AGL (ASX:AGL) shuts coal power unit after serious injury

The unit could be closed for over two months, while activist investors demand AGL to 'wake up' and decommission it permanently.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An investor lobby group has told AGL Energy Limited (ASX: AGL) to "wake up" and permanently close its Liddell coal-fired power station after a worker was injured this week.

On Thursday, a staffer was seriously injured from an incident with a transformer at the site's unit 3 generator. The generator was immediately shut.

The company announced to the market on Friday morning that the unit could be down for up to 2.5 months. This would skip over the entire summer, when power demand peaks from air conditioning usage.

The exact outage period is yet to be confirmed as investigations are currently taking place.

The almost half-century-old Liddell site in NSW is due to be closed in 2022 or 2023.

The Australasian Centre for Corporate Responsibility (ACCR) urged the company to bring forward the closure.

"Today's closure shows that AGL is operating in a high risk environment to its workers, its shareholders and also the reliability of the NSW grid," said ACCR director Dan Gocher.

"These types of incidents will become commonplace and investors must demand that AGL get serious about de-risking its portfolio."

AGL has indicated it would inform the ASX by Wednesday about the impact of the closure to its bottom line.

The AGL share price was up 0.92% as of 2.00pm AEDT, trading at $13.23.

mining asx shares represented by miner writing report on clipboard

Image source: Getty Images

It's expensive to keep coal power plants running

Maintenance costs for ageing coal power plants grew from 25% of AGL's total capital spend in 2013 to 74% in the 2020 financial year, according to Gocher.

"Investors must question whether this expenditure is in the long-term interests of shareholders," he said.

"AGL intends to operate Bayswater beyond 50 years, and Loy Yang A beyond 64 years. It's ridiculous and completely out of step with Australia's climate goals and it will continue to risk the safety of its workers."

The Australian Financial Review reported that the closure of the Liddell unit on Thursday caused the wholesale electricity price in NSW to hit the maximum $15,000 per megawatt-hour.

The  Australian Energy Market Operator was then forced to call upon its emergency reserve to prevent a blackout in NSW on Thursday afternoon.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ASX Share Market News

A woman's hand draws a stylised 'Top Ten' on a projected surface.
Share Gainers

Here are the top 10 ASX 200 shares today

Let's take a look.

Read more »

A little girl has a huge smile and a giant lollipop.
Broker Notes

6 ASX shares tipped by brokers to rise 34% to 87%

Post-earnings season, brokers have updated their 12-month price targets on scores of stocks.

Read more »

Happy businessman fist pumping while looking at a tablet.
Broker Notes

2 ASX shares tipped to return 19% to 47%

Recent sell-offs have caught Morgans’ attention, with the broker now rating both shares as buys.

Read more »

Man sitting in a plane looking through a window and working on a laptop.
Broker Notes

Buy, hold, sell: Dicker Data, Polynovo, Flight Centre shares

Here's what the experts think.

Read more »

Two scientists analysing results on a computer screen.
Healthcare Shares

3 ASX healthcare shares to buy with 25% to 100% upside as sector rebound races higher

After slumping to a 9-year low on 3 June, healthcare shares have rallied by an extraordinary 42%.

Read more »

Man looking at graph decreasing and feeling disappointment.
ASX Share Market News

The ASX 200 has dropped to a 3-day low. Here's what's happening

The market is back below 9,000 points as pressure builds.

Read more »

A baby's eyes open wide in surprise as it sucks on a milk bottle.
Broker Notes

How high could Bubs Australia shares go, according to Bell Potter?

A key approval is expected to boost the Bubs share price.

Read more »

a woman in a business suit looks wide eyed and interested as she holds a tin can with string to hear ear listening to some news.
Broker Notes

UBS names its 10 top ASX picks for the next 3-6 months

Here are the 10 ASX shares UBS thinks could outperform.

Read more »