AGL to close SA gas power plant in 2026 as renewable energy rises

Energy giant AGL will close South Australia’s Torrens Island B gas-fired power plant in 2026 as expensive fossil fuel-based generators across the grid face escalating pressure from wind and solar pummelling their profits and viability.

AGL, which has already mothballed one unit at the gas plant because of “challenging conditions”, on Thursday said the three remaining units would close on June 30, 2026.

AGL’s Torrens Island power station in South Australia.Credit:Daniel Kalisz

The company cited the planned completion of a new interconnector cable linking the South Australian and New South Wales power grids, which would “further impact gas-fired generation in South Australia and, as a result, the economic viability of the power station”.

“Today’s announcement is not expected to have a material impact on underlying profit … due to the challenged economic viability of the power station,” the company said in a statement.

AGL, the nation’s largest power supplier and heaviest greenhouse gas emitter, is continuing to face intensifying pressure from billionaire activist investor Mike Cannon-Brookes and other key shareholders to accelerate the decarbonisation of its power generation fleet. Earlier this year, the board resolved to close its last-remaining coal plant, Loy Yang A in Victoria’s Latrobe Valley, up to 10 years earlier in 2035, and invest $20 billion on renewable energy and back-up “firming” assets by 2036.

While AGL’s new climate strategy won the backing of 70 per cent of voting shareholders at its annual investor meeting last week, Cannon-Brookes has vowed to keep pressing for even faster and deeper emissions cuts that would align with the Paris Agreement’s ultimate aim of limiting global heating to 1.5 degrees.

AGL on Thursday said the decision to close Torrens B followed careful consideration with stakeholders including the South Australian government. The company said was strongly committed to working with its workers, unions and governments to help “transition and further develop the skills and capabilities required for new and existing energy industries” as Australia’s energy system shifts to a low-carbon future.

AGL said Torrens Island continued to be an important site for AGL’s future generation plans, and would be the site of one of its proposed low-carbon industrial energy hubs.

It said it would continue to advance plans to transform the Torrens Island site to a low-carbon industrial energy hub.

AGL said Torrens Island continued to be an important site for AGL’s future generation plans, and would be the site of one of its proposed low-carbon industrial energy hubs.

“Over the past four years, AGL has invested $475 million in major energy projects on Torrens Island, including the 210-megawatt Barker Inlet Power Station, which opened in 2019, and the 250-megawatt Torrens Island battery, which is expected to be operational mid-2023, providing crucial firming capability and system security to the grid,” the company said.

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