AGL indicates no strategic shift despite CEO change

Energy giant AGL Energy has confirmed it will stay on the course set by its former chief executive Andy Vesey, a fierce advocate of the closure of the Liddell coal plant.

“The most common question I have been asked is whether I anticipate a change in strategic direction for AGL. My answer, in a word, is no,“ said Brett Redman, the interim chief executive, said at yesterday’s annual general meeting.

As Australia’s largest emitter of carbon, AGL Energy’s responsible operation of its existing coal-fired fleet is of cardinal importance, including scheduled closures of coal-fired power plants, such as the hotly-contested NSW’s power station Liddell.

Former AGL CEO Vesey had maintained that the closure of the 1,680 MW Liddell coal plant was necessary, which put him on a collision course with the federal government. Supporters of coal within the government, often using of the term ‘baseload’, had insisted that Liddell should be kept open beyond its scheduled closure in 2022.

Following Vesey’s abrupt departure, which occurred on the same day when Prime Minister Malcolm Turnbull was ousted and replaced by Scott Morrison, Brett Redman was appointed to the top job on an interim basis. 

“The question of closure dates is an operational one: of ensuring ageing coal plants are retired responsibly and safely as we work through [energy] transition,” Redman said in his first address since his appointment.

“It is not a question of ideology on our part, Far from it. And neither is the need to address our carbon exposure more generally. It is a question of prudent and pragmatic risk management, working alongside all stakeholders, to deliver a sustainable and responsible transition in which the power sector continues both to enable and to participate in Australia’s future prosperity.”

In 2015, Australia’s biggest power producer first announced its intention to close its coal fleet at the end of its operational life. It even suggested transforming the Liddell site into an integrated renewables hub – comprising renewable generation, batteries, gas and demand response, a plan developed by Vesey. Nonetheless, it has no plans to hurry its exit from coal generation.

“There is no question in my mind that its continued responsible operation will be fundamental to Australia’s energy system, at least in the medium term,” Redman said.

Noting that it is aware that the long-term transition to lower carbon technologies is already happening, AGL says it must meet changes in technology or be left behind. According to Redman, this can be achieved with the help of firming capacity.

“The question of how to provide the back-up capacity in the system for when wind and solar generation is not available – known in the industry as “firming capacity” – is, in my opinion, such a key component of making energy more affordable for all,“ he said, stressing that the solution is a long-term capacity market that rewards generators for providing back-up capacity.

In addition to commenting on its record profit in the previous fiscal year, which came on the back of soaring electricity prices, AGL confirmed yesterday it would announce its official CEO by the end of the year.