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AGL brings forward closure of two power plants

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AGL has brought forward the closure of Victoria's Loy Yang power station, as well as Bayswater, in NSW. Photo: ABC
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Victoria’s coal-fired Loy Yang power station will close three years earlier than expected after owner AGL Energy updated its demerger plan.

AGL plans to split into two listed entities – energy retailer AGL Australia and electricity generator Accel Energy – by June 30.

The two entities have been assigned emissions reductions targets, putting them on course to reach net zero in coming decades.

Under the climate goals, Accel Energy will bring forward its coal closure date for Loy Yang A to 2045, from 2048.

It will also close the Bayswater power station in the NSW Hunter region by 2033, from 2035 previously.

“As a result, emissions from Accel Energy’s electricity generation assets will be reduced by a further 90 million tonnes over the period financial year 2023 to financial year 2050 compared to modelled outcomes of our previous commitments,” AGL said.

The update was announced in AGL’s first-half results release issued on Thursday.

AGL’s bottom line first-half net profit is back in the black at $555 million, after last year’s result was hit by significant and one-off items resulting in a more than $2 billion loss.

The net underlying result was down 40.9 per cent to $194 million, excluding the impact of hedging and other items.

Also on Thursday, AGL narrowed its earnings guidance for the 2021/22 year.

It now expects pre-tax underlying earnings of between $1.28 billion and $1.4 billion and a net profit between $260 million and $340 million.

“Despite the strong first half performance, earnings are expected to be lower in the second half due to increased costs of capacity to cover periods of peak electricity demand, which are higher in the summer months,” AGL said.

Meanwhile, AGL said a rise in global energy demand would boost future earnings.

“With the rise in energy and commodity prices across the globe, AGL Energy is well positioned to benefit from improving wholesale electricity prices seen over the past six months,” CEO Graeme Hunt said on Thursday.

“We expected to see this reflected in future earnings beyond financial year 2022.”

AGL will pay an interim dividend of 16 cents, down from 41 cents last year.