Why is the AGL share price falling on Thursday?

AGL shares are trading lower on Thursday morning…

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The AGL Energy Limited (ASX: AGL) share price is under pressure on Thursday.

In morning trade, the energy company's shares are down 1% to $7.86.

Why is the AGL share price falling?

The catalyst for the weakness in the AGL share price on Thursday has been the release of an announcement relating to the Torrens Island 'B' Power Station in South Australia.

According to the release, AGL has decided to close the power station on 30 June 2026 after 50 years of operation. After which, it will continue to progress the transformation of its Torrens Island site into a low-carbon industrial Energy Hub.

AGL advised that this has been driven in part by the planned completion of the Project Energy Connect interconnector between South Australia and New South Wales in mid-2026, which will further impact gas-fired generation in South Australia and the economic viability of the power station.

What impact will this have?

The good news is that management doesn't expect this to have a material impact on its earnings in FY 2023. Nor does it expect the closure to have a long term impact due to the challenged economic viability of the power station.

Looking ahead, the company advised that Torrens Island will continue to play a crucial role in AGL's current energy requirements and future generation plans as the site is transformed into an integrated industrial Energy Hub.

It notes that it has the potential to drive new investment, create new job opportunities, and even expand into new markets such as hydrogen and green energy. In fact, AGL is currently working on a feasibility study into the development of a green hydrogen facility at Torrens Island.

Motley Fool contributor James Mickleboro 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 Scott Phillips.

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