Genesis Energy Limited · NZX:GNE
Genesis Energy — Investor Day (December 2020)
41 slides from Genesis Energy's investor day presentation, Dec 8, 2020
Slide 1: Genesis Stakeholder Day: Future thinking discussion
Genesis Stakeholder Day Future thinking discussion Empowering New Zealand’s sustainable future
Slide 2: Haere mai
Haere mail
Slide 3: Who we have in the room today
Who we have in the room today 2% 6% 11% RSVPs received 4% 6% for the morning • 139 attending in person • 91 guests • 8 speakers • 20 Genesis 24% • 7 Media 28% • 39 attending online • 109 organisations represented 4% 15% RSVPs received for the afternoon Community Customer Government & Regulatory Inve
Slide 4: Genesis Energy Board of Directors and Executive Team
Genesis Energy Board of Directors and Executive Team CHAIRMAN Barbara Chapman Catherine Drayton Doug McKay Tim Miles James Moulder Maury Leyland Penno Paul Zealand CNZM, BCom, CMInstD BCom, LLB, FCA ONZM, BA, AMP (Harvard) BA BA, BCA BE (Hons), FEng, CMInstD MBA, BSc Mech. Eng (Hons) CHIEF EXECUTIVE
Slide 5: Genesis team here today
Genesis team here today Andre Gaylard Angus Judge Cameron Jardine Courtney Simpson Christopher Mirams David Gutteridge Emma-Kate Greer Fiona Turvey General Manager General Manager General Manager LPG Group Manager Group Manager General Manager Group Manager Employee Marketing Manager Future Generati
Slide 6: An interactive discussion
An interactive discussion Dr Rod Carr Rod Oram Mike Burrell Kirsten Corson Chair of the Business journalist Executive Director of Co-founder and Executive Director Climate Change Commission and columnist the Sustainable Business Council of Zilch Graeme Milne Arizona Leger Nicole (Niki) Harré Shamube
Slide 7: Empowering New Zealand's sustainable future
Empowering New Zealand’s sustainable future Manaaki whenua, manaaki tangata, haere whakamua
Slide 8: Electricity contributes a small portion of New Zealand's emissions but is vital to the transition
Electricity contributes a small portion of New Zealand’s emissions but is vital to the transition Other Opportunity to decarbonise (incl. industrial) 26% process heat through Electricity electrification 5% Transport 21% Opportunity to decarbonise transport through electrification Agriculture 48% Gro
Slide 9: Our 84% renewable electricity system is a unique opportunity
Our 84% renewable electricity system is a unique opportunity to increase the only 40% renewable portion of total energy 9. 8 DECEM BER 2020
Slide 10: We're reducing our emissions
We’re reducing our emissions while advocating for a reliable and affordable, highly renewable electricity system
Slide 11: Genesis has a track record of reducing emissions despite a volatile output
Genesis has a track record of reducing emissions despite a volatile output kt, CO2-e 7000 GENESIS’ HISTORICAL EMISSIONS annual equivalent 6000 5000 4000 3000 Monthly emissions 5 year average 2000 1000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Genesis Stakeholder Day 2020 11.
Slide 12: Science Based Targets consistent with limiting warming to 1.5°C
We’re continuing emissions reductions by setting Science Based Targets consistent with limiting warming to 1.5°C Reduce direct emissions Reduce indirect emissions Target Year 1: Scope 1 & 2 Scope 3 % % Reduce emissions2 by at least 1.2 million tonnes 1. Target is based on our FY20 as the base year.
Slide 13: Cheaper renewable electricity will actively displace baseload thermal
Cheaper renewable electricity will actively displace baseload thermal GWh 6,775 6,775 6,775 Backup Thermal 1,507 1,312 1,312 850 2,200 Baseload Thermal 2,455 1,350 450 450 Hydro 2,813 2,813 2,813 Generation 5 Yr Average 2025 2030 Genesis Renewable Generation (circa) 42% 68% 81% Market Renewable Gene
Slide 14: Strategic partnerships, alliances and collaboration through our supply chains
Empowering a sustainable future will require strategic partnerships, alliances and collaboration through our supply chains Genesis Stakeholder Day 2020 14.
Slide 15: We need more systems thinking and an energy strategy
We need more systems thinking and an energy strategy to ensure we navigate the fastest route to decarbonise Decarbonised economy Use electricity to decarbonise 100% renewable energy electricity Genesis Stakeholder Day 2020 15.
Slide 16: Understanding the decarbonisation landscape
Understanding the decarbonisation landscape
Slide 17: Energy is one of the two major contributors to New Zealand's emissions
Energy is one of the two major contributors to New Zealand’s emissions NEW ZEALAND’S EMISSIONS Annual 80,000 emissions Waste kt CO2-e 70,000 Industrial process and product use 60,000 50,000 Energy 40,000 30,000 Agriculture 20,000 10,000 0 -10,000 Land use, land-use change and forestry -20,000 -30,00
Slide 18: Almost all energy use is either electricity, heat or transport
Almost all energy use is either electricity, heat or transport 35,000 ENERGY EMISSIONS Annual emissions 30,000 Fugitive kt CO2-e Electricity 25,000 Heat 20,000 15,000 10,000 Transport 5,000 - MFE and EECA data - 2018, Genesis analysis Genesis Stakeholder Day 2020 18.
Slide 19: Energy emissions come from a range of activities
Energy emissions come from a range of activities, with solutions only available for some in the 2020-2030 decade ENERGY EMISSIONS Annual emissions 30,000 Fossil fuels – fugitive, processing and manufacture kt CO2-e Electricity 25,000 Residential, commercial and agricultural 20,000 Industry Agricultu
Slide 20: Electricity
Electricity 20.
Slide 21: New Zealand's Energy Trilemma
New Zealand’s Energy Trilemma EMISSIONS RELIABILITY COSTS SECURITY HAS A PRICE Genesis Stakeholder Day 2020 21.
Slide 22: Electricity is decarbonising with falling wind and solar costs
Electricity is decarbonising with falling wind and solar costs providing tail winds for further progress RENEWABLE ELECTRICITY RENEWABLE ELECTRICITY COSTS SHARE - NEW ZEALAND IN THE USA USD / MWh 60 90% 50 85% 40 80% 30 75% 70% Quarterly 20 5-year rolling average 65% 10 60% 0 2010 2012 2014 2016 201
Slide 23: Seasonal demand is a challenge for our electricity system
Seasonal demand is a challenge for our electricity system, demand is highest in winter when southern inflows are the lowest SEASONAL STORAGE CHALLENGE 4,000 400 3,500 350 Solar Monthly Total (GWh) 3,000 300 Monthly Totals (GWh) 2,500 250 2,000 200 1,500 150 1,000 100 500 50 0 0 Jan Feb Mar Apr May J
Slide 24: Our hydro storage is too small to manage droughts and seasonality
Our hydro storage is too small to manage droughts and seasonality Even with 4x the relative storage, Norway still only 98% renewable NORWAY HYDRO BY TWH NEW ZEALAND HYDRO BY TWH 140 30 120 25 100 20 80 NZ x 5 15 60 10 40 5 20 0 Annual Generation Wet/Dry Variation Storage 0 Annual Generation Wet/Dry
Slide 25: Deep energy storage is a big challenge
Deep energy storage is a big challenge, there are limited options available to store 3,000 GWh of energy m % Genesis Stakeholder Day 2020 25.
Slide 26: Electricity is decarbonising, but the last few percent will be challenging
Electricity is decarbonising, but the last few percent will be challenging 2030 MARGINAL ABATEMENT COST CURVE 500 Abatement cost (NZ$ / tCO2-e) 400 300 200 100 0 0 1000 2000 3000 4000 5000 6000 Abatement potential (kt CO2-e / year) Baseload thernal Flexible thermal Geothermal MFE data Genesis Stakeh
Slide 27: Transport
Transport 27.
Slide 28: Cars are the largest decarbonisation opportunity from the transport sector
Cars are the largest decarbonisation opportunity from the transport sector TRANSPORT EMISSIONS, NZ 2019 Annual emissions kt CO2-e 10,000 8,000 6,000 International 4,000 2,000 0 Buses Cars Road Freight Rail Shipping Air EECA / MBIE data, Genesis analysis Genesis Stakeholder Day 2020 28.
Slide 29: Low energy costs help, but high upfront costs are a barrier for EV adoption
Low energy costs help, but high upfront costs are a barrier for electric vehicle adoption 10 YEAR TOTAL COST OF OWNERSHIP* $80,000 Average weekly electricity for an EV costs about the same as 2 coffees $60,000 Capital and cost of Capital and ownership cost of $40,000 ownership Maintenance $20,000 En
Slide 30: Currently, price is not the only barrier to adoption
Currently, price is not the only barrier to adoption REASONS FOR PURCHASE OF EV BARRIERS FOR PURCHASE OF EV Less costs to run High price Less pollution Low range Less reliance on fossil fuel Hard to find chargers Requires less maintenance Unsure about maintenance Technology Other (please specify) Ta
Slide 31: Electric vehicle adoption is growing but still has a long way to go
Electric vehicle adoption is growing but still has a long way to go INDICATIVE ADOPTION CURVE 100% 80% 60% 40% EV in NZ c. 0.6% of light vehicles 20% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Time → Genesis Stakeholder Day 2020 31.
Slide 32: Innovation is still needed for other transport sectors
Innovation is still needed for other transport sectors – is this an opportunity for New Zealand to help find solutions? ROAD FREIGHT SHIPPING AIRCRAFT A number of truck electrification projects Electric tug boat developed for Ports of Cora electric air taxi tested in Canterbury and undertaken with f
Slide 33: Heat
Heat 33.
Slide 34: The cost of energy is critical for transitioning heat
The cost of energy is critical for transitioning heat COST OF ENERGY TO CREATE HEAT* $/GJ 30 Electricity is expensive to 25 use for heat… 20 15 unless used in 10 a heat pump 5 0 Electricty - Electricity - Gas - boiler Coal - boiler LPG - boiler Biomass Biomass electrode heat pump (chip) - boiler (pe
Slide 35: Higher temperatures are harder to transition than lower temperatures
Higher temperatures are harder to transition than lower temperatures 3,000 EMISSIONS FROM HEAT 2,500 Annual emissions kt CO2-e Other Other 2,000 Gas Other 1,500 Gas Gas 1,000 500 Coal Coal Coal 0 Low temperature heat Intermediate Heat High temperature heat Easier to Harder to transition transition E
Slide 36: Significant heat emissions are from a small number of sectors and sites
Significant heat emissions are from a small number of sectors and sites EMISSIONS FROM HEAT Annual emissions kt CO2-e 0 1,000 2,000 3,000 Dairy, meat and other food and beverage processing Methanol, petroleum refining and other chemicals Commercial Residential Pulp, Paper and Print Cement, lime and
Slide 37: Efficiency
Efficiency 37.
Slide 38: Significant opportunities for efficiency exist in homes and businesses
Significant opportunities for efficiency exist in homes and businesses Cost to COST TO IMPLEMENT ENERGY SAVING TECHNOLOGIES implement $/GWh Residential space heating and clothes drying electric motors Space heating Residential Business Business Business Business lighting lighting lighting 0 1000 200
Slide 39: Decarbonisation pathway
Decarbonisation pathway 39.
Slide 40: Is New Zealand going to reduce emissions fast enough?
Is New Zealand going to reduce emissions fast enough? ~50% gas and coal ~50% of low fired generation temperature heat and cogeneration Further emissions reductions within ~200k cars the decade 75,000 Annual emissions kt CO2-e 70,000 65,000 60,000 55,000 2020 Agriculture Transport Space, Other heavy
Slide 41: Disclaimer
Disclaimer This presentation has been prepared by Genesis Energy Limited (‘Genesis Energy’) for information purposes only. The information in this presentation is of a general nature and does not purport to be complete nor does it contain all the information required for an investor to evaluate an i