The AGL Energy Limited (ASX: AGL) share price is edging higher today after Australia’s largest electricity provider unveiled its plans for a “concentrated solar thermal” project.
At the time of writing, the AGL share price is flat at $9.08 a piece.
Who moved my cheese?
Dr. Spencer Johnson’s wildly popular book “Who Moved My Cheese” describes an important aspect of business. If you haven’t read the book – it’s a short story of two mice, Sniff and Scurry; and two little people, Hem and Haw, that are faced with the dilemma of dwindling cheese reserves.
Sniff and Scurry decided to take a chance and begin looking for the next delectable block of cheese before their current one ran out. Meanwhile, Hem and Haw basked in the delight of their current cheese block, ignoring the vanishing supply – until one day it was gone.
Point being, it often pays to move out of one’s comfort zone voluntarily, rather than the decision being made for you at an inconvenient time. Which makes for quite an interesting overlay when considering Australia’s shift to renewables.
AGL’s latest news might be the energy company’s attempt at searching for the new block of metaphorical cheese. According to The Sydney Morning Herald, AGL is planning to replace the Liddell coal-powered thermal power station with a solar-and-hydro energy facility once the plant shuts down in 2023.
This development is in addition to AGL’s work with RayGen on a “concentrated solar thermal” project in Carwarp, Victoria. Construction has already commenced on this renewable endeavour – capable of delivering 4 megawatts of solar power and 50 megawatt-hours of storage.
Interestingly, the low carbon replacement for Liddell is expected to be encompassed by AGL’s PrimeCo business – not ‘New AGL’. Speaking in an interview with The Australian Financial Review, interim chief executive Graeme Hunt said:
For things that are on the land where PrimeCo will continue to have thermal generation for some time to come yet it is most likely that PrimeCo will be the participant in the project.
In March, the company’s proposed ‘New AGL’ was described as ‘the business with a clear pathway to full carbon neutrality’.
ASX utilities and AGL
It’s been a challenging 12 months for ASX-listed utilities, including AGL Energy. The S&P/ASX 200 Utilities [XUJ] (ASX: XUJ) index has sunk roughly 22% during the past year. Similarly, the AGL share price has eroded by 48%.
Both the utility sector and AGL have substantially underperformed the S&P/ASX 200 Index (ASX: XJO). Perhaps the cheese was moved on the whole sector.