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This was driven by increases in gross margin of $77.2 million from wholesale electricity, $10.5 million from wholesale gas and $20.0 million from eco-markets gross margin. 

In relation to wholesale electricity, the improved result for the year was partly due to the non-recurrence of severe weather events experienced across the National Electricity Market in late January and early February 2011. 

Other drivers of the wholesale electricity result include additional generation from new assets and increased hydro capacity. 

Higher generation output from hydro and wind assets combined with portfolio management increased AGL’s eco-markets gross margins. The year also included a full 12 months gross margin contribution from the small-scale renewable energy scheme compared with only 6 months in the prior corresponding period. 

AGL’s flexible and market competitive gas portfolio was the basis for the improved result despite a slight offset from lower residential demand between July and September 2011 due to mild weather. 

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## Power Development 

Power Development generates earnings from the development of wind farms. Development profits are recognised on a percentage of completion basis. 

Development profits of $43 million were recognised in the year, mainly from the sale of the completed Hallett 5 Wind Farm (which reached practical completion in March 2012) and from the Oaklands Hill Wind Farm (which reached practical completion in February 2012). 

Although it has been sold, AGL will continue to operate and maintain the Hallett 5 Wind Farm, and will retain the rights to all electricity output and renewable energy certificates. 

Work continued on construction of the Macarthur Wind Farm in western Victoria. When completed in early 2013, it will be the largest wind farm in the Southern Hemisphere with a generation capacity of 420 MW. 

On 9 June 2012, AGL was named as the successful bidder under the Commonwealth Government’s Solar Flagships program. As a result, AGL will construct 2 solar photovoltaic (PV) power stations at Broken Hill and Nyngan with a total capacity of 159 MW. The total capital cost of the projects will be $445 million with $195 million being provided from Commonwealth and New South Wales state government grants. 

## Merchant Operations 

Merchant Operations is responsible for managing and maintaining AGL’s growing portfolio of wind, water and gas-fired electricity generation plants. 

AGL’s thermal and renewable generation portfolio includes the 1,280 MW gas-fired Torrens Island Power Station in South Australia, the 150 MW gas-fired Somerton Power Station in Victoria, and 781 MW of hydro generation in Victoria and New South Wales. It now also includes the 2,210 MW 

## Macarthur Wind Farm 

Upon completion, Macarthur Wind Farm will be the largest wind farm in the Southern Hemisphere with a generation capacity of 420 MW. 

## Solar Flagships PV project 

AGL will construct two PV power stations in New South Wales with a generation capacity of 159 MW. If built today, the larger of the two stations would be the largest solar power station in the Southern Hemisphere. 

## Co-generation at Qenos 

AGL’s 21 MW co-generation project for Qenos’ Altona plant is scheduled for completion in December 2012. 

