AGL denies Do-nothing Malcolm coal deal

It appears Do-nothing Malcolm can’t even write a press release:

Energy company AGL has stressed it has no plans to operate its Liddell power station beyond the 2022 closure date and insists it has not yet agreed to sell the station to enable another operator to keep it functioning for another five years.

After Prime Minister Malcolm Turnbull said AGL boss Andy Vesey had agreed to negotiate the sale of the old coal-fired power plant during a series of phone calls on Tuesday, the company issued a statement to the ASX saying that while it was prepared to have discussions, nothing was set in concrete.

“AGL will continue to engage with governments, regulators and other stakeholders to deliver appropriate outcomes but notes that the company has made no commitment to sell the Liddell Power Station nor to extend its life beyond 2022,” the statement said.

Energy Minister Josh Frydenberg said he and Mr Vesey had scheduled a meeting for Monday next week.

Chaos.

Comments

  1. Bereft of Adani level government backing (aka taxpayer funding), I expect to see exactly zero energy companies commit to either:
    a) maintaining old coal plants beyond retirement age
    or
    b) build new coal plants

    Economics baby, the environment is finally getting a helping hand from the profit machine.

  2. “Prior to September 2014 Liddell power station was part of NSW Government power producer, Macquarie Generation.[1] Macquarie Generation was acquired by AGL Energy in September 2014”
    Ah so selling off your power generation assets (albeit at a State level) then having the federal government doing dodgy deals with the new owners to keep them open?
    What a country!

    • Philly SlimMEMBER

      This is a good point. Arguably, the Feds should’ve bid for every asset privatised by the States and then fixed them up, retained what they needed and floated a share of the rest.

  3. It’s doable. Whether the Government has the balls is the issue.

    Transfer incentives (RET CET) to the all important provision of baseload (and in NSW almost 90% of energy is fossil, biggest majority coal) and with unrealistic renewable targets held at bay – makes good sense. Abandon all LCOE analysis which distorts (see recent EIA) in favour of renewables.

    One hot summer, failing power supply and Martin Place will be chockers with taxpayers demanding coal baseload.

    Followed by similar at Federation Square.

  4. I do wonder about the on-going economics of running a very old asset like Liddell power station.
    The turbines used at Liddell were manufactured by GEC (now part of Alstom I’d guess) and they were an important player in the field of Steam Turbines 50 years ago. Today they’re irrelevant, Nobody designing a new power station would even bother asking them to submit a quote, the whole game has shifted to Asia with three Chinese firms completely dominating the design and manufacture of Steam Turbines.
    So what’s the point of this: Well in the real world where public companies need to maintain/grow gross revenues (yet have lost the ability to sell new systems) they must focus their revenue goals on extracting extra Service revenues from their installed customer base.
    I wonder if this reality is what’s behind AGL’s strident position. If you think about the task of extracting maximum revenue from End of Life operations of any machine / system, it’s only really possible for one of the players in the value chain to play this game.
    Lets assume that Alstom decides to double or triple AGL’s service costs, what options does AGL really have? they’re stuck with operating the machines without undertaking ongoing service and risking possible catastrophic failure, or paying these new absurdly high service charges. From what I’ve heard informally AGL was gambling on the Turbines all surviving another 5 years with dramatically reduced service. Now MT wants a guarantee that they’ll stay operational for another 10 years, the gamble that AGL was making might work for 5 years but probably falls into the bin of impossible dreams if extended to 10 years.
    If Liddell must run for 10 years than Alstom is right back in the drivers seat and will be able to force AGL to pay any service cost number that they come up with.
    I love these End-of-Life operations games, normally what keeps everyone honest at the service end of the business is the overarching need for continued sales of new equipment to a relatively small customer base, once you don’t care about new equipment sales…well it’s time to let the service guys get real inventive.

  5. AGL would need massive incentive to keep their coal plants running. Those plants produce low cost dispatchable power. That is not good for the developing business model built on government subsidised wind and solar generators with high cost gas as the reliable fuel source. AGL is making an absolute windfall riding the unrenewable renewables gravy train. AGL revenue has increased 4-fold in the last decade literally driven by wind and solar energy with its growing reliance on gas to make up the ever increasing shortfall as low cost coal generation is displaced.

    With RET forcing more intermittents into the grid the power supply industry will grow to dwarf the banks. All of Australia’s economic output will eventually go toward power generation, transmission and distribution. The situation is unsustainable – a government sanctioned parasite that will destroy its host. AGL has a feel good advertising campaign aimed at making those hurting from the financial burden of higher energy costs to feel good about it. It is an economic disaster unfolding in the vain hope of reducing CO2 output. That cannot happen because the only way the system is affordable for some is that all the components are manufactured in China from electricity generated using coal fuel. The joke is that Australia supplies the coal.

    Ross Greenwood makes some useful points:
    https://twitter.com/ross_greenwood?lang=en

    • Can’t blame AGL for chasing the gravy train, who doesn’t like a handout – but at this stage I’ll put my money on a deal being reached as politically and PR wise this could play very badly for AGL who have made few friends with their bearded man ads.

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