AGL Energy Limited · ASX:AGL
AGL Energy — Corporate Update (May 2015)
19 slides from AGL Energy's corporate update, May 27, 2015
Slide 1: ASX & Media Release: AGL Macquarie presentation
AGL Energy Limited Locked Bag 1837 Level 22, 101 Miller St T: +61 2 9921 2999 ABN: 74 115 061 375 St Leonards NSW 2065 North Sydney NSW 2060 F: +61 2 9921 2552 AUSTRALIA AUSTRALIA www.agl.com.au ASX & Media Release AGL Macquarie presentation 27 May 2015 Attached is a presentation to be made today by
Slide 2: Driving Operational Results
Driving 1 Operational Results Doug Jackson Ian Brooksbank Ray Durie Glenn Schumacher 2 Agenda 1 › Group Operations – Doug Jackson 2 › AGL Macquarie overview – Ian Brooksbank 3 › Coal advantage – Ray Durie 4 › Asset strategy – Glenn Schumacher > Driving Operational Results > Doug Jackson, Ian Brooksb
Slide 3: Group Operations
Group 3 Operations Doug Jackson Group Operations 4 Clear objectives; execute well. Safe and Asset Capital secure strategy discipline Driving Cost Harness productivity effective insights > Group Operations > Doug Jackson > 27 May 2015 2
Slide 4: Capital efficiency and Project Pulse
Capital efficiency 5 Discipline around doing the right work at the right cost. › Periscope risk tool Risk weighted impact vs capex – Total risk mitigated › Capital projects ranked across asset portfolio › Consistent management of capital projects Risk exposure › Standard project tools and processes
Slide 5: Project Pulse: Bucket teeth initiative and conveyor shutdown
Project Pulse: Bucket teeth initiative 7 Challenging the status quo. Concerns: › Low dig time › Low tool time › High wear rates A better way Results › Fewer replacements › Tool time nearly 100% › Lowered cost ~$192,000 p.a. › ~2m tonnes more material moved > Group Operations > Doug Jackson > 27 May
Slide 6: Project Pulse: Overtime reduction and Torrens boiler feed pumps
Project Pulse: Overtime reduction 9 People making a difference Concerns: Overtime cost per month ($ 000) › Excessive overtime costs 250 › Rescheduling of work AGL Torrens BLITZ started in › Poor schedule compliance 200 early September Visible measures 150 $150,000 saving per Results 100 month › 90%
Slide 7: Project Pulse: Forced outage readiness; Extracting value
Project Pulse: Forced outage readiness 11 Lean process to improve margins. Concerns: Liddell Boiler leak force outages › Poor tool time Historical Current › No integrated schedule 6.2 6.2 › Inconsistent delivery › Series processes 4.2 Lean process 3.1 3.6 Results › Average repair time reduced 40% ›
Slide 8: AGL Macquarie overview: The Flagship
AGL Macquarie 13 overview Ian Brooksbank AGL Macquarie: The Flagship 14 Key facts. › Produced 33.7% of NSW electricity in April 2015 › FY14 last full year of NSW ownership: » Generated 21.9 TWh » 10% of the NEM » Revenue of ~$1 billion » 10+ million tonnes of coal » ~81.5 GL water Opportunity › 1% i
Slide 9: Overview: Two of the lowest cost generators
Overview 15 Two of the lowest cost generators. › Two black coal fired power stations Key metrics » Bayswater (2,640 MW) Bayswater Liddell Nameplate Capacity 2,640 MW 2,000 MW » Liddell (2,000 MW) Commissioned 1985–1986 1971-1973 » Coal is delivered by rail unloaders (Antiene and Ravensworth) and con
Slide 10: Bayswater and Liddell power stations
Bayswater power station 17 Well-designed and built. › Plant configuration » 4 x 660 MW units = 16 Jumbo jets » Turbine weighs over 1,300 tonnes » Flexible coal handling plant » Hyperbolic cooling towers › Plant History » Commissioned between 1985 and 1986 Bayswater - Larger than the Sydney Harbour b
Slide 11: Generation flexibility; Water Security
Generation flexibility 19 AGL Macquarie provides total flex of 2,360 MW. AGL Macquarie unit performance (MW) 700 600 500 400 300 200 100 0 Bayswater Bayswater Bayswater Bayswater Liddell Liddell Liddell Liddell Unit 1 Unit 2 Unit 3 Unit 4 Unit 1 Unit 2 Unit 3 Unit 4 Minimum stable load Flex > AGL Ma
Slide 12: Water resources; Coal advantage
Water resources 21 Drought proof in a dry climate. › First zero discharge power station built in Australia › Annual water entitlements (106GL) › Water storage – 2.5 times Sydney Harbour » Offsite (1,033GL) » Onsite (218GL) › Pumping upgrade » Increase of 160% to 1,200ML/day › Treatment plant upgrade
Slide 13: Strategic coal advantage; Rail access and infrastructure
Strategic coal advantage 23 Ideally located with significant delivery infrastructure. > Coal advantage > Ray Durie > 27 May 2015 Rail access and infrastructure 24 State of the art rail access and infrastructure. Rail access › Contracted with ARTC until December 2024 Antiene coal unloader › Construct
Slide 14: Coal supply and transport agreements; Coal quality comparison
Coal supply and transport agreements 25 Provides significant fuel flexibility. Wilpinjong CSA Peabody Term: Dec 2025 Price: Open book Rail track access Rail haulage ARTC Pacific National AGL Term: Dec 2024 Term: Jul 2017 Macquarie Price: Price: Base + coal Mangoola CSA Regulated/TOP escalation unloa
Slide 15: Contracted coal supplies; Long-term coal cost advantage
Contracted coal supplies 27 Maintain price advantage through 2026. Breakdown of coal requirements (2016-2027) 300 AGL’s GHG policy 250 commits to shutting Liddell in 2022 200 150 PJ 100 50 0 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 Contracted Coal Stockpile
Slide 16: AGL Macquarie Asset strategy
AGL Macquarie 29 Asset strategy Glenn Schumacher Asset strategy 30 A “clean sheet” approach to both power stations. 1 › Engineering review of asset performance capability 2 › Challenging the status quo 3 › Catch up of maintenance backlog 4 › Trialing new methods 5 › Building upon fuel source strateg
Slide 17: Asset strategy: due diligence opportunities
Asset strategy 31 Due diligence identified opportunities. › Identified a number of critical areas that needed focused effort: » Reducing milling losses at Bayswater (“Milling IS Thrilling” project underway) » Reducing plant performance losses » Improved outage management » Boiler leak reduction » Im
Slide 18: Asset strategy: Bayswater
Asset strategy: Bayswater 33 Enhancing asset performance delivers >$200,000 p.a. improvement. › Improving air heater seals efficiency Bayswater Unit #4 Air Heater Performance » 30 MW maximum capacity recovery 50 » Reduced fan power losses 45 » ~6,300 tonnes of coal saved p.a. 40 Air Leakage (%) 35 1
Slide 19: Asset strategy: Liddell
Asset strategy: Liddell 35 Safely extracting value. › Asset life to 2022 Liddell: Actual v Acquisition model › 33 discrete asset management plans 100% › Modest capital investment plans 90% › Station output has been higher than 80% Acquisition model due to: 70% Capacity Factor » Refocus on plant retu