Rewrite with new quotes, context following earnings call

By Christine Chen

SYDNEY, Feb 12 (Reuters) - Australia's top power producer AGL Energy AGL.AX said on Wednesday it was targeting 1.4 gigawatts of grid-scale battery storage projects in the next year, doubling down on its commitment to the green transition.

The announcement comes as AGL seeks to fulfil its promise of exiting coal-fired generation and achieve net zero by 2035, despite a pullback of pro-climate policies in the wake of U.S. President Donald Trump’s election.

In a call to investors after announcing a 6.5% drop in half-year net profit to A$373 million ($234.8 million), Chief Executive Damien Nicks said AGL was committed “driving Australia’s energy transition”.

“We delivered a strong first-half result … driven by the flexibility of our generation fleet and its ability to capture higher realised electricity pricing. This included strong earnings from out battery portfolio,” he said.

“Our continued investment in flexibility and availability is delivering value in the energy transition.”

AGL said its capital expenditure increased by almost two-fold to A$667 million in the six months to December 31, 2024, due to the ongoing construction of the Liddell battery project and increased investment in clean energy such as Firm Power and Terrain Solar.

Nicks said AGL would also be targeting final investment decisions for 1.4 gigawatts of grid-scale battery projects, used to “firm” renewable sources of electricity like wind and solar, over the next 12 to 18 months.

The projects included nearly 900 megawatts across four batteries in the state of New South Wales and a 500-megawatt battery in Queensland.

“Capital is well behind our strategy,” Nicks said, adding that banks wanted to “lean in harder” to green investments, despite recent pushback on environmental, social, and governance $(ESG.NZ)$ initiatives by Trump as well as lawmakers from Australia's main opposition party.

AGL’s earnings came in slightly ahead of analyst expectations of A$307 million and prompted it to narrow guidance for full-year profit to between A$580 million and A$710 million. The previous guidance of A$530 million to A$730 million had a lower midpoint.

The Sydney-headquartered firm also declared an interim dividend of 23 Australian cents per share, below the 26 Australian cents declared last year.

Shares of AGL were up 2.5% off the back of the consensus-beating result, while the ASX index was 0.37% higher.

($1 = 1.5896 Australian dollars)

(Reporting by Christine Chen in Sydney and Sameer Manekar and Rajasik Mukherjee in Bengaluru; Editing by Stephen Coates)

((Sameer.Manekar@thomsonreuters.comRajasik.Mukherjee@thomsonreuters.com))