• 220 MW open-cycle, dual-fuel gas turbine power station in WA
• 10-year revenue secured through Peak Certified Reserve Capacity credits
• Total project cost estimated at $490 million, funded from AGL's balance sheet

AGL Energy Limited (AGL) has announced that it has reached a Final Investment Decision (FID) to proceed with the Kwinana Gas Power Generation 2 (K2) Project, a 220 MW open-cycle, dual-fuel gas turbine power station to be co-located with the existing Kwinana Swift facility in Western Australia (WA). This follows AGL's previous announcement in October 2025 of the agreement to purchase four new gas turbines from Siemens AB for $185 million, and the Australian Energy Market Operator (AEMO) assigning 176 MW of Peak Certified Reserve Capacity to the project commencing from 1 October 2027. Construction is expected to begin in mid-2026, with the commencement of operations targeted for Q4 of 2027, and an expected asset life of 25 years. A significant portion of revenues have been secured for 10 years at a price of $360,700 per MW (escalating with CPI), through the assigned Peak Certified Reserve Capacity credits, with a targeted post-tax, ungeared, project return of above 8% in line with AGL's previously stated target range of 7-11% for firming projects. The total cost of this project is estimated to be approximately $490 million, inclusive of the gas turbines. AGL has entered into a contract with Clough as the engineering, procurement and construction provider, and the project will be funded using AGL's existing balance sheet capacity.

The Final Investment Decision on the K2 Project, along with AGL's recently signed 15-year PPA with Waddi Wind Farm for 105 MW, bolsters AGL's portfolio in Western Australia and provides further opportunity to continue to scale the company's Perth Energy business and further diversify its earnings outside the National Electricity Market. The K2 Project also marks another important milestone in AGL's strategy to develop new firming capacity to support the build-out of renewables, and further expands the breadth and capacity of the company's flexible asset portfolio.