Bold AGL bid rejected but Aussies’ keenness for greener energy to grow

AGL Energy may have rejected a bold bid aimed at closing its coal-fired power plants 15 years earlier than planned but Aussie consumers will continue to push energy companies to fast-track their transition to renewable energy, industry insiders said.

AGL hit the headlines at the weekend when it emerged that Australian tech billionaire Mike Cannon-Brookes had teamed up with Canadian fund manager Brookfield Asset Management to bid for the company known as ‘Australia’s biggest polluter’.

If the takeover was successful, Mr Cannon-Brookes and Brookfield planned to shut AGL’s coal stations by 2030, according to reports. Government data released in 2021 showed that AGL, Australia’s biggest energy provider, was also the country’s largest emitter of greenhouse gases.

AGL rejected the bid on Monday, however, in a statement to the Australian Securities Exchange that said the $7.50 a share, or approximately $8 billion including debt, offer undervalued the company.

Just weeks ago AGL brought forward the closure of its Bayswater coal-fired station in New South Wales from 2035 to 2033 and of Victoria’s Loy Yang A station to 2045 from 2048. At the same time, it announced new climate commitments as part of its plan to split the company into two businesses; AGL Australia, which would hold AGL’s renewable and consumer business, and Accel Energy, which would hold AGL’s coal-fire power plants.

But the bid for AGL was a sign of consumers’ desire to move to clean energy more quickly, Adrian Merrick, Energy Locals founder and CEO, told Canstar Blue.

“Mike Cannon-Brookes’ bid is reflective of a growing wave of customer impatience to see bold leadership in Australia when it comes to renewable energy,” Mr Merrick said. “Customers have been fed a lot of confusing lines when it comes to how we can transition to clean power for too long.

“Many are getting on with it themselves, by investing in solar PV or battery storage for example, while others will wait until there are more cost-effective ways of adopting local, renewable power.”

Energy Locals is a smaller energy provider that claims to offset 100% of its customers usage through purchasing international carbon credits, at no extra cost to households and businesses. Energy Locals claims that it doesn’t profit from customers’ power usage, but uses a monthly subscription fee that gives its ‘members’ access to low fixed rates at the wholesale price.

Felicity Stening, the managing director of Enova Community Energy, said she had observed that consumers increasingly wanted to choose “ethical electricity retailers that are supporting renewable energy”.

“Renewable energy can be cheaper and is cleaner to produce,” she added. “Bringing more renewables into the electricity grid is likely to assist in reducing electricity bills for consumers and bringing more renewables into the grid is required to help combat climate change and the effects of extreme weather events that we’ve seen increase in frequency and intensity.”

Enova became Australia’s first community owned electricity retailer when it was launched in 2016, with a focus on helping communities generate, store and share their own renewable energy.

Recent research by Canstar Blue found that 57 per cent of consumers considered the sustainability and environmental impact of their energy purchase. But price remained the biggest factor, Canstar Blue’s Energy Editor, Jared Mullane, noted.

“Only eight per cent of Canstar Blue survey respondents stated they never took the environment or sustainability into consideration when buying electricity or gas,” Mr Mullane said. “More than a quarter of Australians, however, would only act on that consideration if it did not impact the price.”

AGL was not the only large energy provider to have recently said that it would accelerate its move away from coal-fired energy production, he added.

“Origin Energy’s already announced that it will close its Eraring coal-fired power plant in 2025, seven years earlier than anticipated,” Mr Mullane said. Eraring Power Station is Australia’s largest black coal-fired power station and accounts for approximately 25 per cent of NSW’s power requirements.

Energy Australia, meanwhile, said in 2021 that it would accelerate its own transition by closing its Yallourn power station in 2028, four years earlier than originally planned.

Mr Mullane said the bid for AGL was likely to generate even more consumer interest in how and when Australia transitioned from coal to renewable energy sources.

AGL’s statement to the stockmarket on Monday said that shareholders would receive better value from the demerger of the company, scheduled to be voted on by investors in June, than from the joint bid from Mr Cannon-Brookes and Brookfield.

But ABC News reported that Brookfield remained optimistic an agreement could be reached with AGL. And AGL’s share price rose by as much as 13 per cent on Monday, which was interpreted as a sign that investors expected a higher bid to emerge for the company.

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