AGL blinks over Liddell, handing Turnbull a win on energy policy

Energy company AGL has blinked in the face of sustained pressure from the Turnbull government over the future of the Liddell coal-fired power plant, asking for 90 days to come up with a proposal to keep the plant open, sell it – or deliver equivalent power into the market.

After a 90-minute meeting in Canberra between Mr Turnbull, Energy Minister Josh Frydenberg and AGL chief executive Andy Vesey over the future of the plant, Mr Frydenberg said the company had indicated it was ready to back down from its plan to shut Liddell in 2022.

But Greens climate change and energy spokesman Adam Bandt MP said the meeting with AGL was a fizzer.

Prime Minister Malcolm Turnbull has had a win in the government’s battle with AGL over the future of the Liddell coal-fired power plant. Photo: Andrew Meares

“All the government has done has forced AGL to bring forward its planning for new renewables. AGL’s board will discuss what they were going to discuss anyway,” he said.

“Given AGL indicated to the minister that their preference is for additional new supply and that the company is getting out of coal, we are expecting to see a plan in 90 days for more renewables and storage.”

A war of words erupted between the government and the power company last week over Liddell’s future.

Mr Turnbull told Parliament that AGL had indicated it was willing to sell Liddell, the oldest coal-fired power station in , to a third party to keep it open for five years beyond 2022 and avoid a 1000-megawatt shortfall of base load, dispatchable power forecast by the electricity market operator.

That prompted a strident response from Mr Vesey, who last week said the company had no plans to change its the 2022 shut down timeline and issued a statement to the stockmarket to that effect.

But in a win for the Turnbull government, Mr Frydenberg announced after the meeting with Mr Vesey that “AGL will take to its board proposal to keep Liddell open for another five years, or to sell to another party”.

As an alternative, “the company will also work up a plan to ensure sufficient additional supply into the market equivalent to what is coming out of Liddell. This would be firm, dispatchable capacity, and would have no adverse impact on consumers in terms of those price and reliability of the system,” Mr Frydenberg said.

The key criteria for any alternative proposal for the Liddell site, Mr Frydenberg said, is that it would have to provide reliable base-load power to ensure no shortfall of supply from 2022 onwards.

Mr Vesey said he had been “asked to take to the AGL board the government’s request to continue the operation of Liddell post 2022 for five years and/or sell Liddell, which I agreed to do”.

“Short term, new development will continue to favour renewables supported by gas peaking. Longer term, we see this trend continuing with large scale battery deployment enhancing the value of renewable technology. In this environment, we just don’t see new development of coal as economically rational, even before factoring in a carbon cost,” he said.

The company had already indicated that its plans for the Liddell site, if the plant shuts down in 2022 as planned, could include wind and solar power, and a battery farm.

Mr Frydenberg said the company had not asked for any support from the Commonwealth government and that “today was about discussing the challenge that the market faces” as it changed dramatically with the entry of more renewable energy and the retirement of older, legacy coal plants such as Liddell.

“From the government perspective, obviously our preference is to keep the power station open. But we haven’t seen their plan. They have asked for 90 days to work on that, and we look forward to seeing that when it is complete,” he said.

AGL markets itself as getting out of coal from 2022, but this exit will not be complete until 2050.

Delta Electricity has already indicated it could be willing to buy Liddell from AGL and add it to its stable of electricity assets.

Mr Frydenberg and Treasurer Scott Morrison had ramped up pressure before the meeting to keep Liddell open after 2022.

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