Tauhara Project Update

contactenergy.co.nz
8 February 2022

Tauhara project update: increased renewable
electricity output and improved market conditions,
but costs expected to increase

Contact Energy says the development of the new Tauhara geothermal power station
near Taupō is progressing well and is now expected to generate 168 megawatts, up
from 152 megawatts when the investment was announced a year ago.
1


Contact CEO Mike Fuge said Tauhara would generate more renewable electricity than
was initially forecast. “The way the power station has been designed means there is
flexibility to deliver a higher generation capacity. Given that the reservoir of geothermal
fluid is more productive than initially anticipated, we now expect to be able to deliver
to the full design potential.”

He said the “excellent news” about the increased capacity was tempered by an
increase in the overall costs of the Tauhara development, with project costs now
expected to total $818m, up $140m from the initial estimate of $678m.

“Obviously there are increased costs associated with the expansion in capacity and
some of the complexities associated with delivering this increased capacity, but like
every project across New Zealand we have some serious headwinds from the Covid19
pandemic to navigate which have impacted project costs.

“The pandemic’s tentacles reach far and wide and affect everything from increasing
commodity prices, to finding the right people in an ever-tightening labour market, to
the ongoing constraints impacting global supply chains.”

Mr Fuge said the Tauhara project was initially expected to be completed by the middle
of 2023, but is now expected to be on-stream in the second half of 2023. “It is a small
delay to accommodate the increased capacity – and we’re just being realistic and
pragmatic about our timelines as we continue to navigate the pandemic-driven
uncertainty.”

He said market demand for renewable energy had “markedly improved” in the past
year.

“We’ve seen the emergence of multiple datacentre projects, process heat conversions
ramping up, and strong appetite from industrial users for long-term electricity supply
deals. The overall economics for a renewable development like Tauhara will be
increasingly compelling.”


1
The Tauhara power station is expected to replace 1.4 terawatt hours of thermal generation per annum from New
Zealand’s electricity system, displacing over 500,000 tonnes per year of carbon emissions.

contactenergy.co.nz
-ends-


1/ MORE INFORMATION:

Investors: Matt Forbes
matthew.forbes@contactenergy.co.nz
+64 21 072 8578

Media: Leah Chamberlin-Gunn
leah.chamberlin-gunn@contactenergy.co.nz
Ph 021 227 7991

2/ PRESENTATION:

Contact CEO Mike Fuge and CFO Dorian Devers are updating analysts, investors, and
media on the Tauhara Project via a short presentation on Tue 8 Feb 2022 at 1.30pm. The
webcast details are set out below.

Live webcast
• To attend the live presentation, please enter the webcast here: LIVE EVENT LINK
• The live presentation will start at 1.30pm NZST.
• We recommend all attendees install the Microsoft Teams application on their device
as this offers seamless interaction, including superior sound and image quality
• If you would like to use your phone or tablet, you must have pre-installed the
Microsoft Teams application (available on all platforms).
• You may ask a question following the conclusion of the formal presentation by using
the ‘Q&A’ function at the top-right hand side of the screen when prompted. Your
written questions will be moderated, read out and addressed on the call as
appropriate.
• Microsoft Teams offers the ability to ‘Watch on web instead’ for laptops and desktop
computers should you choose not to download the application (i.e. by clicking cancel
when prompted to download the application). We recommend using the Chrome
browser.

Replay
• An archived replay will be available on our website once the presentation has
concluded.

---

1
1
8 February 2022
Tauhara project
update

2
2
Market
Schedule
Cost
Geothermal development
Capability
Execution
Process heat
Datacentres
Energy intensive industries
Thermal substitution
Resource
ImprovementDeteriorationNeutral / no-change
Key: Change over the last 12 months
Executive summary
3
of the progress over the first year of the project
Implications
Contact will
continue to invest
instrengthening
renewable
development
construction
capability to
deliver on our
capital investment
ambitions.
Geothermal
project rates of
return (IRRs)
remain attractive
relative to
renewable
alternatives.
1
2
3
Tauhara field capacity
Station capacity
Geothermal potential
Execution
Uncontracted costs at the final
investment decision (FID) are higher
than expected, predominantly
because of COVID impacts and the
station capacity expansion.
Project costs are estimated to
be around 21% or
$140m higher than
anticipated.
Marketconditions
have materially improved.
Decarbonisation demand
is expected to
accelerate.
1
2
Resourceis
world-class. The
expected station output
has been upgraded
11% to 168MW.
(previously 152MW)

3
3
Market update
New data centre buildEnergy intensive industries
Data centres proposed by the following companies
2,470
2,826
4,637
NZAS notice of
termination (Jul 20)
NZAS extension
(Jan 21)
+1,811
(+64%)
Al (US$)Al (NZ$)
Aluminium price
(/tonne)
Demand growth outlook markedly improving
Current
(Jan 22)
Several credible data centre owners have publicly announced they
are planning to invest in New Zealand.
The baseload characteristics of data centres make them attractive.
Hyperscale
data centres
Edge data
centres
20222024
2023
1
DataGrid
Tiwai smelter (NZAS) extension beyond 2024 appears likely:
•Aluminium economics materially improved.
•Rio Tinto carbon reduction targets aligned with extension
of the renewably powered NZAS smelter, without
renewable energy investment.
•Reduced international aluminium smelting capacity.
Alltrademarks, service marks andcompany namesare thepropertyoftheir respective owners. All company, product and service names used in this presentation are for identification purposes only. Use of these names, trademarks and brands does not imply endorsement or that they
are or will be customers of Contact and reflectspublic announcements of intention only.
A
B
C
•Request for information completed
•Request for proposals with preferred
bidders underway –targeting April
2022
Two major electricity users signed to long-term Tauhara
backed electricity signed (PPA). Contracts beginning
April 2024:
15MW / 10 years
10MW / 10 years

4
4
Process heat conversionBaseload thermal substitution
Since 2020, there has been $56m in confirmed GIDI funding for process heat conversion
projects.
Application of funding will drive conversions tonew electric boilers (~50MW). These
projects are expected online by 2023.
Baseload thermal generation fuel costs are expected to continue to remain above
estimated baseload renewable PPA pricing¹.
38
39
30
37
37
41
47
50
63
65
65
68
71
Jan-21Jul-21Mar-21May-21Sep-21Nov-21Jan-22
NZ carbon price ($/unit)
NZ ETS (ave)
11
18
28
45
74
102
57
40
Carbon at $75/unit2020
120
2021Carbon at $140/unit
85
Gas
Carbon
8585
$7.5/GJ
2022 real
Thermal fuel costs at average market prices
This issue is more acute when fixed operating costs and return on capital requirements are
considered.
PPA to support thermal substitution signed in August 2021:
•Long-term PPA signed with Genesis Energy (62.5MW) commencing January 2025.
•Commercial risk positions and agreement on key terms should accelerate
future PPA negotiations.
Market update
Demand growth outlook markedly improving
1
Rising carbon costs
(+85% on Jan 2021) are
nearing thermal / electricity
switching points for new
boiler investments if electricity
supplied long-term through PPA.
Current
carbon price
CCC 2030
estimate
$5.3/GJ
2022 real
$/MWh
Average market prices
¹ Ultimate pricing for renewable PPAs will include consideration of the offtake credit rating and credit support, the location of take, firming
commitments and outage cover and term.
13MW
boilers
Alltrademarks, service marks andcompany namesare thepropertyoftheir respective owners. All company, product and service names used
in this presentation are for identification purposes only. Use of these names, trademarks and brands does not imply endorsement or that they
are or will be customers of Contact and reflectspublic announcements of intention only.
Economic switching
range
$75/unit
Equivalent
gas prices

5
5
Station capacity
Flexible station design allowed
for higher production if the
reservoir was more productive
than expected.
Thetriple-flash separation plant
design was key delivering the
efficient use of geothermal fluid.
The additional capacity was
achieved at an incremental
capital cost of ~$2.7m/MW (this
is 45% below the all-in capital
cost)
152
168
Feb-21Feb-22
+16
Tauhara station capacity upgrade (MW)
Tauhara will deliver more renewable generation than expected
Resource update
2
Tauhara field capacity upgrade
Higher field productivity means
the expected Tauhara field
output, using all the fluid under
current consents, will be ~8%
higher (200GWh p.a.) than was
expected at FID.
Consented Tauhara geothermal field
fluid take generation metrics
TWh p.a.
kT/day
1.4
0.2
Direct heat
Te Huka
Tauhara
Remaining
fluid estimate¹
46MWh per
kT extracted
35MWh per
kT extracted
25MWh per
kT extracted
Expectations as at:
24.0
1.4
0.2
2.7
100.0
6.0
83.0
Consented
fluid take
1.2
Station
output
213.0
¹ Includes an allowance for make-up drilling at Tauhara over time

6
6
Tauhara resource has been confirmed as world class
Resource update
2
0.4
2.8
0.3
Tauhara
(under construction)
Current capacity
0.2
1.4
Te Huka (option)
1.4
0.3
0.8
GeoFutures
(net of Wairakei retirement*)
0.7
Tauhara (remaining)
2.73.4
Potential generation
under current consents
3.3
0.6
6.4
+3.2
Geothermal generation potential (TWh p.a.)
Geothermal field responses
to extraction and injection
will determine the ultimate
geothermal generation
potential beyond current
consents.
Geothermal pipeline
Wairakei
115.0
Te Mihi
and Poihipi
1.7
130.0
Consented
fluid take
1.1
Station output
2.8245.0
TWh p.a.
kT/day
25MWh per
kT extracted
Wairakei geothermal field fluid
take generation metrics
36MWh per
kT extracted
Future development on the
Wairakei field will most likely
focus on the higher enthalpy
Te Mihi production zones.
Wairakei field
Tauhara field
Ohaaki field
*Expected enthalpy decline at Wairakei is expected to be offset through continuous improvement
projects

7
7
ScheduleCost
CapabilityGeothermal development
Standalone geothermal
developments are expected to
continue to be executed between
$4.5-5.0m/MW².
This is dependent on resource
quality and the technology choices.
Increases in construction costs will
be recovered through updated PPA
or market pricing.
Additional major project
capability added to the existing,
experienced geothermal
delivery team.
Flexible owners works delivery
model to make allowances for
consideration of the capacity
of the contractor market and
supply chain dynamics:
•Aligning contractor
capability with scope vs.
blanket outsourced EPC
risk avoidance model.
Capability added for Tauhara
construction will be invaluable
in delivering future geothermal
developments.
Focused, major project delivery
group setup. Led by Jack Ariel.
Expected project costs are up by ~$140m to ($818m¹)
The cost increase relates to:
1.Marginal capacity expansion in drilling and the steam
field separation system to deliver the higher output.
2.Separation plant complexity beyond expectations.
3.Costs associated with COVID:
a.Commodity price changes.
b.Tight New Zealand construction labour market.
c.Global supply chain constraints.
COVID
impacts
~53%
Estimated sources of cost increase
$140m
Costs expected to be higher than anticipated
Execution update
3
11%
8%
31%
17%
34%
Commodity
prices
Labour
capacity
Capacity
increase
Plant
complexity (triple flash)
COVID
uncertainty
Strong mitigation plans in place
for COVID, Omicron variant has
increased the risks.
Supply chains remain under
pressure on the back of COVID.
Tauhara EPC contractor has
had a COVID schedule extension
approved.
Adapted construction strategies
to overcome current constraints
and align with contractor
capability.
¹ Total estimated construction costs related to this phase of development
(2008 –2024). Excludes capitalised interest.
Targeting second half of
calendar year 2023 for
station on-stream date
²The GeoFuturesproject (170MW) is expected to
leverage existing assets and could therefore be lower
than the range once the project is assessed and
appraised.

8
8
Key project metrics
February 2021February 2022Impact and commentary
Tauhara generation capacity
and expected annual output
152MW /
1.25TWh p.a.
168MW / 1.4TWh
p.a.
11% increase in renewable generation capacity.
Cash project cost¹
$678m / $4.4m
per MW
$818m / $4.9m
per MW
Capital cost up $140m (21%). Project holds contingency that reflects the uncertain
environment. Independent assurance underway to test the appropriateness of the
estimates in the new COVID impacted environment.
Contracted or spent (%)
60% of the $678m
~86% of the
$818m
EPC contracted at FID. Progress on contracting the remaining power station and
steam field components in line contracting strategy. Remaining cash capital spend
from 31 December 2021 ~$550m.
Expected operation date
Mid-2023
Second half of
2023
Tauhara back PPAs
contracted PPAs
0MW87.5MW
10 year + PPAs with creditworthy counterparties. Offtake linked to station production
and performance. Inflation protected.
Merchant strip pricing –
Calendar 2024²
$122/MWh$126/MWh
Futures prices for calendar 2024 continues to remain significantly above long-run
pricing expectations. Market-based pricing for merchant strip remains favourable.
¹ Total estimated construction costs related to this phase of development (2008 –2024). Excludes capitalised interest.
² Average settlement of the 2024 Otahuhu baseload futures contract for the two weeks prior the 15 February 2021
Project economics remain compelling