AGL Energy Limited · ASX:AGL
AGL Energy — Non-Deal Roadshow (May 2009)
42 slides from AGL Energy's roadshow presentation, May 21, 2009
Slide 1: ASX statement
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 statement 21 May 2009 Attached is a presentation to be made today by Managing Director Michael Fraser
Slide 2: Australia's Largest Integrated Renewable Energy Company
AGL Energy Limited Australia’s Largest Integrated Renewable Energy Company Michael Fraser Managing Director & CEO Jeff Dimery Group General Manager, Merchant Energy UK Investor Roadshow May 2009
Slide 3: Disclaimer
2 Disclaimer The information in this presentation: › Is not an offer or recommendation to purchase or subscribe for securities in AGL Energy Limited or to retain any securities currently held. › Does not take into account the potential and current individual investment objectives or the financial si
Slide 4: Agenda
3 Agenda › About AGL Energy – Background & Strategy › Renewables & Carbon: Policies & Industry Impacts – An Update › AGL Renewables & Carbon: Positioning & Opportunities › AGL Upstream Gas Portfolio › Way Forward › Supplementary Information » UK Investor Roadshow » May 2009 » AGL External
Slide 5: About AGL Energy
4 About AGL Energy » UK Investor Roadshow » May 2009 » AGL External
Slide 6: About AGL Energy
5 About AGL Energy Australia’s largest integrated renewable energy company. › Australia’s largest private owner, operator & developer of renewable generation › Australia’s largest, diversified (geography, fuel & mix) generation portfolio › Australia’s largest natural gas & electricity customer base
Slide 7: AGL Energy Today – Asset Profile
6 AGL Energy Today – Asset Profile » UK Investor Roadshow » May 2009 » AGL External
Slide 8: The Integrated Strategy
7 The Integrated Strategy Balancing risk between upstream supply, retail markets & providing access to multiple profit pools. UPSTREAM SUPPLY (Core) Capturing value & growth Capturing value & growth Upstream Gas: Gas Production Renewable Generation Thermal Generation Generation: › Direct ownership o
Slide 9: Renewables & Carbon: Policies & Industry Impacts – An Update
8 Renewables & Carbon: Policies & Industry Impacts – An Update » UK Investor Roadshow » May 2009 » AGL External
Slide 10: Proposed Legislative Changes
9 Proposed Legislative Changes Federal Government proposing two schemes – Expanded Renewable Energy Target (RET) & Carbon Pollution Reduction Scheme (CPRS). Expanded RET › Draft legislation released – to be introduced mid 2009 › Commences 1 January 2010 – Council Of Australian Governments (COAG) agr
Slide 11: Expanded RET drives Growth
10 Expanded RET drives Growth AGL renewable portfolio to deliver material upside. 50000 › Additional 35,500 GWh pa of Exisiting MRET Expanded RET renewable energy required to 45000 meet expanded target of 40000 45,000GWh pa › COAG Agreement last week 35000 to: 30000 » Extend full target of 45,000 GW
Slide 12: Growth - Wind Compared To Other Renewables
11 Growth - Wind Compared To Other Renewables Global installed base, gigawatts (GW) 220 2000 - 06 CAGR,1 % Ongoing global renewables growth 74 26 CAGR1 = +12% › ~$100 billion investment in Renewables in 2008 8 30 › ~30% of all new capacity addition is 110 renewable power 45 5 18 2 Biomass & waste Wi
Slide 13: Required Renewables Growth
12 Required Renewables Growth Wind will dominate early build - geothermal & other technologies anticipated to play increasing role in out years. 50000 45000 › AGL has a leading portfolio of 40000 development options across all major renewable technology groups 35000 New build › Largest privately own
Slide 14: AGL Renewables & Carbon: Positioning & Opportunities
13 AGL Renewables & Carbon: Positioning & Opportunities » UK Investor Roadshow » May 2009 » AGL External
Slide 15: Renewables & Carbon: First Mover Advantage
14 Renewables & Carbon: First Mover Advantage AGL’s strategy benefits from recent Government announcements. » UK Investor Roadshow » May 2009 » AGL External
Slide 16: AGL – Wind Growth Pipeline
15 AGL – Wind Growth Pipeline Developing a portfolio with strategic depth and optionality. › Probable Projects: Projects which are under development with an approved budget and pending final investment decision › Possible Projects: Projects where AGL holds rights to the sites and/or where the final
Slide 17: Wind Capacity Factors - Global
16 Wind Capacity Factors - Global AGL portfolio has world class wind resource. 50% 45% 40% Indicative ranges of 30%– Capacity Factor 35% European ops 2006 European ops 2007 40% 30% 25% Hallett 1 Actual Hallett 4 Hallett 2 20% BBW Australia BBW Global 15% 10% 5% 0% EDF Iberdrola Theolia Greentech BBW
Slide 18: Wind Farm Development Process (off balance sheet option)
17 Wind Farm Development Process (off balance sheet option) AGL maintains ‘off’ and ‘on’ balance sheet development optionality. » UK Investor Roadshow » May 2009 » AGL External
Slide 19: Renewable Generation - Geothermal
18 Renewable Generation - Geothermal Potential to deliver meaningful base load. Beltana › AGL holds 9.9% equity interest in ASX listed Torrens Energy (TEY) Parachilna › AGL and TEY have 50/50 Geothermal Alliance Agreement to commercialise base load projects › TEY permits all adjacent to transmission
Slide 20: Renewable Generation - Hydro
19 Renewable Generation - Hydro Bogong & McKay Creek (peaking plant) expansion. › Australia’s last, large scale hydro opportunity › A$240m, Bogong 140MW peaking plant in Kiewa Valley, Victorian Alpine region » minimises environmental impacts with 6.5 kilometre underground tunnel » also results in 10
Slide 21: Impact of Renewable Policy Settings
20 Impact of Renewable Policy Settings Fundamental changes required to generation mix. New Build Generation Mix Years of Forecast - 2010 to 2020 Coal Plant CCGT Base Plant OCGT Peak Plant Renewable Plant 20000 18000 Capacity required (MW) 16000 14000 Renewables 9,500MW dominate 12000 1,200MW 10000 8
Slide 22: Gas Generation – Growth Pipeline
21 Gas Generation – Growth Pipeline Developing a portfolio with strategic depth and optionality. › Probable Projects: Projects which are under development with an approved budget and pending final investment decision › Possible Projects: Projects where AGL holds rights to the sites and/or where the
Slide 23: A Carbon Effective Generation Portfolio
22 A Carbon Effective Generation Portfolio Current & future AGL generation portfolios are well positioned in a carbon constrained environment. Current generation ~3,860 MW1 Medium Term Targeted generation ~6,000MW2 Coal 11% Coal Gas 18% 43% Gas 51% Renewables 31% Renewables 46% » UK Investor Roadsho
Slide 24: AGL Upstream Gas Portfolio
23 AGL Upstream Gas Portfolio » UK Investor Roadshow » May 2009 » AGL External
Slide 25: Upstream Gas
24 Upstream Gas Strategic acquisitions to deliver upside growth & optionality. › Recent transactions deliver access & control over additional certified 2P reserves with further, material upside potential & optionality: » Investment in Galilee Basin CSG production pilot & exploration program » Entere
Slide 26: Upstream Gas – Growth Pipeline
25 Upstream Gas – Growth Pipeline Developing a portfolio with strategic depth, duration and optionality. » UK Investor Roadshow » May 2009 » AGL External
Slide 27: Upstream Gas – Duration & Flexibility
26 Upstream Gas – Duration & Flexibility Delivering on medium term strategic target of 2,000PJ equity gas. › Domestic gas strategy focus › Existing portfolio flexibility allows timely development of gas production projects › AGL will continue to be a significant contractor of wholesale gas › Anticip
Slide 28: Way Forward
27 Way Forward » UK Investor Roadshow » May 2009 » AGL External
Slide 29: NSW Privatisation
28 NSW Privatisation Disciplined approach to industry consolidation opportunity. › Support privatisation – awaiting final detail of structure › Support Gentrader model – risk allocation details key › Depending on final structure, AGL remains interested in retail and/or gentrader assets › AGL’s SAP r
Slide 30: Strategic Priorities
29 Strategic Priorities Ongoing, disciplined roll out of integrated strategy. › Expansion of industry leading renewables portfolio › Exploration and development of gas acreage and reserves › Development of gas generation portfolio Strategic › Delivering benefits of Phoenix Business Transformation Pr
Slide 31: Further Information / Contacts
30 Further Information / Contacts A range of information on AGL Energy Limited including ASX & Media Releases, Presentations, Financial Results, Annual Reports and Sustainability Reports is available from our website: www.agl.com.au alternatively, contact: Graeme Thompson Head of Investor Relations
Slide 32: Supplementary Information
31 Supplementary Information » UK Investor Roadshow » May 2009 » AGL External
Slide 33: 1H09 Result Highlights
32 1H09 Result Highlights Delivering on strategy, creating value & long term growth. › Revenue: $2,977.7m, Ï 5.1% FINANCIAL › Operating EBIT from continuing operations: $322.7m, Ï 10.2% › Statutory NPAT: $1,654.8m › Underlying NPAT: $192.5m, Ï 5.3% › Interim dividend 26 cps, fully franked – DRP in o
Slide 34: 1H09 Profit & Loss
33 1H09 Profit & Loss (excluding significant items & fair value movements) Result in line with full year guidance. 6 months to 31 Dec 2008 31 Dec 2007 Change $m Revenue 2,977.7 2,833.8 5.1% Operating EBITDA 443.9 471.4 (5.8%) Operating EBIT Retail 145.7 134.8 8.1% Merchant 211.9 156.9 35.1% Gas & Po
Slide 35: Disciplined Capital Management
34 Disciplined Capital Management Well positioned for future growth opportunities. › October 09 maturities covered by cash reserves › Immediate debt capacity of ~A$1.2b to A$1.8b › Reinstated BBB stable credit rating Facilities @ 20 Feb 2009 $m Limit Usage Available Maturity Current Revolving credit
Slide 36: Defensive Earnings Profile
35 Defensive Earnings Profile Robust earnings during deteriorating economic conditions. › Majority of electricity & gas gross margin is derived from mass market customer base which historically has had limited volume impacts during economic downturns Electricity Gross Margin Contribution Gas Gross M
Slide 37: Generation – Building a Balanced Portfolio
36 Generation – Building a Balanced Portfolio Diversity mitigates market risks & benefits from a carbon constrained future. › Diversity of fuel type - renewables, gas & coal › Diversity of generation type – base, intermediate & peak › Diversity of geography – across all NEM states/nodes Generation t
Slide 38: East Coast Gas - Substantial Reserves & Duration
37 East Coast Gas - Substantial Reserves & Duration Security of supply given quantum of ongoing Eastern Australia gas reserves. Eastern Australia 2P gas reserves and contingent resources almost 70,000 PJ, of which only ~14% are contracted: › Further increases are likely, particularly CSG reserves an
Slide 39: Renewable Energy Certificates (RECs)
38 Renewable Energy Certificates (RECs) Expanded RET to put upward pressure on pricing $80.00 SPOT 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 $70.00 $60.00 $50.00 $/REC $40.00 $30.00 $20.00 $10.00 3 4 5 6 7 8 03 04 05 06 07 08 09 -0 -0 -0 -0 -0 -0 r- r- r- r- r- r- ct ct ct ct ct ct b- Ap Ap
Slide 40: Electricity Flat Forward Price Curve
39 Electricity Flat Forward Price Curve (Calendar year contract) Carbon, coal pricing and electricity demand growth to drive pricing. $ MW/h 100 NSW QLD SA VIC 90 80 70 60 50 40 30 20 10 0 09 3 4 4 5 5 6 6 7 7 8 8 -0 r-0 -0 r-0 -0 r-0 -0 r-0 -0 r-0 -0 b- ct ct ct ct ct ct Ap Ap Ap Ap Ap Fe O O O O O
Slide 41: Australia's National Electricity Market (NEM)
40 Australia’s National Electricity Market (NEM) › National Electricity Market (NEM) began operating as a wholesale market for supply of electricity to retailers and end-users in 1998 Queensland › World’s longest interconnected power system – ~51,700GWh 4,000 km (2,500 miles) AGL ~10,900GWh › Exchan
Slide 42: Australian NEM Generation Mix
41 Australian NEM Generation Mix Coal dominates the current Australian landscape. Generation Capacity: ~43,000 MW Generation Output: ~210,000 GWh Gas Gas 15% Wind 8% 1% Hydro Wind 6% 2% Oil 1% Coal Hydro 65% 17% Oil Coal 1% 84% » UK Investor Roadshow » May 2009 » AGL External