1. Thermal GEM assumptions Erwan Hemery 12 May 2009

2. Number of peakers available Before: 15 peakers - 10 diesel and 5 gas, total capacity = 2500 MW Now: 37 peakers - 24 diesel and 13 gas, total capacity = 2960 MW Engine capex and HR The capex decreases with the installed capacity and the capex increases with the efficiency – intercool system 15-20% more expensive Reference: GTW handbook 2009

3. Peakers details Gas peakers Diesel peakers Assumptions: 80 % of the total cost is exposed to foreign currency e.g. LMS100 US$709/kW at exchange of 0.8 = NZ$886/kW + 20% for local cost = NZ$1063/kW at exchange of 0.5 = NZ$1418/kW + 20% for local cost = NZ$1701/kW Location: Marsden, Otahuhu, Huntly, Port Maunganui, Whirinaki, New Plymouth, Gracefield and Islington. Location: Stratford, Southdown, Otahuhu, and Huntly.

4. Peakers O&M costs Average is presented above but fixed and variable O&M would differ between engine size and type (decrease vs capacity and more expensive for diesel engine) For the gas engine an extra $2/GJ is added on the top of the gas price to reflect gas flexibility

5. CCGT Reference: GTW handbook 2009 and GE website

6. CCGT details Assumptions: 80 % of the total cost is exposed to foreign currency e.g. US$600/kW at exchange of 0.5 = NZ$1200/kW + 20% for local cost = NZ$1440/kW

7. Coal Assuming exchange rate of 0.6 for the triangles O&M coal should be ~$100/kW instead of $40/kW Adjust Coal/Lignite capex price as the CCGT capex has been changed : roughly 2.33 times more expensive than CCGT (~ $NZ 3300/kW)

8. Coal and Lignite HR HR values in GEM average at 10,000 GJ/GWh (36 %)…this is true for existing subcritical (180 bar, 540 o C) New subcritical coal plant with conventional environmental controls operate closer to 39% efficiency Supercrital steam-cycle (240 bar, 570 o C) have become the system of choice in Europe and USA and have efficiency in the range of 42% to 45%. IGCC and ultra-supercritical plants could have 50% efficiency Coal HR in GEM: 8600 GJ/GWh (42 %) Lignite HR in GEM: 9300 GJ/GWh (39 %)

9. CCS Before we had a gain in efficiency but that’s the opposite there is a loss in efficiency caused by the capturing ~ 10% less then a standard Coal CCS cost has been set to twice the price of standard coal (IEA,2006) – cheaper in the future? Calculation shows that CCS break even with Coal at a carbon charge of $110/t (good agreement with IEA). IEA says in the future break even could be at ~$NZ 90/t roughly equivalent to a 10% decrease of capex …in the base case ($75/t) we need to drop the capex by 25% to built CCS instead of Coal or set the carbon charge higher (do we want Coal generation in the TTER base case?) CCS has been set to $US 2800/kW

10. Pipeline costs Rough calculation to add an extra concost to the gas fired station depending on their location (steady state isothermal gas flow model) Sfd and Hly no gas concost Swn, Ota and hpi required gas concost Set all the potential CCGT and OCGT to max offtake and remove the constraint – get the diameter and the total cost (based on ITL costs estimate) Need to extent the Maui pipeline (750 mm) to Ota. Split the total cost (fraction of the volume used for each power station) for the 1 st 80 km For hpi an extra 40 km of 350 mm pipeline is required and half of the cost goes to 240 MW Rodney 1 and 240 MW Rodney 2. CCCT $m 20-30 OCGT $m 8-15