Apa Group · ASX:APA
Apa — Investor Day (May 2022)
55 slides from Apa's investor day presentation, May 6, 2022
Slide 1: Responsibly transitioning energy
APA Investor Morning 6 May 2022 Responsibly transitioning energy
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Australian Pipeline Limited (ACN 091 344 704) as responsible entity of Investors should form their own views as to these matters and any assumptions on which any forward-looking the Australian Pipeline Trust (ARSN 091 678 778) and APT Investment Trus
Slide 3: Welcome
Welcome
Slide 4: Acknowledgement of Traditional Custodians
In the spirit of reconciliation APA acknowledges the Traditional Custodians of country throughout Australia and their connections to land, sea and community. We pay our respects to their elders past and present, and extend that respect to all Aboriginal and Torres Strait Islander Peoples today. APA
Slide 5: Agenda: Responsibly transitioning energy
Agenda: Responsibly transitioning energy Session 1 Session 2 1. The energy transition (30 mins) 4. APA's investment considerations (20 mins) Rob Wheals, Chief Executive Officer Adam Watson, Chief Financial Officer The energy sector must decarbonise • Capital allocation framework • Path to net zero i
Slide 6: Rob Wheals: The energy transition
Rob Wheals CEO & Managing Director The energy transition APA Investor Morning 2022 6
Slide 7: Australia's energy sector must decarbonise to support net zero
Australia's energy sector must decarbonise to support its ambition to achieve net zero Australia’s emissions in 2021 by sector(1) 3% 15% 33% 10% 501 MT CO2-e 1% 18% 20% Electricity Stationary energy Transport Agriculture & LULUCF Fugitive Emissions Industrial Processes Waste & Product Use 1. Source:
Slide 8: The path to net zero is uncertain, dependent on unproven technologies
The path to net zero is uncertain with current plans dependent on new, often unproven energy technologies Government’s priority low emission technologies for Australia to achieve net zero emissions (by technology contribution)(1) 100% -20% -40% -15% Further technology -10% to breakthroughs -20% -15%
Slide 9: Multiple technologies are being progressed to support a lower carbon future
Multiple technologies are being progressed and explored to support a lower carbon future Proven and commercial Developing Wind & Solar Hydro Batteries Hydrogen Carbon Capture e.g. NSW Renewable e.g. Snowy 2.0; e.g. Gruyere e.g. Hydrogen Hubs; & Storage Energy Zones Battery of the Nation Battery; Hor
Slide 10: Balancing security, reliability and affordability: UK experience
The transition needs to balance security, reliability and affordability as the recent experience in the UK highlights (case study) UK generation mix(1) UK Electricity Generated by source (TWh)(1) • Coal and nuclear have declined • Renewables have increased; now ~40% 100% 90% Recent challenges(1,2,3)
Slide 11: A disorderly transition can result in significant energy price increases
A disorderly energy transition without appropriate firming can result in significant energy price increases (case study) Consequences UK electricity prices day ahead baseload contracts(1) • Wholesale electricity and gas prices have increased by ~3x and ~4x respectively over the last 12 months(1) 300
Slide 12: Australia's energy transition is underway
Australia's energy transition is underway: coal exiting; renewable generation growing; developing gas resources to ensure affordable security of supply National Energy Market Generation mix – ISP Step Change(1) TWh 400 Solar - Distributed Solar - Utility 350 Wind Other Dispatchable (inc gas) 300 Bro
Slide 13: Australia is well positioned given its excellent resource base
Australia is well positioned for an orderly transition given our excellent resource base Gas resources Wind resources Solar resources 25+ years of resource at current Attractive resources for both onshore Highest solar radiation per m2 production levels and offshore wind of any continent Source: htt
Slide 14: Energy transition presents multiple opportunities for APA
The energy transition presents multiple opportunities for APA given our expertise and experience in operating and developing energy infrastructure Regulated/contracted Renewables Hydrogen Regulated/contracted electricity Infrastructure & Firming gas infrastructure Electrification Renewables Hydrogen
Slide 15: Electricity transmission opportunities via renewable energy zones
Electricity transmission opportunities arising with the decarbonisation of Australia's economy via renewable energy zones REZ development 2049-50 ~122 GW 35 REZs $30+ B – Step Change scenario(4) additional VRE shortlisted across New transmission capacity by 2050(1) eastern Australia(2) investment(3)
Slide 16: APA consortium shortlisted to tender for Central-West Orana REZ
APA consortium shortlisted to tender for Central-West Orana REZ (case study) Central West Orana REZ(4) $5.2B 3GW 1st REZ investment(1) capacity(1) in NSW Central West Orana - NSW first REZ The Central West-Orana (CWO) Renewable Energy Zone is New South Wales's first REZ Stage 1 of the REZ is targeti
Slide 17: Supporting customers via renewable energy microgrids
Supporting our customers with their decarbonisation efforts via renewable energy microgrids Energy solutions that support the North West Minerals Province (case study) APA is developing a $150m 88MW solar farm at Mica Creek; will be operational by mid CY23 Fully contracted for 15 years with two foun
Slide 18: Participating in hydrogen feasibility projects via Pathfinder program
Participating in hydrogen feasibility projects via our Pathfinder program Renewable Energy Transmission Energy Trading H2 Production H2 Pipeline H2 Storage Liquefaction / H2 Transport End User Inc. CO2 pipeline Inc. CCS Chemical production (Shipping / Tanker) APA areas of interest APA actively parti
Slide 19: Central Queensland Hydrogen Consortium
Partnering to assess green hydrogen opportunities via the Central Queensland Hydrogen Consortium (case study) Development of hydrogen hub in central Queensland for domestic and export supply Highly credentialed consortium: APA; Stanwell; Iwatani Corporation; Kawasaki Heavy Industries; Kansai Electri
Slide 20: Different drivers of gas demand and supply, east and west coast
Different drivers of gas demand and supply between the east coast and west coast of Australia Key themes in the east coast gas market Key themes in the west coast gas market Gas demand Gas demand • Stable near term outlook but gas usage becoming ‘peakier’ given • Strong demand from resources sector,
Slide 21: East coast energy infrastructure responding to growing supply from north
APA’s east coast energy infrastructure responding to growing supply from northern Australia Total annual gas consumption, Step Change scenario Projected supply balance in south-eastern region with existing, excluding Qld LNG (1) committed, and anticipated developments excluding imports (2) 600 400 3
Slide 22: Resource demand driving new energy infrastructure on west coast
Growth in demand for Australia’s resources driving demand for new energy infrastructure along the west coast APA opportunities for WA Goldfields region (2) West coast case study – providing Demand drivers reliable energy to support resource Growth in global demand 2019 to 2030(1) High Probability de
Slide 23: Gas is critical for Australia's energy users
Gas is critical to ensure secure, reliable and affordable energy for Australia’s energy users Power Generation – 98 PJ East Coast Gas Consumption 2021(1) • Gas is critical for firming renewable electricity • Supporting the transition away from coal fired power generation (eg Kurri Kurri) 18% • Capac
Slide 24: Hugo Batten, Aurora Energy Research
Hugo Batten Managing Director, Aurora Energy Research APA Investor Morning 2022 24
Slide 25: Aurora analysis of a net-zero NEM
Aurora analysis of a net-zero NEM APA presentation May 2022 © Aurora Energy Research Ltd. – CONFIDENTIAL
Slide 26: Introducing our Net Zero scenarios
Introducing our Net Zero scenarios: built with rapid electrification, hydrogen uptake, and grid upgrades to achieve a net zero emissions target Detailed input changes (continued overleaf) Rapid electrification Behind the meter capacity Additional grid upgrades This scenario assumes an acceleration i
Slide 27: Policy pathway to net zero impacts wholesale electricity prices
The policy pathway to net zero has a material impact on wholesale electricity prices NSW wholesale prices1 $/MWh, real 2021 TWA Solar post-curtailment DWA Wind post-curtailment DWA 120 120 120 110 110 110 100 100 100 90 90 90 80 80 80 70 70 70 60 60 60 50 50 50 40 40 40 30 30 30 20 20 20 10 10 10 0
Slide 28: Under net-zero, VIC requires short and long duration firming
Under net-zero, VIC will see many instances where demand cannot be fully met by renewables; both short and long duration firming is required Example of VIC in 2050 under Aurora 2021 Q1 Net-zero scenario (with carbon price) Residual demand “duration” curve - FY2016 weather year Residual demand by con
Slide 29: Name-plate capacity increases materially in Net Zero scenarios
Name-plate capacity increases materially in Aurora Net Zero scenarios, with firming coming from a variety of sources 3 Capacity mix NEM-wide capacity, Net Zero scenario State-wide firming capacity, Net Zero scenario1 • As thermal assets exit, firming is GW forecast to come from a variety of GW sourc
Slide 30: Thermal assets likely required in each state in 2050
Thermal assets are likely to be required in each state to ensure security of supply in 2050 in a net-zero scenario Maximum half-hour gas output in a net-zero scenario for 2021 and 2050 (in central weather year) MW 2021 2050 12,600 • Aurora’s long-term modelling indicates that there will be a 2,000 r
Slide 31: Thermal generators contribute 3-10% of NEM generation in 2050
Thermal generators contribute to 3-10% of NEM generation in 2050, but are the marginal generation source 40-60% of the time in a net zero system NEM-wide generation in 2050 % of total generation $/MWh Thermal technologies contribute to only 3-10% of the NEM generation 150% 300 Thermal generation set
Slide 32: Details and General Disclaimer
Details and General Disclaimer This document is provided "as is" for your information only and no representation or warranty, express or implied, is disclaimer given by Aurora Energy Research Limited and its subsidiaries Aurora Energy Research GmbH and Aurora Energy Research Pty Ltd (together, "Auro
Slide 33: Moderated Panel
Moderated Panel APA Investor Morning 2022 33
Slide 34: Moderated panel members
Moderated panel members Hugo Batten, Managing Director David Ogilvy, Partner Low Emissions Manufacturing – Aurora Energy Research L.E.K. Consulting Australia’s Opportunities L.E.K. and Manufacturing Australia have examined the opportunities and hurdles facing Australian manufacturing in the global t
Slide 35: BREAK
BREAK APA Investor Morning 2022 35
Slide 36: Session 2
always apa Ghead 2 Session 2
Slide 37: Agenda: Responsibly transitioning energy
Agenda Responsibly transitioning energy Session 2 4. APA's investment considerations (20 mins) Adam Watson, Chief Financial Officer • Capital allocation framework • Investing for sustainable growth 5. ESG – Video (10 mins) • Introduction by Rob Wheals • Video showcasing APA's progress with its ESG a
Slide 38: Adam Watson: APA's Investment Considerations
Adam Watson Chief Financial Officer APA's Investment Considerations APA Investor Morning 2022 38
Slide 39: APA is positively leveraged to rising inflation
APA is positively leveraged to rising inflation Majority of APA’s revenue is Drawn debt fully hedged with High EBITDA margins(3) indexed to inflation(1) average maturity of 7 yrs(2) CPI linked revenue EBITDA as % of revenue Other revenue Drawn debt hedged at 31 Dec 2021 Costs as % of revenue 1. Cont
Slide 40: A strong balance sheet to support future growth
A strong balance sheet to support future growth BBB / Baa2 ratings FFO : Debt of 11.5% providing $1.8b of liquidity with stable outlook headroom to fund growth and support capital management (1) No material debt refinancing Average cost of debt 4.6% (1H21 5.2%) obligations until FY25 Drawn debt is 1
Slide 41: Attractive debt maturity profile with no material refinancing until FY25
Attractive debt maturity profile with no material refinancing obligations until FY25 Average all-in cost of funding ~5% Undrawn committed facilities 536 AUD AUD DCM bonds(2) USD DCM bonds(3) 1,396 (USD 1,100) 1,140 (USD 886) 879 (USD 683) 1,104 1,018 925 500 770 738 379 (USD 300) 650 450 200 50 50 1
Slide 42: Capital allocation framework
Capital allocation framework ensures the ongoing focus on maximising securityholder value Sources Uses Approach Stay In • SIB capex to ensure safe reliable operations Operating cash flow Business Capex • Consistently growing distributions; targeting 60-70% of free cash flow Liquidity • Enhancement o
Slide 43: Investing in capability to ensure growth is responsible and sustainable
Investing in capability to ensure growth is responsible and sustainable Organic growth opportunities Investing in our business • Pipelines – new and expansion • Business development • Contracted and regulated electricity transmission • Community and customer engagement • Contracted renewable power g
Slide 44: Rob Wheals: ESG at APA
Rob Wheals CEO & Managing Director ESG at APA APA Investor Morning 2022 44
Slide 45: Our ESG framework
Our ESG framework Build Accelerate Maintain & Evolve Priority issues to be built Fundamental issues which Existing plans and processes into strengths require strengthening to evolve via ESG lens • Climate Change Transition & Risk • Environmental management • Safety, Health & Wellbeing • Community &
Slide 46: ESG Video
ESG Video APA Investor Morning 2022 46
Slide 47: Moderated Panel
Moderated Panel APA Investor Morning 2022 47
Slide 48: Moderated panel members
Moderated panel members Ben Pratt (Moderator) Julian Peck Corporate Affairs Commercial and Strategy Caroline Beattie Darren Rogers Hydrogen and Future Fuels Operations and Asset Management Amanda Cheney Megan Saussey Legal and Company Secretariat Net Zero and Climate Ross Gersbach Jane Thomas North
Slide 49: Rob Wheals: Wrap-up
Rob Wheals CEO & Managing Director Wrap-up APA Investor Morning 2022 49
Slide 50: APA is playing a key role in the transition of Australia's energy system
APA is playing a key role in the transition of Australia's energy system Infrastructure in place to deliver reliable, secure Agnostic to the energy transition pathways given and affordable energy exposure to major new energy technologies • Reliable delivery of gas to residential and commercial users
Slide 51: Appendix
Appendix APA Investor Morning 2022 51
Slide 52: Existing APA operational footprint across energy infrastructure assets
Existing APA operational footprint diversified across a range of energy infrastructure assets Assets and Investments Glossary GLOSSARY: AGP Amadeus Gas Pipeline BGP Bonaparte Gas Pipeline BWSF Badgingarra Wind and Solar Farms BWP Berwyndale Wallumbilla Pipeline CGP Carpentaria Gas Pipeline CRP Centr
Slide 53: Group structure
Group Structure Group structure Australian Pipeline Trust APT Investment Trust (APT) (APTIT) • APA Group is listed as a stapled structure on the Australian Securities Exchange (ASX:APA) Australian Pipeline Limited • APA is comprised of two registered managed investment schemes: (Responsible Entity)
Slide 54: Thank you
always apa Powering ahead Thank you
Slide 55: For further information
For further information Kynwynn Strong General Manager, Investor Relations M: +61 410 481 383 E: kynwynn.strong@apa.com.au www.apa.com.au