AGL Energy has announced it will close Australia’s biggest-emitting power plant a decade earlier than planned. 

After activist shareholders forced AGL to back down on its plan to split the business and scrapped the board’s first pick for chairman, they have now successfully pushed the company to close its coal-fired Loy Yang A power station in Victoria in 2035. AGL Energy  previously said it would retire the generator in 2045.

“We think that is the most viable path that sits in front of us today,” AGL chairman Patricia McKenzie has told The Australian Financial Review. 

“AGL is committing to an ambitious but achievable strategy to deliver a responsible and accelerated low-carbon future.

“We have listened to our stakeholders – in particular, our shareholders, as well as government and energy regulatory authorities.”

But some shareholders are concerned that the company’s plans to develop $20 billion worth of zero emission generation threatens will diminish the returns for other investors over time.

“The quantum of capital needed to even partially replace the coal capacity is eye-watering,” says Mark Samter, senior research analyst at MST Marquee.

“Just how much of those earnings you are happy to see evaporate as a shareholder will determine how much equity you are willing to give to retain part of that earnings stream.

“It is entirely unfathomable to me that AGL won’t be asking you for equity in the near term.”

The closure dates for AGL’s other coal power stations, Liddell and Bayswater, are unchanged, with Liddell set to close next year and Bayswater due to be retired between 2030 and 2033.

AGL’s accelerated coal exit means Australia’s old coal power stations will be mothballed by 2035. after Queensland announcedit would end its dependence on the commodity and have 80 per cent renewable energy by 2035.

Coal still accounts for two-thirds of Australia’s electricity needs, so replacing it will require a rapid increase in new generation and storage.

For many in Victoria’s Latrobe Valley area, coal has provided a livelihood for generations. 

Traralgon Chamber of Commerce and Industry treasurer David Clark says the closure of Loy Yang A power station will affect businesses within the region, as many well-paid jobs will be lost.

“It gives us more need for some sort of transition from coal to either some sort of renewables industry in the valley or replacement industries to replace the level of employment,” he said.

“And not only that, the expenditure in the three towns [of Moe, Morwell and Traralgon] that that brings.”