CEN - Contact Energy

[divs4ever]

Contact Energy (’Contact’) will close its 44-megawatt Te Rapa power station in June
2023, reducing the company’s long-term scope 1 and 2 carbon emissions by 20 per
cent per annum. 1
The Te Rapa plant has been operating since 1999. It is a gas-fuelled cogeneration
plant, providing steam and electricity to Fonterra's Te Rapa dairy factory, and directing
surplus electricity back to the grid.
The current agreement for Contact to supply Fonterra with electricity expires in June
2023. Fonterra will acquire the plant’s auxiliary boiler and will continue to use these
assets for its dairy operations beyond June next year, but the gas turbine used to
generate electricity at Te Rapa will be retired.
Contact has a team of 16 people at Te Rapa. CEO Mike Fuge said it had been an
unsettling time, but it was good to be able to provide people with more certainty.
“It is business as usual until June next year, and everybody in our team at Te Rapa
will be looked after. After the power station closes, there will be some opportunities for
people to move across to Fonterra’s Te Rapa team or be redeployed elsewhere within
Contact.”
Mr Fuge said the closure of the Te Rapa power station next year aligned with Contact’s
strategy to decarbonise New Zealand and decarbonise its own portfolio. “We are
committed to ramping up our development portfolio to help meet the anticipated
demand for renewable electricity, complemented by reducing our portfolio of thermal
assets.”
This will reduce Contact’s long-term scope 1 and 2 emissions by 20 per cent – or
200,000 tons per annum.
“The gap in generation created by the closure of Te Rapa next year will be replaced
by new, renewable generation that is set to come on stream over the coming years,”
Mr Fuge said.
Currently 83 per cent of Contact’s electricity generation is renewable.
-ends

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i hold CEN

 

[divs4ever]

For the month of December 2022

The Customer business recorded:
• Mass market electricity and gas sales of 283GWh
(December 2021: 288GWh)
• Mass market netback of $122.17/MWh (December 2021:
$106.73/MWh)
» The Wholesale business recorded:
• Contracted Wholesale electricity sales, including that
sold to the Customer business, totalled 568GWh
(December 2021: 644GWh)
• Electricity and steam net revenue of $84.10/MWh
(December 2021: $83.33/MWh)
• Electricity generated (or acquired) of 612GWh
(December 2021: 684GWh)
• The unit generation cost, which includes acquired
generation was $27.01/MWh (December 2021:
$20.03/MWh)
• Own generation cost in the month of
$26.32/MWh (December 2021: $18.30/MWh)
» Tauhara project progress vs. target for December 2022 was
79% vs. 74% *
» Otahuhu futures settlement wholesale price
for the 1st quarter of 2023 (ASX):
• As at 18 January 2023: $187/MWh
• As at 30 December 2022: $167/MWh
• As at 30 November 2022: $138/MWh
» As at 18 January 2023, South Island controlled
storage was 107% of mean and North Island
controlled storage was 149% of mean
• As at 18 January 2023, total Clutha
scheme storage was 84% of mean
• Inflows into Contact’s Clutha catchment
for December 2022 were 76% of mean.
(November 2022: 117% October 2022: 73%
September 2022: 112%)
» As at 1 January 2023, Contact’s contracted gas
volume (including contracted swaps) for the
next 12 months is 13.45PJ**
» In light of the reduction in modelled storage
capacity at AGS, announced 21 December
2022, Contact is reviewing the contract with
AGS to determine potential onerous contract
treatment
For the month of December 2022
** Forecast gas volumes as notified by suppliers, actual gas received is dependent
on field delivery
Prior periods restated to account for metering costs, previously included within ‘Cost to serve’, have been
reclassified to ‘Electricity direct pass thru costs’ to better reflect the direct nature of these costs and to improve
comparability with the industry.
*The progress target for Tauhara follows an S-Curve model in line with standard project management practice
(for large scale infrastructure projects). This will result in more gradual increments in the reporting of target and
actual progress as the project nears completion in Q4 of 2023.


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DYOR

i hold CEN

will need to drop another $1 to tempt me to add more

 

[divs4ever]

Contact to revisit Wairākei development options

Contact has been working towards a final investment decision on GeoFuture - a new geothermal plant on the Wairākei steamfield, due to come online in FY27.

The project has been undertaken with the objective of replacing the Wairākei geothermal power station at a scale that maximises generation from the field.

To provide up-front confidence in schedule and cost estimates, advanced front-end design and a competitive tender for a large-scale power station have recently been completed.

Since the project was initiated, costs have increased through construction inflation as well as a weakened New Zealand dollar. On completion of detailed development activities, assessed total project costs have come in substantially higher than previously expected, with the impact of increased construction costs compounded at scale.

While geothermal project economics remain favourable, given the assessed total project cost and complex integration with Contact’s existing operations on the Wairākei steamfield, a range of alternatives will be revisited.

This includes a phased approach to new power station investment, potentially together with the longer running of existing plant. A phased approach would also reduce market and execution risk.

Based on the latest information, we would expect a scaled new build plant to cost over $7m / MW1 . Contact has resource consent to operate the existing Wairākei geothermal power station up to June 2031 and is assessing the operational, regulatory and capex requirements for the extended running of some of the plant.

We expect the additional capex requirements will be economic but meaningful. To undertake works critical to maintaining field development options, the Board has approved an additional $30 million of development costs, taking the total to $144 million.

Nearly all spend to date on the project is expected to deliver benefits under all options.

Contact will provide an update on Wairākei development options at its FY24 results.

“Continued long-term generation that sustainably optimises the take from the Wairākei steamfield is an important part of Contact’s renewable energy strategy and our commitment to decarbonise,” said CEO Mike Fuge.

“We are taking a disciplined approach to capital allocation and are fortunate to have an array of options at our disposal which can flex to changes in the external environment.”

- ends -

i took the 'exit ' option yesterday ( booked a profit not a little extra portfolio rise )