AGL pushes ahead with Liddell exit plans

AGL Energy has sent a strong signal that its ageing Liddell coal-fired power plant is unlikely to operate beyond 2022 after unveiling plans for a largely gas and renewables-based replacement.

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AGL, which is under pressure from the federal government to keep Liddell open, has told shareholders at its annual general meeting that extending the life of the 45-year-old facility would cost hundreds of millions of dollars, while a sale would be “challenging” due to its complexity.

AGL chief executive Andy Vesey told the meeting that AGL has been assessing options to replace the NSW Hunter Valley-based Liddell since April, 2015.

The company will present its plans for replacement power to the Prime Minister and energy market operator AMEO by early December.

Mr Vesey, who reaffirmed AGL’s intention to move away from coal-fired generation, said the bulk of energy lost from the forecast closure of Liddell in 2022 can come from wind farms to be built in NSW and Queensland.

An upgrade of Liddell’s neighbouring Bayswater plant, new gas-fired plants and battery storage will make up the balance of capacity.

Mr Vesey said the plans needed further development but indicated the Liddell site could be repurposed with gas-fired power or battery storage.

“We’ re confident. My job is to make sure that everybody who is paying attention to this sector is equally confident,” he told reporters at a press conference affter the AGM..

New AGL chairman Graeme Hunt said AGL was “very optimistic” that Liddell could be replaced with new technology, without a negative impact on the market in terms of reliability and affordability.

But he said it would be up to the AGL board to assess the plans when they are complete and weigh it up against the options suggested by Prime Minister Malcolm Turnbull.

Mr Hunt said the options that AGL has been asked to consider by the government are just that: “options”.

“But what we’re doing is looking at other options, and in the end we will weigh up the options that we’ve been asked to look at against the variety of other options,” Mr Hunt said.

“And the main one that’s on the table at the moment is the outline of the plan that we’ve put more flesh on the bone today.”

Prime Minister Malcolm Turnbull, speaking after a meeting with bosses of major Queensland gas export facilities in Sydney,

I have seen brief details of an alternative strategy by AGL which involves some additional coal-fired generation at Bayswater, was noncommittal on the AGL plan.

“Whether that will meet the requirements for ensuring reliable base load power, that remains to be seen,” Mr Turnbull said at a press conference.

Mr Hunt said AGL’s plans to replace Liddell were not conditional upon anything other than AGL’s normal governance processes that ensures that the company makes wise investments.

“It just needs to make good, common business sense,” he said.

Meanwhile, AGL avoided a so-called second strike during the annual general meeting when shareholders voted overwhelmingly in favour of its remuneration report.