AGL acquires stake in geothermal power firm Torrens Energy; inks JV pact

10 July 2008

Power company AGL has decided to pick up a stake in Torrens Energy, paying Aus$2.2-million for a 9.99 per cent ownership in the geothermal exploration firm.

AGL Energy, which is based out of St. Leonards, New South Wales, is Australia's largest gas and electricity supplier. It is not entering the geothermal sector, having announced its buy-in in Perth-based Torrens Energy.

According to Michael Fraser, AGL's managing director, geothermal energy is an emerging renewable technology that will complement AGL's existing pipeline of renewable energy projects in wind and hydro, and represents an opportunity for AGL to participate in the development of this new industry.

Geothermal power is energy generated by heat stored below the Earth's surface, or the collection of absorbed heat in the atmosphere or oceans. Geothermal power currently supplies less than one per cent of the global energy consumption.

Frasersaid geothermal energy could help AGL meet the federal government's mandatory renewable energy target scheme (MRET), which will need energy companies to source an increasing proportion of their power from renewable sources.
AGL said it had also penned a geothermal alliance with Torrens to commercialise base load geothermal projects close to the national electricity market, forming a 50-50 joint venture.

As part of the joint venture, Torrens will be responsible for carrying out exploration activities, while AGL would get the option to participate in a number of base load renewable energy projects close to the national electricity grid. AGL has a planned outlay of around Aus$10 million during fiscal 2009 in the new venture, which precludes the Aus$2.2 million stake in Torrens.