Q&A with AGL's Michael Fraser  

The Climate Spectator (GP) has an interview with AGL CEO Michael Fraser (MF) looking at their interest in renewables, amongst other things - Q&A: Michael Fraser.

GP: Ok. You said today that you might not need to build out any more, to give the go ahead to any more wind farms for 12 to 18 months, because you’ve met your RET obligations. That might change, though, if you buy some of the Energy Australia assets, mightn’t it? You might have to accelerate that development pipeline

MF: Well, I think that’s really where people were heading. Obviously if you buy any of the retail businesses in NSW, you’re going to inherit an obligation to surrender additional RECs. Whether you need to build more wind farms to satisfy that, or not, will depend on the particular position of that retailer and how much they’ve forward contracted.

GP: Ok. How have your wind assets actually performed this year? Did you get enough wind and did the wind blow at the right time?

MF: The long and the short of that is absolutely yes. We generated 780,000 megawatt hours and it was up pretty substantially on the prior year. And the capacity factors, the Hallett wind farms were sitting up around the 40 per cent mark, which really is world class. It’s just interesting to note that's equivalent to taking around 160,000 cars off the road, what we generated out of our wind farms this year.

GP: And your hydro assets? How are they performing? And do you have enough water for them?

MF: Yeah. Well, that’s part of the good news that we’re letting people know about today; that the last time the Dartmouth hydro plant ran was back in late 2007. It’s a dam of last resort for irrigation purposes and with the drought it was run down and hasn’t been able to operate. But we’ve got it back up to the water levels that are necessary and it ran the other week. We’ve run it up to around a 100MW. Also, at Eildon we’ve had, you know, the good rainfall and the snow that’s there at the moment, that’s led to an increase in capacity at Eildon for us as well for the summer that’s ahead. The hydro scheme is basically drought proof because it collects all the snow melt from Falls Creek, so it fills three times a year and that’s more of the same for it.

GP: What about solar? You have a shortlisted application in the Solar Flagships Program. What role do you see solar playing in the Australian energy industry?

MF: Well, first of all, of the technologies that we see out there in distributed generation, obviously it’s got a lot of potential to come down the cost curve and certainly from the people that we’re talking to, over the next couple of years we expect to see continued reductions in the cost to manufacture, and see improvements in the efficiency of solar. So, I think there’s a lot of potential that’s sitting there. I think the other really interesting thing about solar is the... almost the love affair, I guess you’d describe it, that the general public has with solar. And we’ve seen that with the uptake of solar as a result of the policies that the government put in place. So, people are wanting to do the right thing and I think that community attitude, as much as anything else, is going to drive the future development of the solar market.

GP: You’re particularly interested in solar PV, I understand – large-scale solar PV. What is the potential there, and what about the cost outlook?

MF: Well, when we look out two to three years from where we are today, we see some fairly significant reductions in the cost of large-scale solar PV and improvements in the efficiency of the technology. That having been said, there’s still a way to go for large-scale solar and certainly small-scale solar, to compete with wind. As a large-scale technology, wind is well down the cost curve. I think one of the other interesting issues about large-scale solar is the quantum of land, quite frankly, that is required to be taken up. I think that’s an issue that people will need to focus on, as opposed to wind farms, that you really don’t sterilise the farms. Once you’ve got your wind farms up and running, people run their sheep and run their cattle. It’s not an issue.

GP: Lend Lease announced their solar plans just a few weeks ago and said that they’ll be joining with a large electricity retailer. That wouldn’t happen to be you, would it?

MF: I think that would happen to be us, yes.

GP: And what are your expectations of that joint venture?

MF: Well, we’ve combined with them. We’ve obviously got the relationship with our customers. We’re a natural channel to market and we’ve teamed up with Lend Lease and First Solar, who we think have the best quality product out there to supply, to back to our… into our customer base. Lend Lease will do the installation. First Solar are supplying the product. And we’ll manage the customer interface.

GP: The electric vehicles; you’ve got an interesting joint venture with Better Place. How’s that progressing?

MF: Well, I think the primary focus, and if it goes ahead, is likely to be in the ACT market. So that gets interesting for us from a number of points of view, because obviously we have our interest in the ACTEW AGL joint venture there, as well as the overarching relationship between ourselves and Better Place. That’s progressing well, but at the end of the day it’s a matter for Better Place as to when they press the 'go' button on that and if and when they do, we’re ready to supply the renewable energy.