The AGL Energy (ASX:AGL) old dog with green new tricks

AGL Energy has green plans for Liddell power station…

| More on:
wind farm

Image source: Getty Images

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

The AGL Energy Limited (ASX: AGL) share price is edging higher today after Australia's largest electricity provider unveiled its plans for a "concentrated solar thermal" project.

At the time of writing, the AGL share price is flat at $9.08 a piece.

Who moved my cheese?

Dr. Spencer Johnson's wildly popular book "Who Moved My Cheese" describes an important aspect of business. If you haven't read the book – it's a short story of two mice, Sniff and Scurry; and two little people, Hem and Haw, that are faced with the dilemma of dwindling cheese reserves.

Sniff and Scurry decided to take a chance and begin looking for the next delectable block of cheese before their current one ran out. Meanwhile, Hem and Haw basked in the delight of their current cheese block, ignoring the vanishing supply – until one day it was gone.

Point being, it often pays to move out of one's comfort zone voluntarily, rather than the decision being made for you at an inconvenient time. Which makes for quite an interesting overlay when considering Australia's shift to renewables.

AGL's latest news might be the energy company's attempt at searching for the new block of metaphorical cheese. According to The Sydney Morning Herald, AGL is planning to replace the Liddell coal-powered thermal power station with a solar-and-hydro energy facility once the plant shuts down in 2023.

This development is in addition to AGL's work with RayGen on a "concentrated solar thermal" project in Carwarp, Victoria. Construction has already commenced on this renewable endeavour – capable of delivering 4 megawatts of solar power and 50 megawatt-hours of storage.

PrimeCo involvement

Interestingly, the low carbon replacement for Liddell is expected to be encompassed by AGL's PrimeCo business – not 'New AGL'. Speaking in an interview with The Australian Financial Review, interim chief executive Graeme Hunt said:

For things that are on the land where PrimeCo will continue to have thermal generation for some time to come yet it is most likely that PrimeCo will be the participant in the project.

In March, the company's proposed 'New AGL' was described as 'the business with a clear pathway to full carbon neutrality'.

ASX utilities and AGL

It's been a challenging 12 months for ASX-listed utilities, including AGL Energy. The S&P/ASX 200 Utilities [XUJ] (ASX: XUJ) index has sunk roughly 22% during the past year. Similarly, the AGL share price has eroded by 48%.

Both the utility sector and AGL have substantially underperformed the S&P/ASX 200 Index (ASX: XJO). Perhaps the cheese was moved on the whole sector.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Energy Shares

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Are Woodside shares the number one pick in the energy sector?

One leading broker thinks that the energy giant is the best option for investors right now.

Read more »

A young woman carefully adds a rock to the top of a pile of balanced river rocks.
Share Market News

Here's how the ASX 200 market sectors stacked up last week

Energy and utilities stocks led the way last week with 4%-plus gains.

Read more »

A male oil and gas mechanic wearing a white hardhat walks along a steel platform above a series of gas pipes in a gas plant
Dividend Investing

Should I buy Santos shares for dividend income?

Santos shares have been steadily upping their dividends since 2020.

Read more »

Focused man entrepreneur with glasses working, looking at laptop screen thinking about something intently while sitting in the office.
Energy Shares

Are Santos shares a screaming buy?

Goldman Sachs thinks now could be a good time to buy this energy stock.

Read more »

A young woman lifts her red glasses with one hand as she takes a closer look at news about interest rates rising and one expert's surprising recommendation as to which ASX shares to buy
Energy Shares

What is getting investors excited about this ASX 200 uranium stock today?

There's a good reason why this share is charging higher on Wednesday.

Read more »

Businessman studying a high technology holographic stock market chart.
Energy Shares

Is this stock the 'best placed' of the ASX uranium shares?

This fund manager thinks so.

Read more »

Worker on a laptop at an oil and gas pipeline.
Energy Shares

Why today is a big day for Santos shares

Why is everyone talking about Santos shares today?

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Energy Shares

This ASX 200 mining stock just reported a 40% earnings jump

Investors appear pleased with this miner's performance during the first quarter.

Read more »