AGL Energy Limited · ASX:AGL
AGL Energy — Conference Presentation (July 2015)
29 slides from AGL Energy's conference presentation, July 2015
Slide 1: Renewable and climate change policy – where to from here?
Renewable and1 climate change policy – where to from here? Tim Nelson July 2015
Slide 2: The science
2 The science > Presentation title > Author > Date (Verdana 10pt)
Slide 3: A national carbon budget for Australia
A national carbon budget for Australia 3 10 Gt under the most ‘generous’ of 20C allocations > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015
Slide 4: Energy-only markets and renewables
4 Energy-only markets and renewables > Presentation title > Author > Date (Verdana 10pt)
Slide 5: Energy-only markets and RET
Energy-only markets and RET 5 New electricity demand was expected to match policy-induced new supply > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015
Slide 6: Energy-only markets and RET
Energy-only markets and RET 6 But demand declined and new capacity was added…older capacity didn’t retire in large volumes > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015
Slide 7: What has happened in practice?
7 What has happened in practice? > Presentation title > Author > Date (Verdana 10pt)
Slide 8: Energy-only markets
Energy-only markets 8 Price and new capacity > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015
Slide 9: Policy induced capacity…
Policy induced capacity… 9 Policies have been introduced which have created significant incentives for new capacity despite a demand/supply balance not warranting it > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015
Slide 10: Policy induced capacity…
Policy induced capacity… 10 On one measure, greenhouse intensity, policy has been very successful with a material decline in emissions intensity > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015
Slide 11: Policy induced capacity…
Policy induced capacity… 11 But capacity factors for existing plants have fallen – in an energy-only market, this has reduced revenues for all participants > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015
Slide 12: Optimal plant mix results
Optimal plant mix results 12 Market is significantly oversupplied – but there is also a structural imbalance between peaking and base/intermediate Plant Type Optimal Mix Actual Mix Imbalance Weighting (2013) Baseload 20,345 30,508 10,162 overweight Intermediate 3,697 6,077 2,379 overweight Peaking 1
Slide 13: Barriers to exit?
Barriers to exit? 13 The evidence – supply curve in 1998 and today > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015
Slide 14: Barriers to exit?
Barriers to exit? 14 The evidence – supply curve in 1998 and today > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015
Slide 15: Capacity utilisation….
Capacity utilisation…. 15 Demand declining and new policy-induced capacity has led to reductions in capacity utilisation > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015
Slide 16: What are the other issues?
16 What are the other issues? > Presentation title > Author > Date (Verdana 10pt)
Slide 17: Barriers to exit?
Barriers to exit? 17 Given the trend towards low-emitting asset investment, why aren’t more old plants being decommissioned? Policy uncertainty: - Why would you do anything? Asset sweating: - Run coal plant as intermediate - 72% of the existing steam plant fleet has passed design life First mover di
Slide 18: Is the status quo energy-only NEM sustainable?
Is the status quo energy-only NEM sustainable? 18 Key question for policy makers relates to sustainability of NEM design - how will ca.75% of plant beyond its original design life be replaced? > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015
Slide 19: Strategic risks and opportunities
19 Strategic risks and opportunities > Presentation title > Author > Date (Verdana 10pt)
Slide 20: Australian emissions
Australian emissions 20 Largely ignored strategic risk is related to our export revenues Australian strategic advantage in energy resources › Australia has 33%, 10% and 2% respectively of the world’s uranium, coal and gas resources › Around one-quarter of Australia’s export revenues from goods are s
Slide 21: International experience
21 International experience > Presentation title > Author > Date (Verdana 10pt)
Slide 22: The policy
The policy 22 International experience on carbon pricing and regulatory alternatives US › Climate Action Plan underpinned by the Clean Air Act › US EPA has established two rules › New performance standards establish separate GHG limits on new coal (0.5 t/MWh) and gas generators (0.45-0.5 t/MWh) › St
Slide 23: The policy – where to from here?
23 The policy – where to from here? > Presentation title > Author > Date (Verdana 10pt)
Slide 24: Implications for Australia
Implications for Australia 24 Is carbon pricing the answer? › Carbon pricing debate in Australia LRMC/SRMC ($/MWh) 180 Economics of new coal, new gas and existing coal has stalled 160 › Carbon price of over $100/tonne required to displace coal 140 Relatively low GHG price alters economics of new pla
Slide 25: Are alternatives worth looking at?
Are alternatives worth looking at? 25 Using existing mechanisms to drive technology development? › Policy has been successful at incentivising new electricity generation › But demand has declined › Financing new renewables requires sustainable LGC and wholesale markets › RET requires complementary p
Slide 26: A zero-emissions level playing field
26 A zero-emissions level playing field > Presentation title > Author > Date (Verdana 10pt)
Slide 27: Are alternatives worth looking at?
Are alternatives worth looking at? 27 Using existing mechanisms to drive technology development - CCS? > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015
Slide 28: Integration of energy/climate policy
Integration of energy/climate policy 28 Carbon pricing is a politically contentious topic – it may be time for something new based upon international experience › Australian policy could be set in a way that both transitions the domestic power sector and contributes to a level-playing field of techn
Slide 29: Further information
Further information 29 @tanelsonaus www.aglblog.com.au > Renewable and climate change policy – where to from here? > Tim Nelson > July 2015