Australia's AGL under pressure to sell, not close, coal-fired plant

MELBOURNE (Reuters) - AGL Energy AGL.AX, Australia's biggest power producer, came under pressure from the government on Wednesday to sell rather than close one of its coal-fired plants in 2022 to help keep the lights on in a market short on stable power supplies.

The logo of AGL Energy Ltd, Australia's no.2 power retailer, adorns the building of their head office in Sydney, Australia, February 8, 2017. Picture taken February 8, 2017. REUTERS/David Gray

The company said it remained committed to shutting its Liddell power station in 2022, even after Prime Minister Malcolm Turnbull said the government was talking to AGL Chief Executive Andy Vesey about selling the plant.

“AGL has committed to the closure of the Liddell power station in 2022, which is the end of its operating life,” AGL said in a statement.

The comments came after the Australian Energy Market Operator warned this week of a heightened risk of blackouts in Australia’s most populous state, New South Wales, after 2022 if Liddell is shut.

The clash highlights challenges facing Australia, where blackouts have become more frequent following a decade of uncertainty over carbon policy that has deterred investment in stable generation to back up wind and solar power.

Turnbull told parliament on Tuesday he was talking to AGL about extending the life of the Liddell plant for at least five years, and told reporters that CEO Vesey was willing to consider selling it.

“He’s said that he would be prepared to discuss selling to a responsible party who would be able to keep the power station going for a period,” Turnbull said.

AGL said on Wednesday it still plans to close Liddell in 2022, noting it had given the market seven years notice to allow time to replace that capacity.

“Keeping old coal plants open won’t deliver the reliable, affordable energy our customers need,” Vesey said on social media.

The company said it continued to assess what capacity would be needed to replace Liddell.

“AGL will continue to engage with governments, regulators and other stakeholders to deliver appropriate outcomes but notes that the company has made no commitment to sell the Liddell Power Station nor to extend its life beyond 2022,” it said.

Privately owned Delta Electricity, which owns another coal-fired plant, said it would be interested in Liddell, but would have to carefully study the cost of extending its life before deciding whether to bid.

“If it’s out there, we’d certainly go and have a look,” Delta Company Secretary Steve Gurney told Reuters.

Energy Minister Josh Frydenberg said it was too early to say whether the government would help pay to keep the plant open.

Reporting by Chris Thomas and Sonali Paul; Editing by Stephen Coates and Richard Pullin