AGL chief Damien Nicks explains transition challenges for 2014 CEO Survey

Wind farm components are scarce, transformer supply is patchy and sourcing the special steel for them is even harder. AGL boss Damien Nicks explains the vast challenges of energy transition.   

AGL has increased security of its systems, CEO Damien Nicks says. Picture: Britta Campion / The Australian

AGL chief executive Damien Nicks is positive about the year ahead for the power giant but is frank about the long list of challenges it, and the industry, are facing. The Australian surveyed the biggest names in business for its 2024 CEO Survey. This is Nicks’ full response to questions about inflation, meeting 2030 targets and the evolution of working from home.


How is inflation and the prospect of higher for longer interest rates affecting your business? Importantly, is the behaviour of your customers changing?

We are acutely aware of cost-of-living pressures and the impact on households, and we are focused on supporting our most vulnerable customers with assistance, including the $70m in customer support we have put in place over the next two years.

We continue to see inflationary pressures in our supply chains with increased prices for materials and equipment. Demand in the renewables and firming pipeline remains significant.

The supply of components is also difficult as factories and supply chains, including the shipping industry, have been constrained and slow to ramp up.

There are not enough wind farm components available, for example, and transformer supply of all sizes is becoming hugely problematic. Even sourcing the special type of steel required for transformers is difficult.   

How would you rate the shape of the Australian economy as we head into the New Year? While we remain cautious about the broader economy, there continues to be strong activity in our industry and we remain positive about the outlook for AGL through the energy transition.

In the energy sector we continue to see strong demand for materials and for skilled labour to support the development and build-out of new projects.

AGL CEO Damien Nicks says the energy transition is the most significant and complicated challenge Australia has ever attempted. Picture: Alexander Legaree

What are the big reforms needed so the economy (and your business) can sustainably reach full potential?

The energy transition is one of the most significant, most complicated, and most important transformational challenges Australia has ever attempted.

For it to succeed, transition requires all of us – the energy industry, all levels of government and regulators, and the community – to work together to meet Australia’s emissions reduction targets.

We need to consider all the moving parts of transition to overcome challenges. This includes supply chain delays, attracting adequate global capital, ensuring we have the required industry skills, improving grid connections and planning processes, and bringing projects to market quicker.

We must bring communities and customers along on this journey as well – they have the potential to be both facilitators and beneficiaries from the transition.

In the short term, helping consumers with affordability is important. One option governments can help with is the harmonisation of state concessions schemes and energy relief grants programs to create a more targeted and unified framework.

In the medium term, policies to help support a significant increase in customer energy resources (CER) – like rooftop solar, home batteries, and electric vehicles and the orchestration services – to take advantage of a decentralised grid will be critical. To date these policies are mostly managed at a state level. A co-ordinated national CER policy and working closely across the energy retail sector could help to ensure the expansion, management and benefits of a more decentralised electricity system are experienced across the National Electricity Market.

At AGL, we continue to accelerate our efforts to build and contract up to 5GW of new renewables and firming capacity by the end of 2030 as part of our ambition of adding up to 12GW of renewables and firming by the end of 2035.

AGL's 250 MW / 250 MWh grid-scale battery at Torrens Island. Picture: Supplied

Australia has six years to meet its 2030 targets for a 43 per cent reduction in baseline emissions. What needs to happen here?

We need to prioritise and expedite approvals for those projects that are most readily achievable while considering the important issues of delivering on our environment and social licence.

This would mean an immediate focus on projects that can utilise existing infrastructure, such as transmission connections.

The current time for planning, approval and delivery of energy projects is too long. While it’s important there are robust planning and environmental approval processes in place, the need for the transition to make significant gains over the next six years means efficiencies in prioritising renewable and storage projects in the planning process (which today can take longer than three years) and a streamlined connection process is needed to keep the transition on track.

This is not a criticism of any agency, but an acknowledgment this transition is such an enormous task that we need to do things differently. We welcome governments leaning into a whole-of-government approach to the energy transition and engaging planning and transport portfolios.

What level of adoption is your business currently at with the use of AI technology?

AGL is committed to exploring ways new artificial intelligence (AI) technologies can be used across our business and a key part of our strategy is leveraging technology, digitisation and AI.

We already use AI in our retail business and have more than five million transactions managed through AI annually, and this continues to grow incrementally.

Our load forecasting team use machine learning models and AI to help forecast customer usage patterns for electricity and gas. These enable us to more accurately manage how our portfolio of assets are dispatched into the grid to meet variable demand.

We are in the process of rolling out our enterprise-wide AI functionality for employees. AGL is one of the first companies in Australia to trial Microsoft’s 365 Copilot Early Access Program.

What external issues do you expect to impact or disrupt your business within the next 12 months – the so-called 3AM thought?

Several high-profile cyber security attacks in Australia this year continue to reinforce the ever-evolving cyber critical risk for all businesses. We continue to evolve our systems, monitoring and detection, and testing to keep pace with the cyber landscape. We have increased the resilience of our systems this year and continue to scale up our cyber security systems and teams, but we can’t afford to stand still. The risk is always there.

How has your organisation’s approach to working from home evolved since the pandemic?

In 2023, we announced a new hybrid working arrangement with corporate employees working in the office three days a week. Two of these days are set “anchor days” allowing for all members of each team to be in the office at the same time. The third day in the office can be chosen by each employee.

We believe this strikes a balance between providing flexibility for employees and fostering opportunities for team members to be together in person.