Meridian Energy Limited · NZX:MEL
Meridian Energy — Non-Deal Roadshow (November 2022)
30 slides from Meridian Energy's roadshow presentation, November 2022
Slide 1: 2022 Investor Presentation
2022 Investor Presentation NOVEMBER 2022
Slide 2: Why Meridian?
Why Meridian? N OVE M B E R 2 02 2 I N VE S TOR R OAD S HOW PR E S E N TATI ON 2
Slide 3: Why Meridian? Half by 30
Why Meridian? Half by 30 2030 Leading sustainability performance We are focused on re our gross operationa emissions by half by Where we can’t reduce our operational e * Meridian’s operational emission boundary includes all scope 1, 2 and Green Greenhouse Our Finance Gas Emissions Framework Inventor
Slide 4: Why Meridian?
Why Meridian? High quality investment quality, high free progressive balance strong deep scale assets cash flow ordinary sheet growth renewable dividend headroom outlook development pipeline H2 Renewable energy generation Customer decarbonisation New markets Building on our existing 100% renewable W
Slide 5: New Zealand electricity market
New Zealand electricity market N OVE M B E R 2 02 2 I N VE S TOR R OAD S HOW PR E S E N TATI ON 5
Slide 6: New Zealand electricity market
New Zealand electricity market § A reliable, affordable and environmentally sustainable electricity system § A well functioning competitive market with high level of renewable resources and rational competition § Vertical integration is the prevailing market structure § Wholesale and retail market r
Slide 7: New Zealand electricity market
New Zealand electricity market § New Zealand’s hydro generation is managed against limited controlled storage § Bulk of hydro inflow is anti-correlated to winter demand peak § Thermal capacity and fuel storage has historically managed potential hydro inflow deficit and other renewable intermittency
Slide 8: New Zealand electricity market
New Zealand electricity market 5 major generators (all listed, 1 transmission grid 1 very large industrial user 29 distribution 44 retail 2.1 million 3 majority Govt owned) owner (state owned) (Rio Tinto/Sumitomo businesses (various brands consumers smelter), ~13% of national ownership structures) (
Slide 9: Market pricing
Market pricing Meridian average generation price Unit electricity costs (real) $/MWh c/KWh Residential Commercial Industrial 200 173 35 excluding GST excluding GST 150 123 130 30 100 83 89 25 62 50 20 0 15 2018 2019 2020 2021 2022 2023 (Q1) 10 Financial Year ended 30 June 2013 2014 2015 2016 2017 20
Slide 10: Policy and regulation
Policy and regulation Emissions Reduction Plan Average annual emissions § Released in May 2022, it sets out how NZ Mt CO2-e Emissions Reduction Plan will meet its first emissions budget for 100 2022-2025 79.5 79.5 80 72.5 § Requires additional emissions reductions 61.0 of 4% 60 48.0 § Plan targets t
Slide 11: National emissions
National emissions Greenhouse gas emissions by sector 1% 0.05%, operational emissions offset 4% 6% Electricity 6% 7% Other energy Transport 17% 79 Manufacturing & construction MtCO2e Agriculture 9% Industrial & product 50% Fugutive emissions Waste Sources: Meridian, New Zealand's Greenhouse Gas Inve
Slide 12: Policy and regulation
Policy and regulation Resource management reform § Reform programme risks renewable projects needing to clear a higher consenting hurdle § Generator CEs have collectively written to Ministers outlining issues that need addressing, supported by independent advice Low carbon commitment § Meridian is p
Slide 13: About Meridian
About Meridian N OVE M B E R 2 02 2 I N VE S TOR R OAD S HOW PR E S E N TATI ON 13
Slide 14: About Meridian
About Meridian 366,000 Total shareholder return1 customers Auckland 80% Meridian TSR NZX50 Index Te Uku 60% Meridian Asset Key 60% Wind Farm Harapaki 40% 36% Hydro Station (construction) 33% Mill Creek Meridian Offices Te Āpiti West Wind 20% 19% 20% 15% Powershop Offices 10% 12% Masterton Wellington
Slide 15: About Meridian
About Meridian § New Zealand’s largest generator, all production from renewable sources § Seven big hydro stations – flexible plant with the country’s largest storage § With low operating costs and capital needs § Five New Zealand wind farms, a sixth under construction and proven success operating i
Slide 16: Our purpose
Our purpose N OVE M B E R 20 22 I N VE ST OR ROAD SH OW PRE SE N T AT I ON 16
Slide 17: Our strategy
Our strategy Champion Optimise Grow initiatives Strategic Competitive markets Trading and asset management Retail Sustainability Re-consenting Generation Climate action Financing Flux Grow a clear sustainable leadership position NZ's highest customer satisfaction Provide the most relevant and impact
Slide 18: Our Climate Action Plan
Our Climate Action Plan N OVE M B E R 20 22 I N VE ST OR ROAD SH OW PRE SE N T AT I ON 18
Slide 19: Half by 30
Half by 30 § Goal to halve our 2021 operational Progress against our Half by 30 goal tCO2e land transport farms fugitive emissions emissions by 2030 40,000 air travel ferry other (scope 3) § An approved science-based target reduction target § Today all Meridian’s operational 30,000 emissions are off
Slide 20: Forever forests
Forever forests § Creating a carbon sink by planting 1.5 million trees § Will offset the emissions we can’t remove through Half by 30 § A mixed planting model of natives and exotics § To act as an effective carbon sink and leave a native forest legacy N OVE M B E R 20 22 I N VE ST OR ROAD SH OW PRE
Slide 21: Social focus
Social focus Local communities § Long term relationships, community relationship managers § $9M of local project support over 15 years Iwi § Recognise the mana whenua of Ngāi Tahu § Close association with local rūnanga § Focus on strengthening our iwi partnerships KidsCan § $1M annual contribution t
Slide 22: Renewable growth
Renewable growth Annual market demand for generation TWh history range of future growth 70 $30+ 65 billion of new 60 generation investment 55 50 Harapaki wind farm Carbon neutral, stable 45 on schedule operational emissions 7 in 7 40 20 in 28 35 30 300 2024 GWh* in MoU’s or contracted 1.1 GW of secu
Slide 23: Harapaki wind farm – Hawkes Bay
Harapaki wind farm – Hawkes Bay § $448m capital costs § To power the equivalent of 70,000 homes § Local iwi are integral part of our team § Sustainability focus to design out emissions N OVE M B E R 20 22 I N VE ST OR ROAD SH OW PRE SE N T AT I ON 23
Slide 24: Renewable development pipeline
Renewable development pipeline § Deep pipeline of 2.3 GW (5.4 TWh) of development options § 1.1 GW secured, 1.2 GW in advanced prospects, further battery site acquired § North Island focus, flexibility on South Island options maintained Taranaki Ruakaka (100 MW) (75 MW) Secured Advanced Auckland opt
Slide 25: Portfolio response to NZAS contract termination
Portfolio response to NZAS contract termination NZAS Contract: 14 JAN 2021 1 JAN 2022 1 JAN 2023 1 JAN 2024 31 DEC 2024 May 21 August 21 Feb 22 August 22 Investor Day Annual Results Interim Results Annual Results Meridian Portfolio Response: Current Swaption: Exploring options Options discussions No
Slide 26: Green hydrogen
Green hydrogen final final responses commercial investment and development decision selection late 2022 2023-2024 late 2024 N OVE M B E R 20 22 I N VE ST OR ROAD SH OW PRE SE N T AT I ON 26
Slide 27: Evolving our customer approach…from sales growth
Evolving our customer approach…from sales growth Retail sales volume GWh 10,000 8,941 8,000 56% 8,405 growth 7,376 in 5 years 6,000 6,240 5,981 5,727 4,000 2017 2018 2019 2020 2021 2022 Financial Year ended 30 June Source: Meridian N OVE M B E R 20 22 I N VE ST OR ROAD SH OW PRE SE N T AT I ON 27
Slide 28: To energy solutions that enable customers to decarbonise
To energy solutions that enable customers to decarbonise Accelerate Energy Innovation Predict VPP Optimise Aggregate Transport Distributed Process Heat Demand Flexibility Gen/Storage 2025 Draft Retail to 30% of Retail to or operate 50MW of flexibility Utility scale VPP/DF Outcomes homes/businesses 3
Slide 29: 5-year financial performance
5-year financial performance EBITDAF1 Net profit after tax (continuing operations) Operating cash flows $M $M $M 1,000 500 700 800 600 400 500 600 300 400 400 200 415 451 300 635 604 774 787 692 709 622 339 200 427 431 461 200 100 201 175 100 0 0 0 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 2
Slide 30: Disclaimer
Disclaimer The information in this presentation was prepared by Meridian This presentation contains a number of non-GAAP financial Energy with due care and attention. However, the information is measures, including Energy Margin, EBITDAF, Underlying NPAT and supplied in summary form and is therefore