Victoria’s coal-fired Loy Yang power station will close three years earlier than expected after owner AGL Energy updated its demerger plan.
AGL plans to split into two listed entities – energy retailer AGL Australia and electricity generator Accel Energy – by 30 June.
The two entities have now been assigned emissions reductions targets, putting them on course to reach net zero in coming decades.
Under the climate goals, Accel Energy will bring forward its coal closure date for Loy Yang A to 2045, from 2048.
It will also close the Bayswater power station, located between Muswellbrook and Singleton, by 2033, from 2035 previously.
“As a result, emissions from Accel Energy’s electricity generation assets will be reduced by a further 90 million tonnes over the period financial year 2023 to financial year 2050 compared to modelled outcomes of our previous commitments,” AGL said.
The update was announced in AGL’s first half results release issued on Thursday.
AGL’s bottom line first-half net profit is back in the black at $555 million, after last year’s result was hit by significant and one-off items resulting in a more than $2 billion loss.
The net underlying result was down 40.9% to $194 million, excluding the impact of hedging and other items.
But, not everyone is happy with the company’s decision for an early departure.
The Mining and Energy Union (MEU) has called on AGL to urgently meet with workers and union representatives to discuss the impact of fast-tracked closures of the Bayswater and Loy Yang A power stations.
MEU general president Tony Maher said the employees and communities who had supported and relied on the coal-fired power industry for decades should not be thrown on the scrapheap.
“Our energy generation industry is undergoing a major transformation,” he explained.
“However, it shouldn’t follow that the workers and communities who have supported and relied on the coal-fired power generation industry for decades should pay the price of decarbonisation.
“Central to closure plans must be measures to prevent forced redundancies, create job transfer opportunities for skilled workers and invest in diversification in the Hunter and Latrobe Valley regions.
“We have worked constructively with AGL on measures to support workers at Liddell power station, which is the next slated for closure.
“With the timelines outlined today by AGL for Bayswater and Loy Yang A, there is time to put comprehensive plans in place to support and reassure workers.
“Unfortunately, Australians have seen too many examples of workers and communities being thrown on the scrapheap when their industries face structural change.
“We can and must take this opportunity to demonstrate that workers’ livelihoods and futures matter and deserve planning and investment.”
AGL also on Thursday narrowed its earnings guidance for the 2021/22 year.
It now expects pre-tax underlying earnings of between $1.28 billion and $1.4 billion and a net profit between $260 million and $340 million.
“Despite the strong first half performance, earnings are expected to be lower in the second half due to increased costs of capacity to cover periods of peak electricity demand, which are higher in the summer months,” AGL said.
Meanwhile, AGL says a rise in global energy demand will boost future earnings.
“With the rise in energy and commodity prices across the globe, AGL Energy is well positioned to benefit from improving wholesale electricity prices seen over the past six months,” CEO Graeme Hunt said.
“We expected to see this reflected in future earnings beyond financial year 2022.”
AGL will pay an interim dividend of 16 cents, down from 41 cents last year.
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