AGL Energy Ltd. said it would massively expand its production of clean energy as it abandons coal-fired power plants.
The company will spend as much as A$10 billion ($6.9 billion) of its own money to build new facilities, including with debt-financing, Chief Financial Officer Gary Brown said at an investor day in Melbourne on Friday.
The Australian coal giant, which came under attack from billionaire climate activist Mike Cannon-Brookes last year, plans to shut all its coal plants by 2035 and replace them with 12 gigawatts of additional renewable capacity and storage.
That new energy — the equivalent of five large coal plants — will include wind and solar farms, grid-scale batteries and other storage infrastructure, and could also include some back-up gas plants.
“Coal is leaving the market. That means we have to replace those assets,” said AGL CEO Damien Nicks. “The system is tight,” he said, “but I do not believe the lights will go out.”
Shares jumped 11% to A$10.74 as of 3:08 p.m. in Sydney as the company also raised its underlying profit guidance for the full year.
The A$10 billion will fund about half of the planned 12 gigawatts. The rest — which the company did not put a dollar figure on — will come from third parties, including joint ventures with “renowned renewable asset developers” and power purchase agreements, Brown said.
Australia is undergoing one of the world’s most rapid shifts from coal to renewables. The nation currently relies on the fuel for well over 50% of its electricity, but could be almost entirely powered by wind, solar and zero carbon storage by the end of next decade, according to official estimates.
There are fears investment is not happening fast enough to replace aging coal plants, which have struggled to compete with cheap wind and solar but continue to supply vital baseload power particularly at times of peak demand when the sun isn’t shining.
AGL’s shift to renewables is a turnaround for the company, which until last year had intended to keep its coal plants running until well into the 2040s. Coal and gas make up the biggest chunk of AGL’s earnings, but Brown said he was confident the new low carbon business would fill the earnings gap by 2035.
AGL made global headlines last year when it became the target of a takeover by Canadian private equity giant Brookfield Asset Management and Cannon-Brookes, who wanted to shut its coal plants early and replace them with renewables. That bid failed, but Cannon-Brookes, founder of software company Atlassian Corp., subsequently built an 11% stake in the company and drove a board and executive shake-up that led to a more ambitious emissions-reduction strategy.
Cannon-Brookes’s family office Grok Ventures did not immediately respond to a request for comment on Friday. But the plan can be seen as a success for the Sydney-based billionaire, whose key objectives of coal closures and renewable investments are now company policy.