Big emitters’ green goals drive AGL to mull ‘hybrid’ power plans
Energy giant AGL has struck a partnership to assess developing huge hybrid power systems to help decarbonise some of Australia’s most emissions-intensive industrial operations such as mine sites, oil and gas facilities and refineries.
The venture, involving AGL and Finnish manufacturer Wartsila, comes as big changes rock the energy market and power suppliers seek to keep pace with customers’ efforts to slash greenhouse gases and target “net-zero” emissions.
AGL chief operating officer Markus Brokhof said the hybrid systems, aimed at customers requiring more than 20 megawatts of power, would reduce remote, off-grid sites’ dependence on fossil fuels such as diesel. Hybrid systems would pair solar or wind generation and battery storage alongside decentralised gas or diesel generation to reduce emissions, while energy-management technology would lower usage and costs.
“The mining industry, the oil and gas industry … they are making commitments to be carbon-neutral by certain dates so they have to do something to reduce their carbon footprint,” Mr Brokhof said
“These systems will provide customers with certainty and peace of mind – knowing [that] on low generation solar or wind days, flexible firming technologies are in place to meet their demands.”
As an influx of renewable energy drives wholesale power prices to multi-year lows and hammers earnings from coal- and gas-fired power plants, ASX-listed AGL and Origin Energy have been increasingly exploring new technologies in order to be able to offer a range of energy solutions to customers and find new revenue streams.
Wartsila Energy president Sushil Purohit said hybrid solutions would be key to enabling a “stable and reliable grid”, while lowering emissions and costs.
“Energy storage, balancing engine power plants and intelligent energy management software are needed to support the seamless integration of renewable energy sources into the power system while maintaining system flexibility, network stability and energy security,” he said.
AGL, which ranks as Australia’s biggest emitter of greenhouse gases, said the memorandum of understanding with Wartsila built on its commitments to striving to achieve net-zero emissions by 2050.
In response to the accelerating clean-energy transition, AGL last month told shareholders it would seek to split into two companies: “New AGL”, incorporating power, gas and telecommunications retailing along with some energy assets, and “PrimeCo” which would own its largest thermal power stations and some wind farms.
As institutional shareholders globally seek to reduce their exposure to fossil fuels on ethical and financial grounds, chief executive Brett Redman said he believed “New AGL” would appeal to investors who were increasingly concerned about environmental, social and governance (ESG) risks.
Some analysts, however, have questioned AGL’s ability to hive off “PrimeCo” through demerger or divestment at an acceptable valuation, warning that investor appetite for an emissions-intensive generation fleet may be very low.
“With its exposure to coal assets, leverage to wholesale prices and currently weak spot prices, it is difficult to see how PrimeCo will be attractive to investors as a standalone entity,” JP Morgan’s Mark Busuttil said.