Philip Hopkins
Philip Hopkins
THE Loy Yang A Power Station could close within seven years if software billionaire Mike Cannon-Brookes wins control of the AGL board at the company’s annual meeting on Tuesday.
Mr Cannon-Brooke’s Grok Ventures is gaining support from more directors to close Loy Yang A by 2029, six years earlier than AGL’s plan by 2035, the Australian Financial Review reported.
He faces opposition from AGL chair, Patricia McKenzie, who wrote in the AFR that faster closure of the coal plants was not possible because replacement capacity could not be built in time to keep lights on and prevent higher energy prices.
The Grok camp maintains closing Loy Yang A by 2029 would push AGL towards the goal of the Paris climate agreement to limit warming by 1.5 degrees. The current board’s position to close the power station by 2035, announced last month, aligns more with 1.8 degrees of warming, the AFR reported. It said latest moves ensured that Mr Cannon-Brookes and his private firm Grok Ventures would succeed in upending the incumbent board.
Ms McKenzie, in her AFR opinion piece, said modelling showed that to achieve the 1.5-degree ambition, all AGL’s power stations would close by at least 2029, and all the nation’s coal stations by no later than 2031.
“This would mean that 98 gigawatts of new capacity would need to be delivered by 2030 to keep the lights on. To put it in perspective, over the past five years, the average amount of new capacity built in the NEM (national electricity market) has been 2.2GW,” she said.
“Simply put, we do not consider that the replacement renewable generation, firming and supporting transmission can be built quickly enough and this would put unacceptable pressure on energy security and affordability.”
The industry superannuation sector was backing Mr Cannon-Brooks, the AFR reported. The Australian Council of Superannuation Investors, which advises the super sector how to vote during the annual meeting season, has backed three of Mr Cannon-Brookes’ four nominations to the board.
The Grattan Institute’s energy program director, Tony Wood, told the AFR it would be “next to impossible” for AGL to deliver on Grok’s goal, although a detailed plan may show it was possible.
Adding the estimated 98GW of renewable energy and battery storage required would be a tough task, he said.
Ms McKenzie said closing Loy Yang A by 2035 would reduce AGL’s annual scope one and two greenhouse gas emissions from about 40 million tonnes today to net zero.
“We are already playing an important role in helping deliver the country’s energy transition,” she said.
“Shareholders should be in no doubt AGL’s board shares an ambition to exit coal and decarbonise. We also want decisive action on climate change and an increase in renewable energy generation.”
AGL’s revised closure date came in the same week as the Queensland government’s commitment to exit coal energy generation by 2035, and Victoria’s announcement to accelerate renewable energy and reform the State Electricity Commission, Ms McKenzie said.
Although AGL had concerns about reinstating the SEC, “we understand the need for government support of different initiatives to help drive the transition”.
“We believe it’s important that policies and interventions continue to provide an even playing field, and do not deter private investment or have unintended consequences for customers,” she said.
Ms McKenzie said from the middle of next decade, coal-fired power, which accounts for about 60 per cent of Australia’s energy generation, would be virtually gone.
“That dramatic change in Australia’s energy generation mix will require significant investment (for AGL alone it will require up to 12GW of renewable and firming capacity by 2036) and a coordinated, considered approach across all stakeholders,” she said.
This was widely acknowledged by energy professionals with deep knowledge and understanding of the industry as one of the biggest and complex challenges the sector had ever faced.
“Transforming Australia’s energy generation and fuel mix and moving the economy away from fossil fuels and towards a low-emission economy must be well-planned, well-timed and well executed.”
