OPERATORS of the huge Loy Yang A Power Station in the Latrobe Valley, which can generate up to 2210 megawatts (MW) of electricity, about 30 per cent of the state's total requirement, AGL has told the sharemarket today that it is closing the plant 10-13 years earlier.
To be shut by the end of 2035, if not earlier, and not between 2045 and 2048 as earlier indicated, the move will wipe out 600 Gippsland jobs.
Its announcement to the ASX on Thursday morning, September 29 was as follows:
AGL targets to complete its exit from coal-fired generation by the end of FY35 and accelerates its transition to an integrated low carbon energy leader.
* AGL targets an accelerated exit from all coal fired generation, announcing today a targeted earlier closure date of Loy Yang A Power Station – up to 10 years earlier than previously announced
* AGL’s annual greenhouse gas emissions are expected to reduce from 40 million tonnes to Net Zero on achieving targeted closure, supporting the transition to a lower carbon world aligned with the Paris Agreement goals and achieving net zero for operated Scope 1 and 2 emissions after coal closures
* AGL aims to progressively decarbonise its asset portfolio with new renewable and firming capacity, with an ambition to supply its customer demand with up to 12 GW of new generation and firming capacity, requiring a total investment of up to $20 billion, in place before 2036, funded from a combination of assets on AGL’s balance sheet, offtakes and via partnerships.
* This includes an interim target to have up to 5 GW of new renewables and firming in place by 2030
* Unwavering focus on its customers as a continued major retailer of essential services, supplying affordable energy, supporting electrification and their transition to a low carbon future
* Unchanged commitment to rejuvenate its operating sites into low-carbon Energy Hubs
* Continuing consultation with its employees to understand their needs as AGL explores opportunities for career transition and re-skilling
* Inaugural Climate Transition Action Plan published today
AGL Chair, Patricia McKenzie, said: “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.
“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.”
“This represents one of the most significant decarbonisation initiatives in Australia. It supports the transition to a lower carbon world aligned with the Paris Agreement goals. AGL will be Net Zero for operated Scope 1 and Scope 2 emissions following the closure of all AGL’s coal-fired power stations.”
“We are excited by what is before us and believe our shareholders will benefit from a stronger and more sustainable business that will be uniquely positioned in the transitioning energy market. Today’s announcement recognises the increasing ESG pressure from investors and consumers that has been affecting our business and we expect to be able access a wider pool of capital and attract new investors, which will ultimately result in a lower cost of capital and a more sustainable business.”
“AGL will work with its broad stakeholder group to deliver these ambitious outcomes. It is particularly important that we support our people who maintain and operate our coal-fired power stations. We will work with our people, their representatives, and government to help develop the skills and capabilities required for new and existing industries as we progress to ensure the transitioning energy sector is supported by a skilled workforce.”
Nationals' Melina Bath MP has concerns
Melina Bath’s statement on the early closure of AGL’s Loy Yang A Power Station
Latrobe Valley has a proud history of powering Victoria and Loy Yang A’s early closure announcement by mid-2035 has an impact on two major fronts:
• The workers, their families & the broader community
• The ability of the region to establish replacement - renewable power generation and the transmission infrastructure needed to connect this power to the grid.
Loy Yang A powers about 30% of the state power generation, while its mine supplies 50 per cent of state power.
Supporting and respecting workers and their families over the coming decade should be the priority for AGL and by all levels of government – it is essential new local industries are established with quality like for like jobs.
It’s been five years since Hazelwood closure and the subsequent establishment of Latrobe Valley Authority (LVA) by Labor to transition Latrobe Valley and workers.
The community is yet to see a plan from the LVA. Its only community report was issued in 2019.
The Valley needs new industries with new technologies and the creation long term, sustainable jobs for our high skilled, technical workforce is a priority for The Nationals.
If past performance is an indicator of future outcomes, the Andrews Labor Government lacks the ability to fully support workers, genuinely work with industry to create new technologies and develop a pathway that is affordable and reliable in time.
“My focus will remain on supporting people, our community and industry – so that our power station workers can have the opportunity to shape a bright and secure future,” Ms Bath said.
Green lobby welcomes decision
The AGL 2035 coal closure announcement is a “wakeup call to ramp up Gippsland renewable energy transition”, according to Friends of the Valley Spokesperson Wendy Farmer.
In a statement by the local green lobby, they say it is the second time this year AGL has announced earlier closure dates for its ageing coal fleet, after announcing Loy Yang A would close by 2045.
“It is hard to trust this announcement from AGL. The changing messages from the power generators is a wakeup call that we need to prepare for early closure” said Wendy Farmer, Gippsland Community Organiser for Friends of the Earth.
She said today's news serves as a wakeup call for governments to take a more active role in planning the transition with communities like the Latrobe Valley.
“We can’t keep leaving plans for coal closure to private companies,” said Wendy Farmer.
Over many years, people in the Latrobe Valley community have been calling for a proper, well-funded transition plan for the region, she said.
“What communities need is certainty. That means a proper transition plan and support from all levels of government, and rapid development of renewable energy in Gippsland to bring on new power supply,” said Farmer.
Ms Farmer said:
Long home to the state’s coal industry, Gippsland is on the cusp of a massive transformation of its energy system, with an estimated $40 billion worth of new renewable energy and transmission projects now on the table. And with game changing offshore wind projects like the Star of the South on the horizon, Gippsland is set to become the centre of the country’s offshore wind sector.
This represents an opportunity for thousands of new jobs and careers, regional investment and a significant source of community income.
“The opportunity in renewable energy is there, and AGL’s announcement today shows we can’t afford to delay a transition plan for the region any longer,” said Wendy Farmer.
