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Economic
Sustainability Performance Report 2012 17
Optimisation of electricity generation portfolio
AGL has Australia’s largest privately owned, operated
and controlled portfolio of renewable generation assets
and a pipeline of renewable development opportunities.
AGL’s integrated business strategy is consistent with
a carbon constrained future.
The acquisition of Loy Yang A significantly increases AGL’s generating
capacity and output providing more scope to optimise the portfolio.
Approach
Over the next decade, it is estimated that the industry will need
to spend approximately $30 billion on new renewable generation
assets in order to meet targets pursuant to the Commonwealth
Renewable Energy Target. Based on current customer numbers,
AGL would need to invest approximately $5.1 billion if it were to
meet its share of the mandated scheme. The current and future
earning potential of AGL’s electricity generation portfolio is
influenced by many factors, including the operational efficiency
of the assets and their availability and ability to start reliably when
electricity prices are high.
For wind farms, the capacity factors achieved determine revenue,
and AGL recognises the importance of accurately projecting
capacity factors during the development stages of projects
to ensure that actual performance meets the investment case.
For all renewable generation assets, revenue is partly dependent
on the value of Renewable Energy Certificates and partly on
the wholesale National Electricity Market price. Higher returns
are possible where individual investor costs are lower than the
costs associated with the marginal project required to meet the
Renewable Energy Target. Through early site selection, AGL has
sourced some of the best sites for wind development in the country,
allowing for potentially greater returns over the long term.
Performance
During FY2012, the operational performance of gas and hydro
generation assets has been strong with dam levels at Eildon and
Dartmouth increasing from 86% and 64% respectively, as at
1 July 2011, to 90% and 86% respectively as at 30 June 2012
due to significant rainfall in Victoria.
Commercial availability and start reliability of generation assets
show strong performance well above the international benchmark,
as highlighted in the chart below.
During FY2012, AGL completed the construction of 120 MW of
new renewable energy. At 30 June 2012, AGL had 420 MW of new
renewable generation under construction.
Ongoing profitability
Commercial availability/start reliability
Somerton
Power Station
2
AGL Hydro
2, 3
Wind
Torrens Island
Power Station
1
Availability/start reliability
84
86
88
90
92
94
96
98
100
%
Wind farm generation
Legend
FY09
FY10
FY11
FY12
International benchmark
3
Legend
Capacity factor FY10
Capacity factor FY11
Capacity factor FY12
Note
Hallett 5 achieved practical completion
on 28 February 2012.
Oaklands Hill achieved practical
completion on 23 March 2012.
Oaklands Hill Wind Farm –
Overnight shutdown of nine turbines.
0
10
20
30
50
40
31.7 31.8 33.3
40.7
41.4
38.6
39.8 39.0 41.9
40.6
31.8
23.2
37.8
Wattle Point
Hallett 1
Hallett 2
Hallett 4 Hallett
5
Oaklands
Hill
%
Notes
1 Commercial availability is used to measure Torrens Island performance, and represents the percentage of times the plant is available to operate when required.
2 Start reliability is used to measure the performance of Somerton and AGL Hydro. Start Reliability is the percentage of times the plant started successfully when asked to start.
3 North American Electric Reliability Council Five Year Average. Note that the benchmark for Hydro facilities has been adjusted for the difference in operating regime between
the North American fleet and AGL’s fleet which operate as peaking plant which increases the frequency of starts and stops.