AGL expands renewables pipeline with $250m acquisition of Firm Power and Terrain Solar

AGL Energy (ASX: AGL) will spend $250 million to acquire battery energy storage system (BESS) developer Firm Power and solar project company Terrain Solar, along with an 8.1-gigawatt pipeline of renewable energy projects.

The pipeline comprises 27 developments including 6.1GW of grid-scale BESS projects, 1.8GW of solar projects and 250 megawatts of onshore wind assets across Australia.

The deal will be funded from AGL’s cash on hand and is scheduled for completion this year.

Transition a priority

AGL managing director Damien Nicks said the acquisition demonstrates the company’s commitment to taking advantage of market conditions and prioritising energy transition developments that generate the best long-term value.

“We believe this high-quality development pipeline presents strong optionality for AGL and focuses on firming capacity for renewable energy alternatives as thermal baseload generation exits the national electricity market,” he said.

Results announced

News of the acquisition follows strong full-year results for AGL, including a statutory profit after tax for the 12 months ending June of $711m and underlying EBITDA of $2.2 billion.

Underlying net profit after tax totalled $812m and the group delivered net cash from operating activities of $1.85b, an increase of $947m on the previous year due to increased underlying EBITDA and lower working capital outflows.

The financial results were driven by improved fleet availability and portfolio flexibility, including a solid earnings contribution from a 250MW grid-scale battery at Torrens Island in Adelaide in its first nine months of operation.

AGL also saw more stable market conditions during the year, along with the impact of higher wholesale electricity pricing from prior periods being reflected in pricing outcomes, trading and contract positions.

‘Operational excellence’

Mr Nicks said AGL had experienced a year of operational excellence.

“We continue to see growth as we help our residential and commercial customers electrify and decarbonise [and] are continuing to support our customers through ongoing cost-of-living pressures.”

He said a significant amount of government relief went to AGL’s customers over the year, with more than $1b projected to be delivered by the end of 2025.

Chair retirement

AGL has also announced the retirement of chair Patricia McKenzie after seven years on the board of directors.

Ms McKenzie will step down in February 2025 and be replaced by Miles George.

Mr George has more than 30 years of experience in the energy and infrastructure sectors, with a focus on development, investment and financing in the renewable energy industry worldwide.