AGL chief calls for smooth transition to renewables

AGL Energy chief executive Andy Vesey has countered the push for new coal-fired power stations in his opening address to the Australian Energy Week in Melbourne, stating that large-scale renewable technologies would rapidly become the “new baseload” for the grid, superceding any argument for new coal plant.

“The new baseload for us is going to be large-scale renewables, firmed up by open-cycle gas and, eventually, when storage comes down, that’s what it will be,” Mr Vesey said.

AGL, which is one of Australia’s leading integrated energy companies and Australia's largest owner of coal-fired power stations, also has major investments in gas-fired, and renewable electricity generation and upstream gas exploration, storage and production projects. The company is planning to phase out coal-fired electricity in the medium term.

“We don’t see anything baseload other than renewables. You’ll hear people tell you how coal can compete. But… all you need to think about is economies of scale of production versus economies of manufacturing.

“Solar plants, the more you make the cheaper they get. …Wind turbines, the same thing. The more you make the cheaper it gets.

“It would work with (coal) plants too. …Large coal plants, supercritical plants and even what I hope comes around one day, carbon capture and sequestration; the more you make the cheaper they’ll get. But guess how many you’re going to make? They’re bespoke. Prices of large-scale generating plants haven’t moved in over 20 years,” Mr Vesey said.

Mr Vesey said a bipartisan response was needed to the Finkel Review on energy security to enable a smooth transition, but with or without political support, the transition was already occurring.

“We’re not waiting for clarity, we’re not waiting for certainty. Would it be good? Absolutely. To get bipartisan support would be an amazing way to unleash the energy and investment that people want to make in this system. That is the thing what will ultimately drive down prices… that’s what you need, is investment. And nothing gives you investment like policy certainty.”

“We’ll invest and we’ll compete in the market, and you all can decide which is the best deal or the best solution, but let us know what the boundaries are, because what we’re doing now is not sustainable," Mr Vesey said.

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