AGL seals $2.7b wind power deal to help ‘orderly’ shift away from coal
A consortium involving AGL and Australia’s Future Fund has sealed a $2.7 billion takeover deal for wind farm operator Tilt Renewables as top power providers accelerate the shift away from coal.
Powering Australian Renewables (PowAR) – a partnership including AGL, the Future Fund and Queensland Investment Corporation– will acquire Tilt’s Australian operations. New Zealand’s Mercury Energy will buy its wind farms across the Tasman.
Tilt Renewables has 20 wind and solar farms operational or under development across New Zealand, Victoria, New South Wales and South Australia.
AGL chief executive Brett Redman said the acquisition built on the company’s legacy as one of the largest private investors in renewable energy and “further progresses” AGL’s transition away from fossil fuel-fired power generation and towards cleaner alternatives.
“The proposed acquisition by PowAR will provide more renewable energy options in AGL’s generation portfolio, further supporting our orderly transition away from coal-fired power and responding to our customers’ increasing appetite for cleaner energy,” Mr Redman said.
The acquisition comes as coal plants run by AGL and Australia’s other diversified energy providers are facing financial pressure due to the influx of large-scale wind and solar generators and rooftop solar panels driving down daytime electricity prices. Last week, the country’s most carbon-intensive coal power station, Yallourn, announced it would close its doors four years early, in 2028.
Shares in Tilt Renewables soared on news of the deal to end the day up 15 per cent at an all-time high of $7.04.
Tilt’s board has urged shareholders to vote in favour of the consortium’s offer of $NZ7.80 per share in cash, subject to an independent adviser’s report and no superior offers being received.
Tilt chairman Bruce Harker said the proposal was compelling and the result of the board’s focus on delivering long-term value for shareholders.
“The board is pleased that, with these new owners, the transition to renewables in Australia and New Zealand will continue to accelerate,” he said.
AGL, whose power-generation assets include coal, gas and renewable energy across Australia, is facing enormous pressure as the influx of renewable energy into the nation’s main electrical grid has sent daytime prices tumbling to six-year lows, meaning coal-fired generation is struggling to compete with cheaper renewables.
The ultra-low daytime prices prompted AGL to slash $2.7 billion off the value of its assets earlier this year and warn of the elevated risk of a “supply-side response”.
AGL, the Future Fund and QIC launched the Powering Australian Renewables Fund in 2016 to drive large-scale renewable energy generation across the country. On Monday, AGL said it would invest a further $341 million to fund its share of the group’s acquisition of Tilt’s Australian business.