Agl Energy Limited · ASX:AGL
Agl Energy — Macquarie Securities conference 2017
21 slides from Agl Energy's conference presentation, May 2, 2017
Slide 1: A future of storable renewable energy
A future of storable renewable energy Brett Redman, CFO, AGL Energy Limited
Slide 2: Shaping a sustainable energy future for Australia
Shaping a sustainable energy future for Australia AGL’s new brand campaign makes our position clear 2
Slide 3: Two strategic imperatives drive AGL's agenda
Two strategic imperatives drive AGL’s agenda Supported by three key objectives Strategic imperatives driving our agenda Prosper in a carbon Build customer advocacy constrained future Key objectives for strategy and decision-making From: mass retailing From: operator of large assets From: high emissi
Slide 4: Electricity is headed for a low carbon future
Electricity is headed for a low carbon future Current Australian market conditions and foreseeable technology suggest the following potential scenario 1. Growth in renewables long-term depends upon growth in storage Initial need to firm capacity eventually overtaken by larger need to time shift ener
Slide 5: Structural drivers of electricity price
Structural drivers of electricity price How did we arrive at today’s wholesale market? Rolling 12-month average electricity price NEM thermal generation fleet by age since NEM formation 1.5% 90 80 10.4% 70 28.6% 60 16.0% $/ MWh 50 40 30 20 43.5% 10 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Slide 6: Cost of new development favours renewables
Cost of new development favours renewables A major program of new build baseload thermal development in Australia is unlikely Implied cost of new generation 350 Levelised cost of electricity ($/MWh) 300 Downward trend of pricing in wind and solar likely to continue 250 200 150 100 50 0 Brown coal Bl
Slide 7: But big growth in renewables depends on storage
But big growth in renewables depends on storage Without storage, renewables capacity will always be limited Gas firming example Time-shifted solar example 90,000 90,000 80,000 80,000 70,000 70,000 60,000 60,000 50,000 50,000 MW MW 40,000 40,000 30,000 30,000 20,000 20,000 10,000 10,000 0 0 00:30 02:
Slide 8: Potential development need is colossal
Potential development need is colossal ~$250 billion of renewables and storage investment could be required across the NEM Today 2050 (~15% renewables) (if 100% renewables) National Electricity Market demand 170 TWh 200 TWh Thermal capacity 45 GW Backup only Rooftop 5 GW 15 GW Renewables capacity (2
Slide 9: Storable electricity changes everything
Storable electricity changes everything We need to reimagine the fundamentals of the NEM 1 Storage cost is lead indicator Lower storage cost = more storage = more renewables = less coal Outlook for storage becomes key to predicting long-term change 2 Firm capacity needed Short term, we need to solve
Slide 10: AGL is uniquely placed to lead this transition
AGL is uniquely placed to lead this transition AGL wholesale business will lead the shift to renewables and storage 2022: Liddell closure Flexibility to invest in grid-scale renewables/storage as economics and policy signals develop Orchestrator of complex trading portfolio AGL wholesale revenue 203
Slide 11: On track to deliver FY17 guidance
On track to deliver FY17 guidance Underlying Profit after tax expected to be in the upper half of $720-800m guidance range, subject to normal trading conditions Electricity: impact of rising wholesale prices expected to continue • Forward curve points to sustained improvement • Impact phased over ti
Slide 12: A future of storable renewable energy
A future of storable renewable energy Brett Redman, CFO, AGL Energy Limited
Slide 13: Contact
Contact James Hall General manager, Capital Markets P +61 2 9921 2789 M +61 401 524 645 jbhall@agl.com.au agl.com.au 131 245 Download the app agl.com.au/ community Nicole Rizgalla Investor Relations Manager P +61 2 9921 2691 M +61 400 488 836 nrizgalla@agl.com.au Blathnaid Byrne Group Treasurer face
Slide 14: Disclaimer and important information
Disclaimer and important information The information in this presentation: Is not an offer or recommendation to purchase or subscribe for securities in AGL Energy Limited or to retain any securities currently held. Does not take into account the potential and current individual investment objectives
Slide 15: Speaker notes
A future of storable renewable energy Brett Redman, CFO, AGL Energy Limited Speaker notes for presentation to Macquarie Securities conference, 2 May 2017 [Slide 1] Good afternoon everyone; thank you for joining me for this presentation. Thank you also to Macquarie for putting on an excellent confere
Slide 16: Speaker notes: strategic imperatives and low carbon future
Today’s topic speaks directly to the first strategic imperative, prospering in a carbon-constrained future, and to the third objective, moving to lower emissions. But it should also be relatively apparent that investing in our leadership role in addressing Australia’s energy challenges will also sup
Slide 17: Speaker notes: thermal fleet age and prices
In fact, as the pie chart on the right-hand side of this slide shows, by 2014, more than 75 per cent of thermal generation was past its original design life. The fleet is overdue for renewal. Going back to the chart on the left, in the last few years, price has started to lift. The first wave of inc
Slide 18: Speaker notes: cost of firming renewables
The issue for renewables is the cost of firming their output which using gas peaking increases the like-for-like cost to about $100 for wind and $125 for solar. Using gas outright for baseload presents a different cost picture. In Australia, gas prices have risen to 15 dollars per gigajoule and more
Slide 19: Speaker notes: time shifting and 2050 scenario
You can't satisfy more demand without time shifting renewable energy into other parts of the day – as illustrated in the chart on the right-hand side, which is modelled using assumptions from a real model we have built for a potential grid-scale battery. When the sun doesn't shine and the wind doesn
Slide 20: Speaker notes: storage investment needed
You could argue for more storage needed to cover peak days and multiple days for security. And you could argue for less storage as you start to finesse the matching of demand and supply. But it gives an order of magnitude. We assumed a longer-term storage cost of 300,000 dollars per megawatt hour. T
Slide 21: Speaker notes: closing remarks
[Slide 10] So, let me close with a simple visual of what the future might hold for AGL. I have set out today a scenario that paced the closure of coal matched by the building of storable renewable energy and how the bow wave of that change will be all about the cost of storage. AGL is uniquely place