The company aims to supply up to 12 gigawatts of renewable energy to the grid by 2036,five gigawatts of which is due to be built by 2030. McKenzie said the plan was estimated to require a $20 billion investment.
The company also provided FY23 guidance for underlying net profit between $200 million and $230 million. Underlying EBITDA is anticipated to be between $1250 million and $1450 million,around a $100 million increase on FY22.
Interim chief executive Damien Nicks said the company will fund its transition by utilising existing network infrastructure and tapping into the market’s growing demand for energy sourced from renewables.
“There is a huge amount of capital available in the market today,and I think us taking this new direction will give us much greater access to that capital in the markets - both debt and equity,” he said.
Nicks added AGL would work with the state and federal governments on how best to look after the 575 workers at Loy Yang A in the transition.
Victorian energy minister Lily D’Ambrosio said the state government welcomed AGL’s investment into renewable energy and storage,and they would work with AGL to help retrain and reskill workers.
Wilson Asset Management portfolio manager John Ayoub said rising interest rates would make it more difficult for AGL to secure the estimated $20 billion capital required.
“It’s an easy statement to make when there’s no detail and no return metrics,” he said. “As rates globally,start trending north,return expectations,go with it.”
The lack of detail about how the company would transition left investors with more questions than answers,Ayoub said.
“They’ve got a majority shareholder who has a very positive agenda. There will be pockets of the market that will also be requiring[the transition],” he said.
“So you can understand it,but then our job as investors is to actually try to value it and work out if it’s feasible or not. At the moment,we’re not able to do that.”
AGL was forced into conducting a strategic review of its business after Cannon-Brookes scuttled its planned demerger of its coal-fired power stations from its retail arm.
The end of the demerger has also seen a reshuffle at the top at AGL,with chief executive Graeme Hunt and chairman Botten both stepping down.
Superannuation fund HESTA,which has a stake in AGL and was vocal in its opposition to the planned demerger,said it welcomed the energy company’s announcement to exit coal by 2035 but said more detail was needed.
“While the commitments made in AGL’s plan around supporting the workforce and impacted communities are encouraging,more detail is needed,” said Debby Blakey. “We will continue to engage with AGL on how the company will support a 1.5 °C pathway while providing comprehensive support for its workers and impacted communities.”
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Investor Group on Climate Change chief executive Rebecca Mikula-Wright said the early closure of Loy Yang was not unexpected and it was likely more companies would follow suit.
“Companies that have credible transition plans and good climate governance are going to find it a lot easier to fund the transition,compared to companies who don’t,” she said.“This is a really positive step in that direction.”
Harriet Kater from the Australasian Centre for Corporate Responsibility (ACCR) said AGL’s updated strategy was evidence thatactive engagement strategies by major shareholders can have a major impact on how company’s deal with their emissions.
“The board of AGL has finally listened to its shareholders and accepted that this ageing,polluting coal-fired power station is incompatible with the energy transition and a serious risk to company value,” she said.
AGL shares closed Thursday’s session flat at $6.60.
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