Australia’s biggest energy utility Origin Energy has dramatically upgraded its earnings forecast for the current year, and confirmed that it has joined the local and global rush to secure an offshore wind licence in Victoria.
Origin has accepted an $18 billion takeover offer that will see global funds giant Brookfield take over its  Australian utility business, and it has pledged to sped $20 billion on new wind, solar and storage projects by 2030 to accelerate its switch from fossil fuels to renewables.
That transition includes the anticipated closure of the country’s biggest coal plant, Eraring, in late 2025, but most of its planned new investments were thought to be focused on onshore wind, solar, battery storage and possibly pumped hydro.
Origin has now confirmed it has teamed up with RES to pursue two potential licences in the Gippsland region of Victoria, the country’s first offshore wind zone where more than a dozen global giants and local hopefuls are competing to win licences to conduct full feasibility studies.
It has provided no detail on the exact location or scale of the offshore wind projects.
The company meanwhile, has revealed that the price caps imposed by the federal and state governments is helping lower wholesale prices, and – along with its ability to source low cost coal from suppliers – will help boost its own profits in the 2022/23 financial.
“Since the introduction of the price cap, forward wholesale electricity prices have reduced, and this is expected to have a positive impact on consumer tariffs from FY2024,” the company said in a statement.
This will be welcomed by the federal government, which last week applauded the big fall in wholesale electricity prices in the March quarter, helped by the price caps and the growing amount of wind and solar in the grid.
“Origin has also been able to contract additional coal supply at the capped price of $125/tonne which, together with higher than anticipated deliveries of legacy-priced coal, has resulted in lower coal supply costs for FY2023,” the company said.
Origin now expects underlying profits from its energy markets business to be between $950 million and $1.2 billion, a significant upgrade from its previous guidance of the higher end of a $600 million to $730 million range.
It said, however, that the bulk of the increase will come from its investment in Octopus Energy, which is enjoying stronger than expected trading in the UK, which is also emerging from its own energy crisis.
“In the UK, following a volatile first half, market conditions have stabilised over the winter period and Octopus has seen a rapid return to more normal trading conditions,” Origin said in a statement.
“With the more volatile shoulder period concluded, Origin now expects to record a significant positive EBITDA contribution from Octopus in FY2023. Following the recent acquisition of Bulb, Octopus is now the second largest energy retailer by customer accounts.
“This, together with strong momentum in Kraken licensing, positions in international markets and across other energy services, means Octopus is well positioned to grow revenue and EBITDA margins as the energy transition continues to accelerate.”
