Energy giant AGL has announced it will close the Loy Yang A power station in Victoria's Latrobe Valley up to 10 years earlier than planned, targeting the end of 2035 financial year.
AGL notified the stock exchange of the move this morning.
The statement also said the company remained on track to close its Bayswater coal plant in the NSW Hunter Valley between 2030 and 2033.
The Loy Yang A power station is one of Victoria's newest coal-fired power stations and produces 2,210 megawatts (MW) of electricity, about 30 per cent of the state's total.
It was initially slated to close by 2048, but in February 2022, AGL announced it would get out of coal between 2040 and 2045.
The newly disclosed closure date of Loy Yang A in 2035 appears to have brought that schedule even further forward.
In the statement to the stock exchange, AGL's incoming interim chief executive Damien Nicks said the early closure of Loy Yang A represented "a major step forward in Australia's decarbonisation journey".
"The targeted earlier closure of Loy Yang A Power Station will avoid up to 200 million tonnes of greenhouse gases being emitted, compared to the previous Loy Yang A Power Station closure date," he said.
"AGL's future portfolio will be 'demand driven', meaning we will focus on capacity that responds to what our customers need — with the majority of new supply anticipated to be from wind and storage, including batteries."
Federal Environment Minister Tanya Plibersek said AGL's move to close the plant early reflected swift changes in Australia's energy market.
"The reason that this is happening is because the cheapest form of energy in Australia and globally now is renewable energy," she said.
"This move has come as a shock to many people and the first consideration of the state government and the federal government is giving all the support we can to the affected workforce."
Victoria's Energy Minister, Lily D'Ambrosio, said the government would work with AGL to assist the workers affected by the plant's early closure through retraining, reskilling and new work opportunities.
"These are workforces and families that sustained our power industry for decades and decades and I'm absolutely confident that we will continue to have a really bright future for them, their families and their communities," she said.
AGL had planned to split its business into two companies — AGL Australia and Accel Energy — but the proposed split was abandoned in May 2022 after failing to gather enough shareholder support.
The failure of the proposal resulted in AGL chief executive Graeme Hunt and chairman Peter Botten leaving the company.
Green groups welcome early plant closure
Greenpeace Australia Pacific CEO David Ritter welcomed the move, saying Australia was moving "at lightning speed towards renewables".
"This is a change which will make a real difference to the climate," he said.
"When Greenpeace started piling pressure on AGL in early 2021, the company planned to run the filthy and decrepit Loy Yang A out to 2048. The commitment to close it by 2035 has a real, tangible benefit to Australia and the world."
Bronya Lipski from Environment Victoria said AGL should have committed to closing the plant by 2032.
"Today's announcement is a positive step for AGL, but it falls short of the Paris climate targets to keep us below 1.5 degrees of warming — targets that AGL shareholders demanded in an unprecedented vote at last year's AGM," she said.
"AGL needs to explain why it continues to resist the wishes of not only its shareholders but most Australians who want urgent action on climate."
Tracy Anton from Friends of Latrobe Water said the safe rehabilitation of the site of the power station should be AGL's next priority.
"It's great to see AGL shave a decade off its operations, but we need to know what's going to happen when Loy Yang A shuts down," she said.
"Power stations and coal mines leave toxic waste behind; operators must safely rehabilitate the sites or risk leaving our community with the dangerous consequences.
Fears over Loy Yang A job losses
Late last year AGL revealed plans to slash its coal and gas workforce amid growth in the renewables sector.
AGL offered voluntary redundancies at its Victorian, South Australian and New South Wales' plants.
Director of the Victorian Energy Policy Centre, Bruce Mountain, said the closure of Loy Yang A would put almost 600 staff out of work.
"I think those in favour of the transition to clean resources will be celebrating, but I think some of the staff who work at the power station and who don't have the option to transition will be concerned about the implications for them," he said.
Mr Mountain said private shareholders were driving the company towards transitioning from coal-fired power to renewable energy.
"Things have reached a tipping point now, not just here in Victoria but in all states — they've all reached a tipping point where private shareholders are now saying we just have to get out [of coal], shareholders demand it, we need to get on with the transition."
AGL's announcement comes on the same day as two reports which highlighted energy affordability as a significant challenge in Australia's transition away from fossil fuels to renewable power.
The Australian Energy Regulator's (AER) State of the Energy Market report warned high inflation and the rising cost of network investments could add to the pain of high energy prices in the near term.
But the Health of the National Energy Market (NEM) report, released simultaneously, said the best strategy to improve energy affordability was "massive physical investment and purposeful, coordinated policy reform".
Justin Oliver, a board member with the energy regulator, said the early closure of the plant demonstrated the need for reform in the sector.
"That [State of the Energy Market] report talks about the need for urgent physical investment and wide-ranging regulatory reform really to prepare for and avoid this very outcome," he said.
"It really underscores the importance of that message more than anything."
