By Perry Williams
AGL Energy looked in-house for its new chief executive, and Damien Nicks expects a ‘bumpy road’ as the nation’s biggest coal generator pivots to renewables.
AGL Energy’s new chief executive Damien Nicks expects a “bumpy road” as the nation’s biggest coal generator pivots to renewables and plans to hold talks with major shareholders including Mike Cannon-Brookes to update them on how it will execute its green strategy.
The power giant looked in-house for its next leader after an international search, promoting its acting CEO to the role on a permanent basis, as it draws a line under a chaotic year which saw its demerger dumped, an executive exodus and a clean-out of the board.
AGL needs to find up to $20bn to realise its decarbonisation plans over the next 12 years, installing 12GW of renewable energy assets by the time it finally exits coal in 2035. The new chief conceded the journey was unlikely to be straight forward and hinted the power provider would tweak its approach depending on the shape of the market.
“There are going to be bumps on the road. This is not going to necessarily be a purely smooth ride for the whole market,” Mr Nicks told The Australian. “But for us it’s about having clarity about how we deliver. We’ve got deep plans over the next seven years to 2030. And we’ll continue to refine those plans, and then continue refining those plans out to 2035 as well.
“There are going to be challenges, but we need that co-ordinated approach across the market, not just AGL. It needs to be co-ordinated and that’s what we’re driving particularly hard. And that’s where we can play that leadership role.”
Mr Nicks faces a challenge reinventing the 185-year-old coal-dominated power generator to keep pace with an accelerating transition to renewables and chart a course that can meet the climate and environmental demands of investors including its biggest shareholder, Grok Ventures’ Mr Cannon-Brookes.
Meetings with Grok and other major shareholders will take place in February and Mr Nicks said there was broad investor support for AGL’s strategy.
“For us, we need to deliver on our strategy and that ultimately gets the support of our shareholders,” Mr Nicks said.
“Broadly what we’re seeing today is some great support out in the marketplace – across the breadth – which is fantastic.”
While Grok declined to comment on the new CEO on Thursday, several other shareholders weighed in with broad backing for the appointment while noting a laundry list of challenges ahead.
“The big question is can he bring the dynamism that is needed,” fund manager and AGL shareholder Geoff Wilson said.
“His key challenges are motivating the team and filling in all the gaps as they have suffered a lot of brain drain recently. The agenda is there, it is just a question of will the energy be there to be dynamic and catalytic in change.”
Mr Nicks joined AGL in 2013 and worked his way through finance roles before being named interim boss last October.
“From his CV he appears to be a steady and competent leader. All shareholders hope that his appointment will stabilise AGL,” said Mr Wilson, chair of Wilson Asset Management.
Another major investor, Van Eck, said AGL had a raft of issues to work through.
“He has a massive job ahead. From staffing to financing to the roll out of the new initiatives and to the changes to the company and winding down of existing assets. If you wrote down all the things that they need to achieve over the next five years, it’s a somewhat overwhelming task,” Van Eck’s Jamie Hannah said. “So he’s not going be able to do it himself. Obviously, he just needs to set the agenda. And make sure he gets the right staff.
“I don’t know how he’s going to go on something this big. But I don’t think he’s the wrong person for the role. He certainly knows the company and knows what it can achieve. So I’m more than happy to give him a fair chance at this and see how he performs.”
The company fought off two takeover offers from the tech billionaire and Brookfield nearly 12 months ago, but its year-long plan to rejuvenate the electricity utility took a major back-step when a planned demerger into retail and generation arms was dumped after pressure led by Mr Cannon-Brookes.
A board rout ensued including the removal of former chairman Peter Botten along with chief executive Graeme Hunt.
Mr Nicks was part of the original management team that helped formulate the company’s plan to split in two, describing it as strategy that would deliver “compelling growth” options.
He was due to take up the CFO role at AGL Australia, but a well orchestrated campaign by Mr Cannon-Brookes – dubbed Keep It Together – played a large part in sinking the deal, forcing AGL back to the boardroom to formulate a new strategy.
AGL’s strategy includes the closure of Loy Yang A by 2035, a decade ahead of schedule, and the construction of a massive portfolio of renewable energy and battery assets capable of replacing the company’s coal-fired fleet.
The 12GW renewable energy plants would include 6.5GW of primary generation, such as wind and solar farms, plus 5.5GW of firming capacity – including batteries and pumped hydro.
To achieve that target AGL says it would need to build 12 new wind farms the size of its 453 megawatt Coopers Gap operation, and another eight new solar plants the size of its 102MW Nyngan solar farm.
In addition it would need 14 new 250MW grid-scale battery stations, supported by at least eight other long-duration energy storage plants – such as pumped hydro operations, hydrogen or bio-fuelled firming projects.
AGL has 3.2GW of firming capacity in its development pipeline and under construction, including a 250MW battery at Torrens Island in South Australia, due for completion in 2023.
It has planned a 50MW battery in Broken Hill and the 500MW Liddell battery, the 200MW Loy Yang battery and the 250MW Muswellbrook pumped hydro project. The energy player is approaching the closure of its remaining coal-fired units at Liddell in NSW’s Hunter Valley by April and will mothball the nearby Bayswater power station by the end of 2033.
Shares in the company fell 3c to $7.67.
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