Power giant AGL has taken a $150 million stake in software platform Kaluza and will roll out the technology to its 4 million Australian customers, allowing it to manage and trade on its customers’ behalf the renewable energy they generate and store from solar panels and batteries in their homes.
AGL’s Kaluza deal will level the playing field with its chief rival Origin Energy, which has successfully invested in a similar digital retailing technology called Kraken, owned by European energy retailer Octopus Energy.
The technological wizardry of digital retailing has several benefits for big energy producers.Credit: Bloomberg
Origin Energy acquired a 20 per cent stake in Octopus in 2020 for just over $500 million, and adopted Kraken as its retail platform. The platform’s success and the question marks over its true value helped scuttle Canadian funds giant Brookfield Asset Management’s ultimately unsuccessful $20 billion takeover bid for the retailer in 2023.
AGL’s investment will give it a 20 per cent stake in Kaluza, valuing the pioneering software platform at about $US500 million. AGL, Australia’s largest energy retailer, said the rollout of the digital retailing platform to its customer base is expected to unlock between $70 million to $90 million in pre-tax cash savings annually from 2029.
Kaluza chief executive Melissa Gander said the platform automated billing processes, gave retailers greater flexibility and allowed them to tailor energy usage for customers by interpreting the data provided by smart metres.
“[It] allows retailers to connect to devices in customers’ homes, whether that’s their EV, heat pump, a battery, and then allows us to understand the state of that device, whether it’s plugged in, whether it’s charged,” said Gander.
“It also allows us to bring in market feeds of data to ensure that we have the most up-to-date price curves within the Kaluza platform, and also respond to any grid events.”
The technological wizardry of digital retailing has several benefits for big energy producers and their customers. It gives the companies the ability to automatically store power when prices are low in home batteries or electric vehicles, creating a “virtual power plant” from which they can then sell the energy back to the electricity grid when prices are high. That ensures customers obtain power at the lowest price and sell it when demand is at a peak.
It also enables generators and retailers to pay customers to use less electricity at peak times, shedding large energy loads that would otherwise need to be supported by more costly coal-fired power, and helping grid owners stabilise the peaks and troughs of demand and supply as the world heads towards a renewable energy future.
AGL already has a relationship with Kaluza. It took a 51 per cent interest in UK retailer OVO Energy’s Australian arm in 2021. OVO developed the Kaluza software.
AGL now fully owns OVO Energy Australia and last year migrated all its 80,000 customer services onto the Kaluza platform.
Kaluza says its software enables energy utilities to reduce costs by automating various customer operations, and adds value by optimising energy usage across millions of connected customer devices.
“The technology market is changing materially with the emergence of new core utility platforms offering greater flexibility and speed,” AGL’s managing director and chief executive Damien Nicks said.
“Kaluza will enable AGL to be the energy utility of choice for Australian consumers as they make informed decisions that will power the energy transition.”
AGL said its investment will be funded with cash and the capital it provides will accelerate Kaluza’s growth and international expansion.
AGL is part of a global consortium that secured one of six federal permits last month allowing it to conduct feasibility studies in an area off the Gippsland coast where it wants to build one of the nation’s first offshore wind farms.
The company is under pressure from investors, including billionaire climate activist Mike Cannon-Brookes, to bring forward its exit from coal-fired power generation and boost spending on renewables.
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