Contact Energy - CEN Chart

[BlackPeter]

Yet another alternative.

Canberra megabattery to hold 250MW. Onslow expected to hold....1000-1200MW?? depending on which news source you read (Newsroom v Stuff).

https://www.abc.net.au/news/2023-04-...ergy/102217104

"Expected to be online in 2025, the battery energy storage system will cost between $300 million and $400 million".
Looks like construction hasnt started yet.

....so one can be built in about 2 years? Maybe 4-5 of them would roughly match Onslow?? No birds or lizards displaced and maybe total under $2bn in a 2-4 year timeframe plus you could put them in the North Is where needed.
Just charge them during summer with a solar field.

There must be a catch of course, be interested to hear what that is from those in the know. I didnt see Contact's presentation refer to any alternatives.....
(thanks RTM by the way)

I am sure there are better alternatives than lake Onslow. However - while your calculation looks at face value sensible, I think that you did fall victim of reports written by reporters not understanding the difference between storage capacity (measured in kWh, MWh, GWh or TWh) and generating power (measured in kW - or MW).

Just to clarify the units: 1TWh (i.e. 1 Tera Watt hour) = 1000 GWh, 1 GWh = 1000 MWh, 1 MWh = 1000 kWh; 1 MW = 1000 kW;

100 MW might be the generating capacity of the turbines - i.e. they could produce 100 MWh - every hour.

The storage capacity is a different thing. This is how long you could supply the 100 MW capacity before the lake is empty. For Lake Onslow this would be something like 5 Tera watt hours - i.e. 50,000 hrs of 100 MW generation. This is a lot of energy if you want to put it into batteries.

[mfd]

Yet another alternative.

Canberra megabattery to hold 250MW. Onslow expected to hold....1000-1200MW?? depending on which news source you read (Newsroom v Stuff).

https://www.abc.net.au/news/2023-04-...ergy/102217104

"Expected to be online in 2025, the battery energy storage system will cost between $300 million and $400 million".
Looks like construction hasnt started yet.

....so one can be built in about 2 years? Maybe 4-5 of them would roughly match Onslow?? No birds or lizards displaced and maybe total under $2bn in a 2-4 year timeframe plus you could put them in the North Is where needed.
Just charge them during summer with a solar field.

There must be a catch of course, be interested to hear what that is from those in the know. I didnt see Contact's presentation refer to any alternatives.....
(thanks RTM by the way)

You're getting your units mixed up here - MW is the power that the schemes can release. That is, when charged/filled, this battery can release 250 MW of power to the grid, while Onslow could release ~1000 MW. The energy stored is quite different.

From that article, if the battery is fully charged it can release power for 2 hours before exhausting itself. This suggests a storage capacity of about 500 MWh. Onslow is intended to hold a capacity of 5 TWh, or 5,000,000 MWh. You'd need to build 10,000 megabatteries to replicate that, at a cost of something like $3 trillion AUD. Onslow can storage this energy for a period of years, losing a small amount due to evaporation. How well do these batteries hold charge?

Grid scale batteries are useful, but they are answering a completely different question to Onslow. Battery tech would need to improve by several orders of magnitude to compete with pumped hydro on the 'dry year' issue.

[dibble]

MFD/BP, thanks both for taking the time to clarify.

Had a nasty feeling after posting I hadnt quite nailed the maths.... ("quite" obviously being an understatement)

[Sideshow Bob]

https://www.nzx.com/announcements/416270

Contact delivers solid FY23 performance while investing for decarbonisation

Key financial metrics

[please see table in attached announcement]
Overview

New Zealand renewable energy company Contact Energy (‘Contact’) today released its financial results for the year to 30 June 2023.

- Net profit of $127m after recognising an onerous contract
provision expense of $84m ($113m EBITDAF impact) following a
review of the estimated available capacity of the Ahuroa Gas
Storage facility (AGS). Excluding AGS, underlying net profit
was $211m.

- Underling EBITDAF (excluding the AGS provision) increased by
$27m to $573m with higher realised electricity pricing and a
gain on sale of the Te Rapa co-generation plant, partially
offset by high gas and carbon unit costs, lower electricity
sales volumes and higher fixed operating costs.

- Operating free cash flow decreased by $48m to $282m. Working
capital continues to be elevated, with more gas and carbon
units in inventory.

Contact has made significant progress on delivering to its Contact26 strategy and remains focused on leading New Zealand’s decarbonisation by connecting customers with its renewable development pipeline.

- New geothermal station of up to 180MW at Te Mihi, GeoFuture,
proceeding to final investment decision in early 2024.
Investment of up to $114m approved. Pre-construction drilling
to begin from September 2023.

- Preparing for final investment decisions on Kōwhai Park 170MWp
solar farm and 100MW North Island battery in FY24.

- Planning to apply for resource consent at Glorit on the Kaipara
Coast, northwest of Auckland by the end of 2023 for the second
160MWp solar farm through Contact’s joint venture with
Lightsource bp.

- Te Rapa power station closed on 30 June 2023 as planned.
Contact’s generation on track to be more than 95% renewable by
FY27.

- Strong endorsement of Contact’s retail offering, reaching
approximately 589,000 energy and broadband connections.

- Introduced wireless broadband and Dream Charge time-of-
use plan, enabling customers to charge their EVs at home
at lower night rates, contributing to the decarbonisation
of New Zealand. Contact Mobile launches later this month.

- Supported mass market customers by keeping average
electricity price increase realised year-on-year in line
with general inflation, despite elevated forward
wholesale prices over the last three years.

Financial performance

In FY23 Contact recognised an onerous contract provision expense of $84m after tax ($113m EBITDAF impact) following a review of the estimated available storage capacity of AGS. This is a non-cash accounting adjustment to recognise the difference between the expected benefits from access to gas storage and the contracted schedule of payments over the remaining 10 years of the contract.

Reported net profit of $127m was down $55m on the prior year, with lower operating earnings (EBITDAF) reflecting the onerous contract provision, higher interest expense reflecting the higher interest rate environment and unfavourable movements in the fair value of financial instruments as higher losses were realised from unhedged financial instruments, partially offset by lower depreciation and amortisation and lower tax on earnings. Excluding the impact of the AGS provision, underlying net profit was $211m, up $29m from the prior year.

Underlying EBITDAF, which excludes the impact of the AGS provision, increased by $27m to $573m, up five percent on the prior year, with higher realised electricity pricing as our sales channels align closer to the wholesale market, and higher other income which included a $7m gain on sale of Te Rapa. This was partially offset by continued higher thermal generation input costs, lower electricity sales volumes and higher fixed costs driven by inflation and the preparation of the business for growth.
Operating free cash flow decreased from $330m to $282m, down 15 percent year-on-year with higher underlying operating earnings offset by higher stay-in-business capital expenditure, higher cash tax paid on strong earnings in prior periods and unfavourable working capital movements. Working capital remained elevated as Contact held more gas and carbon units in inventory on lower thermal generation than the prior year.

The Board approved a final dividend of 21 cents per share (imputed by up to 18 cents per share for qualifying shareholders) to be paid on 26 September 2023; taking the annual dividend declared for FY23 to 35 cents per share, which is in line with the prior year.

“Contact delivered a solid financial performance despite soft short-term wholesale market conditions,” said Mr Fuge.

“We saw the highest nationwide hydro inflows in post-market history, with North Island rainfall the highest on record. This depressed spot market prices and saw greater price separation between the North and South Islands. We responded by purchasing excess renewable electricity from the wholesale spot market and reduced our thermal generation to the lowest in Contact history.”

Renewable development

Contact’s geothermal development activity is moving at pace, with plans to replace the 1950s-built Wairākei A and B power stations with a new station of up to 180MW at Te Mihi – the GeoFuture project. Development costs of up to $114m have been approved and Contact is targeting a final investment decision in early 2024.
“It is an exciting time for Contact as we focus on advancing our steamfield design work for GeoFuture and we will start pre-construction drilling in September. This comes as we are reaching completion of our world-class geothermal development at Tauhara,” said Mr Fuge.

The Minister for the Environment has approved the Southland Wind Farm Project for fast-track consenting. If approved, the 300MW facility would be Contact’s first wind farm and New Zealand’s largest. Together with its partner, Roaring40s, Contact continues to engage with local communities and mana whenua.

Subject to taking a final investment decision in FY24, Contact’s joint venture with Lightsource bp will begin construction on a 170MWp solar farm at Christchurch Airport, Kōwhai Park in 2024. The joint venture’s second proposed solar farm development is in Glorit on the Kaipara Coast, northwest of Auckland. The proposed site has good access to the transmission grid and is expected to generate 0.3TWh per year. The joint venture plans to apply for consent for the Glorit site in the second half of 2023.

Demand
Industry interest in converting to renewable electricity was strong, Mr Fuge said.

“In May we announced a pioneering energy agreement with NZ Steel. We will provide 30MW of flexible off-peak renewable electricity for its proposed new $300m electric arc furnace. This will enable NZ Steel to scale down production in peak demand times or supply shortages, with the project representing a significant step towards meeting New Zealand’s climate change goals.”

The trend continued with accelerating opportunities with several other industrial companies exploring similar opportunities to decarbonise industrial heat processes and cut fossil fuel use.

The New Zealand Aluminium Smelter (NZAS) has indicated it would like to continue operations at Tiwai Point beyond December 2024. “We are encouraged as we continue to work closely with NZAS to negotiate a new agreement. The smelter is valuable to our country, and our economy, particularly as a significant exporter. It is also highly carbon efficient in its production of premium aluminium, and a major employer and contributor to the Southland economy.”

Decarbonising our portfolio

In June 2023, as planned, Contact closed its 44 MW Te Rapa gas-fired co-generation power station. And the company has confirmed it won’t extend the operating hours of its gas-fired Taranaki Combined Cycle (TCC) plant. While it will support security of supply with remaining operating hours, decommissioning is expected at the end of 2024.

The 1.9TWh of new renewable generation that Contact will be bringing online at Tauhara and Te Huka is enabling Contact to take these steps. And, after a successful trial at Te Huka, Contact has confirmed it is exploring the feasibility of CO2 capture and reinjection or reuse across existing and planned geothermal plants.

“This year we have taken key steps towards decarbonising our own portfolio and now have a clear path to achieve net zero emissions from our generation operations by 2035. We are committed to doing this in an orderly manner, ensuring security of supply and energy affordability to New Zealanders,” said Mr Fuge.

In line with Contact’s decarbonisation strategy, the company will be taking a final investment decision on a 100MW battery in FY24. Contact has a preferred site option at Glenbrook, subject to consenting, and has resource consent to build at Stratford where Contact has existing operations.

“Investment in renewable energy flexibility in the North Island, close to retail load, is key to our strategy to lead New Zealand’s decarbonisation. With more intermittent renewables being introduced, grid-scale batteries will play an important role by storing energy during periods of low demand and discharging power into the grid during the peaks. This investment will reduce our reliance on gas peaking plant and will enable us to participate across physical, reserve and frequency-keeping markets,” said Mr Fuge.

Retail

Mr Fuge said Contact’s retail business has continued with targeted growth in FY23. “Multi-product customers are up 10% on FY22 driven by growth in our broadband business and supported by the introduction of fixed wireless broadband and expanded time-of-use offerings with the new Dream Charge EV plan. We’ve also been preparing to introduce Contact mobile, which will launch later this month.” Contact has been named as a finalist for Energy Retailer of the Year for the second year running.

Outlook

Looking ahead, Mr Fuge said the coming year will see Contact reaching significant milestones in the delivery of its strategy to lead the decarbonisation of New Zealand.
“We’re preparing for Tauhara to come online by the end of the year, which will be a pivotal moment for the company. We’re well on track to bring Te Huka 3 online by the end of 2024 and we’ll be taking final investment decisions on GeoFuture, Kōwhai Park and a 100MW battery all within this financial year. I’m exceptionally proud of the team’s dedication in laying the groundwork to realise our strategy.”
“We are excited about the future. We have a clear strategy, strong balance sheet with supportive shareholders and stand ready to execute on the opportunities in front of us to lead the decarbonisation of the New Zealand economy over the next decade.”

1/ MORE INFORMATION
Investors:
Shelley Hollingsworth
Investor Relations & Strategy Manager shelley.hollingsworth@contactenergy.co.nz
+64 27 227 2429
Media:

[winner69]

Report reads amazingly good but there are some big down numbers but as long as we focus on normalisation and the good things suppose all is fine.

In some respects I’m glad I don’t try to hard to understand how these companies work…..seems very messy and complicated

No pay rise for share holders this year

[RTM]

Report reads amazingly good but there are some big down numbers but as long as we focus on normalisation and the good things suppose all is fine.

In some respects I’m glad I don’t try to hard to understand how these companies work…..seems very messy and complicated

No pay rise for share holders this year

And taking inflation into account Winner ?

[winner69]

And taking inflation into account Winner ?

So really it’s a pay cut

Govt should consider cutting GST on power bills so retirees depending on their CEN divie as income don’t suffer too much

[RTM]

So really it’s a pay cut

Govt should consider cutting GST on power bills so retirees depending on their CEN divie as income don’t suffer too much

Yes. Good idea. Another non-targeted bit of tax relief. I suspect most people depending on the contact dividend are doing pretty well overall.

[troyvdh]

winner69 I love your sense of humour.

[Sideshow Bob]

https://www.nzx.com/announcements/426369

Contact Energy performance demonstrates underlying business health; Focus on asset delivery

Financial performance

Contact Energy has reported net profit of $153m in 1H24 and operating earnings (EBITDAF) of $354m. Reported figures include a net provision release relating to the Ahuroa Gas Storage facility (AGS) onerous contract of $29m within EBITDAF ($19m within net profit after tax and interest). Excluding the provision release, underlying net profit was up 70% on 1H23 to $134m and EBITDAF was up 26% to $325m.

The improved operating result was driven by closer alignment of channel pricing to the wholesale market and greater thermal efficiency, partially offset by lower hydro generation, reduced steam revenue following the closure of Te Rapa and one-off write-offs of $8m relating to damage to Peaker assets and the CRM system upgrade programme not continuing as originally planned.

Hydro volatility characterised operating conditions throughout the period, with flow-on impacts to wholesale pricing from more thermal generation. Contact increased contracted sales volumes in anticipation of Tauhara coming online in 4Q 2023 and with the delay to 3Q 2024 applied some mitigations to meet this position. At the same time, Contact has executed well on its channel mix and pricing strategies.

“The result has been a demonstration of strength in our underlying performance, setting us up well for the year ahead and we now expect to deliver underlying EBITDAF of $620m in FY24,” says Chief Executive Mike Fuge.

Operating free cash flow of $187m was up 163% on the prior year on the improved operating result, relatively lower levels of working capital due to higher thermal generation and lower tax paid on FY23 profit, partially offset by accelerated stay in business capex. The Board declared an interim dividend of 14 cents per share, in line with 1H23.

Demand

Negotiations with Rio Tinto have been constructive and have re-enforced Contact’s long-held view that the New Zealand Aluminium Smelter (NZAS) appears likely to stay. Contact is expecting a new agreement to be long-term, at a fair price materially above the current pricing, and including demand response (mitigating dry-year risk).

“A new long-term agreement would de-risk investment in new renewable generation, contribute to energy security and help to preserve an important export industry, supporting growth and decarbonisation of the New Zealand economy,” said Mr Fuge.
Renewable development

Remediation works got underway at Contact’s Tauhara geothermal development in November and re-construction of the steam separation plant is near complete. Tauhara is expected to come online in Q3 2024 at the initial design capacity of around 152MW (expecting 174MW from the first planned outage in 2025), and Te Huka 3 is on track to follow in Q4 2024.

“I’m extremely proud of the team that has worked hard over the summer to get Tauhara back into the full swing of commissioning. Both Tauhara and Te Huka will join Contact’s renewable generation fleet in 2024 and will add 1.9TWh per annum of baseload renewable output once full capacity is reached.”

Drilling, advanced steamfield design and tendering have progressed to prepare for a final investment decision in 2024 on GeoFuture, the replacement of Contact’s 65-year-old Wairākei geothermal plant. Final investment decisions are also expected in 2024 on a 100MW North Island battery and the Kōwhai Park solar development.

“These investments in new renewable technologies will contribute to security of supply as New Zealand decarbonises, said Mr Fuge”.

Decarbonising the portfolio

Emissions intensity from thermal generation was down ~30% on 1H23 driven largely by the closure of Te Rapa on 30 June 2023. Portfolio decarbonisation is just one aspect of Contact’s broader commitment to sustainability, which in December saw Contact win both the Sustainability Leadership award in the Deloitte Top 200 and move into the number one ranking of participating New Zealand companies in the DJSI Asia Pacific.

Contact expects to decommission its combined cycle gas generation plant (TCC) at the end of 2024. A planned outage at TCC was brought forward and completed in December with additional operating hours approved. Contact has also worked to accelerate the return of its spare peaker engine and is expecting GT22 to be in service for winter 2024.

Retail

Retail electricity net price has improved in light of rising energy and pass-through costs. Total connections were up 20,000 on 1H23, driven primarily by broadband. Contact also expanded its telecommunication offering with the introduction of Contact Mobile and boosted its time of use offerings with the introduction of Good Weekends. Contact remains focused on supporting our customers in energy hardship through ERANZ, with offerings like ConnectMe and EnergyMate, and directly with community groups like Women’s Refuge and Good Shepherd. Over the last twelve months Contact has provided in excess of one million dollars to directly support customers in energy hardship.

Outlook

Looking ahead, Mr Fuge said the next six months will see Contact reaching significant milestones in the delivery of its strategy to lead the decarbonisation of New Zealand.

“We are excited about the future. We have a clear strategy, strong balance sheet with supportive shareholders and stand ready to deliver on the opportunities in front of us to lead the decarbonisation of the New Zealand economy over the next decade.”