Mercury NZ Limited (MCY) Earnings Call Transcript & Summary

Killed everybody. My name is Stew Hamilton. I'm the Chief Executive of Mercury. It's a real privilege to be here today to share with you the next step of our geothermal strategy. So at the Investor Day in 2015 -- 2025, actually, it was June 2025, so just under a year ago, we presented our strategy to deliver a better Mercury today, primarily through productivity and operational expenditure improvements, a plan to build tomorrow through our geothermal and our wind platforms and growing aspirations to build a brighter future together, primarily through electrification. Today, our Geothermal Investor Day will delve into the exciting and critical element of the geothermal part of our strategy, which I'm committed to delivering in my term as CEO of Mercury. Mercury is building a credible, investable platform for long-term growth, which provides firm renewables backed by proven delivery and disciplined capital allocation. This Investor Day today is about showing yourselves and the market the proof points behind our geothermal platform becoming a repeatable growth engine. It's not just a one-off project-by-project pipeline. So we're focused on creating durable shareholder value through staged high confidence development funded within balance sheet guidelines. So welcome to the day. I'd like to introduce you to the people who will be talking through today who have Richard Hopkins, where are you, Richard? Here, our CFO. We've got Matt Tolcher, our Executive General Manager for Generation Development. We have Ben Pezaro, Head of Geothermal Development. We've got Mana Newton, who's the Chief Executive of the Tauhara North No.2 Trust. Also joined with some of the Mercury's directors and our Chair, Scott St. John, is Rob Hamilton. Hannah Hamling, I know is somewhere. And we've got -- I think everybody can see, put your hands up. Jess, where are you, Jesper? Jasper in the back as well. I'm joined by the Mercury Fos. So as you break out to different groups after lunch, we've got an amazing opportunity to connect with the Mercury team. They're really the brains, the heart, the drive behind our geothermal platform. So really exciting to share with you the prospect that exists there. Nga Tamariki and particularly OEC5 here started up in March. Nga Tamariki is a really important proof point for Mercury, really shows our ability to successfully develop and operate geothermal projects in partnership with And our geothermal capability today reflects decades of operational excellence, our experience, the technical learning that we've developed and the long-term stewardship of these amazing resources. We see geothermal as having increasing value, and it shows value in a market that needs reliable, renewable generation to support electrification and economic growth. Okay. So I just wanted to share today's agenda with you. It's really today's session is designed to connect Mercury's strategy, our development capability and our partnerships and capital allocation framework all into one coherent story for you. The focus is not simply on pipeline size, but it's on demonstrating a repeatable platform that's capable of delivering scalable value over time. So I'll start by providing an overview of the platform we have to strengthen value for Mercury. I'll then hand over to Matt. Matt will drill deeper into the approach that's going to leverage that platform for value. Ben will then inject the technical detail into our story by sharing the next 2 projects that will bring our geothermal platform to life. Mana will then share insight into the power of our partnerships and how Ewi and Mardi Land Trust are critical to our growth pipeline. And then Richard will connect and flow it all together nicely and our disciplined approach to managing our owners' capital. We want to leave you with the confidence in both the quality and the opportunity set ahead of us and also the disciplined execution approach we're taking to our geothermal growth story. I want to start by connecting to our geothermal opportunity to Mercury's strategy. Our strategy has a set of 2035 aspirations. They guide our priorities for the next 5 years and set immediate strategic objectives. These are based on 4 -- 5 key areas. It's centered on delivering more affordable, renewable, reliable energy while generating sustainable financial growth. Geothermal directly supports multiple of these strategic objectives through energy security, electrification, customer growth and long-term portfolio resilience. These are underpinned by demand growth and built from a capable team and strong partnerships. So our ambition is to grow for not just for growth's sake, but it's disciplined value-accretive expansion that strengthens Mercury competitive position. Through our strategic priorities, we will deliver superior value. So our portfolio of assets are actually based on 100% renewable resources. Mercury's portfolio is differentiated by its combination of hydro flexibility, geothermal baseload and wind generation, and that provides a strong firm renewable portfolio and platform. It starts with the foundation of our hydro assets. The great thing about our hydro assets in the Waikato River is that their production is aligned with winter peak demand. Our growth platforms then show further on that slide, those growth platforms for us over the next 10 years will be geothermal and wind. Geothermal is particularly attractive because it delivers renewable, reliable output with low intermittency risk and strong alignment to long-duration demand growth. Both of our platforms for geothermal and wind will leverage our existing capability, our existing infrastructure and our partnerships to pursue stage development options. We'll share today the first 1 terawatt hour of that growth options in our geothermal platform. That 1 terawatt hour is entering into feasibility and is planned for production by 2035. When we combine our wind prospects across New Zealand, by 2035, the bar chart shows that we will be closer to 1/3 hydro, 1/3 geothermal and 1/3 wind, supported by selective growth in solar and battery energy storage solutions or BES, providing short-term portfolio peaking. Importantly, we are not trying to build everything all at once. We are sequencing the opportunities, carefully allocating capital where we see the strongest long-term value. And we do see demand growth supporting our delivery approach. There's strong structural electricity demand growth, and that will emerge from areas like data centers, industrial electrification and broader decarbonization trends. By 2035, we're forecasting an additional 9 terawatt hour of increased net grid demand in New Zealand. With that, firm renewable generation is likely to become increasingly valuable. This is as the market looks to balance reliability, affordability and sustainability. Mercury's geothermal platform, therefore, is really well positioned to support this through scalable and investable development options. We have a high confidence in the meaningful demand growth, although the timing and the shape of that may vary. And that affordable, reliable renewable geothermal power will support major energy users when you combine geothermal platform being really well suited to major energy users. The major energy users are increasingly valuing renewable, reliable electricity, particularly when operations are 24/7 and require that sort of supply profile. Geothermal really enhances Mercury's ability to provide major energy users and supports long-term contracting while improving resilience of earnings. Our geothermal platform enables major load to be firmed. And for Mercury, this matters because it gives us confidence to keep growing. And for our major users, it supports their growth. So it really does provide value uplift across the entire ecosystem of New Zealand. We've actually been building our growth platforms of wind and geothermal for many years, in fact, nearly 20 years. We've demonstrated repeatable delivery capability across both wind and geothermal development pipelines. We've transitioned from geothermal to wind in the 2020s, and we now see a really valuable combination of progressing both of these growth platforms together. So from 2008 to 2014, our geothermal capability was truly established. And then from 2020 through to now, our wind capability has been established. Now both of them are a potent combination with very similar strengths. Our geothermal platform, that combines 3 key strengths. The first is our resource quality with New Zealand's largest portfolio of geothermal options. The second are our people and partners. We have technical capability and operational expertise. Thirdly, we have repeatable modular options. All of these 3 strengths are very difficult for others to replicate. We are vertically integrated across the geothermal and the wind value chain. And this is a globally unique competitive advantage. This is not just a project-by-project approach. This is actually a platform to deliver steady growth. And we believe that, that positions Mercury to continue growing market share through disciplined renewable development over time. And we have our finger on the pulse with global developments. That ensures that our geothermal platform is set to drive our momentum. Earlier this year, I had the great opportunity with our directors, actually the directors in the room and some of the executives to travel to the United States, and I also traveled to Scandinavia, where we engage with global leaders in geothermal. Globally, the interest in geothermal is growing being backed by significant investment. Conventional geothermal, however, is currently the only economic technology available, and New Zealand has significant advantages in that space. Over the next 15 to 20 years, other forms of next-generation geothermal will also develop really quickly. Our engagements overseas confirm that our advantages that we have and back our staged approach over 3 horizons. Horizon 1 will see us take an inside-out approach. We start inside with a deep understanding of our current reservoir, and we continually step outside through appraisal drilling to develop brownfields, low-risk options. Horizon 2 then sees us add our greenfield opportunities and also start to develop us or put us in a position for Horizon 3 in which other forms of geothermal production such as enhanced geothermal systems and super hot geothermal will play a part in the outer phases of Horizon 3. This 3-horizon approach means that we can leverage our current strengths and advantages, reduces the risk of development and position us to scale demand as it arrives. Scale alone is certainly not the objective. Scalable returns certainly are. So we have everything we need to leverage our geothermal growth platform to deliver value. I'll now summarize what you'll hear through the rest of the day. The next phase of Mercury's growth is about building on today's capability, today's resource quality and the recent project delivery success. This is shown through our operations performance, our drilling successes and our Nga Tamariki expansion. Our geothermal platform will then build tomorrow. It has near-term conventional growth across diverse, scalable reservoir. We have 5 terawatt of options that we've shared previously, half of which is currently under active development and 1 terawatt hour is now producing or moving into feasibility stages. This all starts with a commitment of a $75 million drilling campaign that's recently been approved, and Ben will talk a bit more about that later today. So our geothermal platform is our competitive advantage. It combines scale, our people, our partnerships and a model that is set to be repeatable beyond the individual projects. And it is now my privilege to introduce to you Matt Tolcher. Matt will now talk about how we're leveraging our geothermal platform for value.

Yes. Thanks, Stew. Nice to see so many friendly faces. And yes, thanks again for your commitment for attending today. So as Stew talked about our renewable platforms in wind and geo -- sorry, I'll keep the slide. I'm going to share a little bit more about those platforms and I'll also dive a little bit deeper in terms of our strategy on geothermal and what we think is a unique value proposition. We're scaling from strong renewable assets into renewable growth platforms with wind and geothermal at the core. So something that's probably familiar to lots of you, but I thought I'd just start with a few technology fundamentals because they're really at the core of our GenDev strategy. So just kind of starting on the left, cost matters, LCOE matters, but really, the story is much broader than cost. It's about market value. On the left, we're just sharing a few recent observations around LCOE on wind, solar and geothermal. GEO has proven competitive recently, as many of you will be aware, and wind and solar compare on an LCOE basis. But as I said, that's not the whole story. Different technologies capture price differently in the market. And as you can see there, geothermal, the little thin line at the top, it stands out because it provides baseload renewable power. Wind remains attractive to us, particularly where we can develop non-correlated and diverse wind. So if you're looking at the gray bar there, we want to be playing towards the top of that bar, and we achieve that through developing diverse and non-correlated assets. We do believe solar has a role, but we think it faces tougher economics in New Zealand than it may in other areas. And that's predominantly due to price shape in a single time zone and mismatch with winter demand. On the right is how we sort of net that picture up into an LRMC picture. As I said, we're not chasing megawatts. We're targeting the right technologies in the right location at the right time. And effectively, that underpins our strategy on wind and geothermal. As you'll know, our pipeline has plenty of scale, but the real value in our pipeline is optionality. Again, the 3 key pillars of our GenDev strategy, geothermal platform, scale and diversity, people and capability and partnerships and repeatable execution. 17 terawatts of wind and geothermal prospects and projects across the development life cycle. We can stage projects as demand, market value and delivery readiness presents clear value cases. We've got proven capability, as Stew mentioned, across the value chain in geothermal and wind. And I think our track record demonstrates that through delivery of a number of successful wind projects recently and the successful delivery of OEC5. Our partners are fundamental to everything we do. It's really a pleasure to have Mona here with us today, especially in the geothermal land, our partners will play a key role in our success in geothermal. Repeatable execution is really important. I think we've been demonstrating that in wind. We've built the geothermal platform that will provide similar opportunities. It's around that right technology, the right location, the right timing, disciplined investment and leveraging all of our skills and capability. So a little bit more about some of the practicalities of the geothermal strategy. The 3 pillars there around scale and diversity, again, people and partnership, executable and delivery. Our -- really, it's around a portfolio of options. So we've got multiple reservoir opportunities. We've got a very large landholding. And our strategy is around, as Stew mentioned, pursuing higher confidence brownfield conventional first. As we do that, we'll be developing greenfield options, and we'll be positioning for next-gen geothermal. That's significant opportunity. So just to demonstrate that, a bit of a market landing point. But currently, there are about 10 terawatt hours of geothermal in production in New Zealand. Mercury owns and operates about 3 terawatt hours. If you think about what we're operating, that's up to 4. And this opportunity set of 5 terawatt hours is significant. If you compare that to the current generation in the country of EN, this is a significant opportunity for geothermal growth for Mercury. Ben is going to provide a little bit more insight into the 5 terawatt hours across Nga Tamariki, Rotokawa, Rosumar and a few other options that we're pursuing. As Stew said, 2.5 terawatts of that are under active development. Our large landholding of 33,000 hectares creates a lot of opportunity for us around brownfield, greenfield and next gen and allows us to think about time horizons and what we want to prioritize first and where we'll go through subsequent time horizons. Just a little bit of a share, the green dots are the areas where we'll be -- where we've committed capital, the $75 million to the appraisal drilling campaign. And again, Ben will share a little bit more about that campaign coming up. So Stew talked about the time horizons. Again, Horizon 1, which is now we're accelerating higher confidence options around brownfield conventional geothermal while developing greenfield options. Horizon 2 will be more of the same, maximizing that greenfield conventional opportunity and starting to execute on greenfield opportunities. Horizon 3 will be focused on playing a leading position around next-generation technologies and opportunities, which we'll share a little bit more on later. As I said, none of this happens without a deep and wide experience set across the value chain. So Mercury has been playing in the space around reservoir and exploration for many years and recently have delivered OEC5, which backs our ability to deliver and execute well. There are a few proof points at the bottom here, but what I'd really encourage you to do is spend some time walking around and meeting our people, and they'll be able to share with you their deep experience and help you connect a little bit better to the value chain story. And with that, I'd like to introduce Ben Pezaro, who's our Head of Geothermal Development, who will share a little bit more about these opportunities. Thank you very much.

I'm Ben Pezaro, Head of Geothermal Development. So I'm going to pick up on the platform and talk to you about the path for commercialization. In my slides, I'll cover the Horizon 1 opportunity set, our detailed near-term headline projects and talk about the committed appraisal drilling program. I'll then touch on next-generation geothermal technologies and what that could bring to New Zealand and to Mercury. And then we'll wrap that up with some Q&A with myself and Matt. Look, on a personal note, it's been really exciting to see these opportunities develop over the last 12 months. Our teams worked really hard to bring these to life, and these projects are looking great. And I think it really sets up our GEO platform for success. So this is an overview of Horizon 1. This is the core of our near-term opportunity set and program plan. On the left-hand side, as Matt said, we're investigating up to 5 terawatt hours of potential, and this really underpins our platform diversity and scale. Within that, we have 2.5 terawatt hours of active development across Nga Tamariki, Rotokawa and [ Rotamara ]. We've been doing advanced prospecting activities there. That includes things like geophysical surveys, detailed modeling and opportunity assessments. Within that opportunity set, we've identified the first 2 projects totaling 1 terawatt hour at Nga Tamariki and Rotokawa. We've completed concept screening and resource assessments, and we're now moving into feasibility and appraisal drilling. It's important to note that we've identified additional prospects through this process on these fields, and we envisage that those will enter the pipeline at some point in the future. Down the bottom, the remaining 2.5 terawatt hours is under technical assessment and planning and is in the early prospecting phase. The opportunity set there includes our other brownfield geothermal interests, which is Cowwadal and Moka. It includes identified but higher risk options across our current reservoirs, and it also includes medium temperature prospects and some new sites. Our approach to this is deliberate. We aren't trying to do everything at once, and we're not chasing volume. We're focused on staged, disciplined development to advance the best options, starting with brownfield first. This means for us, known resources, existing infrastructure and lower risk. So the key here is that we expect our geo platform to generate multiple development options over time using this approach. So let me bring that approach to life with Nga Tamariki. This slide dives into reservoir capacity and our first project. Nga Tamariki is a really high-quality reservoir. It's got extensive acreage for us, and it's got a proven phase development history. Today, it's generating about 132 megs with OEC5 now online. And we estimate that it has potential to grow to 180 to 260 mgs over time. It's important to note the reservoir performance is tracking really well post OEC5, and this builds confidence for the next phase of development on the field. So into the project. We have identified a new project up to 75 megawatts, delivering around 620 gigs. We're targeting 2 appraisal wells here as part of the feasibility phase that will aim to improve reservoir capacity and underpin new resource zones on the field. The project will leverage our deep reservoir knowledge, existing infrastructure and be developed by our development-ready team. At this stage, we're working towards costs of approximately $6.5 million to $8 million a megawatt. We have a clear pathway for the project. It does require more feasibility work and resource consent prior to an investment decision around late 2028. So this is the platform in action. It's generating high confidence projects, high-value projects ready for delivery. So on to Rotokawa. Rotokawa is a strong complement to that story. Again, on this slide, I'll cover reservoir capacity, and then I'll dive into the project. The Rotokawa is the hottest geothermal field in New Zealand, which gives a really attractive characteristics. It's also the location of our largest geothermal power station, which is Naapu, and that's jointly owned by Mercury and Tauhara North No.2 Trust. A well from our recent drilling campaign has confirmed reservoir temperatures in a new zone of the field that are above 340 degrees. That's really exciting and reinforces the potential on the field for future development. The field is currently generating about 175 megawatts, and we think it's got potential over time to grow that to 220 to 300 megawatts. We've identified the first project, which is in the order of 50 megs, and we're planning to drill one appraisal well here to prove additional capacity for this project and future projects. So what's really important is that as part of our platform, we're going to progress Nga Tamariki and Rotokawa in parallel, and that gives us scale and diversity options. We're doing this on reservoirs that we've got decades of data, and we've got a team that's operated these fields for years. So we're leveraging what we know on what we've already built. So on to drilling. This is a wider -- this is a view of our wider drilling program and our overall approach. To unlock these opportunities I've just been talking about, we're going to invest, but in a very targeted way. We've committed $75 million of growth capital to appraisal drilling, and we intend to do that across FY '27 and '28. The goal of that program is to prove up 150 megawatts of new reservoir capacity based on our brownfield data-driven expertise. These appraisal wells will be designed to be suitable for future production and can form part of the projects that I've just mentioned. We've designed the appraisal program, as Stew mentioned, to be really high confidence. We're targeting wells and zones adjacent to own production, and we're going to take advantage of our comprehensive data sets and technical expertise. The program will reduce uncertainty for us. It will manage our risk profile, and it will create value by converting reservoir potential into investable projects. Looking a bit broader, we do -- our forward drilling program does envisage that future rounds of appraisal drilling will occur based on disciplined investment criteria. And that will sit alongside periods of replacement makeup well drilling. We've also got the government-funded superhot exploration well being drilled at Rotokawa in the next few years. This project has been run by MB. It's been supported by Mercury and Tahara North No.2 Trust and the wider geothermal sector, in fact, global geothermal sector. In the next slide, I'll talk a bit about how we see Superhot fitting into the long-term horizon for us. But what's important is the benefits of this wider drilling activity is that it provides scale. It provides stability of supply chain, which is really important for us, and it provides opportunities to continue to improve execution and delivery of drilling, which is a key aspect of our core business. Finally, all of this isn't possible without the bench strength of our Mercury team, many of who are here today. And as Matt said, we've got core capability in this space. We've got a really strong supply chain, and that allows us to deliver these complex drilling programs. So looking over the horizon, technology is a really important part of our geothermal platform story. The graphic on this slide describes the different types of next-generation geothermal systems that are currently being tested around the world. And for comparison, it compares them to our conventional hydrothermal operations. Mercury is well connected to that global geothermal industry, and we see long-term potential in these technologies. In the near term, we're focused on conventional geothermal because it's proven, it's reliable. We understand the economics of it. But at the same time, we're positioning for next-generation technologies, in particular, super hot and enhanced geothermal systems. We think these could materially expand the resource base over time. But we're also realistic. These technologies are still early stage, and they have -- and they're not yet commercially proven. But we do see them as a credible long-term option within our portfolio. And we are an early mover in this space. The Super Hot project at Rotokawa is a great example. We don't see commercial value in the near term, but we believe the advancements that will come in science and technology from this project could create new development opportunities in the long term. We're really lucky to have Robert Rankin here today, who is the Project Director for Superhot, and he's been seconded from Mercury to lead the project for the government. I urge you to go and have a chat with Rob afterwards. It's a really fascinating project. So in summary, our platform approach for technology is to stay close to the global geothermal trends through our partners and actively test these technologies while we build our capability, and that will position us and our platform to capture any upside in the future. So to pull it all together, we've got a really exciting material incredible geothermal pipeline centered around our 5 terawatt hour opportunity. We've worked really hard to develop this 1 terawatt of new projects that are now entering feasibility. And we have committed and we're preparing for the $75 million appraisal drilling program. We think that will occur in the next 12 to 18 months. And we're targeting first generation in 2030. So in summary, we've got a really strong platform for growth and a really clear pathway to commercialization. Thanks.

So happy to take questions for Matt and myself.

Appreciate the presentation. Just on the LRMC of -- sorry, just on the notes. OEC5 versus, I suppose, the new brownfield, there's quite a big difference, 82 up to 110. Could you sort of break down where the differences have increased so much? I appreciate there's been a lot of construction inflation.

Yes. I think probably just as a start, there's probably a little bit of a timing phasing thing on those 2 numbers. So OEC5 was committed to a few years ago, as you know. I think OEC5 benefited from some previous investment on the first OEC 1, 4 unit, so the development of the first phase. I think we're still learning around the next phase of brownfield geothermal. So we're sort of showing LRMC at Auckland of around 110 plus or minus. There's still a lot of work to go for us to understand the true economics of each of those opportunities. But obviously, there's value of 110, and we think that's a credible LRMC position now. And as I said, as we develop, we'll learn more and more about each of those opportunities. We definitely see brownfield in the current market as being more valuable, higher confidence projects than greenfield. But again, that's what we'll be learning over the next few years.

Okay. So perhaps some conservatism there. But I suppose on the next stage of the greenfield, I can understand why brownfield is going to be more attractive, but greenfield AMC is going to be well north of that potentially. I suppose where current wholesale prices are, it might be difficult for those to stack up a bit of a crystal ball of 5 years in the future plus 10 years of what price will be. But yes, it kind of feels a bit tougher further out.

Yes. I think you're probably articulating why our strategy is focused on brownfield conventional growth from the inside out to start pursuing higher confidence, highest value projects. I think greenfield development has got its own unique challenges. And I guess that's the work we have ahead of us over the next few years. But certainly, we've got plenty of brownfield conventional growth ahead of us. There's plenty of scope for significant growth in that space. And our greenfield position will be explore and learn disciplined capital allocation across those projects. So watch the space.

Just staying on NRMC. So your first terawatt hour at $7.25 per megawatt of capital cost at the midpoint. That's around about $95 per megawatt hour of LRMC. Does that sound about right? And is the first 2.5 terawatt hours, including that 1 terawatt hour, going to be in a similar sort of range?

I think we've done some early phase modeling on both of those projects to support the drilling investment. I'll say that. I think we're finding that, that range around 110 plus or minus, Grant, is sort of testing out across those 2 opportunities. Again, it's early phase, but we have developed the economic models for both of those opportunities. I think 95 LRMC may be a stretch. I'd love to have projects at that. But again, that's the optimizing that we'll be doing over the next couple of years to understand through value.

And I just -- can I just add to that, that 2.5 under active development, how we are looking at modular development of that volume, and that might allow us to optimize $1 million per megawatt over time, but we're still doing that work now.

Okay. And then you've got 1 terawatt hour in some of those slides up to 2035. But if you put this 2.5 terawatt hours you're developing and you've got 1,000 megawatts starting up by 2030 anyway, why have you not put the other 1.5 in your 2035?

So the way we're looking at these opportunities across brownfield is that there are different risk profiles as we explore different zones of the reservoirs. What we're keen to do is to get these core high confidence projects going and look for upside as we go through the design phase.

So you haven't reversed that maybe an update in time.

Yes, it's more horizon thinking, I think, Grant. So focused on this terawatt hours as Horizon 1 to 2030, thinking about the whole opportunity set across wind and geo, looking at potential demand curve growth and what potential demand might be and maintaining that optionality and flexibility to build when we've got clear line of sight on value.

A couple of questions from me. First one is just around -- can you give us an update on transmission capacity in the region with this plus given what Contact is doing, is there sufficient capacity at the moment to develop all of this by 2030 or in the early 2030 be more put in by Trustpower?

Yes. Maybe I'll talk generically and you can talk to the specific projects. So I mean grid connection and grid capacity is obviously a huge consideration across everyone's growth platforms, certainly is ours. We -- as you'll know, and Stew has the slide in front, Trustpower have a huge investment program. I think there's a phasing and sequencing thing that we're all watching closely to understand which projects are going to make sense around that grid connection and grid capacity. So it's certainly something that the industry is leaning into. It's something that we're watching at a macro level. It's also something that we're trying to gain deep understanding really early in our project life cycles around that grid connection. So it's certainly a key consideration. I think we're experiencing some challenges with more inverter-based generation. And so baseload power, I think, will play an important role in finding a position in terms of grid connection capacity that perhaps inverter-based technology, solar and wind are finding a little bit more challenging. But I'll let Ben talk to specifically around that top of volcanic zone and connection of the projects.

Sort of behind the meter from Nga Tamariki into Rotokawa, there's no issues there. We see in the short term or short to medium term that we'll be able to get these projects out the gate. Longer term, we do see probably the need for more investment in the region.

Okay. And the second question, you talked about modular development. So I'm assuming you're looking more at a continuation of technology through...

It's a really interesting time in the geo sector. There is a lot of different technology options coming to market. We are considering everything. And we are keen to get best value, best price where we can. And so at the moment, there's no particular technology preference.

I think maybe just linking that back to the GenDev platform. We are finding a reasonable amount of benefit in playing widely in terms of supply chain, staying competitive, encouraging, supporting new entrants to the market as well. And so I think we'll take a similar approach to Geo, which is go wide on market, go out and find good partners and see competition and value.

Just a question on phasing. You've just wrapped up OEC5. If you're looking at potentially having go on these projects in late calendar year '28, that's a 2.5-year gap. Is it an issue at all just in terms of perhaps a lack of need for the delivery team on these projects for 2.5 years between projects?

Yes. So that's a good question. We've got -- the drilling team very focused on this next appraisal program. The team that helped deliver OEC 5 are actually coming further upstream to work on these -- on the feasibility phases. So the whole team is remaining in-house, which is fantastic for us. They'll also get early ownership of these new projects. We're balancing pace versus demand, but there's plenty of work for the team to do.

Two for me. Just one, I guess you've known the sort of the existing fields very well, operating for quite some time. I'm just interested what's changed in the last sort of 11, 12 months to sort of unlock the potential for that sort of first 2.5 terawatt hours from those existing fields?

Yes. Look, I'd probably go back a bit further than that. When we committed to the 8-well drilling program, we had our eye on learning about other parts of the field back then, and that was sort of 4, 5 -- 4 years ago now. And so as we went through that drilling program, and we also had some additional changes happen on the field with shifting production and injection around, we've learned about resource capacity. And the amazing thing about these fields are they are very dynamic. You do learn the longer you operate.

Great. Second question is in your sort of cost range there, $6.5 million, $8 million per megawatt, what determines whether you're at the upper or lower end of the range? Is that to do with Ormat or a new competitor -- or is that more to do with steam field design? Kind of what takes you to the bottom or upper end of that range?

Yes. So key drivers, obviously, plant cost is a big one. And because of we're entering feasibility now, we're keeping that pretty wide. And then the other big driver is wells and well capacity. And we're taking a conservative approach to that at this point in time until we actually get a hole in the ground.

I guess the third might be scale to what scale we're building at if we're building at 25 versus 75, there's scale benefits as well.

Just a couple from me. Just your land interest, can you talk about exactly what they are?

Yes. So Mercury has a wide range of different types of land interests across our -- the geothermal reservoirs where we operate. Those include things like freehold land, a large amount of long-term leases as well as options, further development options on land parcels.

And maybe just to add, I guess, in terms of the value that we've got this enormous landholding, right? I think we're operating on probably 10% of it now, something like that. Really, it's back to that value of optionality. So that large landholding positions us for now, but it also gives us some optionality around what may play out through Horizons 2, Horizon 3, the evolution of these new technologies, the commercialization. So really, it's another example of being in this really unique position around optionality and scale.

Okay. A couple more. Just on the OEM options that you're exploring. What are you seeing there in terms of credible competitors to the dominant player in the binary space?

Yes. In the binary space, was that the question? Yes. So we've seen at least 3 different ORC developers with projects online in the last 4 years and some pretty big commitments or commitments to build new technology in the last 12 months. And so we're monitoring those very closely.

With a couple more. You touched on data centers. Everybody is -- I think is still kind of talking about data centers around the world. Are you getting inbound interest right now ahead of this prospective development? And can you kind of size up what sort of resource they're looking for?

Yes. It's a great question. Certainly, a core pillar of our strategy is supporting and enabling demand growth, are very conscious of the prospective role that data centers may have in that demand growth. And I think some of our more optimistic demand growth scenarios probably don't quite estimate the potential opportunity in data centers. We -- as Steve mentioned, we were just in the states. We're supposed to be in Iceland in the States, but we ended up in San Francisco, and we connected with AI players, data center players and geothermal. And the link between firm baseload, low carbon geothermal and AI and data centers was just -- we didn't quite expect the strength of that link from both parties. I would say the industry is kind of mobilizing itself into an international conversation about how we might attract some of that demand to New Zealand. I would also say, in the meantime, in the process of us organizing this international conversation, that conversation has turned up in our doorstep. So there's certainly a lot of conversations happening in New Zealand now that maybe weren't happening 12 or 18 months ago. Obviously, there's DataGrid, which we're really proud to have signed that agreement with DataGrid. I think there's a lot of prospects in this space. Can we scale it? I think we're probably all in the same place of seeing that there's a lot of interest and trying to understand for us what it might mean. I guess in terms of gene strategy, our approach is to build a portfolio of executable options aligned to a really high demand growth scenario and allow us to play across all those demand growth scenarios. So that's probably mostly how we're thinking about it. I might just ask Tim has been at the center of demand data center growth, but whether you want to add anything in.

I think you covered it off quite well. We probably have a chat up decision.

He can give you...

Sorry, I'm hogging last one. It sounds like you may have seen firsthand some of the EGF technology that's going on about the world. The Sage one looks particularly interesting, simply for long-duration storage. Can you give us some idea about exactly when that may be able to be commercialized?

Yes. Good question. So for those people that don't know, Sage is offering a form of advanced geothermal. It's almost like a pressurized reservoir pressurized system that could be a medium-term storage usage. We have connections with them and with the two of their development partners, Ormat and [ Schlumberger ]. Their pilot is in the next 24 months or so. It's an interesting technology, and we're staying close to it.

Just on -- you've got it up on the slide there, the $75 million on appraisal drilling in FY '27 and '28. There's an outcome you'll be hoping for, but can you give us a sense of the downside risk if the appraisal isn't what you hope for or perhaps the range of possible outcomes?

Yes. We've designed some contingency into that $75 million . The well targeting is focused on that 150 megawatts of new capacity, but there's also potential to sidetrack these wells and make them useful for current production and current assets. So we're trying to derisk that as much as possible.

Yes. And I think some reported here and it's been the conversation about that business case effectively outlined a number of success cases. So as Ben said, we think we've got a program that's inside out our confidence with multiple success cases, but we're hoping for the big price.

And it's important to note that's across two reservoirs and effectively 3 different reservoir zones.

Good. If that's all for questions, we will keep going. I'd like to welcome Mana Newton up to the stage. Mana is the Group Chief Executive of Tauhara North No.2 Trust.

[Foreign Language] My name is Mana Newton, and I'm the Group CEO for Tauhara North No.2 Trust, which is a Trust, which is one of those earlier maps right between the Taupo and Rotorua area. And so a lot of you might know that area as a Sam cane country where Sam is from. But before Sam cane was there, GSM has always been there, and we've been there as well. And so it's good to be able to come and call it all to you guys after all of the questions because there's obviously no more left for me. So that's a great timing. I just wanted to talk a little bit about what Stew referred to in the beginning around the formula for success, which is just as important, if not more than the pipeline that we have because I believe that the relationship that we have as Tauhara North No.2 Trust and [indiscernible] Trust or a Faro trust from our region actually demonstrates that example of a formula for success. A lot of those areas that were shown on the map of potential exploration is our backyard, and we have a very long story and connection to that backyard. I'm not going to share the long story version with you because I know everybody wants to get on to lunch at some stage, but I do want to indulge with you guys a little bit about the story of our connection and to why it's so important around partnership and moving forward. And so for us, we're from an [indiscernible] Which is right in that area, and our connection goes back all the way to 1250 AD when our first ancestor, Tahu Matua came to our region. I want to -- we went through a journey of connection to geothermal as part of that journey as well, we were also disconnected and we had different experiences with geothermal. Some of them not so great and then some of them actually disconnected us from our lands and from our resources. As an [indiscernible] Group, we've had a long history of deep connection not only to our reservoir, but to our lands, our resources and to the people that are from that area. When we came into existence as a trust by around the early 1990s, we started a relationship where we started to go out and look for potential partners. And a key to looking for potential partners was that it had to be built on the concept of trust. We had to be able to find a partner that could understand our place, understand our resources, understand our people and not develop at us but develop alongside and with us. And I think a lot of that is the formula for success that Stew referred to earlier today. Based on that platform, we are able to build a relationship and a partnership that saw us participate. And as Ben mentioned before, not only as just a sign-off on consent, but a true equity partner, which is the highest Echelon partnership that we can have in a business relationship, and that's part of our key journey as well. From there and from our partnership, we were able to develop the power stations that we have today. But we're able to also develop that on into the operational, the way that we look at our geothermal power station and the way that we look at our resource. It's good to have a partner that cares just as much about the resources as what we do. We're the center of the things that we discuss and all of our joint venture relationships and agreements, the environment is at the core of our discussions and not just a side note is something that we talk about, but it's actually at the main decision point. Not only is it good economically, but it's also good for the environment, good for our community and good for our people, and it's a model that we can get behind and support. That concept of Kaitiakitanga, that concept of stewardship and that formula for success for development doesn't stop at development. It carries on all the way through to operations. And I believe the partnership that we have between Tauhara North and Mercury is a demonstration of that operational partnership that focuses on stewardship. For us, through that partnership, we've been able to establish multiple opportunities for Alfaro to participate not only in the development, but also see themselves in the benefits of the partnership that we have. As I said earlier, we've had a long history with geothermal. Some of those developments that happened at us and not with us were not necessarily great developments for us as a people. So when our people agreed to come under this partnership, they needed to see something where they saw themselves benefiting from the journey of the geothermal development. We're not talking about Ivory towers here or glass houses where people can't see themselves as part of the development. They needed to see themselves inside of it. So that allowed us as a trust to be able to create a framework that allowed us to have Alfano participate in distribution. Now we have education programs. We have opportunities around health, housing, land type strategies. There was a question earlier around the succession of workforce. We hope to be the answer of that succession to workforce by allowing our children out on Nga Tamariki to be able to participate in what the next journey of this development looks like. One of the key things about the development that we've participated in or we've been part of is the pace of play. So this relationship that we're talking about, it didn't start today. It didn't start 5 years ago. For us, our relationship with geothermal started 800 years ago, and our relationship with Mercury started about 30 years ago. So around 1995, 1997, that's when we started to get into the first developments. And each of the developments have a duality to them. As we develop for production, that is the exploration of the next megawatts that we're looking at together. And so much of this expansion of where we're coming to now and the opportunity to develop fast within the space comes from the fact that we've had this 30-year relationship that not only developed, produced, but also explored the opportunities for the next areas. We know what good stewardship looks like. We know what kaitiaki looks like and the ability to move fast at this place is because of the partnership that we've formed that focuses on kaitiaki of the environment. No Manawa group will be comfortable about pace of play of the next level of development that's required to meet AI and decarbonization if they were not inside the journey and just standing on the outside. And I think that's one of the key points to the relationship that we have as Tauhara North No.2 Trust and as Mercury. It doesn't mean we hold hands and we skip around the campfire. We hold each other accountable to what's important to each of us. And I think throughout that 30-year relationship, one of the key steps is that we respect that we have different perspectives and each perspective is important to the journey. We are excited about what the next development looks like. We are excited about the potential to learn more about the Matoanga or the knowledge that sits with inside our reservoirs, and we're excited about the partnership that we have with Mercury and where this could go into the future. [Foreign Language]

Okay. Well, good morning, everyone. We're now starting to head into the wrap-up of the presentations. So look, it's been great to hear from Mana, from Stew, from Matt and from Ben. And I think what's coming through clearly is that we're in a really good place now. A year ago at Investor Day, we stood in front of you, and we talked about the up to 5 terawatt hours of geothermal potential. I remember Grant sticking his hand up into the presentation. He said he thought he was more excited about the potential of geothermal than management was. And in a way, that was right. The opportunity was there, and we knew it was there. But at that point, we were deliberately measured. We're not going to get ahead of ourselves. and before the work had really been done. And what has changed over the last year is the opportunity has become much more tangible. We've now have bought back drilling around 1 terawatt hour entering feasibility, but we're staying conservative. You've already picked up there's 2.5 terawatt hours of brownfield potential. We're not talking about all of that. We're doing the first piece of this is $75 million of drilling with the 1 terawatt hour entering feasibility. So I think the -- there's more to come, but we're going to pace our conversations with you over time. So look, I'm really excited about where this is and what the future could hold. But I'm not here to hype it. What I'm here to do over the next couple of slides is run through how we're going to take a measured approach to this over the next few years. So the first thing to say is, look, geothermal still has to compete for capital like every other opportunity in the portfolio. So look, we assess this through four lenses: value, timing, risk and funding. The first one is about value. So we're backing value-accretive growth, not megawatt growth for its own sake. And we've got a pipeline of 30 to 75 megawatt executable options, which gives us repeatable conventional geothermal pathway over time. And with 1 terawatt hour now entering feasibility, the scale is meaningful. We're looking at $800 million to $1 billion of future investments on current assumptions. So the bar on value and the bar on capital discipline is high. Second is timing. And one of the real risks, which is coming out through all of the conversations we're having with investors and analysts is the risk of overbuild, getting supply ahead of demand and giving value away. And we're very mindful of that. What gives us confidence is that Mercury has got proven resources, repeatable options and the ability to stage gate development as demand becomes real. So the advantage is not the scale of the opportunity, it's the opportunity to time the developments with discipline rather than building ahead of the market. And that's what you're going to see us doing. You've seen that approach and what we've been doing in wind with the PPAs, and that has served us really well, balancing portfolio needs with contracting where we need to. We see geothermal as in a similar way. Long-term contracting can help underpin timing and protect value while still giving us flexibility to stage capital as demand becomes clearer. It's too early to get into detail on that point, but you know us, we're going to act responsibly with our shareholders' value and the capital. And with a stronger team and great portfolio options and disciplined governance, we'll make sure that we're positioned to progress the right opportunities at the right time. Third point is risk and how we're thinking about that. We're building confidence in stages before major capital is committed. And you can now see with a $75 million investment, we're confident to move forward. The projects then move through clear technical, commercial and investment gates. And the Board-approved program is a great example of that. We expect that to be NPV positive. We've done the analysis. We look at the probabilities of producing -- of getting to a well that will be a production well. And looking across the 3 wells, we think we're in really good shape for that. So that gives us confidence that we are drilling in the right way and the likelihood of this becoming an operating cost is low if we don't see anything significant. And then the fourth part of this is our balance sheet strength and funding. What we're going to be doing is disciplined growth funding all on balance sheet. We've got clear balance sheet guardrails, which is supported by the balance sheet strength that we have. We have committed $75 million to the appraisal drilling across FY '27 and FY '28. And on our current planned leverage continues to peak around 2.6x before declining. So the key point is simple. This is not growth for growth's sake. It's responsible capital deployment behind a platform Mercury is well placed to execute. So then the next question is, look, why does this matter for shareholders? For us, it comes down to resilient earnings, better growth visibility, balance sheet resilience and long-term upside. So first, quality of earnings. Firm renewable generation is easy to talk about, but hard to deliver, but Mercury can do this. Geothermal adds renewable baseload and 24/7 firm supply that is not weather dependent. And over time, that should support durable earnings. One of the key points that Stew mentioned earlier on is actually the portfolio that we're building for the future, having 1/3 in hydro, 1/3 in geothermal and 1/3 in wind, and that's really important going forward. We're no longer a hydro company. The second is growth visibility. The appraisal drilling, the consent progression and development milestones reduce uncertainty before major capital is committed. Growing demand from major energy users improves confidence, and we're having lots of conversations just like Matt and Tim touched on. But geothermal is not just more generation. It's affordable, it's reliable and renewable energy that supports long-term contracting and is the type of power that New Zealand needs. Third is balance sheet resilience. Growth is going to be pursued with clear financial guardrails and the significant investments that we're looking at ahead is going to be accommodated while continuing to support our progressive dividend policy. And fourth, long-term upside. Macquarie's geothermal footprint is an opportunity that's unmatched in New Zealand. We're already progressing around the 1 terawatt hour of conventional geothermal opportunities, and they're now entering feasibility. We've got up to 5 terawatt hours across -- identified across the horizons. And the next-generation options mean that the geothermal resources that we have access to are just so exciting in the long term. So when we step back, this is much more than just adding new generation. It's about Mercury combining 2 winning renewable platforms, wind and geothermal to build a more resilient portfolio, stronger earnings quality and disciplined long-term growth. Wind gives us scale and flexibility. Geothermal gives us firm renewable baseload and durability. Together, they leave us better positioned to meet demand as it emerges and create value under a wide range of market conditions. So to me, this is becoming real. Geothermal capital is now being committed in a disciplined way behind what we believe is the right technology mix for New Zealand's future. And with geothermal able to deliver firm renewable baseload at around 110 megawatts per hour at Auckland, that's the right thing to be looking at now. And whatever demand does from here, Mercury is going to be well positioned to capitalize on that because we've got the portfolio and we've got the platforms to do it. So with that, I'm going to hand back to Stew and then we can -- for the close, then we can open up for some Q&A.

Thanks, Richard. It's my chance to wrap this up. So as we've mentioned today, geothermal growth really strengthens Mercury's value and how we deliver that. Mercury is building credible long-term platform for firm renewable growth. It's supported by our operational capability, our partnerships and our disciplined approach to execution. We have a leading platform with 5 terawatt hours of options in the geothermal space, 2.5 terawatt hours under active development and 1 terawatt hour of projects now entering into feasibility. These consist of 2 near-term projects at both Nga Tamariki and Rotokawa. They're targeting production firstly by 2030. We have proven capabilities in operations and development with expertise across the value chain, and we'll take a staged approach with balance sheets being carefully managed. We believe that geothermal will play a crucial and increasingly important role in New Zealand's energy transition. It will support long duration electricity demand growth. Mercury's future is very, very bright, and our geothermal platform is super exciting. I'm committed to delivering geothermal growth for Mercury for the long-term value of our shareholders and for New Zealand. This is Mercury at its very, very best. We've got firm renewables, disciplined growth, trusted partnerships, and it really gives us the confidence to lead New Zealand's geothermal future. Thanks for joining us today. Richard, I think, and myself will take some questions now, and then we'll be really excited to share the Mercury capability as we move through the various stations. So we'll take some questions now. Although hopefully, Matt and Ben have already answered most of them for you.

One for you. Okay. Richard, that 2.6x peaking of your debt to EBITDA, does that take into account the $1 billion spend on geothermal and it's just peaking because it hasn't shown up in the earnings yet?

So the 2.6 is really -- we've got an overall investment portfolio to deliver the 3.5 by 2030. And so the question is which ones of these go first? If geothermal takes a bit longer, we can produce more wind. But ultimately, the peak was going to be tied to how much we have to deliver on what the demand is. So that the first project here will compete with wind, and that's why we stay within 2.6x.

Okay. So it's the back end of the -- that you're seeing it peak at 2.6. And the second question is you mentioned a few times, and it might just be a throwaway comment that you now 1/3 hydro, 1/3 geothermal and 1/3 intermittent. Is that something to do with what you think is optimal for your hedge book? Or is that just a throwaway comment?

No, I think when we talk to investors, there's a lot of discussion just about hydro risk. So it's not just a throwaway comment. I think the hydro risk is that, it's real. But actually, as we move into the future, we've actually -- it's not -- we're not hydro and a bit of hydro and a bit of a little bit of geo. We've got a wider portfolio. I think the third, is a really valuable portfolio for the future. Having the baseload is really important, which is what geothermal brings. Having the diversified wind across the country is really important -- and actually, the hydro and the flexibility that, that has for the peaking and the intermittent is really important. So they've all got a really nice place to play. When I talk to Tim, he's got a dream portfolio really. So that's how we see it. It's very deliberate what we're doing here. But it's important to say that 1/3 of that mix is there and that's going to deliver, we believe, a lot of value.

So does that preclude you building out a full 5 terawatt hours of geothermal it goes beyond 1/3?

Look, the amount of geothermal we build is going to be really focused on the amount of demand that Zealand, that's what the valley is about. Look, I would love to build some more geothermal. I'd love to build some more wind, but we're not going to do it before the demand arrives. So we'll see what shape that looks like. And that comes down to the type of industry that's attracted to New Zealand. If it's data centers, we're going to be building as much geothermal as we can. If there's other stuff that's a bit more peaky, we'll see. But you look at the major energy users and they want this geothermal stuff. So I think that's a bright part to play the future. And also, Matt sort of touched on grid stability as well, actually having these things there is really future.

Yes. And the key thing also is to make sure it is firm. So you see on that chart where on the right-hand side, we had battery shaft as well. And so that is really a portfolio connection. So wholesale team under the leadership of Tim, really making sure that the whole of our portfolio is very well matched to whatever customer base we have. So the customer base might actually determine some of that makeup of the various stacks of our geothermal, wind, hydro and battery portfolio.

Sorry, just to make sure I heard correctly. So the 2030 targets you issued $1.15 billion to $1.25 billion at your Investor Day, it always felt like to get to the top end of that, you need what looked like Waikokowai wind to come online. Are you saying that these projects they're about the same generation volume, about the same CapEx, give or take. Are you saying that they may potentially replace Waikokowai as a method to get to the top of that range?

No. Certainly, we still -- to get to that 1.15 to 1.25, we've got our plan of 3.5 terawatt hour of development. And that 3.5 terawatt hour is focused on the 1 terawatt hour that we've already got in construction and actually producing at the moment. Two more significant wind projects, of which Waikokowai and what used to be called Mahararanga, but Puke Kapo Hau is the next part. And then geothermal starts toponden that as well and also some selective solar. So the aim is still to hit the 3.5 terawatt hour by 2030, and that's where the EBITDA sort of forecast comes from.

Richard, you had in your slides there, and you say to this audience, that you won't be building ahead of the demand curve. But if Shane Jones was in this room, perhaps that comment wouldn't be in the slide deck, and there are a lot of New Zealanders and New Zealand households that want you to build ahead of the curve. How do you sort of balance those 2 competing interests?

Yes. I guess, my view is I don't see them as being competing. When we look at all of the projects that we're looking at, we have electricity prices coming down. The range for electricity prices that we're talking about hasn't changed, so coming down back towards that LMC that we've been talking about. So look, we're going to be building through. But when you're putting big lits of capital the time. We've got a clear choice. Is it just going into the market as a whole or are we contracting? And we'll see what demand is out there at the time. If the economics work, we'll build the plans with or without a PPA -- preferences sites of CFO bias like PPAs for sort of 25 years and guarantee a great sort of return on capital. So we're just going to get all of these up to the sort of fit starting blocks effectively, have some really great discussions with the Board. And every time one is ready to go, we'll have that discussion and decide what's going on, but also taking a whole of market view as well. It's not just what we're doing, it's what the other the other and other independents are building as well. So we'll keep on doing that. The thing that we think we've got the right technologies, and we think we've got the best projects. So we think we're in great shape for whatever comes through.

Yes. Just one more, please. Just I suppose we're coming potentially into the back half of the year post your results, election campaign coming up as well. There's been a few ideas floated out there, structural separation being one of them. Do you think you're going to have to do a bit more of a defense campaign on whether that and perhaps some other more radical ideas are not a good idea?

So I guess where these ideas are coming from is a very similar place to where we come from, and that is that we're ultimately shooting to have affordable electricity for New Zealand. And so that's the first thing to recognize that everyone wants that to be the goal. And actually, if you look at over the last 12 months, I mean, the 3-year forward price on the ASX has moved from $180 per megawatt hour. Now it's close to $130 per megawatt hour. If you pull that forward today's dollars, it's in the 120s, which is actually very, very reasonable in terms of long-run marginal cost. So I'd say, firstly, the work that we've been doing as an industry, building significantly, working on firming options such as the Huntly firming option and other things like geothermal production really is leading to the reduction in the risk premium in the future. and also leading to the prices coming down. And I think that's really what's being asked from all of these potential ideas. What we typically do in our engagement with various parties and stakeholders when people propose different sort of solutions, you really have that discussion around are those solutions really going to target the problem. And I'd argue that the work we've been doing has been pretty significant. There's much more work for us to do. And what we really argue when we're talking to different stakeholders is make sure that what we're doing is actually going to contribute to bringing that price down. So that's sort of discussion we have. It's really hard for us to stand up and say everything is sweet, just leave us alone because clearly, there is more that needs to be done around affordability. And so we enter into those conversations with a pretty open mind to try and explore the options. We'll advocate for what we think the best thing to do is, but also open to other options. Best thing for us to do to make sure we're building these options, working with customers, especially those that are most vulnerable that cannot afford or have issues with electricity prices, and we do that pretty strongly with a number of people in here. So we keep having those discussions. We'll keep on having them as we get towards election. Best thing for us to do in the meantime is to keep putting our money where our mouth is and keep building these sorts of projects.

Just firstly, two questions. Firstly, just a clarification on Josh. So you're not saying you incrementally build the 1 terawatt hour on top of the I think last year, you had sort of 250-odd gigawatt hours as part of 3.5 back until 2030. Like can we just get some color on what gets you to the 4.3, I suppose, blue sky, if you want to call it, adding the incremental [ 750 ] announced today, like...

4.3.

If you add the sort of difference in sort of 1 terawatt hour versus the 250 as part of the building blocks, is it just demand driving that sort of upside scenario? Like how do we think about the building blocks to sort of 3.5 now?

Yes. So the main thing for us is we've got options to get to that 3.5. That's probably the key thing. So we've got two -- actually a couple of very strong wind prospects in the pipeline, Mahararanga 2, Waikokowai and Puatoi. There was a small portion of geothermal at 3.5. What we're doing now is showing what that looks like. We're certainly looking for the first production before 2030. But ultimately, that 1 terawatt hour will be -- it will take a couple of years to build. So once you get that production happening, it's probably not all going to be before 2030.

Yes. And I think that's the key thing, is this is just spanning that 2030 to sort of 2031, '32 period. So it would be lovely if financial year is lined up perfectly with building things, but it doesn't. But what this is saying is we're even more comfortable than 3.5 by 2030. And there's more to come if the demand side, we're going to be ready to go with the next expiry shortly afterwards. So it's 3.5 plus.

Yes. So faster run rate, faster at one point... The second question is on battery market. I know you've got 200 megawatts in best. That sort of your peers are really ramping up still. Can you give us some context in terms of what you see the size of the market in 2030, 2035? And also secondarily, like does that sort of eat your lunch a little bit in terms of GWAP, TWAP out of the Waikato?

I might touch on the first question and maybe Richard or Tim because it was So certainly, we have 300 megawatts of batteries will be consented at Puaumaru. And primarily, the work we're looking at the moment is when does that make sense for Mercury. We believe that the arbitrage value is pretty low in terms of how it shows up. And so the most valuable way for batteries to show up for Mercury is in our portfolio and firming the intermittency of wind, for example. So for us, our decision around when we put the battery in our portfolio is really linked to our portfolio, and that's where it shows up in sort of 2028, 2029 period. From a GWAP to I'll hand it to Tim for that...

I'll see how much you're going to get. Yes. So we talked about this at the Investor Day last year. So we definitely view batteries as part of our portfolio approach. So Stew talked about that. And more specifically, there to supplement the hydro flexibility. So our constraints are going to emerge as capacity -- short-term capacity issues and batteries for that get quite well. So yes, I think we're going to chat about this again after this. But yes, I would refer you back to last year and how we talked about that. But yes...

And the [indiscernible]

Yes. So batteries will have an impact on that. But again, the market is growing in terms of the amount of intermittent renewables coming into the sector and that opportunity is going to grow. So again, we talked a little bit about that last Investor Day, but we definitely see GWAP for flexible assets like our hydros increasing into the future.

Yes. And so just to finish off, I think the big thing for me is when we're looking at batteries a year ago, the economics weren't quite stacking up for us and our portfolio. It's now getting much closer than it was. It's still not quite that, but it's not far away. We can see the prices and technologies around batteries continuing to change. I've been -- as people ask me about batteries, one thing about batteries is going to be much better than anything that else that's been built before you and probably a bit more expensive than anything that's built after you. But we're starting to move towards the zone where it's getting interesting for us to have a battery for our portfolio, NPV positive for us to have a battery in our portfolio. And yes, look, let's see how things develop, but you can certainly see us having one in the portfolio before 2030.

Yes. Just a quick one for me, just on risk. I think the OEC5 project was a turnkey solution. What's your appetite for EPC risk from here? And you're obviously seeing globally EPC contractors and OEMs kind of seeking out more equity in projects. So just interested in what your view is on future partnerships with those two sectors?

Yes. I think certainly, in the wind space, just maybe sort of take a holistic view, we're really convinced around the split contract delivery model. The OEMs, we're not -- we're sort of thinking that they're not going to be able to perform that for RA EPC as well as we can integrate amongst those specialist contracts. And I mean that's heavily reliant on a high level of capability and commerciality within our teams, which we have. I think in the Geospace and OEC5, it was actually a split contract around the station and the transmission work. So there were 2 large contracts on that. And I think -- we have a piece of work to do around the geothermal supply chain and think about what these other market participants might be. And we're not -- across the whole platform, we don't have close ideas about EPC versus other delivery models, but we'll just be taking those conversations around those delivery strategies around what the opportunity is, what the supply chain looks like and what they're up for and what we think is an appropriate you mentioned risk, allocation of risk. And so I think, again, that's part of the discovery will be going around how we widen this geothermal supply chain. And part of that will be thinking about these delivery models, what makes sense for us and what makes sense for our partners as well.

So I think that covers it really well. I think we're actually in really great shape to try to choose where we want to sit on the contracting for the projects. We've got lots of good experience. If we see someone coming in and pricing it really cheaply on a fixed price, we will be quite happy to take that. But we'll keep on looking at the risk profile that we are and the technologies that we're building and what makes most sense for value.

Two for me. The first one, it is very clear how important the partnership model is for delivery. In the past, obviously, we've seen you have varying sort of equity shares, if you like, of the generation that's the result of the new stations. What proportion of that sort of 1 terawatt hour, for example, should we think is your equity share? And how does that -- is it the equity share you're counting in your targets or the total generation of the plant?

Yes. So at the moment, the 1 terawatt hour that's at Nga Tamariki and both Tamariki North Rotokawa is 100% Mercury equity share at present. There's clearly a connection with Tahara North on the 2 trust. There is potential for Tauhara North to buy in equity at fair value. But at the moment, that 1 terawatt hour is 100%.

And the second question is a generic question to ask, but always worth following up on. Sort of roughly, how should we think about the stay-in business CapEx profile for the geothermal side of the business going forward with -- obviously with completing OEC5.

Yes. So we sort of continue to guide on the $150 million per year on average over time. CapEx geothermal baked into. You sort of seen what we've done in terms of hydro in recent times. So that's now baked in. It is important that that's within -- as an average. It's pretty hard to lend these things on the nose year after year, particularly with the varying projects that we'll go through. So you might see a few years a little bit higher, a few years a little bit lower. But yes, all of this still fits within that 150...

The bulk of business CapEx from a geothermal perspective is in makeup wells and the makeup Wes requirement is included in our stay-in business CapEx expectation that we've delivered previously.

Yes. And fundamentally, the good discussion we have with the Board and see Hannah here as well is about risk. And actually, we're not just going to blindly say, well, it's 150 and our risk is going to. So we do a lot of work around looking at what the profile looks like, understanding all of the assets and where we are. So we think that's a good number to use.

No more questions. Okay. Well, we might leave it there. So thank you very much for your time today. We've got plenty of opportunity to mingle around. I really do encourage you to explore the Mercury capability that's going to be out there in a moment. It's a good chance to delve deeper or tap deeper, trying to use as many geothermal analogies as possible into this. So get into that super hot stuff. And I really wanted to thank the Mercury Fano and team that's here. Thanks, Paul, Lara, Joly, everybody that's involved in putting on the day. Thank you, Mana, for joining us as well. Really appreciate your partnership and relationship we've had. And I look forward to sharing this geothermal prospect with you over the remaining rest of the day, but equally into the next 5 to 10 years. So thank you very much. [Foreign Language]