Prime Minister Malcolm Turnbull and AGL chief Andy Vesey meet after a testy week

Arrival: AGL chief executive Andy Vesey arrives at Parliament House in Canberra on Monday ahead of a meeting with Prime Minister Malcolm Turnbull about the future of Liddell power station at Muswellbrook.
Arrival: AGL chief executive Andy Vesey arrives at Parliament House in Canberra on Monday ahead of a meeting with Prime Minister Malcolm Turnbull about the future of Liddell power station at Muswellbrook.

THE AGL board will consider a Federal Government request to extend the operations of Liddell power station to 2027 and possibly sell the station, the company said after a meeting in Canberra on Monday between AGL chief executive Andy Vesey and Prime Minister Malcolm Turnbull.

But Mr Vesey appears to have stuck to the company’s commitment to move away from coal, despite strident criticism from senior government ministers for more than a week after an Australian Energy Market Operator report last week raised serious concerns about short and long term energy supply, and particularly once Liddell closes in 2022.

In a statement released after the meeting Mr Vesey said AGL had committed to deliver a plan in 90 days of the actions AGL will take to avoid a market shortfall once the power station closes.

AGL has previously advised the market that a future energy generation scenario would likely be provided by a mix of load shaping and firming from gas peaking plant, demand response, pumped hydro and batteries.

In the statement Mr Vesey said he was “asked to take to the AGL board the Government’s request to continue the operation of Liddell post 2022 for five years and/or sell Liddell, which I agreed to do”.

He repeated his comments that the company did not see new development of coal as “economically rational” only a day after the National Party voted to end renewable energy subsidies.

Mr Vesey said that in the short term new development would continue to favour renewables supported by gas peaking.

“Longer term, we see this trend continuing with large scale battery deployment enhancing the value of renewable technology. In this environment, we just don’t see new development of coal as economically rational, even before factoring in a carbon cost.”

AGL was investing more than any other company to build new energy supply because “the best way to address pricing challenges in the market is to increase supply,” Mr Vesey said.

The company had spent $123 million to improve reliability at Liddell since buying it from the NSW Government in a $1.5 billion deal that included Bayswater, where Liddell was effectively valueless.

”Despite this investment, during the February 2017 heatwave, two units from Liddell were out of the market due to unforeseeable boiler tube leaks. As a result, there was not enough energy in the system and NSW experienced blackouts in parts of the State,” Mr Vesey said.

AGL expected to spend a further $159 million on the plant before 2022 because “it will likely experience more unanticipated outages”.