Unveiling the plan at its Investor Day, ‘New AGL' will become what it describes as Australia's largest multi-product energy retailer, while ‘PrimeCo' will focus on electricity generation. 

"The accelerating market forces of customer, community are driving the imperatives to create this new path and separate AGL into two distinct organisations," AGL CEO Brett Redman said.

"The proposed structural separation would give each business the freedom, focus and clarity to execute their own respective strategies and growth agendas, while playing and equally important, but different, role in Australia's energy transition." 

Redman touted the benefits of splitting the company in half, saying New AGL would be customer focused, and encompass AGL's gas firming plants, its hydropower portfolio, virtual power plants, gas trading, internet and mobile services, and the proposed Crib Point LNG import terminal, which now looks like it is off the table after the Victorian government suggested unacceptable environmental effects. 

The company said New AGL would have net-zero Scope 1 and 2 emissions from day one, using accredited carbon offsets and would continue its earlier promise of offering carbon neutral options for all customer products by June 30 2021.

New AGL would have 2.1 gigawatts of electricity supply in its portfolio and around 154 petajoules of gas volumes and would also have access to Powering Australia Renewables platform - a boon for the company following its proposed acquisition of Tilt Renewables. 

Meanwhile, PrimeCo would feature all of the company's coal-fired power stations, its long-life wind portfolio, its battery, hydrogen and waste-to-energy developments and the Torrens gas supply. It would have a nameplate thermal capacity of 8GW and a 1.6GW development pipeline. 

"PrimeCo's assets are required for network stability and capacity for many years to come, while supporting reliability, affordability and the livelihoods of our people and the community in which they work," Redman said. 

He reiterated AGL's previous closure dates for its coal-fired power stations, starting with Liddell in 2023, Bayswater in 2035 and Loy Yang in 2048, while at the same time developing its multiple battery projects at the sites of the stations via New AGL. 

AGL acquired Loy Yang in 2012 for A$448 million, with the move to shunt it over to PrimeCo criticised by the Australasian Centre for Corporate Responsibility, saying it was shirking its responsibilities to close it down in a timely manner.

"Just seven years after it acquired the last of its coal-fired power stations, AGL is walking away from managing their closure, by spinning them off into PrimeCo, which any responsible investor will surely avoid," ACCR director Dan Gocher said. 

"AGL has chosen the easy way out, leaving the hard decisions around coal closure to whoever is chosen to run PrimeCo."

ACCR has peppered AGL with shareholder resolutions in recent years demanding it bring forward the closure dates of its coal-fired power stations, given the company is responsible for 8% Australia's annual emissions. 

"Nothing in this announcement addresses the need to bring forward the closure of Bayswater and Loy Yang in a transition that protects the health of Hunter Valley and Latrobe Valley communities, respectively, as well as supporting the workers," Gocher said. 

Greenpeace Australia Pacific senior coal campaigner Glenn Walker said the demerger was an attempt to ringfence the AGL brand from criticism of its poor environmental performance.

"AGL is trying to dodge its responsibility to manage the shutdown and rehabilitation of its ageing coal burning power stations by hiding its coal assets in a separate business," he said.

"This demerger should be seen for what it is - an attempt by a company worried about its brand to hide its reputation as the nation's biggest polluter."

The economic and environmental viability of Australia's coal-fired power stations have been put in the spotlight once again after EnergyAustralia announced it would close Victoria's Yallourn coal-fired power station in 2028 - four years earlier than expected - and replace it with a 350MW battery. 

 AGL shares were up 1.6% trading at A$10.33. 

*Updated with additional comment from Greenpeace Australia Pacific senior coal campaigner Glenn Walker*