Meridian Energy Limited · NZX:MEL

Meridian Energy — Investor Day (May 2021)

65 slides from Meridian Energy's investor day presentation, May 11, 2021

1. Slide 1: 2021 Investor Day Presentation

   2021 Investor Day Presentation 11 MAY 2021

2. Slide 2: Introduction

   Introduction Mark Verbiest Chair 2021 INVESTOR DAY PRESENTATION 2

3. Slide 3: Welcome

   Welcome Welcome and introduction Mark Verbiest Chair Strategy and targets Rory Blundell Group Strategy Manager Retail Lisa Hannifin Chief Customer Officer Flux Federation Nic Kennedy CEO Flex Federation Future of the NZ system Grant Telfar Modelling Manager South Island demand options Guy Waipara Ge

4. Slide 4: Three key themes

   Three key themes  Aotearoa's future decarbonisation and the electrification opportunity  Future dry year solutions  Meridian’s response to a 2024 NZAS exit 11 MAY 2021 2 0 2 1 I N V EST O R D A Y P R ES EN T A T IO N 4

5. Slide 5: NZAS exit response

   NZAS exit response NZAS contract 14 Jan 1 Jan 1 Jan 1 Jan 31 Dec 2021 2022 2023 2024 2024 Meridian portfolio response Current swaption CUWLP NI battery Process heat Data centre Green hydrogen 11 MAY 2021 2 0 2 1 I N V EST O R D A Y P R ES EN T A T IO N 5

6. Slide 6: Board matters

   Board matters Dividend policy  No changes to ordinary dividend policy proposed (subject always to circumstances)  ‘No earnings or dividend guidance’ approach will remain in place Current Board  Diverse skill set  Gender parity Board rotation  Further changes planned this year 11 MAY 2021 2 0 2

7. Slide 7: Strategy and targets

   Strategy and targets Rory Blundell Group Strategy Manager 2021 INVESTOR DAY PRESENTATION 7

8. Slide 8: Strategic initiatives

   Strategy Champion Optimise Grow initiatives Strategic Competitive markets Trading & asset management Retail Sustainability Re-consenting Generation Climate action Financing Flux Grow a clear sustainability leadership NZ’s highest customer satisfaction position NZ’s largest retail group by ICPs targe

9. Slide 9: Strategic initiatives

   Strategy Champion Optimise Grow initiatives Strategic Competitive markets Trading & asset management Retail Sustainability Re-consenting Generation Climate action Financing Flux Regulatory and government relations Portfolio evolution to support continued Customer best in class digital and programmes

10. Slide 10: Retail

    Retail Lisa Hannifin Chief Customer Officer 2021 INVESTOR DAY PRESENTATION 10

11. Slide 11: Profitable growth

    Profitable growth New Zealand retail sales volumes GWh  Being delivered through volume and margin 9,000 7,376 >8,000 management 6,000 5,727 5,981 6,240  Improved financial performance continues despite 3,000 increased competition and pressure on retail margins 0 2017 2018 2019 2020 2021 est  Sign

12. Slide 12: Sustained customer growth

    Sustained customer growth ICPs by Segment  Through disciplined execution of multi-brand strategy Total Total 400k  The Group is delivering net growth in all segments and has 324 338 12 become the 3rd largest retail group in NZ 10 300k  Powershop recently surpassed a milestone 100k ICPs 79 87  Th

13. Slide 13: Core platform transformation

    Core platform transformation  Near completion with no major issues to date and improved efficiencies  Over 60% of Meridian ICPs have been successfully migrated to the Flux platform with the project due for completion in 2021 Source: Meridian  Platform productivity benefits are being realised with

14. Slide 14: Stable customer satisfaction

    Stable customer satisfaction CSAT – Gentailer brands 8  In both brands, despite core platform transformation 7 Meridian Energy Genesis Contact Energy Mercury Trustpower Gentailer average 6 May-19 Aug-19 Nov-19 Feb-20 May-20 Aug-20 Nov-20 Feb-21 Source: Meridian Source: Meridian CSAT – Challenger br

15. Slide 15: Improving retention and market leading brand

    Improving retention and market leading brand  Meridian continues to enjoy trader churn rates 12 month rolling average trader churn significantly below the market average 12%  Powershop’s programme of ‘churn busting’ work 10% has delivered substantial improvements to its churn rate 8%  Brand healt

16. Slide 16: Innovation and delivery with a decarbonisation focus

    Innovation and delivery with a decarbonisation focus EV Charging Network Meridian is launching a nationwide network of more than 200 EV chargers to help build real momentum for the switch to electric as electrification of transport is one of the biggest ways to help combat climate change Process Hea

17. Slide 17: Our way of working continues to evolve

    Our way of working continues to evolve 11 MAY 2021 2 0 2 1 I N V EST O R D A Y P R ES EN T A T IO N 17

18. Slide 18: Flux Federation

    Flux Federation Move faster, price smarter & integrate widely Nic Kennedy, CEO May 2021

19. Slide 19: Flux Federation vision

    FLUX FEDERATION VISION Flux empowers visionary companies leading the energy transition; enabling them to respond to changing generation, distribution and consumption models by moving faster, pricing smarter and integrating widely. Flux Federation | May 2021 11 MAY 2021 2021 INVESTOR DAY PRESENTATION

20. Slide 20: Flux creates value for the Meridian Group in three ways

    FLUX’S ROLE IN THE MERIDIAN GROUP 1. Providing the best retail platform in market to the Meridian Group Flux creates value for retailers the Meridian Group in 2. Selling that platform to other three ways... retailers to capture revenue for the Meridian Group 3. Building the enterprise value of the F

21. Slide 21: Introducing Flux Federation

    INTRODUCING FLUX FEDERATION ● 100% owned by Meridian Energy ● 250+ staff globally ● Remote-first operations Enabling retailers to ● World class Exec team ● Targeting growth in AU, NZ and UK, in mass move faster, price market, SME and C&I smarter and integrate Flux provides deep industry knowledge an

22. Slide 22: Market demand accelerating

    MARKET DEMAND ACCELERATING Energy transition challenges - the 3D’s: “Energy retailers ● Digitisation globally are being ● ● Decentralisation Decarbonisation challenged like never before.” On top of: Increasing regulation - McKinsey ● ● Changing competition landscape ● Decreasing margin ● Challenging

23. Slide 23: Competition

    COMPETITION Incumbents ● SAP New entrant tech ● ● Gentrack Oracle companies see great ● Agility opportunity in the energy transition New entrants ● Flux (Meridian) ● Kaluza (Ovo) ● Kraken (Octopus) ● Ensek Flux Federation | May 2021 11 MAY 2021 2021 INVESTOR DAY PRESENTATION 23

24. Slide 24: Looking ahead

    LOOKING AHEAD Last 12 months - Foundations for scale. Improving the team, architecture, product, brand and delivery and establishing strategy for growth • Great things in Secured 101 talented people in 2020 during Covid, all remotely • business are never Transformed the culture, high-performing, Rem

25. Slide 25: The future of the NZ system with 100% renewables

    The future of the NZ system with 100% renewables Grant Telfar Modelling Manager 2021 INVESTOR DAY PRESENTATION 25

26. Slide 26: Living in uncertain times: renewable energy & dry year flexibility

    Living in uncertain times: renewable energy & dry year flexibility  Hydro inflow deficits of 5TWh (20%) have historically been managed by Major Generation Sources Scaled to size of mean energy contribution : 2021-23 maintaining thermal capacity, flexible thermal fuel storage, and flexible Hydro sto

27. Slide 27: Changes to the power system by 2030

    Changes to the power system by 2030  A large volume of new renewable energy (RE) generation is NZ Power System 2030 Generation Summary needed: 12TWh, 3GW, and $7B of new grid generation Southland Stimulation & System Flexibility: all weeks, all hydrologies 50 100%  A secure power system can be ach

28. Slide 28: Future dry year flexibility scenarios

    Future dry year flexibility scenarios (1) 610MW Southland demand Annual Demand Consumption with Dry-Year Flexibility  This could either be new or existing demand output Southland Stimulation; 610MW dry-year flexible H2; no thermal 250 100%  Flex production down in times of hydro inflow scarcity, 9

29. Slide 29: Future dry year flexibility scenarios

    Future dry year flexibility scenarios (2) 750MW hydrogen electrolysis plant Weekly Hydrogen Electrolysis Consumption  As per scenario #1, flex production down in times of hydro output Southland Stimulation & System Flexibility: all weeks, all hydrologies 140 inflow scarcity in incremental steps 120

30. Slide 30: Future dry year flexibility scenarios

    Future dry year flexibility scenarios (3) Onslow-Manorburn (simple) pumped storage  585MW of (new or old) Southland load with no flexibility Annual Onslow-Manorburn Generation output  A simple 4,000GWh storage and 1,000MW power station 100 Southland Stimulation; 750MW generator; trickle-charge pum

31. Slide 31: Annual system costs by 2030

    Annual system costs by 2030  Over the decade, the challenge of meeting the generation needs of a power system moving towards 99%-100% RE are Annual NZ System Costs significant, regardless of the dry-year solution pursued: Southland Stimulation & System Flexibility: all weeks, all hydrologies  13-1

32. Slide 32: The best source of future dry year flexibility

    The best source of future dry year flexibility  The scale and pace of change required to move the NZ power system to 100% renewable energy is significant  Changes expected in wholesale market outcomes and performance will be dramatic at times:  Mean modelled prices ~$80/MWh in most scenarios, but

33. Slide 33: South Island demand options

    South Island demand options Guy Waipara General Manager Development 2021 INVESTOR DAY PRESENTATION 33

34. Slide 34: Datagrid - overview

    Datagrid - overview  Manapouri has abundant, stable and very competitive renewable energy (versus lack of hydro power in Australia)  Southland has the coolest weather in ANZ (average 9.8°C temperature)  Shortest distance to Australia, 20M population within 35 millisecond latency  Existing high r

35. Slide 35: Datagrid – project update

    Datagrid – project update  Exclusivity arrangement - Datagrid have rights to up to 100MW of electricity  Conditional on Datagrid achieving project milestones  Working with Great South to identify potential sites, closure imminent  Australian DC market forecast to grow from 500 MW in 2021 to 2200

36. Slide 36: Datagrid – project timeline

    Datagrid – project timeline Source: datagrid 11 MAY 2021 2 0 2 1 I N V EST O R D A Y P R ES EN T A T IO N 36

37. Slide 37: Process heat electrification - business

    Process heat electrification - business  Meridian team is working with South Island industrial customers to assist with the decarbonisation and electrification of industrial plant  Mainly replacement of coal boilers with electricity powered options  Meridian is committed to:  Potential new deman

38. Slide 38: Green hydrogen feasibility study

    Green hydrogen feasibility study  A three part study:  Market scan – markets, end use cases, logistics, NZ opportunity  Technology and engineering assessment – development costs, technology options, health and process safety and logistics  Dry year flexibility  Study completion by August 2021 

39. Slide 39: Green hydrogen project plan

    Green hydrogen project plan Key dates May 2021 ROI released August 2021 Feasibility study and ROI completed March 2022 Select pathway December 2022 Develop consortium and commercial December 2023 Complete detailed design and secure consents December 2024 Final investment decision Source: Contact Ene

40. Slide 40: Green hydrogen initial conclusions

    Green hydrogen initial conclusions Global demand forecasts are  International focus on decarbonisation is driving large increases in demand forecasts for green high hydrogen  Countries such as Japan and South Korea have limited domestic decarbonisation options Many potential pathways  Ammonia and

41. Slide 41: Portfolio balance

    Portfolio balance Chris Ewers General Manager Wholesale 2021 INVESTOR DAY PRESENTATION 41

42. Slide 42: Role of Wholesale

    Role of Wholesale  The Wholesale Team are accountable for delivering Energy Margin while simultaneously minimising risk and volatility across time.  Specifically – we work collaboratively across Meridian to ensure we have:  the optimal amount of committed sales going forward  the optimal amount

43. Slide 43: Portfolio tracking

    Portfolio tracking  Portfolio length is decreasing physical generation hedging mass market sales C&I sales NZAS sales financial sales TWh 1H FY21 18 +2.5 +2.6 +1.5 +1.7 17.0 +1.7 +0.7 15.5 15.3 14.8 14.9 14.8 2.7 15 2.0 13.8 1.1 1.6 13.3 2.5 12.3 12.3 2.2 2.3 2.2 12 1.3 1.6 5.4 9 5.3 5.0 5.0 5.0 13

44. Slide 44: Lake Pūkaki low range operation

    Lake Pūkaki low range operation Lake Pūkaki operating range schematic  Lake Pūkaki is consented to be used 532.5m top of consented operating range down to 513.0m 1,767GWh  Usage below 518.0m is generally tied 523.8m current storage (10 May) to the System Operator’s Electricity Risk Curves 518.0m E

45. Slide 45: Lake Pūkaki low range operation

    Lake Pūkaki low range operation  Since April 2020, the full Lake Pūkaki storage range has been included in our modelling and forecasting  Including the contingent storage allows a greater use of flexibility in the main range which can be seen in the forecast distribution  Contingent storage is al

46. Slide 46: Harapaki

    Harapaki  Investment in Harapaki will add length to the portfolio (542 GWh pa)  And support existing flexibility while enabling continued retail sales growth  Investment in renewables also aligns with New Zealand's move towards a highly renewable energy system  And supporting the retirement of a

47. Slide 47: Genesis swaption

    Genesis swaption  Meridian has a swaption arrangement with Genesis for up to 150 MW, up until the end of 2022  The swaption is a financial arrangement, which locks in a fixed price for the volume called  Since this was agreed, Lake Pūkaki contingent storage availability has provided additional fl

48. Slide 48: Smelter demand response

    Smelter demand response  Under the NZAS contract, Meridian can by notice to NZAS require a Smelter Demand Response (SDR) when the relevant hydro storage is less than the Dry Year Trigger Level  If Meridian gives NZAS an SDR notice, NZAS must start to reduce electricity consumption by a date specif

49. Slide 49: Harapaki wind farm

    Harapaki wind farm Chris More Wind Maintenance & Development Manager 2021 INVESTOR DAY PRESENTATION 49

50. Slide 50: Harapaki site features

    Harapaki site features  Highest wind farm in NZ – in sub-alpine altitudes  Terrain has geological features that require innovative solutions  Great access to site via State Highway 5 from Napier, being the main port of supply  Transmission connection is on the site. Significant cable reticulatio

51. Slide 51: Community and Iwi

    Community and Iwi  Within the Te Pōhue community based on the eastern side of the range  Two iwi have ties to the region; Ngati Hineuru and Maungaharuru Tangitu Trust  Meridian will be a good long-term citizen and fulfil what is culturally appropriate to iwi and also support community led initiat

52. Slide 52: Team

    Team  Assembled a very experienced delivery team with deep construction and operational experience  Aim to use local expertise to fill site roles as much as reasonably possible  Team disciplines aligned with contracts thereby having commercial and technical oversight  Strong focus on culture, en

53. Slide 53: Delivery

    Delivery  Meridian has chosen the ‘Principal’ over ‘turn key’, or ‘Engineer, Procure, Construct’ models  Enables Meridian to set, monitor and control the Health & Safety and performance culture on-site  Enables the complex interaction between contractors to be seamlessly managed within the master

54. Slide 54: Technology

    Technology  Direct Drive (DD) technology has far less moving parts as there is no gearbox  DD turbines use less oil, have greater ability to respond to changes in wind strength and generally have a longer life expectancy  Meridian previous experience with DD technology at the Mt Millar wind farm

55. Slide 55: Financials

    Financials  NZ$395M capital investment  41 turbines | 176MW | 542 GWh  35% capacity factor  NZ$35M to NZ$39M EBITDAF p.a.  On a $/kW basis, Harapaki construction is expected to be 17% lower than Mill Creek  The technology change to direct drive turbines gives rise to two benefits:  Lower oper

56. Slide 56: Generation development

    Generation development Rebecca Knott Head of Renewable Development 2021 INVESTOR DAY PRESENTATION 56

57. Slide 57: Development context

    Development context  Meridian’s analysis suggests 12TWh of new grid generation by 2030 to meet 100% RE  Greater than the CCC’s Draft Advice, which suggested 10TWh of additional system generation +10TWh by 2035  A third of that growth equates to at least 7 Meridian generation projects by 2035  Lo

58. Slide 58: Development scenario

    Development scenario  Frequent builds will be needed just to meet a portion of the CCC’s projected system growth  Development focus is on finding, consenting and holding options, not the timing of builds Harapaki 7+ additional projects North Island battery Source: Meridian 11 MAY 2021 2 0 2 1 I N

59. Slide 59: Current development pipeline

    Current development pipeline  Pipeline of 1.9GW (4,400GWh) Development pipeline (MW)  Consented sites will likely require re-consenting for better technology fit 110  Design, development and construction timeframe is subject to site complexity  Opportunities inevitably will not crystalise, more

60. Slide 60: North Island battery

    North Island battery  To build greater depth to North Island reserve offers  In turn allowing greater HVDC North transfer and less inter-island price differential  Potentially shared ownership with Contact Energy  Likely 100MW capacity  NZAS exit delay gives more time to consider location and t

61. Slide 61: Forever Forests

    Forever Forests Target  1,100 hectares of new plantings to grow Meridian’s own carbon offsets (21t)  Plant Meridian land​  Partner with others land​  Purchase land (marginal land)  Long-term native biodiversity through mixed model (exotics and natives) Progress  60ha planted (~60k stems), 80k

62. Slide 62: Closing comments

    Closing comments Neal Barclay Chief Executive 2021 INVESTOR DAY PRESENTATION 62

63. Slide 63: NZAS exit response

    NZAS exit response NZAS contract 14 Jan May 21 1 Jan 1 Jan 1 Jan 31 Dec investor 2021 day 2022 2023 2024 2024 Meridian portfolio response Exploring Current swaption options on CUWLP schedule completion review of site design & construction NI battery sites acquisition consents NTP go live ECCA ECCA P

64. Slide 64: Supply demand balance

    Supply demand balance  NZAS exit mostly absorbed by 2030 with modest organic demand growth and new load (industrial heat, data centre, EV’s) NZ Power System New Generation & Retirement 10 Year Outlook Exit @Feb21 2,500 2,000 1,500 expected annual energy [GWh] 1,000 500 0 Source: Meridian FY2021 FY2

65. Slide 65: Closing comments

    Closing comments  Engaged Lazard to assess Australian strategic direction and options  People focus  changing world of work  health, safety and wellbeing 11 MAY 2021 2 0 2 1 I N V EST O R D A Y P R ES EN T A T IO N 65

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