AGL announced its full-year financial earnings on Wednesday, revealing a 21 per cent drop to $640 million underlying net profit after tax compared to the previous year's $812 million.
The company posted a statutory loss of $98 million, which was attributed to an increase in onerous contracts and retail transformation costs.
Chief executive Damien Nicks said the profit plunge was expected due to lower wholesale electricity prices.
It was also a result of the company deciding not to "fully pass through" the year-on-year cost increases to customers to help with affordability.
Still, he said it's a "strong" financial result as AGL turns its focus to renewable energy resources.
The business aims to offset coal and gas losses, particularly from outages and contract expirations, by instead transitioning to renewables, with a $900 million investment in batteries.
AGL will add 12 gigawatts of renewable energy by the end of 2035 and bolster its interim target from five to six gigawatts by 2030, including half being grid-scale batteries.
The company already has 300 megawatts of batteries and 1000 under construction, with a plan for 900 more megawatts of grid-scale battery projects.
It is also aiming to move to 60 per cent emission reductions following the closure of the coal plants, with Bayswater in NSW to shut in 2033 and Loy Yang A in Victoria by 2035.
Mr Nicks confirmed AGL will be able to completely offset losses from coal and gas through batteries by 2028.
"As we build these batteries and have them in the market, they will more than offset those contractions of both the coal and gas," he said.
The next financial year is forecast to see an underlying net profit after tax between $500 and $700 million, due to higher operating costs as the company moves towards renewables.
Gas prices are also expected to revert to historical levels as commodity pricing eases following the start of the Ukraine-Russia war in 2022, further impacting earnings.
But the profits are expected to be improved with better coal plant availability and the introduction of renewables, including the Liddell battery which will begin operations from early 2026.
The business will pay a $0.25 final dividend per share, down from $0.35 last year.
AGL shares tumbled 12 per cent on Wednesday after trading opened, sitting at $8.92.
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