Mr Vesey said customers expect power companies to supply energy sustainably, and AGL believed long term the company’s “ability to emit carbon into the atmosphere is going to be constrained”. It had set up the $3 billion Powering Australian Renewables Fund rather than invest in new coal plant.
But he said problem for coal power plants was that their economics had not improved in 25 years, and they repaid their capital over 30 or 40 years.
In contrast, the price of wind turbines had fallen 40 per cent and the price off solar power had fallen 80 per cent.
Even with storage backup renewables were becoming more competitive than coal plant.
The reason is the wind turbines, solar panels and batteries are manufactured, and their prices fall as more volume is manufactured, whereas each coal power plant is a bespoke build.
“How many are you going to make? They’re bespoke. Prices of large scale generation plants haven’t moved in 25 years,” Mr Vesey told Energy Week 2017 in Melbourne.
But for solar and wind, “The more you make the cheaper it gets.”