<?xml version="1.0" encoding="ISO-8859-1"?> <docID>331061</docID> <postdate>2024-10-16 13:08:55</postdate> <headline>Origin Energy defends complex switch to renewables, gas</headline> <body><p><img class=" wp-image-331062" src="https://citynews.com.au/wp-content/uploads/2024/10/20231123001868602514-original-1-scaled.jpg" alt="" width="600" height="400" /></p> <caption>Origin Energy's shareholders have been warned of a "messy" transition to renewables. (Joel Carrett/AAP PHOTOS)</caption> <p class="wire-column__preview__author"><span class="kicker-line">By <b>Marion Rae</b> in Canberra</span></p> <p>Origin Energy is pumped on gas being a key part of the energy transition but faces a push by China for lower prices for Australian LNG.</p> <p>"We continue to have really strong medium- to long-term conviction that LNG will play an important role in the energy transition," chair Scott Perkins told shareholders on Wednesday at the annual general meeting in Sydney.</p> <p>He confirmed customer and significant shareholder Sinopec had triggered a price review of its long-term LNG contract, with any change to be effective from January 1, but declined to comment further.</p> <p>Amid ongoing high prices for oil and gas, Mr Perkins defended the sale of a 10 per cent stake in Australia Pacific LNG (ALNG) to Sinopec three years ago for a mere $2 billion.</p> <p>Origin-operated ALNG, which became 25 per cent owned by China's Sinopec, is a major exporter to Asia and the largest producer of gas in the east-coast gas market.</p> <p>"We decided to sell down our stake at a time where the balance sheet had very little room to manoeuvre and we needed to start making some urgent progress on the renewables front," Mr Perkins said.</p> <p>Origin was "very pleased" with ALNG's performance since then, particularly its globally cost-competitive position, he said.</p> <p>Shareholders of Australia's largest energy retailer were also warned of a "messy" transition to renewables that would not involve Origin investment in green hydrogen.</p> <p>"The enormity of the task is stark," Mr Perkins said.</p> <p>Higher earnings from energy markets and gas may be driving higher dividends but transmission and renewable generation projects have been hamstrung by delays in approval and construction, he said.</p> <p>Mr Perkins said the transition needed to accelerate even further to allow the exit of coal and meet emissions targets set by governments, supported by regulatory certainty.</p> <p>Output from the Eraring coal-fired power station hit its highest level in five years after a deal with the NSW government to postpone its exit from the electricity grid.</p> <p>But Origin was "well-placed" for the transition to solar, wind and big batteries, supported by fast-start gas power plants, he said.</p> <p>He also defended the recent decision to walk away from costly green hydrogen and focus on wind, solar and batteries.</p> <p>In contrast, risks for the big battery being built on the Eraring site in the Hunter Valley and 1.5-gigawatt Yanco Delta wind farm - both located next to existing transmission - were more manageable, he told shareholders.</p> <p>"This is no longer a debate about technologies - we need to focus on execution," he said.</p> <p>Chief executive Frank Calabria reaffirmed earnings guidance issued in August for the 2025 financial year, supported by strong gas production and cashflow from Australia Pacific LNG.</p> <p>Origin expected underlying earnings of $1.1 billion to $1.4 billion for the energy markets division and a higher contribution from Octopus Energy in the UK of $100 million-$200 million.</p> <p>ALNG production was forecast at 685-710 petajoules, while LNG trading earnings were expected to be $400 million-$500 million.</p> </body>