AGL Energy Limited · ASX:AGL
AGL Energy — Clean Energy Council Annual Conference 2010
24 slides from AGL Energy's conference presentation, May 2010
Slide 1: The Importance of Reforming the Renewable Energy Target
AGL Energy Limited The Importance of Reforming the Renewable Energy Target Michael Fraser CEO and Managing Director Clean Energy Council Annual Conference May 2010
Slide 2: 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 3: Agenda
3 Agenda › Importance of the 26 February reforms › Sustainable Energy within the context of global energy market transformation › Renewable Energy Target: » MRET and the reforms of 2009 » Unintended consequences of complementary policies » Reforms announced on 26 February » Fundamental shift in supp
Slide 4: Importance of the 26 February reforms
4 Importance of the 26 February reforms › 26 February reforms of the Renewable Energy Target were welcomed by the industry › There are serious consequences flowing from any delay in passage of the legislation: » Loss of jobs » Loss of investment confidence » Flow on effects for confidence in energy
Slide 5: Transformation of Global Energy Markets
5 Transformation of Global Energy Markets » CEDA CEO Vision Series » July 2009
Slide 6: Energy Market Transformation
6 Energy Market Transformation Global energy markets are undergoing significant transformation. Energy policy makers are responding to three key issues: Issue Global Policy Australian Policy Response Response Climate Change Greenhouse gas CPRS (deferred) emissions trading Energy Security Renewable e
Slide 7: Global policies driving renewable investment
7 Global policies driving renewable investment Since mid-2009, a number of new policies have been announced that will drive renewable investment – Australian policy is consistent with global trends Country/State Renewable Mandate Spain 22.5% renewable by 2020 US – Colorado 30% renewable by 2020 US -
Slide 8: Renewables provide fuel cost certainty
8 Renewables provide fuel cost certainty In an environment of increasing global commodity prices, renewable technologies provide certainty of fuel cost Source: Bloomberg (2010) » Clean Energy Council Annual Conference » May 2010 » AGL Energy Limited
Slide 9: New investment
9 New investment More than half of new installed capacity globally was renewable $US bns 2008 Source: New Energy Finance (published 2009) 52 110 Investment in Wind Investment in Other Renewable Investment in Fossil Fuel Generation 88 » Clean Energy Council Annual Conference » May 2010 » AGL Energy L
Slide 10: Investment in renewable technologies
10 Investment in renewable technologies All technologies have a role to play – growth in global investment has been significant particularly for wind and solar Average growth rates of investment in wind and solar Source: PEW Centre (2010) are 49% and 120% respectively » Clean Energy Council Annual C
Slide 11: Trend is forecast to continue
11 Trend is forecast to continue Wind and biomass forecast by IEA to be the technologies of choice in developed countries through to 2020 Source: International Energy Agency (2009) » Clean Energy Council Annual Conference » May 2010 » AGL Energy Limited
Slide 12: The Evolution of Renewable Policy – MRET to RET to....
12 The Evolution of Renewable Policy – MRET to RET to.... » CEDA CEO Vision Series » July 2009
Slide 13: The Expanded Renewable Energy Target
13 The Expanded Renewable Energy Target… Renewable Target (GWh) 70,000 Pre-1997 Renewable Baseline Old MRET (9,500 GWh by 2010) 60,000 Expanded RET (45,000 GWh by 2020) Historical renewable generation 50,000 40,000 xRET: 45,000 GWh 30,000 20,000 Original MRET: 9,500 GWh 10,000 Pre-1997 generation -
Slide 14: Role of complementary policies
14 Role of complementary policies › Additional subsidies for solar hot water and solar PV have driven substantial uptake of these technologies in recent years › Recent example: solar hot water Rebate State RECs Total Incentives Subsidies $1,600 $500 $910 $3,010 › Recent example: solar PV FiT RECs To
Slide 15: Historical REC creation
15 Historical REC creation RECs from SHW and solar PV grew substantially due to complementary policies. This negated the need for new investment. Source: Office of the Renewable Energy Regulator (2010) » Clean Energy Council Annual Conference » May 2010 » AGL Energy Limited
Slide 16: Role of complementary policies
16 Role of complementary policies REC prices declined substantially as complementary policies drove creation of RECs from SHW and PV preventing new investment $100 $/REC $90 $80 $70 Expanded MRET Announced SHW & PV Increases REC Bank $60 $50 Reform announced $40 $30 $20 Drought Impacting Hydros $10
Slide 17: Reforms of 26 February – Driving Growth in Renewables
17 Reforms of 26 February – Driving Growth in Renewables » CEDA CEO Vision Series » July 2009
Slide 18: Small scale renewable energy scheme (SRES)
18 Small scale renewable energy scheme (SRES) › Small scale renewable energy scheme » Fixed $40 per certificate price for solar PV and solar hot water » All other technologies remain in the LRET » Uncapped quantity › Similar to ‘feed-in tariff’ › Uptake dependant upon numerous factors including » On
Slide 19: Large scale renewable energy target (LRET)
19 Large scale renewable energy target (LRET) LRET to drive investment of up to 10,000 MW of new renewable investment » Clean Energy Council Annual Conference » May 2010 » AGL Energy Limited
Slide 20: Impact of Renewable Policy Setting
20 Impact of Renewable Policy Setting 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 dominate 9,500MW 12000 1,200MW 10000 80
Slide 21: Downstream Customer Impacts
21 Downstream Customer Impacts » CEDA CEO Vision Series » July 2009
Slide 22: Cost impacts - LRET
22 Cost impacts - LRET › At a REC price of $90, impacts of LRET are estimated to be about 1% pa (real) on electricity bills over the next decade › This should be contrasted with recent price increases driven by network charges of 10-15% (real) pa for three years › Important conclusion: renewable tar
Slide 23: Conclusion
23 Conclusion › 26 February reforms of the Renewable Energy Target were welcomed by the industry › There are serious consequences of the legislation not being passed before a Commonwealth election › Objective of the reforms have previously had bipartisan agreement › No reason why the legislation sho
Slide 24: Further information
24 Further information AGL Sustainability Report (online and concise summary) www.aglsustainability.com.au AGL Sustainability Blog http://aglenergy.wordpress.com John Hobson Nathan Vass Head of Investor Relations Head of Media phone: +61 2 9921 2789 phone: +61 2 9921 2264 Mobile: +61 (0) 488 002 460
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