Mike Cannon-Brookes’ solution to the energy crisis

Mr Cannon-Brookes, whose private company Grok Ventures owns 11.28% of AGL, said the problem in the eastern states’ energy market was no longer a shortage of coal, but coal-fired power plants broke down because they were so old. About 25-30% of coal-fired power plants in the national electricity market are offline for various reasons.

“It’s not a shortage. It is very expensive energy and it breaks. So we need to move faster to renewables, which is yes renewables… and transmission. It’s not a particularly complicated equation as to what we need. It’s just a matter of how quickly we can deploy it.

Nuclear makes “no sense”

Mr Cannon-Brookes said that from the perspective of individual consumers, the electrification of homes and buildings was also a key solution in the short and medium term.

Politically, a “capacity” mechanism that is proposed for the national electricity market is worth considering, he said.

“I think it’s an interesting conversation. I think it needs to be explored quite deeply. It would be nice if it was properly balanced, not to maintain the existing expensive resources.

But nuclear power made “no sense” for Australia, being a “super expensive” source of energy and a technology where the country had no advantage, he said.

“It doesn’t make any sense. It won’t help us solve this problem, it takes decades to build, we have no capacity, we have no talent. And guess what? Everyone else is building it elsewhere in the world [found] the costs explode massively.

“We see it in pumped hydro, we see it in concentrated solar thermal, we see it in tidal power: a lot of these power sources are great science experiments. When you actually try to build them at large scale, they become engineering projects one by one.

But he dismissed the idea that increasing natural gas production was part of the answer, calling it “absolutely bullish —” because it wasn’t going to solve the longer-term problem of decarbonization. .

He said there was no need for more gas-fired power, saying Snowy Hydro’s Morrison Government gas-fired power generator Kurri Kurri in New South Wales was becoming “less viable by a month to month”.

Mr Cannon-Brookes, through his private company Grok Ventures, last month acted as a catalyst for AGL Energy’s last-minute decision to scrap a controversial plan to split its business in two, with the intention that maintaining the entire company would allow for faster growth out of coal.

Catherine McCormack, managing director of investment banking at Jardenwho advises Grok, told the Summit that the campaign to reverse the split had made history in Australia in terms of the activism involved.

“The reality was that we were in uncharted territory when it came to the campaign against AGL and the split,” she said. She noted that it was the first time in the history of Australian companies that such a campaign had been conducted in a manner similar to those conducted in the United States with activist investors such as Elliott and Engine No. 1.

“The intention was to acquire a stake and agitate for change. It required a large number of individuals and the engagement of a wide range of stakeholders relevant to the business and who were affected by what was likely to be the outcome of the split,” Ms. McCormack said.

She said it was essential to align the interests of these groups and highlight why the split did not make sense and the opportunity to be seized if the company remained whole, both for reasons of value and ESG.

“I think there was an under appreciation in terms of stakeholders and their understanding of ESG issues and what is the challenge and also the opportunity in terms of decarbonisation and the energy transition in Australia,” said said Ms. McCormack.

Mr Cannon-Brookes told the Summit that AGL should exit coal by 2035 at the latest, and preferably sooner to be aligned with the goals of the Paris Agreement, something several institutional shareholders support it, including HESTA and Martin Currie.

Since the failure of the split, Grok focused on refreshing AGL’s board following the announced departures of chairman Peter Botten, CEO Graeme Hunt and two non-executive directors.

“We’ve had a large number of people contacting us, including some in this room,” he said, pointing to the “more ambitious” leadership needed to see the energy transition through.

“I told everyone I spoke to, this is not your standard job on the ASX board. If you want to get paid a few hundred dollars, drink coffee on top of the building, coming every two months, that’s not the job for you.

“This will be the most challenging yet rewarding board appointment you will make in your life, and likely the most significant transition you will make. This is the largest decarbonization project in the world,” he said.

Emissions of around 40 million tonnes per year of FFAs were larger than those of Sweden, Ireland and New Zealand, he noted. “This is the dirtiest company per billion dollars of market capitalization per megawatt of power generated almost on the planet. It’s horribly disgraceful and we’re going to fix it. And if you’re a director who wants to be a part, great.

Mr Cannon-Brookes also promised that AGL customers would get cheaper energy than if the split had taken place, and that plans would be made for workers during the transition.