Australia’s biggest electricity retailer, AGL, has rejected an “unsolicited” takeover bid by Australian tech billionaire Mike Cannon-Brookes and $A1 trillion Canadian asset manager Brookfield.
The Cannon-Brookes plan is to spend $20 billion to get AGL to net zero carbon emissions by 2035. This involves closing AGL’s Baywater and Loy Yang coal-fired power stations earlier than planned and spending on renewables to make up for any lost capacity.
News analysts cite this as a “watershed moment” for the decarbonisation of the main electricity grid in Australia.
On this post:
- Why is Cannon-Brookes trying to takeover AGL?
- Who is Mike Cannon-Brookes?
- How big a polluter is AGL?
- Why has AGL rejected the Cannon-Brookes bid?
- Why is this a “watershed moment” for Australian electricity?
- What can you do?
Why is Cannon-Brookes trying to takeover AGL?
In a nutshell, because AGL is Australia’s dirtiest electricity retailer – and the biggest, with 37 per cent market share.
Mr Cannon-Brookes and Brookfield want to transform AGL into a clean energy power generator and electricity retailer.
Their stated goal is to “help accelerate the plan so that Australia’s main grid reaches net zero emissions by 2035.”
They also want to bring down the price of electricity for consumers.
Mr Cannon-Brookes said, “Australia should have the lowest-priced energy – electricity – in the world. We have all the assets to make that happen. Renewable assets generate power at far cheaper prices than the coal assets currently do.”
By taking over AGL, Cannon-Brookes is planning to achieve – within one single business entity – a massive step change in the amount of renewable energy flowing through the Australian grid.
Who is Mike Cannon-Brookes?
Mr Cannon-Brookes is co-founder of Atlassian, the Australian software company that went global including a NASDAQ listing. Cannon-Brookes is estimated to have personal wealth of around $30 billion. He is also a green philanthropist and climate change crusader.
With Brookfield, one of the world’s biggest asset management firms as takeover partner, they make a formidable team.
And they aren’t letting AGL’s bid rejection put them off.
How big a polluter is AGL?
AGL produces 8 per cent of total CO2 emissions in Australia. That’s more than every single car on the road.
According to Cannon-Brookes “It’s more than all domestic and international aviation, and if it’s a country, it’s bigger than Sweden or Ireland or New Zealand, and that would make it one of the biggest decarbonisation projects on Earth.”
The reason why AGL is such a big polluter is because it operates six of Australia’s largest coal-fired power plants – and the largest of these are:
- Bayswater Power Station, NSW
- Liddell Power Station, NSW
- Lou Yang Power Station A, Victoria
AGL plans to close Liddell in 2023 but intends to keep operating Lou Yang Power Station A until 2045 and Bayswater Power Station until 2033.
But this isn’t good enough according to international climate experts. They say Australia (and other OECD countries) must stop burning coal for electricity by 2030 in order keep global temperature rise to no more than 1.5 degrees Celsius on pre-industrial levels.
That’s why the Cannon-Brookes takeover bid is so significant.
Why has AGL rejected the Cannon-Brookes bid?
AGL says that the bid “materially undervalues” the company and “is not in the best interests of AGL shareholders.”
AGL shareholders were due to vote in June on a proposal to split AGL into two companies: AGL Australia and Accel Energy.
ALG’s board believes that under the “unsolicited” proposal, shareholders would lose the opportunity to realise future potential value from the proposed demerger.
Cannon-Brookes disagrees saying their bid was “a far better option… from the point of view of risk and the point of view of shareholder value.”
Why is this a “watershed moment” for Australian electricity?
Currently, the main electricity grid in Australia is around 75% powered by dirty electricity and 25% renewables.
By transforming Australia’s big and dirtiest electricity generator/retailer into a clean energy generator/retailer, Cannon-Brookes will be tackling climate change from the inside.
If successful, the transformation of AGL would fast-track the transformation of the Australian electricity grid into a clean energy grid.
It will also result in low bills for consumers according to Cannon-Brookes.
“We know that renewables are the cheapest source of power generation. What you require is the ability [and] capital to make that transition and do it sensibly and rationally.
Decarbonisation is the greatest economic opportunity facing Australia says Cannon-Brookes.
“I think Australia should be really proud that we can do it in an economic way that creates jobs and drives prices down.
“It’s a very sensible thing.”
What can you do?
Being conscious of where electricity comes from is something all of us can do. That’s why installing solar panels and battery storage is a good idea. With a rooftop solar system, you’re reducing your reliance on grid electricity. What’s more, any surplus is going back into the grid offsetting the amount of dirty electricity required from coal-fired power stations.
Your choice of electricity retailer is important too. Naturally we all want the cheapest deal for electricity, and you’ll find that many of the green electricity retailers are extremely price competitive. The Green Electricity Guide 2022 lists the top 10 greenest electricity retailers in Australia and the dirtiest. You can learn more about it here.
Another way to cut back on grid electricity is to install modern electric systems in your home for heating and cooling , hot water etc., – and run them off your solar electricity. Not only will you save thousands of dollars on power bills, but you’ll be cutting your household’s carbon footprint as well.
Want greener, cheaper electricity?
Get in touch if you want greener, cheaper electricity to power your home or business. We can provide advice and quotes on any of the following:
- Solar panels systems
- Solar battery storage
- Electric hot water heat pumps
- Electric swimming pool pumps
- Reverse-cycle air conditioning systems
- Electric vehicle charging
- Solar monitoring
- Solar panels cleaning and maintenance