AGL Energy Accelerates 1.4 GW Battery Projects Amid Strong FY25 Half-Year Results

Strong Financial Performance Amid Energy Transition

AGL Energy Limited has delivered a robust financial performance for the first half of FY25, reporting an underlying EBITDA of $1.068 billion and an underlying net profit after tax (NPAT) of $373 million. These results align with company expectations and reflect AGL's strategic focus on leveraging flexibility within its generation portfolio, particularly through its growing battery assets.

Despite a 7% decline in underlying NPAT compared to the prior corresponding period, largely due to increased depreciation and amortisation from ongoing investments, AGL maintained strong operational cash flow and declared a fully franked interim dividend of 23 cents per share. The company also narrowed its FY25 guidance ranges, signaling confidence in its trajectory while acknowledging anticipated second-half moderation due to seasonal demand and competitive pressures.

Accelerating Battery and Renewable Energy Investments

A key highlight of AGL's half-year results is its aggressive push into grid-scale battery projects. The company is targeting Final Investment Decisions (FIDs) for 1.4 gigawatts of battery capacity over the next 12 to 18 months, including nearly 900 megawatts across four batteries in New South Wales and a 500-megawatt battery in Queensland. These projects are expected to deliver post-tax returns between 7% and 11% and will be funded primarily through AGL's balance sheet.

Construction of the 500 MW Liddell Battery is progressing on schedule, with approximately 30% completion and phased commissioning expected to begin in early 2026. This grid-forming battery, with a 20-year asset life, represents a cornerstone of AGL's strategy to enhance grid stability and support the transition to a lower emissions future.

Navigating Market Challenges and Customer Dynamics

While AGL's integrated energy business benefited from increased volatility and flexibility in wholesale markets, the consumer segment experienced margin compression due to lower pricing and intensified competition. The company attributed this to deliberate pricing strategies aimed at customer affordability and a shift toward lower-priced products.

Nevertheless, AGL expanded its customer base by 46,000 services across energy, telecommunications, and Netflix offerings, maintaining strong customer satisfaction scores and a positive net promoter score. The Retail Transformation Program is already delivering operational efficiencies and enhanced customer experiences, with a targeted $70-90 million in annual pre-tax savings by FY29.

Strategic Outlook and Market Positioning

AGL's development pipeline has grown to 7 gigawatts, bolstered by acquisitions such as Firm Power and Terrain Solar, which added substantial firming and renewable capacity options. The company remains focused on executing projects with the highest portfolio value and adapting its pipeline dynamically based on economic viability.

With a diversified and flexible generation portfolio, including coal, gas, hydro, wind, solar, and batteries, AGL is well-positioned to capture value from increasing market volatility and the evolving energy landscape. The company also highlighted its strong liquidity position, with no major refinancing required until FY26 and a stable investment-grade credit rating.

Looking ahead, AGL anticipates continued collaboration with industry and government to ensure regulatory stability, which is critical for sustaining investment momentum in Australia's energy transition.