Whether it’s the evening news or the social media feed, there’s no shortage of reasons to feel anxious. Each night we’re told of America’s debt load; China’s economic slowdown; and Japan’s struggle against deflation. It’s a lot to take in. But if you look at the facts, there are some safe harbours in this turbulent time: utilities.
The origin energy vs agl between what an energy retailer generates and what it sells to customers can be filled in a number of ways. Most fill the gap by entering the National Electricity Market, an almost-national (it excludes Western Australia) market that trades electricity volumes in much the same way the ASX trades shares. This’spot’ market can be volatile; prices can go up or down 100-fold in response to demand surges. Retailers can minimise volatility by hedging or signing contracts with independent generators that oblige them to supply power at a set price. Origin has a major advantage in this area, with its own generation capacity comprising 13% of its total capacity.
From Darkness to Light: Navigating the Process of Electricity Connection
This gives it a massive competitive advantage when it comes to wholesale energy pricing, says Morgans analyst Peter Vickerson. He also points to Origin’s recent move to accelerate the closure of its uneconomic Eraring coal-fired power station to 2025, six years earlier than planned. This is the sort of action that should placate critics who argue the company hasn’t done enough to close down coal assets consistent with Paris climate goals.
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