MARKET RELEASE Date: 9th December 2020
NZX: GNE / ASX: GNE
GENESIS STAKEHOLDER DAY
Genesis Energy Limited (Genesis) hosts its 2020 Stakeholder Day today to consider how we can empower New Zealand’s sustainable future.
The presentation from the morning session is attached and is available on our Investor website, https://www.genesisenergy.co.nz/investors. A full recording of the session will be made available following the event, also on our Investor website.
ENDS
For media enquiries, please contact: Allan Swann Communications Manager Genesis Energy M: 027 211 4874
For investor relations enquiries, please contact: Tim McSweeney Investor Relations Manager Genesis Energy M: 027 200 5548
About Genesis Energy Genesis Energy (NZX: GNE, ASX: GNE) is a diversified New Zealand energy company. Genesis sells electricity, reticulated natural gas and LPG through its retail brands of Genesis and Energy Online and is New Zealand’s largest energy retailer with approximately 500,000 customers. The Company generates electricity from a diverse portfolio of thermal and renewable generation assets located in different parts of the country. Genesis also has a 46% interest in the Kupe Joint Venture, which owns the Kupe Oil and Gas Field offshore of Taranaki, New Zealand. Genesis had revenue of $NZ2.6bn during the 12 months ended 30 June 2020. More information can be found at www.genesisenergy.co.nz
Genesis Stakeholder Day Future thinking discussion
Empowering New Zealand’s sustainable future Haere mai Who we have in the room today
2% 11% 6% RSVPs received 6% 4% for the morning • 139 attending in person • 91 guests • 8 speakers • 20 Genesis 24% • 7 Media 28% • 39 attending online • 109 organisations represented
4%
15% RSVPs received for the afternoon Community Customer Government & Regulatory Investor • 39 in person, 8 online Media Supplier Partner Speaker Genesis Genesis Stakeholder Day 2020 3. Genesis Energy Board of Directors and Executive Team
CHAIRMAN Barbara Chapman Catherine Drayton Doug McKay Tim Miles James Moulder Maury Leyland Penno Paul Zealand CNZM, BCom, CMInstD BCom, LLB, FCA ONZM, BA, AMP (Harvard) BA BA, BCA BE (Hons), FEng, CMInstD MBA, BSc Mech. Eng (Hons)
CHIEF EXECUTIVE Chris Jewell James Magill Matthew Osborne Nicola Richardson Nigel Clark Shaun Goldsbury Tracey Hickman Marc England Chief Financial Officer Chief Digital Officer Chief Corporate Chief People Officer Chief Operations Officer Chief Trading Officer Chief Customer Officer MBA, MEng BE (Hons), MEM, CIMA BSc (Hons), Affairs Officer BA (Hons) BBus (Acc), BSc MA (Hons) Dip Corp Finance, BCom, LLB Dip Treasury Mgmt., MBA (Melbourne/Madrid) FCPA, FAICD, CFTP (Snr)
4 . 8 DECEMBER 2020 Genesis team here today
Andre Gaylard Angus Judge Cameron Jardine Courtney Simpson Christopher Mirams David Gutteridge Emma-Kate Greer Fiona Turvey General Manager General Manager General Manager LPG Group Manager Group Manager General Manager Group Manager Employee Marketing Manager Future Generation Operational Excellence Sustainability Communications Residential Join Experience and Strategy and Media
Jackie Shen James Ryan Kiely Evans Michaela Latimer Peter Kennedy Tara Parata Tim McSweeney Tim Rowe Executive Team Manager Group Manager Communications and Community Liaison General Manager, Head of Customer Care Manager - Investor Strategy Partner Strategy and Risk Engagement Manager Manager Growth and Innovation Relations
Genesis Stakeholder Day 2020 5. An interactive discussion
Dr Rod Carr Rod Oram Mike Burrell Kirsten Corson Chair of the Business journalist Executive Director of Co-founder and Executive Director Climate Change Commission and columnist the Sustainable Business Council of Zilch
Graeme Milne Arizona Leger Nicole (Niki) Harré Shamubeel Eaqub Chairman of Youth climate leader Professor at Economist, financial analyst Synlait Milk Ltd The University of Auckland and author
Genesis Stakeholder Day 2020 6. Empowering New Zealand’s sustainable future
Manaaki whenua, manaaki tangata, haere whakamua Electricity contributes a small portion of New Zealand’s emissions but is vital to the transition
Other Opportunity to decarbonise (incl. industrial) 26% process heat through electrification Electricity 5%
Transport 21% Opportunity to decarbonise transport through electrification
Agriculture 48%
Gross carbon emissions
New Zealand’s emissions 2018, MFE data Genesis Stakeholder Day 2020 8. Our 84% renewable electricity system is a unique opportunity to increase the only 40% renewable portion of total energy
9 . 8 DECEMBER 2020 We’re reducing our emissions while advocating for a reliable and affordable, highly renewable electricity system Genesis has a track record of reducing emissions despite a volatile output
kt, CO2-e 7000 GENESIS’ HISTORICAL EMISSIONS annual equivalent 6000
5000
4000
3000 Monthly emissions
5 year average 2000
1000
0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Genesis Stakeholder Day 2020 11. We’re continuing emissions reductions by setting Science Based Targets consistent with limiting warming to 1.5°C
1 Reduce direct emissions Reduce indirect emissions Target Year : Scope 1 & 2 Scope 3
% %
Reduce emissions2 by at least 1.2 million tonnes
1. Target is based on our FY20 as the base year. Reduction for 1.5°C Genesis ambition Remaining emissions 2. Combined scope 1, 2 & 3
Genesis Stakeholder Day 2020 12. Cheaper renewable electricity will actively displace baseload thermal
GWh 6,775 6,775 6,775
Backup Thermal 1,507 1,312 1,312
850
2,200 Baseload Thermal 2,455 1,350
450 450
Hydro 2,813 2,813 2,813
Generation 5 Yr Average 2025 2030
Genesis Renewable Generation (circa) 42% 68% 81%
Market Renewable Generation (circa) 83% 90% 93%
Genesis Stakeholder Day 2020 13. Empowering a sustainable future will require strategic partnerships, alliances and collaboration through our supply chains
Genesis Stakeholder Day 2020 14. We need more systems thinking and an energy strategy to ensure we navigate the fastest route to decarbonise
Decarbonised economy
Use electricity to decarbonise 100% renewable energy electricity
Genesis Stakeholder Day 2020 15. Understanding the decarbonisation landscape Energy is one of the two major contributors to New Zealand’s emissions NEW ZEALAND’S EMISSIONS Annual 80,000 emissions Waste kt CO2-e 70,000 Industrial process and product use
60,000
50,000 Energy
40,000
30,000 Agriculture 20,000
10,000
0
-10,000 Land use, land-use change and forestry -20,000
-30,000 MFE data - 2018 Genesis Stakeholder Day 2020 17. Almost all energy use is either electricity, heat or transport
35,000 ENERGY EMISSIONS Annual emissions 30,000 Fugitive kt CO 2-e Electricity 25,000
Heat 20,000
15,000
10,000 Transport
5,000
-
MFE and EECA data - 2018, Genesis analysis Genesis Stakeholder Day 2020 18. Energy emissions come from a range of activities, with solutions only available for some in the 2020-2030 decade
ENERGY EMISSIONS Annual emissions 30,000 Fossil fuels – fugitive, processing and manufacture kt CO 2-e Electricity
25,000 Residential, commercial and agricultural
20,000 Industry
Agricultural vehicles 15,000 Transport (other) 10,000
5,000 Transport (cars)
0
MFE data, 2018 Genesis Stakeholder Day 2020 19. Electricity
20. New Zealand’s Energy Trilemma
EMISSIONS
RELIABILITY COSTS SECURITY HAS A PRICE Genesis Stakeholder Day 2020 21. Electricity is decarbonising with falling wind and solar costs providing tail winds for further progress
RENEWABLE ELECTRICITY RENEWABLE ELECTRICITY COSTS SHARE - NEW ZEALAND IN THE USA 60 90%
50 85% / MWhUSD
40 80%
30 75%
70% Quarterly 20
5-year rolling average 65% 10
60% 0 2010 2012 2014 2016 2018 2020 2016 2017 2018 2019 2020
Solar Utility Costs Wind Utility costs MBIE data Lazard data Genesis Stakeholder Day 2020 22. Seasonal demand is a challenge for our electricity system, demand is highest in winter when southern inflows are the lowest
SEASONAL STORAGE CHALLENGE 4,000 400
3,500 350
3,000 300
2,500 250
2,000 200
1,500 150
Monthly Totals (GWh) Totals Monthly 1,000 100 Solar Monthly Total (GWh) Total SolarMonthly
500 50
0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
South Island Inflow National Demand Solar Generation (per 1000MW Installed)
Genesis Stakeholder Day 2020 23. Our hydro storage is too small to manage droughts and seasonality Even with 4x the relative storage, Norway still only 98% renewable
NORWAY HYDRO BY TWH NEW ZEALAND HYDRO BY TWH 140 30 120 25 100 20 80 15 NZ x 5 60 10 40 5 20 0 Annual Generation Wet/Dry Variation Storage 0 Annual Generation Wet/Dry Variation Storage NZ has 2 months hydro storage (84% renewable) Norway has 8 months hydro storage (98% renewable)
Genesis Stakeholder Day 2020 24. Deep energy storage is a big challenge, there are limited options available to store 3,000 GWh of energy
m %
Genesis Stakeholder Day 2020 25. Electricity is decarbonising, but the last few percent will be challenging
2030 MARGINAL ABATEMENT COST CURVE
500
) e
- 400 2
300
200
Abatement cost (NZ$ / tCO / (NZ$ cost Abatement 100
0 0 1000 2000 3000 4000 5000 6000 Abatement potential (kt CO2-e / year)
Baseload thernal Flexible thermal Geothermal MFE data
Genesis Stakeholder Day 2020 26. Transport
27. Cars are the largest decarbonisation opportunity from the transport sector
TRANSPORT EMISSIONS, NZ 2019
e -
2 10,000
CO kt
8,000
6,000
Annualemissions International
4,000
2,000
0 Buses Cars Road Freight Rail Shipping Air
EECA / MBIE data, Genesis analysis Genesis Stakeholder Day 2020 28. Low energy costs help, but high upfront costs are a barrier for electric vehicle adoption
10 YEAR TOTAL COST OF OWNERSHIP* $80,000 Average weekly electricity for an EV costs about the same as 2 coffees $60,000 Capital and cost of Capital and ownership cost of $40,000 ownership Maintenance
$20,000 Energy costs Maintenance $- Energy costs Hyundai PetrolKONA - Petrol HyundaiElectric KONA - EV
*Hyundai Kona, ~21,000 km/year over 10 year terms, as at 2020 https://www.eecabusiness.govt.nz/tools/vehicle-total-cost-of-ownership-tool/
Genesis Stakeholder Day 2020 29. Currently, price is not the only barrier to adoption
REASONS FOR PURCHASE OF EV BARRIERS FOR PURCHASE OF EV
Less costs to run High price Less pollution Low range Less reliance on fossil fuel Hard to find chargers Requires less maintenance Unsure about maintenance Technology Other (please specify) Takes a long time to charge a car Quiet Do not know anything about electric… Modern Do not have a garage Convenience Efficiency Performance Hard to source vehicle in NZ Brand Safety 0% 10% 20% 30% 40% 50% 60% 70% Other (please specify) Some of the barriers to adoption could fall Resale value away as consumers learn more about 0% 20% 40% 60% 80% 100% Electric vehicles and how to use them
Genesis Stakeholder Day 2020 30. Electric vehicle adoption is growing but still has a long way to go
INDICATIVE ADOPTION CURVE
100%
80%
60%
40% EV in NZ c. 0.6% of light vehicles 20%
0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Time →
Genesis Stakeholder Day 2020 31. Innovation is still needed for other transport sectors – is this an opportunity for New Zealand to help find solutions?
ROAD FREIGHT SHIPPING AIRCRAFT
A number of truck electrification projects Electric tug boat developed for Ports of Cora electric air taxi tested in Canterbury and undertaken with funding from the Low Auckland and electric ferries being explored Sounds Air has intent to buy electric plane for Emissions Vehicle Contestable Fund for Auckland and Wellington commercial flights
Genesis Stakeholder Day 2020 32. Heat
33. The cost of energy is critical for transitioning heat COST OF ENERGY TO CREATE HEAT* $/GJ
30 Electricity is expensive to 25 use for heat… 20
15
unless used in 10 a heat pump 5
0 Electricty - Electricity - Gas - boiler Coal - boiler LPG - boiler Biomass Biomass electrode heat pump (chip) - boiler (pellets) - boiler
*Energy costs including fuel, delivery, carbon cost at $50/tonne, and typical boiler efficiency Genesis Stakeholder Day 2020 34. Higher temperatures are harder to transition than lower temperatures
3,000 EMISSIONS FROM HEAT
e 2,500 - 2 Other
Other CO
kt 2,000
Gas 1,500 Other Gas
1,000 Gas Annualemissions 500 Coal Coal Coal 0 Low temperature heat Intermediate Heat High temperature heat
Easier to Harder to transition transition
EECA data, Genesis analysis Genesis Stakeholder Day 2020 35. Significant heat emissions are from a small number of sectors and sites EMISSIONS FROM HEAT Annual emissions kt CO2-e 0 1,000 2,000 3,000
Dairy, meat and other food and beverage processing Methanol, petroleum refining and other chemicals
Commercial
Residential
Pulp, Paper and Print
Cement, lime and other non-metallic minerals
Agriculture, Forestry Fishing Low temperature heat
Steel and aluminium production Intermediate temperature heat
Other energy use High temperature heat EECA and MFE data, Genesis analysis
Genesis Stakeholder Day 2020 36. Efficiency
37. Significant opportunities for efficiency exist in homes and businesses
Cost to COST TO IMPLEMENT ENERGY SAVING TECHNOLOGIES implement
$/GWh
and clothes clothes drying and Business Business lighting Business Space heating Business electric motors Residential lighting Residential space heating
lighting Business Business 0 1000 2000 3000 4000 5000 Cumulative electricity savings potential (GWh pa) EECA data
Genesis Stakeholder Day 2020 38. Decarbonisation pathway
39. Is New Zealand going to reduce emissions fast enough?
~50% gas and coal ~50% of low fired generation temperature heat and cogeneration Further emissions reductions within ~200k cars the decade
75,000
e
- 2
CO 70,000 kt
65,000
60,000
Annual emissionsAnnual 55,000 2020 Agriculture Transport Space, Other heavy Electricity Further 2030 Expected and wate water and industry reductions targeted process heat 2025 to for food 2030 processing
MFE identified reductions to meet provisional emissions budget 2021 to 2025
Genesis Stakeholder Day 2020 40. Disclaimer
This presentation has been prepared by Genesis Energy Limited (‘Genesis Energy’) for information purposes only. The information in this presentation is of a general nature and does not purport to be complete nor does it contain all the information required for an investor to evaluate an investment. This presentation may contain projections or forward- looking statements regarding a variety of items. Such forward-looking statements are based upon current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks. Although management may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realised. EBITDAF, underlying profit and free cash flow are non-GAAP (generally accepted accounting practice) measures. While all reasonable care has been taken in compiling this presentation, to the maximum extent permitted by law Genesis Energy accepts no responsibility for any errors or omissions and no representation is made as to the accuracy, completeness or reliability of the information. This presentation does not constitute investment advice. All reference to $ are New Zealand dollars, unless specifically stated.
Genesis Stakeholder Day 2020 41.