AGL Energy says battery storage “already interesting”

Australia’s biggest energy utility, AGL Energy, says battery storage is already an “interesting” proposition for consumers, and it expects radical changes in the home energy market in coming years.

“We are at the point where we have got big changes going on (in energy markets),” AGL Energy managing director Michael Fraser said on Wednesday.

“We see battery storage technology going ahead in leaps and bounds.” This, in conjcution with rooftop solar and home energy mangement systems, would cause a “significant” and “fundamental” change in the way the energy market operates, Fraser said.

AGL Energy has created a new division, called New Energy, to manage its move into these technologies. As RenewEconomy has reported, AGL Energy is planning a major new push into the rooftop solar market, along with digital meters, battery storage and home management systems.

But it is Fraser’ comments about the state of battery storage technology that will most interest the market. Many downplay exactly how close battery storage technology is to becoming commercially viable in the consumer market.

Some predict it will take off like rooftop solar did 5 years ago. Others suggest that Australia’s huge network tariff costs, as revealed again today by a new report by Carbon Market Economics, means storage will be a no-brainer and a major challenge for incumbent utilities. Others are more skeptical.

Fraser, however, says it will be like any other change the company has faced over the last 180 years – from the introdution of gas lights, light bulbs, and the arrival of gas and large scale coal generation and renewables.

“History shows that (such technologies) start slow, but then take off faster than anyone expects,” he said. “We are positioning ourselves for that.”

Fraser added that AGL Energy had already been in discussions with suppliers about battery storage and digital meters technology. See RenewEconomy’s articles on the big push by retailers into the home energy market, in an attempt to regain lost ground in the rooftop solar sector.

The comments by Fraser came in response to questions from RenewEconomy on a telephone press conference in conjunction with the company’s results.

These results showed that average household consumption continues to fall substantially, largely as a result of energy efficient appliances, and the penetration of rooftop solar.

AGL says new houses use 37 per cent less electricity than the country average. Average consumption per customer fell another 4.4 per cent in the latest period, extending a decline lasting more than 5 years.

Asked how long that could continue, an AGL executive said: “That is the $64 million question.”

Still, despite the lower consumption, AGL Energy managed to extract ore profits from its retail division, courtesy of “margin management”, which translates into higher prices. Gross margins per customer rose 7.2 per cent as profits from the retail division (which includes gas and electricity) rose 16.9 per cent to $159 million.

See also https://reneweconomy.wpengine.com/2015/australias-first-100mw-solar-plant-to-begin-generating-in-march-55326

and https://reneweconomy.wpengine.com/2015/agl-says-political-deal-wont-lift-renewable-energy-investment-72133