The credit rating agency, Standard & Poors (S&P), has released its annual ratings review and reaffirmed the credit rating for AGL of BBB/stable and has reduced the amount required to be capitalised for the payment stream arising under wind farm PPAs from 100% to 50% effective immediately.
So what does this mean? Well it means that AGL's wind farm developments that have been sold as physical assets but will continued to be operated by AGL will now be treated differently from a balance sheet capitalisation perspective. By reducing the amount that has to be capitalised on AGL's balance sheet, there is greater remaining room within the balance sheet for more renewable energy development.
When combined with the expanded Renewable Energy Target amendments that will enter Parliament soon, it means AGL will be well placed to continue to invest in building new wind farms.