Manawa Energy Limited (MNW) Earnings Call Transcript & Summary

My name is David Prentice, I'm Chief Executive. I've got Phil Wiltshire here to my left, albeit you shouldn't be able to see us because you can only see the slide presentation. And we'll step through the presentation that we uploaded to the NZX here this morning. [Operator Instructions]. So we'll step through this as quickly as we can because we really do want to leave as much time for questions as we can, but it will probably think about 25 minutes. So briefly on the highlights slide that you can see in front of you there. Starting from the left-hand side, we reported an EBITDAF of $73.4 million, which consisted of almost exactly $70 million EBITDAF from our continuing operations and $3.4 million from our discontinued. Just as a reminder, that was primarily the Trustpower retail contribution, which we had for 1 month in May of this year. A couple of important points to make here. First of all, if you look at that figure at the top, the 976-gigawatt hours of electricity generated. Now while we have sensed that that has been slightly down on previous year, what's really important to note is that, that is quite significantly below long-run averages. And I've got a slide on the next page that will actually show that graphically. But certainly from our perspective, it's the one -- I guess one point on highlight that I wanted to really draw your attention, and we've got 2 or 3 slides to contextualize and provide more information on that is the fact that we now are able to confirm that we've got just under 800 megawatts of development pipeline options, primarily wind and solar, that have been confirmed over the past 6 months, which is really a fantastic effort. As I said, we'll come on to that in a minute. But in terms of just that question of the first 6 months in terms of our performance. I'll just wait for it to change. So this is a fascinating graph. So we call that somewhat cynically a game of three halves. But what you can actually see there is that the significant impact that we had in terms of inflows and therefore, price over the last 6 months. Probably this won't come as a surprise to anybody here, but it's sometimes difficult to forget that, especially with a significantly bad weather, long periods of wet weather and a series of storms that we've had over the last 3 months, it's quite -- sorry to say, it's quite easy to forget. But from March, April, May, June, at that stage we were potentially facing what was going to be a very dry winter. And what you can see in that top left-hand graph there in terms of the inflows into our schemes, we were circa almost 80 gigawatt hours down in the first 2 months of this year. And pretty superimposed that in terms of high prices, which will come as no surprise to anybody, we're facing significantly high prices on the market because of that lack of volume. Then literally in the space of a month, that flipped around, and June and July saw elevated inflows right across the country. And commensurately, the wholesale prices and stuff decreased quite significantly until we got towards, obviously, the end of the year where we were certainly from an inflow perspective, we are more back to kind of normal long-run averages. But what's fascinating was the graph on the bottom left, where we compare generation volumes to low-run average. That's not cumulative, that's on a month-by-month basis. And it basically shows that in all 6 months, only June -- June was the only month where we effectively had volumes, which we would consider to be commensurate long-run averages and in all other months, it was below. The important thing to note there, and Phil will talk about this a bit later, is that in the latter months, in August and September, we actually made some quite deliberate strategic decisions to actually hold some of the water that we've got primarily down in Waipori because we want to minimize our risk position going into winter next year because we see some quite significant issues there. In terms of financial results, I'll step kind of through this very quickly. So there are a number of kind of key levers that contributed from the difference between the EBITDAF from last year to this -- first half of this year. So first of all, we'll go through the left to the right. The Mercury hedge has lower initial pricing, but the key thing to note there is it's got significantly lower long-term trading risk than previous internal transfer hedge we had. And as importantly, has a CPI escalator which actually kicked in from October this year. Now the impact that you're seeing there will primarily only be in the first half FY '23. We will not see that same impact in the second half, mainly due to the shaping of that hedge. Moving to the right. We then look at the energy component. So as I mentioned earlier on the previous slide, that's obviously had a quite significant impact, both in terms of [indiscernible] of $11.4 million. I don't need to label that point anymore. And carbon revenue, we have roughly 160,000 carbon credits, which we revalue on a regular basis. The carbon price has, obviously, come off in this past 6 months from where it was last year, and that's, obviously, had an impact to EBITDAF of net $5.5 million. And on the other, which is the other main price, predominantly relates to a different methodology of cost allocation, as we've moved to a stand-alone generation business. And we've actually signaled that our previous updates. So moving onto generation. I'll talk a little bit about the technology because we're quite pleased with that. So just as a reminder to everybody, we actually have 26 generation schemes spread right throughout the country in incredibly remote places. So it's incredibly important for us that we have technology that allows our site teams to be able to connect with our operations teams and to be able to connect with our co-engineering support teams so that we can continue to support those teams around the country. And I think it's fair to say that our communications over the past few years have not served us particularly well. So we've just in the past 6 months, done a successful trial with Starlink and Starlink is a lower orbit satellite system, which is commoditized, it's easy to deploy, very cost-effective, finest quality. And we have had really, really successful outcomes at 3 of our hydro schemes and are planning to roll out across the remainder of our schemes. And it's even more so important from a health and safety perspective when we actually consider some of the adversity that our teams had to face, particularly over the last three months in dealing with what have been challenging weather conditions, as you can see from the photographs there. [indiscernible] which is probably a very nice -- excuse savory on to health and safety. As we move into, I don't know how to call it but is it [ normal ], who knows, but as we move into our more normal post-COVID BAU environment, we were actually able to get back around the country and engage with each other where we've loosened mandates and restrictions are gone, we put a lot of effort into going around all of our schemes and reengaging with our site staff. We probably haven't seen a lot of people over the last couple of years, but primarily talking to them and understanding from their perspectives, what more needs to be done with respect to health and safety and particularly looking through wellbeing lines because I think we're all aware that certainly wellbeing is something that we need to continue to monitor very, very carefully, especially in the current climate that we're operating in. From an ESG perspective, I think it's really pleasing to see, as you can see that start in the top left hand corner that our GRESB score has increased from 52% up to 72% this year, but we know that there's more that we need to do, and we're actually developing a sustainability strategy, and we intend to kind of update the market on that as we develop more of that early next year. Now in terms of our asset management of transformation. The top point a bit about in the past. Many of our assets are well over 50 years old and some of them are close to 100 years old. And our schemes are incredibly complex with multiple different conveyance structures involved in [ tunneling ] the water from whatever it originates from into electrons. And the team over the past 10, 20, 30, 40 years have done a fantastic job in terms of reactive maintenance and making sure that we keep all those schemes and all those conveyance structures working as best as they can. But we know that we need to move our thinking from that kind of reactive great fix methodology and to more of a holistic, longer-term and longer-life investment. We started to focus on the majority of our high-value machines, and we've got a slide here, that's -- a slide that will follow this that shows that we have been focusing on these and most of our major machines and most of the major components in those machines are either being refurbished or replaced and should be complete by FY '27. So we've got a huge doorway of work across the organization at present as we seek to move, as I said, from kind of a reactive to more of a proactive asset management. And the benefits that you see in there is we're actually already seeing 16% lower time spent on reactive maintenance. So in terms of some of those projects there, I'm not going to go through this slide in detail, but I would welcome everybody listening in here today to take some time to look through those. There's an awful lot of information provided here. But what this does is less so are high-value and/or strategic assets. It confirms the work that has been going on -- is ongoing or is about to start on each of those assets, how much we're actually planning to invest and when we're actually implying to invest that and mostly what we expect the outcome or the outputs will be. Now, what drives us is 2 or 3 things. First of all, we seek to get more output through enhancing some of our assets. We can't do that with all of them. But certainly, what you're seeing here is a combination of enhancements. But as a major infrastructure owner and operator, we also have obligations to ensure that we manage, maintain and run our assets safely. So from a dam safety perspective, we need to continue to invest in our asset base and there's a number of -- a couple of projects in there which are pure dam safety projects. And then finally, there's also refurbishment projects. So not necessarily enhancement, but refurbishment projects, noting that many of these key value assets, as I said earlier, are 50 to 100 years old, and we're starting to get time components. So that just provides just a little bit more color into some of the, I guess, more recent, if you like, enhancement updates. So I'll talk a bit more of a brand scheme, which is in Marlborough. That is now complete and operational. And just as a reminder, we designed, developed and implemented a new infiltration gallery down at [ Branch River ], which is in Marlborough, which is delivering -- will deliver up to 10 gigawatts extra per annum. Likewise at Cobb, which is one of our high-value strategic schemes in Nelson region. We have just a place called G5, which is a 12-megawatt turbine -- sorry, generator, which is already exceeding design requirements. And G6 is in the process of being replaced. We expect that to be up in service in the next couple of months. On deepstream, this is an interesting one. Most of you won't be remembering deepstream, that is a relatively small scheme, quite new scheme that's connected into our Waipori stream down in Otago. I'm just through -- working through revised resource consents and looking at tweaking some of our logic controls. So a relatively small investment, we've been able to or will be able to deliver extra 3 gigawatts per annum from February 2023. So moving on to new development opportunities. I think it's safe to say earlier that we're very pleased that the progress that has been made in the last 6 months under Rob Buchanan and his team is certainly more than any of us could have expected. Now the flip side of that is that obviously it comes at cost, but we actually think about that as a good cost. So if you pick out some of kind of the key elements here, we've now got just under 800 megawatts of solar and wind projects with either landholder or option agreements in place. And we've got another 900 under advanced negotiations. Now the key thing here, we'll all be aware of this that there's no way that we're going to get all of these through to FID. But the most important thing is to actually give us options so that we can work through these. Our long-term aspiration remains to develop 500 megawatts of new projects by 2030. So we believe this is an absolutely fantastic start. And as a result, we're actually now moving from origination to execution, and we're actually going out on hiring new staff to actually help us do that. I'll maybe actually go into the next slide, Phil, because what that does is it starts to break it down in a little bit more detail. Now our focus remains on solar and wind. That doesn't mean to say that we won't be looking at other technologies. We believe all technologies and time will have a part to play. But right now, we remain focused with minimal distraction on developing our solar and wind portfolio. Now from a solar perspective, it's almost like every week, you've got an announcement from some other new companies that have got other new developments that are coming to the market. And I'm not going to comment on them, but I will comment on why I believe we at Manawa are different. I believe that we have got the proven development capability, primarily through the old Trustpower, primarily through renewable development of wind technology, but we've got that mindset and continue to have that development capability. We've got balance sheet flexibility. We've got a committed major shareholder, and we've got an aligned board with strong growth aspirations. And all of that is showing through in terms of the speed by which we have originated and brought these options up and the fact that the board have approved significant spend in the last 6 months. So our focus today has been securing projects, mainly solar projects, mainly in the upper North Island. This will be important with very strong grid connection and nodal pricing. Our first solar opportunity, which we've mentioned before is a grid-scale project in Northland, which is already consented, and we are working with -- we continue to work with potential customers for offtake. It's a relatively small project, but that's certainly the one that's focused on the funnel, and we hope to bring that to FID in the first half of next year. But I think excitingly, over the last 6 months, we now have acquired either via land purchases or lease an additional 3 circa 100-megawatt solar sites north of Auckland. As I said earlier, we have good expansion opportunity, really strong grid connections and proximity to significant demand. And that's on top of the Thames project, which is also roughly 100 megawatts that we previously announced to the market. And only yesterday, in our Board meeting, the Board signed off on the purchase of [indiscernible] South Islands, which can accommodate circa 30 megawatts of solar site. And importantly, we'll make use of an existing hydro grid connection and hopefully certainly from our perspective will present intraday hydro peaking opportunities. So we're feeling pretty excited about this, I have to say. And our strategy is now moving from looking at certain move from -- looking for options to look at procurement and assessing technology. But we were actually overseas a couple of weeks ago talking to solar developers and wind developers and suppliers to understand from them what their pipeline is like, to understand from them what some of the technological requirements are and just to get a better understanding of what that procurement pipeline looks like. So pretty exciting. Now moving on to wind. While we expect that the -- I guess the development lead times are bit longer than solar, we are still actively considering several advanced projects. And again, super pleased to announce that in the past 6 months, we have secured a 250 megawatt really exciting project in Waikato. Again with strong connection prospects and landholder agreements in place. And we've just got wind monitoring that's about to commence there. We've also got a 78-megawatt project in South Island with wind monitoring already in place. But that third bullet point there shows that we've got circa 575 megawatts of other sites in advanced negotiations with landholders. Now as I said earlier, we are not going to get all of these over the line, and they're all at various stages of gestation and maturity. But I think it's fair to say that we are hopeful of being able to update the market again at some point in the near future as some of these projects mature and firm up. So I think we're in a pretty good position there. And just before I move on from this, the interesting thing is that in terms of location, obviously, you got to have a good wind resource and that goes without saying. But certainly, our focus in terms of location has been looking for areas which are uncorrelated with a significant installed capacity already in the lower North Island where we're already seeing peaking factors starting to be impacted downwards or deteriorating with correlate build. So that's been a key factor for us. I'm nearly going to speed up, and you can talk to Phil. Finally, from a C&I perspective, look, we have an obligation of our Mercury hedge to supply circa 2 gigawatts of volume through to October 2024. And at that stage, it starts to ramp down and then it gives us more opportunities on how we can place our project into the marketplace. Now we deliberately maintain a C&I customer base to give us options to place that project and really seek value in divesting from the sales channels. Now it's fantastic because we already received heaps of interest from a range of parties on the opening wedge of volume from FY '24 and importantly, we're going to continue to balance this against creating an energy book with attractive pricing, tenor, but also to kind of manage our trading risk and exposure. And what we're also finding is that the whole country contains with the march towards decarbonation. We are getting more and more customers approach us, wanting to understand how they can work with us potentially through longer-term PPAs or potentially through the development of new products to kind of decarbonize their investments. So we continue to work hand in hand with them. Finally, the last slide for me. And this is super important. As an asset order of significant infrastructure for the country, we recognize that we've got a social license to operate and especially appreciate that it's a privilege and not a right for us to be able to use that water. And so therefore, as soon as we get complacent around that, then we will fail. But the most important thing here is we also need to recognize that we have a part to play in helping decarbonize New Zealand through the development of new renewable electricity. And so we will continue to advocate for policies that enable and outstanding this and therefore, provide balance through appropriate policy savings. So what you can see there is the range of policies that depending on where they want, could either have a fundamental impact, both positive and negative, on our ability to do that. So this continues to be a key point of focus for [indiscernible] GM risk and regulatory in terms of how we work, what government and various organizations to minimize the impact. So that's probably enough for me. I'll hand you over to Phil and then we'll open up for questions. Thanks, everyone.

Thanks, David. I'll just spend a couple of minutes running through, I guess, how we see the go-forward position. And while we've had some challenging high growth conditions in the first half of FY '23, we do see an improving outlook, particularly for the last quarter of FY '23 and into FY '24. And significantly, I guess what this slide highlights is that we're very well placed in terms of water storage. The graph on the left shows the lake levels. The current lake levels at our Waipori scheme, which is our largest storage lake. And that red line, you can see there, that's currently 34% higher than the long-run average for this time of the year. And that is significantly higher than the October position we've seen for the last 5 years, which are those -- the other colored lines below the dotted line on the chart. And this, I guess, combined with an increase in forward prices that we've seen from Q4 this financial year, and that chart on the right shows the current ASX forward prices for the next 5 quarters, does provide us with a good tailwind and ensures that our trading book is well-positioned from a risk management perspective. And while we're working on a pipeline of new development options, the next 2.5 years will also see significantly higher levels of nondevelopment CapEx expenditure. And David talked about some of the projects and the reasons for that higher expenditure. But we have existing hydro asset portfolio worth $1.8 billion and that generates very strong and very stable cash flows. But a number of these assets are now at a point in their life cycle where they require some significant investment, and that will flow through to cash flows in the next 2.5 years. Broadly, that CapEx is split evenly into 3 categories, as you can see on the pie chart there. We have enhancements, which generates additional capacity and good returns. And we have just pure life cycle plant replacement, and we have dam safety projects. And when we're looking at our forecasting, in aggregate over the next 3 years, we'll spend approximately $120 million over and above our BAU level of CapEx in this area. And that spend will peak in FY '24, and then it will taper off to a new normal or business as usual level from FY '26, FY '27 onwards. Like all New Zealand businesses, we are watching very closely some of the moves in inflation and exchange rate. Our revenue is largely protected from high inflation through inflation index contracts we have with third parties. But on the cost side, there is no doubt that inflation and the lower New Zealand dollar is impacting on both the cost of new development and the cost of the existing sort of asset CapEx projects, where generally, the spend is -- consists of 2 key areas. One is civil works, which is New Zealand dollar based, obviously. But then the other is the plant and equipment, which is almost predominantly sourced in U.S. dollars. And looking at here, if inflation does persist at the levels we see now, the cost of new generate -- the higher cost of new generation will inevitably flow through to wholesale electricity prices. And we believe that, therefore, the investment in new generation will likely remain an attractive proposition that we do see that flow through into wholesale prices. In setting out first dividend as Manawa Energy, we are seeking to carefully balance providing a stable dividend to shareholders with our significant growth aspirations. And we've looked and we've considered the forecast cash flows over the next 3 years, including some of this elevated period -- CapEx period and also normalizing for sort of abnormal FY '23 hydrology. And that's consistent with our dividend policy. So we will pay a $0.075 interim dividend, with a target to pay another $0.085 final dividend, taking the full-year dividend to $0.16. Looking at our balance sheet. We have a good level of near-term liquidity and flexibility within our balance sheet funding. We're very pleased with the demand we saw for the bond issue that we completed in September, and we raised $150 million through that issue with $50 million of that being in exchange of December '22 bond. So therefore in December, we will repay the remaining $77 million of that maturing bond. And post that repayment, we will have circa sort of $180 million of undrawn bank facilities, and we will move into a refinancing of those facilities with some extend tenure in the first quarter of calendar '23. And finally, we just reiterate our guidance. We published this guidance on -- a few weeks ago on the 18th of October. And that guidance is that we -- FY '23 EBITDAF will be in the range of $127.5 million to $140 million. That forecast is underpinned by the typical assumptions that we make considering our guidance being wholesale prices remaining in line with current ASX. Generation volumes in the second half of the year will be a forecast to the 830-gigawatt hours and that average -- we'll see average hydrological conditions during that remainder of the year. The CapEx guidance for FY '23 remains in the range of $45 million to $55 million. And I will pause there, and we will take any questions that have come through.

Fantastic. Look, there have been a few questions, but do you have to stop sharing the screen or no? No. Unfortunately, we can't stop sharing the screen, sorry. [Operator Instructions]. So there's a couple of questions that have come through already. So I'll maybe just pick up the first one and that's come through from [ Cam Parker ]. And [ Cam ] says we'll be keen to hear more on the key takeaways from the RE supplier discussions, particularly around cost, availability and time lines to deliver. Yes, look, it was a fascinating week. Well, I had a week in the states, mainly going around, as I said, talking to developers and suppliers. One of the -- I guess, one of the takeaways first of all we think about our strategy. So I will talk to [ Longwood ]. I'm sure Longwood are part of the sustainability if you look of [indiscernible], who have been incredibly successful in terms of development of wind and solar across the states. So I really wanted us to talk to them to find out what's gone well, what hasn't been gone well, what were the lessons learned. And I think it was really heartening to hear from them when they talked about, how they think about developing and what are the key things from their perspective, and it is very much aligned with how we are thinking about it as well. So that was, I guess, the first positive takeaway. We went to talk to one of, I think, the largest supplier of solar panels in the states. And interestingly, they say that they have forward orders through to FY '26. So they are not taking any new orders until '26, which, on one hand is interesting, full stop. But what it shows is the huge demand for solar panels across the world. Now they are only in the states, and there are, obviously, many, many, many other large manufacturers of solar elsewhere. But that certainly gives you an indication of the demand for solar panels. Look, [ Cameron ], there was a whole bunch of other probably more detailed takeaways that I'm very happy to share with you, but happy to do that offline, if you want to get in for Rob Buchanan who was also there with me, a call. Phil, do you want to answer the question from [ Andrew ]?

Yes. Thanks, [ Andrew ]. I think your question here around the gigawatt enhancements. Yes, you're correct. We -- well, by the end of FY '23, we would have delivered an additional 30 gigawatts. And then we have another 77 gigawatts that are planned to be delivered over the next 3 to 4 years, and we can provide, I guess, perhaps when we catch up, we can probably go through that. It's circa -- it's reasonably even on a per annum basis, where we'll be -- by the end of FY '26, we expect to have delivered sort of around 55 gigawatts. By the end of FY '27, it's around 74 and by FY '28, the full 107. So hopefully, that helps.

But I will say there that of the 107, not all of that 107 has gone to FID. So that's the super important thing to recognize here. So the 30 is locked in. And that -- by the way, that's not just to say that will be delivered this year. That's the projects that I spoke about earlier, which will be included in the 30 and previous updates since we've actually announced this program. So we will have 30 announced by the end of this year. Phil was right in terms of FY '24, '25 and '26. But all that 107, which is mentioned in one of the slides, there's a portion of that, and I'm going to say circa 20 to 30 gigawatt hours is subject to a lot more analysis at FID and are at relatively at early stages in how we develop some of our thinking around that. I hope that helps [ Andrew ], certainly, I'll talk the drill into that more outside of this session. Sorry, just a note to read the questions on progression from [ Shelton ]. The delivery of the larger advancing projects generally involve upgrades of turbines and generations, the lead time of these is 2 to 3 years. [ Shelton ], you're right. There is a long lead time on those. Not quite sure of its 2 to 3 years. But all I will say is that the timing that we just talked about in terms of the deliberately -- the uplift and the outgroup allows for those procurement time frames. So that's why we're talking about a bold wave over the next 3 to 4 years. Sorry for Andrew. The second part of your question probably for you, Phil. A question about BAU CapEx after FY '28 or is BAU CapEx, assuming it drops a bit once the enhancement program ends?

Yes. Thanks, Andrew. Yes, we're looking out beyond some elevated period of CapEx, we see a new normal CapEx range of between $22 million to $32 million per annum as our new normal range.

Yes. Sorry, does that answer your question, Andrew? Sorry, I've just -- I've actually now just noticed -- I was looking. I've just actually now notice a whole bunch of questions on the Q&A function, I was just looking at the chat function. So let's walk down through this. We've got 5 questions here. First of all, from [ Neville ]. With TPM now looking set to be implemented, can you update the likely ACOT revenue part outlook for Manawa? I think some contracts will continue even if ACOT rules change. You want to answer that, Phil? Yes. The answer is no. [ Neville ], that's incorrect. So we are assuming from FY -- our FY '24, which is from April '23 calendar year. So from April next year, all ACOT revenue that we had will no longer be available to us. [ Stephen Hudson ], 3 questions. Can you give us lake storage and gigawatt hours now versus min? Yes, I can. It's roughly -- roughly the current gigawatt hour storage compared to average is about 60-gigawatt hours above where we would normally expect to be at this time of the year. So 60-gigawatt hours above. Second part of your question, [ Stephen ], does your definition of free cash flow. I'll let Phil answer this. Does your definition of free cost fully get up to $120 million ex CapEx above BAU?

Yes, we've included all that additional CapEx in our forward-looking cash flows. The free cash flow we use for -- within our dividend policy excludes growth CapEx and excludes enhancement CapEx where we are generating a return that's greater than our WACC. So I hope that answers the question.

Yes. Hopefully, it does. But if it doesn't, please post again. Third part to [ Stephen's ] question there. How do ACOT revenues next year phase out half, half? Across first half, second half. I think I probably answered that earlier, but just to repeat. Those ACOT revenues will we gone or we assume that they will all be gone from 1st of April 2023. Sorry, and it will be linear across the year. [ Stephen ], last one. Did you capture -- probably, one for you, Phil. Did you catch circa $7 million of indexation on the Mercury PPA or is there a true-up with delay?

Yes, your assumptions there are broadly correct. The first indexation was from 1 October of this year, and it indexes on a quarterly basis from there on. So there's no true up to -- those index increases flow through quarter by quarter.

From [ Richard ]. Does your new development pipeline include any investments into commercial scale battery technologies or assumptions around battery technology trends? Or is all CapEx in generation only? That's a yes and a no answer to that question. So first off, to your first part of your question, I think, as I mentioned earlier, when we think about new development, we are -- we have been and will remain to be very focused on solar and wind development. So that's not to say -- sorry, wind generation. That's not to say that we won't continue to look at battery technology or maybe not so much offshore winds, but certainly battery technology. But at present, there are more no assumptions and no CapEx, could -- certainly no CapEx assumptions and our CapEx profile going forward around some of those technologies. But we do -- to answer the second part of your question is all CapEx and generation only? No, we have assumed a reasonably -- a reasonable increase in CapEx spend over the next 3 to 4 years as we -- around our generation development side of the business, again focused on wind and solar. [ Neville ]. For future PPA contracts, are C&I customers looking for raw generation following PPA uptake or seeking some form of firming from Manawa? Look, both, if I'm being absolutely honest, [ Neville ]. I think it's a super interesting time at present setting with forward prices the way that they are. Some of the challenges that customers have got in terms of decarbonizing their own portfolio and how they are thinking about how do we do that. So there's some really interesting discussions that are going on. I think I mentioned to you that -- I think I mentioned earlier, sorry, that we are funding the whole. Previously at -- it was -- the industry norm would have 3-year PPA. We are finding more and more if you just look at it from a PPA perspective that customers are now wanting to understand what the benefits are, and I guess, risks are and how we can share that in terms of longer-term PPAs. And of course, when we look at our portfolio, as we develop more renewable generation going forward, where we see we have a distinct advantage in some of our -- some of the other competitors out there is that we will have the ability to be able to firm the PPA offtake with our existing hydro. So we're not discounting anything at present. I think it's fair to say customers are looking for -- looking and considering all options. How much -- second part of the question, how much firming can Manawa offer PPA via stock market once the Mercury contracts roll-off? Well -- as Manawa looking at new flexibility plans. Well, the first part of that question is how much firming can Manawa offer PPA buyers. Well, as I said, from October 2024, we start to drop off in tranches. I think we made in the market, 250 megawatts per year for the next 5 years will become available. So theoretically, we could decrease offer that to customers. But what I said earlier is we need to look across our portfolio as to how we best store that energy and manage our trading risk, but also at the same time as building up our C&I base. So that remains a really interesting and complex opportunity for us. Is Manawa looking at new flexibility plant, pump hydro or batteries? Not at this stage, no. How much stronger PVD you think the New Zealand market can economically absorb by 2030? Phil? Good question, [ Neville ]. It's -- and really difficult to answer. And I'll just sum it around and say, I guess, it depends on how convicted we all are with respect to what the demand will be. And every report that comes out, we just saw the BCG report that just comes out -- has to out, whether it's climate commission, whether it's any of the other organizations that are out there. You've heard me say this before, they're all pointing to a significant increase in demand over the next 10, 15, 20 years. And we remain convicted that would be the case. How much solar will contribute? How much wind will contribute? I think it's difficult to see at this stage. But our strategy at present remains on building as many options that we have got into our portfolio so that we can work through that in a rational and pragmatic basis and trying get as main to FID as we can. It doesn't really answer your question, [ Neville ] because I'm not sure we can. So there's no more questions there. They were great questions. Thanks very much, everyone. And doesn't look as if any more are coming in. I'll just check in the chat function. I don't think -- just one final one from [ Andrew ] on the chat function. But the $20 million to $23 million includes existing enhancement programs as well? So does outlook drop off when enhancement program ends?

Yes, so the '22, '23 will include the end of our enhancement program. We will expect a large chunk of it prior to FY '26, FY '27 but the [ tallied ] will be included in these.

I think the way to think about that is if you look back at our CapEx spend historically, particularly over the last 10 to 15 years and just look at generation, just look at our generation portfolio for a minute. I'm looking at guys here, correct me at the moment, but it was circa $10 million per year. So you think about that in the context of an asset portfolio that's what circa $1.8 billion and think about what's an appropriate level of ongoing investment to ensure that we maintain -- as a minimum, maintain our existing asset portfolio but continue to seek enhancements. through because all we've done there is work for major projects. So look for enhancement opportunities through sort of major schemes. As we go forward, we will continue to look at all our other lesser schemes, but they are still legally quite significant opportunities over and above what we've already providing to the market. So I think it's fair to say there will be an elevated level beyond -- over and above what we've seen over the last 10 years. So I think we are probably good to go. There doesn't seem to be any more questions coming in. No one's raised their hands. So maybe just call it in. Look, I'd like to thank you all for listening in this morning. It's been a great turnout year. Thanks very much for the questions and the engagement. I really appreciate it. As I said, we are pretty -- lots of moving parts for everybody to get the heads around here, but we are super excited certainly as an organization in terms of the opportunities that we see in front of us, particularly with new generation development and look forward to coming out with even more announcements certainly over the next 6 months and years ahead. So thank you very much, everyone, and look forward to, I'm sure, talking to some of you in more detail over the next couple of days. Cheers.