AGL, Australia's largest electricity provider, has made a decisive move to accelerate its transition to renewable energy with the $250 million acquisition of Firm Power, a developer of grid-scale battery systems, and Terrain Solar, a company focused on solar and wind farm projects. This acquisition is a key part of AGL's strategy to phase out its coal-fired power plants and significantly expand its renewable energy portfolio.
AGL has long been a dominant player in the coal-fired power generation sector, but this latest acquisition underscores the company's commitment to shifting towards cleaner energy. AGL aims to develop 12 gigawatts of new renewable energy capacity by 2035, including "firming" assets such as batteries and pumped hydro to ensure a stable supply of energy during periods of low wind and sunlight. The acquisition of Firm Power and Terrain Solar adds approximately 8.1 gigawatts of potential projects to AGL's development pipeline, with a strong focus on battery energy storage systems (BESS) and solar projects across key Australian states, including Queensland and New South Wales.
This strategic acquisition comes alongside the appointment of Miles George as the new chairman of AGL, effective February 2025. George, a respected figure in the renewable energy sector and former head of the Clean Energy Council, is expected to play a crucial role in guiding AGL's ambitious transition plans. His appointment reflects AGL's focus on strengthening its leadership team with experienced individuals who are well-versed in the complexities of renewable energy development.
Financially, AGL has reported a robust performance for the fiscal year ending June 30, 2024. The company recorded a statutory profit after tax of $711 million, a marked improvement from the previous year's loss of $1.2 billion. This turnaround is largely attributed to higher wholesale electricity prices and the successful operation of the Torrens Island grid-scale battery in South Australia, which has contributed to AGL's earnings as the company continues to invest in renewable energy projects. Despite an anticipated decline in earnings for the 2025 financial year, the outlook remains positive, with AGL's guidance for underlying EBITDA set between $1,870 million and $2,170 million.
The acquisition of Firm Power and Terrain Solar not only enhances AGL's renewable energy capabilities but also positions the company to play a significant role in Australia's broader energy transition. As AGL continues to divest from coal and invest in renewable energy and firming technologies, the company is making strides towards achieving its long-term goal of becoming a leading provider of sustainable energy solutions.
This strategic shift is further supported by AGL's decision to close its Bayswater coal-fired power plant in New South Wales by 2033 and the Loy Yang A plant in Victoria by 2035, a decade earlier than originally planned. The early closures highlight the increasing competitiveness of renewable energy sources and the growing obsolescence of aging coal-fired power stations.
AGL's ongoing investments in renewable energy, including the recent acquisition, underscore the company's commitment to supporting Australia's transition to a low-carbon future. Analysts have noted the importance of grid-scale batteries in this transition, as they enable the storage of surplus renewable energy and provide stability to the grid during periods of fluctuating renewable output.