UBS Australian Utilities Conference. Presentation by Jeff Dimery, Group General Manager Merchant Energy, AGL Energy Limited. April 2010.

1. AGL Energy Limited
Regulatory reform:
Blowing in the right direction
Jeff Dimery
Group General Manager Merchant Energy
UBS – Australian Utilities Conference
29 April 2010
AGL External

2. 2
Disclaimer
The information in this presentation:
› Is not an offer or recommendation to purchase or subscribe for securities
in AGL Energy Limited or to retain any securities currently held.
› Does not take into account the potential and current individual
investment objectives or the financial situation of investors.
› Was prepared with due care and attention and is current at the date of
the presentation.
› Actual results may materially vary from any forecasts (where applicable)
in this presentation.
› Before making or varying any investment in securities in AGL Energy
Limited, all investors should consider the appropriateness of that
investment in light of their individual investment objectives and financial
situation and should seek their own independent professional advice.
UBS – Australian Utilities Conference
29 April 2010
AGL External

3. Investment in renewable technologies 3
Wind is the global technology of choice among renewable
technologies- 63% of investment in 2009 (US$60bn)
Source: PEW Centre (2010)
UBS – Australian Utilities Conference
29 April 2010
AGL External

4. Technology cost curve
4
Wind currently has a substantial cost advantage
» Source: ACIL Tasman, AGL, Roam, MMA
Renewable technologies
UBS – Australian Utilities Conference
29 April 2010
AGL External

5. 5
Policies globally driving renewable investment
Since mid-2009, a number of new policies have been announced that will
drive renewable investment
Country/State Renewable Mandate
Spain 22.5% renewable by 2020
US – Colorado 30% renewable by 2020
US - Alaska 50% renewable by 2025
Israel 10% renewable by 2020
Kuwait 5% renewable by 2020
» Source: DB Climate Change Advisors
UBS – Australian Utilities Conference
29 April 2010
AGL External

6. 6
Expanded Renewable Energy Target…
Source: Roam, AGL
UBS – Australian Utilities Conference
29 April 2010
AGL External

7. 7
Renewable Energy Certificates: Prices start to rise
Penalty effectively raised to $93 per MWh.
$100
› Responsibility resides with $90
retailer $80
$70
› Increased penalty Expanded MRET Announced SHW & PV Increases REC Bank
$60
recognises need to
$/REC
incentivise development of
$50
higher cost renewable sites
$40
$30
› Anticipate rapid rise in REC $20
Expanded MRET Passed
prices following $10
Drought Impacting Hydros
development of low cost $0
sites and ramp up of target Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09
UBS – Australian Utilities Conference
29 April 2010
AGL External

8. 8
Impact of Renewable Policy Setting
Fundamental changes required to generation mix.
New Build Generation Mix
Years of Forecast - 2010 to 2020
Coal Plant CCGT Base Plant OCGT Peak Plant Renewable Plant
20000
18000
Capacity required (MW)
16000
14000 Renewables dominate
9,500MW
12000
1,200MW
10000
8000 4,500MW
OCGT peaking plant
6000 5,500MW displaces CCGT base
plant
4000
5,500MW
2000 2,800MW
0
Original 2006 forecast Current 2010 forecast
(ETS, 2% MRET) (ETS, 20% Expanded RET)
Source: AGL Greenhouse modeling
UBS – Australian Utilities Conference
29 April 2010
AGL External

9. 9
Renewable Energy Certificate (REC) obligations
Appropriate regulatory settings required to facilitate investment.
› Macarthur (365MW)
conditional commitment
› Federal legislation requires
AGL to surrender
approximately 9 million RECs
per annum by 2020
› Strong pipeline of development
opportunities
› Proven capability in site
selection, project development
and performance
› Development pipeline delayed
until improved MRET policy
framework
1. Excludes long-term supply agreements and Voluntary REC demands.
UBS – Australian Utilities Conference
29 April 2010
AGL External

10. 10
Australia has a world class wind resource
Average wind speeds (metres per second)
› Wind resource is best in
Tasmania and areas in
Western Australia, South
Australia and Victoria
› NSW, Queensland and the
Northern Territory have
limited large scale wind
potential
› The best wind sites are
already being taken in
Tasmania, South Australia
>8 and Western Australia
6-8
4-6
<4
Source: CSIRO
UBS – Australian Utilities Conference
29 April 2010
AGL External

11. 11
Wind farms: Success factors
A number of critical issues can mean success or failure of a wind farm
development:
› Wind resource
› Land access (support by landowners)
› Capital cost
› Connection access: (cost, loss factor, grid capacity)
› Wind farm scale (to absorb certain fixed cost)
› O&M costs (typically only around 2% of capital cost per year)
UBS – Australian Utilities Conference
29 April 2010
AGL External

12. 12
Wind farms: Cost profile
1
UBS – Australian Utilities Conference
29 April 2010
AGL External

13. 13
Wind resource drives turbine selection
Location of Hallett 1 turbines & wind speeds
› Wind speed generally increases with
height
› Wake effects reduce yield and drives
turbine spacing
› Hallett Wind Farm stages 1, 2 and 4 are
classic wind farm sites with prevailing
winds perpendicular to ridge
Wind Rose for Hallett 1
N
UBS – Australian Utilities Conference
29 April 2010
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14. 14
Wind project diversity improves reliability
Geographical diversity enhances the level of ’firm’ generation.
Wattle Point Hallett 1 Pool Pric e
100 $10,000
90
Regional pool price ($/MWh)
80
Wind generation (MW)
$1,000
70
60
50 $100
40
30
$10
20
10
0 $1
Sun 06 Mon 07 Tue 08 Wed 09 Thu 10 Fri 11
Half hour time increments (6-12 April 2008)
UBS – Australian Utilities Conference
29 April 2010
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15. 15
Delivering high capacity factors
Operational performance exceeds investment assumptions.
1
UBS – Australian Utilities Conference
29 April 2010
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16. 16
Strong growth pipeline
Market leading portfolio provides strategic depth and optionality.
Project Nominal Capacity (MW) Location Type Project Status Definition
Bogong 140 Victorian Alps Hydro Commissioning Committed
McKay Creek Up Rate 10 Victorian Alps Hydro Commissioning Committed
Hallett 2 71 SA - Hallett Wind Commissioning Committed
Hallett 4 132 SA - Hallett Wind Under Construction Committed
RENEWABLE GENERATION
Werribee Expansion 2 VIC - Werribee Biogas Under Construction Committed
Oaklands Hill 67 VIC - West Wind Under Construction Committed
Hallett 5 52 SA – Hallett Wind Under Construction Committed
In Development, JV with Conditional
Macarthur 365 VIC - West Wind
Meridian Commitment
Barn Hill 130 SA - Redhill Wind DA Approved Probable
Hallett 3 80 SA - Hallett Wind In Development Possible
Crows Nest 150 QLD - Toowoomba Wind Permitted Possible
Landowner Agreements in
Ben Lomond 150 NSW - Armidale Wind Possible
Place
Landowner Agreements in
Coopers Gap 300 QLD - Kingaroy Wind Possible
Place
Other 3 Projects totalling up to 600 Various Various Under Review Possible
UBS – Australian Utilities Conference
29 April 2010
AGL External

17. 17
Summary
› Significant progress with renewable policies
› Critical that legislation is passed in May/June 2010
› Requires ~ $30 billion of investment in renewable generation
› Delay to CPRS is disappointing
› Uncertainty adversely impacts investment decisions
› Wind will be the dominant renewable technology over next decade
› AGL’s renewable portfolio performing well
› First-mover advantage
› Considerable development and operational experience
› Well-positioned portfolio of sites
UBS – Australian Utilities Conference
29 April 2010
AGL External

18. 18
Further Information / Contacts
A range of information on AGL Energy Limited including ASX & Media Releases, Presentations,
Financial Results, Annual Reports and Sustainability Reports is available from our website:
www.agl.com.au
Alternatively, contact:
INSTITUTIONAL INVESTORS
& ANALYSTS RETAIL INVESTORS & MEDIA
John Hobson Nathan Vass
Head of Investor Relations Investor Relations & Media
AGL Energy Limited AGL Energy Limited
phone: +61 2 9921 2789 phone: +61 2 9921 2264
Mobile: +61 (0) 488 002 460 mobile: +61 (0) 405 040 133
e-mail: john.hobson@agl.com.au e-mail: nvass@agl.com.au
UBS – Australian Utilities Conference
29 April 2010
AGL External