AGL Energy becomes first big retailer to roll out solar PPA plan

AGL Energy has become the first of the major electricity retailers to formally launch a solar power purchase agreement (PPA) plan, as the major incumbents try to head off incursions into their retail market from the rush to solar and the emergence of rival leasing and PPA offerings and energy service companies.

AGL has branded its product the Solar Smart Plan, and it is being managed by a new division, New Energy, headed up by Marc England, who says customers are looking for choice and access to new technologies.

“Energy companies must innovate to remain competitive,” England said in a statement. “This launch is the first in a multi-pronged new product development approach from AGL’s newly established New Energy division.

Those products include battery storage and electric vehicles. England said that storage would be offered to customers later this year, although not likely as part of a PPA product.

“This business unit has adopted a new lean product development approach to ensure we get more products to market faster and improve them as we learn what customers need.”

The launch will not be a “big bang” move but will be a gradual roll-out. Origin Energy is taking a similarly cautious approach, having trialled its PPA product with employees and family, and last week beginning a “soft” launch of it product.

It will be launched in NSW and South Australia first on a “limited volume” basis to residential and commercial customers.  Victoria and Queensland will follow soon after. England says the slow start will ensure that systems are ready to cope with new offering.

AGL says its plan will allowing customers to have a solar system installed with no upfront costs. In return, AGL guarantees to supply a minimum amount of solar energy for which the customer pays a fixed monthly fee (it has not yet announced that fee) for the period of the agreement.

At the end of the agreement, which is for seven or 12 years, the customer has the right to take ownership of the solar system and continue to receive energy for “free.”

England later told RenewEconomy that the fees would not be revealed now – they would be to customers – but would be competitive with other offerings. They will be cheaper than the current retail rate. Those on 7-year PPAs will pay a higher fee for their electricity. (Other companies are offering rates of 25c/kWh).

AGL says its research shows that 81 per cent of households understand that solar can cut energy bills, and half of them think it is worth the investment. It wants to target those who have not been able to afford the upfront capital investment.

“AGL guarantees to supply a minimum amount of power from the system each year and any extra energy generated the customer gets to use for free.

“AGL will monitor and service the system for the life of the arrangement however the customer will be able to track how much their system is producing as well as their usage via a password protected online portal.”

That portal is being provided by GreenBox Australia, an Australian-based technology start-up.

AGL says customers do not need to be an AGL customer, but it says there are “additional benefits” if they are. This includes the rate of feed in tariffs for electricity exported to the grid.

(This story will be updated shortly, ed. 4pm thursday).