The biggest emitter in Australia, AGL Energy Ltd., plans to split off its coal-fired plants into a separate unit as increased renewable energy generation is shifting the country’s electricity landscape.
What is Happening?
- This is the one of the most radical responses yet to Australia’s increased wind and solar generation, which according to AGL, undermined power prices and hurt the company’s profitability. A similar decision was made in Germany five years ago, when the country’s largest utilities floated their renewable businesses as separate entities.
- AGL’s new arm, currently called “PrimeCo,” would encompass 8.9 GW of installed generation representing a fifth of the electricity demand in Australia, including the company’s coal plants. A second unit, “New AGL,” would be the largest power retailer covering almost a third of Australian households.
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Glenn Walker, Greenpeace Australia Pacific senior coal campaigner, said in a statement, “AGL is trying to dodge its responsibility to manage the shutdown and rehabilitation of its ageing coal burning power stations by hiding its coal assets in a separate business. This demerger should be seen for what it is — an attempt by a company worried about its brand to hide its reputation as the nation’s biggest polluter.”
- A plan for the separation is expected to be completed by the end of June. The company’s shares have fallen 11% after it last month flagged expectations of further drops in wholesale prices.
- “New AGL” will take over the company’s retail units, as well as its hydro portfolio, battery pipeline, some gas units and a stake in the PowAR renewable generation joint venture. “PrimeCo” will encompass assets including the coal stations and non-PowAR wind.
- AGL’s revenue from customer markets was A$7.69 billion (USD$5.87 billion) in 2020, up from A$7.54 billion in 2019, while its revenue from wholesale markets was A$4.34 billion over the same period, down from A$5.56 billion in 2019.
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