We believe that Australia’s energy future will be affordable and smart – delivered from renewable sources that are backed by flexible energy storage and generation technologies which come together to power our homes, businesses, and vehicles.
Our transition to this future has already begun – and the pace of this journey will be driven by three major forces: customer demand, how communities act, and how technologies evolve. This forms the basis of our Climate Statement, and it guides our portfolio management, supply and technology investment, and customer offerings.
A proud leader in renewables
For a long time AGL has led the way on the investment, development, and activation of large-scale renewable hydro, wind, and solar assets.
Our investment in these large-scale renewables began with the acquisition of Southern Hydro in 2005, making us the largest privately-owned operator of hydro power stations in Australia.
We’ve also invested in the development of major utility-scale solar assets in Broken Hill and Nyngan in 2014 and 2015. In FY19 alone, our wind and solar assets generated enough electricity to power more than half a million Australian homes.
We have become one of the largest private investors in renewable energy in Australia and as operators of these assets, they form an important part of our generation portfolio, with our renewable energy generation increasing fourfold over the past decade.
From renewables to firming energy and PPAs
In the 15 years since our first investment in utility-scale renewable generation, the market and the role AGL plays has matured and evolved.
With many more renewable projects and investors entering the market, AGL is becoming more of an offtaker under power-purchase agreements (PPAs – see breakout box below), and our investment attention is turning increasingly to the flexible generation and storage – like large scale batteries, pumped hydro, and gas-fired generation – that is needed to support (or firm) the renewables in the National Electricity Market (NEM).
Why do renewables need firming technology?
Renewable power is intermittent – solar panels only generate power in sunlight, and wind turbines only generate power when the wind is blowing. The rise of renewables has changed the profile of supply and demand in the NEM: it’s now marked by bigger peaks and troughs.
Firming generation works to support intermittent renewable generation by quickly ramping up to top up electricity supply when it can’t be met by available baseload and renewable generation, or when there is a sudden peak in demand.
Flexible and firming generation is a role filled in today’s energy mix by a variety of technologies – chief among them pumped hydro, batteries, and peaking gas power stations. For example, the new Barker Inlet Power Station in South Australia can ramp up to full power in just a few minutes. This means that gas peakers can sit at a low-level (or even offline) during periods of low demand during the day, and then rapidly ramp up to meet peak demand when it’s needed the most.
The strength to progress the energy transition
As we progress our transition, our coal-fired generation remains an important part of generation portfolio.
Our major coal-fired power stations – Liddell Power Station and Bayswater Power Station in New South Wales and Loy Yang A Power Station in Victoria – generate enough power to light up more than five million Australian homes every year.
Due to the important role these assets play and where they are in their technical lives, we need to responsibly plan for what’s next. Replacing with new coal-fired generators is costly and does not support AGL’s and the communities’ ambition to progress with decarbonising our economy. It will be firmed renewables that will provide customers with the cheapest form of new generation and that will deliver a reduction in Australia’s emissions. How these new types of assets ramp-up will unfold will depend on the evolution of customers, community and technology.
In the meantime, not only do our coal-fired generators ensure Australia’s lights remain on, they provide the financial strength and foundation for AGL to responsibly progress the transition to Australia’s energy future.
|POWER PURCHASE AGREEMENTS EXPLAINED|
As an offtaker, under a power-purchase agreement, we enter into a long-term, offtake agreement to support the construction of utility-scale storage or generation technologies, and that permits us to subsequently draw on the energy at a fixed price for a fixed period.
In the past 12 months, we announced a number of these agreements – especially around battery storage – such as our agreement with Vena Energy Australia to support the construction of one of Australia’s largest grid-scale batteries at Wandoan, in Queensland. This battery will have a 100 MW / 150 MWh capacity – enough to power up to 57,000 average homes.