Contact Energy Limited · NZX:CEN
Contact Energy — Investor Presentation (September 2023)
27 slides from Contact Energy's investor presentation, September 2023
Slide 1: Contact Energy Introduction
Contact Energy Introduction International Engagements | September 2023 1
Slide 2: Disclaimer and important information
Disclaimer and important information While all reasonable care has been taken in compiling this presentation, neither Contact EBITDAF, free cash flow and operating free cash flow are financial measures that are nor any of its directors, employees, shareholders nor any other person gives any “non-GAA
Slide 3: Content
Content 1 Introduction to New Zealand’s Electricity Sector 4–9 2 Contact Energy Overview 10 – 24 3 Appendix: Supporting information 25 – 27 3
Slide 4: Introduction to New Zealand's electricity sector
Introduction to New Zealand’s electricity sector 4
Slide 5: New Zealand enjoys a reliable, affordable and environmentally sustainable electricity system
New Zealand enjoys a reliable, affordable and environmentally sustainable electricity system Competitive Regulated monopolies Competitive Spot 4 electricity pool 1 29 8 2.3 Major generators National Distribution Retailers Million consumers transmission businesses over 50k connections grid operator N
Slide 6: NZ electricity supply is highly renewable
NZ electricity supply is highly renewable Contact has led the way in decarbonising the NZ electricity system through geothermal development Electricity generation carbon emissions (units of CO2e) Current national quarterly supply and demand (TWh) Calendar year Measured at the station grid entry poin
Slide 7: Electrification will reduce carbon emissions
Electrification will reduce carbon emissions With New Zealand's high renewable penetration, electricity is the solution to reducing carbon emissions, not the problem Greenhouse gas Government’s The Climate Change Commission expects electricity demand to emissions by sector first Emissions grow to me
Slide 8: The market quickly responds to changes in supply and demand by sending price signals
The market quickly responds to changes in supply and demand by sending price signals And the fundamental requirement for thermal to support a hydro dominated system supports forward electricity prices Short-term external factors that Wholesale and futures electricity pricing ($/MWh) can influence th
Slide 9: Why invest in New Zealand?
Why invest in New Zealand? New Zealand has an open economy that works on free market principles Market oriented economy Stable banking sector with Comparatively Reserve Bank low-developed Ease of doing Policies to Strong supervision country business business promote skills international costs immigr
Slide 10: Contact Energy Overview
Contact Energy Overview 10
Slide 11: Why invest in Contact?
Why invest in Contact? The investment opportunity in our core market is large and in line with our unique capability which will deliver cash flow growth ultimately flowing through to dividends <IR> ESG CREDENTIALS Strong balance sheet to support growth investment; Shares offer relative value and liq
Slide 12: Contact is one of New Zealand's most significant companies
Contact is one of New Zealand’s most significant companies It is an owner and operator of low-cost, long-life renewable generation assets and is developing its consented geothermal development options 86% Long term renewable contract for gas storage generation 5-year average 5 8.4TWh geothermal 5-ye
Slide 13: Contact has a diversified and resilient portfolio of generation assets
Contact has a diversified and resilient portfolio of generation assets 5 year average generation by station and type (FY19-FY23)1 Where we are 8.4TWh Under construction ~1,870 average 3,908GWh generated Roxburgh (320 MW) 1,746 3,234GWh Te Huka (27 MW) 181 Ohaaki (41 MW) 319 Poihipi (53 MW) 340 1,252
Slide 14: Our strategy to lead NZ's decarbonisation
Our strategy to lead NZ’s decarbonisation Strategic Grow Grow renewable Decarbonise Create outstanding theme demand development our portfolio customer experiences Objective Attract new industrial demand with Build renewable generation and Lead an orderly transition Create NZ's leading energy and ser
Slide 15: Contact has a clear path towards a long-term thermal asset solution
Contact has a clear path towards a long-term thermal asset solution Decarbonise our portfolio Horizon Otahuhu closed in 2015 Peakers to be retained, medium term, to assist orderly transition 1 without threatening stable, affordable electricity supply Market testing of ThermalCo solution concluded Pe
Slide 16: Our pathway to Net Zero for Scope 1 and 2 emissions by 2035
Our pathway to Net Zero for Scope 1 and 2 emissions by 2035 Decarbonise our portfolio Current emission breakdown Decarbonisation pathway (ktCO2e) (ktCO2e) 92 788 -207 Te Rapa SBTI FY26 target 648 ktCO2e -287 TCC -36 -51 299 -128 -148 -189 FY22 scope 1 New emissions (Tauhara Long term thermal Capturi
Slide 17: Showing clear leadership in responsible decarbonisation of NZ's electricity supply
Showing clear leadership in responsible decarbonisation of NZ’s electricity supply Decarbonise our portfolio By investing to displace baseload thermal generation at Te Rapa and TCC and innovating to reduce NZ’s reliance on fast start peakers for system security FY12 FY18 FY22 FY23 FY273 Output from
Slide 18: Key partnerships to advance demand growth
Key partnerships to advance demand growth Contact has developed a view of relative netbacks across applications and Grow will focus on those of highest value demand Large scale data centres Entered into 10-year renewable energy agreement with Microsoft on new geothermal power station at Te Huka (ren
Slide 19: Market leading renewable development pipeline consented
Market leading renewable development pipeline Contact has built a renewable electricity development pipeline of >6TWh, and is targeting 10.3TWh of Grow renewable generation output online by end of FY27 renewables development 6.5TWh Planned and consented renewable energy development projects1 Expecte
Slide 20: Geothermal investment programme underway
Geothermal investment programme underway Supporting the decarbonisation of New Zealand by building world class geothermal power stations Grow renewables development Tauhara Te Huka 3 GeoFuture3 Size (TWh p.a) 1.4 0.4 1.44 FID date Feb 2021 Aug 2022 Early 2024 Online date Q1 2024 Q4 2024 2H 2026 Curr
Slide 21: We've developed the capability to execute large capital projects through our Major Projects office
We’ve developed the capability to execute large capital projects through our Major Projects office Grow renewables development Tauhara Te Huka 3 GeoFuture Wind Solar Battery Organisation Design Capability Construction Clear vision and leadership Design Efficiency through scope Front-end work and pro
Slide 22: Contact's retail business
Create Contact’s retail business outstanding customer experiences An innovative customer-focussed business with multiple service offerings Electricity is purchased from the wholesale business at an Retail electricity market-share by customer connections arm's length internal transfer price and sold
Slide 23: Scaling retail business through adjacencies
Create Scaling retail business through adjacencies outstanding customer experiences Incremental margin and improved customer experiences drive increased customer lifetime value Broadband: Broadband connections Multi product attachment Multi-product churn benefit Growing continues to drive lower chur
Slide 24: Contact expects to deliver near term uplift in renewable generation and EBITDAF
Contact expects to deliver near term uplift in renewable generation and EBITDAF Further substitution of baseload gas generation for low cost geothermal to drive EBITDAF margin uplift Renewable generation – Annual output (TWh) EBITDAF Guidance vs Actual ($m)3 (Exit run-rate illustration) 10.9 10.3TWh
Slide 25: Appendix: Supporting information
Appendix: Supporting information 25
Slide 26: We have stepped up our ambitions for the delivery of Contact26
We have stepped up our ambitions for the delivery of Contact26 And we have committed to reach net zero (Scope 1&2) by 2035 Strategic pillar FY27 ambitions1 Facilitate 100MW of new demand. Grow demand Reach 100MW total Demand Flex and start pivoting to Demand Response. New green chemical channel esta
Slide 27: Integrated portfolio performance
Integrated portfolio performance Operating earnings (EBITDAF) 1 Electricity sales Continuing operations ($m) (i) Long-term channels (ii) Market channels 553 131 133 133 546 115 Price 108 103 105 106 573 ($/MWh) 5051 EBITDAF 5.08 5.14 93 4.94 Price 87 446 4.59 4.57 ($/MWh) 3.73 5.03 3.61 3.69 4.29 3.
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