AGL Energy Limited · ASX:AGL
AGL Energy — AmCham March 2017
13 slides from AGL Energy's conference presentation, March 2017
Slide 1: Energy markets in transition
SS SEC VS 5B ore” Energy markets in transition. Andy Vesey March 2017 AmCham
Slide 2: Misconceptions about the market
Misconceptions about Some of the reasons publicly given for the state of the market. > Renewables - concerns about unreliability. > Gas - view it’s all being exported by multinational corporations. > Coal -— desire to shut it down tomorrow. > Privatisation — belief that government would run the syst
Slide 3: The National Electricity Market
The National Electricity Market The National Electricity Market ATA _ (NEM) supplies around 19 million people. AmCham Andy Vesey March 2017
Slide 4: The energy system of yesterday
The energy system of yesterday Large coal-fired power stations transporting power through transmission and distribution to customers Generator Transmission Lines Distribution Lines Produces electricity Carry electricity Carry low voltage long distances electricity to consumers \ = _ 2 = E _ in ait G
Slide 5: The energy system of tomorrow
The energy system of tomorrow Diverse large-scale and small-scale low-emissions generation supplied through an intelligent network Generator Produces electricity ra \ > Pas Generator Transformer Converts low voltage electricity to high voltage for efficient transport AmCham Andy Vesey March 2017 Tra
Slide 6: Wholesale cost drivers
Wholesale cost drivers Pricing driven by need to invest in new plants nnouncement of Hazelwood closure Rumours of Hazelwood closure == Calendar 2019 == Calendar 2018 w= Calendar 2017 == Calendar 2016 2014 2015 2016 2017 vIc Source: Market data JAGL P Energy in AmCham Andy Vesey March 2017 action* 6
Slide 7: Wholesale cost drivers
Wholesale cost drivers Long-term costs likely to be driven lower due to technology 160 140 ~ 120, = 100 ... reflects operating and fixed costs when LCOE ($/MWh) Bal new capacity required 60 MD, eee = Pricing reflects operating costs 20 when no new capacity required 0 USC Brown Coal USC Black Coal So
Slide 8: Intermittency
intermittency We need to shift away from ‘baseload’ plant to efficient more flexible gas-fired plant and storage 1500 Demand (MW) 1000 500 Chronological Time (2016) SA Source: Market data SAGL i Energy in AmCham Andy Vesey March 2017 action? 8
Slide 9: Retailing and competition behind the meter
Retailing and competition behind the meter The gap between ‘average’ cost and ‘marginal’ cost likely to widen — increasing competitive forces 1,600 -- os I Gap increases with deployment of more renewables Annual Electricity Cost ($pa) Descending scale of retailer offers == Averagecost “= Marginalcos
Slide 10: Supporting vulnerable customers
upporting vulnerable customers 6.5m Affordability Initiative provides debt relief, financial counsellors, solar for high consumers. > Building on this with AGL’s Fairer Way package: » Concession card and hardship program customers are not charged late fees » Customers participating in AGL’s hardship
Slide 11: Retailing and competition behind the meter
Retailing and competition behind the meter Traditional retailing largely the provision of ‘risk management’ services = 10 = S = 3 > 5 g& 05 oo. 12AM 2AM 4AM 6AM 8AM 10 AM 12PM 2PM 4PM 6PM 8PM 10PM == Imports/exports fromthe grid fl) household energy demand Source: Orton, Nelson, Pierce and Chappel N
Slide 12: Retailing and competition behind the meter
Retailing and competition behind the meter Retailing of the Future will be a mix of ‘risk management’, new products and customer service Energy demand kW 12AM 2AM 4AM © Supply fromthe grid §) Supply from solar PV [MJ Battery discharge mmm Household energy use = = = Imports/exports from the grid Sour
Slide 13: Correcting misconceptions
Correcting misconceptions Some recommendations for reform > Wholesale prices are rising because we need new investment and prices need to reflect both operating costs and the cost of building new power stations. > But longer-term, prices are likely to moderate as new technologies fall in cost. > We