Meridian Energy Limited · NZX:MEL
Meridian Energy — Investor Presentation (2012)
33 slides from Meridian Energy's investor presentation, 2012
Slide 1: Smart New Zealand Energy Futures Summary Presentation
Smart New Zealand Energy Futures Summary Presentation MERIDIAN ENERGY LIMITED – Analyst Presentation: Smart New Zealand Energy Futures PAGE 1
Slide 2: Disclaimer
Disclaimer This presentation may contain projections or forward-looking statements regarding a variety of items. Such forward- looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking sta
Slide 3: Introduction
Introduction o Meridian Energy commissioned a study by Professor Goran Strbac of Imperial College, London in order to better assess the implications of smart grid technologies for New Zealand o Professor Strbac has previously completed work for Meridian to quantify the wider system implications and
Slide 4: Executive summary
Executive summary o The study quantifies the potential benefits of emerging new sources of electricity demand and control (“smart grid”) o The benefits for New Zealand are quantified in terms of the opportunity for the smart grid to defer investment in electricity infrastructure o The study conclude
Slide 5: High level results
High level results Breakdown of estimated benefits of flexible demand in 2030 and 2050 ($bn) $10.65bn Cost savings in response provision o The 2030 projections have 0.28 Cost savings in distribution capacity medium levels of EVs and Cost savings in transmission capacity heat pump uptake with use of
Slide 6: What the study findings mean for New Zealand
What the study findings mean for New Zealand o New Zealand’s market design and regulatory framework will need to evolve over time to provide the right investment signals to unlock flexible demand side participation o Ensure that New Zealand’s existing load control resource is being fully utilised Ne
Slide 7: Smart grid context
Smart grid context MERIDIAN ENERGY LIMITED – Analyst Presentation: Smart New Zealand Energy Futures PAGE 7
Slide 8: What is a smart grid and why is Meridian interested?
What is a smart grid and why is Meridian interested? o Smart meters lay the foundation for a smart grid, but do not constitute the “smart grid” in and of themselves o Definitions of what the “smart grid” is vary*, but two way information flow between the electricity system and consumers is a key pri
Slide 9: Environmental Context
Environmental Context o Internationally, climate change challenges are strongly driving investigations into the benefits of a smarter grid. There are two main drivers: the need to integrate renewable generation into existing systems, and the need to meet energy requirements from electricity in prefe
Slide 10: The smart grid study builds on previous work
The smart grid study builds on previous work o Meridian, in 2007 and 2008, funded long term industry analysis on the integration of wind in the New Zealand power system*: o Modelled increased system reserve, generation capacity and transmission reinforcement costs as a result of integrating signific
Slide 11: The current study …
The current study … … considers the changing nature of electricity demand and supply in New Zealand: o Two main drivers of change in demand (beyond “business as usual” growth) used to test the boundaries of smart grid benefits: o Electrification of transportation (electric vehicles - EVs) o Increase
Slide 12: A simple explanation of the issue …
A simple explanation of the issue … o High uptake of Heat pumps (HPs) and Electric Vehicles (EVs) could significantly increase peak demands on New Zealand’s electricity system if not used in a smart fashion o A significant increase in peak demand would require investment in new generation, and reinf
Slide 13: … and how a smart grid can help
… and how a smart grid can help o A smart grid can be used to shift demand, reducing the peak o The study models this in a way that doesn’t compromise quality of service for customers, e.g.: o pre-heating of homes before people return from work o EVs charge overnight and during the day*, rather than
Slide 14: Characteristics of flexible demand
Characteristics of flexible demand o Flexible demand redistributes load but may not lessen the total energy used (it can increase overall energy consumption if there are losses in the storage or energy conversion process) o Load reduction periods are followed or preceded by load recovery o A key tec
Slide 15: Methodology and scenarios
Methodology and scenarios MERIDIAN ENERGY LIMITED – Analyst Presentation: Smart New Zealand Energy Futures PAGE 15
Slide 16: Modelling of New Zealand's electricity system
Modelling of New Zealand’s electricity system o The study is based on an integrated model of generation and transmission investment in New Zealand o The model quantifies the investment required to provide new generation and transmission to meet demand growth, under each of the scenarios considered o
Slide 17: Modelling of electric vehicles and heat pumps
Modelling of electric vehicles and heat pumps o Transportation flows are modelled using European and UK data, calibrated to New Zealand driving patterns: o 40,000 different types of EV journey modelled o The model simulates energy use for each journey o The model simulates when the EV is stationary
Slide 18: Methodology
Methodology Future Supply and Demand Development Scenario Water heaters Smart appliances Electric vehicles Heat pumps System operation paradigm Scenario 1:Uncontrolled demand Scenario 2: Smart demand Impact assessment Distribution network Generation and transmission Real-time investment cost investm
Slide 19: Scenarios considered
Scenarios considered Referred to in charts Scenario full name Description as Business as usual 2030 Business as usual demand growth forecast Business as usual based on Electricity Authority forecasts Uncontrolled high demand Business as usual demand growth, plus 50 % Uncontrolled scenario with integ
Slide 20: HP and EV uptake assumptions
HP and EV uptake assumptions 1. Heat pump uptake (based on projecting BRANZ 2. Electric vehicle uptake – European data data) 100% 100% 90% Percentage of houses (%) 90% 80% 80% Number of EVs (%) 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 2010 2012 2014 2016 2018 2020 2022 2024 2026
Slide 21: Study scope
Study scope o In scope: o Quantify the order of magnitude cost savings available from deferring the need for electricity system investment, through using consumer sources of flexible demand enabled by smart grid technology o Out of scope: o An NPV business case for a New Zealand smart grid deploymen
Slide 22: Results – distribution, generation and transmission benefits
Results – distribution, generation and transmission benefits MERIDIAN ENERGY LIMITED – Analyst Presentation: Smart New Zealand Energy Futures PAGE 22
Slide 23: Savings come from reducing peak demand
Savings come from reducing peak demand o Annual peak demand increases from around 7 GW now to around 11 GW in 2030 and around 15 GW in 2050, in the high demand scenarios o Smart grid applications can reduce these peaks and therefore reduce the level of investment required Annual electricity Scenario
Slide 24: Distribution network – deferred investment benefits
Distribution network – deferred investment benefits New Zealand distribution reinforcement costs for uncontrolled scenario and savings achieved from controlling flexible demand (Smart) in 2030 and 2050 $5.0bn $3.3bn $2.0bn $1.6bn Uncontrolled Smart Uncontrolled Smart 2030 2050 o “Uncontrolled” assum
Slide 25: Value of different forms of flexible demand at distribution network level
Value of different forms of flexible demand at distribution network level New Zealand distribution reinforcement costs for uncontrolled scenario and cumulative savings from controlling various flexible demand technologies for 2030 and 2050 $5.0bn 0.71 0.77 2.79 3.02 + heat + voltage 3.32 Water + sma
Slide 26: Generation – deferred investment benefits
Generation – deferred investment benefits Additional generating investment needed to accommodate electrification of transport and heat sectors in Uncontrolled and Smart futures $9.0bn $4.5bn $2.5bn $1.4bn Uncontrolled Smart Uncontrolled Smart 2030 2050 o Generation capacity investment can be reduced
Slide 27: Assumptions around new generation
Assumptions around new generation o The study assumes that to ensure system reliability, additional thermal generation would be required to: o support the level of wind generation capacity assumed; and o support the additional heat pump and EV load. o The study assumes this is built in regions with
Slide 28: Transmission – deferred investment benefits
Transmission – deferred investment benefits Savings in transmission investment contributed by smart demand $3.6bn $2.6bn $0.3bn $0.28 Uncontrolled Smart Uncontrolled Smart 2030 2050 o Transmission capacity investment can be reduced through the use of smart electric vehicle charging and heat pump con
Slide 29: HVDC flows under different scenarios
HVDC flows under different scenarios o HVDC flow is mostly south to north at present, but with significant flows the other way o By 2030 under the uncontrolled 2010 North-South scenario the predominant flows begin to reverse, but the present HVDC link HVDC link is adequate; therefore no additional F
Slide 30: System Balancing – deferred investment
System Balancing – deferred investment 2030 Capitalised value of cost and savings in providing frequency response services o System balancing (i.e. ancillary/reserve services) costs can be reduced significantly by using smart appliances and electric vehicles as sources of storage (“vehicle to grid”)
Slide 31: High level findings
High level findings o No particular urgency for smart grid technologies to manage intermittency of generation or supply peak demand (due to high proportion of hydro) o Additional electricity system investment will be required to accommodate the electrification of the heat and transport sectors in Ne
Slide 32: What the study findings mean for New Zealand
What the study findings mean for New Zealand o New Zealand’s market design and regulatory framework will need to evolve over time to provide the right investment signals to unlock flexible demand side participation o Ensure that New Zealand’s existing load control resource is being fully utilised Ne
Slide 33: Trials
Trials o Trials with two way information flows to test customer engagement and tailor products to suit customer needs will be an important step to learn about the value a smarter grid can bring to both consumers and the electricity industry. New Zealand retailers have begun experimenting in this spa