Agl Energy Limited · ASX:AGL
Agl Energy — Investor Day (June 2023)
55 slides from Agl Energy's investor day presentation, Jun 16, 2023
Slide 1: ASX & Media Release: Investor Day, FY23 and FY24 guidance, dividend policy
Locked Bag 3013 Level 24, 200 George St T: +61 2 9921 2999 AGL Energy Limited Australia Square NSW 1215 Sydney NSW 2000 F: +61 2 9921 2552 ABN: 74 115 061 375 Australia Australia www.agl.com.au ASX & Media Release AGL Investor Day, FY23 and FY24 earnings guidance, and updated dividend policy 16 June
Slide 2: Update to dividend policy
Update to dividend policy AGL has today updated its dividend policy, effective from the FY24 interim dividend. AGL will target a payout ratio of 50 to 75 percent of Underlying Profit after tax, which will be franked to the extent possible. This replaces AGL’s current dividend policy, announced in Se
Slide 3: About AGL Energy
About AGL Energy At AGL, we believe energy makes life better and are passionate about powering the way Australians live, work and move. Proudly Australian for more than 185 years, AGL supplies around 4.3 million[1] energy and telecommunications customer services. We’re committed to becoming a leadin
Slide 4: AGL Investor Day June 2023
AGL Investor Day 16 June 2023 a NZ = agl Join the change
Slide 5: Important notice and disclaimer
• The material in this presentation is general information about AGL’s activities as at the date of this presentation. It is provided in summary form and does not purport to be complete. It should be read in conjunction with AGL’s periodic reporting and other announcements lodged with the Australian
Slide 6: Agenda
10:30 Strategic overview and Business update 12:45 Funding the transition and capital allocation Damien Nicks, Managing Director & CEO principles Gary Brown, Chief Financial Officer 11:00 Connecting our customers to a sustainable future 13:15 Question and Answer panel session Jo Egan, Chief Customer
Slide 7: Strategic Overview and Business Update
Strategic Overview and Business Update Damien Nicks
Slide 8: Our purpose - Powering Australian Life
Our purpose - Powering Australian Life Connecting our customers Transitioning our to a sustainable future energy portfolio Helping our customers Ambition to add 12 GW of new generation decarbonise the way they and firming by the end of 2035, while live, move and work running safely and delivering op
Slide 9: Majority of earnings uplift expected in Integrated Energy
Majority of earnings uplift expected to be captured in Integrated Energy, supported by our low-cost generation portfolio CUSTOMER MARKETS INTEGRATED ENERGY Customer Load Generation Volumes* 39.0 TWh ~2.5 TWh via 37.0 TWh Consumer (Retail) solar rooftop Renewables ELECTRICITY PORTFFOLIO Pricing typic
Slide 10: Electrification services and Energy Hubs to create future value
Electrification services and Energy Hubs to create incremental future value CUSTOMER MARKETS INTEGRATED ENERGY Expected future state of our customer business Targeted future state of our energy portfolio Consumer (Retail) Renewables ELECTRICITY PORTFFOLIO Electrification expected to drive a >100% in
Slide 11: Shift to lower carbon earnings mix
Shift to lower carbon earnings* mix Targeting a progressive shift away from earnings largely derived (Estimated future earnings mix) from thermal assets to a low-carbon earnings mix • Bayswater targeted for closure between 2030 and 2033 • Targeted closure of Loy Yang A by end of 2035 • “Future state
Slide 12: AGL's Decarbonisation Roadmap
AGL’s DECARBONISATION ROADMAP By end of 2025 Target by end of 2030 Target by end of FY35 ~5 GW 2030-2033 renewable generation, firming and DER Bayswater Power Station closure Liddell Power Station safely closed capacity targeted to be in place in April 2023 after over 50 years of operation; By end F
Slide 13: Plans recognise growing demand for accelerated transition from coal
Our plans recognise growing demand for We will continue working with all stakeholders, striving to ensure the an accelerated transition from coal from way we transition helps deliver a balanced and responsible outcome many parts of the community as it: Supports the delivery of the Federal …with all
Slide 14: Powering Australian Life
Powering Australian Life Customer NPS Digital only Speed to market Green revenue Cumulative customer leadership customers improved by expanded1 assets installed +20 85%+ 300 MW2 (Strategic NPS) 60% by 80% Increase in green behind the meter revenue from FY191 Operational New renewable and firming Tot
Slide 15: Why invest in AGL
Strong positive momentum in earnings and cashflow outlook underscored by our low-cost baseload generation position, flexible portfolio and development pipeline Leading energy retailer, large quality customer base to underpin investment in transition and capture new value from electrification WHY INV
Slide 16: FY23 guidance range narrowed; FY24 guidance
FY23 guidance range narrowed: • Underlying EBITDA between $1,330 and $1,375 million (previously between $1,250 and $1,375 million) • Underlying NPAT between $255 and $285 million (previously between $200 and $280 million) FY23 guidance reflects an improved second half, in line with expectations, wit
Slide 17: Strong foundation to deliver
Poised to navigate Portfolio transition accelerating; Refreshed capital allocation FY23 and FY24 guidance; and grow in a complex energy Continued focus on principles to fund transition Updated dividend policy retailing market legacy assets • Relentless focus on strengthening • Development pipeline i
Slide 18: Connecting Our Customers to a Sustainable Future
Connecting Our Customers to a Sustainable Future Jo Egan
Slide 19: Strengthening the core and capturing new value pools
Consumer Net Operating Cost ($m)1 480 415 Add Graphic Add Graphic FY19 FY22 Post Transformation STRENGTHENING THE CORE AND CAPTURING NEW AND GROWING CREATING EFFICIENCY THROUGH SUPPORTING OUR CUSTOMERS VALUE POOLS RETAIL TRANSFORMATION > Strong results delivered during period of > Electricity Gross
Slide 20: Our competitive strengths
OUR COMPETITIVE STRENGTHS Scale and stability to capture growth and 4.3 13.9% underpin the transition investment million customer churn rate, services 5.6 ppts below rest of market Deep customer and energy expertise to be a market maker in new energy solutions ~25 TWh ~72 PJ In Electricity in Gas de
Slide 21: Current and emerging market trends
Current and emerging market trends Uncertain economic Digitisation Electrification environment and technology and decarbonisation Playing our role Debt and affordability Retail Transformation Sustainable outcomes in supporting a • providing targeted payment matching, • investing in a future ready te
Slide 22: Significant growth projected in electricity consumption
Significant growth projected in electricity Electrification expected to be driven by… consumption (TWh) within the NEM 1 • Fuel switching will drive electrification in how we live, move and work +103% 405 • Five assets within the home, that make up 70%+2 of a home’s future energy load; solar, batter
Slide 23: Live Move Work: electrification and decarbonisation products
LIVE MOVE WORK A suite of innovative electrification and decarbonisation products and services Make it easy to Drive savings and Enhance electrify efficiency sustainability RETAIL Digitisation and Agile operating DER TRANSFORMATION automation model orchestration AGL Investor Day | 16 June 2023 20
Slide 24: Electrification services and new commercial models
ELECTRIFICATION SERVICES NEW COMMERCIAL MODELS VALUE CREATED Shift from commodity Electrification creates a much deeper supply to EaaS relationship with the customer Solar Batteries EV charging LIVE Increased electricity Hot water Heating and cooling consumption MOVE Increased tenure and EV’s Chargi
Slide 25: 'Electrify Now' home electrification solution centre
‘Electrify Now’ – AGL's home electrification solution centre LIVE An Australian-first program that • Simplifies access to electrification products and services 3.5k1 ~$100m1 28 Kt1 • Utilises smart meter data to understand customer usage customers reached worth of hardware in potential CO2 savings •
Slide 26: E-mobility partnership with bp pulse
Innovative e-mobility partnership focused on charging at home and on the go MOVE An exclusive partnership with bp pulse aimed at: • Accelerating Australia’s transition to electric vehicles 2.8m 1,400+ 600 • Developing offers and promotions that make charging simple EVs on the road by bp Branded Serv
Slide 27: Case Study: Kerarbury Almond Farm microgrid
Case Study: Design, build, own, operate and maintain a microgrid for the Kerarbury Almond Farm WORK Energy-as-a-Service offering: • Own and operate an on-site microgrid 6.0 MWp 10.6 GWh1 6.9 Kt2 4.3 MWh • Providing fixed price, reliable electricity with high renewable Solar Capacity Energy Supply CO
Slide 28: Retail Transformation already delivering benefits
Our Retail Transformation will continue to deliver efficiencies, Consumer net operating cost ($m)1 decentralisation, and effortless customer experiences -65 480 415 • Aggressive pursuit to • Agility to respond to • Flexible capability to support simplify and streamline evolving market real-time orch
Slide 29: Supporting customers facing financial hardship
Direct financial Proactive customer Innovative solar Improving energy Specialised frontline support engagement fund literacy and accessibility agent Training • Targeted payment • Advanced analytics • Launching new program • Simplified • Empowering agents to matching and debt relief identify and enab
Slide 30: Connecting Our Customers to a Sustainable Future
Connecting Our Customers to a Sustainable Future Jo Egan
Slide 31: Shaping the energy portfolio of tomorrow
Shaping the energy portfolio of tomorrow Markus Brokhof Torrens Island grid scale battery, South Australia 28 (Anticipated to be operational in Q1 FY24)
Slide 32: Development pipeline, energy hubs, decommissioning and fleet availability
SUBSTANTIAL INCREASE IN INTEGRATED INDUSTRIAL DECOMMISSIONING AND ASSET FLEET AVAILABILITY DEVELOPMENT PIPELINE ENERGY HUBS ADVANCED REHABILITATION ON TRACK AND RELIABILITY IMPROVED Equivalent Availability Factor (%) Raw Design materials 76.6% Production, 74.5% remanufacturing 73.7% Recycling CIRCUL
Slide 33: Meeting the 12 GW ambition by end of 2035
AGL aims to meet its 5 GW 2030 target by… AGL aims to meet its 12 GW ambition by the end of 2035 by… Progressing onshore wind, battery and PHES projects Building mid-long term optionality and developing options for proven asset classes ~1.9 GW ~2.2 GW Expand peaking Renewables and Renewables and dev
Slide 34: 2030 / 2035 portfolio mix build up
2030 / 2035 portfolio mix build up (GW - nameplate) Key points: Indicative build-out by asset types • AGL will seek the most efficient way of sourcing the Variable renewable 1.6 required energy and firming energy projects Firming projects • AGL needs both self-development and external project 2.0 op
Slide 35: Development pipeline project map
Queensland Battery 500 MW Legend Muswellbrook Pumped Hydro 250- 400 MW / 8-hour duration Bowmans Creek Wind Farm Existing development pipeline Targeted FID FY26 350-450 MW Liddell Battery New addition to pipeline* Broken Hill Battery 500 MW / 2-hour duration | 50 MW | Expected Targeted FID FY24 NSW
Slide 36: Liddell decommissioning, Cairn Curran, Camden last gas
Liddell decommissioning Liddell Ash Dam – 140ha north and • Preparation of plant to 'cold, dark, dry’. south cells rehabilitation works • 202 scopes of work, 12,500 hours. • FY23: Mobilisation, polymer dust suppression, preliminary works. • Decoupling for high voltage separation of Liddell / Bayswat
Slide 37: AGL decommissioning and rehabilitation plan
AGL decommissioning and rehabilitation plan FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 Torrens A Plan Decommission Demolish Rehabilitation ` Energy Hub / Operations Power Station Torrens B Plan Decommission Demolish Rehabilitation Energy Hub / Power Station Operations Liddell Power Station and Hun
Slide 38: Energy Hub value: firmed renewable electricity
EXPECTED CAPITAL VALUE REQUIREMENT • Firmed renewable electricity to meet Hub participants’ needs Firmed Med. – Renewable • Strong customer demand de-risks and accelerates project development High • Leverages high quality renewable projects and existing electricity infrastructure High Electricity at
Slide 39: Hunter Hub and Torrens Hub developments
Under planning and development HUNTER HUB Industrial Energy Hub • Planning approval and ARENA funding for developments / concepts Liddell battery • MoU with SLB to explore early commercialisation of alternative chemistry battery storage technology with multiple hub TORRENS HUB Hunter Hub locations,
Slide 40: Current Operations
Current Operations Markus Brokhof
Slide 41: Baseload to flexible operations
BASELOAD TO FLEXIBLE OPERATIONS • Focus on reliable flexible low load operations Equivalent Availability Factor (%) – Loy Yang A flexibility between min and max generation is ~ 1,000 MW 76.6% – Bayswater flexibility between min and max generation ~ 1,900 MW 73.7% 74.5% • Accessing global expertise t
Slide 42: Gas as a transition fuel and key input into electricity pricing
Gas as a transition fuel Gas as key input into electricity pricing The projections for the electrification of gas demand are Short-term gas prices have been a key driver of electricity pricing varied, but gas-powered generation has a key transition role outcomes, reflecting the marginal nature of ga
Slide 43: Gas portfolio well balanced to FY27
AGL’s gas portfolio is well balanced to FY27 Strategic supply options • Active engagement and support of smaller producers to underwrite 140 new gas supplies • Partnerships with third-party LNG import projects as a key source of 120 flexible and scalable gas supply Maintaining AGL’s scaled presence
Slide 44: Shaping the energy portfolio of tomorrow
Shaping the energy portfolio of tomorrow Markus Brokhof Torrens Island grid scale battery, South Australia 41 (Anticipated to be operational in Q1 FY24)
Slide 45: Funding the transition and capital allocation principles
Funding the transition and capital allocation principles Gary Brown Eildon Power Station, Victoria
Slide 46: Replacement of thermal generation earnings
Replacement of thermal Aim to deploy $8-10bn - $3-4bn Strengthen core business, Disciplined approach generation earnings by FY30, and $5-6bn by FY36 unlock future value pools to Capital Allocation AGL expects to retain strong AGL’s targeted portfolio Commitment to an Refreshed capital allocation ear
Slide 47: Growth from customer and new build to replace thermal earnings
Growth from customer and Shift to lower carbon earnings* mix Lower risk returns from new build targeted to materially (Estimated future earnings mix) future generation portfolio replace thermal earnings • AGL aims to materially replace current • The current generation earnings mix earnings from ther
Slide 48: Expected commitment to the 12 GW ambition by asset type
Expected commitment to the 12 GW ambition ~5.5 GW of the 12 GW ~6.5 GW expected to be by asset type (GW) ambition expected to procured via joint ventures, be funded on AGL’s partnerships, third party Projects to be delivered prior to FY30-FY33 closure balance sheet offtakes and DER of Bayswater and
Slide 49: Estimated timing of capital outlay for ~5.5 GW
Estimated timing of AGL’s AGL aims to derive incremental returns utilising existing capital outlay for the ~5.5 GW ($bn) infrastructure, along with strong capabilities in development, procurement, management, trading and Majority of capital spend expected in the ongoing servicing of energy projects
Slide 50: Partial refinancing of bank facilities and US private placement
Partial refinancing of existing bank facilities and Debt maturity profile post completion of successful issuance of long-term debt in US private bank debt refinancing and USPP ($Am)1 placement market (“Notes”) 1,100 1,000 AGL is committed to investment grade balance sheet and 900 capital structure 8
Slide 51: Targeting a dividend payout ratio of 50-75% of Underlying Profit after tax
Targeting a dividend payout ratio of 50-75% of AGL’s historic and forecast DPS Underlying Profit after tax, franked to extent possible (cents per share) • Updated dividend payout ratio range (effective from the FY24 interim dividend*) to enable capital flexibility, further Dividend based on FY24 87
Slide 52: Disciplined and strategic approach to capital allocation
DISCIPLINED AND STRATEGIC APPROACH TO CAPITAL ALLOCATION OBJECTIVES Maintain financial strength Capital investment to Maximize value and and financial flexibility maintain, transition and shareholder returns grow our energy portfolio EXCESS CASH FLOW 1. Maintain strong credit profile: Baa2 investmen
Slide 53: Closing Remarks
Closing Remarks Damien Nicks Wattle Point Wind Farm, South Australia
Slide 54: Appendix
APPENDIX \l L = ag| Join the change
Slide 55: GHG emissions (MtCO2e)
AGL plans to bring forward the closure of Loy Yang A by up to 10 years which would avoid up to 200 MtCO2e** of greenhouse gas emissions compared to previous thermal coal closure dates Progressive and responsible retirement of the AGL’S EMISSIONS REDUCTION TARGETS 2,3,4 coal-fired fleet over a target