Page 71 - AGL Sustainability Report 2011

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Sustainability Performance Report 2011 69
Sustainable generation sources
Renewable energy target
Investing in renewable energy delivers an immediate
beneft in ensuring AGL contributes its share of meeting
Australia’s Renewable Energy Target, and in the medium
term will deliver greater value to the organisation
when the cost of carbon is accounted for in the energy
supply chain.
In August 2009, the Commonwealth Government passed legislation
introducing a 20% Renewable Energy Target (RET) by 2020 for
Australia. The new target requires 41,000 GWh of renewable
generation by 2020 to 2030, a four-fold increase on the original
Mandatory Renewable Energy Target.
In June 2010, the Commonwealth Government amended the RET
Scheme, splitting it into two distinct components:
>> a Large Scale Renewable Energy Target (LRET) – which uses a
market mechanism to support new large-scale investment
>> a Small Scale Renewable Energy Scheme (SRES) – which delivers a
fxed price incentive for the installation of small scale technologies
such as solar hot water systems and solar PV.
The LRET constitutes the vast majority of the 20% RET by 2020.
AGL has already commenced planning new large-scale generation
projects and is in regular discussions with independent developers to
satisfy its RET obligations. New renewable generation commencing
operation is able to create one Renewable Energy Certificate (REC)
for each MWh of electricity produced. These RECs are then sold to
electricity retailers such as AGL for use in complying with the LRET
Building new renewable generation
It is estimated that meeting the 20% target by 2020 will require
around $30 billion of investment in new renewable energy
generation. As an energy retailer with a significant market share of
Australia’s electricity consumption, AGL’s developments are poised
to make a significant contribution to meeting this target.
In FY2011, AGL completed work on the AGL Hallett 4 Wind Farm.
This project adds 132 MW of new renewable capacity to AGL’s
operated electricity generation portfolio. AGL is continuing to
develop a number of other wind farm projects including:
>> AGL Hallett 5 Wind Farm: located close to AGL’s other Hallett wind
farms in South Australia, when completed this project will add
around 52 MW of wind capacity to AGL’s portfolio
>> Oaklands Hill Wind Farm: this project, located in western Victoria,
will comprise 63 MW of new wind powered generation capacity
>> Macarthur Wind Farm: the 420 MW Macarthur project in
south-western Victoria will be one of the southern hemisphere’s
largest wind farms, producing enough energy to power 220,000
AGL is also acting to further diversify the renewable energy
technologies in which it invests (refer to
page 71
for further
Securing demand
AGL’s strategy of investing in renewable energy is not only in
response to government-mandated targets. Consumer-driven
demand is also important. As part of managing issues such as
legislative risk, AGL has sought to contract renewable electricity
supply directly with large consumers that is in addition to mandated
targets. AGL has secured significant customer loads for renewable
energy, which effectively underwrite new renewable energy
projects. Through these contracts, AGL is meeting its goal of being
Australia’s largest retailer of new renewable energy, selling over
1 TWh annually.
Renewable generation required to meet LRET
This chart indicates the relative proportion of Australia’s renewable energy target that AGL will be responsible for, based on current market share (approximately 15%), and also its
potential market share of 20% or 25% over the coming years.
15% market share
20% market share
25% market share