Renewable

February 4 (Renewables Now) - Australian utility AGL Energy Ltd (ASX:AGL) said today it will book AUD 2.69 billion (USD 2.05bn/EUR 1.71bn) net in write-downs for 2020, mostly due to long-term wind farm off-take deals for a past period when power prices were significantly higher.

The company said in a bourse filing that some AUD 1.92 billion of the total will come from provisions for onerous contracts that mainly concern legacy power purchase agreements (PPAs) for wind turbine generation signed between 2006 and 2012. Another AUD 1.12 billion of charges relate to increased provisions for environmental restoration, while some AUD 532 million in write-offs come from impairments across its generation fleet and gas assets.

AGL expects “a sustained and material reduction in prices” for wholesale energy and renewable energy certificates in the long term because of policy measures to back construction of new power generation capacity, coupled with lower technology costs and expectations of increased supply.

For wind power in particular, the company said that the off-take deals in the six-year period were signed at prices much higher than current spot and forecast electricity prices, while the spread-out of wind and solar projects has subsequently slashed wholesale prices in the country.

AGL noted the charges will not have a material impact on its underlying net profit for the fiscal year ending June 2021 and reaffirmed its forecast of AUD 500 million-580 million.

(AUD 1.0 = USD 0.763/EUR 0.635)

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