AGL Energy has rejected an offer of A$250m ($188.85m) from Chow Tai Fook Enterprises and Alinta Energy to acquire the former’s 2GW Liddell Power Station and associated assets in New South Wales, Australia.
Image: The Liddell Power Station pictured in 2006. Photo: courtesy of Webaware/Wikipedia.org.
The Australian energy company’s board said that the offer made in late April is not in its best interests of AGL or that of its shareholders.
Further, AGL said that the offer from the duo significantly undervalues its future cash flows of operating the Liddell coal power plant until 2022 and the subsequent repurposing of the site.
Alinta Energy is a generation, electricity and gas retailing company based in Sydney, and is a subsidiary of Chow Tai Fook Enterprises (CTFE), based in Hong Kong.
Located in the Hunter Region at Lake Liddell near Muswellbrook, the Liddel coal power plant is capable of covering the power consumption needs of about a million average homes in Australia.
Made up of four units of 500MW each, the Liddel power plant, which has been in operations since 1971, generates nearly 8,000GWh of power annually.
AGL, in a statement, said: “In considering the Offer, AGL sought external expert advice on matters relevant to the Offer, including the capital expenditure requirements across all plant components and the reliability and safety profile of the ageing power station.
“Consequently, AGL has reaffirmed its decision to close Liddell in December 2022 and will continue progressing its NSW Generation Plan, which includes repurposing Liddell.”
According to the NSW generation plan, AGL intends to replace the Liddell power plant with a mix of high-efficiency gas peakers, renewables, demand response and battery storage. As part of the plan, AGL will also invest more than $156m to carry out an efficiency upgrade at the 2,640MW Bayswater Power Station.
AGL said that the Australian Energy Market Operator has confirmed that completion of the plan will help in addressing the 1GW capacity shortfall that could result following the closure of the Liddell plant.