AGL says it will urgently rewrite its business strategy after rapid market change forced it to announce a massive loss in the December half, and as demand for home batteries, remote storage and electric vehicles is starting to “take off.”
CEO Brett Redman said the company had been banking on a slower transition to renewables and so-called “behind the meter” technologies, such as batteries and EVs, but now admits the speed of change requires an immediate response. The company will present that new strategy in late March.
“The external forces of customer needs, community expectations and technological change have always shaped our market,” he said at an analyst briefing announcing AGL’s dire December loss of $2.29 billion, much of it from huge writedowns announced last week. “As we’ve said for some time, it is the speed with which those forces change that will dictate the velocity of our strategy. What we have seen in recent months is an acceleration of all of those forces beyond what we anticipated.”
This has caught out AGL – and many of the incumbent fossil fuel generators – on two fronts.
The energy juggernaut is heavily dependent on revenue streams from three massive coal plants and, as a result, is Australia’s single biggest carbon emitter. AGL thought those profit streams from coal would allow it to adapt to the energy transition in its own good time, but the rapid shift to renewables has forced wholesale prices down and coal is not delivering the windfalls anticipated.
On the second front, consumers are switching behind the meter technologies, such as rooftop solar and battery storage, demand response and electric vehicles at a pace AGL had not imagined, and this is having an impact on the overall market. AGL has dabbled in all these offerings, but appears taken aback by the scale of transition.
[James Fernyhough and Giles Parkinson]