Michelle Slater
Energy giant AGL has not ruled out ramping down or “mothballing” its coal units to meet market demand and cutting worker overtime as part of its plans to split the company in two.
AGL announced on March 30 it was planning to divide itself into two separate businesses, one to be dubbed New AGL – a carbon-neutral business focusing on energy retail.
The other business, to be called PrimeCo, would hold on to AGL’s coal and gas fleet, accounting for 20 per cent of the National Electricity Market, with 1600 megawatts of wind in the pipeline.
AGL chief executive officer Brett Redman said the changes would not affect the day-to-day operations at Loy Yang A, and stressed it would not accelerate any early coal closures.
Mr Redman said Loy Yang A would continue to be “the low-cost backbone of the NEM”.
He said there were still plans to keep investing “tens of millions” of dollars each year to maintain Loy Yang A to “run it for the long haul” out to the end of its technical life in 2048.
However, he also left the window open, stating that the company was “responsible for responding to market forces”.
“We have never shied away from the fact that if our customers want a different product, it will affect our pathway forward. But we will run Loy Yang to no later than 2048,” he told The Express.
AGL had cited cutting $150 million in operating costs for the 2022 financial year, in order to match spending to market conditions as wholesale electricity prices were in a slump.
In an investor briefing on Tuesday, the company flagged lowering generation to better manage the “duck curve”‘ of renewables coming online which could include considering “to mothball units”.
“Loy Yang A was built with the idea it would be turned on steady and full without any deviation. Today, we are thinking about flexing up and down as the market requires,” Mr Redman said.
“All the plants in the market are being pushed to run with more flexibility and Loy Yang is no different. We are thinking about ramping up and down to cycle to meet the market needs.”
The company had also pointed out “stopping spending on overtime and weekend workforce mobilisation” if the market did not require the energy and the capacity availability.
Mr Redman said it could involve looking at the “right mix of permanent, contract, or ordinary hours and outside hours”.
“How can we work more within normal hours and less in public holidays? I recognise this can have a flow-on effect to overtime, but also give people more work-life balance,” he said.
Mr Redman pointed to plans for PrimeCo to diversify the Loy Yang site into an energy hub generating hydrogen, grid scale batteries and possibly floating solar beyond the coal plant closure.
“We are continuing to make sure the site has a long future there beyond 2048, this is recognising we have some wonderful assets at that site,” Mr Redman said.
“I’m proud of the Loy Yang business and the people who work there and I’ve always been upfront when talking about the site.”
Greenpeace Australia Pacific senior coal campaigner Glenn Walker described the company split as a demerger in an attempt to hive off the AGL brand from of its poor environmental performance.
Mr Walker said that AGL’s failure to plan for Loy Yang A’s closure was unrealistic.
“Given where the coal market is headed, Brett Redman is dreaming if he thinks Loy Yang A can stay open until 2048,” Mr Walker said.
“This timeline is also completely inconsistent with nation-wide efforts to reach net zero emissions by 2050.”
