Meridian Energy Limited · NZX:MEL
Meridian Energy — Investor Day (November 2017)
108 slides from Meridian Energy's investor day presentation, Nov 20, 2017
Slide 1: Meridian Energy investor day presentation
For personal use only Meridian Energy investor day presentation 20 November 2017 Attached is a presentation Meridian Energy is making at its investor day today. ENDS Mark Binns Chief Executive Meridian Energy Limited For investor relations queries, please contact: For media queries, please contact:
Slide 2: Investor Day 2017
2017 For personal use only INVESTOR DAY. MERIDIAN ENERGY LIMITED MANAGEMENT PRESENTATION
Slide 3: Welcome and goodbye
WELCOME For personal use only AND GOODBYE. MARK BINNS. Meridian Energy Limited Investor Day November 2017 2
Slide 4: Introduction
INTRODUCTION. For personal use only NEAL BARCLAY. Meridian Energy Limited Investor Day November 2017 3
Slide 5: Also attending today
Also attending Today. For personal use only Neal Barclay Richard Griffiths Geoffry Sams CEO Designate Strategic Asset Transmission Our customers Manager Specialist Strategic asset Transmission Chris Moller Paul Chambers management Chair CFO Mike Roan Mat Bayliss Grant Telfar Wholesale Asset Maintenance
Slide 6: Our customers
OUR For personal use only CUSTOMERS. NEAL BARCLAY. Meridian Energy Limited Investor Day November 2017 5
Slide 7: Value of our customers
Value of our customers. RETAIL SEGMENT PROFITABILITY Historical earnings growth For personal use only • Source of earnings growth in the low $74M $75M $64M demand growth New Zealand market $39M $21M Vertical integration • Provides wholesale market hedge against 2013 2014 2015 2016 2017 Financial Yea
Slide 8: Value of our customers: sources of shareholder value
Value of our customers. Sources of shareholder value For personal use only Strong Customer free cash growth in flow NZ Capital Low Long term Customer manage- capital sustainable platform ment needs business review High Potential Income Growth High free Powershop Medium Progressive franchise ordinary
Slide 9: Customer brand strength
Customer brand strength. High level of awareness relative to market share, authentically sustainable For personal use only Source: Evaluating Brand Performance December 2016 (Meridian – Clarity Insight) Meridian Energy Limited Investor Day November 2017 8
Slide 10: Customer growth
FY2017 NZ RETAIL SALES EXCL. TIWAI Customer growth. • High residential awareness, underweight For personal use only Residential 24% residential position 35% Small/medium business • Additional load from back-to-back agreements Agricultural • Growth aspirations in all segments including 15% Corporate/
Slide 11: Australian scale
Australian scale. AUSTRALIAN CUSTOMERS Aspiration to significantly grow Australian For personal use only • 100,524 customer base 77,970 • Needs to be backed by more generation 48,208 • PPA process is well advanced 13,426 • Direct generation investment possible 2014 2015 2016 2017 under the right comm
Slide 12: Powershop UK
Powershop UK. For personal use only • Powershop platform and brand franchised to nPower • 14,000 nPower ICP’s through energy only soft launch • Dual fuel functionality by January 2018 • White label offers launched • Customer uptake dependent on nPower’s sales and marketing • Exploring mainland Europe
Slide 13: Our approach to innovation
Our approach to innovation. Systematic approach For personal use only • Significant review and analysis of new technology and customer changes • Selective scope • Test and trial approach, quick start and stop (if needed), low investment • Global insights from three ‘natural labs’ Meridian Energy Limi
Slide 14: Innovation in NZ
Innovation in NZ. For personal use only • Separate software development business with international focus • Significant Meridian digital investment creating a quality customer experience • Powershop is a true native digital business, well placed for transformation • SmartHome and Smart Tariffs recent
Slide 15: Innovation in Australia
Innovation in Australia. A more disruptive market than New Zealand For personal use only • Powershop is well positioned • Powershop helping customer participation in neighbourhood generation and community energy projects • Both through tariff redistribution • And initiatives incentivising customers t
Slide 16: The political scene: New Zealand
The political scene. For personal use only New Zealand AVERAGE RESIDENTIAL ELECTRICITY COST c/kWh • Positive on the new Government’s proposals, plenty of detail to engage on • Conversion of the Government car fleet to 28.6 28.1 28.8 27.8 electric by 2025/26 will strengthen EV takeup 26.9 • Meridian i
Slide 17: The political scene: Australia
The political scene. Australia For personal use only • Market is slow to commit to new renewables due to the lack of coherent energy policy • Electricity is highly politicised, with significant potential developments in the near term: • VIC Government reponse to Thwaites Review on re-regulation • COA
Slide 18: Summary
Summary. For personal use only • Greater focus on our customers • To realise potential growth in multiple countries • With continued discipline on cost management and customer innovation • While protecting shareholder value in our core business • Enduring commitment to sustainability, staff wellbeing
Slide 19: NZ wholesale markets
NZ WHOLESALE For personal use only MARKETS. MIKE ROAN. Meridian Energy Limited Investor Day November 2017 18
Slide 20: Overview
Overview. For personal use only • “New Zealand is a world leading example of a well functioning electricity market…” 2017 NZ Energy Policy Review – International Energy Agency • “….strong improvement across the three key outcomes of competition, reliability and efficiency…” 2017 Electricity Authority
Slide 21: Key market reforms
Key market reforms. ASX Commences – April 2011 For personal use only 2008 ‘dry year’ and subsequent Ministerial Review • Liquidity ASX – standardised forward market Pole 3 Commissioned – May 2013 Pole 3 – improved market flexibility & risk management • NZ-wide competition emerges Financial Transmissi
Slide 22: ASX forward market
ASX forward market. For personal use only The forward market is very effective • Liquidity exceeds initial targets • Monthly products provide ability to hedge $#!"& "#!"' %'! seasonal shapes (and enhance liquidity) "#! "!! • Meridian has sold over 100MW on ASX in (! various quarters &! $! • Others us
Slide 23: Over the Counter (OTC) market
Over the Counter (OTC) market. For personal use only OTC market emerged following ASX "& • Used for short term hedging '! • Brokered and bilateral (direct) %! • Products are typically bespoke $! • Large hedging transactions (i.e. 10MW +) #! ! • Unit outage hedges "& "& "& "& "& "& #! • Shaped retail
Slide 24: Financial Transmission Rights (FTRs)
Financial Transmission Rights (FTRs). For personal use only • Instrument that manages price risk between nodes • Meridian is one of the largest participants • Should not be a surprise with our South Island hydro generation and distributed ■ Contact customer base ■ OMF ■ Other • FTRs are effective bas
Slide 25: Years of spot market trading
20 years of spot market trading. For personal use only • Spot market prices provide an index for most contracts • Efficiency and reliability of these prices builds support for contracting • Enabling changes to offers/bids as close to real time as possible improves price formation • Spot market is the c
Slide 26: Summary
Summary. For personal use only • Wholesale markets are competitive and effective • The addition of ASX, OTC and FTR markets in particular drive greater competition • Meridian participates in all markets to manage its portfolio • The Electricity Authority is acknowledged internationally as an effective
Slide 27: Managing our portfolio
MANAGING For personal use only OUR PORTFOLIO. GUY WAIPARA. Meridian Energy Limited Investor Day November 2017 26
Slide 28: Overview
Overview. For personal use only Generation and sales portfolio • Bowtie framework • Modified to cover observed behaviour • Optimising real time hydro dispatch 2017 review • Statistics • Managing risk and storage Image: Lake Pūkaki and Genesis Energy’s Tekapo B station, June 2017 • “Hindcast” results
Slide 29: Bowties
Bowties. Whole of NZ construct For personal use only • Demand (including demand response) • Supply (including plant reliability) • Hydrology • A simplified regional transmission system Our objective • To find the portfolio or contract position that delivers the maximum revenue, with the minimum distri
Slide 30: Reflecting market behaviour
Reflecting market behaviour. For personal use only Impact of contract positions • Observations are that parties’ behaviour is affected by their respective contract positions • Have developed our models to include the best information we have on our and others’ contract positions • Still includes an op
Slide 31: Next evolution
Next evolution. The bowtie neck has a reasonable range For personal use only • So there are a number of “optimal” contract Maximise revenue positions • Doing more work to test what position(s) deliver improvements in mean revenues while Minimise risk minimising variability • Early results look like
Slide 32: Moving closer to real time
Moving closer to real time. For personal use only How we adjust the portfolio to reflect near-term GENERATION AND CONTRACTED SALES GWH conditions • Even with what may look like a conservative portfolio, we can find ourselves long generation (first half of 2017) 7,029 6,285 6,435 or short generation (se
Slide 33: Within a week, up to real time
Within a week, up to real time. Hydro optimisation continues right up to real time For personal use only • Waitaki is block dispatched • Optimising lake levels across the chain means you can get the best water to wire efficiency (remember Ep = mgh?) What we have achieved • Developed in-house tools to
Slide 34: 2017 in review
2017 IN For personal use only REVIEW. Meridian Energy Limited Investor Day November 2017 33
Slide 35: 2017 key statistics
INFLOWS, GENERATION, STORAGE 1H FY17 (GWH) 2017 key statistics. 5,665 For personal use only 7,029 First half FY17 1,919 Inflows Physical generation Storage (period end) • Inflows 96% of average MERIDIAN'S WAITAKI STORAGE 1H FY17 (GWh) 3,000 • Generation 3% above FY16 2,000 1,000 • $44/MWh average gene
Slide 36: Managing risk
Managing risk. Commercially For personal use only GENESIS SWAPTION VOLUMES Weekly energy (GWh) 30 • Called the Genesis Swaption between June and 25 20 August 2017 15 10 • Were able to delay calling this as we had better 5 0 offers available earlier on 19 Jun 17 26 Jun 17 03 Jul 17 10 Jul 17 17 Jul 17
Slide 37: Storage management
Theoretical storage energy balance Storage management. For personal use only Even at the end of the dry period • Portfolio could still be covered with minimal risk of hitting the bottom of Pūkaki • At 21 July still 1ox more likely to spill (34 sequences) than to even use contingent storage (3 sequen
Slide 38: A Hindcast comparison
A “Hindcast” comparison. What is a Hindcast? For personal use only • A comparison of what occurred with what perfect competition would have delivered Why is it important? • Provides an analytical framework to test whether the market has delivered an efficient outcome for consumers • Is a good proxy fo
Slide 39: Engaging with stakeholders
Engaging with stakeholders. For personal use only Transpower • Engaged early to discuss hydrology, water values and plans • Considered a change to contingent storage – but decided to put off until a review was completed • Reviewing their security of supply policy Electricity Authority • Engaged early
Slide 40: What did we learn from this year?
What did we learn from this year? Market maturity For personal use only • Continued to learn and evolve over dry year experiences “Assumptions are • The improved liquidity in the ASX and OTC markets helped manage risk the termites of Stakeholder engagement • No such thing as engaging too early. Ther
Slide 41: Strategic asset management
STRATEGIC For personal use only ASSET MANAGEMENT. RICHARD GRIFFITHS. Meridian Energy Limited Investor Day November 2017 40
Slide 42: Content
Image: Meridian’s Benmore power station Content. For personal use only • Approach and philosophy • Our 20-year asset management plan • Expenditure forecasts • Major projects • Process safety • Benchmarking Image: Meridian’s Aviemore power station Meridian Energy Limited Investor Day November 2017 41
Slide 43: Asset management principles
Asset management principles. We are committed to: For personal use only • Protecting the value of Meridian’s assets • Maintaining the safety, performance and capability of these assets over their projected economic life, and • Meeting our asset management obligations in a manner that is demonstrably
Slide 44: Strategic asset management plan
Strategic asset management plan. For personal use only Major turbine and generator works set the primary timing of the 20-year plan Meridian Energy Limited Investor Day November 2017 43
Slide 45: Strategic asset management plan
Strategic asset management plan. For personal use only Long-term commitment to the Structural Safety Evaluation Programme Meridian Energy Limited Investor Day November 2017 44
Slide 46: Strategic asset management plan
Strategic asset management plan. For personal use only Control systems, excitation & protection replacements are best fit Meridian Energy Limited Investor Day November 2017 45
Slide 47: Strategic asset management plan
Strategic asset management plan. For personal use only Fit other projects in at optimum timing Meridian Energy Limited Investor Day November 2017 46
Slide 48: Strategic asset management plan
Strategic asset management plan. For personal use only Waitaki Stage II, civil works, contingent works Meridian Energy Limited Investor Day November 2017 47
Slide 49: Strategic asset management plan
Strategic asset management plan. For personal use only Current plan Meridian Energy Limited Investor Day November 2017 48
Slide 50: Hydro capital expenditure forecast
Hydro capital expenditure forecast. For personal use only $M INDICATIVE HYDRO CAPITAL EXPENDITURE 50 40 30 20 10 0 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 Source: Meridian Excludes Stage II Waitaki generator refurbishment – a 10-year progra
Slide 51: Waitaki refurbishment
Waitaki refurbishment. Overview For personal use only • Waitaki was first commissioned in 1935 and is the final power station on the Waitaki River • Reliability and performance is important for managing consent flows • Annually generates ~$30m in energy revenues Capital Deferral Enabling Works (complet
Slide 52: Waitaki refurbishment
Waitaki refurbishment. Dam Safety Upgrades (complete) For personal use only • Repairs to left bank abutment • River bank erosion protection works • Piezometers upgraded • Uplift drainage upgraded and extended Dam Safety Upgrades (work in progress) • Inundation protection of the Hornell Gallery • Man
Slide 53: Manapōuri transformers
Manapōuri transformers. Overview For personal use only • Manapōuri commissioned in 1967 • Underground power station • Generates ~$250m per annum Main Unit Transformers • T2, T3 and T4 were replaced in 2015 following failure of the oil coolers • T1, T5, T6, T7 currently being manufactured by Wilsons
Slide 54: Ōhau chain upgrade programme
Ōhau chain upgrade programme. Overview For personal use only • Ōhau chain comprises Ōhau A, B & C • Controls flow from Lakes Pūkaki & Ōhau • Collectively generate ~$220m pa Programme • $48m business case approved in October 16 • Programme extends through to 2023 Image: Meridian’s Scope comprises: Ōha
Slide 55: Process safety
Process safety. Overview For personal use only • Meridian initiated a review of its process safety risks in 2014 • Lockheed Martin and Scottish Power were engaged in 2015 to facilitate risk bowtie workshops and undertake a gap analysis • Meridian established a programme to implement the recommendati
Slide 56: Process safety
Process safety. Key Workstreams: For personal use only • Develop Risk Bowties for all sites and integrate into AMP • Undertake an Alarm Management and rationalisation programme • Undertake a Risk Management review • Review the Plant Change Control process • Process safety Training and Awareness prog
Slide 57: Benchmarking results
Benchmarking results. International Benchmarking For personal use only • Meridian compares very favourably against international peer group in respect to both Composite Service Level (function of Plant Availability and Forced Outage duration) and Unit Cost Of Production • Manapōuri is a leading perf
Slide 58: Operational maintenance
OPERATIONAL For personal use only MAINTENANCE. MAT BAYLISS. Meridian Energy Limited Investor Day November 2017 57
Slide 59: The Waitaki scheme
The Waitaki scheme. Some facts For personal use only • Eight hydro stations in the Waitaki Scheme • Tekapo A and B are owned by Genesis Energy • The six hydro stations from Lake Pūkaki to Waitaki, owned by Meridian Meridian Energy Limited Investor Day November 2017 58
Slide 60: The Waitaki scheme
The Waitaki scheme. For personal use only Meridian Energy Limited Investor Day November 2017 59
Slide 61: Hydroelectric power
Hydroelectric power. For personal use only Meridian Energy Limited Investor Day November 2017 60
Slide 62: Hydro Asset Maintenance
Hydro Asset Maintenance. For personal use only How we are organised • Engineers, trades staff, technicians, operators, maintenance planners • Dedicated maintenance teams for three asset portfolios • Ōhau Chain, Mid-Waitaki and Manapōuri • Including graduates and apprentices, 70 staff in three location
Slide 63: Performance
Performance. Hydro plant performance measures For personal use only • Availability (% of time) • Operational Unit Cost $/MWh • Forced Outage Factor (% of cap) • Forced Outage Count (# events) Maintenance process measures • Multiple live measures • Extensive use of maintenance management system (Maxi
Slide 64: Health and safety
Health and safety. For personal use only Our Approach • Lead role in industry collaboration forums (StayLive, EEA etc) • Safety & Sustainability Board Committee • Dedicated H&S team reporting to MaP GM • Competent workforce, strong safety culture • Incident reporting and investigation • Safety perfo
Slide 65: Community
Community. Our Community Engagement Strategy For personal use only • Significant footprint in multiple small rural communities • Goodwill important when operating large assets, lakes and rivers • Multiple engagement mechanisms & channels • Power Up – Meridian community fund • Community sponsorships •
Slide 66: Twizel
Twizel. For personal use only History • Built in 1968 as a temporary service town • Saved from demolition in 1983 • Today is the largest town in the MacKenzie Meridian Source: Electricity Authority • Large employer in the area, now including a retail call centre • Direct contributor to the community
Slide 67: Managing transmission
MANAGING For personal use only TRANSMISSION. GEOFFRY SAMS AND JON SPILLER. Meridian Energy Limited Investor Day November 2017 66
Slide 68: Getting energy to customers
Getting energy to customers. For personal use only Meridian’s power stations • 2,762MW installed capacity • 32% of New Zealand’s generation • 89% located in South Canterbury and Southland Meridian’s customer base • 280,000 customers all across New Zealand • Connected through 29 lines networks • Geog
Slide 69: Transmission backbone
Transmission backbone. The transmission system is robust For personal use only • Transpower backbone consists of high voltage (220-110kV) AC transmission lines • North and South Islands connected via 350kV HVDC link between Haywards in Wellington and Benmore in South Canterbury • Transpower’s invest
Slide 70: HVDC Pole 3
HVDC Pole 3. 1400 HVDC transfer capability (2011 - 2017) Pole 3, Control upgrade, 1200MW Pole 2, For personal use only 1200 700MW 1000MW Overload 1000 Transfer [MW] capacity Investment in the HVDC link has greatly improved 800 Meridian’s generation flexibility 600 Usable capacity • Following the deco
Slide 71: Constraint management
Constraint management. Meridian has a number of tools and processes to For personal use only manage transmission constraints • Simulations from power system modelling • Historical event analysis • Knowledge capture of constraints and outages Power System We also manage exposure through a number of M
Slide 72: Catalyst for transmission investment
Catalyst for transmission investment. For personal use only Two primary drivers • Meridian perceives the biggest possible catalysts of change to the transmission system as: • Potential Tiwai Point smelter shutdown • Potential Huntly Rankine unit retirement Image: NZAS aluminium smelter at Tiwai Poin
Slide 73: Potential Tiwai Point smelter shutdown
Potential Tiwai Point smelter shutdown. Three significant restrictions For personal use only • If an exit of the Tiwai Point smelter occurs, a number of transmission constraints have been identified by Transpower that would impede energy transfer across the transmission system: • 1. Southland export c
Slide 74: Southland export constraint
1. Southland export constraint. Source: Transpower’s 2016 SSF For personal use only Constraints can be managed while investment programme is completed • A potential Tiwai Point smelter exit will release an additional 5,000GWh of energy into the market • This generation is predominately supplied from
Slide 75: Southland improvements
Southland improvements. Project ready to initiate following a smelter For personal use only announcement • Transpower have a fully costed and approved project to resolve the Southland export issue; the Clutha Upper Waitaki Lines Project1: • Two sections already commissioned • Three years to complete
Slide 76: HVDC north export constraint
2. HVDC north export constraint. Image: Transpower’s Pole 3, Benmore For personal use only Current HVDC capacity is sufficient to manage greater transfer to North Island • HVDC capacity has been substantially increased • Current peaking capacity of 950MW has only been utilised 2% of the time • Any pot
Slide 77: HVDC improvements
2. HVDC improvements. Increasing usable capability For personal use only • Transpower have started detailed investigation into undersea cable replacement project • Current cable asset end of life between 2023-2025 • Installing a fourth cable would increase HVDC capability to 1,400MW and could increa
Slide 78: Lower North Island transfer constraint
3. Lower North Island transfer constraint. Source: Transpower’s 2016 SSF For personal use only Current transmission issues • Limited transfer from Bunnythorpe through to Whakamaru • Limits lower North Island and Taranaki generation into the upper North Island No planned improvements Wellington expor
Slide 79: Huntly Rankine unit retirement
Huntly Rankine unit retirement. Investigation is underway For personal use only • A separate issue is the potential decommissioning of Huntly Rankine units • There is sufficient generation in the market to cover demand into the upper North Island • 94% of upper North Island generation is currently sou
Slide 80: Auckland import
Auckland import. For personal use only Investment project underway • Transpower currently working through the Waikato and Upper North Island Voltage Management Investigation • Longlist option consultation has been completed • Lower cost short-term options likely to be Source: Transpower’s 2016 SSF p
Slide 81: Summary
Summary. Meridian is well placed to manage its portfolio For personal use only through future uncertainty • Transmission upgrades are more critical for lower South Island and reduce as you move north • Key projects are well developed • Flexibility of storage will allow Meridian to manage lost energy
Slide 82: Energy efficiency
ENERGY For personal use only EFFICIENCY. GRANT TELFAR. Meridian Energy Limited Investor Day November 2017 81
Slide 83: Forecasting demand
Forecasting demand. What is the problem For personal use only “Missing” demand • Very poor data on energy usage • Demand has been flat for some time • Traditional econometric modelling approach has ! increasingly struggled to explain demand outcomes 1998-2008: small residuals GDP Population (error in
Slide 84: Usage as at 2008: NZ household usage
Usage as at 2008. $ ,**/% For personal use only costs in real terms (2017$) '+!2** NZ household usage # '+0*" 1** # • Very poor data on energy usage '+12" '03" -** ',+." 11/ 3,/ • BRANZ HEEP study (2002-2005) last '/," ,,/ comprehensive nationwide survey ',,," 31/ '21" -1/ " +!11/ • Insights: '+/0"
Slide 85: Usage as at 2008: NZ non-household usage
Usage as at 2008. # $ *((-% NZ non-household usage For personal use only • Even worse data " " " *!0,* )!0*- )!1// • BRANZ HEEP plus 2005 Treasury study are both " +!((1 " )!.0, useful • Insights: " +!/)- " ,1) " .!1-, • NZ business use a lot of motors (motive and " .(+ " -+1 pumping) " -!*.0 " *(-
Slide 86: What has changed?
What has changed? 8'0 7'0 6'0 4'5 4'0 3'5 NZ households ! " For personal use only technology #%$$% 3'0 5'0 changes driving 2'5 • Kiwis love buying appliances 4'0 savings 2'0 2000(02 !# 2004(08 !# 3'0 1'5 20013(17 !# • TV efficiency has improved dramatically 2'0 1'0 2017 $& - ) % * 1'0 0'5 • 2017 light
Slide 87: How we use energy now
How we use energy now. Efficiency is only one part of the puzzle For personal use only indoor temperatures up • Greater efficiency does not necessarily mean a no clear change in reduction in overall consumption, e.g: external temperatures • NZ houses appear warmer than they were 15 years ago (not hard)
Slide 88: Better efficiency potential?
$'"" Better efficiency potential? $""" For personal use only NZ households technology driven #'"" efficiency potential • Increase seen in potential household efficiency steadily increasing #""" related savings since 2002 • Hot water shown least improvement '"" • Scale of implied savings ~500MW of new wind
Slide 89: Where to now?
Where to now? Improved demand forecast • Including efficiency potential alongside other For personal use only !" “Missing” demand better explained !" economic variables dramatically improves model ! • But early days! Careful of monkeys & typewriters $" " 1991-2017: Efficiency " GDP Population potential
Slide 90: Climate variability and change
CLIMATE For personal use only VARIABILITY AND CHANGE. DR JEN PURDIE. Meridian Energy Limited Investor Day November 2017 89
Slide 91: We rely on the timely arrival of our fuel
We rely on the timely arrival of our fuel. We forecast and plan on different time scales: For personal use only • Days to weeks: • plan generation and offers into the market to use intermittent wind and to move water through the river chain Image: Genesis Energy’s Tekapo • Months to years: B station •
Slide 92: Our fuel is variable
Our fuel is variable. & • Our fuel arrival varies from year to year % • It’s arrival is anticorrelated with electricity demand For personal use only $ # • We have limited ability to store it " • We have to plan the number of customers/contracts ! that we take on ahead of time • We can offset some of
Slide 93: Predictability – short term
Predictability – short term. For personal use only Weather forecast Quantified half-hourly rainfall and wind forecast Inflow forecast Offer into electricity market Meridian Energy Limited Investor Day November 2017 92
Slide 94: Predictability – medium term – cycles
Predictability – medium term - cycles. Summer El Nino rainfall anomaly (%) Summer La Nina rainfall anomaly (%) El Nino – Southern Oscillation (ENSO) For personal use only • Periodical variation in winds and sea surface temperatures over the tropical Pacific Ocean • 2-5 year cycle • Significant impact
Slide 95: Predictability – medium term – snow melt
Predictability – medium term – snow melt. For personal use only Snowmelt contributes half of our summer inflows • in the Waitaki catchment • Difficult to measure in a mountainous catchment • Several high-altitude measurement sites • A snowpack simulation model estimates GWh stored as snow • Useful in s
Slide 96: Predictability – long term climate change
Predictability – long term climate change. The climate is changing For personal use only • Glaciers are retreating • Seasonal snow is disappearing • Sea level has risen by 20cm in the past century Image: Upsala glacier, Argentina • A 1 metre sea level rise is predicted to make 15 million Image: Mt H
Slide 97: Climate change - local changes
Climate change - local changes. For personal use only • Warming trend at local climate stations • Snow and ice recession in our headwaters Ice loss Images: Glacial retreat at Mt Cook National Park – Tasman Glacier 1 deg C warming since 1930 Hermitage annual average temperature 1930-2017 Meridian Ene
Slide 98: Climate change – local changes
Climate change – local changes. For personal use only • Annual rainfall and inflow totals have not changed significantly over the 90 years of record… • but the seasonality of our rainfall and inflows has changed significantly over the past 90 years Hermitage at Mt Cook February rainfall 1930-2017 • Autu
Slide 99: What can we expect in the future?
What can we expect in the future? Niwa take global climate model (GCM) projections and regionally downscale them to predict what climate For personal use only changes we can expect in NZ Temperature changes 2055 2090 1 – 2.5 degrees warmer everywhere About 1 - 1.5 degrees warmer everywhere Source: T
Slide 100: Rainfall changes – annual
Rainfall changes – annual For personal use only 2055 2090 Wetter in the west and south, and drier in the east and north 5-15% wetter in 10-20% wetter in our catchments our catchments Source: Tait et al 2016, https:// ofcnz.niwa.co.nz 9 9 Meridian Energy Limited Investor Day November 2017 99 Projecte
Slide 101: Rainfall changes – seasonal
Rainfall changes – seasonal For personal use only 2055 2055 Source: Tait et al 2016, https://ofcnz.niwa.co.nz Summer rainfall is projected to increase 5-15% in our Winter rainfall is projected to increase catchment headwaters 15-25% Meridian Energy Limited Investor Day November 2017 100
Slide 102: Wind and heavy rainfall
40.00 Wind 35.00 • The frequency of extreme winds over New Zealand is 30.00 For personal use only likely to; 25.00 GWh 20.00 • Increase in almost all areas in winter 15.00 • Decrease in summer 10.00 5.00 0.00 15-Aug 25-Aug 14-Sep 4-Oct 14-Oct 24-Oct 3-Nov 24-Sep 13-Nov 23-Nov 3-Dec 13-Dec 23-Dec 16-
Slide 103: Drought
Drought • No change to drought frequency is predicted in our catchments over the next 50 years For personal use only New Zealand median • Approx. 10-12% more time in drought is predicted drought change for the East Coast of the South Island between 1980-99 • An increase of 10% corresponds to about 3
Slide 104: Snow
Snow • Snow amounts are predicted to decrease and • 50% of Waitaki summer inflows = snow melt For personal use only snowlines rise under climate change • So future inflows will be lower in summer and • 80-90% of current snow depths by 2040 higher in winter… • 50-80% of current snow depths by 2090 • (b
Slide 105: Summary of predicted changes in climate
Summary of predicted changes in climate. &($"$ ! %*&*#%*)& %*)'#&$%( Recent inflows Older inflows We have seen: For personal use only &$$"$ %($"$ No significant change to hydro catchment rainfall %$$"$ • ($"$ and inflows over the last 100 years, but… $"$ Significant seasonal shifts in inflow regime %# %
Slide 106: Impacts on Meridian of predicted changes in climate
Impacts on Meridian of predicted changes in climate. Potential Manapouri lake levels 2017-18 with all historical inflows These changes may result in: For personal use only • Inflow regime better matching demand Manapōuri forecast lake levels under • Higher summer electricity demand (irrigation) and P
Slide 107: Thank you
For personal use only Thank you.
Slide 108: Disclaimer
Disclaimer. For personal use only The information in this presentation was prepared by Meridian Energy with This presentation contains a number of non-GAAP financial measures, due care and attention. However, the information is supplied in summary including Energy Margin, EBITDAF, Underlying NPAT and