AGL Energy Ltd., Australia’s biggest power producer, is targeting about A$1 billion ($780 million) in asset sales and cutting costs as the company prepares for what it sees as a transformation in the sector.
AGL plans to find buyers for the “non-strategic and under-performing” assets by the end of its 2017 fiscal year and has started a sale of its 50 percent stake in the Macarthur wind farm, it said Tuesday. AGL, which is also expecting a reduction in its operating cost base of about A$170 million, rose to the highest in Sydney trading since 2007.
AGL, led by new Chief Executive Officer Andy Vesey, plans to shutter its coal-fired power plants by 2050 while moving like Elon Musk’s Tesla Motors Inc. into battery storage, and evaluating technologies such as electric cars.
“There are challenges in the long-term from the need to reduce carbon emissions, as well as from increasing penetration of decentralized generation and digital technologies,” AGL said. “Energy markets will be transformed” by new products such as solar power and battery storage, it said.
AGL rose 6.4 percent to close at A$16.47, while the benchmark index climbed 0.9 percent.
AGL said it’s committed to competing in retail gas markets, which requires the company to secure gas supplies. Preliminary recommendations from a review of its gas exploration and production business are due to be announced shortly, AGL said. The company said it’s continuing to evaluate its Gloucester coal-seam gas project in New South Wales.