Feb 8, 2023
Unreliable Coal Plants Hit Profits of Australia’s Worst Polluter
(Bloomberg) -- AGL Energy Ltd., Australia’s biggest polluter, said a string of unplanned outages at its aging coal-fired power plants led it to swing into a loss.
The Sydney-based utility reported a net loss of A$1.08 billion ($750 million) for the six months through December from a profit of A$555 million a year earlier after underlying profit fell more than 55%. The company’s shares fell the most since 2021 as it also lowered its forecast for its financial year.
That follows a chaotic year for AGL in which it was the target of a high profile corporate raid by Mike Cannon-Brookes. The Australian software billionaire pressured the utility to accelerate its transition to cleaner fuels and close its coal plants more quickly.
AGL posted about $706 million of impairment charges due to the accelerated decarbonization plans. The decline in profit was also driven by “a far higher” number of outages at its coal plants than the group was planning, Chief Executive Officer Damien Nicks said in a statement.
Australia gets most of its electricity from an aging fleet of coal plants operated by AGL and other utilities, which have been breaking down with increasing frequency in recent years. A rapid proliferation of rooftop solar and other renewables has also damaged the profitability of the generation units, putting off investments needed to prolong their lives.
AGL will shut down one of its three coal plants later this year. The utility made global headlines last February when Brookfield Asset Management and Cannon-Brookes attempted to acquire the company, take it private and accelerate its path to become a zero carbon energy provider, an offer AGL rejected.
Cannon-Brookes then bought an approximately 11% stake in the generator-retailer and successfully pressured it to cancel plans to spin off the coal generation arm of the business. The CEO and chairman resigned, and the closure of its remaining coal plants was brought forward a decade to 2035.
AGl fell as much as 8.1% to A$7.30 in Sydney.
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