As a result of the abandonment of its split proposal and another review of its business, AGL Energy may end up closing its coal fired power stations and accelerating the switch to greater use of renewables and gas much more quickly than previously thought.
AGL abandoned the increasingly controversial plans to spin off its coal-fired power stations and announced the resignation of chief executive Graeme Hunt and chairman Peter Botten, as well as two other directors, one of whom quit yesterday.
In an announcement on Monday to the ASX, AGL’s board confirmed it would halt an upcoming shareholder vote on demerger in the wake og growing opposition to the idea from tech billionaire Mike Cannon-Brookes and other investors.
That saw AGL Energy shares dip to a low of $8.46 before they staggered higher to touch a day’s high of $8.88 in the final hour. but then they fell to close down 1.7% at $8.72.
It would seem investors found it impossible to put a price on what the dropping of the split idea, the June 15 meeting and the board clean out means.
In Monday’s statement the board was still insistent that the demerger would have been supported by a majority of shareholders, but needed a 75% level of support:
“AGL Energy believes that the Demerger Proposal would have been supported by a majority of shareholders, both retail and institutional, many of whom are long term holders of AGL Energy shares. However, having regard to anticipated voter turnout and stated opposition from a small number of investors including Grok Ventures (Cannon-Brookes company), AGL Energy believes the Demerger Proposal will not receive sufficient support to meet the 75% approval threshold for a scheme of arrangement.”
The failure of a unit at AGL’s Loy Yang A station in Victoria was the latest reminder that coal-fired power is increasingly unreliable in Australia — even as the global price of thermal coal soared, driving prices up for households and small businesses.
But there was an intriguing suggestion in the statement that the future of coal fired power stations in Australia may be shorter than expected before the May 21 poll and its very pro climate change outcome.
The AGL board will now conduct a strategic review of the company’s direction, reporting in September which will look at the possibility of an even faster closure timetable for its coal-fired assets:
“AGL has been in ongoing discussions with key stakeholders in this regard and believes that the relevant dates for closure of coal fired power stations will continue to be accelerated… The Board is committed to working actively with all stakeholders including government to decarbonise AGL Energy’s business at the fastest rate possible, while ensuring energy system stability, energy affordability for retail and industrial customers, and appropriate shareholder value outcomes.”
That would encourage other owners of coal-fired stations to look at earlier than expected closures.
The board on Monday said Australia was at a pivotal moment in the clean-energy transition, and believed the closure dates of its Bayswater power station in 2035 and Loy Yang coal-fired power station in 2045 would as the company said in the statement “continue to be accelerated”.
AGL’s coal- and gas-fired power stations are the biggest sources of greenhouse gas emissions in Australia, accounting for 8% of the nation’s carbon footprint.
In a post on social media, Cannon-Brookes said it was a “huge day for Australia”.
“We embrace the opportunities of decarbonisation with Aussie courage, tenacity & creativity, he wrote. “Lots of work but we can do this.”