Australia's largest solar power plant gets the last of its 1,366,380 panels. Credit:AGL AGL's renewable energy portfolio has now expanded to 1,766 MW, contributing 17 per cent of its generation capacity. To support the federal government's commitment to work towards keeping global warming to less than 2 degrees of pre-industrial levels, "companies such as AGL need to take the lead", Mr Vesey said in a statement. "It is important that government policy incentivise investment in lower-emitting technology while at the same time ensuring that older, less efficient and reliable power stations are removed from Australia's energy mix," Mr Vesey said. As part of a "measured process of decarbonisation", AGL said it will not build, finance or buy new coal-fired power plant unless they are equipped with processes that capture and store resulting carbon emissions.

The company also said it will not extend the operating life of any of its existing coal-fired power stations, which include the brown coal-fired Loy Yang plant in Victoria and the Bayswater black coal-fired plant in NSW. AGL, which has drawn criticism for the missteps of its coal seam gas operations in NSW, is now at odds with the Abbott government, which has repeatedly played up the future of coal. The company's new policy also includes a forecast of future carbon pricing – which the government scrapped last July – in all its generation investments. Erwin Jackson, deputy chief executive of The Climate Institute, welcomed AGL's announcement. "We look forward to other power companies disclosing how they're preparing for decarbonisation," Mr Jackson said. "We need our electricity to cut its pollution by half by 2030 and reach net zero carbon pollution by 2050." Cloud over CSG plans, renewables

AGL's new policy leaves unclear what role CSG will play in the company's future, with no reference made to the controversial energy source. In a statement on Thursday, AGL announced a revamp of its organisation but left its upstream gas operations as a standalone unit until an internal review is completed next month. That prompted speculation the company may hive off the troubled division, which faces several probes from agencies in NSW. AGL operates 96 CSG wells at Camden on Sydney's south-west fringe and 4 pilot wells at Gloucester in northern NSW. The future of new renewable energy investments in Australia by AGL and other companies also remains uncertain amid efforts by the Abbott government to cut the Renewable Energy Target from the current goal of supplying 41,000 gigawatt-hours from clean energy sources annually by 2020. The government is holding out for a reduction to 32,000 gWh, while Labor and industry groups have agreed on a cut to 33,500 gWh.

Jack Curtis, First Solar's Asia-Pacific regional manager, said he was hopeful the gap could be closed in the "next week or two". First Solar, which supplied the solar photovoltaic panels to AGL's new plants, has several projects in the 10-50 MW range ready to seek financing if the RET impasse can be resolved. WA is the most promising state, he said. Construction of the Nyngan and Broken Hill plants had resulted in cost reductions "in the order of 20 per cent" as operators learned new skills that may be squandered if the industry froze completely, Mr Curtis said. "It's a crying shame to start that cost-reduction trajectory and then for it to stall," he said. Figures out this week from Bloomberg New Energy Finance showed just one large-scale renewable energy project – worth $6.6 million – secured approval in the past six months amid the policy uncertainty.

Mr Curtis estimates large-scale solar plants will be competitive with fossil-fuel generation within about five years, a view companies such as AGL were beginning to accept. "Now it's really a race to see if they can disrupt themselves or be disrupted by third parties," Mr Curtis said. Ivor Frischknecht, chief executive of the Australian Renewable Energy Agency which contributed $166.7 million to the AGL solar plants, said "wind and solar are already cost-competitive with new-build coal-fired plants". "The challenge is that they don't compete with new-build plants," Mr Frischknecht said, noting existing coal-fired plants have already had their value depreciated. The NSW government also contributed $64.9 million to AGL's two solar plants.