AGL's $7bn for green projects

Australian
Monday 24/8/2009 Page: 21

AGL Energy says it will develop up to $7 billion worth of renewable energy projects over the next decade. Chief executive Michael Fraser said the recent passage of renewable energy target (RET) legislation through parliament was "very significant" for AGL. Under the new law, 20% of electricity must be generated from renewable energy sources by 2020.

We are the largest developer of renewable assets in the country, and this really means that we are going to be able to accelerate our development program," Mr Fraser told the ABC's Inside Business program yesterday. Mr Fraser said that about $25bn to $30bn of renewable projects would have to be built over the next decade to meet the RET target. "We intend to develop a pipeline of our projects, so when we look over the next decade that's probably $6bn-$7bn worth of projects on our own," he said. "We've already got over $2bn worth of projects on our books so, over the longer term, it's a very significant value creation opportunity for the company."

Mr Fraser said that under the RET, about 4500 wind turbines would have to be built to supply about 9000 MWs of power. He agreed that the RET legislation would "crowd out" gas-fired power generation. "Yes, that is definitely what will happen," Mr Fraser said. He said renewable power generation technologies were dominated by wind energy. Mr Fraser rejected a suggestion that AGL, which also has interests in the gas and brown coal sectors, would be happy about delays in the passage of emissions trading scheme legislation through federal parliament.

He said the ETS would result in additional costs to the energy industry and to the economy. "(But) what we really want is that legislation in place," he said. We want certainty about what the business environment is going forward." Mr Fraser said companies would find it hard to make investment decisions unless there was certainty. He said that, ultimately, sensible legislation would be put in place around a carbon pollution reduction scheme, but it would require transition arrangements to "make sure that the lights stay on".

Mr Fraser acknowledged that, under the legislation, coal-fired power stations using brown coal would eventually have to shut down unless they became cleaner. "When we took forward, ultimately, if there are no advances in carbon capture and storage, then ultimately, yes, the objective of the legislation is that those generators will be shut down and other generation will take its place," he said.