Coal will close to schedule, says AGL, but to build more wind we need policy certainty in return

AGL Energy says it is holding firm on the closure dates it has set for its remaining coal-fired power plants, but says regulatory and policy certainty remain critical to its efforts to replace outgoing coal with new firmed renewables.

The big-three gentailer has announced a “strong result” for the 2025-26 financial year, albeit a 2 per cent fall in underlying earnings to $631 million, underpinned in part, by the “increasing flexibility” of its generation asset portfolio, including a “continued strong performance” from its big batteries.

“We’ve had another excellent year of strategic execution, generating long-term value and strengthening the resilience, flexibility and optionality of the business through the energy transition,” AGL CEO Damian Nicks said in a results presentation on Wednesday.

“Our flexible asset fleet advanced by roughly 400 megawatts to 8.7 gigawatts, largely driven by an increase in decentralised assets under orchestration,” Nicks said.

“This is spread across a diverse range of assets including batteries, hydro and 3.3 gigawatts of thermal coal unit flexibility, enhancing our ability to respond to evolving market conditions throughout the energy transition.”

But AGL – alongside its major competitors, Origin Energy and EnergyAustralia – has come under strong criticism for the lack of new investment in large-scale renewables and storage, particularly in the states where it needs to replace outgoing coal assets, Loy Yang A in Victoria and Bayswater in NSW.

Fresh progress towards the company target of 6 gigawatts (GW) of new renewable and firming capacity by 2030 has been limited to the signing of two 15-year power purchase agreements with Tilt Renewables, for the Palmer Wind Farm in South Australia and the Waddi Waddi wind farm in Western Australia.

In the works is the 500 megawatt (MW) / 2,000 megawatt-hour (MWh) Tomago battery in NSW and Nicks says the company is “working through the environmentals” for the 600 MW Hexham wind farm, a Victorian JV project that was awarded a Capacity Investment Scheme (CIS) contract in October 2025.

In the development pipeline, AGL says it is continuing to pursue priority late-stage battery and wind projects, including the 500 MW Tuckeroo battery project in Queensland, the Barn Hill wind farm (300 MW) in South Australia, and its joint development with Someva Renewables in NSW, the Pottinger Energy Park (1,250 MW).

In comments on Wednesday, Nicks described this as part of the company’s strategy of “executing with discipline,” but at the same time he acknowledged the huge task ahead to replace coal, and the huge current gap in Australia’s development pipeline where new wind projects should be.

“This market absolutely needs more wind built,” Nicks told a Q&A session following the results presentation. “We have a range of conversations underway with, you know, in terms of getting wind projects up and underwritten.

“[But] it’s not about just bringing the next asset to market as an FID [final investment decision]. You want to bring the right asset to the market at the right time, depending also how some of these … government contracting schemes are also playing out.

On the CIS, Nicks repeated his call for developers that have been awarded contracts for wind to “either use it or lose it.”

“When we’re bidding into these type of arrangements, and there’s many of them, we bid to build,” he said. “So we want to make sure that if we’re bidding to build, we’ve got the economics that stacks up behind it.

“We can’t have people winning and then not building,” he told Renew Economy in a separate interview. “Wind is the missing piece.” AGL’s own Hexham wind project, is till a long way from construction as it has yet to complete approvals.

Indeed, AGL is not currently building any new wind projects.

Nicks, however, says it has made an important contribution to establishing the right market conditions by providing “certainty and credibility” on its coal closure dates: 2033 for Bayswater and 2035 for Loy Yang A. It closed the Liddell coal generator in 2023.

“First and foremost, you know, I think we’ve been really clear about this: certainty and credibility around closure notice periods … are incredibly important. It provides the investment certainty that the market needs,” Nicks told Renew Economy.

“We’ve given huge amounts of notice on our plants,” he said, adding, “we have no plans to change our closure dates. It’s all about, now, trying to get the right assets built in this marketplace.”

To that end, Nicks says what AGL is depending on most is policy and regulatory certainty.

“That would be a big piece, to make sure … we don’t see moving goalposts all the time, because we are deploying capital over 20 to 25 years across our business, and we want to make sure we can continue to deliver at the pace we need to, across the breadth of of that asset base.

“And then I think the other thing I would say … is just clarity around where some of this policy is moving as well. …We need to steer through [any market reforms] both politically and from an energy markets point of view. We need to steer through the cycles, but we would love that certainty.”

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