Page 4 - AsiaElec Week 26

AsiaElec COMMENTARY AsiaElec
AGL charts uncertain course in stormy political waters
AGL is building new capacity in Australia, but faces political uncertainty and strong competition in the hunt for revenues, writes Richard Lockhart
AUSTRALIA
WHAT:
AGL has walked away from buying telco Vocus
WHY:
Integrating power and telecom services would be too risky
WHAT NEXT:
AGL faces a politically uncertain and competitive market in Australia in future
AUSTRALIA’S biggest generator AGL is facing testing times in its turbulent domestic power market, with its recent e orts to diversify into telecoms coming to nothing.
As one of Australia’s Big ree power retailers and the country’s largest generator, AGL is nd- ing it di cult to juggle the demands of the coun- try’s highly politicalised, privatised yet tightly regulated power market.
While coal and gas exports are major earn- ers for Australia, the country’s fossil fuels-based generating infrastructure is ageing. The grid struggles to balance supply and demand, with power cuts and wholesale price spikes hurting consumer con dence.
e new right-of centre government led by Scott Morrison is likely to be friendly to fossil fuels – whether coal or gas – although the coun- try’s Paris Agreement commitments on emis- sions mean that green development is a must in order to keep the lights on at an a ordable price.
Meanwhile, AGL faces keen competition in the retail market as consumers leave the incum- bent supplier for smaller start-up operators.
Diversi cation
Against this background, AGL, which had 10,245 MW of capacity in 2018, is putting its toe in the water of diversification. In June, it considered buying internet provider Vocus, but withdrew its A$3.02bn ($2.08bn) o er a er con- cluding that the deal would be too risky.
“We are no longer con dent that an acquisi- tion of Vocus at the proposed terms would repre- sent su cient certainty of creating value for AGL shareholders,” AGL’s managing director & CEO Brett Redman said in a statement.
AGL had made its bid with the intention of integrating Vocus’ bre optic business with its own power supply operations, something that rival supplier Origin Energy has done via its bundling deal with Optus’ NBN network.
AGL claimed that this could improve its retail o er, for example by using bre optic infrastruc- ture to use customers’ roo op solar panels and domestic batteries to create a virtual power plant to meet supply at peak times. With no progress on such moves into new markets, AGL must focus on its power operations.
Wind
Renewables is one area of growth, and AGL in June opened the 453MW Coopers Gap wind farm in Queensland, part of its plans to build 1 GW of wind capacity in the state.
AGL said it had delivered rst power from the rst two GE turbines at the site into Aus- tralia’s National Electricity Market at the end of June. e A$850mn ($597mn) facility is set to comprise 123 3.6-MW and 3.8-MW turbines situated 250km north-west of Brisbane near Cooranga North, between Dalby and Kingaroy.
AGL chief executive Brett Redman said: “ is is a signi cant project for AGL and the timing of bringing new generation into the grid iscrucialforallenergyusers.”
When complete, the wind farm will be able to generate 1,510 TWh per year, enough to power 264,000 average Australian homes, AGL said.
The wind farm connects to the existing 275kV Western Downs-to-Halys power line at a new substation built in 2018 by state transmis- sion system operator (TSO) Powerlink.
The project is owned and constructed by the Powering Australian Renewables Fund, a nancing initiative created by AGL and the state-run Queensland Investment Corporation.
AGL is also building the A$450mn ($316mn) Silverton wind farm in New South Wales through the A$2bn-3bn ($1.4bn-2.1bn) fund aimed at developing and owning 1 GW of large-scale renewable generation projects across the state.
AGL is also pursuing an innovative LNG import project in Victoria, where a floating storage regasification unit (FSRU) would be installed at Crib Point to regasify LNG that would be fed into the state’s gas grid.
However, AGL said at the end of June that the project would be pushed back to 2023 as it waited for a federal government-mandated environmental impact assessment (EIA) exer- cise and for the availability of a suitable FSRU.
AGL argues that importing LNG into the Victorian market would create much needed diversity and security of supply, as well as increase competition in the gas market, push down wholesale gas prices and reduce pressure to open up new domestic gas elds.
When complete, the wind farm will be able to generate 1,510 TWh per year, enough to power 264,000 average Australian homes
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w w w . N E W S B A S E . c o m Week 26 02•July•2019