AGL reveals extended outage at broken Loy Yang coal unit

AGL Energy has revealed that its broken Unit 2 at the Loy Yang A generator in Victoria’s Latrobe Valley faces another month off line after a fault was discovered in the repairs that requires new parts to be made in Switzerland.

The Loy Yang 2 unit has been out of action since April because of an electric fault – one of the many outages that contributed to the country’s energy crisis and ultimately the market suspension in June.

It had initially been due to return to service at the start of August, before this was extended to September, and now delayed until the second half of October, after testing in the final assembly of the generator rotor discovered a defect in a part that requires the GE to manufacture a new part in Switzerland.

It is the latest in a long series of problems at AGL’s ageing and increasingly unreliable coal generators. The company currently intends to run the unit for at least another two decades, even though the market operator assumes, in its planning blueprint, that it and other brown coal generators will be closed within a decade.

AGL is currently scheduled to close the remaining units at its oldest and most decrepit coal fired generator, Liddell in NSW, early next year. It also owns the Bayswater coal generator, and has plans for battery storage and renewable and hydrogen hubs at each of its coal centres, along with the Torrens Island gas hub near Adelaide.

The company had planned to split its assets in two, in a bid to separate its legacy coal assets with the distributed and consumer focused part of the business that is trying to win over household consumers and engage with its rooftop solar, battery and EV offerings.

However, that plan was abandoned after the intervention of software billionaire Mike Cannon-Brookes, who retains an 11.8 per cent stake and is urging the company to accelerate its switch to renewables in accordance with a 1.5°C climate plan.

AGL is due to inform the market of its updated strategic review at the end of the month, and will also provide an update on its earnings guidance for the current financial year.

It says the Loy Yang 2 extended outage is unlikely to have a material impact on those forecasts, given the profits made by other units that have returned to service and and enjoying an earnings boost because of the continue high wholesale prices.