22 March 2011
MANAGING DIRECTOR PRESENTATION TO SINGAPORE CONFERENCE
ERM Power Managing Director and CEO Philip St Baker will be presenting to the 14th Annual Power & Electricity World Asia conference in Singapore today.
A copy of his presentation follows this page.
Peter Jans Group General Counsel & Company Secretary ERM Power Limited
For further information
Garry West Corporate Communications Manager 07 3020 5165 0457 140 650 [email protected]
About ERM Power
ERM Power (ASX code: EPW) is an integrated energy company which operates electricity sales, generation and gas procurement businesses. Founded in 1980 as a specialist energy advisory firm, it grew through deregulation and privatisation to become Australia’s largest private energy sector company before listing on the Australian Securities
For personal use only use personal For Exchange on 10 December 2010. ERM Power is leveraged to the forecast growth in the Australian electricity market through its sales business, ERM Sales, which focuses on larger business customers, and its generation business, which focuses on low emission gas‐fired assets with long term contracts. In the last five years ERM Power has developed six power stations, operating three of them and retaining interests in two.
www.ermpower.com.au Australia Project Showcase
The 14th Annual Power & Electricity World Asia
21 – 25 March 2011 Raffles City Convention Centre Singapore
Philip St Baker – Managing Director and CEO, ERM Power Ltd For personal use only use personal For 2 Important Notice ‐ Disclaimer
This presentttiation conttiains certtiain ffdorward‐lkilooking stttatement s with respect to the financ ia l condition, results of operations and business of ERM Power Limited (ERM Power) and certain plans and objectives of the management of ERM Power. Such forward‐looking statements involve both known and unknown risks, uncertainties, assumptions and other important factors which are beyond the control of ERM Power and could cause the actual outcomes to be materially different from the events or results expressed or implied by such statements. None of ERM Power, its officers, advisers or any other person makes any representation, assurance or guarantee as to the accuracy or likelihood of fulfilment of any forward‐looking statements or any outcomes expressed or implied by any forward‐looking statements. The information contained in this presentation does not take into account your investment objectives, financial situation or particular needs. Before making an investment decision, investors should consider their own needs and situation and, if necessary, seek professional advice. To the maximum extent permitted by law, none of ERM Power, its directors, employees or agents, nor any other person accepts any liability for any loss arising from the use of this presentation or its contents or otherwise arising out of, or in connection with it. Graphical representations in this presentation are sourced from the ERM Power Prospectus date 17 November
2010. For personal use only use personal For 3 Agenda
1 ERM Power Profile
2 Australia Power Industry Profile
3 Recent ERM Power Projects
4 Future ERM Power Projects 5 ERM Power Partnership Opportunities
A Appendix For personal use only use personal For
1. ERM Power Profile For personal use only use personal For 5 One of Australia’ s fastest‐growing energy companies
Organically grown 9 Total revenue
9 Fast growing electricity sales business 800
690.9 9 Focused on large customers & long term contracts 600
9 Leading developer, owner and operator of 478.9 low emission gas‐fired power stations 418.4
400 million
$ Extensive portfolio of new low emission generation development projects 243.2 200
Emerging gas business with two consecutive 81.6 gas discoveries
0 For personal use only use personal For
9 Listed on ASX on 10 December 2010 ‐ ASX FY2008A FY2009A FY2010A FY2011F FY2012F code: EPW 6 Active across the value chain
ERM Pipelines For personal use only use personal For 7 Major gas buyer and emerging gas explorer
Highlights
• Procured >AU$3 billion in gas contracts
•Two successive gas discoveries in WA
• Interests in >10,000 km² of WA expl’ acreage
• 21.25% interest in EP389
• Gingin Gas West‐1 Gas Field discovery
• Gingin Gas Field (Red Gully 1) discovery
• Farming up to 50% interest in large Garabaldi prospect EP454
•20 year /20 PJ per annum MOU with Eastern For personal use only use personal For Star Gas (($1~$1.5 billion)
• Experienced gas pipeline developer ~290km 8 Australia’ s leading developer of power projects
•ERM Power has developed 29% of all new scheduled generation commissioned across Australia over the last 5 years (to end of FY2010) and approximately 5% of Australia’s entire generation capacity
Scheduled generation capacity commissioned by lead developer since 2005
2500 2,337
2000
1500
MW 997 1000 757 744 724
460 500 416 340 300 208 166 140 135 120 88 86 49 0 AGL Tinto
Delta Hydro Power Water Power Energy Energy Energy Energy Energy Energy Energy
Rio QGC/ANZ Services CS Transfield and TRUenergy ERM
ATCO Snowy Alinta Origin Griffin Aurora
Infratil For personal use only use personal For Western Power
Source: AEMO ‐ Winter Aggregate Scheduled and Semi Scheduled Generation Capacity (for Qld, NSW, Vic, Tas and SA) and ESAA 2010 (for WA) Note: Scheduled capacity (MW) figures do not relate to historical or current ownership interests in the commissioned generation capacity 9 Manager of Power Station Businesses
•ERM Power manages three power station businesses (noting ERM Power has an ongoing ownership interest in only one of these, Neerabup) • 1,145 MW of gas fired generation and 140 km of high pressure gas pipelines
Neerabup (2009) – 330MW OCGT
Braemar 2 (2009) – 495MW OCGT For personal use only use personal For
Kwinana (2008) – 320MW CCGT 10 Ownership of gas fired power stations
Oakey Neerabup Location 150 km west of Brisbane, Qld Location 40 km north of Perth, WAW.A. Low‐emission gas fired peaker Low‐emission gas fired peaker Type Type (< 5% expected ACF) (< 7% expected ACF) Capacity (()MW) 332 Cappyacity ()(MW) 330
ERM Power ERM Power 12.5% (economic interest) 50%
ownership ownership For personal use only use personal For 11 Rapidly growing electricity sales business
Customer demand by industry (()FY2010) Historic and forecast customer demand
900 Gov & Education 2.3% Leisure & Tourism 800 2.3% Property 1.2% Primary Industries 700
2.4% 600 th Who lesa le & RilRetail 500 mon
/ 3.4% 400 Heavy Industry 27.1% Healthcare 3.5% GWh 300
200
Manufacturing 11.2% 100
0 11F 12F 10A 10F 11F 11F 12F 12F 09A 09A 10A 10A
Jun Jun Jun Dec Sep Dec Sep Dec Sep Mar Mar Mar Platinum Gold Silver Bronze
Historic and forecast sales contracts
Major Infrastructure 1,000 23.6% 900
Mining 23.0% 800
700 ntracts oo
c 600
sales
500 of
400
•Business customer market comprises 12% of all 300 Number
For personal use only use personal For customers by number but approximately 70% of 200 100
Australia’s total electricity market by load 0 11F 12F 10F 12F 11F 09A 09A 12F 10A 10A 11F 10A
Jun Jun Jun Sep Sep Dec Sep Dec Dec Mar Mar Mar Platinum Gold Silver Bronze 2. Australia Power Industry
Profile For personal use only use personal For Australia ‐ Electricity
• Unprecedented investment forecast over the next 10‐15 years • ~ $100 billion ~ equivalent to existing investment – ~$50 billion in TiiTransmission and Dis tr ibu tion – ~$50 billion in Generation • Much of the existing coal generators are 30‐40 years old • Rapid growth in gas reserves continuing long term • Resources boom driving base demand
For personal use only use personal For • Population & AC driving peak demand Australian Power and Power Development 14 Markets
• Large and growing electricity market with an increasing green component • Approximately 8,500 MW of new generation capacity likely to be required over the next decade
Cumulative new system capacity requirements in the NEM and Forecast electricity market turnover (excl network charges) WEM 30 9,000
8,000 25
7,000 20 9.2 6,000 8.2 8.7 8.0 (MW) billion 5,000 7.3 7.7 $ 15 7.1 4,000 apacity CC 1.2 3.2 10 1.1 3,000 15.8 14.0 12.7 13.1 2,000 10.5 11.6 11.6 5 9.2 9.7 8.9 1,000
0 0 2011F 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2013F 2014F 2015F 2016F 2017F 2018F 2019F 2020F Electricity Green certificates Qld NSW Vic SA WA Source: AEMO 2010 ESOO and IMO (WA) 2010 ESOO For personal use only use personal For Source: Electricity: AEMO 2010 ESOO, IMO 2010 SOO and ACIL Tasman Industry Expert Report, Green Certificates (Carbon): Modelling a Voluntary Generator Retirement Policy, ACIL Tasman, 12 March 2010 (Figure 8 Policy case), IMO 2010 SOO and ABARE (http://www.abare.gov.au/publications_html/data/data/data.html) for calculated emissions intensity and Australia's Low Pollution Future, Commonwealth of Australia (Chart 3.4) Green Certificates (RECs): Renewable Energy (Electricity) Amendment Bill 2009 (Cwth), Renewable Energy (Electricity) (Charge) Amendment Bill 2009 (Cwth) and MMA "Impact of Changes to the Design of the Expanded Renewable Energy Target, May 2010" (page 24) MMA = McLennan Magasanik Associates Green excludes state based schemes (NGACs, GECs etc) 15 Australian Market Structure (NEM not WEM)
•Mature market with high level of complexity
For personal use only use personal For •Retail contracts typicall y fixed price but not volume
•High prudential demands
3. Recent ERM Power Projects For personal use only use personal For 17 Australian leader in power projects
Oakey, Qld (1999) Braemar, 1 Qld (2006) Kwinana, WA (2008) Uranquinty, NSW (2008) Braemar, 2 Qld (2009) Neerabup, WA (2009) For personal use only use personal For 18 Oakey power station
Oakey •Located close to the Roma to Brisbane gas pipeline Location Darling Downs, 150 km west of Brisbane and a number of coal seam gas fields •Off‐take agreement is structured such that the Type Peaker (< 5% expected ACF^) plant is only dispatched in times of peak electricity Capacity (MW) 332 demand ERM Power •Expected to have a significant useful life upon 12.5% (economic interest) ownership expiry of initial off‐take agreement Partner Contact Energy / Alinta •Project debt expected to be repaid by December 2014 Operator Contact Energy
Commission December 1999 date
Open cycle (dual fuel) Technology 2 x Siemens V94.2 OCGTs
Fuel supply Customer risk and expense
For personal use only use personal For 100% contracted with AGL under a PPA Off‐take until expiry December 2014
^Annual capacity factor 19 Neerabup power station
Neerabup •Synergy provides its own gas whhhich is tolle d as Location 40 km north of Perth, Western Australia directed by Synergy and as such, no gas supply arrangements are required Type Peaker (< 7% expected ACF^) • Off‐take agreement structured such that the plant Capacity (MW) 330 is only dispatched in times of peak electricity ERM Power 50% demand ownership • Incorporates a 30 km high pressure gas pipeline Partner ANZ Energy Infrastructure Trust and compressor station that provides connection Operator ERM Power to the Dampier to Bunbury Natural Gas Pipeline and line‐pack storage of gas for use as required Commission October 2009 date
Open cycle Technology 2 x Siemens V94.2 OCGTs
Fuel supply Customer risk and expense 100% contracted with Synergy under a 20 Off‐take year tolling agreement expiring in October
For personal use only use personal For 2029 Pipeline 30 km high pressure gas pipeline linepack
^Annual capacity factor 20 Wealth creation through power projects
Hist ori cal revenue Hist ori cal EBITDAIF
90.0 82.9 80.0 75.7 80.0 70.0 70.0 60.0 60.0 46.1 on illion 50.0 46.1 m 46.2 50.0 $
38.3 milli 33.3 40.0
40.0 0.8 $ 12.1 30.0 30.0 36.4 19.5 12.1 16.7 14.7 20.0 37.5 20.0 36.4 10.0 0.8 10.0 24.7 19.5 10.0 17.5 4.9 9.8 6.6 15.9 6.6 14.7 0.0 3.4 0.0 (3.0) (1.7) FY2008A FY2009A FY2010A FY2011F FY2012F ‐10.0 FY2008A FY2009A FY2010A FY2011F FY2012F Development and Operations Discount on acquistion Development and Operations Discount on acquisition Asset sales Asset sales $129.3 million EBITDAIF created in the last 3 years from: • Development and Operational Services • Discou nt on acqu isition (Partner Premiu ms)
• Asset Sales ‐ Early Divestment (during development or within 1 year from COD) For personal use only use personal For
4. Future ERM Power Projects For personal use only use personal For 22 Future ERM Power Projects
Key ppjrojects ERM Power’s development portfolio
Project Status State Land Type Size (MW) Fuel 5,000
Develop. Braemar 3^ Qld Own S 550 G Approved
Develop. Wellington 1^ NSW Sec. P 550 G AdApproved 4,000 Total 1,100† Project Status State Land Type Size (MW) Fuel 2,530 SPP1* Feasibility N/A N/A Int. 30 G 3,000 SPP2* Feasibility N/A N/A Int. 30 G
Neerabup 2 Feasibility WA Sec. P 330 G
Braemar 4 Feasibility Qld Own S 550 G MW
Wellington 2 Concept NSW Sec. P 550 G 2,000 Braemar 5 Concept Qld Own S 550 G
Victoria 1 Concept Vic Id. P 550 G 940
NSW Concept NSW Id. S 550 G
Three Springs Concept WA Sec. S 330 G 1,000
Total † 3,470 1,1001,100 1,100
Note: ERM Power also has up to 1,300km of gas pipeline planned 0
For personal use only use personal For for development over the next decade (assoc. with above projects) Development approved Feasibility Concept
Note: Own –represents strategic land holdings owned by ERM Power, Sec –represents strategic land holdings which ERM Power has secured under option agreements executed with current land owners to contract to purchase that land, except in the case of Neerabup 2, where the land will be held by NewGen Power Neerabup Pty Ltd (ERM Power 50% interest), S – Shoulder, P –Peaker, Int – Intermediate, B –Baseload, Id – Identified, G –Gas, ^Pipeline / linepack for Braemar 3 and Wellington 1 is 40km and 200km respectively, †Power station project sizes based on expected AEMO winter Aggregate Scheduled and Semi‐Scheduled Generation Capacity or generation capacity of registered facilities published by IMO, *SPP – undisclosed small power project 23 550 MW Braemar 3 Project
Braemar 3 Located to supply south‐east Queensland Location Darling Downs, Qld adjacent to Braemar 1 and 2 Located near coal seam gas and substation ERM Power ownership Currently 100% Cost ($m) 530 Recent improvement in forward electricity prices Targeted financial Q2 FY2012 close Investment decisions on major Qld projects Targeted commission committing to significant demand Q2 FY2014 date DA approved and Off‐take, gas supply and Cappyacity (()MW) 550 financing are key work streams to financial close 2x275 MW Siemens open cycle gas turbines, Technology designed for future conversion to combined cycle Maintain prospectus forecast of financial close operation and start of construction by end FY12 Site is adjacent to Powerlink 330 / 275kV Transmission substation High pressure underground gas pipeline with > 25 TJ usable linepack and potential connections with Fuel supply Braemar 2 linepack/pipeline and Roma‐Brisbane pipeline to provide access to additional gas sources and increased storage capacity Expected project 70% (senior debt) gearing 6% (equity mezzanine financing) Target retained 50% For personal use only use personal For ownership Project manager and ERM Power operator 24 550 MW Braemar 3 Project
Additional capacity required in Queensland from 2013/14 Component Status Comment
Power Station 18,000 9 Owned by ERM Power Site 16,000 Power Station 14,000 Approved by Qld Govt Development 9 and local council 12,000 Approval
) 10,000 WW
(M Executed EPC with 8,000 Major Plant Siemens and John and 6,000 9 Holland and LTM Equipment Agreement with 4,000 Contracted Siemens 2,000 Executed Connection 0 Grid 9 Agreement with Connection 2/13F 3/14F 4/15F 5/16F 6/17F 7/18F 8/19F 9/20F
11 11 11 11 11 11 11 11 PowerLink Queensland 20 20 20 20 20 20 20 20
Allocated Capacity Additional Capacity Required
Capacity for Reliability For personal use only use personal For
Source: AEMO 2010 ESOO and IMO (WA) 2010 ESOO 25 640/550 MW Wellington 1 Project
Wellington 1 Locat ed to suppl y laagesrgest NEM regio n Location 4 km north of Wellington, NSW Located near coal seam gas and substation ERM Power ownership Currently 100% DA approved Power Station and Gas Pipeline Cost ($m) 681 Targeted financial Strong NSW ldload growth of >500MW from summer Q1 FY2013 close 2009/10 to summer 2010/11 Targeted commission Q1 FY2015 Recent improvement in forward electricity price date Capacity (MW) 550 Off‐tktake, gas supply and financ ing are key work 2 x 275 MW Siemens open cycle gas turbines, streams to financial close Technology designed for future conversion to combined cycle operation Financial close forecast is calendar 2012 TransGrid has completed a second 330 kV transmission line to Wellington substation, Transmission providing a high level of transmission security and export capability High pressure underground gas pipeline with > 25 Fuel supply TJ usable line pack Expected project 70% gearing Target retained For personal use only use personal For 50% ownership Project manager and ERM Power operator Wellington power station configuration may differ from illustration. 26 Other Projects
Three Springs • ERM Power has secured a strategic land holding in Western Australia, near Three Springs • This site is ideally located for generation development to help meet the forecast demand growth in the mid west region of WA • Potential exists for the financial close of a Three Springs project in
FY2013 For personal use only use personal For
5. Partnership Opportunities For personal use only use personal For Historical Project Equity Partners (sample)
(Sample)
320 MW Kwinana Project Sumitomo Corporation
495 MW Braemar 2 Project Arrow Energy Ltd
330 MW Neerabup Project ANZ Energy Infrastructure Trust Managed by Infrastructure Capital Group
332 MW Oakey Project Contact Energy Ltd, Alinta Energy Ltd
Siemens (Divested) For personal use only use personal For 29 ERM Power Partnering Opportunities
• Power Project Equity Partnership Opportunities – Wellington 1, and – Three Springs Power Projects • Gas Pipeline Equity Partnership Opportunities – Interstate Gas Pipeline Project • Gas Exploration Equity Partnership Opportunities – >10,000 square km of exploration acreage in WA Perth Basin • Financing Partnership Opportunities – Senior Debt for Projects
– Prudential Facility for ERM Sales For personal use only use personal For More Information
General Enquiries ‐ Garry West Corporate Communications Manager Email: [email protected] Direct Ph: +61 7 3020 5165 and Mobile: +61 457 140 650
Financing Enquiries – Michael Allen Executive General Manager Finance Email: [email protected]
Equity Enquiries – Andrew St Baker Executive General Manager Commercial Email: [email protected]
Website: www.ermpower.com.au For personal use only use personal For
A. Appendix For personal use only use personal For 32 A1. Board of Directors
Director Title Started Experience
Trevor St Baker Non Executive 1980 50+ yrs in the • Founded ERM Power in 1980 Chairman electricity • Transitioned from MD to Chairman in 2006 industry
Philip St Baker Managing Director 2005 20+ yrs in •MD of ERM Power from 2006 resources and •Prior roles include Global Maintenance Manager for BHP energy Billiton, Vice President of QNI, and CEO of NewGen Power
Tony Bellas Independent Non 2009 35+ yrs in •Non Executive Chairman of CTM Travel Holdings Executive Director government •Former CEO of the Seymour Group and has previously been and energy CEO of Ergon Energy and CS Energy, after a long career as Qld’s Deputy Under Treasurer Martin Greenberg Independent Non 2006 30+ yrs in the •MD of Apollan Investments Group Executive Director finance industry •Chairman of Selector Funds Mgt, AI Medics and Director of Liquid Capital Mgt
Brett Heading Independent Non 2010 25+ yrs in •Partner at McCullough Robertson Lawyers since 1985, Executive Director corporate law Chairman of Partners since 2004 •Chairman of Trinity Limited and ChemGenex Pharmaceuticals Limited Tony Iannello Independent Non 2010 30+ yrs in •Chairman of HBF Health Fund, MG Kailis Group, Aviva Corp
Executive Director banking and and Energia Minerals, and Director of SP AusNet Limited For personal use only use personal For energy •Former MD of Western Power Corporation (and in charge of disaggregation) and senior executive at BankWest