Meridian Energy Limited · NZX:MEL
Meridian Energy — 2015 UBS Australasia Conference
26 slides from Meridian Energy's conference presentation, Nov 16, 2015
Slide 1: Better energy future
Better energy future MERIDIAN ENERGY LIMITED 2015 UBS Australasia conference
Slide 2: Disclaimer
16 NOVEMBER 2015 Disclaimer The information in this presentation was prepared by Meridian Energy with due care and attention. However, the information is supplied in summary form and is therefore not necessarily complete, and no representation is made as to the accuracy, completeness or reliability
Slide 3: Today
16 NOVEMBER 2015 Today New technologies Thermal plant retirement in New Zealand Wholesale environment in Australia 2016 operating update About Meridian and the New Zealand market MERIDIAN ENERGY LIMITED 2015 UBS Australasia conference 3
Slide 4: New technologies
New technologies MERIDIAN ENERGY LIMITED 2015 UBS Australasia conference
Slide 5: Utility scale generation
16 NOVEMBER 2015 Utility scale generation Marine/wave technology not expected to be cost competitive in NZ for the foreseeable future Grid scale solar PV is not expected to be cost competitive in NZ for 20 years Wind turbine improvements are expected to lead to cost reductions Meridian is collaborat
Slide 6: Utility scale batteries
16 NOVEMBER 2015 Utility scale batteries NZ has a significant amount of grid storage through its hydro lakes Battery storage will do little to add value to system flexibility for some time Value of battery storage significantly below current costs Costs will fall and value will increase over time Trans
Slide 7: Distributed solar PV and batteries in NZ
16 NOVEMBER 2015 Distributed solar PV and batteries in NZ Solar PV is growing and battery trials are Lowest current simple payback periods in years beginning, industry participation is (3kW solar, 7 kWh battery – not going off grid) spreading Overall less than 0.5% of NZ customers Residential economi
Slide 8: Distributed solar PV and batteries in Australia
16 NOVEMBER 2015 Distributed solar PV and batteries in Australia Subsidies have supported high solar PV Lowest current simple payback periods in years penetration – 1.4m homes (3kW solar, 7 kWh battery – not going off grid) Forecast to triple during the next decade Superior economics than NZ with add
Slide 9: Electric vehicles in NZ
16 NOVEMBER 2015 Electric vehicles in NZ Small number of electric vehicles in NZ currently Growth initially expected to be dominated by hybrids Battery v hydrogen technology futures yet to play out A lot of discussion and work on charging infrastructure is occurring Cumulative light electric and plu
Slide 10: Thermal plant retirement
Thermal plant retirement MERIDIAN ENERGY LIMITED 2015 UBS Australasia conference
Slide 11: Recent announcements
16 NOVEMBER 2015 Recent announcements Southdown Owner: Mighty River Power Otahuhu B Capacity: 140MW Owner: Contact Energy Expected closure: 31 Dec 2015 Capacity: 400MW Closed: 30 Sep 2015 Retirements will remove almost 1,1ooMW from the system Huntly Rankine Units And the flexibility inherent in the O
Slide 12: Security of supply
16 NOVEMBER 2015 Security of supply If all announced retirements proceed New Zealand Winter Energy Margin and no new builds occur: NZ’s winter energy margin will fall below the current security standard Capacity adequacy in the upper North Island will also become a concern New builds will be require
Slide 13: Price impacts
16 NOVEMBER 2015 Price impacts OTAHUHU ASX FUTURES SETTLEMENT PRICE ASX prices have lifted since early $/MWh August 95 85 2019 prices are trading above 2018 75 Over the longer term prices are 65 expected to rise above the cost of new 55 generation 45 Low demand growth does not alter the Q4 2015 Q2 2
Slide 14: Meridian's response
16 NOVEMBER 2015 Meridian’s response Thermal retirements do not change the NZ system's need for flexible generation and fuel 5,000-8,000 GWh of load is currently spot exposed and system shortfall is highly undesirable Meridian’s operational risks are less concerning than physical impacts on the syste
Slide 15: Possible industry mitigations
16 NOVEMBER 2015 Possible industry mitigations Thermal fuel flexibility options Particularly gas supply/demand/ storage Options for thermal generators Genesis may retain Huntly given its cost advantage over new builds Others are considering new open or combined cycle gas turbines Renewable options fo
Slide 16: Australian wholesale environment
Australian wholesale environment MERIDIAN ENERGY LIMITED 2015 UBS Australasia conference
Slide 17: The Australian market
16 NOVEMBER 2015 NEM ELECTRICITY CONSUMPTION The Australian market TWh 275 Declining demand at the market level 270 -2.3% Adjusted RET (33TWh p.a. by 2020) 265 -2.6% 0.0% calls for more than 7,000MW of new 260 generation 255 Certificate market has firmed and 250 medium term thermal plant 2012 2013 201
Slide 18: Strategic focus
Strategic focus MERIDIAN ENERGY LIMITED 2015 UBS Australasia conference
Slide 19: Strategic focus
16 NOVEMBER 2015 Strategic focus Maintaining an open market in which we Close known retail profit gap can compete effectively Efficiency – full smart meter rollout and Transmission pricing investment in self service RET Service – significantly improved service Thermal retirements stats Price – focus on h
Slide 20: 2016 operating update
2016 operating update MERIDIAN ENERGY LIMITED 2015 UBS Australasia conference
Slide 21: Market data
16 NOVEMBER 2015 NATIONAL DEMAND Market data GWh 3,800 Demand growth in the 2015 calendar 3,600 year has slowed to be 1.7% higher than 3,400 the same ten month period last year 3,200 3,000 Switching remains high with the 12 2,800 month average switching rate for all 2,600 retailers at 19.9% at the e
Slide 22: New Zealand retail
16 NOVEMBER 2015 NEW ZEALAND CUSTOMER NUMBERS New Zealand retail ICP (000) Meridian North Island Meridian South Island -0.5% 350 Powershop Small decline in ICP numbers since June 300 287 272 277 277 275 2015, reflecting aggressive residential 250 48 51 55 56 55 sales activity 200 123 115 114 116 150
Slide 23: Hydrology
16 NOVEMBER 2015 MERIDIAN'S COMBINED CATCHMENT INFLOWS Hydrology GWh 6,000 To date this financial year inflows are 5,000 around historical average levels 4,000 3,000 Storage at the end of October 2015 was 2,000 121% of historical average 1,000 To date this financial year Meridian’s 0 New Zealand genera
Slide 24: Meridian and the New Zealand market
Meridian and the New Zealand market MERIDIAN ENERGY LIMITED 2015 UBS Australasia conference
Slide 25: About Meridian
16 NOVEMBER 2015 About Meridian Vertically integrated renewable generator, retailing electricity to over 330,000 customers in New Zealand and Australia New Zealand’s largest generator from purely renewable sources Seven hydro stations Flexible plant with New Zealand’s largest storage Long life asset
Slide 26: The New Zealand electricity market
16 NOVEMBER 2015 The New Zealand electricity market 5 Major generators 1 Transmission grid operator 29 Distribution businesses 26 Electricity retail brands 2 Million consumers MERIDIAN ENERGY LIMITED 2015 UBS Australasia conference 26