Agl Energy Limited · ASX:AGL
Agl Energy — 2019 Macquarie Australia Conference
24 slides from Agl Energy's conference presentation, Apr 30, 2019
Slide 1: Growth in transition
Growth in transition AGL's growth as the Australian energy market transitions Brett Redman, Managing Director & CEO AGL Energy Limited 2019 Macquarie Australia Conference
Slide 2: Government policy and market design uncertainty
Government policy and market design uncertainty 1837 AGL 2006 AGL Energy formed formed from merger/demerger Rising community expectations of large companies 2007 Acquired Torrens 2012 Acquired 2014 Acquired Island power station Loy Yang A Macquarie Generation Aging fleet and the need to decarbonise
Slide 3: Three growth priorities: optimise, evolve and expand, create new opportunities
1. Optimise existing 2. Evolve and expand core 3 . Create new opportunities portfolio for performance and value energy market offerings with connected customers BROWN COAL BLACK COAL GAS RENEWABLES & DISTRIBUTED ENERGY+ DATA STORAGE ENERGY DELIVERING FOR OUR CUSTOMERS Solar, wind, Upgrades for LNG i
Slide 4: AGL's historic asset base and ROFE
$ billion AGL’s historic asset base and ROFE 15 16.00% 15.2% 14.00% 12.7% 12.00% 10 10.5% 10.8% 10.00% 10.0% 9.5% 8.9% 9.2% 8.00% 5 6.00% 4.00% 2.00% 0 0.00% FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Upstream gas Gas storage Thermal generation Hydro generation Renewables generation Renewables PPA's El
Slide 5: Coal-fired generation remains a strong feature of today's asset base
Coal-fired generation Delivering our strategy remains a strong feature of New growth requires investment in today’s asset base and has opportunities are energy supply, systems and underpinned recent being considered customer experiences shareholder returns Legend Current asset base including renewab
Slide 6: Short run marginal cost and thermal fleet capacity
Coal Gas $200 $180 Asset life remaining Torrens A Somerton < 5 years < 10 years < 20 years < 30 years $160 Short Run marginal cost ($/MWh) Torrens B $140 Barker Inlet $120 210 MW | $295m Completion FY20 $100 $80 Loy Yang A Bayswater Station turbine Upgrade upgrade 100 MW | $100m $60 15 MW | $25m Com
Slide 7: Forecast NEM energy generation mix; themes shaping the energy industry
Forecast NEM energy generation mix Themes shaping the energy industry Generation (GWh) 300,000 Thermal asset retirement Providing system reliability, which is not reflected in an 250,000 ‘energy only’ market price 200,000 Renewables displacing energy generated by thermals 150,000 Decreasing technolo
Slide 8: AGL customers and data download activity; evolving customer needs
AGL customers and data download activity1 Evolving customer needs AGL customer Downloads accounts (m) (TB/3 months) rooftop solar 4 4,000,000 3 3,000,000 battery storage smart electric + smart 2 2,000,000 meter vehicle electricity home O III - gas 1 1,000,000 Energy supply Energy insight 0 0 2011 20
Slide 9: Residential battery installations; progressing plans for residential batteries
Residential battery installations Progressing plans for residential batteries Batteries Forecast installed Energy Storage CSIRO/AEMO forecast up to ~200,000 residential (MW) batteries will be installed by 2025 (representing a total 1,000,000 installed capacity of ~1,100MW) CSIRO/AEMO 2018 Moderate C
Slide 10: Residential electric vehicle forecast; consumer and environmental benefits
Residential electric vehicle forecast Consumer, environmental annual benefits Number of vehicles (m) Consumption (TWh/a) 5 20 Consumer saves $2,000 Petrol 1,4 Carbon emission reduction 4 16 2,500 L 40% $3,300 3 12 6.1 CO2e Electricity equivalent 2,3,4 4.3 MWh ~$1,300 2 8 ~3.6 CO2e 1 4 0 0 1. Assumes
Slide 11: Growth project pipeline: generation, storage and gas supply
Coopers Gap Wind Farm * 453 MW | $850m Completion FY20 Under development Feasibility Bells Mountain Pumped Hydro Bayswater Power Station upgrade Offtake agreements 250 MW / 8hrs | ~$450m 100 MW | $100m Potential completion FY26 Completion FY23 Generation Kanmantoo Pumped Hydro Gas firming 250 MW / 8
Slide 12: Underlying Profit after tax expected to be $970 million to $1,070 million
Underlying Profit after tax expected to be $970 million to $1,070 million Tracking towards mid-point of guidance range Strong portfolio performance offsetting impact of increased operating expenditure, coal plant outages Second half impacted by: Lower gas volumes due to seasonality and lower Large B
Slide 13: Wn Cc Oo aa) va) OU =) (oe;
Wn Cc Oo aa) va) OU =) (oe;
Slide 14: Important notice and disclaimer
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 and Australian Accounting any securitie
Slide 15: Investor relations contacts
James Hall Chris Kotsaris Blathnaid Byrne General Manager, Capital Markets Senior Manager, Investor Relations Group Treasurer Phone: +61 2 9921 2789 Phone: +61 2 9921 2256 Phone: +61 2 9921 2255 Mobile: +61 401 524 645 Mobile: +61 402 060 508 Mobile: +61 424 644 947 Email: jbhall@agl.com.au Email: c
Slide 16: Speaker notes: Growth in transition
Growth in transition: AGL’s growth as the Australian energy market transitions Brett Redman, Managing Director & CEO, AGL Energy Limited Speaker notes for presentation to 2019 Macquarie Australia Conference, 30 April 2019 [SLIDE 1] Good afternoon everyone, thank you for joining me for this presentat
Slide 17: Speaker notes: AGL's heritage and investment record
A company with AGL’s heritage and investment record should see this as an opportunity. Let me give you some context as to how AGL has gotten to where we are today. We are a 180 year-old company. Over recent months as we have refreshed our growth agenda, we have taken inspiration from that heritage.
Slide 18: Speaker notes: AGL's asset base over time
Today’s presentation will speak to all three of these areas. [SLIDE 4] The next slide provides a visual representation of AGL’s asset base over time. It supports what I mentioned previously; that AGL’s recent financial performance has come about because of the big capital allocation decisions we hav
Slide 19: Speaker notes: conceptual asset base and thermal fleet
I cannot stress enough that this wave is not to scale – it’s just conceptual. The obvious take away from this graph is that the we are moving towards a model during which our asset base will evolve again, gradually, as the need for AGL to invest in large-scale energy generation assets is replaced by
Slide 20: Speaker notes: renewables, flexibility and storage
[SLIDE 7] As the market transitions inevitably towards higher renewable penetration, AGL has an opportunity to play a key role as an enabler. Renewables will continue to penetrate but as we have said many times before, renewables alone cannot fully replace capacity without firming to smooth out thei
Slide 21: Speaker notes: regulatory change and connected customers
Upcoming regulatory change is significant but AGL is well placed to respond and we are positioned well for growth by creating opportunities with connected customers. What do I mean by connected customers? Customer needs and expectations are increasing and evolving. There has been a convergence of a
Slide 22: Speaker notes: rooftop solar, batteries and e-mobility
Underpinning this growth in battery storage is the growth in rooftop solar between now and 2030, with capacity expected to double from ~7GWh to ~14GWh. This provides a potential opportunity from a combination of battery sales with an orchestration contract. The customer value is limited to their own
Slide 23: Speaker notes: social licence to operate
[SLIDE 11] Let me close by reiterating what I mentioned at the beginning of this presentation, one of the short-term challenges facing the energy industry is the rising community expectations of large companies, and in particular, essential services providers like AGL. As one of Australia’s largest
Slide 24: Speaker notes: FY20 expectations and market headwinds
Looking at our expectations for FY20, while we continue to trade strongly amid challenging and volatile conditions, there are a number of market headwinds; - LREC prices have reduced materially and are expected to fall further during FY20, impacting Eco Markets gross margin; - Wholesale prices for e