Meridian Energy Limited · NZX:MEL
Meridian Energy — FMANZ Summit (May 2015)
29 slides from Meridian Energy's conference presentation, May 7, 2015
Slide 1: Everything you wanted to know about the electricity industry – but were afraid to ask!
Everything y gyyou wanted to know about the electricity industry – but were afraid to ask! Mark Binns, Chief Executive, Meridian Energy 7 May 2015 FMANZ Summit
Slide 2: What we'll talk about
What we’ll talk about 1. A little bit on us - Meridian 2. How the industry works 3. The elephant in the room – price! 4. How you can take control of your bill – p pricingg and energy gy efficiencyy 5. New technologies MERIDIAN ENERGY LIMITED Everything you wanted to know about the electricity indust
Slide 3: Meridian − a little bit on us
Meridian − a little bit on us
Slide 4: Meridian – some facts
Meridian – some facts Renewable generator producing approximately one-third of NZ’s electricity NZ’s largest generator – 100% from renewable resources Operating O ti g seven hydro h d stations t ti and d seven wind i d ffarms iin NZ and d Australia Retailingg to over 300,000 3 , customers in
Slide 5: How does the industry work?
How does the industry work?
Slide 6: New Zealand electricity industry
New Zealand electricity industry 27 MERIDIAN ENERGY LIMITED Everything you wanted to know about the electricity industry - but were afraid to ask! 7 May 2015 6
Slide 7: What's in my bill? And why does it keep going up?
What’s in my bill? And why does it keep going up? MERIDIAN ENERGY LIMITED Everything you wanted to know about the electricity industry - but were afraid to ask! 7 May 2015
Slide 8: Breakdown of an average residential bill
Breakdown of an average g residential bill Image here? Source: Meridian MERIDIAN ENERGY LIMITED Everything you wanted to know about the electricity industry - but were afraid to ask! 7 May 2015 8
Slide 9: Cost increasing at a higher rate than price
Cost increasing g at a higher g rate than price p SSource: Electricity El t i it A Authority. th it El Electricity t i it Market Performance: 2014 Year in Review. Available: www.ea.govt.nz/monitoring/year‐ in‐review/2014‐review‐of‐electricity‐market‐ performance MERIDIAN ENERGY LIMITED Everything yo
Slide 10: Transmission/distribution costs a major price driver in recent years
Transmission/distribution costs a major price driver in recent years SSource: Electricity El t i it A Authority. th it El Electricity t i it Market Performance: 2014 Year in Review. Available: www.ea.govt.nz/monitoring/year‐ in‐review/2014‐review‐of‐electricity‐market‐ performance MERIDIAN ENERGY LI
Slide 11: Are New Zealanders paying too much?
Are New Zealanders p paying y g too much? NZ residential electricity prices compare favourably with other OECD countries Source: Ministry of Business Innovation (2013). Data available: www.med.govt.nz/sectors‐ industries/energy/energy‐modelling/data/international‐comparisons MERIDIAN ENERGY LIMITED
Slide 12: Meridian's return on investment
Meridian’s return on investment RETURN ON CAPITAL EMPLOYED 5% 4% 3% 2% 1% 0% FY12 FY13 FY14 FY15 (half year) Source: Meridian MERIDIAN ENERGY LIMITED Everything you wanted to know about the electricity industry - but were afraid to ask! 7 May 2015 12
Slide 13: So how do I reduce my bill?
So how do I reduce my bill? MERIDIAN ENERGY LIMITED Everything you wanted to know about the electricity industry - but were afraid to ask! 7 May 2015
Slide 14: Get the best pricing to suit your business
Get the best p pricing g to suit y your business • 14 retailers and 27 brands to choose from • Innovative, time of use pricing available with the roll-out of smart meters • Consider the spot market – if you can accept variability when the system experiences i adverse d constraints i or shortages • S
Slide 15: Innovative time of use pricing
Innovative time of use pricing p g off‐peak off‐peak peak Usage 6am 4pm midnight Source: Meridian. Illustrative Time of day purposes only. MERIDIAN ENERGY LIMITED Everything you wanted to know about the electricity industry - but were afraid to ask! 7 May 2015 15
Slide 16: Spot market − if you can manage the risk
Spot p market − if y you can manage g the risk “Normal Day” Normal retail price Price Average spot price Midnight Midnight Time of day Source: Meridian. Illustrative purposes only. MERIDIAN ENERGY LIMITED Everything you wanted to know about the electricity industry - but were afraid to ask! 7 May 20
Slide 17: What's the demand outlook? Should I fix?
What’s the demand outlook? Should I fix? • NZ electricity demand has been reasonably static since 2007 • MBIE is forecasting growth but at reasonably low levels • My guess – prices i unlikely lik l to race ahead over the next few years … and, if the Tiwai Point Smelter exits NZ prices must go down,
Slide 18: Reduce waste – be energy efficient
Reduce waste – be energy gy efficient • Choose a retailer that will work with you to identify cost saving opportunities • Understand your usage and charges • Undertake an audit MERIDIAN ENERGY LIMITED Everything you wanted to know about the electricity industry - but were afraid to ask! 7 May 2015 1
Slide 19: Unashamed plug for Meridian
Unashamed p plug g for Meridian • 100% renewable generation • Committed account managers • Coverage throughout New Zealand • Online energy monitoring tool • Smart tailored solutions MERIDIAN ENERGY LIMITED Everything you wanted to know about the electricity industry - but were afraid to ask! 7 May 2
Slide 20: Creating a better energy future
Creating g a better energy gy future MERIDIAN ENERGY LIMITED Everything you wanted to know about the electricity industry - but were afraid to ask! 7 May 2015 20
Slide 21: Can new technologies save me money?
Can new technologies save me money? 21
Slide 22: Solar PV − saviour or smoke?
Solar PV − saviour or smoke? • Meridian has international solar experience i – in i California lif i and d Tonga • Meridian’s domestic buy back rates continue to be attractive − solar sign sign- ups post-rate change not slowed • Surveys of our customers indicate there are multiple reasons for instal
Slide 23: Factory size installation − example scenario
Factory y size installation − example p scenario For a three-phase 50 kWp solar PV system • Capital cost = $100 − 150K +GST approx. pp • Annual yield =60,000− 70,000kWh • Reduction in annual energy gy purchase = $5,400− 6,300 (based on a day-time average gy y cost of 9 cents plus energy-only p GST p
Slide 24: Batteries to the rescue?
Batteries to the rescue? Very early days Interest due to: Enabling consumers to go off-grid entirely Helping customers avoid peak pricing Reducing injection back into the grid for solar PV Winter sunlight Increased facility resilience Energy generation Lines network management g 8am 4p
Slide 25: Battery storage − domestic and commercial use
Battery y storage g − domestic and commercial use Economics are mostly unattractive: Day‐time‐consumption >> 25% No Seasonality Going off-grid: PV + battery system Solar PV Battery Total costt > $100K $ K ffor an average h home Installation kW 6.9 5.2 cost $/kW $ 3,333 $ 3,593 Avoiding peak pr
Slide 26: Battery storage − low value in the NZ system?
Battery y storage g − low value in the NZ system? y New Zealand has a significant System Value of Battery Storage amount of grid storage within the Battery System Value vs Declining Unit Cost existing power system: $200 $180 Thermal 4.8 TWh – monthly $160 e rev/cost [$/MWh] $140 Reservoirs 4TW
Slide 27: And finally, the hot topic “electric vehicles”
And finally, y the hot topic p “electric vehicles” • Early days • Anecdotally, 548 electric vehicles (EVs) in New Zealand at end of March 2015 • More than 50 public charging stations • EVs offer an opportunity to transition towards a lower carbon future • And make the most of our national renewable
Slide 28: Concluding remarks
Concluding g remarks • 80% of New Zealand’s electricity comes from renewable resources – world class • A diff different market k to overseas economies trying to decarbonise • Subsidies from new technologies are unlikely • Evolution NOT revolution • Take control of your bill – choose the best pricing
Slide 29: Any questions?
A questions? Any ti ? MERIDIAN ENERGY LIMITED Everything you wanted to know about the electricity industry - but were afraid to ask! 7 May 2015