The Hong Kong-owned energy retailer Alinta Energy says it has made good on a much-telegraphed offer for AGL Energy’s ageing Liddell coal plant after achieving board sign-off at the weekend.
AGL confirmed on Monday it had received a non-binding and “highly conditional” $250m cash offer from Alinta and its Hong Kong-based owner, Chow Tai Fook Enterprises, for the power station and site.
In a statement AGL said it was assessing the proposal but could give no assurance that a deal would result. Previous reports had speculated an offer might value Liddell at around $1bn.
An Alinta spokesman confirmed on Monday morning: “Alinta Energy has fulfilled our commitment and submitted a nonbinding offer for the Liddell power station to AGL, which we believe represents a compelling commercial proposition for AGL shareholders.
“We won’t be in a position to comment further until AGL has considered the offer and responded.”
The Turnbull government has applied extraordinary public pressure to AGL to prolong the life of the New South Wales plant beyond 2022, when it is scheduled to close.
But AGL has thus far refused to budge on its plan to close the facility and replace it with a mix of renewables, batteries, gas power, upgraded coal power and demand response.
“AGL has not sought to sell the Liddell power station as it requires Liddell to provide energy to its customers until 2022 and for repurposing as part of its NSW generation plan post 2022,” AGL said in a statement to the Australian Stock Exchange.
The prime minister, Malcolm Turnbull, and the energy minister, Josh Frydenberg, have been directly involved in encouraging Alinta to bring forward a concrete offer for Liddell with a view to extending the operating life of the plant for five to seven years.
“It’s important that AGL gives proper consideration to the offer, given Alinta’s stated intention to continue operating the plant beyond 2022,” Frydenberg said.
“The government is concerned about the impact on the reliability and affordability of our energy system should Liddell close in 2022.”
Frydenberg said while AGL’s investments in a new 250MW gas peaking plant and 100MW upgrade of Bayswater were welcome, they weren’t enough to fill the gap left by the closure of Liddell.
The government wants Liddell to keep downward pressure on power prices until the expanded Snowy Hydro project comes online.
AGL has said thus far it has no interest in selling Liddell because some of its transition plan relies on access to the site.
Alinta has said it is interested in a quick acquisition, and has tried to sweeten its offer by signalling it would be happy to sell power back to AGL to allow it to proceed with its own transition plans.
Alinta is interested in expanding its market share in NSW.
While both the competition watchdog and the Australian Energy Market Operator have argued that more competition in the NSW energy market would be beneficial to consumers, the federal government has no power to force AGL to do anything with the asset it acquired from the state government in 2014.
This article was originally written for The Guardian and can be read here.