Nearly a decade after AGL changed the colour coding of its business strategy from green to black as it bought three of the country’s biggest coal generators, Australia’s largest emitter has announced it will split its business into two so it can better deal with the accelerating clean energy transition.
In a long awaited investor day event, AGL said on Tuesday the split would create two new businesses. One, dubbed “New AGL”, would become Australia’s largest multi-product energy retailer “leading the transition to a low carbon future.” The second, dubbed “PrimeCo”, would hold its biggest generation assets, mostly coal, but also wind, and would use these massive energy hubs as a centre for switching to renewables “as the energy market evolves.”
But it has also warned that some coal units may be mothballed to manage the solar “duck curve”, and in an interview with Renew Economy, CEO Brett Redman did not rule out early closures as the market continues to evolve.
The split into two businesses was widely expected, and follows a similar path with utilities in Europe who found it impossible to turn their businesses towards zero emissions without splitting them in two, new and old, green and black or clean versus dirty.
AGL has been laying the groundwork for the transition in recent months, with numerous announcements on new battery storage installations, electric vehicle incentives, deals with mobile and internet providers, the purchase of solar companies Solgen and Epho, the proposed $2.7 billion purchase of Tilt Renewables by its partly owned PowAR fund, and alliances with the likes of the UK-based Ovo Energy.
Redman says the goal of “new AGL” will be to deliver electricity, gas, internet and mobile services to more than 30 per cent of Australian households, backed by a 2.1 GW portfolio of flexible generation and storage assets to manage peak demand events. PrimeCo will feature the coal assets – Loy Yang A, Bayswater and Liddell (due to close in 2023). Redman describes this as “the low-cost backbone of the NEM”, but insists it will be in a position to evolve these centres into the “energy hubs of the future”. It will also focus on its 1,600 MW wind development pipeline.
Still, the idea did not win much applause from environmental groups, who suggested that AGL was simply hand balling the problem around coal closures to a new entity, Dan Gocher, from the Australasian Centre for Corporate Responsibility (ACCR) said AGL is walking away from managing their closure, by spinning them off into PrimeCo, which any responsible investor will surely avoid.