AGL Energy (ASX:AGL) to shut Torrens Island power station in 2026

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 AGL Energy (ASX:AGL) to shut Torrens Island power station in 2026
Image source: © Timonschneider | Megapixl.com

Highlights

  • AGL Energy announced that it will close its Torrens Island ‘B’ power station on 30 June 2026.
  • Shares of AGL were trading down 1.133% at AU$7.850 apiece.
  • AGL plans to transform the Torrens Island site into a low-carbon energy hub.

On 24 November 2022, Australia-based AGL Energy Limited (ASX:AGL) announced via an ASX filing that the company would shut down its Torrens Island ‘B’ power station on 30 June 2026. Additionally, AGL Energy will continue to work on converting its Torrens Island site into a low-carbon industrial energy hub.

With an 800 MW nameplate capacity, the Torrens Island "B" power station started operating in 1976. This power plant served South Australia with services like energy generation and grid ancillary.

Following this update, shares of AGL Energy were trading 1.133% lower on the ASX today (24 November). One share of AGL was valued at AU$7.850 as of 1:35 PM AEDT. However, in the last trading sessions, AGL’s share price has jumped 3.69%, and in a month, it has gained 19.82%. Talking about AGL’s share value on a year-to-date (YTD) basis, it has surged 24.56% while leaping 46.10% in a year.

Details of Torrens Island site shutdown

The decision to shut off operations at Torrens Island ‘B’ power station was taken after careful consideration and considerable discussions with the company’s stakeholders as well as the South Australian government.

This decision has also been influenced partly by the Project Energy Connect interconnector's scheduled completion in the middle of 2026 between South Australia and New South Wales. This interconnector is anticipated to have more effects on South Australia's gas-fired generation, ultimately affecting the power station’s economic viability.

AGL Energy already dismantled the first of the four energy generation units in October 2021 with the remaining units to be taken down on 30 June 2026.

What does AGL expect from Torrens Island shutdown?

AGL Energy made sure that this announcement to close the Torrens Island site would not have a material impact on the underlying profit of FY23. Not just FY23, the challenged economic viability of the Torrens Island power station eliminates the possibility of lower material generation in the long run.

AGL Energy has spent AU$475 million on large-scale energy projects in Torrens Island over the past four years. This includes:

  1. a 210 MW capacity Barker Inlet Power Station, debuted in 2019
  2. a 250 MW Torrens Island battery, anticipated being operational by the middle of 2023.

Both projects are expected to provide vital firming capability and system security to the grid.

This shutdown of Torrens Island ‘B’ power station will not impact its importance in AGL’s ecosystem. AGL revealed the plans to conduct a feasibility study for constructing a green hydrogen facility on Torrens Island.

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