AGL toys with idea of electric vehicles for customers

One of the more intriguing developments in the Australian energy industry is the Jekyll and Hyde transformation of AGL Energy.

The company that just months ago argued for the small scale renewable energy target to be killed off is now – under new management – pinning its brand on a big push into household solar.

The company that just last year completed its $4 billion spending binge on massive coal fire plants is now – under new management – leading the utility push into energy storage, a technology that will help turn the economics of coal fired generation on its head.

Whatever is next? Well, in keeping with the mandate by new managing director Andrew Vesey for its new energy division to challenge its traditional businesses, the most likely move will be into electric vehicles.

The energy world got a brief glimpse into the thinking of AGL when its “connected mobility specialist” Kristian Handberg gave a presentation at the Australian Energy Storage Conference.

Handberg did not actually give away much about AGL Energy’s plans, and whether you will get an EV in the driveway when you sign up for one of their home energy management contracts.

But the fact that AGL Energy has a connected mobility specialist, and lets him out in public, should be a fair indication that they are taking the issue of EVs seriously.

Handberg was one of the key architects of the electric vehicle trial in Victoria, and a specialist in the design of micro grids.

He told the conference that AGL New Energy is changing the way the utility does business, moving towards the “customer-centric model” for fear that if they don’t, then they won’t be able to hang on to customers.

“If we can integrate these and make them work, that gives us the business model for the future.”

Those components include the solar power purchase agreements it rolled out earlier this year, and the storage component that it will fast-track in the wake of the Tesla announcement. It will offer a 6kWh battery to its household customers.

Electric vehicles are appealing to utilities for two reasons. One, their adoption in the mass market may help reverse the fall in demand that has helped undercut their earnings.

The second reason is that it is very likely their consumers will want one. And a home with solar, stationary storage and an electric vehicle is going to be an interesting prospect for the tech-savvy energy management specialists. If the utilities don’t act soon, they risk losing that market.

Either way, it is a trend that utilities cannot ignore. And it is one of the reasons why AGL is investing heavily in its New Energy division, and hired some of brightest minds that would not normally be associated with the traditional utility model.

In a recent report on AGL Energy, investment bank Morgan Stanley wrote that “we do think that EVs will happen.” But it noted there are less than 1,000 EVs on the road in Australia, and even with 10,000 EVs by 2018, that would require just 5MW of baseload capacity and 12MW of renewable capacity to meet that demand.

A total of 450,000 EVs by 2025 would justify an extra 214MW of base load capacity and 410MW of renewable capacity. Morgan Stanley noted that if EVs were mandated to source power from renewable energy (doesn’t make a lot of sense to plug them into brown coal generators), then that could be an opportunity for “2 to 3 new large wind and/or solar farms of 150-200MW each”.

Handberg’s presentation gave no specifics on AGL’s plans, but it did contain some interesting graphs of some of the trends and the opportunities.

The first is that the market for electric vehicles is pretty much on the doorstep, or in the garage. And using EVs to  boost home energy resources, and buildings, is not far away.

But it will be a while, Handberg reckoned, before EVs are used in what was once considered the “nirvana” of EV use, as vehicle to grid, selling electricity back into the networks at times of peak demand and high prices.

Electric vehicles are expensive, he noted, but that’s because they have a big battery. While AGL and other companies are going to offer storage at around 6kWh, the battery arrays of various EVs and hybrids are way bigger, from 12kWh in the , to 85kWh for the top-range Tesla Model S. And electric bikes, trucks and buses offer even more options. That, Handberg noted, is potentially a lot of storage driving around the streets.