Australian
Thursday 10/7/2008 Page: 20
AGL Energy has agreed to buy a stake in geothermal exploration company Torrens Energy, potentially expanding its renewable energy portfolio to include power generated from hot rocks. AGL, Australia's largest gas and electricity supplier, will pay $2.2 million for a 9.99 per cent stake in Perth-based Torrens. The companies have also agreed to jointly develop geothermal projects close to the national electricity grid.
Under the agreement, AGL will have the right to earn 50 per cent of any geothermal resource project identified by Torrens in return for funding the drilling of a well, estimated to cost about $10 million. AGL's competitors have also been busy investing in hot rocks. Origin Energy and Woodside Petroleum have recently invested in GeoDynamics, a geothermal energy company that is testing the transformation of heat into electricity from underground rocks in the Cooper Basin in South Australia.
AGL managing director Michael Fraser said geothermal energy was an emerging renewable technology that would complement the company's existing projects in hydro and wind and could help it meet the federal Government's Mandatory Renewable Energy Target scheme (MRET), which would require energy companies to source an increasing proportion of their power from renewables.
"If successful, geothermal energy could play an important role in meeting AGL's longer-term renewable energy obligations," Mr Fraser said. AGL's renewable energy generation assets now comprise about 40 per cent of its generation portfolio. Torrens, which listed in 2007, has been granted a large geothermal tenement holding in areas close to Adelaide.
Earlier this year, it completed exploration drilling in an area north of Port Augusta and found temperatures of more than 200 degrees Celsius at about 4000m depth which it says is well within the range required for hot rock commercial power generation. AGL shares closed up 52c to $14.32 yesterday while Torrens rose 6c to 41.5c.
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