Thanks jezyh, particularly for the explantation around converting Liddell to syncons.
You nail AGL's dilemma with: "This is a story about AGL’s social licence to operate..."
So AGL is installing syncons - a dated way to stabilise frequency - to repurpose a dilapidated coal power plant even though future remediation standards and costs for Liddell are likely to be much higher later. This kicking the can down the road may be entirely in accord with contemporary views in the federal and NSW L/NP governments, but these are fickle and not supported by mainstream voters. While the poll linked below was commissioned by left-leaning Guardian, I see no reason to doubt its veracity on voters' strong expectations, including among rusted-on conservatives, that government should be moving the country toward low/nil emissions.
Then AGL is looking to repurpose Muswellbrook and Kanmantoo coal mines carrying major remediation liabilities to pumped hydro sites. The ANU identified at least 22,000 potential PH pairs across Australia. Who is to say these former coal mines are among the best of these pairs and deserve to advance, were it not for the remediation consideration?
AGL's capex spend is compromised, directed at remediation as much as extension or modernisation.
Contrast their legacy obligations to a relative clean-skin like IFN, free to invest in batteries instead of syncons and to select the very best PH sites. It can step back from a pure wind operator and add Smithfield and SA OCGTs as the community accepts these firming assets will be used 2-8% of the time. If AGL builds 500Mw of new gas plant to be used 2-8% of the time, its shareholders will go ballistic.
I closed my remarks in my post above above with: "I think AGL is on a hiding to nowhere. Its coal generating kit is a stranded asset. Writing it all off will destroy AGL's equity base while its debt remains. Sure, it appears AGL is navigating an orderly transition to non-polluting cheap renewables, but those legacy fossil fuel assets will destroy it."
Similar conflicts are apparent at Origin and Energy Australia.
Ash
IFN Price at posting:
40.0¢ Sentiment: Buy Disclosure: Held
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