Good morning, and welcome to the Tauhara Project update here at Contact Energy. Today we're gonna have our CEO, Mike Fuge, give an update on the Tauhara Project one year in, and joined by our CFO, Dorian Devers. Over to you, Mike. Thanks, Matt. The purpose of today is just to bring you up to speed with the project. We're coming into the end of the drilling campaign. We've got a fair chunk of the contract, well and truly contracted now. We did think it was an opportune time just to give you an update. We'll get straight into it. In terms of project and its, the world in which it's going to operate and the economics, the market conditions have materially improved over the last 12 months, and the decarbonization demand we expect to accelerate. The resource itself, which Dorian will talk to, is absolutely world-class, and that has enabled us to upgrade the expected station output to 168 MW. Looking at the execution, it's a bit tougher, obviously because of COVID, but also because the station capacity expansion, which we've talked about, but the technology choices we'd made early in the project to enable that capacity increase to be possible. The project costs overall we expect to be about 21% or NZD 140 million higher than anticipated when we talk of FID almost a year ago. Look, what are the implications of this? We're gonna continue to invest in strengthening our renewable development capability. It's fair to say, we have a fantastic resource under the ground there, and well, it's beholden on us to develop our major project capability to ensure that we can deliver these projects well. The rates of returns, the IRRs for the projects remain incredibly attractive, particularly compared to both renewable and more traditional alternatives. You can see on the right there our assessment. The market has only strengthened the economics and demand for this project. The resource has got better and better, and in execution, schedule and cost remains a challenge. We're building the capability to ensure that over the medium to long term, we indeed do have the capability to execute these major projects well. If we just go to the market and how it's looking. Obviously a feature of the last 12 months has been in the announcement of new data centers or people intending to build data centers, including Microsoft, DCI and AWS. There was our own relatively small announcement about Lake Coleridge. These data centers we do see as a very positive development for New Zealand, particularly in the quality of the brands we're attracting here. In energy-intensive industries, look, Tiwai you saw the news this morning. It appears that an extension beyond 2024 is more likely than it was. The economics, as everyone's aware, have improved markedly. You've seen challenges internationally with higher energy prices where aluminum smelting capacity is actually being taken out of market because it simply is not economic. For our own part, we've signed two major electricity users for the Tauhara Project in terms of PPAs, Oji and Pan Pac, which is a great vote of confidence both in the renewable project that is Tauhara, but also in the intent of these international companies to stay in New Zealand for the long term to support the industrial base in this country. Of course, there's the work that we have been doing with Southern Green Hydrogen around hydrogen in the deep south. We've put the RFI, we've got a shortlist of preferred bidders, and we're targeting April 2022 for an announcement around that. Look, demand growth over the last 12 months has been incredibly positive. There's also been a lot of hard work that's been going with process heat conversion. We're not gonna claim all of the credit here. Some of our competitors have been very much involved in the conversion of process heat boilers. We also would like to acknowledge the role of EECA and the GIDI funding process, which has got stuck into process heat conversion projects. You can see the carbon price there and that the rise over the last 12 months has actually got us to our future faster where we can see process heat conversions as being incredibly competitive. They're now in a zone where with the carbon price they would be paying on otherwise traditional gas or coal, actively considering conversion to electricity is a real viable option. Even in baseload thermal substitution, you can see on the right-hand side there the amount that the carbon price is now attracting in terms of baseload electricity at NZD 75, and what the equivalent gas price would have to be to maintain that NZD 85/MWh. This in essence motivated us and Genesis to get together and sign that long-term PPA, which commences in January 2025 off the back of Tauhara. We think that provides momentum for further PPA discussions. Okay. On that note, Dorian, over to you. Thanks, Mike. Here I'll just give an update on the resource. Regarding the station capacity or the plant capacity, when we design the plant with the EPC provider, we always have one eye on a potential upside depending on the quality of the resource. The issue is you only get to really understand the full quality of the resource post bid when you've finished your drilling campaign. Some of the things we look for is the location of the resource. Obviously, we want it to be as close to the plant as possible, but also the temperature and heat fluid flow. You wanna have the right combination of those three things and, now that we've largely finished all of our drilling, we're confident that we do have that, so we can take the plant up to 168 MW, which is about 140 GWh of additional generation. In terms of extra CapEx, accounts for about a third of the additional CapEx increase that we're talking about today. The capital required for the extra megawatts is relatively low at NZD 2.7 million per MW, which is really good. It does obviously gets the benefit of being able to leverage the plant, the existing part of it, because you don't need to increase the size of that. The extra capacity is required for obviously a slightly bigger steam field and a bit more drilling to account for the extra fuel that's required. As Mike said, the market is looking more positive. Particularly you saw the announcement today from Rio. Probably not surprised to most people if you sort of understand the client demand and what's going on with global aluminum prices, that everyone was sort of expecting it to come, but it's obviously good that that's now been announced. What that does mean is the market's becoming more and more conducive for renewable development. It means that understanding resource potential is a very important topic that's actually understanding long-term value. In the past, we've talked a lot about, you know, consented fluid that's available to us, which actually is very difficult for anyone to derive some sort of meaningful financials from that. What we're trying to do now is talk about what's the most important topic is actually how much extra generation do you think you're gonna get from your fluids? On the right-hand side of your chart, that's what we're doing. There's a topic here called specific energy, which is how much generations you expect to get per unit of fluid. You can see there, the Tauhara resource is very, very good. At 45, I think it is, or maybe 46, I can't read it from here, NZD per MW. It's almost double what we are getting on the Te Huka plant that's on a different part of this field. The reason why the value's coming through so much more there with Tauhara is both the quality of the resource in terms of the heat within it, but then that allows you to leverage the latest technology around plant design. We're using a triple-flash, which basically means we're recycling the steam three times. To do that, you actually need to have a high quality of steam. It's those two topics, you know, leveraging the latest technology and the quality of the resource, which have enabled us to get such a big uplift in the specific energy relative to the Te Huka projects already on the field. Overall, that's increased our expected output from the Tauhara field by 0.2 TWh per year to 2.7TWh. Actually, those of you who have been watching Contact for a while will know this is actually the second upgrade. I think when I joined back in 2018, we were saying the field was gonna deliver 250 MW plus to Te Huka, which is 2.3 TWh of output. We're actually now 0.4 above that, which we're very happy about. Just to give yourself a full picture here, if you've got the same chart there on the specific energy for the Wairākei field, you'll know why we keep going on about GeoFuture and building a 170 MW plant up at Te Mihi to replace Wairākei, based on this chart, because the specific energy up at Te Mihi is considerably higher there. You can see it, 36 MWh per kiloton as opposed to the 25 down at Wairākei. That's what drives that 0.6 TWh of additional generation that we get from GeoFuture for no extra steam consent. That's why we're so excited about that particular investment. Overall, what does this mean in terms of our geothermal development? Currently sitting at 2.3 TWh per year. We expect it when fully built out in terms of consented fluids from Tauhara, plus the GeoFuture project completed, we expect it to increase by 3.2 TWh to 6.4 TWh. It's a little bit of rounding, obviously, in that calculation. I mean a caveat here that these numbers are based on assumptions, and the more we develop the field, the more accurate we're gonna get at those assumptions. I think the last topic just to mention around resources, you know, we're obviously constrained by the amount of consent that we can actually take, the amount of fluid we can actually take off Tauhara. So logically, can we take more? I think the answer to that is, well, potentially, but we are a more of a relative novice on the field at the moment, if you like. You know, the Te Huka, which is the one that's running, is quite small. In terms of the amount that we'll be extracting and reinjecting, that goes up by an order of magnitude when we're operating, Tauhara. So that will start to give us more data around the sustainability of the field in the long term, which is gonna be required, if we're gonna ask for an increase on our, consent. It is front of mind to us all because if that is possible, obviously, there's a lot of value in that, for us, but that will be a few years away just to manage expectations. Excellent. Right. This is the third item which we flagged earlier this morning. Look, it's fair to say that the team, we mobilized them shortly after FID, but COVID has thrown a bit of a curveball at us, both in terms of getting access to labor, keeping the site productive, but also supply chains. It's fair to say that over the Christmas period, in particular, the team have worked incredibly hard to mitigate a whole range of potential issues quite successfully. The EPC contractor we've given a COVID schedule extension and approved that. Look, we've had to be very flexible and adaptable in terms of the construction strategies that we put in place. It hasn't been a one size fits all. In a lot of instances, we have matched the remaining scope with the capability of the different contractors we have here in New Zealand. Around cost, the expected project costs are up by NZD 140 million to NZD 818 million. That's the all-in project costs. That relates to firstly, we talked about the marginal capacity expansion as a result of the drilling campaign and the steam field separation system, which now allows us to deliver that higher output. The drilling campaign in particular has been a fantastic example of risk mitigation with the much improved reservoir understanding the people have acquired as they've drilled, being applied to the next well, and the next well, and the next well after that. We've been delighted with those outcomes. The separation plant complexity, look, the triple-flash, it was beyond what we expected, given the experience we had almost a decade ago with Te Mihi. We're learning from that, and we've very much got on top of that scope requirement now with the near completion of detailed design. Then there's been the cost associated with COVID, whether it's been the escalation in commodity prices, the very tight New Zealand construction labor market with unemployment at an all-time low, and some global supply chain constraints. Now, in the chart below, we have actually broken that down about roughly where that NZD 140 million increase lands and how it can be divvied up. We're confident that 1, we've now got the capability in place to deliver the project on the schedule that we've put out there in terms of second half next year. 2, we've got a good handle on the cost with an allowance for any more uncertainty caused by COVID. If we're gonna develop this fantastic pipeline of development projects around Tauhara and Wairākei, it's really important for us as a company that we build the major project capability and sustain it over a good long period. That's very much what we've been doing in this last 12 months, is complementing the resources we had with new resources, including Jack Ariel, the Major Projects Director, who has significant international experience, and just building up the capability to match what was a very agile internal team. We've had to think on our feet in terms of matching the scope that we had in front of us with what's actually available here in New Zealand. We've brought together a range of contractors to deliver the different pieces of scope, whether it's the flash plant, the flow lines and pipelines leading into the plant, and the buildings which will contain the control systems and electrical equipment. This will be key to the future. It's important that once we get match fit, we keep going, we maintain that capability. New Zealand is a small place. Major project capability, by and large, is in short supply. Now that we've got a good team led by Jack, together, the intent is that we will maintain that team. In terms of geothermal development going forward, look, we expect that geothermal development typically will range between NZD 4.5 million-NZD 5 million a MW, which will be dependent on the resource quality, which Dorian talked to, and also the technology choices you make, whether you go for the open-cycle or a binary-cycle plant. It's important to hold those numbers, but also set them in context, remembering that geothermal typically has those very, very high capacity factors, in excess of 95% compared to, say, 35%-40% for wind or less than 20% for solar, if you're lucky. We expect that the increase in construction costs will be recovered through both the updated PPAs that we might sign in the future and indeed the market pricing, and you can already see the effect in the forward curves on the ASX on that. Look, on that note, we've got one more slide there which we issued today. We're happy to take questions 'cause I imagine there's a few questions out there around both the project itself, the resource, what's happening in the market, the commentary from Rio earlier in the day. Happy to cover that full scope. Yeah. Thank you very much. If you have questions, can you please send them through the Q&A function, and we'll do our best to get through them today. Got a couple questions coming through. The first one is from Andrew Harvey-Green from Forsyth Barr. Could you please provide any more specifics on the 34% of cost that has been tagged as COVID uncertainty as part of the 52% COVID impact bowl? Yeah. It's just the change of contracting strategy is to provide cover in terms of any reimbursable elements we still have in the plant scope. Also to cover any material price increases for works or materials which aren't yet ordered. Dorian, is there anything else? Yeah. It's a lot of it's around more of the going forward stuff. You know, we know we've reflected what's happened to commodity prices and construction rates based on what we know at the moment. As Mike said, because of the environment we're in, whereas previously we would've had fixed price protection on some of these packages of work, we're not gonna be able to get that. We don't expect completely, so you've got reimbursable elements now within there, so we've got to manage the risk around that, which I'm sure we will do, you know, based on the additional capability that we've got in around managing contractors, you know, productivity levels to deliver at a certain price, which is not something you have to worry about with a fixed price contract. It's topics like that, Andrew. Second question for Andrew: Is there any impact on the TCC closure from today's announcement? No, there's not. Obviously the whole thing with TCC is the flexibility that we have in picking a closure date. Obviously the market dynamics, as demand holds up, they could alter that. TCC provides an excellent insurance policy for Tauhara delays. In that regard, we haven't changed our plans in terms of the potential closure 2024. The big thing we hold on TCC, we are flexible and we will maintain that flexibility to ensure that we can respond to market demands as they arise. Andrew, as you all know from our operating stats, we haven't been using TCC as much as we've used in previous years, so we've got plenty of operating hours under the previous C5 investment to keep us going if we need to keep TCC going for a little bit longer to align to Tauhara coming online slightly later. Perfect. Thanks. Next question is, small delay to Tauhara completion. Does the higher cost and supply constraints mean any delay for the next builds decision? When should we expect the next potential FID? Look, we're working on options. At the end, the short answer is no, because they're separate teams. The big thing that we've been very acutely aware of in the development of this geothermal pipeline is that we didn't overstretch the team. The idea was that we always had a sequence so that the drilling, the reservoir modeling, the actual build, the EPC contracting, as far as possible was sequential. That major project capability that we built up under Jack can go from one project to the next. We still managed to submit our resource consent for GeoFuture at the end of last year. We are looking at other options around potential further development at Tauhara. We expect announcements around the timing of those to come forward. Certainly GeoFuture on track for a mid second half 2023 announcement for FID. We'll continue to look at other options we've got to bring any projects we can forward. Yeah. The only other thing I'd add on that is, we talked a bit about data centers and, they actually want additionality, which basically means that they wanna be able to point to a specific renewable asset that's been built to supply, their electricity. So obviously that means, as these data centers come to New Zealand, you need to build, to support them. You can't rely on existing assets and existing generation. The other point, obviously, is data centers load is, base load like our geothermal. In order for them to hit their carbon targets, you know, they need to actually be able to demonstrate that they have renewable supply actually aligned on a half-hourly basis to their consumption. So that means other forms of renewables which are more intermittent aren't attractive to them. That's our understanding. Another big tick for geothermal. Yeah, guess we should watch that space. Yeah. Can I just reference you back to that market analysis that we produced. The demand growth we've seen, and one is over and above what we anticipated from Tiwai. Tiwai is more likely than not, it seems, to stay open after 2024. When remember our decision on Tauhara, the FID decision was based on Tiwai going at the end of 2024. All of those factors combined to actually put a pretty strong pull on everyone's renewable energy development pipelines. There's a question just on that point, Mike. It asks, seeing positive demand growth signs in market, how much demand growth in gigawatt hours do you expect between now and 2025? Well, what we have been experiencing is I think the last two years, 1%-2%. It's all been normalized. I would expect that to continue. The big unknown is these step changes that we've seen with the addition of data centers in particular. Those announcements typically will bring with them anywhere from 0.1 TWh-0.4 TWh with each one of those announcements, and that could increase on that number of 1%-2%. Which is reflecting your usual economy growth, but also the entry of EVs into market. Now the next question comes from Jeremy Kincaid from UBS. Could you give us an idea of what the LCOE is for Tauhara pre- and post-capacity and cost upgrades? We normally go for Long-Run Marginal Cost as opposed to Levelized Cost of Energy, which would be low 60s now. Still, when you consider what the wholesale price is and actually what one expects it to go to in the long term around Long-Run Marginal Cost, that's still a pretty attractive project, which is why, you know, the IRR is actually funnily enough not too dissimilar to what we originally thought it was going to be 'cause the upsides from the downsides were largely offset. Next question from Stephen Hudson from Macquarie Securities. Thanks, James. Two for me. Any obvious implications from today's announcement for SIB CapEx levels in the medium term? And two, have you built in a contingency percentage into the NZD 880 million? So- Can I just say. No. Obviously, we're not gonna disclose our contingency for reasons of commerciality. Fair to say that we think it's an appropriate balance to reflect the mixture between a drilling campaign which is drawing to a close, an EPC contract which is lump sum and remaining scope, which is a mixture of lump sum and reimbursable. The other thing that we run over that is a probabilistic model to ensure that our costs are reflecting. We're aware of what the P90 and the P50 costs are gonna be. It's fair to say that our modeling reflects what we're putting in front of you today is looking close to the P90. We take those levels of care around this, and we think, on that basis, we've got a pretty robust allowance for contingency. We're not expecting to have any impact on our Stay in Business CapEx. I mean, the bigger impact on our Stay in Business CapEx is Omicron and lockdowns and having to sort of isolate our critical workers around the operating sites and meaning we can't get as much sort of maintenance done as we would normally do. Yeah, but no extra impact from this. Yeah. The only sort of key stay in business CapEx question is potentially the Wairākei extension post 2026, the capacity expansion. There's no read-through from these costs onto that final CapEx for that project. Oh, that's what Steven referred to as basic CapEx. Yeah. Fair enough. Sure. Next question from Cameron Parker, from Craigs Investment Partners. Could you please provide an indication of the remaining hours on TCC prior to closure? Off the top of my head, I don't know. I know we borrowed it a lot, and we've got enough. All I know. We'll get back to you on the answer. I think it's 5,000, but don't quote me on that. As Dorian said, it was enough to get us through to. In 2024 we had a number on that, didn't we? It did go into 2023 at least. Question from Jonathan Davis, from ACC. Are you looking to contract out a percentage of Tauhara generation in PPAs prior to completion? We already have a bunch of those deals with Oji Group and Pan Pac and Genesis Energy. If you take those deals collectively, they add up to 80? Is that it? 87 MW. We've got capacity for 168 MW, so we're just over 50% contracted and the other half nicely exposed to what looks like a very attractive merchant strip. There's one final question in the chat, and that's a question on, do you have any comment on the Climate Change Commission's position on new geothermal projects? We've been actively engaged with the Climate Change Commission on initially, their initial position on geothermal was a tad negative. A couple of differences there. Number one is our geothermal resource is extremely low CO2 intensity. Both Wairākei and Tauhara are between 20 grams and 50 grams per KWh, which makes them competitive with embedded wind and solar carbon footprints. We've engaged on that. The second thing which people always have underestimated is the economics of geothermal in this country, is that they've always underestimated the consequential development pipeline that was possible. We think it's got far more potential than what both I think what some of the Transpower reports and the Climate Change Commission in terms of their assumptions. Geothermal can compete at particularly low CO2 geothermal as we have. Its natural competitor overseas is nuclear energy, which is an order of magnitude cost higher. The last thing is that what we are excited about and we're getting on with this year is the ability to do carbon capture from geothermal. We hope to have that trial underway by the end of the year. The thing about geothermal which people forget is that the gases when they come off are very pure. The CO2 is CO2 and CO2 alone, virtually. It's easy to capture and with a little bit of clever technology get it back into the disposal stream and back to the reservoir from which it came. We're quite excited by that possibility. Those three factors combined, we think there's a lot more upside to geothermal than maybe people thought there was 18 months ago, and we've been engaging with critical stakeholders on that. Great. Thanks. No further questions today. Thank you for joining us and we look forward to seeing you with our results on the 14th of February. Thanks all. Yeah. Thanks. Cheers.