Contact Energy Limited · NZX:CEN
Contact Energy — UBS Australasia Conference 2022
19 slides from Contact Energy's conference presentation, Nov 14, 2022
Slide 1: UBS Australasia Conference
UBS Australasia Conference For personal use only November 2022 1
Slide 2: Disclaimer and important information
Disclaimer and important information For personal use only While all reasonable care has been taken in compiling this presentation, EBITDAF, free cash flow and operating free cash flow are financial measures that are “non-GAAP (generally neither Contact nor any of its directors, employees, sharehold
Slide 3: Presenters
Presenters For personal use only Mike Fuge Chief Executive Officer Mike Fuge was appointed CEO in September 2019 and joined Contact in February 2020. Mike was previously the chief executive of Refining New Zealand and has a long history in the energy sector, both in New Zealand and internationally.
Slide 4: 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 For personal use only flow growth ultimately flowing through to dividends <IR> ESG CREDENTIALS Strong balance sheet to support growth investment; Shares offer
Slide 5: 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 For personal use only the problem Greenhouse gas emissions by sector Paris agreement target, Mt CO2e Our future energy profile (Greenhouse Gas Inv
Slide 6: Climate change and regulation
Climate change and regulation The New Zealand regulatory framework is being adapted to deliver on this societal imperative. There is political consensus to For personal use only deliver net zero by 2050 and on the emissions reductions budgets needed to get there Potential electricity demand impact P
Slide 7: Government support for decarbonisation
Government support for decarbonisation The Government has recently released its first Emissions Reduction Plan in response to the Climate Change For personal use only Commission recommendations An economy-wide plan to meet New Zealand’s net zero emissions target by 2050. It includes specific actions
Slide 8: Our strategy to lead NZ's decarbonisation
Our strategy to lead NZ’s decarbonisation For personal use only 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
Slide 9: Positive outlook for demand
Positive outlook for demand Data centres looking to enter New Zeland, and energy intensive industries looking to sign up long-term renewable energy For personal use only agreements New data centre build Energy intensive industries A Tiwai smelter (NZAS) extension beyond 2024 appears likely: Several
Slide 10: Positive outlook for demand
Positive outlook for demand For personal use only Process heat conversion and baseload thermal substitution Process heat conversion Baseload thermal substitution Since 2020, there has been $69m in confirmed GIDI funding for process heat conversion Despite higher expected long run electricity prices,
Slide 11: Market leading development pipeline
Market leading development pipeline For personal use only In line with core markets and capability Geothermal generation potential (TWh p.a.) Potential geothermal development projects 0.2 Current generation (p.a.) 2.8 3.3 0.3 Tauhara Te Huka Tauhara 1.4 (174MW) (51.4MW) GeoFutures (under constructio
Slide 12: Strategic acquisitions and partnerships to build capability
Strategic acquisitions and partnerships to build capability For personal use only Wind: Roaring40s adds wind development capability Solar: Lightsource BP partnership adds solar development capability Immediate wind development Capability and resourcing to accelerate Contact’s position in grid-scale
Slide 13: Decarbonising our portfolio: Leading an orderly transition to renewables
Decarbonising our portfolio: Leading an orderly transition to renewables For personal use only 2021 Thermal review announced Key outcomes: • Act on our commitment to ESG, contributing to better outcomes for our communities and the ThermalCo discussion paper released environment 2022 • Support secure
Slide 14: Wholesale risks remain elevated
Wholesale risks remain elevated For personal use only Forward wholesale pricing reflects current market conditions, including fuel cost and availability risks Short-term external factors that Aluminium prices higher can influence the market (+$1,123/t, up 40%). Elevated wholesale pricing out to 2026
Slide 15: Long run pricing expected to revert to $100-110/MWh
Long run pricing expected to revert to $100 – $110/MWh from $85/MWh previously For personal use only Long-term pricing is linked to the long-run marginal costs (LRMC) of new renewable projects to meet demand plus costs associated with firming renewable intermittency Previous (~2019/20) Current (2022
Slide 16: Tauhara capacity further increased
Tauhara capacity further increased Capital cost up reflecting capacity addition, inflationary environment and initiatives to de-risk the schedule For personal use only Schedule Resource / capacity Cost Returns On track for first steam supplied Expected project costs of $880m¹. This is $62m higher th
Slide 17: Contact indicative EBITDAF after completion of announced investment programme
Contact indicative EBITDAF after completion of announced investment programme For personal use only Normalised and expected EBITDAF ($ million) Driven by pricing and channel management Growth investment Actual 41 15 57 553 537 88 30 446 40 Long-term channel netbacks remain 720 below wholesale market
Slide 18: Appendix
For personal use only Appendix 18
Slide 19: Integrated portfolio performance
Integrated portfolio performance 1 Electricity sales Annual sensitivities Operating earnings (EBITDAF) For personal use only Actual Forecast Actual Forecast 1 Electricity revenue: Electricity sales (net of network, Continuing operations ($m) (i) Long-term channels 103 105 108 106 110 meters costs) f