AGL - AGL Energy

[Smurf1976]

MCBs only plan is to shut the lights off from what I can see. There's no structural replacement for coal and gas at the gigawatts required in the time frame he's suggesting. The only possibility is nuclear in the next 5-10 years.

Agree with the first half but so far as nuclear is concerned, there's zero chance one could be built in 5 years and even 10 years would be seriously pushing it in practice.

 

[Sean K]

Agree with the first half but so far as nuclear is concerned, there's zero chance one could be built in 5 years and even 10 years would be seriously pushing it in practice.

Agree in the current environment as it would take years of politics to even agree to agree that we should form a committee to discuss it. The tipping point might be when the power goes out just often enough and we can't charge our devices, or the car. My overall opinion is we're running too fast to shut down without structural alternatives. Prove that the batteries and hydrogen work first, before shutting down. There's too much scare mongering going on too, from my perspective, without consideration of mitigation. Wolves and all. Might be the wrong thread, but it's obviously related.

 

[Smurf1976]

My overall opinion is we're running too fast to shut down without structural alternatives. Prove that the batteries and hydrogen work first, before shutting down.

Has been discussed in another thread since it's not specific to AGL but in short, there wouldn't be too many engineers and others with technical knowledge who don't have serious concerns about the overall situation. Some might be publicly gagged by virtue of employment, or simply not interested in publicly commenting anyway, but there's a lot of concern.

In short the problem is not how to close coal. That's remarkably easy and is ultimately going to happen regardless.

The problem is how to replace it within the relatively limited available time and to do so in a manner that doesn't simply switch one problem for another problem.

 

[divs4ever]

Divvies! Nice to see when you haven't been paying any attention to it.

have had bad interactions with then for at least 15 years , they are second on my 'black-list 'only to David Jones

if you can make a profit there good for you

( and yes i carry grudges on family and companies alike , for decades )

 

[divs4ever]

Agree with the first half but so far as nuclear is concerned, there's zero chance one could be built in 5 years and even 10 years would be seriously pushing it in practice.

there is ( and has been ) an agenda push away from nuclear power in the West , i suspect your grandchildren will live to regret that agenda

MAYBE the BRICS group will convince the world nuclear has it's place , but some nations are slow-learners ( and some are just broke )

 

[StockyGuy]

have had bad interactions with then for at least 15 years , they are second on my 'black-list 'only to David Jones

if you can make a profit there good for you

( and yes i carry grudges on family and companies alike , for decades )

grudges4decades or grudges4ever

 

[divs4ever]

grudges4decades or grudges4ever

the longest one has been 1974 ( David Jones ) , i still MIGHT change my mind on some ( but make sure you take big odds betting on that )

( half my living relatives since 1984 )

 

[divs4ever]

AGL finally made the 'blacklist in 2010 so is a relatively newcomer to it ( but it took several events before the decision was made )

 

[Miner]

Between 1 and 10, 10 means surely and 1 means No, what score do you offer on the probability of demerger ?
Please see the AFR report

 

[JohnDe]

There was a time when I thought about buying.

AGL Energy eyeing demerger U-turn, strategic review in sight

AGL Energy is considering a strategic review of its operations, casting doubt on a long-running move to split the company into a power retailer and generator business.

The company’s board was considering options in a meeting on Sunday afternoon, faced with the possibility that its demerger plans would lack sufficient shareholder support to be approved at a ballot scheduled for June 15.

Atlassian founder Mike Cannon-Brookes, who has used his considerable wealth to build up a 11.3 per cent stake in AGL, is publicly campaigning for the demerger plans to be dumped.

The potential shelving of demerger plans was first revealed by The Australian on Sunday.

Mr Cannon-Brookes, who was part of an earlier, failed takeover bid for the entirety of AGL alongside asset manager Brookfield, on Friday wrote to the energy company’s board demanding two seats if the demerger plan did not proceed. He warned the board should be prepared for the plan to fail.

If the board dumps the demerger plans, it is expected that the company will also announce some executive and director changes – both AGL chief executive Graeme Hunt and chairman Peter Botten could step down, sources said.

AGL declined to comment.

On Sunday, one option under consideration was a strategic review that could increase the likelihood the company would be sold off, sources indicated.

The AGL demerger would require approval of 75 per cent of shares voted at the meeting, and influential proxy advisory groups are yet to tell clients their views on the proposal. Sources close to Mr Cannon-Brookes said on Sunday that an overwhelming majority of shareholders who had engaged with his Grok Ventures viewed the demerger unfavourably.

Mr Cannon-Brookes has also accused AGL of having no plan should he be successful in derailing the company restructure and the positions of Mr Hunt and Mr Botten may become untenable if they have lost the support of additional shareholders. With AGL’s small shareholder base accounting for half of its register, the battle to win over retail investors remains a critical path for Grok.

Mr Cannon-Brookes has floated a proposal for the company to phase out coal by 2035 and make green loans available to customers to switch households to 100 per cent renewable electricity.

The demerger plans have split the market, with Grok finding support among other major investors including high-profile fund manager Geoff Wilson, who last week said he had taken a stake in AGL and was concerned splitting the company would leave both businesses unable to drive or pay for decarbonisation plans.

Separately, HESTA chief executive Debby Blakey said the superannuation fund was not convinced the demerger plans would help accelerate AGL’s decarbonisation to meet Paris-aligned targets, nor manage the risk of stranded assets.

The AGL demerger plans endured a rocky start after then AGL executive Brett Redman resigned from the company in April just four weeks after touting the merits of the plan.

The appointment of Mr Hunt, the company’s former chairman, as his interim replacement also unsettled some in the market. Mr Hunt was named as chief executive of Accel, which will operate the power generation assets. Former Australia Post executive Christine Corbett will take charge of the renamed AGL Australia, the retailer.

Mr Botten, a former Oil Search chief, was to chair Accel with AGL‘s non-executive director Patricia McKenzie chair of AGL Australia.

Some in the market, however, do support the demerger plans.

Last week, Morningstar analyst Adrian Atkins wrote: “While it’s true there will be extra costs and a loss of scale compared with the status quo, it is irrelevant as banks won’t support the business in its current form.”

“A better question is whether the demerger is better value than Cannon-Brookes’ plan of closing the coal power stations early, and we believe it is,” he wrote. “Cannon-Brookes also believes that Accel won’t be financially viable … a quick glance at electricity futures prices should have disavowed (him) of this view.”

PERRY WILLIAMS SENIOR BUSINESS WRITER

 

[omac]

How realistic are these general claims of meeting targets, turning off coal, running off full renewables etc in Oz? I've read a couple of books by Vaclav Smil and Bjorn Lomborg who make seemingly well reasoned arguments that its possible but way under costed and run into other problems, highly dependent on country circumstance (eg Norway small pop, massive water resources) etc. Given the flippancy with which the pro renewable camp states how easy/quick it will all be but seeing the lack of progress in EU and most in the pro camp seem to be professional politicians of from unrelated fields. Additionally, with a very anti-nuclear attitude in Oz I'm concerned we'll be all running gennies in a few years. Hard to get objective information on it all given the emotive nature of the issue, keen for any suggestions for good info resources etc.

 

[basilio]

Vaclav Smil

Hadn't heard of this writer before so I had to check him out.

Certainly has an extensive CV. I can see his reservations about how quickly we can move to a renewable energy society. Quite understandable and generally speaking realistic.

In an ideal world we would be undertaking this transition over a 30-50 year period. But in this world for a range of reasons the movement to clean renewable energy will need to much quicker - for a range of reasons.

Vaclav Smil - Wikipedia

en.wikipedia.org

 

[UMike]

How realistic are these general claims of meeting targets, turning off coal, running off full renewables etc in Oz? I've read a couple of books by Vaclav Smil and Bjorn Lomborg who make seemingly well reasoned arguments that its possible but way under costed and run into other problems, highly dependent on country circumstance (eg Norway small pop, massive water resources) etc. Given the flippancy with which the pro renewable camp states how easy/quick it will all be but seeing the lack of progress in EU and most in the pro camp seem to be professional politicians of from unrelated fields. Additionally, with a very anti-nuclear attitude in Oz I'm concerned we'll be all running gennies in a few years. Hard to get objective information on it all given the emotive nature of the issue, keen for any suggestions for good info resources etc.

None. It is the greatest scam of all time. Activists should not have this type of influence over company's commercial decisions.

 

[basilio]

None. It is the greatest scam of all time. Activists should not have this type of influence over company's commercial decisions.

Total and absolute rubbish...

There are a number of critical reasons for quickly moving to clean renewable energy.

1) Fossil fuels will and are finite. Moving to a renewable energy source that won't disappear just makes sustainability sense

2) Fossils fuel create dangerous pollution. The air, land and water pollution of coal, oil and gas damages our environment and kills millions of people. Moving to clean renewable will substantially reduce this health impact

3) Renewable energy is now cheaper than fossil fuels. Even if one ignores the health and sustainability issues around basing a society on a diminishing resource these economic facts alone should make the change to renewable wind/solar other energy a no brainer.

3) Fossil fuel CO2 emissions are creating runaway global heating which left unchecked will make the earth largely uninhabitable for humans

This stark scientific reality is shared by 10's of thousands of scientists across many disciplines who are only too aware of the impact of global warming and its cause. Pretending it's just activists is a lie.

Yep. I'm fed up to the back teeth with rubbish arguments against renewable energy that can't even see it's basic economic advantage over the current fossil fuel processes let alone the host of other important factors.

 

[basilio]

In the end this thread is about AGL as an investment. In that context consider this. Coal fired power at AGL are getting too old, too unreliable and too expensive . They don't make sense (or dollars ) any more

AGL needs a new plan in sync with the Paris agreement​

Mr Cannon-Brookes said that was a view that AGL shareholders agreed with since 53 per cent of them voted for a Paris-aligned decarbonisation plan at the company's AGM last year.

"The shareholders want a Paris-aligned plan — and they don't want it because they're bleeding-heart greenies. They want it because a Paris-aligned plan is [the] most economic thing for the company.

"Having that will unlock financing and also have a lower cost of capital for the company, as ESG [environmental, social and governance] investors will come back to the company as well as banks and other companies who lend money."

AGL's largest shareholder wants to help lower the cost of your power bills

AGL's biggest shareholder, billionaire businessman Mike Cannon-Brookes, is not ruling out another takeover bid for the energy giant but says he is focused on rebuilding the company for renewable generation.

www.abc.net.au

 

[Tyre Kicker]

Has been discussed in another thread since it's not specific to AGL but in short, there wouldn't be too many engineers and others with technical knowledge who don't have serious concerns about the overall situation. Some might be publicly gagged by virtue of employment, or simply not interested in publicly commenting anyway, but there's a lot of concern.

In short the problem is not how to close coal. That's remarkably easy and is ultimately going to happen regardless.

The problem is how to replace it within the relatively limited available time and to do so in a manner that doesn't simply switch one problem for another problem.

Exactly.

Great post.

 

[frugal.rock]

Between 1 and 10, 10 means surely and 1 means No, what score do you offer on the probability of demerger ?

At the mo, No. 1

"Australia's AGL Energy ditches demerger, CEO and chairman to quit"

"Unfortunately for shareholders now, they have no chairman, no CEO and no strategy," Barrenjoey analyst Dale Koenders said."

Reuters article linked by others

Australia's AGL Energy ditches demerger, CEO and chairman to quit By Reuters

Australia's AGL Energy ditches demerger, CEO and chairman to quit

au.investing.com

 

[Smurf1976]

Coal fired power at AGL are getting too old, too unreliable and too expensive . They don't make sense (or dollars ) any more

Long term agreed.

Short term though, Loy Yang A is cash flow positive somewhere in the order of $400k per hour at present despite being only three quarters operational. That's based on the past 30 days' market pricing with three of the four generating units in operation.

It hasn't been anywhere near so profitable over the longer term that's true but right now the cash is, or at least should be, rolling in giving management some good news.

Even if they not directly gaining due to internal hedging, it's still a competitive advantage over most others so they ought to be able to turn that into a pretty decent profit at least in the short term.

 

[Smurf1976]

Short term though, Loy Yang A is cash flow positive

Putting some figures around this one.

From the AGL demerger document on page 100:

Loy Yang A short run marginal cost (SRMC) = $12.35 / MWh

Bayswater SRMC = $21 / MWh

Figures read from chart so are approximate.

FY21 sent out generation, which in layman's terms is total generation less that used internally within the power station and in the case of Loy Yang also the mine:

Loy Yang A = 15,011 GWh (15,011,000 MWh)

Bayswater = 13,455 GWh (13,455,000 MWh)

From external sources compiling Australian Energy Market Operator (AEMO) data:

Average spot price as received by Victorian coal-fired generation (relevant to the Loy Yang operation) over the past year to date = $90.22 / MWh with that being $267.63 over the past 30 days.

Average spot price as received by NSW coal-fired generation (relevant to the Bayswater operation) over the past year to date = $138.37 with that being $437.21 over the past 30 days.

Gap between past year's spot price and stated SRMC for Loy Yang based on FY21 output = $1,168,906,570

Gap between past year's spot price and stated SRMC for Bayswater based on FY21 output = $1,579,213,350

So between them that's $2.748 billion in cash operating surplus.

The hydro stations at recent market pricing should be good for over $100 million a year operating surplus too. Roughly 1000 GWh output from AGL owned facilities x market prices in Victoria where the majority are located = $160 million. Less costs should still be a decent surplus.

Now suffice to say there are others in the industry in a very much worse position than that. Anyone paying the export price for black coal, and there are certainly some who are indeed paying that, is facing costs of just over $200 / MWh for fuel alone. For those using gas, with spot market exposure even the best (in a technical efficiency sense) plant will be incurring fuel costs close to $300 / MWh at present and for many it'll be even higher if the plant's less than optimal as most are in practice.

Long term future aside, if AGL can't make money out of all that in the short term then something's seriously wrong. There'd have to be a rather massive financial black hole somewhere to not be making a profit out of it right now.

That said..... It raises the question. Is there in fact a black hole somewhere draining money?

 

[mullokintyre]

Putting some figures around this one.

From the AGL demerger document on page 100:

Loy Yang A short run marginal cost (SRMC) = $12.35 / MWh

Bayswater SRMC = $21 / MWh

Figures read from chart so are approximate.

FY21 sent out generation, which in layman's terms is total generation less that used internally within the power station and in the case of Loy Yang also the mine:

Loy Yang A = 15,011 GWh (15,011,000 MWh)

Bayswater = 13,455 GWh (13,455,000 MWh)

From external sources compiling Australian Energy Market Operator (AEMO) data:

Average spot price as received by Victorian coal-fired generation (relevant to the Loy Yang operation) over the past year to date = $90.22 / MWh with that being $267.63 over the past 30 days.

Average spot price as received by NSW coal-fired generation (relevant to the Bayswater operation) over the past year to date = $138.37 with that being $437.21 over the past 30 days.

Gap between past year's spot price and stated SRMC for Loy Yang based on FY21 output = $1,168,906,570

Gap between past year's spot price and stated SRMC for Bayswater based on FY21 output = $1,579,213,350

So between them that's $2.748 billion in cash operating surplus.

The hydro stations at recent market pricing should be good for over $100 million a year operating surplus too. Roughly 1000 GWh output from AGL owned facilities x market prices in Victoria where the majority are located = $160 million. Less costs should still be a decent surplus.

Now suffice to say there are others in the industry in a very much worse position than that. Anyone paying the export price for black coal, and there are certainly some who are indeed paying that, is facing costs of just over $200 / MWh for fuel alone. For those using gas, with spot market exposure even the best (in a technical efficiency sense) plant will be incurring fuel costs close to $300 / MWh at present and for many it'll be even higher if the plant's less than optimal as most are in practice.

Long term future aside, if AGL can't make money out of all that in the short term then something's seriously wrong. There'd have to be a rather massive financial black hole somewhere to not be making a profit out of it right now.

That said..... It raises the question. Is there in fact a black hole somewhere draining money?

That average which was 90 bucks last year, based on what is happening now, will most likely be more than double for this year, hence the free cash flow will also be significantly higher.
It might explain why the hyphenated ego wanted the demerger killed, as that cash generating would be needed to fund his plans to make AGL carbon nuetral.
Mick