Infratil Limited · NZX:IFT
Infratil — Investor Day (March 2011)
29 slides from Infratil's investor day presentation, March 2011
Slide 1: Infratil Investor Day March 2011
Infratil Investor Day March 2011
Slide 2: TrustPower – Our Business
TrustPower ust o e – Ou Our Business us ess • Tauranga based national electricity generator / retailer • Market capitalisation circa NZ$2.3 billion • Keyy Shareholders Infratil ((50.4%), ) TECT ((33%)) • Free float 16.6% • NZ generation ti capacity it (hydro (h d / wind) i d) 621 MW producing d i ci
Slide 3: Consistent Performance
Consistent Performance EBITDAF, Underlying Earnings After Tax & Operating • Maintaining Performance Cash Flow six months to September 180 In Competitive and 160 Volatile Market 140 120 • Adapting p gp portfolio to M's 100 $M 80 Market Changes 60 40 • Building Momentum with 20 0 Development Options 2
Slide 4: Performance in sector
Performance in sector • Rational Pricing • Product P d t Placement Pl t EBITDA driven • Asset Investment for value growth • Focused and Collaborative Team
Slide 5: Current Market Environment
Current Market Environment • Load Growth is subdued in line with GDP Growth • Government Reforms still playing out – R Retail t il C Competition titi and dM Margini S Squeeze – Scarcity pricing, Asset swaps – Wholesale price volatility increasing and upward price p p pressure – Peak price events bec
Slide 6: South Island RSL vs Price
South Island RSL vs Price I Average spot price ($/MWh) 450 5 I I I [ I —Price —Storage level (relative) | 400 350 - r\ 300 - 250 - 200 - 100 | 50 Ad / NK Whe -2000 0 -2500 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (UMD) [@Aa] B3es0}5s aBeITAY
Slide 7: Implications – Short Term
Implications – Short Term • Whirinaki to $5000/MWh • Wholesale price uplift 9 ($10/MWh based b d on 2009) 9 - Not N t yett reflected fl t d iin retail t il margins i • Scarcity pricing 9 due to competitive repositioning • Conservative hydro bidding 9 • Conservation campaign • Carbon 9 payments? • Ca
Slide 8: TrustPower Sales Response
TrustPower Sales Response • MM price rises moderated-BUT- not being drawn into market share “wars” • Preserve EBITDA focus where energy price netback is less distorted by competitor dynamics • Reposition volumes to targeted C&I customers • Deliver outstanding customer and community experience – “Bra
Slide 9: TrustPower Response: Mahinerangi Stage
TrustPower ust o e Response espo se Mahinerangi Stage 1 • 36MW and 105GWh (after losses) • Capacity factor 36% • Embedded to avoid HVDC Charges • Generated and Consumed locally • Low Cost Project • Complete May 2011
Slide 10: TrustPower Response: Bream Bay Diesel Peaking Plant
TrustPower Response Bream Bay y Diesel Peaking g Plant • 9MW • Provides a “ low cost”cap for retail • Well positioned in the t transmission i i systemt • Complete July 2011
Slide 11: Forward Market View
Forward Market View • Growth resumes with peak demand increased by 30% to 100% by 2040*. • Grid G id (i (including l di HVDC)upgrade HVDC) d and d pricing i i removes constraints on SI investment • Prices trend toward LRMC (includes carbon) • SOE ownership changes bring more rational investment deci
Slide 12: A Strong Pipeline of Quality Projects
A Strong Pipeline of Quality Projects Total 565 MW producing 2050 GWh Arnold Wairau Mahinerangi 2 Kaiwera Downs Waverley Esk Hydro Coleridge Tailrace Average Annual Development Spend of $6 Million targeted to deliver $20 to $30 Million PV per year over the medium term.
Slide 13: Imminent Opportunities
Imminent Opportunities Project j Description i i C Capacity i Timing i i Esk Valley Hydro High head hydro 4 MW Investment decision Q1 FY12 scheme with resource Construction 18 months consents Coleridge Tailrace Hydro station installed 1.7 MW Investment decision Q1 FY12 in Coleridge tailrace Construc
Slide 14: Larger Scale Investments
Larger Scale Investments • Arnold Hydro y Scheme • Circa 37MW • Est $ 205 million • Design in progress • Investment case Q3 FY12 • Target T t completion l ti 2014
Slide 15: Major Project Pipeline
Major Project Pipeline P j t Project D Description i ti C Capacity it St t Status Wairau Hydro Scheme 5 power stations on a 73 MW Has resource consent, will 47km canal adjacent j follow Arnold dependent p on to the Wairau river investment case and HVDC g Stage Mahinerangi g 2 Wind farm SI 85 MW Depe
Slide 16: Australia – next steps
Australia – next steps • Snowtown 2 • Circa 250 MW, 750 GWh • Capacity factor circa 40% • Has planning approvals • Investment decision Q3 FY12 subject to PPA
Slide 17: Water, Irrigation and Generation
Water, Irrigation and Generation • Climate Change and Impacts • Reliability y and cost • Staged approach • Opportunity for complementary investment
Slide 18: New Zealand Context
New Zealand Context • Climate – Temperature and Rainfall • Country wide temperature increase. • Rainfall expected to fall in fewer higher intensity events. – Likely Impacts • Increase in drought due to greater evapotranspiration even if time between rainfall events remains unchanged. • Predictions s
Slide 19: Water and Irrigation
Water and Irrigation • Cost vs Reliability – Irrigators want very high reliability – but not well defined. – Cost of supply is not linear with volume. Last 20% of capacity can cost 50% of per volume charge. p g – Historical charging systems don’t reflect this incremental (marginal) cost of supply. –
Slide 20: Water and Irrigation
Water and Irrigation • Historical Approach – Bulk charging – everyone pays the same – Flood irrigation dominated. • Certainty vs Reliability – A high certainty of supply at any point in time is better than an overall reliability which may mean extended periods of no supply supply. – More emphasis sh
Slide 21: Lake Coleridge Staged and Complimentary
Lake a e Co Coleridge e dge Staged and a d Complimentary Co p e ta y Scope of Potential mid Canterbury Mid stages, stages up to 80 80,000Ha 000Ha + 45MW Existing Assets Coleridge – retained but with improved peaking and lake utilisation. Hi hb k – retained Highbank t i db butt with ith greater t ene
Slide 22: Canal, Storage and Generation
Canal, Storage and Generation Wilberforce Harper 30 m3/sec 40 m3/sec Statistics Lake River Irrigation 60 to 80,000Ha Coleridge hburton R Energy : Pumping, 15 GWh Generation, 430 GWh Ash Canal Pump Station 31 m3/sec 7.1 m3/sec New Stations Siphon p RDR ata River a River RDR and Central Barhill Cherts
Slide 23: Key Success Factors
Key Success Factors • Water Conservation Order change – stakeholder engagement • Irrigation consent access and environmental limitations to intensification • Irrigation consents are end enduring ring (25 years ears pl plus) s) • Distribution infrastructure investment • Staged development that matche
Slide 24: Staged Development
Staged Development Year Stage Area Generation Capex ha $M cumulative MW cumulative 2010-2011 BCI pumps 9000 15 BCI p pumps p to 8 2012 cumecs 12000 30 Pumps and 2013 siphon 24000 69 Pumps and 2015 uptake p CPW 36000 84 2020 Canal complete 80000 44 370
Slide 25: Stage 1: Existing
Stage 1 : “Existing” Pumped Supply to South Wilberforce Harper 30 m3/sec 40 m3/sec Lake River Coleridge hburton R 36MW 260GWh Ash Pump up Max Level 0 = 509.4 m to 5 m3/sec 0 mil m3 ge (m) 31 m3/sec 7.1 m3/sec -1 Summer 70 mil m3 ge Lake Rang Storag -2 2 Total = 120 Winter 30 mil m3 RDR -3 Dry Event
Slide 26: Highbank Pumps – stage one
Highbank Pumps – stage one • Five Pumps • Deliver up to 5 cumecs • Capacity and delivery payments
Slide 27: Highbank Pumps Water Intake
Highbank Pumps Water Intake TrustPower
Slide 28: Highbank Pumps Penstock Connection
Highbank Pumps Penstock Connection
Slide 29: Summary
Summary • TrustPower continues to “outperform” and manage g competitive p threats • Wholesale Price pressure will drive next round of investment • SI projects ready and will accelerate with HVDC pricing change • Irrigation exciting prospect for NZ NZ, Canterbury and TrustPower