AGL Energy looks at solar, storage and home energy solutions

AGl Energy says it is in talks with a number of battery storage suppliers at tries to ready itself for the emergence of a new decentralized electricity model.

The company – one of the three biggest retailers in Australia, and now the largest generator – says it is clear there will be rapid changes to technologies and the incumbent business models of energy utilities.

It said in its annual results presentation on Wednesday that is looking to deliver more “in-home” energy services, including smart meters, solar PV and energy storage. And it is looking to develop strategic partnerships.

“This new business model will also give AGL a capability and future growth opportunity,” it said in its report.

It is clear that incumbent utilities are facing massive pressure from the emergence of solar, and storage, and a range of software solutions, and new home energy providers. Just how quickly incumbent utilities can respond to that will be a key to their future.

RenewEconomy asked AGL Energy managing director Michael Fraser at an analyst briefing when such technologies would be brought to market.

“When is here and now,” Fraser said. “It is pretty obvious that technology is going to continue to develop – and not just technology, but disruptive business models.”

The key, he said, was working out how to plug that together. Work was underway on “solar propositions”, and the roll-out of its smart metering products, and AGL Energy was also in discussion with a number of major energy storage suppliers.

RenewEconomy asked Fraser how quickly these new technologies would impact the market, given the apparent surprise at the major impact that rooftop solar had in Australia in elsewhere

“The fact that we are talking openly about that capability clearly recognizes” the ability of technology to “sneak up” on the market,” he said. “We aim to get ahead of the curve in that respect.”

“Often technologies  … when they take off come at you quicker than you expect. We go into this with our eyes wide open. That’s why we are taking the steps that we are.”

AGL Energy’s approach follows recent remarks by EnergyAustralia, which has said that the market faces major structural change from the impact of rooftop solar, and that the industry was at a major inflection point, with usage falling, solar parity reached, and the emergence of storage and micro-grids that will bypassing- or at least challenge – traditional network businesses.

The table below illustrates how AGL Energy sees the evolution of the energy markets, and the different technologies that are influencing that. Still, Fraser said he believed that the centralized model of coal generation would continue “for some time”, given the sheer weight of capacity of the nation’s coal fired generators.

“We think it willcontinue to be dominated by that (centralised) model for some time to come. Having said that, we also recognise that there are very disruptive technologies and business models that will present challenges to that (centralised) business model,” he said.

“These initiatives will allow us to transition that business” from a centralised to a decentralised world.