Disclaimer: All information on this section is of a general nature.
Before making any investment decision, you should consult your adviser.
AGL Energy (ASX: AGL) – could benefit from Hazelwood closure
- Press reports indicate that the Victoria’s 1.6GW Hazelwood brown coal-fired electricity plant is scheduled to permanently close in March next year.
- The plant supplies 22% of the coal-fired generation capacity in Victoria and 6% of the total coal-fired capacity in VIC, QLD, and NSW combined.
- Some analysts believe the closure could drive up wholesale electricity prices by 15% in Vic and 10% in NSW.
- AGL Energy, which owns the rival Loy Lang A power station (2.3GW) in Victoria could benefit from this higher price environment.
- AGL is currently trading at A$19.28ps, some 3% below IRESS consensus target price of A$19.95, and offers a dividend yield of 4.4% 100% franked). We believe that a total return of ~7%, with the potential for an earnings uplift, could attract increased investor interest.