The chief executive believes green energy can replace huge cashflows of coal over time, with most of the earnings uplift coming after 2030.Critically he calculates green renewables are likely to deliver superior return to today’s coal-fired generation.Green generation such as solar and wind are forecast to return between 6 per cent and 8.5 per cent over time while firming (grid scale batteries and pumped hydro projects) will be more lucrative, generating returns in a range of 7 per cent to 11 per cent.
By comparison AGL’s return of capital averaged 7 per cent over the last three years, although that also includes gas and trading businesses.
That’s the Macquarie model in action.
Damien Nicks has painted a picture of what the new AGL is set to look like a decade from now as he attempts to put further distance between what has been an accident prone few years for the electricity major. “There will need to be a significant build out over the next 10 to 12 years and therefore we need to get this progressively going as quickly as we can”.“We will continue to ensure our current thermal coal assets are there for the market as this transition occurs. That is a very big part of this”.
AGL Price at posting:
$10.60 Sentiment: None Disclosure: Held
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