Origin Energy Limited · ASX:ORG
Origin Energy — Investor Day (June 2024)
65 slides from Origin Energy's investor day presentation, Jun 12, 2024
Slide 1: ASX announcement cover note: Origin Energy 2024 Investor Briefing
To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 12 June 2024 From Helen Hardy Pages 65 Subject Origin Energy 2024 Investor Briefing Please find attached a release on the above subject. For personal use only Authorised for lodgement by: Helen Hardy Company Secretary 02
Slide 2: Origin Energy 2024 Investor Briefing
For personal use only Origin Energy 2024 Investor Briefing 12 June 2024
Slide 3: Acknowledgement of Country
For personal use only Acknowledgement of Country Origin Energy acknowledges Aboriginal and Torres Strait Islander Peoples as the Traditional Owners of the lands. We acknowledge the continuous connection to land, water, sea and sky and pay our respects to Elders past and present.
Slide 4: Outline
Outline For personal use only 1. Introduction 2. Energy Markets – leading customer portfolio 3. Energy Markets – advantaged wholesale portfolio 4. Integrated Gas – APLNG world class asset 5. Octopus Energy – high growth opportunity 6. Capital management 7. Wrap up 8. Q&A 3 12 June 2024 2024 Investor
Slide 5: Introduction
For personal use only Introduction Frank Calabria, CEO
Slide 6: Our purpose
Our purpose Our purpose For personal use only Getting energy right for our customers, communities and planet Getting energy right for our customers, communities and planet 5 9 March 2022 2022 Strategy Presentation
Slide 7: Our strategic framework
Our strategic framework For personal use only Disciplined capital allocation framework Sustainable value Belief in Growth in a Assets and Disciplined and creation decarbonisation decarbonising capabilities efficient capital world allocation Good for the The energy Our assets and Track record and abi
Slide 8: Our competitive advantage enables value creation through the transition
Our competitive advantage enables value creation through the transition For personal use only • Leading customer position and a world class platform • ~3 GW gas fired generation, competitive gas supply • World class CSG resource and LNG asset • Exposure to Octopus global growth opportunity Combined,
Slide 9: Growing electricity demand and renewables provides opportunities
Growing electricity demand and renewables provides opportunities For personal use only 16% 82% Increase in of NEM to be electricity demand renewables by 20301 in NEM by 20301 Increased electricity demand Higher renewable penetration Significant growth from EV Opportunity to invest: blend of adoption
Slide 10: Elevated daily price variability provides opportunities for storage and VPP
Elevated daily price variability provides opportunities for storage and VPP For personal use only >3x >25% Increase in quantum Days where prices were of intraday spread negative in the middle of from 2018 to 2024 the day in NSW in 2023 Increased price variability Number of days with negative prices
Slide 11: Longer duration events will increase, providing more value to gas generation
Longer duration events will increase, providing more value to gas generation For personal use only >250 >90% Events in South Australia1 of today’s coal required greater than 8 generation expected hours of firming to close by 20352 • South Australia provides a good proxy of future state of the NEM, w
Slide 12: Price variability is expected to persist over the longer term
Price variability is expected to persist over the longer term For personal use only NEM electricity demand increasing1 TWh • Projected electricity demand growth is strong CAGR 3% • More renewable energy is required to meet this 271 demand1 − ~34 GW by 2030 174 − a further 33 GW by 2040 • These new r
Slide 13: Growth in distributed energy resources, data and digital capability
Growth in distributed energy resources, data and digital capability presents opportunities For personal use only Increase in connected devices and distributed energy assets Growth in distributed assets and IoT provides Traditional house has ~ 4 data points opportunity to optimise supply and demand p
Slide 14: We hold a competitive advantage across the energy chain
We hold a competitive advantage across the energy chain For personal use only Customer Energy supply Energy resource Global growth & technology • Leading customer position, • Largest gas fired generation fleet, • APLNG world class asset – • Exposure to global energy brand and low cost to serve very
Slide 15: Our ambition and strategy
Our ambition and strategy For personal use only Our ambition To lead the energy transition through cleaner energy and customer solutions Unrivalled customer Accelerate renewable Deliver reliable energy solutions and cleaner energy through the transition Our • Leading brand providing lowest cost • Ac
Slide 16: Energy Markets - Leading Customer Portfolio
Energy For personal use only Markets - Leading Customer Portfolio Jon Briskin (EGM Retail) James Magill (EGM Origin Zero)
Slide 17: Leading customer portfolio with ~4.7m customer accounts
Leading customer portfolio with ~4.7m customer accounts1 For personal use only Home and Small Business (Retail) Large Business (Origin Zero) • 2.5m Electricity and 1.1m Gas customer accounts • ~14k customers across ~25k sites • 200k electricity and 270k gas hot water Community • >10% customers on se
Slide 18: Retail competitive advantage
Retail competitive advantage For personal use only Award winning customer Strongest brand Low-cost operator experience Brand health – Preference %1 Cost to serve ($/customer) 24% -15% 22% 16% 12% 5% DMO Origin Origin Competitors retail cost allowance3 • Highest brand awareness, • Customer experience
Slide 19: Growing share and value
Growing share and value For personal use only +140k net YTD churn Creating value customer account growth 7% lower than market To date this financial year1 Monthly churn rate (%) Retail EBITDA (Electricity, Gas, Community Energy Services, 30 Solar, Broadband) 50,000 CAGR 45,000 ~18% 25 40,000 35,000
Slide 20: Unrelenting focus on the customer
Unrelenting focus on the customer For personal use only Loved brand Exceptional experience Electrification Lower cost • Retailer of choice • Leading digitised experiences • Orchestration of distributed • Simplified, leaner organisation assets • Supporting customers • Exceptional energy specialists •
Slide 21: Building solutions for the electrified home and business
Building solutions for the electrified home and business For personal use only Electric Vehicles • EV energy plans • Smart charging plans • Customers access lower cost, lower carbon energy with greater control Solar & Battery solutions − Optimise distributed assets to shift demand • Solar monitoring
Slide 22: Delivering higher customer lifetime value
Delivering higher customer lifetime value For personal use only Indicative customer lifetime value 2X • Broadband • Enabled by VPP (Loop) • EVs • Solar • Batteries • Heat pumps Energy only customer today Electrification of Flexibility Adjacencies and multi- Potential customer homes and businesses pr
Slide 23: Origin Zero – holistic set of energy transition services for large businesses
Origin Zero – holistic set of energy transition services for large businesses For personal use only A range of grid energy Reduce carbon emissions supply options and energy costs at site • Energy Supply Agreements • On-site solar and storage • LGCs and PPAs • Demand side management via VPP • Demand
Slide 24: Origin Zero – creating value through three proven revenue streams
Origin Zero – creating value through three proven revenue streams For personal use only 3 interconnected value streams1 Example case studies • Distributed energy resources (DER) − DER installation and financing − Demand side management via VPP (~230 MW under management) − Energy as a service • E-mob
Slide 25: Origin Loop - In house VPP driving value through innovation
Origin Loop - In house VPP driving value through innovation For personal use only Significant VPP growth profile Assets connected (MW) Incremental distributed assets under Growing management 2,000 connections & partnerships Smart charging: CAGR of 140% EV PowerUp 1,379 1,174 815 >420k connected devi
Slide 26: Energy Markets - Advantaged Wholesale Portfolio
Energy For personal use only Markets - Advantaged Wholesale Portfolio Greg Jarvis (EGM Energy Supply and Operations)
Slide 27: Competitively advantaged assets for the transition
Competitively advantaged assets for the transition For personal use only Existing portfolio Highly complementary additions • Portfolio of coal, gas OCGT & CCGT1, and pumped hydro • ~1 GW committed ~2 hour battery projects (owned and tolled) • Eraring playing a valuable role until new supply is built
Slide 28: Eraring will play a valuable role supporting energy security
Eraring will play a valuable role supporting energy security For personal use only • Eraring will be required to support energy security until renewables and storage fill the gap • Agreement with Government provides downside protection while providing reliable energy supporting households and busine
Slide 29: Origin's existing firming capacity is increasingly valuable
Origin’s existing firming capacity is increasingly valuable For personal use only NSW capacity prices Origin’s existing long-duration “firming” generation embedded in tariffs Gas fired generation (MW) $/MWh 3,000 30 2,500 2,000 20 1,500 1,000 10 500 - - Origin Energy SnowyHydro AGL Australia Source:
Slide 30: Flexible gas supply portfolio and trading expertise underpins value
Flexible gas supply portfolio and trading expertise underpins value For personal use only Contracted gas supply PJ 250 • Flexible long-term gas supply position underpins gas fired generation fleet, Retail and Business customer businesses. This includes: 200 − Legacy long-term gas supply contracts 15
Slide 31: Renewable and storage portfolio to cover Retail energy demand
As Eraring exits, delivering on 4 – 5 GW renewable and storage portfolio will cover Retail energy demand For personal use only Origin’s Energy Position Aim to grow renewables and storage portfolio to 4 – 5 GW by 2030 TWh Losses • Achievement of 4 – 5 GW by 2030 expected to satisfy Origin’s retail en
Slide 32: Committed batteries with further opportunities available
1 GW committed batteries with further opportunities available For personal use only Committed battery projects Project Type Capacity / State Estimated Commercial Duration Operation Date Eraring Stage 1 Build & own 460 MW / ~2hrs NSW Q4 CY2025 • Committed to three battery projects to date with a comb
Slide 33: Investing in battery storage now to capture returns
Investing in battery storage now to capture returns For personal use only Increasing intra-day spreads in NSW $/MWh 290 277 • Investment in battery storage complements our existing 261 portfolio • Value streams include: 226 − Intra-day energy arbitrage: Charge at low prices and discharge at high pri
Slide 34: Renewable development opportunities available
Renewable development opportunities available For personal use only Renewable development pipeline • Building capability and pipeline in renewable development Wind Projects Capacity1 State • Yanco Delta will be the priority development as part of Yanco Delta 1,500 MW NSW our 4 – 5 GW target Ruby Hil
Slide 35: Advanced 1.5 GW Yanco Delta NSW wind project acquired
Advanced 1.5 GW Yanco Delta NSW wind project acquired For personal use only Yanco Delta Windfarm • Advanced 1.5 GW NSW wind-farm project acquired • Development approval secured, with no local objections • Attractive wind resource and site characteristics for construction – ease of access, flat topog
Slide 36: Solid foundation of repeatable earnings that can be leveraged for growth
Solid foundation of repeatable earnings that can be leveraged for growth For personal use only Electricity gross profit1 Gas gross profit $/MWh $/GJ 60 6 50 5 40 4 average average Target range Target range 30 3 20 2 10 1 - - FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY16 FY17 FY18 FY19 FY20 FY21
Slide 37: Integrated Gas - APLNG world class asset
Integrated Gas For personal use only - APLNG world class asset Andrew Thornton (EGM Integrated Gas)
Slide 38: APLNG is a world class CSG resource with low-cost strong, stable production
APLNG is a world class CSG resource with low-cost strong, stable production For personal use only Fields outperforming expectations Stable production Enabling deferral of drilling Talinga & Orana well group production forecast – PJ # wells drilled TJ/day 679 708 701 693 674 680-710 260 251 86 66 63
Slide 39: Continuous improvement to deliver a lower unit cost of supply
Continuous improvement to deliver a lower unit cost of supply For personal use only Lowest cost / Short cycle ↑ 140 Optimise existing Optimisation activities focused on reducing well pressures, accelerating wells TJ/d production up to 140 TJ/d1 Improve well ↑ 6% Uplift in well availability2 since FY
Slide 40: Ambition to maintain cost of supply below $4/GJ
Ambition to maintain cost of supply below $4/GJ1 for the next 5 years For personal use only Create resilience to a lower Optimise the base Find & develop low-cost supply carbon future Further reduce inventory of Lower the cost of future wells offline wells, and well via lower drilling and optimisati
Slide 41: APLNG - potential for significant gas sales beyond life of existing contracts
APLNG - potential for significant gas sales beyond life of existing contracts For personal use only APLNG resource base exceeds contracted sales Supporting the energy transition PJ Exploration may increase future reserves 16,000 • Gas will continue to play a critical long-term role supporting 2C the
Slide 42: Octopus Energy – High Growth Opportunity
For personal use only Octopus Energy – High Growth Opportunity Frank Calabria (CEO) Jon Briskin (EGM Retail)
Slide 43: Octopus – rapidly growing global retail business
Octopus – rapidly growing global retail business For personal use only UK retail exceptional growth Strong growth in international markets % of market share in electricity Customers (‘000), 12-month period to April 2024 25% 400 20% 300 15% 200 10% 100 5% 0% - Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-2
Slide 44: Octopus – competitive advantages support further customer value uplift
Octopus – competitive advantages support further customer value uplift For personal use only Increasing customer value with Strong and trusted brand Cost to serve advantage distributed assets UK energy retailer Net Promoter Score £/customer account Indicative future lifetime value for an energy cust
Slide 45: Kraken enterprise software – high margin with significant global opportunity
Kraken enterprise software – high margin with significant global opportunity For personal use only Enormous addressable market High margin Growing contracted accounts in electricity and gas 12-month period to April 2023 millions of customer accounts millions of customer accounts 60 50 660 59% YoY gr
Slide 46: Octopus Energy and Kraken operate separately
Octopus Energy and Kraken operate separately For personal use only Post-transition energy company Technology business Octopus Energy Generation Octopus Energy Retail Kraken Octopus Energy Services 45 12 June 2024 2024 Investor Briefing 45
Slide 47: Capital Management
For personal use only Capital Management Tony Lucas, CFO designate
Slide 48: Strong cash flow from two diversified businesses
Strong cash flow from two diversified businesses For personal use only Two strong diversified businesses ($m)1 Adjusted Free Cash Flow ($m) 1 981m 1,275 943 1,783 363 709 1,595 1,955 1,644 1,539 1,651 1,574 1,459 1,359 1,062 1,030 965 979 1,038 844 401 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY17 FY18 FY
Slide 49: Delivered balance sheet de-leveraging and improved return on capital
Delivered balance sheet de-leveraging and improved return on capital For personal use only Significant de-leveraging delivered Higher ROCE delivered Proportional net debt1 ($bn) Return on Capital Employed2 (%), reported reported 11.8 14.2% 9.8 12.1% 3.6 8.5 8.2 3.3 9.1% 8.8% 7.2 3.1 7.7% 3.1 7.1% 2.
Slide 50: Leading to improved total shareholder returns
Leading to improved total shareholder returns For personal use only Distributions to shareholders Superior total shareholder returns Shareholder distributions ($bn) 160% Total shareholder returns1 157% 0.8 125% 120% 0.6 83% 0.3 80% 0.5 0.4 0.4 0.3 40% 0.4 0.2 0.3 0.3 - 0.1 0.5 (40%) 0.3 0.3 0.2 0.2
Slide 51: Disciplined capital allocation
Disciplined capital allocation For personal use only Operating Cash Flow APLNG Distribution • Base dividend linked to cash performance and the business cycle Debt service • All capital expenditure and investments subject to rigorous investment evaluation process based on Sustain and committed growth
Slide 52: Rigorous investment evaluation underpins the allocation of capital
Rigorous investment evaluation underpins the allocation of capital For personal use only Contracting / Alignment Hedge Strategy with Climate Targets We deploy capital in areas that deliver value to Strategic shareholders and are consistent with our strategy Scenario Analysis Fit and emissions reduct
Slide 53: Returns and ownership control benefit inform how we fund investments
Returns and ownership control benefit inform how we fund investments For personal use only Utilising third party capital On balance sheet Origin’s customer position and platforms • Retail ‘bolt on’ acquisitions • Strategically located battery sites • Brownfield battery sites Return profile enhanced
Slide 54: Planned on-balance sheet capital investment
Planned on-balance sheet capital investment For personal use only • ~$250 - 300m pa on average to FY2029 Sustain capex • Eraring and gas fired generation fleet maintenance, LPG, Regulatory compliance • 0.75 GW of committed battery projects Eraring Stage 1, Mortlake spend from FY2025 of Committed ~$8
Slide 55: We will bring in funding partners to participate in the transition
We will bring in funding partners to participate in the transition For personal use only Renewables Batteries Partner with third parties and recycle capital Tolling model • Focused on delivering Yanco Delta wind-farm project • Partner with third-party capital providers on battery tolling agreements,
Slide 56: Shareholder Distribution Policy
Shareholder Distribution Policy For personal use only Shareholder distributions cps • Target an ordinary dividend payout in each financial year of a minimum of 50% of free cash flow1 per annum, an increase from the previous payout ratio of 30% to 50% 20 • Expect to have a significant franking balanc
Slide 57: Resilient capital structure
Resilient capital structure For personal use only Adjusted Net Debt / Adjusted Underlying EBITDA1 • Committed to investment grade credit rating 4x • Maintaining investment grade Baa2 credit rating drives capital management decisions • Target leverage 2-3 x adjusted net debt to adjusted 3x EBITDA Tar
Slide 58: Active portfolio management – focussed on strategy, returns and growth
Active portfolio management – focussed on strategy, returns and growth For personal use only Peaking gas fleet Centralised Energy Organic initiatives Exit upstream Battery investment Retail Investment in fast Services (CES) Origin Zero, 360 exploration assets FID on Eraring & aggregators start capab
Slide 59: Wrap up
For personal use only Wrap up Frank Calabria, CEO
Slide 60: For personal use only
For personal use only • Energy transition presents growth opportunities • Enabled by Origin’s competitive advantage across customers, world class platform, energy supply, resource and capabilities • Exposure to Octopus global growth opportunity • Strong combined cashflow from Energy Markets and Inte
Slide 61: Questions
For personal use only Questions
Slide 62: Appendix
For personal use only Appendix
Slide 63: Robust risk management process – protecting core cashflow
Robust risk management process – protecting core cashflow For personal use only Electricity margin Price risk managed by coal and electricity APLNG Commodity Risk contracting to match tariff Hedge as required to protect investment Ability to retain a short position in periods grade credit rating of
Slide 64: Important notices
Important notices For personal use only Forward looking statements This presentation contains forward looking statements, including statements of current intention, statements of opinion and predictions as to possible future events. Such statements are not statements of fact and there can be no cert
Slide 65: For more information
For more information For personal use only Peter Rice General Manager, Capital Markets Email: peter.rice@originenergy.com.au Office: +61 2 8345 5308 Mobile: + 61 417 230 306 Lindsay Donnelly Group Manager, Investor Relations Email: lindsay.donnelly@originenergy.com.au Office: +61 2 8345 5502 Mobile: