Money Finance News Energy retailer AGL to invest $25 million in 33-year-old coal-fired power station

Energy retailer AGL to invest $25 million in 33-year-old coal-fired power station

agl Loy Yang coal
AG: says the upgrade would boost Loy Yang's output and efficiency without raising carbon emissions.
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Energy giant AGL has announced a $25 million upgrade to Victoria’s Loy Yang coal-fired power station and again called for more certainty from Canberra on future energy policy.

AGL, which reported a 10 per cent lift in underlying profit to $537 million for the six months to December 31, said on Thursday the upgrade would boost Loy Yang’s output and efficiency without raising carbon emissions.

But at the same time, the power generator and provider has secured an option over a 250 MW pumped hydro energy storage project at Bells Mountain near Muswellbrook in NSW.

Managing director and chief executive Brett Redman said AGL had asked federal government to give the energy sector more certainty so it can invest in appropriate infrastructure.

“With regard to the efficiency of the overall market, in representations to governments, we have asked them to consider a policy focus that supports certainty of investment for the energy sector and enables us to get on with the business of investing in providing customers the clean, affordable and reliable energy supply we all want for Australia,” Mr Redman said.

AGL’s first-half revenue fell 1.3 per cent to $6.43 billion on falling sales across the customer and wholesale markets, as well as non-recurrence of revenue from its recently divested solar installation unit.

The company also noted consumers had been switching to lower-priced products.

Net profit after tax dropped 53 per cent to $290 million due to a reduction in value of the company’s financial assets.

But underlying net profit rose 10.3 per cent to $537 million, and was tracking at the mid-point of its guidance range.

The loss on fair value of financial instruments of $251 million – compared with a $127 million gain in the prior corresponding period – was a reflection of higher future electricity prices and lower oil and coal prices.

The company will pay an interim dividend of 55 cents, 80 per cent franked, up from 44 cents the same time last year.

AGL shares were valued at $22.16 before the start of trade Thursday, up from a near two-year low of $17.58 in October, but still down on an all-time peak of $28.44 in April 2017.