Australia’s Top Emitter Plans to Split Off its Coal Plants

The biggest emitter in Australia, AGL Energy Ltd., plans to split off its coal-fired plants into a separate unit as increased renewable energy generation is shifting the country’s electricity landscape.

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What is Happening?

1. This is the one of the most radical responses yet to Australia’s increased wind and solar generation, which according to AGL, undermined power prices and hurt the company’s profitability. A similar decision was made in Germany five years ago, when the country’s largest utilities floated their renewable businesses as separate entities.

2. AGL’s new arm, currently called “PrimeCo,” would encompass 8.9 GW of installed generation representing a fifth of the  electricity demand in Australia, including the company’s coal plants. A second unit, “New AGL,” would be the largest power retailer covering almost a third of Australian households.

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Glenn Walker, Greenpeace Australia Pacific senior coal campaigner, said in a statement, “AGL is trying to dodge its responsibility to manage the shutdown and rehabilitation of its ageing coal burning power stations by hiding its coal assets in a separate business. This demerger should be seen for what it is — an attempt by a company worried about its brand to hide its reputation as the nation’s biggest polluter.”

1. A plan for the separation is expected to be completed by the end of June. The company’s shares have fallen 11% after it last month flagged expectations of further drops in wholesale prices.

2. “New AGL” will take over the company’s retail units, as well as its hydro portfolio, battery pipeline, some gas units and a stake in the PowAR renewable generation joint venture. “PrimeCo” will encompass assets including the coal stations and non-PowAR wind.

3. AGL’s revenue from customer markets was A$7.69 billion (USD$5.87 billion) in 2020, up from A$7.54 billion in 2019, while its revenue from wholesale markets was A$4.34 billion over the same period, down from A$5.56 billion in 2019.

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