AGL and Origin switch gears on energy transition strategy

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Australian gen-tailer AGL Energy has followed suit with energy company Origin Energy to say it will also divest from direct investment into renewable energy sources but address its energy transition demands through hydro, gas and batteries.

Following an address to the 2024 Australian Energy Week forum, AGL Energy Chief Operating Officer Markus Brokof said on LinkedIn hydro power and pumped hydro storage have a critical role in Australia’s energy transition.

“There are three areas that Australia should focus on: the expansion of current hydro facilities, ‘bluefield’ development of pumped hydro at current hydro sites and former coal mines, and greenfield pumped hydro,” he said.

“Hydro provides dispatchable and flexible renewable energy generation to meet peak demand, and pumped hydro is the only current technology that provides deep storage of more than eight hours to days in some cases.”

Brokof said AGL is the largest private owner/operator of hydro generation in Australia, with 785 MW of installed capacity, and more to come.

AGL Energy Chief Executive Officer Markus Brokof speaking at Australian Energy Week, Melbourne 2024.

Image: AGL Energy

“ We are investing $40 million (USD 26 million) in upgrades to Clover Power Station which will increase the capacity of the Kiewa Scheme in Victoria by 14 MW. We are also progressing the 400 MW 8-hour storage Muswellbrook pumped hydro plant in NSW with our joint venture (JV) partner Idemitsu, which will provide critical long duration storage for NSW,” Brokof said.

“We are doing early concept work to explore the possibility of upgrading AGL’s three major hydro assets at Dartmouth, Eildon, and Kiewa with pumped hydro capability. These potential projects are in early-stage studies but demonstrates the important role that we think pumped hydro will play in Australia’s energy transition.”

Origin Energy Chief Executive Frank Calabria said at a June 2024 investor briefing that the company’s 3 GW gas fired generation, coal seam gas resources (CSG) and liquified natural gas (LNG) asset will be more valuable in the future to achieving decarbonisation by 2030.

He also said the company would minimise ownership of wind and solar generation to boost investor returns and manage future price volatility through the transition to electrification with a mix of energy purchase agreement, rooftop solar and firming assets like batteries.

“I hope you can see our ability to navigate the exit of Eraring, the timing of storage, the timing of assets coming in, including the benefit from the gas-fired generation can be done capitally very efficiently,” he told investors.

Origin are already investing in grid-scale battery energy storage systems (BESS), such as the $400 million, 300 MW / 650 MWh battery to be built alongside its 566 MW gas-fired Mortlake Power Station in Victoria.

The Australian Renewable Energy Agency (ARENA) awarded AGL $35 million from its $176 million Large Scale Battery Storage Funding Round, announcing in December 2023, a final investment decision had been reached on AGL’s 500 MW / 1 GWh grid-forming battery in the retired Liddell power station for AGL’s Hunter Energy Hub planned for the site.

In June 2024, it announced a $150 million, 20% acquisition into United Kingdom smart energy company Kaluza, which uses a platform to automate distributed energy sources.

AGL Energy Managing Director and Chief Executive Officer Damien Nicks said the platform will enable a step change in customer experience and rapid product innovation that will empower millions of customers to affordably decarbonise.

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