Snowtown Wind Farm Stage 2 Investor and Analyst Briefing 2626 … · 2012. 8. 27. · • 47 Suzlon...

Snowtown Wind Farm Stage 2 Snowtown Wind Farm Stage 2

Investor and Analyst BriefingInvestor and Analyst Briefing

2626 July 2012July 2012

Disclaimer

The information set out below relates to future matters, that are subject to a number of risks and uncertainties (many of which are beyond the control ofnumber of risks and uncertainties (many of which are beyond the control of TrustPower, which may cause the actual results, performance or achievements of TrustPower or the TrustPower Group to be materially different from the future results set out below The inclusion of the forwarddifferent from the future results set out below. The inclusion of the forward-looking information below should not be regarded as a representation or warranty by TrustPower, the directors of TrustPower or any other person that th f d l ki t t t ill b hi d th t th tithose forward-looking statements will be achieved or that the assumptions underlying any forward-looking statements will in fact be correct.

2Date: 26-Jul-12 Snowtown Wind Farm Stage 2: Investor and analyst briefing

Outline

• Key project information• Wind farm contract suite• Construction timetable• Approvals and regulatory framework• Project economics• Project economics• Financing• Sale of Snowtown 2 South – update


Project summary

• Site located 140 km north of Adelaide

Project summary

• 100 MW Stage 1 commissioned in 2008 – 44% long-term capacity factor, prior to Stage 2g p y , p g

• Stage 2: 270 MW, split into two separate wind farms– 90 × 3 MW turbines– 48 turbines for Snowtown 2 North (144 MW) – 42 turbines for Snowtown 2 South (126 MW)

• Total expected project cost ≤ A$439m• Capacity factor for Stage 2≈ 42% (40% North and 44% South)p y g ( )

• PPAs cover 100% of Stage 2 output


Site location and turbine layoutSite location and turbine layout

Direction of construction

Snowtown


Key contracts• EPC Agreement – Siemens Ltd

Key contracts

– Siemens SWT-3.0-101/108 Direct Drive WTG– Covers full installation, to commissioning and handover

• Warranty and O&M Agreement (WOM) – Siemens Ltd– Comprehensive availability warranty and full service O&M coverage

for 15 years from first turbine handovery

• Power purchase agreements – Origin Energy Electricity Limited– Separate agreements for Snowtown 2 North and South with identical– Separate agreements for Snowtown 2 North and South, with identical

commercial terms– Agreements cover 100% of the energy and RECs– Expiry date 31 December 2030 with options to extend the energy– Expiry date 31 December 2030, with options to extend the energy

portion for a further five years at either a put or call price


Key contracts cont.• Transmission Connection Agreement – ElectraNet Pty Ltd

Key contracts cont.

– 25-year agreement finalised

• Land– 25-year agreements in place with all 24 landowners– TrustPower will have the ability to repower the site at the end of these

agreementsg– Strong community and council support of the project

• Transmission line – Downer EDI Pty LtdTransmission line Downer EDI Pty Ltd– 28km transmission line (275 kV) to be constructed between wind

farms and the market connection point, a new substation on the Para-Bungama lineu ga a e

– Line and substation will be owned by Snowtown 2 North and shared by both wind farms


Construction timetable

2012 2013 2014

Construction timetable

Financial Close and

2012 2013 2014

Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4

Notice to Proceed

Wind farm construction

Wind farm completion and handover

Transmission line and connection

KeyDesign, delivery and construction

Commissioning and reliability testing

Major milestoneand construction reliability testing

First h i ti

Snowtown S th l t

Snowtown N th l t


synchronisation South complete North complete

Approvals secured

D l t Pl i A l W k fi ld R CDevelopment Planning Approval Wakefield R.C.

Foreign Investment Approval FIRBForeign Investment Approval FIRB

Generation Licence ESCOSA


Supporting regulatorySupporting regulatory framework

• Emission Reduction Target– Australia has committed to reducing greenhouse gas emissions to 5% g g g %

below 2000 levels by 2020

• Renewable Energy Target (RET)Renewable Energy Target (RET)– Australia’s Large-scale RET legislation is a key driver of renewable

investment– The Government is targeting 20% renewable electricity generation byThe Government is targeting 20% renewable electricity generation by

2020 (41,000 GWh)– Wind is likely to make up c. 75% of this total (≈ 9,700 MW, an

increase of 6,600 MW on current levels), )– The LRET scheme runs to 2030, which supports long-term PPAs


Project economics

Turbine price PPA Currency Wind resource / technology matchtechnology match

Star alignment++

Swift execution=

Shareholder value


Project economics cont.Project economics cont.Snowtown 2

SouthSnowtown 2

North

TotalSnowtown South North Stage 2

Capacity (A$m) 126 MW 144 MW 270 MW

Long term expected annualLong term expected annual yield(at market connection point)

481 GWh 504 GWh 985 GWh

C it f t 44% 40% 42%Capacity factor 44% 40% 42%

CAPEX (A$) 182m 257m 439m

(A$m/MW) 1.44 1.78 1.63

Assumed mid-life ref rbishment $400 000 $400 000 $400 000refurbishment (A$ per WTG, years 16-20)

$400,000 $400,000 $400,000

Ungeared Project IRR >15.0% >13.0% >13.5%

12Date: 26-Jul-12 Snowtown Wind Farm Stage 2: Investor and analyst briefingRefer significant assumptions slide 21 and 22

Snowtown Stage 1Snowtown Stage 1A successful investment

• 47 Suzlon S88 turbines (98.7MW) plus prototype 2.1MW turbine

389 GWh long term• 389 GWh long term expected annual output

• Commissioned 2008

• 44% long term expected capacity factor before commissioning of Stage 2


commissioning of Stage 2

Snowtown Stage 1Snowtown Stage 1A successful investment

60%

Wind Farm Capacity Factors (SCADA Data)

30%

40%

50%

y Factor %

10%

20%

Capacity

0%

Aug‐09 Nov‐09 Feb‐10 May‐10 Aug‐10 Nov‐10 Feb‐11 May‐11 Aug‐11 Nov‐11 Feb‐12 May‐12

Snowtown Stage 1 Avg NEM WF CF (Excl Snowtown Stage 1)

• Snowtown forecast long term output expected to reduce by 19 GWh once Snowtown North constructed due to wind shading

• Capacity factor will reduce from 44% to just under 42%14Date: 26-Jul-12 Snowtown Wind Farm Stage 2: Investor and analyst briefing

• Capacity factor will reduce from 44% to just under 42%

Financing – CommittedFinancing – Committed Sources of Funding

• TrustPower Group has committed debt facilities of

TrustPower Group Funding Sources (NZD millions) committed debt facilities of

close to NZ$ equivalent 1.5 billion

40118

238 NZD Bank238

674

NZD Bank

ECA Facility

Sub Bonds

Senior Bonds

240

AUD Bank

Unutilised Bank

186


Financing – DebtFinancing – Debt Maturity

Debt Maturity (Including Commitment to Fund Snowtown II)

NZD/AUD 0 80

• Over the next 12 months long term $A f di ill b ht

500

600

700 NZD/AUD 0.80 funding will be sought

to refinance AUD bank facilities used for Snowtown Stage 2

300

400

500

NZD

million

Snowtown Stage 2

100

200

‐0‐1 1‐2 2‐3 3‐4 4‐5 5+

Years to Maturity

Subordinated Senior ‐ Drawn Senior ‐ Committed for Snowtown II Senior ‐ Undrawn


Financing –Financing Group Gearing Ratio

Debt:Debt+EquitySell South post construction Hold South Long Term

35%

40%

45%

50%

quity

10%

15%

20%

25%

30%

Deb

t:Deb

t+Eq

0%

5%

10%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Financial Year Ended March

Refer significant assumptions slide 21 and 22



Financing – Group GearingFinancing Group Gearing

4.5

Debt/EBITDAFSell South post construction Hold South Long Term

2 5

3.0

3.5

4.0

TDAF

1.0

1.5

2.0

2.5

Deb

t/EBIT

‐

0.5

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017


Refer significant assumptions slide 21 and 22


Impact on theImpact on the TrustPower Group

Snowtown 2 Snowtown 2 Total Snowtown

First full year of operation of Snowtown 2 project – FY16

Snowtown 2North**

Snowtown 2 South

Total Snowtown Stage 2

CAPEX(A$m) 257 182 439

EBITDA (A$m) 41.2 36.7 77.9

NPAT (A$m) 8.6 11.3 19.9

Operating Free Cash Flow (after tax and debt service) (A$m) 21.5 20.4 41.9

Earnings per share (NZ cps)* 3 4 4 5 7 9Earnings per share (NZ cps)* 3.4 4.5 7.9

* Exchange rate of NZD/AUD 0.8000 assumed** Includes impact of wind shading on Snowtown Stage 1


Snowtown 2 SouthSnowtown 2 South sales process update

TrustPower has two potential avenues to sell Snowtown 2 South:Snowtown 2 South:

1. Sale completed soon after financial closeExclusive process commenced with a potential co-investor that was p pshort listed but unable to provide binding bid by targeted financial close.

2 Sell at commissioning (2014)2. Sell at commissioning (2014)Potential to offer pre-committed long term funding package.Large pool of potential co-investors interested once construction risk

d i l di f fi i l i t i t t d iremoved including range of financial investors interested in renewable infrastructure assets.


TrustPower’sTrustPower s Australian vision

• Snowtown Stage 2 will be the first of several wind f d d d i h ifarms constructed and managed with co-investors

• By 2022:– TrustPower will own 600MW of sustainable generation– It will have built another 600MW for its development p

partners, for which it continues to play a management role• Our Australian pipeline currently consists of p p y

approximately 1,280 MW of potential wind options


SignificantSignificant AssumptionsProject related assumptions

Capex• Based on pricing under fixed price contracts with Siemens Ltd (“Siemens”), Downers EDI Engineering Power Pty Ltd and ElectraNet Pty Ltd• Portions in foreign currencies converted to A$ using rates set by forward exchange contracts. 100% of foreign currency exposure is covered by o t o s o e g cu e c es co e ted to $ us g ates set by o a d e c a ge co t acts 00% o o e g cu e cy e posu e s co e ed by

forward contractsEBITDAF • Revenue based on fixed price contract with Origin Energy Electricity Limited (“Origin”) and long term expected average wind volumes• Maintenance costs based on maintenance contract with Siemens• Landowner royalties based on land rental agreements• Other costs estimated based on existing wind farm costsOther costs estimated based on existing wind farm costs• Fair value movements on financial instruments will be zero as hedge accounting is used for foreign exchange cover.NPAT• EBITDAF less interest (based on expected average TrustPower Group Australian funding cost), depreciation (at 5%) and tax (at 30%)Free cash flows• NPAT plus depreciation and less capex (assumed to be nil in first year of operation i.e. the first full year post commissioning)EPSEPS• Based on expected $A NPAT converted to NZD at 0.8000 divided by number of TrustPower shares on issue (less treasury stock held by TrustPower)Wind volume/capacity factors • Based on independent expert assessmentUngeared Project IRR• Based on project cash flows (being EBITDAF less cash tax and capex) p j ( g p )• Revenue post fixed price contract with Origin based on estimated price path• Maintenance costs post contract with Siemens based on cost in last year of contract• Project life assumed to be 25 years, after 25 years value assumed to be book value of roads, substation and electricity reticulation system• Inflation assumed at 2%


SignificantSignificant AssumptionsGroup Funding AssumptionsDebt:Debt+Equity• Snowtown Stage 2 capex funded entirely through debt. • No other major items of capital expenditure over and above normal operating capex.j p p p g p• Equity increased by profits less dividend and an inflation driven revaluation of generation assets.• Profits are defined as EBITDAF less interest (based on expected average TrustPower Group funding cost), depreciation (at existing rates as per note

2.6 of the 31 March 2012 financial statements) and tax (at 28% in New Zealand and 30% in Australia)• EBITDAF on existing business growing in line with electricity wholesale prices (flat over first three years then lifting)• Snowtown Stage 2 EBITDAF in accordance with above assumptions Under the scenario where Snowtown 2 South is sold post construction the saleSnowtown Stage 2 EBITDAF in accordance with above assumptions Under the scenario where Snowtown 2 South is sold post construction the sale

proceeds reflect the capital expenditure plus an estimate of the expected net present value of future earnings less tax (capital gains tax and stamp duty)

• Dividends held flat at current cents per share• Free cash flows after dividends used to retire debt.Debt/EBITDAFDebt/EBITDAF• Based on same assumptions as debt:debt+equity


Snowtown Wind Farm Stage 2 Investor and Analyst Briefing 2626 … · 2012. 8. 27. · • 47 Suzlon...

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