Australia’s biggest energy generator, AGL Energy, has announced that it will bring forward its targeted closure date for the Loy Yang A power station, based in Victoria’s Latrobe Valley, by 2035.
Australia’s Net Zero ambition
Loy Yang A is one of Victoria’s newest coal-fired power stations and produces up to 30% of the state’s total.
AGL said that the targeted accelerated closure of the station is a huge step forward in Australia’s decarbonisation journey and will assist in the move to a world with lower carbon emissions, aligned with the Paris Agreement goals.
The power station was previously going to be shut by 2048, but AGL later discovered that it would run out of coal as early as 2040.
On achieving targeted closure, AGL’s annual greenhouse gas emissions are expected to reduce from 40m tonnes to Net Zero.
The company plans to decarbonise its whole asset portfolio with new renewable energy, with an ambition to supply its customer demand with up to 12GW of new generation and firming capacity, requiring a total investment of up to AUD$2bn.
AGL’s decarbonisation and energy investment strategy
“Today we have set a new direction for AGL. Our decarbonisation and energy investment strategy sets a clear pathway for the company’s future and its leading role in Australia’s energy transition,” said Patricia McKenzie, AGL Chair. “We have listened to our stakeholders – in particular, our shareholders, as well as government and energy regulatory authorities. Their views were an important consideration as we reviewed the company’s strategic direction after withdrawing the demerger proposal.”
“Our purpose in undertaking the review was to consider options for AGL’s future as a strong integrated entity in a way that enhances long-term shareholder value, and to achieve this in a complex energy environment, with increasing pressure to accelerate the pace of decarbonisation while maintaining energy affordability.”
“AGL is committing to an ambitious but achievable strategy to deliver a responsible and accelerated low carbon future. We are aiming to reshape our energy portfolio into a cleaner and more flexible one, transitioning away from coal and focusing on new renewable and firming capacity.”
“We believe that our ambitions to decarbonise and build a low-carbon portfolio represent an attractive opportunity to participate in Australia’s energy transition and will ultimately provide access to a wider pool of capital sources,” said Damien Nicks, AGL’s incoming Interim CEO. “Importantly, AGL will continue its relentless focus on delivering for its customers as a leading multi-service energy retailer, and our goal of making the energy transition simple, accessible, and affordable for our customers. We will sharpen our focus on digitisation and advanced analytics to further simplify and automate how we operate and serve our customers.”