Contact Energy Limited (CEN) Earnings Call Transcript & Summary

[Foreign Language] Welcome, everyone. I'm Mike Fuge, I'm the CEO of Contact Energy and a very warm welcome to you to [indiscernible]. For those of you who have traveled far, in fact, I think just about everyone has traveled, thank you for making the effort to be with us today. And I hope that you find over the day that to find some interesting things out about us and our ambition for the future. And a warm welcome also to those online. We are being live stream. The usual disclaimer. I won't read it in detail. Just take it that we have plausible deniability on everything we say, that you can take the beautiful slide pack that's been prepared as absolute [indiscernible]. Agenda today, first part of the morning, there's myself and then Chris is -- Chris Abbott, our Chief Corporate Affairs Officer, is going to get up and tell us a little bit about himself, but also the journey we are on around decarbonization, which is so important. Chris has been in the role almost 2 years now. Hails, like myself, from [indiscernible], the North, which don't hold that against either of us, please, but has certainly made an impact in his role, and we look forward to his contribution. And then beyond that, Phillip, part one of the audience [indiscernible] is famous or infamous [indiscernible]. After morning tea, we're going to get properly into the meeting, [ details ] of the presentation with both Matt and Dorian, the fireside chat with Andy and Nathan from New Zealand Steel, welcome. Jacqui, what she's doing in the renewable energy space. And then we'll have some breakout sessions to talk about wind and solar. Matt is going to tell you what we're doing for ordinary Kiwi families in the custom space. And then Louise and John and Jan and Chris and Tighe are going to talk about how we enable those things to happen, how we keep or [indiscernible] the wheels on the business as we do transform it. And then Jack's got a bit of a story to tell around major projects, which is wonderful. Welcome, Jack. And then Dorian will give you a bit of an overview on what all that means with financial. Okay. First of all, welcome to the team. I mentioned most of them have went through. John. I probably didn't mention John Park, Chief Generation Officer, sort of 80% or 90% of our revenue, so a very important individual. I think everyone else, Matt, Tighe, Dorian, Jack, Jan, Jacqui, Chris, the team has been embedded now for the most part, 2 years. They're well established. And as you'll see today, they're really starting to [ kicking door ]. So we're delighted that you all have a chance to get alongside them during the day and this evening, just to pick their brains about where they see the future. Now look, we're on track to deliver our promise that it's one of the things about Contact Energy is that the profitability from our existing asset base has lifted from what we have advised 3 or 4 years ago of $480 million to around $550 million. We expect this year to land at around $530 million. We live in very unusual times with the North Island hydrology sequence unprecedented and recorded history. And what that means is that with an average in the South Island, exactly average, as Matt Forbes keeps reminding me, that will lead to one of the highest post-market years for the national hydrology. What that leads to is some very interesting conditions, lower wholesale spot prices than what was anticipated by futures, lower thermal generation and higher price separation, but we have been able to deliver higher retail channel yields. It's actually a bit of an interesting conundrum because what we've experienced over the last 6 months is what other countries going to look like when we do reach 95% renewable. We are cutting new ground as a nation in the way the market behaves. And so the conditions we see and both the incredible volatility we see but also the value of firming when it's needed is one of the conundrums which has been coming out loud and clear in the last 2 months, in particular. So it's worth all of us just being a little bit curious about what these conditions mean because there's a harbinger of things to come. Look, FY '23, a big year. Final investment decision on Te Huka III, our cheeky little binary, as we call it, that Jack and the team got underway, and Jack has picked up. Took FID on that. You'll see some of the site today. That's progressing really well. The Growing your Whanau policy, market-leading in the war for talent. We just saw that as an incredibly step forward. We've joined the DJSI. We got in. We got in with style and panache, another 2 in New Zealand, and we will continue that journey. Tauhara, you'll see today met 94%. That's a little bit out of date. You'll wander around the site -- well, you won't wander around the site today, it's pouring with the rain, but it is progressing well. We have learned a lot on the way, but we'll take that journey as it comes. Selected from a standing start to build New Zealand's biggest solar farm at Kowhai Park, Christchurch Airport. Energy Retailer the Year. Got the resource consent for the Wairakei field for the next 35 years. That's a huge testament to good relationships we do have with iwi and hapu groups here and to the contribution neighboring, and I do want to acknowledge that. There is a very fragmented attitude to what it is, a valuable resource, and how that is developed for the benefit of our TLR. The $550 million of green bonds and launching the EV owners Dream Charge. There are a few more surprises along the way today, but we'll let those come out as they come out when [indiscernible]. So we're deep in the execution of the strategy. And grow demand, grow renewable development, decarbonize our portfolio, create outstanding customer experiences were the key enablers of the ESG, operational excellence and transformed ways of working. It's one thing to talk a good story. It's quite another thing to walk it. And so you particularly see this with development pipelines or [ vacleware ], as they might call it. What you'll see today is real. It's a lot of hard [ money ] to get a program of $1.1 billion of investment underway with another potential $1 billion in the pipeline to grow our renewable output by the equivalent of 3% to 5% of New Zealand's total electricity demand. It's not a promise. It's not a handshake with the farmer. It's real. It's consented, and it's underway. And I do want to talk about some of the challenges that, that means. Because what that comes down to is [indiscernible]. And I want to spend a bit of time around us, about the journey we have been on because as part of our transformation program, we spend a lot of time around the mechanics like do we actually have the resources to execute this? Can we actually build the execution muscle? But one of the things that Taria Tahana's husband as well as gifting us Taria as our Head of Corporate Relations, he also gifted us a [indiscernible] which you'll know, [Foreign Language] means a saying, [Foreign Language] is a saying that was written for us personally. [Foreign Language] saying something like this [Foreign Language]. And very politely, it was translated as mau taniwha, harness the energy, and I don't know many of you that grew up in rural New Zealand, but I grew up thinking the taniwha genuinely was a monster in the river, and that scared me s*******. And what mau taniwha actually means is actually front up, face it, don't ghost it, as the kids do, don't pretend it's not there, and oh, golly gosh, we finished the project and it's double the cost, and we're 6 months late or a year late. If you can't do it, front up, face up, grab the monster by the tail. Step 2, Mau tumaro, be persistent. Don't give up. Keep working it. Don't lose your backbone. But tomorrow because eventually, you will get into clear blue air. You will arrive at a pace of clarity, Mauri ora, and you'll have a good life. And just to give you an example, and Jack will go into this even more. We set out 2 years ago, 3 years ago, ambition to grow renewable development at Contact Energy. It's going to be easy. You just get a few contractors. They know what we're doing. We [ shell ] out the money, easy, [ kosher ]. Look, after 10 years of no major capital project activity, we run very mean and lean, and we've lost some muscle strength in the capability. We believe that we could contract out that capability. And the reality is you have to do the opposite. You have to be really interested in what people are doing when they're building stuff because if they come back from a day, a 12-hour day, and they have not achieved the things they were meant to be achieving, if they didn't have the materials, if they didn't have the drawings, if they -- someone going their way, your job is to get those things out of the way the next day. Not the next week, not the next month, the next day. And so, we've had 1 or 2 setbacks. We've had COVID. We've had weather, Jack's going to talk about that. You might have seen some of that on the video. But they faced into it. They have faced the taniwha, and they have been persistent and they are getting to a place of clarity. And so with the plans to deliver the new asset classes, you can take that, that culture that we have developed, which is based around that [indiscernible], that will continue in the go forward. So yes, we've had setbacks, but if you face into those setbacks and taking action to make sure that we dealt with them, and when we didn't know how to do things, partner. Adam's is in the room. Welcome, Adam. On solar, we all thought solar was going to be easy. Well, [indiscernible] couple of peaks in the ground, your panels in China, off you go. No. It's not that easy. So when we didn't have the capability, we partnered. We've got Roaring40s in the room as well. They'll be up on stage later. Welcome. And we align the organization to that portfolio growth. If you are persistent, good things happen. That is a fundamental belief we have. So Tauhara, when we started, 152 megawatts, 1.2 terawatt hours of output, $680 million. Yes, the cost went up, but what are we delivering today? Between Tauhara and Te Huka III, 225 megawatts, 1.9 terawatt hours. Tauhara will be on stream before the end of this year. Te Huka III will be on stream by the end of the next calendar year. And the team are getting ready to take FID on GeoFuture for Wairakei replacement. And that learning and ability to front up to the monster to actually tackle it head on has paid real dividends in shareholder value. And now, look, we're not stopping there. We have even greater ambitions. And I just want to run a few of these, which are important for today. With this company was founded, we omitted 2 million tonnes a year of CO2 of scope 1, 2 and 5 million tonnes a year of scope 1, 2 and 3. Where we stand today, we have met between 600,000 and 700,000 tonnes a year of CO2. By 2027, we'll be down to 300,000 tonnes a year. And we think we might have a way through another 200,000 tonnes of that. We haven't done any dodgy financial instruments. We have not peeled off the dirty carbon-emitting parts of our portfolio. We have faced the monster. Yes. And I pay a tribute to those that have gone before me in fronting up and not running away or turning away but actually fronting up and tackling this issue of climate change and carbon emissions. We are -- we will grow demand. And there's 3 things here. There's the 100 megawatts of new demand. We have a fundamental belief that electricity is the fuel of the future. We have a fundamental belief that New Zealand has a fantastic undeveloped pipeline of renewable energy. And we believe that we have the ability to help New Zealand industry and ordinary Kiwi homes decarbonize through adopting electricity as a fuel. We will reach 100 megawatts of Demand Flex. And the other part of that is Demand Response. Demand Flex, we anticipate in the reserves market. Demand Response is when you respond to fluctuating market signals on the prices. And we will get new green chemical channel established by 2027, and Jan will talk a little bit about that soon. Renewables, 10.3 terawatt hours by 2027 from geothermal, first and foremost, but solar and wind. But when you see us in 2027, we've gone past 10.3 almost by accident, because by then, we'll be looking at Tauhara south. We will be looking at further wind and solar because our ambition doesn't stop in 2027. We will have a battery up and running Yes. And the customer, we will be cracking on towards 700,000 customers. Cost to serve of the global benchmark of $80 a connection, which we convert to euro or USD converts very nicely to what the best-in-class are achieving. And we will have grown the EBITDAF from the nonenergy lines of business adjacencies. We will be top quartile for sustainability in the business. We aim to -- we have fought hard of that position at the top of New Zealand-listed companies. We're not going to give it up easily, and the ambition is to go beyond Australasia and beyond to become world-leading. With that, I'll hand over to Chris. Thank you.

Well, thanks, Mike. [Foreign Language]. Good morning, everyone, and thanks each for coming to Taupo today. My name is Chris Abbott. I'm the Chief Corporate Affairs Officer, and I'm privileged to lead our sustainability and ESG practice. As Mike's just talked through, one of the 4 pillars of the Contact26 strategy is to decarbonize our portfolio. I'm pleased to say that we've made considerable progress in the last 2 years, which we'll outline today. We've also accelerated our ambition to decarbonize the generation portfolio. Contact's renewable generation output will increase, as Mike mentioned, from 87% in FY '22 through to 95% in FY '27. And we now have a clear path that will allow us too achieve net zero emissions from our energy generation scope 1 and scope 2 by 2035. When we set out our Contact26 strategy, we said that we decommissioned the Taranaki combined cycle plant, otherwise known as TCC, which is baseline thermal generation. We confirm that TCC will run its remaining operating hours, but we're not going to invest any further upgrades. The confidence to retire TCC as a result of new renewable investments such as Tauhara coming on stream. Secondly, we said that by 2026, we would reduce our greenhouse gas emissions by 45% using 2018 as a base year. We're on target to exceed this goal. Our gross emissions will reduce to less than 450,000 tonnes by 2025. Contact, we were the first retail energy company to set verified targets using SBTi or Science-Based Target initiatives framework. We originally set our SBTi target at -- sorry, for the numbers, 648,000 tonnes of CO2 by 2026. Our current trajectory will exceed our SBTi reduction target by 200,000 tonnes. Our third ambition, which is showing yellow amber on this slide, was to move thermal generation assets into an aligned industry business model to support New Zealand's collective ambition for a fully renewable energy system. Our proposal was to establish an industry-owned thermal co, which would take a coordinated approach, bringing together the industry thermal assets. It would deliver an efficient low-cost transition while minimizing market volatility. Unfortunately, while there was significant interest in thermal co, ultimately, the proposal hasn't got legs and hasn't progressed because of the limited industry appetite. As a result, Contact will continue to own and manage our thermal assets, which allows us to optimize our portfolio performance and continue to play a key role in security through the energy transition. So for 2 years since we set the Contact26 strategy, so I just want to talk you through our thinking and how it's developed. We remain confident that thermal substitution strategy is the right one, and it's necessary to manage the energy trilemma. The cycle's three-legged stool of affordable, reliable and renewable energy. The government has set ambitious climate targets to meet New Zealand's Paris commitments, and the emission reduction plans have bilateral support across political parties. This includes a target of 50% of all energy consumption is sourced from renewable electricity by 2035. That's a significant increase from 28% today. Similarly, all political parties recognize key role that electricity will play in decarbonizing sectors, including processing and transportation that Dorian will talk to us shortly. While supply shocks, COVID and inflationary pressure continue to impact the economy, the government's fundamental direction on sustainability and decarbonization has not changed and similarly nor have Kiwis. However, these challenges are impacting the medium-term outlook for thermal generation and reaffirms our strategy of sensibly decarbonizing generation portfolio as the right one. At the same time, we're seeing increased volatility around carbon prices. You would have seen it declining recently under the ETS with the government setting aside climate change commission advice and announcing a review of the ETS, thus seeking basically to politically moderate short-term impact of market-based carbon pricing. At the same time, in the market, we're also seeing constraints on gas availability, including gas field declines in volatility and storage facility. As a result of this, the marginal cost of electricity generation now sits around $150 per megawatt hour, which is above our long-run wholesale price expectations with investment in renewables. So again, kind of supports our premise at rapid and broadly exit through thermal generation and accelerated investment in renewables is the right approach. At the same time, there's an ongoing focus in government around the security of supply and a fully renewable energy system. The electricity authority industry and government exploring how to address these issues. This includes the nature of intermittent generation for wind and solar. The so-called Dunkelflaute day, this delightful German term, which basically means a dark, windless day where wind and solar don't generate, pretty much like today. So after 2 years, we remain confident despite changes in the environment that the industry will solve the transition challenges without need for government or regulatory intervention. Decarbonizing our portfolio in a rapidly changing environment continues to be the right one, not just for our Contact business performance, but also for New Zealand's water decarb ambitions. So we've got a clear path now over the last 2 years to fully decarbonize our generation. And with Horizon 1, our focus has been removing baseload generation. We will remove all baseload generation with the closure of Te Rapa cogeneration in the coming days and a decision not to invest in TCC and run out the remaining operating hours. We will continue to own and operate our existing thermal patent generation, which can fire up quickly to meet urgent short lift peak demand. On Horizon 2, our focus then turns to solutions about how we wean ourselves off and ultimately to retire our remaining thermal peak plants. We'll achieve this by 4 solutions, which the team will be talking about today. The first is demand flexibility which works to flatten the demand curve at times of peak demand where thermal peaking is currently necessary. And a great example is the risk they announced New Zealand Steel deal, which will be talked about in more detail by Andy and Nathan later on today. Secondly, grid-connected batteries, store electricity off peak and released during periods of peak demand, similarly reducing a need for thermal peaking. And we expect to make a final investment decision on battery storage in 2024. Certainly, Jack and Jacqui's portfolios with our current renewable development investments at Tauhara and Te Huka, coupled with a significant pipeline, which Jacqui will be talking to across geothermal, solar and wind, will increase, as Mike mentioned, our total renewable portfolio will be 10.3 terawatt hours by FY '27. And finally, Matt will talk this afternoon about retail innovation, including products such as Good Nights and Dream Charge, which incentivize Kiwis to use off-peak power, flatten peak demand and ultimately further reduce the need and wean ourselves off faster than we're peaking. Supply FY '27, we forecast greenhouse gas net emissions from electricity generation will reduce to 300,000 tonnes. If we take -- if we consider the closure of Otahuhu in 2015, closure of Te Rapa in the coming days and the retirement of TCC, our generation and emissions will reduce by more than 70% in a decade. It's quite impressive, in my view. This puts us well on track to meet our 2035 net zero ambition. In the coming year, as mentioned, we'll progress investment decisions around additional carbon capture, which I'll talk to in a minute, capture reinjection at our geothermal stations and also expect to make a final investment decision for grid-scale battery. As Mike mentioned, we were also really pleased to be part of the Dow Jones Sustainability Asia Pacific Index this year. That's a recognition of our ESG focus and decarbonization leadership. And this year, we'll continue to strengthen our rankings and performance against global best practice. It's a really good metric for us to measure and compare ourselves against. So everyone last waterfall indiscernible] as one. I just want to step you through in a little bit more detail about just how we will achieve net zero our generation activity. This is scope 1 and scope 2 emissions by 2035. Starting on our left, our FY '22 emissions was 788,000 tonnes. As Tauhara and Te Huka come on stream in the next 18 months, there will be new emissions from these low-carbon, renewable geothermal sites of 92,000s a year. By closing Te Rapa, the next couple of days we're retiring TCC, that will remove approximately 494,000 tonnes. Further reductions will then be achieved through the capture of carbon from geothermal generation. And finally, investment and forestry partnerships with Drylandcarbon and forestry partners will provide sustainable offsetting units. This means, as Mike mentioned, our expected net emissions in FY '27 will be around 300,000 tonnes. This puts us then in a really strong position to nail the rest of this 300,000 tonnes and achieve net zero by 2035, which will be -- which will occur through further investment in carbon capture, offsets from our forestry partnerships and additional initiatives that we're continuing to assess. So I should also note that this is a static and quite a conservative view. As we discussed, we expect further reduction and Contact's reliance on thermal peaking. As we grow renewable generation, we increase our demand flexibility, we invest in batteries, and we innovate new retail products. All that will [ flame ] Demand Flex reducing -- and reduce the need for thermal peaking. I just wanted to quickly talk through geothermal emissions. Geothermal emissions -- geothermal is a low-emission baseload generation, as you know. The ability for us to capture carbon and either reinject or repurpose resulting CO2 will reduce our total emissions impact. It has the potential for us to move geothermal from a low-carbon to a no-carbon generation source. Last year, we successfully completed a trial and have now implemented carbon capture and reinjection in Te Huka. Essentially, CO2 was captured and then it's dissolved back into water and then reinjected back into the reservoir. The composition of geothermal fluid does differ by field, and the capture of potential reinjection technologies similarly differ by plant. So we're continuing to evaluate the feasibility and business cases for each of our sites. Somewhat ironically, New Zealand is facing a shortage of the commercial CO2, and that's a result of a closure of Marsden Point refinery. And as a result, New Zealand is having to become an importer of CO2 to meet commercial demand. Think flat beer, for example. As Dorian will discuss, we're also exploring opportunities to catch and repurpose the CO2 to support that demand and a potentially efficiently monetizable byproduct from geothermal operations. Irrespective of these options that we pursue, we remain confident that we'd still be able to achieve net zero by 2035. So our strategic focus on decarbonizing our portfolio is one of the 4 enablers of our strategy is supporting a Contact26 goal to lead [ these all to ]decarbonization. As I've mentioned, we're retiring our thermal baseload generation. We're innovating and investing to reduce our reliance on thermal peaking. We're capturing emissions from geothermal generation, and we're offsetting residual emissions through sustainable forestry partnerships. So we're well on track to be net zero from our generation activities by 2035. At the same time, we also recognize the position that we have in supporting New Zealand's secure, affordable and highly renewable generation. We believe we can do both carefully and in concert. So we won't stop there through [indiscernible] program. We'll continue to explore opportunities where possible to go harder and faster on these goals. With that, I'll conclude the presentation, which also means we'll now be pausing our live stream. So for online viewers, we'll resume our live stream at 10:45 a.m. [Foreign Language]. Thank you. [Break]

Right. I'm going to start while the stragglers at the back still get their coffees. They've let me on finance. So I'm now talking about growing demand. So this is actually quite exciting for me. Growing demand is clearly very important because it allows us to build out our renewable development pipeline. Obviously, very important as well because it reduces the amount of energy that's coming from fossil fuels, which is actually one of New Zealand's key climate change targets, to grow the amount of energy that's coming from decarbonized sources of 29% to 50% by 2035. It also very much aligns with Contact's values and our primary customer, which is the environment. So we haven't really said that before. Your primary customers, generally, your -- one of your employees, your customers or your shareholders. For us, it's the environment. I know that's dangerous saying that to this group, to this lot, not the shareholders, but you need to trust that if we are supporting the environment, actually all of our other stakeholders are happy as well. For example, it gives us the opportunity to build out that one full development pipeline that we've got to help decarbonize the environment we're in. The other thing I should say about growing demand is we want demand to grow. We want the market grow. We're not particularly fussy about supplying that marginal demand to the market. We're interested supplying the demand that offers the most amount of value, be it through flexibility or through price. There's been a few major changes with the environment over the last couple of the years since we originally came up with these targets back in -- two years ago when launched Contact 2026 actually to this group. The first is that we've realized that exporting hydrogen offers the lowest netback for our electricity of all the options available in the lower sales finance, so we've discounted that. We've also seen the [ outlet ] for green aluminum improved significantly from where it was a couple of years ago. So as we've said before, we have not changed our tune here. We expect the New Zealand aluminum smelter to stay in the long term. And therefore, we're not so concerned about mitigating a Tiwai exit, which is what a lot of the [ broader line ] stuff was about two years ago. So the world has, in effect, moved on. I think it's fair to say the electrification pipeline hasn't performed quite as quickly as we had hoped. We've had a couple of headwinds. So the first one is we have seen higher electricity prices. And also what we mentioned earlier, the cost of carbon has dropped, particularly of late with the government prioritizing reining in an inflation and ignoring the advice of the Climate Change Commission, and that obviously makes the economic switching costs from fossil fuels into renewable electricity a bit more stretched. So that's what's driven that. Flexibility has performed very well. Demand Flex is now up at 50 megawatts. And we have -- you can see we're building flexibility into more of our PPAs with the New Zealand Steel PPA, good example of that, and we'll talk about that later. So how we moved over the last couple of years. So although the demand outlook hasn't accelerated as quickly as we would have hoped, it's definitely incrementally improving every year. I won't talk about the aluminum smelter. We've done that already. In spite of those high sort of short-term electricity prices, we are seeing a lot of interest from major electricity users. With the high commodity prices and most of those major users are exposed to those, they were a lot more financially secure. And therefore, we are seeing sort of appetite to sign long-term PPAs and to use the flexibility that may have within their own production to actually get a cheaper PPA price and reduce the road to scope 2 emissions. Again, referencing New Zealand Steel. That's a good example. There's been a flurry of activity in data centers. I mean, is it me or is there a new data center announced on Energy News every week? So we still believe this is going to be about 200 megawatts of data centers, which is about 2 terawatt hours of baseload new demand to the market. And about 100 megawatts of that, we think, will be online in 2024. This -- some people have asked, is this actually just substituting our existing smaller data centers in New Zealand. We talk to Spark and companies like that, and the answer is no. There's 2 major macro trends going on at the moment. We've got data sovereignty. So bringing data stored overseas back to New Zealand. And then you've just got this exponential growth that's going on in data and processing, which needs more data centers. And if you want more information on that, you should look at the [indiscernible] or Spark Investor Days or go into [indiscernible] the megatrends. The data centers also have very strict renewable electricity requirements. And what I mean by that is their consumption needs to align to a renewable PPA [indiscernible] trading period. So remember, their consumption is baseload. So it aligns very much with geothermal, which is baseload and renewables, making that the ideal partner for them. And you'll have seen some developments in that space with our announcement with Microsoft. Electric vehicles, you see we are starting from a low base, but they are starting to pick up in terms of the percentage of registrations we're seeing. I think there's two things that are driving that. The retailers, electricity retailers, are introducing EV products into the marketplace, which give consumers cheaper off-peak electricity. So that supports the business case for switching. And then obviously, you've got these government subsidies as well, which can be up to $8,000 per vehicle, which help. I think that all -- I mean that all sounds pretty rosy, but I mean, if you listen to James Shore, as a country, we're still not where we need to be in terms of -- to get on to that trajectory to hit our climate change targets. So I do suspect that whoever's in government from October this year, you're going to see more mechanisms being put in place. Whether they're carrot or sticks, I think there'll be a combination of both. Carbon prices will definitely go up, in my view, and I think you will get more subsidies coming through. I guess the extent and the nature of those subsidies will depend on whether it's national or labor that are in government. In terms of our ambitions, FY '24 is really important for us. We need to get a long-term agreement in place for the New Zealand aluminum smelter. We owe it to the people who work at that plant, either directly or indirectly. We also are into our environment, is one of the great aluminum in smelters in the world. And we have a lot of that green being required for renewable activities like EVs. I think we need to play our part as a country. It also removes the shadow that a smelter exit has been casting over the industry, for god knows, how many years, and opens up the opportunity to build more renewables in the South Island, and there's a very good resource down there. The other topic we'll be working on in the short term, which Chris alluded to, was actually work through the feasibility of taking the CO2 from our geothermal steam and using that to support the New Zealand and Pacific Island food and beverage industry, where there is a shortage of food-grade CO2 and is being imported in from Asia. And I'll talk a bit about that later. In terms of our longer-term targets, I'm going to talk about what we're looking to do around green chemicals. I'll do that in a couple of slides. Demand Flex. We're looking to grow that from 50 megawatts, where it is at the moment, up to 100 megawatts. Now remember, as Mike said, that should play within the reserve market. So it adds to the security of the energy system, and it provides us an income stream and our customers an income stream. But what we really want to do is as we get that into true demand spots, where customers are turning their production up and down based on price signals from the market. That is incredibly valuable. 100 megawatts is worth the equivalent of $150 million grid-scale battery. It's actually probably more valuable because a grid-scale battery's got about 2 hours' worth of discharge, whereas the nonresponse has got a far longer duration. So that's quite an exciting space to be moving into and is one that's going to be essential as more intermittent renewables come to market because that's going to be a key source of serving for the market. Partnership is going to be key. We've talked about our partnerships already, and we'll talk some more about that in terms of renewable development. But in terms of growing demand, they're awfully key. Picking the right partners is key to success. And with global decarbonization happening, we're seeing a sort of proliferation of applications for electricity, renewable electricity. So it's important that we have the right partners to actually get the deep market insights that we need before we make any firm decisions on anything. You can see our fine partners there, are all site quality ones. And I should also say that we're actually working with other partners as well, which are pretty high profile but we're down to confidentiality on that at the moment. I wanted to finish off just by talking about a couple of examples around flexibility and growing demand. So the first one is, obviously, there's New Zealand Steel PPA. I'm not going to go into too much detail on this because we're lucky enough to have Nathan here. He can talk about it from a customer's perspective. But the real innovation around this PPA is the flexibility of it. You can see that the neat chart here on the right-hand side, which shows how that works, it's got a 4-hour knockout period over the morning peak and then a 4-hour knock-out period over the evening peak, and that happens for several months of the year over winter. So during that time, New Zealand Steel are exposed to the spot market. So we'll take market price signals to determine how they run their electrical furnace. The key is the electrical furnace is flexible enough to turn up and down at short notice. They get the value of that in terms of that flexibility, in terms of a cheaper PPA price, which that will have facilitated an investment decision around the electrical furnace in the first place. And then from a Contact perspective, we get the value of it in terms of having a shape of load with better reliance to our generation profile and portfolio. So it is a true win-win. The next example is green chemicals. And I mean, interestingly, geothermals has got all of the building blocks that are required for green chemicals. You can run geothermal generation, use it for electrolysis of water, which produce green hydrogen. You've got a naturally carrying carbon stream within geothermal steam in the form of CO2. You then have the building blocks for the green hydrocarbons. You can bang them together with the right technology in any combination to form one of the green chemicals you like. And that's where external partners become key for this because you actually want to understand which green chemicals offer the best netback from an electricity perspective. One of the green chemicals that gets talked about a lot is sustainable aviation fuel, which is definitely something that we're looking at. We have a more immediate opportunity, though, as I said, around our CO2 and our geothermal steam. So the New Zealand food and beverage industry needs about 50,000 tonnes a year of food grade CO2. Problem is, the refinery produced about 45,000 tonnes of that, and we're a bit shuffling down. That gap had to be plugged. And we're now importing about 30,000 tonnes per year of food-grade CO2 from Asia, which clearly is not good for the environment. There's a lot of emissions associated with that type of [indiscernible] and that distance. The other issue is there's a global shortage of food-grade CO2. Can you guys see the irony in all of this? So we've been looking at options around this. We've been working with the market, with customers. There's not actually that many customers. But the ones that they are, are big and consume a lot of this stuff. We've been looking at the purity of the CO2 that comes out of our geothermal steam and also the consistency of it because that's key. If you're going to put a purification and need it in place, you need to know the composition of that CO2 is going to be very consistent. So we've been working through that with a deal of a purification unit being installed and then us stepping in and plugging the gap in the market that's been left by the refinery exiting. We're not looking specifically to deploy material amounts of capital into this. We would look to the potential customers to do that. But just to put that into perspective around the capital purification, it probably cost about $100 million. So we're not talking about building an ammonia plant or anything like that. This is small, relatively small sums of money. Interestingly, actually, if the refinery has been pricing the CO2 based on willingness of the market to play, i.e., import parity, they might have come up with a different conclusion about whether they shut it or not, different topic. And as Chris said, there's a big social imperative to us on this and a huge ESG kickup [indiscernible] because no one want s flat beer in New Zealand. So this is a critically important opportunity for us. So that's it for this part of the presentation. I think we're going to end the live streaming now, [ Meg ]. It's all done. All good. So look, I'm going to introduce Andy [Audio Gap]

Yes. Good to go. [indiscernible] and welcome. Pleased to have everyone here. And today, I'm going to this will move us on a little bit, would be good start. I'm Jacqui Nelson. I'm the Chief Development Officer for Contact Energy. I've worked for Contact for 19 years, I guess, appropriately for this forum start of my days as a treasure and have worked across most disciplined of the business segment as retail [indiscernible]. I've been Chief Development Officer at the end of 2021, and I can confirm that's the best job in the company [indiscernible]. So we're having a lot of fun. Our development team basically support for 2 of the pillars of our strategy to decarbonize -- lead the decarbonization of New Zealand by the grow demand piece and also building our new renewable energy into that demand. So 2 years ago, we set a very ambitious strategy in place. And I think a point to make is we've helped forte that strategy, we haven't gone off piece and that's been really helpful. And in the development space, I would say we are well and truly sitting on that tonnage for. We've been on steroids and we've got things under control. It's been pretty exciting. Our results have far exceeded our expectations. And I thought I'd touch on a couple of the highlights and space, which could be covered that I'll provide button contest. The first one was bringing forward the Te Huka III geothermal development. So for Contact, we had previously been built Tauhara, then do features, which we refer to as the Wairakei replacement. Indeed, we were going to bring on this additional battery plant. And last year, the middle of last year, we've sort of looked at things at. There's a very small gap of opportunity here at the start line. Deck could release some of his team, his design team of Tauhara, and we could have a crack at this as we know that. We achieved final investment decision in August. And that involved moves, we sole-source with [indiscernible] as a supplier, which is not in our nature. We met plant is completed. It will be the largest single giving unit battery plant in the world, about 51 megawatts. And we will be -- we're generating 5 years, volume of generation is coming 5 years early. So it was very valuable. So I also see to look pretty proud of that. It might be -- the second thing I'd like to call out is the consenting process around year futures that Wairakei replacement was exceptional. And again, for some contact that consent process our application, we received 5 submissions. 3 of those were neutral [indiscernible] in support of the project. Back in the early 2000s when we reconcile to Wairakei, we had 197 submissions, and they were all against the project or extending our operations on that field. So just quite incredible. That process also took 7 years, so very painful. And it gives us a reflection of how we've moved things that move the dial in our relationships with key stakeholders in this community. So is that awesome piece of work. Finally, I'd like to call out a fact that we feasibly delayed a final investment decision on battery. We were close to putting the trigger on that, the flannery of development in charge, and we hit those lithium prices just escalating. A 500% increase in a very short period of time. So again, above move, we mainly expose on that in particularly our suppliers, we're not willing to take on that lithium price risk, and that was a position we were not happy to take a risk that we went in to be at that point in time. We went idle while we did that was in the meantime, we've consented at [indiscernible] thermal plant, we have be granted a consent but on a 100-megawatt battery there, so we're good to go. And to Nathan's comment, we have an imminent option, a second option for a battery site [indiscernible] so we are good to go. And in summary, we had the battery, GeoFuture, solar and wind projects that we will all be bringing forward to final Investment Decision in FY '24. So as I say, we've been on steroids. A Jack is going to head Tauhara up and running in the final quarter of this calendar year and at a higher outlook than it was originally modeled. What's happened in the development environment over the last couple of years, plenty [indiscernible], if I call the slide, my geothermal as gold slide. Because I think the value impact of these changes has been very positive for geothermal sitting in our development portfolio and our existing portfolio for that matter. So price path has remained robust. The forward price path. We've got really good demand. Sorry and talk to that, coming both domestically and internationally and buyers, I think most importantly, finally, looking to long-term energy supply agreements, which is positive. And from a global perspective, we see as very affordable and highly renewable, which is not obtainable elsewhere. The technology curve 2 years ago were coming off. But I think we've seen all sorts of interruptions that have halted that, particularly out of Europe, with the Russia side of things. We've recently been in Europe. And there are some incredible subsidies happening there. Germany, we're offering EUR 250 per megawatt for long-term PPAs. So it's driving a huge amount of demand for renewable build is as obviously the U.S. Inflation Reduction Act with what have they got? $370 million floating around and some of that will go into the energy sector. So yes, that the demand has increased and also we've touched on this, the cost of firming is increased. Though geothermal as a baseload renewable has become far more competitive. In the construction space, we've it's sort of it's been nice, I think everyone is aware of the supply constrained -- supply chain constraints, labor is difficult to get, commodity prices and I think a key change that we've seen particularly recently, is a real shift in the contracting model. So suppliers and providers are no longer willing to go say a full wreck at which we would call EPC, so engineering procurement and construction that's been built in this environment, and we need to take far more collaborative approach around sharing of those risks that we can't be mitigated. Batteries I've just talked about, so I'll skip through that. And finally, there's been a cluster of developments announce. Transpower forecasting 7 gigawatts of solar alone by the end of this decade and our peer group, including ourselves, has announced more than 5 gigawatts of new developments coming alone online. So that's significant. I would point out on all of those developments are very early stage and not conceited and not more of a concept internally we as a team call of being [indiscernible] Watts, which I think is quite an action label and we've been guilty of it ourselves. But yes, it's -- but [indiscernible] and context effect that we have a whole pipeline of geothermal development conceited, how well positioned we are around that. What does delivery look like? I think really, what all I can say is, like, we've been, we've exaggerated and we've nailed it. And really been on task and hit those targets. And the coming financial year FY '24, we will be bringing a final investment decision on GeoFuture, so 1.4 terrawatt hours of geothermal, build renewables, beautiful thing. Geothermal is gold. Kowhai Park is a solar farm down at Christchurch of Christchurch International Airport in conjunction with lights and [indiscernible], that's another 0.3 terawatt hours and the victory. And then fast coming alongside those as we have further very real options and solar, North Island Solar, another 0.3 terawatt hours and down Southland Wind Farm that's sitting around 1 terawatt hour. And I guess Mike talked to this in his opening, significantly in that space. We've given ourselves a real stretched targets of 10.3 terawatt hours of renewable generation in place by the end of FY '27 as well as a the battery. Lots to do. How we going to do it I think the key reason we've been able to move at pace is that we have changed out our operating model and in the development space and partnered with global experts and the areas we're interested and it's a real shift. I think I've been at contact a long time. And we have strictly would have the mantra, we can do everything ourselves and we will do it better and we can't is a learning. In geothermal, we're pretty established. We have got outstanding operational capability. The Wairakei field has been operating a Wairakei plant for 65 years. For those who aren't aware, it's a second oldest plant in the world that so not far behind the plant in Italy. And then in a sub-surface team, so the reason why guys, they are continually innovating, adapting to lower the cost of existing fuel and subsequently the operational costs of those plants and there's some pretty globally recognized people and their team were outstanding. And they work very nicely with our recent acquisition of the energy team who are leading downhole down well. Specialists and they are both working here in offshore. So very nice little mix they are. And wind, we partnered with the Roaring40s. We have Paul Botha here, who's going to be speaking to later. And they bring well, proven capability. That's done 9 wind fields -- wind farms in New Zealand. And I think what I've been out with these guys last week, actually. They -- what they bring is great connections. They know everyone. They have the technical knowledge. They know where the good sites are with good grid connections and other land owners and it's just giving us a real leader head in that space. We had some community stakeholder sessions last week down in Southland. As I say, which I attended the two teams accompanied each other brilliantly. We had the Roaring40 guys of the all technical details when deals, how big are the blade is going to be? What is this going to look like outside my kitchen window? How much noise is it going to make? And our team of the market side of things and both of them exceptional and us, that's stakeholder engagement piece was pretty cool. Finally, on the solar front, we have partnered with in a JV arrangement, what's like to expect BP, and we have Adam Pegg here from Lightsource today. So the last about this the Matt Cleland laid out the due diligence in the space. It was like being on tender for a year. We speak to each other's profiles but quite a long time before we hooked up. But we are very happy now that we have. Lightsource has just been announced as the largest solar developer globally, and they've done 8 gigawatts already and have a pipeline of a further 55. They're also an experienced owner and operator, which we're not. And that the scale that they have absolutely brings us access to supply chains so it's critical. And we bring our reputation and market knowledge and transmission being quite critical in that space as well, as well as being critically will offtake up. So to give up, we are pretty nicely partnered up to be positioned for project financing those projects, solar, and that's something that Contact hasn't done before and Lightsource has plenty of experience in doing them. Moving quickly. Here's 10.3 starting off a base of 7.2 in FY '22. And this is made up of assuming being hydrology, 3.9 and hydro 3.3 geothermal. If you take the middle section and knit that off, you get about 2.1 additional terawatt hours of geothermal to take us to a total of 5.4 in our portfolio, and that will add up to 9.3. So we've sort of got over a terrawatt hour to hit. And as I said, I think we are going to knock it out of the park with those projects in Kowhai Park, the second solar park and the solar project in the North Island and the Southland wind farm. So that's all we confident we're going to hit. I'm going to skip through these next 2 slides because these are covered in the breakout area, but very excited to have our wind farm progressing very quickly into conceding stage in Southland. I grew up in Southland, so it's nice to be back home. And then there has been a fair bit of coverage on the lightsource Kowhai Park field, pretty exciting, going to be a whole ecosystem have all sorts of opportunities based out source of industry, including all those green fields as well. And I will quickly finish on GeoFuture. We are seriously hitting into final investment decisions here. As I said, we've got the consents. We have issued tenders actually out to suppliers. So that's a huge piece of work and to see how that goes. I think we'll get on the 17 weeks to get their bids in. And we had interestingly kicked our technology options opened on that field. So we haven't gone that we'll be steamed flash, we have that book opened, so they both look very viable options at this point in time. And yes, but into this calendar year, beginning sort of yes, kind of Christmas, the Christmas deal. But yes, we've got to go. Dorian has done a great job in positioning us balance sheet wise, so that we can have capacity to be able to finance all these projects. So I thought I have finished with [indiscernible] which was relevant to Mike's opening. To cover off, we are, I think, [indiscernible] developments at and it goes [indiscernible] [Foreign Language] and it simply translates, well it's all about ambition, expiration, perseverance. And I think we're demonstrating that in space at the moment. So it literally translates the value you're value most dearly and value here is at [indiscernible] . That's me. I'm going to finish the live streaming at this point. [Audio Gap] [Lunch Break]

My name is Matt Bolton, and I am the Chief Retail offer here at Contact Energy. Been on the strong now 2.5 years and I had the pleasure of working at Contact for the better part of [indiscernible]. I have actually worked right across the business. I spent a number of years in finance, then in operations and moved into the retail space in 2014. For the next 15 minutes, so I really just wanted to step through an update with we're at with the retail proportion of the Contact '26 strategy. I know you're all super excited about this piece. The morning piece of development was great, but retail is outstanding. And that's where we'll start is around creating outstanding customer experiences. And at the core of our Contact '26 strategy for retail was absolutely anchored in the customer. Fair to say at that point, we've done a great job of turning around our business inside the building, but what we were serving up for the customer could have improved. And our success for us really looked like reinforcing the value of our grade. At the time when we created this, we've probably spent the previous 10 years spending a little to none on our brand. And in fact, you probably would have struggled to know what Contact did, create that the lightening of the strategy. We also talked about growth in scale. It's a muscle that we hadn't really worked on at all coming in to this in 2021 for the prior 5 years but actually flat lines. We had not grown at all. And we stood here 2 years ago and said, how about we get to 650,000 connections. And then finally, we've been on a bit of a journey on cost to serve. And in fact, when I started in retail, our cost to serve was about $220 a connection. We're well on the way south of that, and we targeted to get under $90 a connection. We see that as a key enabler for us not only to show operational effectiveness going to invest money, but also to be credible when we talk about price changes with our customers. It's my view that unless we do the work in-house, we can't be credible with our customers when we ask them to ship their pricing. So we're aware that this time last year, when we were announced as the Energy Retailer of the Year, a super proud moment for the team. I know it's not all about the awards, but in 13 years of the energy awards being emplaced, we've never once been asked to even submit an entry for to be in the energy retailer of the year. So here we were last year, we asked to submit not only did we make it to a finalist, but we won the category. And for us, that was just a huge reflection that we were doing more right than wrong when it came to look after our customers, and we're balancing the equation of economic returns versus customer satisfaction. So a huge outcome for us. As an aside, we'd like to go back to back this year, but we'll have to wait until August to see you then. Growth, I talked about it before. We're about 57,000 connections bigger than 2021. I'll go into those a little bit further shortly. But working that muscle of growth is really tough. In retail, you're either growing or you're shrinking, your can stand still by and large. And so to stay here now, and so we're well on the way to that outcome as we're just hugely proud. And then finally, the digitalization program, entire team might talk about this shortly, but it's been a 4-year journey to get to where we are now in our digitization space. Again, I'll deep dive it shortly. But the key attribute for me is that we've an learned to understand what digitization could do for the business and we've now been able to cross-pollinate that across the rest of contact and particularly at the [indiscernible] space in the coming years. So with that in mind and the success we've had, we kind of had to stand back a few months ago and what's changed in our environment. And whilst you can read the slides up there, probably just touch on 2 or 3 that have been picked up this morning. The first is around consumption or demand in the home. Post COVID when we drafted the strategy, we're unsure what working from home would mean, how businesses would evolve with their energy consumption. Quite similarly working from home as a thing. It's real, whether you like it or not, the world's moved on where people are sitting at home and working. Businesses are opening later shutting earlier, they've moved to online models. And so the energy does. Demand curve has changed, and it will continue to evolve. We're also seeing much to the conversation from BG that the use of EVs or the uptake of EVs has hit their true inflection point. I remember when I started to contact them at 2009, we were talking about EVs taking over the world by 2015. Let's make it a little bit longer than that, and I think that parallel with what we've seen in Norway is a really great one for what will happen in New Zealand. We presented this. We're about 20,000 EVs on the road back in 2021, 20,000 to 30,000. We're at 70 now, you can see the easy jump to 500,000 to 700,000 by the end of the decade. So a very real trend. We're going to play in that space and help consumers through that journey. In parallel with that, though, we're seeing that we're experiencing this cost of living price is. The OCR of 5.5%, we got inflation of 7%. We've got near to midterm wholesale prices reflecting the cost of renewable must-run ready. Well, ultimate renewable generation being built and we need to traverse our customers through that if we want a retail business to the other side of '26 and '27. So we're really proud that we've been able to hold our average price increases around the level of inflation. We feel that we'll continue to track that number in the next 2 to 3 years. Clearly, what happens with the resets with the network companies in the coming and 2025 will shape those decisions. But we're mindful that as we move through to the other side of what this -- the new energy market will look like, we have to look after those most in need as well as those that can afford energy. And then finally, competition, what I said here again, 2 years ago, competition was right, 40-odd retailers it's great. We love it. They keep us on our toes, they innovate, they bring forward ideas, both the journey management and product design, customer experience that we hadn't thought of, which is awesome in cut pace supply to our customer base. But the market shift for us in the last 2 years has -- 2 years ago, we were talking about the Tier 2s. But in the last 2 years, I've had to really reassess. In my view, their business model to how to counteract. A rapidly changing wholesale price, cost to serve models that may not be as digitized as it may look from outside in and are feeling the pressure of getting their businesses back to a fair economic return. Conversely, I'm staying in front of a market now where we're seeing mass consolidation. You got trust our mercury paying $0.5 billion to get a few more connections. You've got focus on 2 degrees, joining forces and coming into the energy market with figure and the likes of Genesis and really and really rebranding to push the credentials into the market. So competition is still here. But 2 years later, it looks materially different to whom we might think is our key competitors materially different than it did back in 2021. So if you take all that and have a look at our report card, a little bit deeper. And I've talked about the top right or top left on screen few there that we have, showing this ability to scale our business. By and large, it's come from our broadband adjacency, but we've also been very deliberate about growing into energy and guess where those market conditions are right for us. However, more pleasingly, as we see our multiproduct detachment rate nearly doubled. And that's a critical factor for us that says our customers believe in what we do, not only to purchase one product or service, but to purchase multiple ones. And that's turning up on the right-hand side where our brand trust scores have gone from first equal in the energy market to second equals at the end of March. If I took that number back 3 or 4 more years, we probably wouldn't even be in the top 10. So we're really pleased that not only have been able to scale our customers are buying more products and services from us, they're rewarding us with believing in the brand, and that brand is not just for the retail brand, that is a brand that turns up in the communities across New Zealand through the work that Jacqui and Jones and others are doing on behalf of Content. Our NPS score continues to improve. It's a plus 43 there at times we get into the 60s. And we know when we get that right, down churn obviously has a correspondingly decreases. [indiscernible] the better, though was a bit that you guys are probably all interested in, though, is how we're going with our netback. Look, we're really mindful that -- that's -- it's a juggling it to get the magic putting right of growth versus keeping our customers happy and making sure you get fair shareholder returns. But you can see up there from 2020 through '23 we're looking about a 21% expansion there. And as I said earlier, that's about a really targeted focus on cost reduction within Contact. It's a deliberate use of technology and AI and whatnot shortly to ensure that we get fair customer pricing to our customers at all times. So if they don't mind to go where to next and the strategy hold water, well, we think it did, but we've actually made a few tweaks to where we think, we can see growth in the coming years. And what we've been able to do is we think the 650,000 connections can move slightly north to 685,000. We're actually at nearly 590,000 today. So we see good sense of growth largely through adjacency work in the near term. Cost to serve as great under 90 felt within reason, but we're actually pushing that a little bit further to go sub-$80 cost to serve by the end of the plan period. We think we can get more to returns on our adjacency business, and we're seeing it play through off [indiscernible] . And then finally, we want to hold on to being the #1, we want to be the #1 trusted energy branded market. But we also feel contact needs to sit in the top quartile of the [ Kantar ] sustainability index, which is a small shift from how we want to position us back in 2021. So the next few slides, really just wanted to dig dive where we think we have some magic source, where we think we -- the investments are playing out to generate better returns for both our customers and our people as well as our shareholders. The first is in which is around digitization. I touched on it a few times, but we're seeing a really clear in our world competitive advantage from that investment. And we've almost doubled the interactions that we have for our digital channels with our customers. That's great for them, but ultimately, what it means for our people is that they can focus on the high-value, low-volume transactions. And those are the real proof points when you're under stretched because it doesn't always go right. We don't always sold it the first time we can waste digitize it. But if you can provide the capacity for your people to be at the best, you'll solve those problems and keep the customers, albeit of yet to solve your broadband question in the call, we'll be able to with the batch plan. And then finally, it needs to turn up somewhere and cost to serve is where we kind of watch that number. So you'll see up there that we think we're at about $120 per connection. I mentioned before we started this this journey at 220 you can take a guess that the peers up there who they are, but it would suggest that we are head and shoulders above the rest of the market. But in spaces around using data to basically a better price changes. And if you're tracking our operating [indiscernible] back through the retail channel, this is about contact balancing a price increase in line with the cost inflation, but actually rebalancing our book in line with some pretty clear pricing principles. 2 years ago, it was a pretty analog process. Today, it's a very digitized process, very insight driven to ensure that we get a fair value exchange for those customers. And more importantly, we can keep them through a price change cycle. We're working here at scaling and a couple of markets up here, we have been able to scale our broadband business. When I started this journey, we thought 2,000 connections in 6 months was a success. Here we are now standing knocking on the door of 100,000 5.5 years later. It would make us probably the fifth largest broadband provider in New Zealand, and we have good intent to carry on in that journey. It's very much driven by our customer expectations. They asked us for the product, and we continue to evolve it. We've also been able to evolve that product into wireless, which is where 1 in 4 consumers in New Zealand will actually buy their broadband from in the future. So we actually can cover fixed stabilizes, and we're watching both of those seats as we scale. More importantly, though, loaded leading to the lower share. And so we know more products per customer does lead to lower churn and ultimately higher [indiscernible] then the way to next, look, we are really clear that the market continues to be acceptable for utility providers or energy providers to sell into the telco space. We can help you with your data conversations within your 4 walls. We are looking at options. Whether we can help with a few data and connect tempting outside the walls through contact mobile. We're also looking at opportunities within dynamic loan controls where we can work through into hot water systems and ensure that ultimately, we can lower the cost of the energy bills for consumers as well as lower the cost of supply for Contact and ultimately lower the carbon footprint for New Zealand Inc. Both of those were actively pursuing at the moment. And then finally, where are we seeing a future where we think will be by the end of the decade. Well, we want to be the preeminent supplier or utility provider of choice into the home. We think we've got the formability that works for us today to sensibly scale, continue to sit within the framework of the utilities that I've described earlier and we'll back that up with a hell of a digital journey, which will drive lowest cost to serve, but ultimately the best experiences for our customers. [indiscernible] itself feels pretty obvious, but there's 2 key themes, which I believe will actually are starting to unfold and we're seeing globally. The first is around energy mobility. And that's something that, again, to the BCG report, we haven't had to think about the structural shift of your engagement with electrons ever. And what I mean by that is you would normally go out, you're hoping your car and you drive it to local petrol stations, you've refueled and a new world, which is now not far away, is that you'll be taking your engagement with electrons of from beyond your doors and you want to engage with multiple suppliers through out-of-home charges through traditional charging stations as well as charging across New Zealand. And so we think there's a real space leverage that we can leverage technology to join that conversation up and platform net back into contact, which is something that we haven't had to think about at all in my time in this industry. The second part is around energy independence and we saw it not only through Cyclone Gabriel, but through the closing economics of where solar prices matter pricing is relative to getting it off the grid. And you could run from it and so it's a challenge. But much like Mike's described at the start of today [indiscernible] the Tania, we think there's a real opportunity in there that actually by leveraging technology, by leveraging the light of APPs, our timings plans business, some really clear white space for us to play with our customers, not only in an energy mobility space, but also in an energy independence space. With that, I believe I might be getting close to time. I am around later today to take any other questions and through the Q&A session. I would now like to hand over to Lou Wright and the team of my colleagues to come up for a panel discussion on the key enablers that are actually making the magic happen here at Contact. So with that, I'll hand to Lou.

Welcome to Contact Energy enable decision today. My name is Lou Wright or Louise Wright, and I'm the Head of Communications and reputation here for Contact. Joining me today I have Tighe Wall, who's our Chief Digital Officer; John Clark, Chief Generation Officer; Jan Bibby, Chief People Officer; and my boss, Chris Abbott, Corporate Fees Officer. So in preparing for today, we're going to talk about macro trends and how they've feed our business and some of the insights that we can share with you. You may recall a few weeks ago, we reached out here and said, what would you like us to talk about what. Are you thinking about what would you like to know from us and how we fix and the way we run our business. So thank you for all that feedback that definitely enabled and as providing the questions that we are going to come back answer for you today. We're going to talk about government upcoming election, digitization, the war on talent and also about ECG. So without further ado, let's get start of this question and action. Of course, we might start with you seeing you there on the lucky seat. How's that? So we're seeing rising government intervention, and there were some questions about that earlier today and the energy sector globally as well as locally. But what do we think is going to happen here in New Zealand with the coming election in October.

I think if you look at New Zealand and then get slower comparatives, look at the most symmetric around the edge controlling. So we are highly, we are highly renewable. And we are very affordable. And also -- but the energy trolling on week we do really well and across all metrics. So from a government perspective, they go what did you do well? But we need more from you and that's really around expectation, not only about decarbonizing elements, but people talked about today how we simulate an electric demand growth.. The BCG report has some quite astounding figures, so $42 million sort of required to be in by end of 2020s and for us the number on the expected path. The actual problem is not generate a retailer such as Contact Energy, actually a real challenge. So [indiscernible] actually new distribution networks. Travel distribution networks to a lot of community trust will owned by council limited access to the finance. So that we think will be quite a big challenge. And the government ultimately looks at the best European doing really well. But with the kind of opportunity also kind of expectation. So if we don't level the government but I don't think at risk have one. I guess the other thing I'd say is that we engaged with [indiscernible] Jacqui's been telling me to stop sending politicians. So does that's play our site. They all want to be in states with new development. So ensuring [indiscernible] so they're really listening to us. And by listening to us on things like our reforms. So Mike's got a delightful quote a better dripping roast. We've had really good cut through on RM they do recognize another projects that Jacqui is looking at that we've all -- we will be at best thing so. So we extense of material changes in present reports and particularly, the national environmental standard around and renewable development. So we are having real cut through, and that's because we're investing with decarbonizing. The one gotcha, I think for this election is around cost of living. And while we know well what the center left or center right government would look like. It will really depend on coalition parties, but they have to for coalitions with further right and where you might get to outcomes around well.

Thank you, Chris. Being a part from new technology. The technology is transforming rapidly the way we operate our business and what we do. What have you identified that you could do better type?.

Thanks to everyone who have joined the earlier session, you'll hear some stats repeated, but stay on the same trend I guess. Yes, I will start with what's working really well, and Matt touched on a few of them in the retail space. So for the past 4 years, we've had made a concerted effort to dive in and digitize our retail business. And you can see that through some of the numbers not shown. So over 3/4 of all of our customer interactions are done via digital channels. We have the lowest cost to serve any Tier1 retailer in New Zealand. And a lot of that is through a lot of hard work, but it's also where we're positioned in the world. A lot of the things we're doing in contact have been explored in billions of dollars have been spent trialing in the stuff in other parts of the world. So we have the opportunity to take a lot of that and apply into New Zealand. A year end of the generation and trading digital plan, we're also finding some really immediate and successful in reinsurance in the trading space. And so we'll keep pushing retail, keep driving down that cost to serve and doubling down in trading, but the biggest opportunity for us is where we can do the most going forward is in the generation space. So we talked a little bit about the digital twin and some of the stuff we're doing in generation. Focusing on digitizing our assets. So how we're aligning our outages, our lending of our maintenance plans, doing predictive maintenance, how we're maintaining and managing our fuel, getting the most out of our fuel and our assets and the highest production possible in the most efficient way. Empowering our employees to have the data that they need at their fingertips when they're making decisions and doing natural work. And then finally, how we connect this up with our trading operation so that we're in the strongest possible financial position. and getting the most out of all of our investment in better people and our assets.

Thank you, Tighe, I said we did identify there was good opportunity in generation and trading, particularly if you think if you can making more megawatts efficiently and the trade it better than this board where the chase. And particularly, we're focused on the trading space first. And one example, this is our trading optimization project, which improved. How we model that. This waits for using proprietary software conduct scenario analysis. We have a list of scenarios that are trading experts on a test and we conduct 900 more runs per certain area. Based instead of priors, outages, hydrology, all the things that could potentially headwind within the market. And then this provides a comprehensive improved data set that leads our team to become more data and insight-driven while helping to manage risk and the downside. Our modeling that used to take a week now takes a couple of hours at the most, which means we can use it daily were faster and we can assess risk much quicker and this has improved our ability to see where we should be placing our electricity and get the best thing for our book. And we will continue to improve as we dig further into that data and look further away to optimize. This may include the use of machine learning, AI to pick up trends and parent [indiscernible] . And it's important to step forward is using that all into seamlessly integrate all the new developments that are coming towards us such as solar PPAs demand response wind.

And just to add a couple of other things beyond trading, we can do a bit better. One is that we can become faster as an organization, but certainly digitally and using digital tools, taking advantage of our relatively small size of 1,100 employees to move as quickly as we possibly can. And the other one, as mentioned earlier, is from a talent perspective and having conversations with really highly, highly qualified candidates is infinitely different now than it was when I started in Contact. Leading with the decarb story in the market, some of the changes to our employee value proposition and some of the success we have under our belt is really making us more attractive to candidates than we were 3 years ago when I kicked off the Contact.

Thank you Tighe. Speaking about people and talent always Contact, so special. Jan, there is an aging workforce and a bit of a war for talent. It's a no secret about that. How are you most impacted? And what are you doing to really make sure that we address this?

I might take all that question with 2 separate items. There is no doubt that there's a real war for talent. And as Tighe just alluded, that means you need to have a really strong employee value proposition so that you attract and retain the very best of people. And we have an aspiration to be one off [indiscernible] most sought after workplaces. So we need to make sure we do really create that great proposition. The fact that our people and site Contact today and the people who are seeking to join Contact really do connect with our strategy and our purpose so as Tighe said, it's definitely much easier than it was probably 2 or 3 years ago. Through our transforming ways of working journey, we operate pretty high trust model of flexibility. So we allow our people where practical to be able to choose where we and how they work and to demonstrate that commitment to sort of creating that workplace. We've launched quite a number of initiatives over the past probably 2 years since we all together in the room to give most proudly, our [indiscernible] policy, which is fantastic to see so many other organizations follow suit. We have just recently been awarded the wellbeing tech for our first year, which has been fantastic. We've launched and developed a contact university, and we pay all of our people a good to be home well-being payment every year. Now if you go on to the aging workforce, there's no doubt that it's an issue for everyone actually. And so we have significantly lifted our investment and our graduate program, our intern program. And this year, we are reintroducing at a small scale to start with an apprenticeship program. And it would be fair to say in our generation business, in particular, we remain challenged by the lack of diversity. It's kind of interesting as I look around the room. And so we really are trying to take that seriously. We're focusing on really increasing the number of women, the number of Maori and Pasifika people in our business so that we more accurately reflect the communities in which we reside. And we're doing that through [indiscernible] program as well as through recruited as a whole.

So speaking of communities, we are living in a really high inflation or inflationary environment. But how is this impacting across Contact. How does it change the way we're going about our business time?

The first thing that comes to mind is the [indiscernible] program that Mike mentioned earlier. So how we're aligning our people and our assets to the highest value and most strategic initiatives. And this also plays a role in the technology discussion. So how we're allocating that scarce talent we have to the highest value initiatives. From a digital perspective, it's squeezing in [indiscernible] but the retail business to give our customers as much value as we possibly can and flexibility in the pricing we offer them. And doing that in a really smart data-driven way so that we're down to a specific customer instead of I almost use the term Zip code. I'm falling back on my old language. Excuse me my post code, you're looking at individual customers and how you can target pricing for them. That data-driven insights also flows across the generation business. So looking at our different fuel types, water, for example, how do we get the most out of every cubic of water we possibly have and all of our assets. So we have our asset management plan on an annual basis, making sure that we're focusing on the highest value return, the highest risk things and the things that will contribute the greatest to health and safety. And then obviously, cross trading in the data, the data-driven insights we can get from that. The digital program as a whole is optimizing and making contact more efficient every single day.

John and Jan, do you want to?

Yes, like many New Zealand businesses, we have seen the impact of inflation on our operational costs, particularly for things such as chemicals and where there's a technology line behind the price benefit for them. We are taking this in a few different ways, one way as Tighe mentioned, is looking for efficient operations such as plant efficiency gains. We set up an optimization team with dedicated experts and fields of process engineering, reservoir engineering, reliability and project delivery to identify and then deliver on the opportunities quite successfully [indiscernible] and what the teams managed to comp. One example is what we call it [indiscernible] a project, and I for everyone was the engineering detail that whereby that team identified that through changes and planned process, we could both reduce the amount of fluid, which is going to our holding bond, which brought us a constraint. And we also increased the team flow to the turbine and long about an extra 7 to 8 megawatts from Te Mihi power station or using exactly the same amount of fuel. We also identified we could utilize our geothermal massively on the Wairakei field between the 3 stations Wairakei, Poihipi and [indiscernible] in a way that we could ship lower on a seasonal basis. So from periods of low demand to high demand when prices are higher and that the electricity is more needed. With our large development program, it's also particularly important in geothermal that we ensure we don't directly compete with ourselves for key skills and contractor resources, particularly between operations and the major projects in business, meant we have ensured the timing of major work don't compete with construction activity, and we have -- and we also look for a build now into other parts of the countries source those contractor support for our [indiscernible]. For geothermal, we also have key capability in Western Energy, which is integral to us at a group level, controlling our fueling cost for geothermal. We've also been revisiting the way we -- our partnering models with contractors and suppliers. We're dedicated to joint to ensure: one, we have access to ongoing support that we require to our control on the cost.

Chris, maybe...

May be just to touch on retail. So obviously, meetings are going to have one thing we've been very successful in net share actually controlling our debt book. And then at the same time it is, as we've said, reduced disconnections. So we got them through obviously very concerned about the cost of living. I think the reality is that in the highly competitive environment. We want to be as low cost as we can. But inevitably, we do have to pass through price increases to customers. So mean set up an energy welling team. And it's really about getting around [indiscernible] . Our experience is that disconnection and concern customers reduced. So we have a lot of focus around to focus attention on energy wellbeing and that's paying dividends for us as well as care with face reality of increased energy costs.

In onto the microphone Cristinas you about ESG. Can you explain how you use ESG to make decisions in your business on a day-to-day basis?

Yes. Look, I think ESG is a financial metric to material [indiscernible] about frankly. And we think about an [ intensive ] sustainability. So -- but we have internal work programs about ESG [indiscernible] that way. So I think one of the key things that I really noticed lately and it goes we've got Jacqui is around engagement [indiscernible] consulting revenue closely with our [indiscernible]. That's something I think we're really good at. Jacqui was talking about that can seek grant for future. So the [indiscernible]. But also without [ really ] indiscernible ourselves and we have [indiscernible] and we have a better, stronger relationships, which will endure and that will endure for a long, long [ term ] investment that we'll get [indiscernible].

Thank you. Okay, [indiscernible].

Yes. Look, the social license to operate is an important part of how we behave at Contact. For example, as we transition away from thermal, we know that, that has an impact on our people. And so we actively work really closely with them to either redeploy them, retrain them or relocate them to one of our other sites if possible. And we're also -- as Chris said, we're really conscious about looking after our communities in which we live. Nationally, you see that we support women's refuge. You will have seen that we supported quite closely the cyclone relief fund. But more importantly, we see our people every single day out there either doing local community events that are relative or relevant for their communities. We give time off for people to volunteer and to do work in their communities. And we're pretty proud of the culture that we have at Contact. We talk about human kindness and every single day we see our people taking care of one another and taking a real care of the communities in which they live. So we're very proud of that.

Thank you, Jan. I think we're out of time now, just gets way away. But yes, you can see that Contact is very much about community in the heart of everything we do, whatever type of community that we interact with. Without further ado, I'd like to now invite Jack Ariel, who's our -- from our Major Projects Office to come up and [ visit ] for you. Thank you.

Well, thank you. Good afternoon, everyone. And I will not introduce myself [indiscernible]. I'm still a little bit lagging behind here. My name is Jack Ariel, and I am the Major Projects Director. Before you ask me about my accent, I was born in Argentina. I grew up alongside a huge river that runs from Brazil or the way to the river [ play ] through the waterfalls in [ West ], you have seen pictures of [indiscernible]. And I show -- I started my career with Shell. I worked with Shell for more than 30 years. And I remember when I showing Shell, there was a little tick in the recruiting form that says, Are you prepared to travel abroad? And I say yes, I mean I was [indiscernible] and everything. I never stop traveling for Shell. And in that way, I've been working across the world, doing different projects, every kind of things that Shell asked me to do. And that was extraordinary, the kind of experience you get there. Although I always was on the owner side because I was with Shell and one day I said, well, I would like to see how the other side of the equation works. So I went to the U.S. I've worked there for [ Worley ]. I'm sure you know it's a big global engineering company. I worked for about 6 years there. And then when Mike offered me this job, my hair were darker at that time. And I say, yes, this is beautiful. I mean helping decarbonizing New Zealand and the world, leaving a better world for my kids and my grandkids, it was beautiful. So I didn't think it twice and here I came. So when I was asked to put together this presentation, we don't know, I was very worried what to put together. But I thought that -- but perhaps the best to do here is to walk you a little bit through the process of what is that we have been doing, how we started the journey and how we build capability for the future, which is very, very interesting. I want to show this one because it's a reminder for [ John ] -- what is that we are giving them. Yes, he said, nice shiny piece of turbines that they hope is remaining like that for a while. So you promise them. All right. Projects. So I'm sure you know this S curve. This is how we project -- it will measure progress in projects. It applies to any project, a big infrastructure, a plant-like we are building or you building their own houses. It always does the same thing. This is how you measure progress. So each curve has the beginning, a middle and an end. The middle can be steeper, slower, I mean -- but there is where you build stuff. In the beginning, come in again to the point of building a house. You know that things do not happen for a while because you get into the speed of developing the project. In the end, again, what happens you have to finish. But you have to do that very cautiously to do what you need to do to finish. So in the middle is where you really make things happen. So we are currently in the project in Tauhara, near the top end of the curve. We are very close to that. And we started with this, and it was working well. So it was moving ahead as you expect. But then '21 and '22 happened, and we all know what happened there. A lot of extreme externalities, things that happen like global pandemic. We have a global supply chain that practically collapsed. I cannot say that started here, but because I think the supply chain was very constrained. And then it happens that the ship was stuck in the Panama channel and then everything has started to fall away. And then the pandemic came, and everything collapsed. So the supply chain was incredibly, incredibly difficult, and we are at the end of the world and who would like to come here, and that was a very, very complicated. The commodity prices skyrocketed. They went to -- I mean, numbers that we haven't seen before here. Immigration was down as well because of the pandemic, well, New Zealand was closed. So we didn't have people coming in. The rain, well, you have seen a little bit of rain today, but this has been extremely, extremely uncharacteristic even for this area. And with respect to the pandemic, another thing that impacted us very, very badly was in the beginning when Auckland was locked down. We have our engineering company in Auckland and they have to start working remotely, and that is something that took some time. We couldn't be together with them. So there were some mismatches and things like we couldn't see and we couldn't control. So finally, that has an effect on more complexity that we needed to work out later on. So all these kind of things happened in there and impacted the project. So we started to progress, and we saw that this was not moving the way we wanted to progress. So we rescheduled the project. We started to look at different ways to do it. We continue progressing and this didn't come up because of all these things that I mentioned before. And all the challenges that we have there were even worse than we expected. So [indiscernible], we have a problem, we needed to do something. I had the [indiscernible] on my neck. Come on guys, we need to do it. And I don't want to say about Mike as well. And then we started to work in a plan -- in a recovery plan that will bring it back to what we needed. So this is what is happening today. The red one was the recovery. The blue is what we achieved. And we are currently at 94%, 95% of progress. So we expect in 2 or 3 Sundays from now to start pushing some stream -- steam, getting it from the ground and the commissioning is already there. We are working on commissioning activities. We are [indiscernible] systems. But it's a process that takes time. And we are moving through that. If you look at Te Huka for example, which is the other project that is in the way, we are currently at about 40%. So we are in that part of the curve, the middle where we are delivering. Tauhara is at the back-end when you need to finish. So these are the characteristics of the project right now. So the recovery plan. So what did we do? So we had a lot of challenges there. And because we needed to recover without compromising safety and quality. We started by reshaping the organization. So that was the first thing we did. We flattened the organization. We get some reporting lines. We had more clarity. I had all the project managers reporting directly to me. So we had a much closer interaction with everyone. We really find roles of responsibility. We made it more clear for everyone, what was the scope on what they had to do. And also, we went for more people as well because the organization that we had was more gear up for a lump sum contracts where you bring one company, you just oversee what they do, and that's it, into something that as a consequence of not having enough resources in New Zealand, we couldn't find one company that could do that for us. We needed to go instead of 2 or 3 contractors through the job, we needed to go to 9 contractors through the job. So for doing that, what one person doesn't suffice. So you have to go and get more people. You have to put a structure in place, which is more difficult and with more detailed involvement in everything. So that was, I would say, an enabler. Then we moved into setting up a project acceleration office. Because we said, well, we are late, we need to recover. So what kind of things we can do to recover and not only a recovery but also holding whatever we were recovering. So that was the setting up of this organization where we had initiatives, where we saw there were different kind of things that could be done differently, and we progress them. And so -- we -- one of the most important things there in that process is that used our accounting days and not weeks or months. So today, we have to achieve something. So we start the day, let's say, well, what do we have to do today. And at the end of the day, what we have achieved. And whatever you didn't achieve today, you have to do it tomorrow, plus what you had to do tomorrow. So getting to the pace of delivery and cadence was very, very important to get things done. So for me, this was a kind of a game changer in the process. And then we started to work with our partners in collaborating and working together. So we work with the supplier of the turbine and as I don't remember who said it before, but we ended up with a plant that is producing 22-megawatt more than what it was designed for. And we did this because we started to work with our supplier and say, what can we do here? Can we improve this or the other. And we engage as well with all our contractors to simplify the design. Remember that I said that the design was a little bit complex because we couldn't participate with the engineering contractor. And then we ended up with a design which was perhaps too complex. And then we worked with our suppliers to see how we could improve that. And that is something that we also achieved and we re-designed piping structures and everything. So in fact, we converted somehow a problem that we have into an opportunity and we delivered something which is better than what we started delivering for. So how we did it? Well, I will say that it's a little bit part to basics and trying to see, for example, the intention. So what was our intention, defining well our intention. So defining a strategy, having a vision there, working on clarity of what is that we wanted to achieve and then having a clear plan, which is execution. So one thing is the intention and the other one is the attention. So you have to achieve both of them. And the link in between is basically leadership because otherwise, without the leadership in the middle, you cannot get there. So we had our [indiscernible] there. We still have it. And we are fighting it. And I think we are winning, and that is still great. And this -- when I'm talking about leadership is very important because in my career, very, very, very rarely, I've seen a project failing because of technical issues. Normally, they fail because of all the soft tissues that are around, organization engagement, the collaboration with contractors and whatever. So that is why it's so important what we did in there. And you've been hearing about the pipeline of projects and the amount of projects that we have. And this is something which is also very important. We have moved from having our last project 10 years ago to having 3 projects more or less in 5, 6 years time. So this is a huge change for an organization because you are somehow geared up for doing your day-to-day job. And then you come with these massive projects. We have in Tauhara 650 people working every day. And that changes the dynamics, changes your needs and everything. So we have now, we have 3 projects basically running together. We have Tauhara, which is the point that we will be seeing steam very soon. We have Te Huka, which is in the ramp-up part where we are really delivering. And we have GeoFuture where we are starting to work on and defining the project. So the whole thing, which are 45 own people and another 20 perhaps consultants working with us by working in these particular areas. So when we started with this project as well, and I came in and I was put in charge of the Major Projects department, we started to think about, well, what are the things that we need to build for the future. So how can we make sure that we build the capability for all these projects that we want to do. So we started to think about what kind of things we have and what things we could do for the future. So things that we see here that are very important is we talk about the contracting strategies before. I think Jacqui mentioned something about the contracting strategies. This is not -- well, now it's landed in New Zealand, but for the last few years, we have seen around the world that less and less contractors are willing to take risk of going into [indiscernible]. And that is coming into these shores now. And you can see -- you talk to anyone, and they will say, no, no, you don't do any [indiscernible] because it's is too risky. But it's not only about where you place a risk, it's also about how you can manage those different type of contracts. So that was one of the things -- the most important thing is that we wanted to build when we came in here and that capability for us to be able to manage this different structure of contracting with respect to what we used to have before. Also the design is something very important because we are very, very high technical people in Contact, but that is an enemy sometimes because you need to be able to simplify as well. So we started the path of simplification, which is very important. And all this that we learn. So we learned that the pace of delivery is very important, that having KPIs and tracking is very important because you measure what you do and you deliver to that and do a lot of front-end work, do a lot of front-end work. That is something that when you go into a project, you need to know exactly what are you fronting. What is the size and the shape of your planning out there and that is something which is extremely important. And for us, that's been very important as well in this delivery model that we have now in place, that we are doing the 3 projects somehow in a tandem is that it's not institutional learning what we are having, it's personal experience of the people doing the job. The same guy that has been learning something today in Tauhara is applying that to Te Huka and GeoFuture. So it's much bigger than what we call the lessons learned and institutional learning, this is people learning how to do it in the proper way. So basically now, we have developed a capability. We have a very, very, very strong organization. We are approaching design in a different way. We have built up the capability on teams and processes and the construction piece as well, we are working together with our contractors getting into alliances and getting into collaboration, which is something which is so important to be successful. So I see surely that this wave increase, [indiscernible] there, he wants me to finish and walk away. So I would like to introduce -- reintroduce Dorian now to the podium, which will talk about disciplined investment and growing returns. Thank you.

Thanks, Jack, and this is scripted, but I actually think it's one of the most important things that Mike's done when he's coming to Contact as CEOs, if I identify that gap and bring Jack. He is certainly professionalized the area around construction that you would have seen there, [indiscernible] filled again. He also mentioned his changing hair color. Did you know Jack's actually the youngest person on the leadership team? I'm talking about -- disciplined investments in growing returns, right. It's actually sort of brings it all together, everything that my colleagues have talked about, sort of how do we bring this together in terms of the financials. I did want to start off just by talking a little bit about investor relations. The key to investor relations as everyone in this room will know is about trust and transparency. I guess one of the issues that we had contacted with thermal assets within our portfolio does make this a little bit more complicated relative to 100% renewable generators, and we do try and hopefully realize it simplifies things as much as possible so that you can see in a transparent way our performance. We don't try and hide behind that complexity so that you can actually hold us accountable for that. We've also got a very high standard or a high integrity in particular around ESG topics. And that does actually can mean ironically we lose ESG points. We have less sophisticated investors and market commentators. Obviously, there's none of those in this room, clearly, but it does build trust with everyone else. So a good example of this is our thermal assets. So we will retain our thermal assets to ensure that there is a smooth transition close to 100% renewable to the extent that the system security needs it. So you're not going to see us do any knee-jerk reactions going for ESG reasons, right? We're getting out of thermal, we are going to shut all of us down like of someone else is in problem. But I think it's important that the people actually understand that. And that's what I mean around -- the integrity that we had around that. It's also incredibly important, when you actually consider what's happened in Europe with the Ukraine or the Russian gas disappearing. Immediately system security becomes an issue. The climate change is deprioritized and that's not what we want to see happen in New Zealand. We want to see climate change remain the #1 priority and that's why we will always seek to do that. And we will always forgo our ESG points until all those less sophisticated investors move up the curve to where you guys are seated. There's 5 sort of topics that we've done to sort of initiatives or innovate around how we report to make it less complex around us as a business. I won't go through them individually, but one that sort of I will talk about a little bit is reporting return on invested capital. I wouldn't really call out that an innovation. But I was quite surprised, I come from a capital-intensive industry, industrial gases that no one in this industry did report that. It should be a standard KPI for capital-intensive businesses. And maybe if it was a standard KPI for us, we wouldn't leave ourselves open to the hobbyist accountants having to go and calculating it and then over studying it and reporting it to the media, which has been known to happen, thinking about the new work by the way or -- and just wanted to talk a little bit about our capital allocation process and how that's worked because the environment that we're in, as we talked about, has changed a lot since we did the last Investor Day and how our investment decisions have shifted around that. So you've seen we've got -- we've had elevated electricity pricing, and we've talked about what that's meant. We brought forward. Jacqui talked about this, the investment in Te Huka 3, even though we're actually doing that in a situation where there was elevated risk around global supply chain issues and things like that. We did that knowingly because we've learned a lot through the Tauhara process. we've talked about we're going to take a final investment decision on GeoFuture in early 2024 at the latest, hopefully even earlier. And that is regardless of what happens with the aluminum smelter, and that's because that investment in terms of replacing what roughly is the economics in all scenarios for us. And what this means is you've got that great program in terms of geothermal with Tauhara, Te Huka 3 and then GeoFuture. So you put in place those partnerships with those contractors and then continually learn and adapt as you go through that process, which is key. We've worked with our partners Roaring40s and Lightsource bp to look at our wind and solar investments. And indeed, we're trying to accelerate solar in particular to get some exposure to those high or elevated ASX prices that you see at the moment. As Jacqui mentioned, we delayed our investment decision on a grid-scale battery. That's proven to be very wise, and that was because lithium prices were high. They've now dropped 60% from their peak about 6 months ago, and that saved us about NZD 30 million or 100-megawatt grid-scale battery, which is pretty significant. We are intending to build one. We said already on today, we've already got consented site at Stratford and we've got an option now of one at Glenbrook as well. It does provide us Tiwai exit mitigation, not that we think they're going to go, really already building one in the [ Northland ] and we built another one. We've got 200 megawatts of reserves that can be offered up to the HVDC to run that further, get more water across. And what that does is it increases the price of Southland and generate electricity relative to Northland. So it's just the left pocket-pocket thing there between generators, but clearly [indiscernible] the right side of that. And we've announced the closure of Te Rapa and that we won't reinvest in TCC with the [indiscernible]. we've been saying that for a long time with thermal fuel costs high and only likely to get higher. There's no economic case that they save thermal generation anymore. It will be substituted out by our geothermal that we're bringing to market, Tauhara and Te Huka 3, so we're not putting the market at any extra fuel risk around that. The interesting thing is there's about 3.8 tera watts in new renewables that are coming to market between 2020 and 2024. And the only thermal closure that's been announced is Te Rapa, so I'm expecting that to be a bit of a shakeup in terms of thermal assets over the next few years because otherwise, you will get a lot hell of assets sitting around that and not being dispatched. The next slide gets a little bit technical, but actually, it sort of aligns to some of the questioning that we've had earlier on today. So what we're doing here is we're looking at where we see the relative returns of different types of renewable investments going over the next few years. It's underpinned by our view, our belief that wholesale pricing will be between NZD 100 million, NZD 110 real in 2022 terms. I'll talk about the midpoint as NZD 105. I'm going to use technical language, but I'm sure you guys are all aware of what a long-run marginal cost is, what TWAP is and what GWAP is. If not, I can tell you in a break. So if you look at the chart here, so Geothermals have a long-run marginal cost of NZD 75 per megawatt hour, doesn't need to be firmed because it's baseload and you can sell it for NZD 105 into the long-term real to make pipeline returns. When you look at wind and solar, it's got an LRMC as NZD 80 and NZD 85 respectively, does need to be firmed by this latent hydro flexibility at the moment, so it gets firmed for free. So you can make the pipeline returns, but you can sell it for NZD 105 real. The question is how much spare firming capacity is in the system, that's the billion question because once that's all done, you're actually getting merchant pricing for those investments. And that's -- and the issue you have with merchant pricing is the more you invest in wind or solar, the more the merchant price, the GWAP drops relative to TWAP, which is what the chart on the right-hand side is showing at least now it come from Energy link. So as solar moves up to 10% market penetration, it drops from 100% of TWAP down to just 77% of TWAP as wind moves up to 20%, it drops from 95% to 82%. So what that actually means when you get to that position, so the merchant price you're getting for -- of these intermittent investments that you're making is winds drops to about NZD 85. That's the merchant price you're getting, which you can see is still within the LRMC range, so you're still getting economic returns, probably got solar drops down to about 80, which is below the LRMC range. So you're not [ going to get economic ] return unless you've got firming capability. So some conclusions for this around investments, the geothermal, our view offers the highest return because of that lower LRMC and the fact that its base load. Wind and solar in the short term, offer good returns, particularly solar, which you can build to bring to market quickly and get exposure to those high ASX prices and the fact that there's that latent firming potential at the moment within the hydro schemes. As more wind and solar, though, gets built, the value of renewable flexibility increases because if you actually have the ability to firm wind or solar, you can bridge that widening gap between the falling merchant prices and the baseload price, which is what you can see on the chart here. So renewable flexibility becomes a more attractive investments than intermittent renewables in our view. And overall, on the right-hand side, these are what we're sort of expecting around returns. Geothermal remains above 10% now and into the future. Wind forwards closer to WACC as the merchant price drops and its latent firming potential is exhausted. Solar drops as well, but in a lot of cases, will actually drop below WACC. There is still the opportunity to project finance Solar, which is what we're doing with our partner, Lightsource bp, still generates good equity returns and the value and flexibility of grid-scale batteries improves and actually starts to get above WACC. At the moment, it's below WAC and people are doing it to build capability for strategic reasons. If you're clever, you're building your wind and solar in geographically diverse places and then you're getting those sort of uncorrelated benefits within your portfolio, which allows you to firm off each other. Those shouldn't get passed through to the market, those should be retained in our view. And then that gives you another option to generate returns over and above WACC. So with the Geothermal returns looking so attractive, obviously, you'd expect us to be deploying all of our capital into Geothermal. So I'm just going to talk a bit about that now. Though clearly, that is where we are deploying a large chunk of our capital, NZD 2.4 billion of capital going into Geothermal during FY '19 and FY '27, we'll have spent about NZD 1 billion of that by the end of this financial year. I wanted to do this to provide some transparency around this part of our business with such a huge amount of money going into it. But because of the baseload nature of it as well, it's got very different characteristics from the rest of our business. It's got no weather dependency and minimal fuel risk. So the cash flows and the financials are relatively stable, more akin to an infrastructure type business, and it's 100% renewable. These financials here are seen as an internal PPA with the rest of contact, which is plus to NZD 85 real in FY '19 terms. It's got the external PPAs, which we've already got in plants of Tauhara, with Genesis, Pan Pac and Oji and we assume about 10% of the volumes are linked on merchant volumes, and that provides a bit of a buffer between the generated volumes and the contracted volumes that we've got with our PPAs to cover statutory [ Auditor's ] fees, but require some exposure to spot pricing. So the characteristics of this business actually allow it to be backed by long-term inflation-linked baseload PPAs which we know is actually growing in external market for as well. You can see the direct costs of the business are very low, NZD 10 per a megawatt hour, very stable, very predictable. There is some exposure to carbon, but not much because the emission factor is so low at 0.043 tonnes per megawatt hour. Within the gas it's 10x that. And coal is 20, 20x that. And also remember, we've got our investments into forestry, which hedge that, and you can see the impact of those coming through on the other income line. And with the success that we had on carbon capture and reinject on to hook up and the intention to roll that out plus all of our [indiscernible] level 3 and now we're ready to actually get on to get the geothermal carbon emissions down to mostly 0 and one of the impact of that is actually reflected in these numbers. It's not a particularly complex business this one. So it has got very little corporate overheads. Most of the corporate overheads still remains in other parts of contact. So you've got this inflation protected business, which is very stable. And then it's growing rapidly because you're deploying capital that's earning over 10% returns into it. And you can see there the impact -- the EBITDAF roughly going up by double to NZD 549 million by FY '27 and the operating free cash flow contribution of this business relative to contact shares, on a per share basis, it's going up 130% because there's capital leverage with stay-in business CapEx going up so much when you got multiple plants being built. So I know what you're all asking yourself, how do we get exposure to this amazing infrastructure-type business with a renewable development pipeline. And if you hold contact shares, you're already exposed to these, right? I just want to talk about this as the rest of contact. So this is a vertically integrated business. It sells through the C&I and through the retail channel. It also sells CFDs and on the ASX. [ It is backed by ] baseload PPA that I just talked about from the geothermal business. It's got hydro flexibility at peaking, which provides a seasonal and daily shape to match our loads. It's got peakers to cover for [indiscernible] risk. The complexity of the business, in particular linked to selling through retail and C&I channels. There's more technology and regulatory topics you need to deal with associated with this means it's got most of the corporate overheads linked to it. It has got a solar wind development pipeline and that's firmed by the generating assets themselves, but also geographic diversity, demand flexibility as well. And then ultimately, you'll be building grid-scale battery that will be building grid-scale batteries, a good place to be and move up to being 100% renewable. Because of the effects of hydrology and the exposure to thermal fuel costs, its EBITDAF does vary a lot more than the Geo business that I just took you through. It was NZD 246 million with the average EBITDAF over the last 4 years, but that's plus or minus NZD 50 million with the closure of Te Rapa and then later, TCC, this business will be getting 98% of its volume through generation of renewable PPA, though that is the renewable component of the business to highly renewable. And I've just done this, not because we're about to start splitting contact operating segments up, it really is just to demonstrate in light of all the investment that we're putting into Geothermal, the value that's going to come through associated with it, but also the different characteristics around it. Remember, the Geothermal business will be driving a lot of the near-term growth, but then we would expect a lot more value to be coming through later on through things like wind and batteries so it is the other business that is talked through [indiscernible] In terms of capital, at the last Investor Day 2 years ago, we talked about we had normal stay-in business CapEx of NZD 65 billion a year, and that hasn't changed. We're still at that level. But last Investor Day, we said we were going to have elevated stay-in business capital through 5 years because we needed to invest into our renewable assets to improve the resilience and that we also had the small issue of [indiscernible]. So this Investor Day I'm going to tell you it's gone up a little bit. So I guess the trick is we need to stop having Investor Days and then our stay-in business CapEx won't go up again. But I just wanted to take you through what's driving that up. It's gone up by another NZD 50 billion. The -- we've had an unplanned outage at one of our peakers, which you'll be aware of, one of major one, we had to replace some pellet [indiscernible] and the engine that was covered by insurance, but it's having NZD 11 billion of that, which is the nondeductible element that we've had to fund ourselves. The S4HANA upgrade has gone well. We're actually live a bit. So it's working. So that's great. But unfortunately, it has cost us NZD 11 billion more than we were expecting it to cost us. We've also kept a powerdrive on upgrading the CRM system, we'll take some time over that and work through one of the best options. We're investing NZD 9 million in a trade deal capture system, the amount of training we're doing is going up significantly as the business grows, as [ market make it ] grows. And as the market becomes more volatile, so making sure we've got a robust system and the controls around that is incredibly important. Also this new sort of state-of-the-art system will allow us to buy intermittent PPAs from our Lightsource bp joint venture as well, which is pretty [ key ]. We're investing another NZD 900 million in our carbon capture reinjection. So we've done Te Huka, Te Huka 3 is taken care of by the growth CapEX. This is to look at Poihipi and also to support the food and beverage opportunity that we talked about earlier on. And then there's NZD 10 billion more spending around the re-life of hydro. Originally, we were just going to replace the transformers [indiscernible] but we're never going to be the ones that [indiscernible]as well. So with all the stuff going on internationally around renewable development and the strain on resource with things like the Inflation Reduction Act and what that's going to do, we will keep a close eye on this because supply chains are getting longer. So we want to make sure we've got the right strategic spares in place, because the last thing you want to do is have an outage and then be waiting months on it to get assets in to replace those. So we'll be keeping a watching on that. Now on to the Grand Finale. It said aspiration up there, but it's not actually an aspiration. This is just how the numbers fall out actually and as we'll get into it, I think based also on quite sort of balanced assumptions. We've talked about the geothermal element coming through here. I mean there's not too many numbers you need to tie together to get to that, it's 2.2 terawatt hours of new baseload generation coming online, fits the direct operating cost of NZD 10 a megawatt hour. So you can put whatever price you want into it, take the ASX, you take PPAs, but you're going to get a big number. And that's what that NZD 267 million that's flowing through there. The rest of the business goes up by NZD 21 billion. What we're seeing is price increases are just about covering cost inflation. Within the price increases, you've got what we call our market channels, which is C&I, CFDs, they're actually remaining relatively flat because the net [ bets ] or the net prices on those are quite renovated at the moment because what we're seeing with the ASX, we assume that they will revert to our long-term view of NZD 105 real in 2022 terms. The longer-term channels, which is our retail business of longer-term PPAs and actually, we've chunked in Tiwai being there as well, that escalates with CPI. In terms of the other income, you've got the loss of steam from Te Rapa, which is replaced by the additional Geothermal growth that we've got coming through in the NZD 267 million, but offsetting some of that, you've got all of the additional EBITDAF that we've got coming through from the new adjacencies that we've got within the retail business about continuing to grow broadband. And then you've got some value coming through from our solar uplift, and that relates to the 2 solar grid-scale -- solar grid-scale investments that we're making. So getting grid-scales batteries itself are doubled up. So we do -- there's definitely upsides and downsides to this. We don't expect Tiwai to go up with CPI, and we'd expect that to reprice, so that would be upside, downside risk, although we said, we think it's incredibly unlikely Tiwai related. I think mentioned earlier, there's a regulated WACC [ resale ] on the networks that kicks in April 2025. We're assuming here that, that gets passed through to the market. So that's definitely a risk around this, a downside risk. We think market prices -- market channels remaining roughly at the same level and long-term channels just going up as CPI doesn't sound particularly aggressive. I think that's a relatively balanced way of looking at it. So we think thatNZD 815 million of EBITDAF is a sort of a fair reflection of where we'll end for FY '27. So that's the end of that section. We're on to Q&A now. So I'll invite Mike back on to the stage and we can take some questions when we do have the entire leadership team here today. So I know you guys always go easy [indiscernible] half year results or the full year results, so you can ask the really difficult questions now that we've got the [indiscernible]

What are the risk for the commissioning period and [ key risk derived ]?

The key risk is always the mistakes that have already been made and which you don't know about. That's what commissioning is all about. And it's the risk that someone's put something in, your supply has given you a defective part and the commissioning phase we're now in is just about stepping in and testing each of those. We expect to have a precommissioning run, a warranty run, which runs for 30 days prior to declaring victory in Saint John, it's all yours. Don't mess it up. But yes, that's your biggest risk in commissioning. If there's a problem, it's already there. And the whole idea of your commissioning runs, yeah, A and B check less than all that good stuff are just making sure that you find those things and you deal with them. You do get generation for the 30 days prior to separation of declaration of victory.

[indiscernible]

We expect from the experience of Otahuhu that will be cost neutral. And we still see the site and its connection as having phenomenal value.

Because we're staying on the site, so we're not actually having to decommission the whole site, and our experience in the past had taught us that we can get enough money through the scrap to actually offset the actual decommissioning of the bond itself. And we've got a tax write-off as well, which is a benefit. So there's still some tax rate down value which we still have that we'd expense where the bond was decommissioned which should be favorable to our cash flow.

And last one still the same [indiscernible]