Agl Energy Limited · ASX:AGL
Agl Energy — Investor Day (December 2017)
30 slides from Agl Energy's investor day presentation, Dec 13, 2017
Slide 1: AGL Investor Day - ASX & Media Release
AGL Energy Limited Locked Bag 1837 Level 24, 200 George St T: +61 2 9921 2999 ABN: 74 115 061 375 St Leonards NSW 2065 Sydney NSW, 2000 F: +61 2 9921 2552 Australia Australia www.agl.com.au ASX & Media Release AGL Investor Day 13 December 2017 AGL Energy Limited (AGL) will today host its 2017 Invest
Slide 2: Important notice
13/12/2017 13 December 2017 Melbourne The information in this presentation: Statutory Profit and Underlying Profit: Is not an offer or recommendation to purchase or Statutory Profit is prepared in accordance with the subscribe for securities in AGL Energy Limited or to retain Corporations Act 2001 a
Slide 3: Investor Day agenda
13/12/2017 Andy Vesey 1200 - 1245 Lunch and booth interaction 1445 -1530 Customer Markets Update Melissa Reynolds, Chief Customer Officer 1245 - 1330 Strategy and Business Update 1530 - 1615 Capital Allocation through Transition Andy Vesey, Managing Director & CEO Brett Redman, Chief Financial Offic
Slide 4: Delivering safety and beyond; driving gender equality
13/12/2017 Delivering “safety and beyond” Total Injury Frequency Rate Safety comes first because physical and 12 mental wellbeing are fundamental to a Per million hours worked successful workplace 10 We create a supportive environment, 8 where we feel safe to challenge the 6 norm, to speak up, to sa
Slide 5: Refreshed values and strategic imperatives
13/12/2017 We have Safety and Sustainable refreshed beyond thinking AGL’s values to Inclusive Focused on support our of all what matters ongoing transformation Investor Day | 13 December 2017 7 STRATEGIC IMPERATIVES & KEY OBJECTIVES FY18 PRIORITY FOCUS AREAS From To Mass Personalised retailing retai
Slide 6: Preferred option for Liddell
13/12/2017 Preferred option Liddell Power Station closed in 2022 and repurposed with series of Work undertaken at Liddell Power Station to enable AGL to operate investments in new, low emissions generation and upgrades to the station beyond 2022 existing generation Extending Liddell’s life by five y
Slide 7: Levelised cost of energy: Liddell replacement vs extension
13/12/2017 LCOE ($/MWh, RealCost $2017) Levelised of Energy and portfolio contribution Weighted levelised cost of energy (LCOE) for an (by technology)1 equivalent level of energy production is lower for 150 replacement than for lifetime extension Liddell Replacement Liddell Life Extension, Portfolio
Slide 8: NSW project delivery timeline
13/12/2017 NSW Project delivery Bayswater Development undertaken during existing outage schedule Liddell Ongoing generation Delivery Progressive trials & pilots Coopers Gap Project delivery Silverton Delivery Solar offtake (NSW) Project delivery 2017 2018 2019 2020 2021 2022 2023 2024 Delivery Appro
Slide 9: Richard Wrightson - Key market design issues
13/12/2017 Richard Wrightson 1 Key market design issues today National Energy Guarantee Five-minute pricing 2 Crib Point LNG import jetty Bringing on new supply Barker Inlet Power Station, Firming costs 3 Longer-term perspective Grid-scale batteries Distributed energy orchestration Investor Day | 13
Slide 10: Capacity reserve and dispatchability mechanism
13/12/2017 The electricity system is relatively well equipped to meet a dispatchability mechanism 2019 NEM – forecast extreme day capacity reserve 16,000 14,000 Demand/capacity (MW) 12,000 10,000 8,000 6,000 4,000 2,000 0 NSW QLD SA VIC 10 PoE residential estimate 10 PoE business esimate plus minimu
Slide 11: Emissions mechanism and start-up times
13/12/2017 Emissions mechanism will support development of new renewables projects Estimated AGL emissions intensity for consumer market customers 14,000 0.80 Mass-market demand/generation (GWh) Carbon intensity (tonnes CO2-e/MWh) 12,000 0.70 0.60 10,000 0.50 8,000 0.40 6,000 0.30 4,000 0.20 2,000 0
Slide 12: Crib Point LNG import jetty feasibility study
13/12/2017 Feasibility study under way for FY19 decision Why it makes sense Victorian gas market reliant on production from declining Gippsland basin East Coast gas market restricted to four main producers, not all of which are actively selling to other wholesale participants Domestic gas being pric
Slide 13: Barker Inlet Power Station construction
13/12/2017 Construction set to begin early in 2018 calendar year Improved efficiency, reducing AGL total gas usage Dual fuel operations driving down fixed cost of gas haulage and swing Option to running on diesel caps cost of gas for generation Step change in reliability through multiple newer units
Slide 14: Renewables integration and Virtual Power Plant
13/12/2017 Five potential areas of impact across the system; renewables integration most interesting Wind curtailment case study: North Brown Hill, 11 October 2017 Renewables 120 integration 100 Generation output (MW) Capacity 80 Frequency 60 control Approximately 236 MWh of wind generation curtaile
Slide 15: Portfolio well positioned for changes
13/12/2017 Our portfolio is Key energy supply We are making well positioned projects will aid sure we are for changes on portfolio efficiency prepared for the near-term horizon and flexibility longer-term market transition Investor Day | 13 December 2017 27 14
Slide 16: Renewable certificate surrenders
13/12/2017 Renewable generation certificate surrenders by type: Australia-wide 40,000 35,000 30,000 Certificates (thousands) 25,000 20,000 15,000 10,000 5,000 - 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Onwards Large-scale Existing small-scal
Slide 17: Our customers are at the centre of everything we do
13/12/2017 1 Customer Markets strategy 2 Affordability, market context and pricing 3 Customer Experience Transformation progress and targets Investor Day | 13 December 2017 31 Our customers are at the centre of everything we do It’s important that I’m dealing with a bigger If I were to look in the c
Slide 18: Customer strategy and fairness, simplicity, transparency
13/12/2017 Build long-term sustainable value by helping customers through an increasingly complex energy market Personalised, digital-led customer experiences Prosper in a carbon constrained Lean, low-cost operations future Innovative products and services Build customer advocacy A leading, distinct
Slide 19: Defending market share; investing in capability
13/12/2017 Proactive intervention and rewarding loyalty to defend market share Market activity has driven Increased churn spread Customers accessing competitive 32% increase in to rest of market to market offers up year on year acquisitions and retentions 7ppts from 4ppts Only 14% of customers remai
Slide 20: Personalised retailer customer experience
13/12/2017 MY ACCOUNT REGISTRATIONS MOBILE APP DOWNLOADS MY ACCOUNT & APP INTERACTIONS (MONTHLY AVG,) 24% 366k 21% 986k 184k 563k Oct YTD FY17 Oct YTD FY18 Oct YTD FY17 Oct YTD FY18 Oct YTD FY17 Oct YTD FY18 NET PROMOTER SCORE (DIGITAL) DIGITAL BILLING COMPLAINTS PER ‘000 CUSTOMERS 43% 38% Oct YTD F
Slide 21: Home energy management solutions
13/12/2017 Home energy management Solar Smart home solutions Command Virtual and community distributed energy Home batteries Energy plus EV charging Peer-to-peer Solar PV EV charging infrastructure assets Free energy days AGL Rewards Managed demand Base Green Energy plans energy Dual fuel power/carb
Slide 22: Brett Redman
13/12/2017 Brett Redman 1 Current capital expenditure plans 2 Scale of potential investment opportunity to FY20 3 Capital allocation framework and principles Investor Day | 13 December 2017 42 21
Slide 23: Cash flow supports transition to future asset base
13/12/2017 From To Mass Personalised retailing retailing Prosper in a carbon From To constrained Operator of Orchestrator future large assets of large and small assets From To High Lower emissions emissions technology technology Build customer advocacy From To Leveraging Leveraging platforms in plat
Slide 24: Transformation investments to FY19
13/12/2017 Transformation investments to FY19 to drive returns from FY20 onwards Current investment scope ($m, approximate) From To 600 Mass Personalised retailing retailing 500 Prosper in a carbon 400 constrained future 300 200 100 Build customer 0 advocacy FY16 FY17 FY18F FY19F FY20F Customer Expe
Slide 25: Energy supply investments under assessment
13/12/2017 Energy supply investments under assessment subject to meeting required rates of return Current investment scope ($m, approximate) 600 500 Prosper 400 in a carbon constrained 300 future 200 From To 100 High Lower emissions emissions 0 technology technology Build FY16 FY17 FY18F FY19F FY20F
Slide 26: Maintain balance sheet strength consistent with Baa2 rating
13/12/2017 Investment approved or subject to feasibility (approximate, includes capex and equity investments) $590m $475m $468m $444m $450m $390m $200m $195m FY18 approved - FY18 approved - FY19 approved - FY19 approved - FY19 feasibility - FY20 approved - FY20 approved - FY20 feasibility - sustaini
Slide 27: Significant headroom remains; debt maturity profile
13/12/2017 Significant headroom remains, with no major re-financing until hybrid call in June 2019 Adjusted funds from operations/net debt Debt maturity profile ($m) 50% ~$0.5b ~$2.5b ~$2.4b 900 head- head- head- 45% room room room 800 40% 700 35% 600 30% 500 25% Internal target range determined by
Slide 28: Capital allocation principles
13/12/2017 Increased premium Investment in new required as products/markets Prosper risk goes up in a carbon constrained Management of key future uncertainties affecting Disciplined capital allocation decisions Investment in allocation of existing business capital at Exploration of potential thresho
Slide 29: FY18 Underlying Profit after tax guidance
13/12/2017 Positioned for further profit growth in FY18 Wholesale Electricity and Gas improvements to outweigh impact of Underlying Profit after tax reduced Eco Markets expected to be $940 million to Subject to normal trading conditions $1,040 million Subject to any adverse impacts arising from poli
Slide 30: Investment timeline and investor contacts
13/12/2017 Customer Experience Transformation PT3 Program Prosper in a carbon constrained New Energy New Energy New Energy New Energy New Energy future Barker Inlet Power Station NSW Generation Plan Crib Point LNG Import Jetty Silver Springs Storage Expansion Build customer advocacy WA Gas Retail FY