Contact Energy Limited · NZX:CEN
Contact Energy — Investor Day (March 2009)
40 slides from Contact Energy's investor day presentation, Mar 24, 2009
Slide 1: ASX cover note: Contact Energy investor offsite presentation
For personal use only To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 24 March 2009 From Bill Hundy Pages 40 CONTACT ENERGY – INVESTOR OFFSITE PRESENTATION – 24 & 25 MARCH Subject 2009 Attached herewith is a copy of the above presentation released to the NZX by Contac
Slide 2: Contact Energy Investor Offsite
For personal use only Contact Energy Investor Offsite 24 and 25 March 2009
Slide 3: Disclaimer
Disclaimer For personal use only 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 an
Slide 4: Contact is executing the strategy that it articulated in 2007
Contact is executing the strategy that it articulated in 2007 For personal use only • At the 2007 offsite Contact articulated its strategy for the next five years – This followed a period of significant pressure to return capital • Two years on, significant progress has been made Contact Energy – Of
Slide 5: Significant progress on development of fuel options
Significant progress on development of fuel options For personal use only • Under construction – Tauhara geothermal (phase 1, 23 MW): $100m – Stratford gas-fired fast-start peakers (2x100 MW): $250m – Ahuroa gas storage: Gas injection underway: $250m – All three projects expected to be operational i
Slide 6: Key focus on ensuring effective execution of projects
Key focus on ensuring effective execution of projects For personal use only • With two projects under development, and a third at an advanced stage of development, execution is a key focus • Significant focus on project management • Constant review of liquidity – Current and future cashflows are cri
Slide 7: Transmission constraints affected half-year performance
Transmission Transmissionconstraints affected half-year performance and are a major constraints focus of attention For personal use only • Pole 1 was unexpectedly removed from service in November 2007 • Lower South Island constraints together with loss of 180 MW of Tiwai demand resulting in lower So
Slide 8: The loss of pole – unmitigated
The loss of pole 1 – unmitigated For personal use only Two poles One pole © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite 7
Slide 9: Absence of two HVDC poles results in a minor supply risk for the South Island
The absence of two HVDC poles results in a minor supply risk for the South Island (in the lowest 20% of inflow sequences during mid-winter) For personal use only In the high inflow sequences during summer and into autumn there is a reasonable probability of South/North constraint About 70% of histor
Slide 10: The loss of pole – unmitigated
The loss of pole 1 – unmitigated For personal use only Two poles One pole © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite 9
Slide 11: South Island risk management margins adjusted to mitigate downside financial risk
South Island risk management margins have been adjusted to help mitigate the downside financial risk For personal use only Earnings Distribution NZ$Millions - EBITDA © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite 10
Slide 12: Peakers and Storage will provide upside potential
Peakers and Storage will provide upside potential For personal use only Earnings Distribution NZ$Millions - EBITDA © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite 11
Slide 13: Return of the second pole will narrow the distribution
The return of the second pole will narrow the distribution but provide continued access to upside For personal use only Earnings Distribution NZ$Millions - EBITDA © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite 12
Slide 14: Contact has taken steps to address financing capacity
Contact has taken steps to address financing capacity For personal use only © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite 13
Slide 15: Drivers of future growth remain largely unchanged
Drivers of future growth remain largely unchanged For personal use only • While demand is expected to slow over the next few years, reversion to long term trend is expected • Gas remains an unlikely source of new generation, given supply and price uncertainty • Economics still favour renewables and
Slide 16: Medium to long term supply and demand
Medium to long term supply and demand For personal use only • Economic conditions will likely result in the requirement for significant new capacity being deferred – Te Mihi is primarily an efficiency improvement project – With a relatively small increase in capacity after Wairakei is decommissioned
Slide 17: Renewables beyond Te Mihi depend on demand recovery or carbon pricing
Renewables beyond Te Mihi depend on demand recovery or carbon pricing For personal use only • At relatively low levels of carbon pricing and/or coal price increases Huntly becomes at risk of being pushed out by new renewables © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offs
Slide 18: We also consider the world beyond the next five years
We also consider the world beyond the next five years For personal use only • What is the extent of further geothermal potential? • Wind and hydro options will continue to be developed – Sequencing will be driven by demand and consenting timeframes • Alternative generation options - solar etc • What
Slide 19: Generation / Development Update
For personal use only Generation / Development Update Contact Energy Investor Offsite 24 and 25 March 2009
Slide 20: Generation operations – focussing on the road ahead
Generation operations – focussing on the road ahead For personal use only Generation operations focus for the future is to raise availability factor of the portfolio by 2% whilst maintaining current operating cost per unit output © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor
Slide 21: Generation development strategy: a diverse portfolio of options
Our generation development strategy is to continue creating a diverse portfolio of options For personal use only Geothermal • Remains our core execution priority as the most cost efficient form of new generation Thermal • Current focus is providing flexibility to the generation portfolio through the
Slide 22: The development pipeline is well advanced
The development pipeline is well advanced For personal use only • Under construction – Tauhara geothermal (phase 1, 23 MW): $100m – Stratford gas-fired fast-start peakers (2x100 MW): $250m – Ahuroa gas storage: Gas injection underway: $250m – All three projects expected to be operational in 2010 • I
Slide 23: Geothermal
For personal use only Geothermal © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite - Generation/Development Update 5
Slide 24: Planned geothermal development will see output double in the medium term
Planned geothermal development will see output double in the medium term For personal use only © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite - Generation/Development Update 6
Slide 25: Wairakei output sustained for years; Tauhara expected to be similar
Wairakei output has been sustained for 50 years. Tauhara field is expected to show similar characteristics For personal use only Existing facility Proposed facility Te Mihi Power Station Wairakei A&B and Binary Power Stations Poihipi Power Station Tenon Heat Plant Tauhara Power Station Tauhara Binar
Slide 26: Tauhara Phase 1 binary plant
Tauhara Phase 1 (Binary Plant) will be the first producing power station on the Tauhara field For personal use only • 23 MW plant utilising existing consents on the field • Close in proximity to the Tenon direct heat supply • Project on schedule and on budget © Contact Energy Limited 24 and 25 March
Slide 27: Te Mihi remains on schedule for 2011
Te Mihi remains on schedule for 2011 For personal use only • Te Mihi project designed to ultimately replace the Wairakei station • More efficient use of steam resources • Construction planned in two stages, 2 units in 2011, 3rd unit in 2016, to optimise the existing steamfield resource and network ©
Slide 28: Tauhara Phase 2 - preparing resource consent application
Tauhara Phase 2 - focus on preparation for resource consent application For personal use only 3MW 14MW 18MW TH12 TH12 5MW 18MW 15MW 13MW 5MW © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite - Generation/Development Update 10
Slide 29: Contact has significant share of available geothermal resource
Contact has significant share on the available resource based on the current classification system For personal use only Thermal areas Contact Energy Might River Power # Field estimate MW 122 110 90 65 200 153 285 243 200 © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite
Slide 30: Thermal
For personal use only Thermal © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite - Generation/Development Update 12
Slide 31: The Stratford Peaker is critical for portfolio flexibility
The Stratford Peaker is critical for providing portfolio flexibility For personal use only © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite - Generation/Development Update 13
Slide 32: Gas Storage is the partner asset to the peakers
Gas Storage is the partner asset to the peakers For personal use only AH2 Stage 2 New pipeline full inject/withdrawal Stage 1 Pad Injection TCC/SPP WPS WPS LPG LPG Condensate extraction processing © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite - Generation/Development
Slide 33: Gas storage timetable sees full operation during 2010
Gas storage timetable sees full operation during 2010 For personal use only • Stage 1 underway with reinjection commencing December 2008 • This enables us to build up the pad gas pending the commencement of Stage 2 • Stage 2 for full injection withdrawal expected to be competed 2010 • FEED underway
Slide 34: Example of peaker / storage value - January February 2009
Example of peaker / storage value - January February 2009 For personal use only • Over January –February 2009 Haywards price averaged $38/MWh. • If the peakers has been operating we would have had one of the CCGT’s offline – The combination of one CCGT, the peakers and our financial hedge arrangemen
Slide 35: Wind
For personal use only Wind © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite - Generation/Development Update 17
Slide 36: Hauāuru mā raki wind project
Hauāuru mā raki (up to 540 MW) For personal use only © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite - Generation/Development Update 18
Slide 37: Waitahora Project (177 MW)
Waitahora Project (177 MW) For personal use only © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite - Generation/Development Update 19
Slide 38: Hydro
For personal use only Hydro © Contact Energy Limited 24 and 25 March 2009 Contact Energy Investor Offsite - Generation/Development Update 20
Slide 39: The Clutha presents a number of hydro development options
The Clutha presents a number of hydro development options For personal use only • Four options exist on the Clutha river for new hydro development; two upstream and two downstream from existing facilities • Outputs range from 80 – 350 MW • Community consultation and feedback on the options to begin
Slide 40: Generation development strategy: a diverse portfolio of options
Our generation development strategy is to continue creating a diverse portfolio of options For personal use only Geothermal • Remains our core execution priority as the most cost efficient form of new generation Thermal • Current focus is providing flexibility to the generation portfolio through the