SYDNEY - Australia's top electricity and gas retailer Origin Energy said its green transition was proving slower and more costly than expected, while flagging its coal plant could run beyond 2027.

The company reported a 26% jump in full-year profit on Thursday from strong returns on its liquefied natural gas business. But CEO Frank Calabria said bringing on enough renewable energy to retire fossil fuels was a challenge.

“It is an enormous undertaking that's requiring a large amount of enabling infrastructure, including transmission, to be built,” Calabria told Reuters.

“The scale of it means that that's taking longer to get that in place. And also, it's certainly becoming more expensive along the way.”

The Sydney-based company has been working to scale up investments in energy storage to prepare for the closure of its Eraring coal plant, the largest in Australia, in two years’ time. It is targeting 4-5 gigawatts of renewables and storage by 2030, with 1.7 GW of battery projects underway, and on Thursday also reaffirmed its pledge for net zero emissions by 2050.

Origin, which reported a rise in annual underlying profit to A$1.49-billion from $1.18-billion for the year ended June 30, said that timetable could now be reassessed.

"Eraring is probably making a stronger contribution than we would have forecast three or four years ago, as the prices are sort of holding up. And really the renewable transition has slowed a bit,” CFO Tony Lucas said on an earnings call.

Calabria said Origin needed adequate energy and enough burning capacity to retire coal, adding that Eraring could continue to run beyond 2027.

"We don't want shocks to affordability, and we also want to achieve the emissions reduction," he said.

The 2880-megawatt generator in Australia’s east was originally due to close in 2025 before the New South Wales state government agreed in May last year to postpone the deadline, but it must close by 2029 at the latest.

"It's probably value accretive for Origin," said Regal Funds Senior Energy analyst James Hood.

"If you're still making money from your coal-fired power station and you can handle the intraday spread, then you push out time periods where you need to remediate land and change the use of that site."

Hood added the company could get a boost from its 23% stake in Octopus Energy, which is considering spinning off its Kraken software platform in a deal that British media say could be worth over $13-billion.

“A separation of Kraken and Octopus is important for us to achieve this year,” Calabria said, but added that it was “too early” to discuss a possible IPO.

Underlying earnings before interest, tax, depreciation and amortisation were A$3.41-billion, down 3% as higher integrated gas earnings from LNG trading helped partially offset lower earnings in energy markets and Octopus Energy.

The company declared a final dividend of 30 Australian cents a share, and shares closed at a 10-year high at A$12.59.