ORIGIN ENERGY IMPROVING RETURNS IN ENERGY MARKETS Investor Day Melbourne 10 June 2015
Origins strategy of connecting resources to markets is pursued through its 3 businesses, 4 priorities and 5 measures that drive continued improvement in Origins performance A regionally A growing A regional leader significant…
Improving Returns in Energy Markets Frank Calabria, CEO 4
The energy market continues to rapidly change Wholesale electricity market remains oversupplied Demand for gas is increasing with additional renewables required East coast gas demand1 Reserve energy margin (%)2 East Coast Total…
Consumers have more choice and are demanding more from their energy provider Strong retail competition for grid supply Distributed generation increasingly affordable 6
Origin aspires to become the most trusted energy solutions provider Customer centric organisation, using our knowledge of the customer to offer a range of energy related products and services Grid supply Distributed generation…
Becoming the most trusted energy solutions provider and improving returns in Energy Markets require focus on four clear Strategic Priorities A regionally A growing A regional leader significant position position in in energy…
Origin has made significant progress on these Strategic Priorities Progress to date Focus going forward Increased gas margins and market share Capture benefit of rising gas market Reduced cost to serve Remain competitive on cost…
Increased operating cash flow and reduced capital expenditure are improving returns m Energy Markets EBITDA and Operating Cash Flow Energy Markets EBIT / Sales Margin 1,600 15% 1,200 10% 800 5% 400 0 0% FY2011 FY2012…
Energy Markets is continuing to deliver improved returns by Expanding Natural Gas margins Maintain competitive cost of gas through legacy gas positions Maximise value of ramp gas opportunities Commencement of long dated and well…
Energy Markets team Frank Calabria CEO Greg Jarvis Tony Lucas David Smales Rebekah Jon Briskin Phil Mackey Andrew Bills Phil Moody GM Wholesale GM Energy GM Generation OFlaherty GM Retail GM Solar & GM LPG & HSE GM &…
Maximising Gas Value and Flexibility Greg Jarvis, General Manager Wholesale & Trading and Business Sales
Gas portfolio flexibility in rising price environment 1 Competitive advantage Gas demand increasing in cost of gas 2 Gas prices rising in all markets Increased gas market 3 share Origin has a strong gas supply position ...…
East Coast demand increasing through LNG start up East Coast Total Supply Demand PJ East Coast Gas Demand1 2,000 1,500 1,000 500 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Curtis Island…
Changing nature of east coast gas market and increasing production costs leading to higher wholesale and retail gas prices Australian domestic gas prices Wholesale component of are moving towards export parity retail tariff (NSW)3…
Origins gas for power generation will be sold into the higher priced LNG market ... NEM Prices from 1 January 2015 to 8 June 2015 300 250 Options to call back gas to run generation at 200 prices above 100/MWh, or /MWh…
In an increasingly tight market, access to reserves at competitive prices is an advantage Sources of Energy Markets East Coast Gas Portfolio Equity resources (Bass PJ/a 300 Gas and Otway) and long Ironbark Other Purchases (Price…
Access to gas reserves is complemented by transport capacity and flexibility Historically Queensland gas has flowed to the southern states, however this will reverse once LNG trains are operational Moomba During ramp phase,…
Flexible gas transportation and generation portfolios have allowed Origin to monetise available ramp gas in Queensland Energy Markets Sources and Uses of Gas PJ Sources 120 Uses +28 PJ of ramp 100 gas +6 PJ into generation 80…
Origins competitive advantages will allow it to continue to capture benefits of rising gas prices, near term ramp gas opportunities, increasing sales volumes and market share ... Natural Gas Gross Margin Continued rising domestic…
Maximising Fuel and Generation Flexibility Tony Lucas, General Manager Energy Risk Management
Fuel and generation flexibility in a market with uncertain demand outlook and increasing renewable supply 1 Downside risk to the demand outlook 2 Increasing energy supply & volatility in the NEM Competitive cost of 3…
While some demand growth will come from LNG, increased solar penetration and energy efficiency is expected to continue Rooftop solar penetration continuing, with batteries Demand growth primarily in Queensland on the horizon…
Gas-fired generation will decrease as gas prices rise, however with more certainty on the 33 TWh RET, energy supply will increase as wind and/or utility scale solar are built Gas fired generation reduces in Queensland and Renewables…
Increases in renewables to achieve a 2020 RET will extend the supply curve and place downward pressure on wholesale prices Supply curve changes with additional 14 TWh of Origin able to continue buying from the pool in a renewables…
Origins LRET portfolio has flexibility to contract or build longer term ORG LRET Origins position LRET position1- 33 TWh 8 7 Number of LRECs (millions) 6 5 4 3 2 1 - 2015 2016 2017 2018 2019 2020 2021 2022…
The intermittency of wind will likely increase volatility for which Origin is well placed to benefit through its gas-peaking portfolio Intermittency of renewables increases reliance on Wind variability driving volatility in SA…
Enough wind has received DA approval to meet the 5 GW of new wind equivalent required under a 33 TWh target 5GW of wind required to be built, with 6GW already More economic to build wind rather than pay having required approvals in…
In a market which is expected to remain oversupplied Origin has a competitive cost of electricity through its flexible generation portfolio with a short position to the pool ... Origins Generation Flexibility Capacity Energy 9,000…
Origins fuel position is heavily weighted to gas where market prices are increasing 3.50/GJ+ Large portion of fixed priced gas in Origins supply Coal currently contracted to 2022, with options to position increase at low prices…
Erarings fuel position is contracted at less than 40% of its total capacity with high quality coal Power station flexibility Coal supply flexibility & increased ability to stockpile Eraring fuel position (2017) 12 10 Ability…
Across the NEM energy costs are expected to be highest in Queensland given LNG load and gas price increase Queensland Strongest energy growth due to LNG load and withdrawn gas-powered generation Highest capacity value due to…
Generation Operations David Smales, General Manager Generation
Continuing to increase performance and lower costs through the development and execution of effective asset management strategies 1 Effective asset management Increased asset performance 2 Portfolio flexibility, scale &…
Continued execution of asset management strategies to maintain portfolio flexibility and performance at lowest optimal cost Controlling & optimising costs Lowering capital requirements Generation Generation Capital Expenditure…
Origins Generation portfolio provides flexibility, scale and diversity to support a competitive cost of electricity whilst also leveraging gas transportation capability A highly flexible Generation Portfolio with scale1 A proven…
Eraring continues to make a significant contribution to Origins Generation portfolio and lowers its overall cost of energy Improving asset management performance Contributing to Origins lower cost of energy Eraring Operating Costs…
Origins gas fleet continues to underpin the portfolios strong performance track record, responding well to rapidly emerging market opportunities Improving asset management performance Sustained high performance and flexibility…
Generations Monitoring & Support Centre underpins asset management strategies and operating model, providing systemic ongoing performance improvement across the portfolio Leveraging technology to help drive performance Employing…
Building Loyalty and Trust Rebekah OFlaherty, General Manager Marketing, Sales & Service Jon Briskin, General Manager Retail Customer Operations
Continued execution of Origins customer agenda, improving loyalty and trust while lowering cost to serve 1 Value-based retention Improved net promoter score 2 Origin branded channels Improved churn relative to market 3…
Competition today is predominantly price led. Origin will continue to meet the market on discounts to defend market share Origins Average Signed Discount Offers for Electricity and Competitor offers in market Natural Gas (%) VIC…
Data and analytics enable identification of high value customers, providing a basis upon which Origin tailors offers and service levels Based on Customer Lifetime Value Delivering benefits for customers and Origin Proactive…
Origins digital platform and sales / service operating model has enabled customers to use Origin branded channels as the channel of choice Dedicated sales and service Higher internal sales channel mix New integrated digital…
Origin is moving towards an OMNI customer experience ... ... offering customers greater flexibility and enabling an integrated experience across channels with deeper customer insight 46
Origin is improving communication with its customers Simpler, shorter communications Keeping customers informed Bill due reminder Connection reminder Origin Origin Hi. Just a friendly Hi. Your elect r icit y reminder t hat…
Executing on the Retail Transformation project has enabled Origin to improve operational metrics and bad debt exposure Improving our operational performance Favourable movement in core metrics to date Days Sales Outstanding and 90+…
Benefits of Retail Transformation are evident in reducing cost to serve Cash cost to serve down ... ... with further reduction from Cash Cost to Serve (m)1 Continued reduction in bad and doubtful debts 800 More efficient and…
Building loyalty and trust starts with our people, and our cultural transformation is well under way Reward & recognition tied to New ways for our people to NPS operating model customer experience help our customers 50
Origins journey to build customer loyalty and trust continues Earlier FY15 Coming up Expansion into Entered ACT Open Innovative new Embedded Electricity market Saturdays energy products Networks Contact Centre Customer…
Origin continues to grow the core energy business into new areas Growing Origin water and Entered ACT market Growing multi product holdings embedded energy solutions Entered ACT market September 2014 Leading provider of…
Leveraging our Capability 53
Deepening knowledge of the customer enabled through growing capabilities in data and analytics ... together with core ...deepening our knowledge Core data sources ... platforms ... of the customer Digital Product…
Leveraging Capability Floor Walks Metering capability through our Social media managing engagement Leveraging our capability in SAP established Acumen Metering with our stakeholders business 55
Growing Solar and Energy Services Phil Mackey, General Manager Solar and Emerging Businesses
Growing new products and services 1 Origin will lead the solar market Market share 2 Deliver Solar as a Service Customer experience 3 Expand service offerings 4 Harness new technology Products per customer 57 57
Solar will play a significant role in the future energy landscape; Origin aspires to be 1 in rooftop solar Residential SME / Commercial Remaining addressable market greater than Delivered commercial solar projects and built 5…
59 40,000 60,000 80,000 100,000 120,000 20,000 0 True Value Solar Source: Origin, SunWiz Origin Energy SolarGain SolarpowerRex Modern Solar NU Energy Premier Solar Shop Green Engineering P&N (Euro Solar,…
Origin has been trialling, learning and building new capabilities across new energy technologies, products and business models 2002: Origin delivers its 2010: Origin installs its 2014: Mitsubishi EV first solar offer in the 10,000th…
Solar as a Service creates long term relationships with our customers and delivers increased value for both parties TODAY & THE FUTURE Solar as a Service ... Dont Waste Your Roof Delivers solar at 0 upfront - customer pays for kWhs…
Origin aspires to be 1 in the solar market by delivering on the key value drivers Value created Lowest Cost To Acquire Large, investable portfolio of energy assets Lowest cost of Deeper, longer term customer relationships…
Origin is leveraging its retail experience and harnessing opportunities to deliver home energy services 10 years+ experience Extending service offers Moving to a deep delivering services into customer relationship homes…
Extending into other energy services and products, including batteries Our insights into battery use confirm that there Origin is developing solutions that match is not one battery that fits all customer need with the right battery…
Improving Returns in Energy Markets Frank Calabria, CEO 65
Energy Markets Strategic Priorities Progress to date Focus going forward Increased gas margins and market Capture benefit of rising gas market share Remain competitive on cost of Reduced cost to serve electricity through…
Energy Markets is continuing to deliver improved returns by Expanding Natural Gas margins Maintain competitive cost of gas through legacy gas positions Maximise value of ramp gas opportunities Commencement of long dated and well…
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