Thread for Australian and International BESS News not directly related to AVL.

Article in The Age yesterday about AGL purchasing batteries, and the move away from more expensive fossil fuels.

Highlight for me "Dale Koenders, an analyst at investment bank Barrenjoey, said AGL was now anticipating underlying earnings from batteries to grow from $28 million in the 2024 financial year to $75 million by 2026, and as much as $300 million by 2029."



https://www.theage.com.au/business/companies/australia-s-top-polluter-bets-on-batteries-as-fossil-fuel-costs-climb-20250813-p5mmn0.html

Australia’s top polluter bets on batteries as fossil fuel costs climb

ByNick Toscano

August 13, 2025 — 4.01pm

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AGL, the largest Australian power generator, will accelerate plans to invest in big batteries as it seeks to blunt the impact of higher costs caused by outages at unreliable coal-fired power stations and increasingly expensive coal and natural gas supply contracts.

The electricity and gas giant was hit by a sharp investor sell-off on Wednesday, sending its share price sliding 13 per cent, after posting earnings that missed market expectations and signalling its profit could fall further next year amid the rising cost of sourcing the fossil fuels it needs to keep producing power.

AGL’s Loy Yang Power Station in Victoria’s Latrobe Valley.Credit:Bloomberg

While AGL attributed the past year’s earnings slump mainly to lower wholesale electricity prices and its decision not to fully pass on cost hikes to its 4 million-plus customers, a series of planned and unplanned outages across its fleet of power stations had left the business unable to benefit from periods of higher wholesale prices, analysts said.

AGL chief executive Damien Nicks pointed to the stronger performance and financial contribution of the company’s rapidly growing fleet of grid-scale batteries, which along with hydropower and gas-powered generators were increasing the “flexibility” of its portfolio and mitigating the impact of coal plant outages.

“We saw the performance of our flexible asset fleet really coming into its own,” Nicks said.

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“Those flexible assets are doing exactly what we intend for them to be doing – the response of the batteries was fantastic.”

With response times measured in split seconds, grid-scale batteries are seen as essential to Australia’s green energy shift because of their ability to soak up surplus renewable output when it’s abundant, and use it to plug gaps at later times or provide other services to stabilise the system during unexpected outages.

AGL has two batteries operating at Torrens in South Australia and Broken Hill in NSW, with another at the site of its decommissioned Liddell coal plant due to come online next year. Last month, it gave the green light for the construction of an $800 million battery at Tomago in NSW. Nicks said earnings from AGL’s battery fleet would “more than offset” the added costs it expected from negotiating coal and gas agreements at higher prices in the next three years.

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Although AGL remains Australia’s biggest emitter of planet-warming greenhouse gas emissions, the 180-year-old utility is working to replace its coal plants with cleaner sources, spending billions of dollars building 12 gigawatts of firmed renewables in time for the retirement of its final coal-fired power station, Victoria’s Loy Yang A generator, in 2035.

On Wednesday, Nicks revealed AGL would bring forward some of that new capacity to come online sooner, aiming to build six gigawatts rather than five gigawatts of capacity by 2030, at least half of which would be batteries.

AGL chief executive Damien Nicks.Credit:Louie Douvis

“What’s driven the increase is our confidence in our ability to deliver,” he said.

“The performance of those flexible assets [is] going to be so critical for the energy transition.”

Dale Koenders, an analyst at investment bank Barrenjoey, said AGL was now anticipating underlying earnings from batteries to grow from $28 million in the 2024 financial year to $75 million by 2026, and as much as $300 million by 2029.

“Looking forward, AGL aims to more than offset any earnings impact of coal and gas recontracting with earnings from its significant investment in flexible assets and broader delivery of strategy,” Koenders said.

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In the past three years, under pressure from increasingly climate-minded shareholders, including tech billionaire Mike Cannon-Brookes, AGL has been ratcheting up its decarbonisation commitments and efforts to seize clean energy opportunities.

The company’s updated climate plan on Wednesday also included a strengthening of its direct emissions reduction targets, as well as the introduction of a new target for a 60 per cent cut to Scope 3 emissions – those released by the end users of the electricity and gas that the company supplies – following its final exit from coal.

The Australasian Centre for Corporate Responsibility, a shareholder activist group, praised AGL for listening to investors. It said AGL’s climate strategy was showing “green shoots overall”, but needed to be even more ambitious in its renewable energy rollout plans.

“As Australia’s largest electricity generator, AGL should be driving forwards the build-out of bulk renewable power,” the group’s executive director, Brynn O’Brien, said.

“While a range of barriers currently exist to rapid decarbonisation, investors need to see a company which is future-proofed for a faster transition and positioning to seize the full value of the transformation of the energy sector.”