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 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 2 Important Notice ‐ Disclaimer This presenttitation contitains certitain fdforward‐lkilooking stttatemen ts 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 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 1. ERM Power Profile For personal use only 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 million 400 $ Extensive portfolio of new low emission generation development projects 243.2 200 Emerging gas business with two consecutive 81.6 gas discoveries For personal use only 0 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 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 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 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 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 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 customers by number but approximately 70% of 200 100 Australia’s total electricity market by load 0 10F 11F 12F 11F 12F 09A 09A 10A 10A 11F 12F 10A Jun Jun Jun Sep Sep Sep Dec Dec Dec Mar Mar Mar Platinum Gold Silver Bronze 2. Australia Power Industry Profile For personal use only 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 • 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 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 •Retail contracts typically fixed price but not volume •High prudential demands 3. Recent ERM Power Projects For personal use only 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 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^)
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