mike Cannon-Brookes. Picture: Toby Zerna

Mr Hunt told The Daily Telegraph much more renewable capacity would need to be built to equate to the output of Bayswater in NSW and Loy Yang A in Victoria.

“The amount of gigawatts of renewables to replace a gigawatt of thermal is about 2.5-3 to 1, so it’s not sufficient,” he said.

“And that’s before you start to think about the fact that the transmission networks et cetera needed to keep up with all of that.

“You can’t just wish things to happen faster.”

Mr Hunt said money would be available to deliver the necessary renewable capacity.

“But that money is looking for a return. The money is not for free,” he said.

“The cost of that has got to come from somewhere and typically that’s got to come on the power bill.”

AGL recently said it would be out of coal by several years earlier than planned.

Mr Hunt told The Telegraph the company was prepared to exit even sooner than that.

The Loy Yang power station is seen in the La Trobe Valley east of Melbourne. Picture: AAP Image

“We can go faster if the system can keep up,” he said.

The 2030 deadline proposed by Mr Cannon-Brookes would have adverse consequences, Mr Hunt added.

If the transition occurred before the system could cope, there would be “more chances of the lights going out, higher costs, job losses and impact on regional Australia”.

Mr Cannon-Brookes has said the thermal generation unit would not be able to attract the investment required to transition into clean power.

But Mr Hunt said: “Their approach to us proves that there is access to private capital that wants to support the transition.

“We are out there talking to companies like Brookfield … sovereign wealth funds, pension funds et cetera that want to invest in vehicles that will enable the thermal generation sites to transform over time, in a responsible way such that there are jobs created and economic activity in the regions where we are operating leveraging off the competitive advantages that we have in land, infrastructure and workforces and skills.”

AGL “understands the transition and has the pipeline of opportunities that are already significantly advanced,” Mr Hunt said.

Originally published as AGL takeover bid: Cannon-Brookes has the numbers wrong, Graeme Hunt says