AGL to close Torrens Island gas power station in 2026 as renewables come on stream

AGL to close Torrens Island gas power station in 2026 as renewables come on stream

AGL Energy (ASX: AGL) has announced the closure of its ageing Torrens Island gas-fired power station in 2026, citing the diminishing viability of the South Australian operation once the new Project Energy Connect interconnector gives the state access to a broader range of renewables.

AGL plans to switch off the three remaining operating units at Torrens Island ‘B’ Power Station after mothballing the B1 unit in 2021. The 800-megawatt facility has been providing power and grid ancillary services to South Australia since 1976.

The decision is not due to the recent shake-up of the company’s board driven by Atlassian billionaire Mike Cannon-Brookes, who holds an 11.3 per cent stake in the company and is on a mission to transition the company to a renewable future faster than the previous board planned. This has been confirmed to Business News Australia by AGL.

“This decision follows careful consideration and extensive consultation with stakeholders, including the South Australian Government,” says AGL in a statement to the ASX.

“This has been driven in part by the planned completion of the Project Energy Connect interconnector between South Australia and NSW in mid-2026, which will further impact gas-fired generation in South Australia and as a result the economic viability of the power station.”

Project Energy Connect, which is being delivered by state-based electricity infrastructure providers ElectraNet and TransGrid, will connect South Australian and NSW transmission networks with capabilities to access more electricity generators.

The new above-ground transmission line, which will also have a connection to north-west Victoria, has been designed to pass through renewable energy zones in the three states to supply the energy grid.

AGL says the closure of the four units at Torrens Island ‘B’ Power Station will see the site transformed into a ‘low-carbon industrial energy hub’.

“Today’s announcement is not expected to have a material impact on underlying profit in FY23 or over the longer term due to the challenged economic viability of the power station,” says the company.

“AGL is strongly committed to working with its people, in conjunction with unions and government, to help transition and further develop the skills and capabilities required for new and existing energy industries as Australia’s energy system transitions to a low-carbon future.”

AGL has invested $475 million in major energy projects on Torrens Island over the past four years, including the 210-megawatt Barker Inlet Power Station, which opened in 2019, and the 250 MW Torrens Island battery, which is expected to be operational mid-2023.

AGL is also exploring the feasibility of developing a green hydrogen facility at Torrens Island.

“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, with the potential to drive new investment, create new job opportunities as well as the expansion into new markets including hydrogen and green energy,” says the company.

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