Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — FY2023 Earnings Presentation
57 slides from Engie Energia Chile's earnings presentation, Feb 14, 2024
Slide 1: 12M 2023 Investor Presentation
12M 2023 INVESTOR PRESENTATION ENGIE ENERGÍA CHILE 14 February 2024
Slide 2: Summary
SUMMARY FULL-YEAR 2023 RESULTS AND VIEW FOR 2024 2023 results 1.0 ADDITIONAL INFORMATION EECL and its transformation 2.0 ENERGY TRANSITION Project development and construction status 2.1 ESG Our sustainability strategy 2.2 TRANSMISSION A glance at EECL’s transmission business 2.3 INTRODUCTION TO EEC
Slide 3: 12M 2023 Highlights
12M 2023 HIGHLIGHTS Fuel prices falling from 2022 record highs Tariffs reflecting fuel prices ups and downs Increased renewable generation + back-up PPA volumes LNG supply issues Lower dispatch of coal plants PEC & MPC law Pivotal expansion move in battery storage 3 ENGIE ENERGIA CHILE – INVESTOR PR
Slide 4: 6% Growth in Regulated Customer Sales
6% GROWTH IN REGULATED CUSTOMER SALES 3.4 TWh consumption under ~5 TWh/y regulated PPA in central Chile GWh Unregulated customers 600 Unregulated customers 450 2% decrease 300 mainly due to maintenance at Chuquicamata in early 150 2023 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 2022 2023
Slide 5: Spot Prices Back to ~50 USD/MWh in 2H23
SPOT PRICES BACK TO ~50 USD/MWH IN 2H23 Improved hydrology and lower fuel prices US$/MWh Average marginal cost 2022 average: US$127/MWh 280 260 @ 220 kV nodes North 240 2021 average: Center 220 US$95/MWh 2023 average: 200 US$87/MWh South 180 2017-2020 average: 160 US$52/MWh 140 120 100 80 60 40 20 J
Slide 6: Apr-23 – Mar-24: Presence of El Niño
APR-23 – MAR 24: PRESENCE OF “EL NIÑO” Hydro generation recovered in 2H23; good predictions for 1H24 2,700 Hydro generation in Chile 2,400 2,100 1,800 GWh 1,500 1,200 900 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2023 2019 2020 2021 2022 • In terms of hydraulic generation, as of end of Dec
Slide 7: Significant Coal Price Decline
SIGNIFICANT COAL PRICE DECLINE Coal prices hit all-time highs in 2022 US$/Ton Coal price indices 2022 avg: US$314/Ton 460 420 API 2 (cif ARA) 380 340 2023 avg: 300 API 6 (fob Newcastle) US$138/Ton 260 2021 avg: US$123/Ton 1H24 220 2019 average: Fwd. avg: US$63/Ton 2020 average: US$107/Ton 180 US$52/
Slide 8: Declining Coal Plant Availability in the System
DECLINING COAL PLANT AVAILABILITY IN THE SYSTEM Plant closures, limitations, planned and forced outages Coal plant availability in the system (3,476 MW avg. in 2023) 4,324 MW avg.2020 3,875 MW avg.2021 3,497 MW avg.2022 3,476 MW avg.2023 Mar-20 Jun-20 Mar-21 Jun-21 Mar-22 Jun-22 Mar-23 Jun-23 Feb-20
Slide 9: Natural Gas Availability in the Chilean System
NATURAL GAS AVAILABILITY IN THE CHILEAN SYSTEM Argentine gas available for EECL since October 2023 LNG prices LNG international markets 60 HH ▪ In 2022 the supply-demand imbalance, aggravated by the 50 Russia-Ukraine war, led countries to struggle to re -build stocks JKM 40 and secure energy supply.
Slide 10: Closing the Gap Through Back-up PPAs
CLOSING THE GAP THROUGH BACK-UP PPAS Contracted energy purchases climbing to 3.6 TWh in 2024 (30% of contracted demand) Supply sources to meet demand under Engie’s contracted portfolio [twh] 13 12 11 10 9 8 7 6 5 4 3 0.4 0.5 0.4 0.3 0.3 0.1 2 0.3 2.9 3.1 3.1 3.1 3.1 1 1.9 2.4 2.4 2.4 0.9 0.1 1.1 1.1
Slide 11: Portfolio Balancing Strategy
PORTFOLIO BALANCING STRATEGY More renewables, storage & back-up PPAs. Less coal, curtailment & spot exposure Energy sources and average supply cost GWh 150 3,000 100 2,000 50 1,000 0 0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21
Slide 12: 2023 Energy Supply: Seeking Portfolio Balancing
2023 ENERGY SUPPLY: SEEKING PORTFOLIO BALANCING Increased renewable production, back-up PPAs and LNG supply volumes US$/MWh 300 250 200 2023 Average monomic price 150 144 USD/MWh 2022 Av. price: 140 USD/MWh Other 2022 Av. cost: 114 USD/MWh 100 2023 Average fuel & electricity purchase cost 95 USD/MWh
Slide 13: EECL's Performance During the Energy Transition
EECL’S PERFORMANCE DURING THE ENERGY TRANSITION A closer look at 2023 results 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 2Q23 3Q23 4Q23 FY23 Var % Operating revenues (MUSD) 417.9 481.4 499.7 521.3 1,920.3 587.8 616.2 512.0 476.8 2,192.7 14% EBITDA (MUSD) 68.5 (8.0) 57.3 71.3 189.0 102.0 87.1 123.0 90.9 402.9 113
Slide 14: Strong EBITDA Recovery
STRONG EBITDA RECOVERY More balanced spot exposure, lower fuel prices & higher realized energy prices EBITDA +24 -37 (US$m) +38 -12 +57 Physical -15 Net -30 Average sales Margin capacity Margin +190 realized gas purchases transmission OPEX prices business 403 Lower business + SG&A fuel costs 189 Net
Slide 15: 2023: US$89M Net Income Before One-offs
2023: US$89M NET INCOME BEFORE ONE-OFFS Stronger operating results offset by non-cash asset impairments Recurring results NET RESULTS (US$m) +164 +13 -35 -9 -491 D&A, FX, taxes & Interest PEC 1(*) other expense +89 financial Net expenses +325 +11 -52 Income PEC 1(*) Net Loss EBITDA before financial
Slide 16: Healthier Cash Generation & PEC Sales
HEALTHIER CASH GENERATION & PEC SALES Cash needs financed w/operations, PEC sales & ~US$200m net debt increase NET DEBT & FUND FLOWS +50 -38 -507 (US$m) +119 +241 Income Insurance taxes premiums Accrued +524 interest / MTM -267 PEC / FX Cash from Receivables operations build-up Proceeds 1,844 from s
Slide 17: Price Stabilization Laws (PEC-1 + MPC)
PRICE STABILIZATION LAWS (PEC-1 + MPC) Effects on liquidity and financial cost. US$299m pending to be monetized Interest EVOLUTION OF PEC/MPC expense ACCOUNTS RECEIVABLE (“AR”) (US$m) 13 241 38 PEC-1 AR 221 Interest sales 2023 expense 15 294 39 Interest expense PEC-1 AR AR build-up sales 2022 329 20
Slide 18: Financial Structure
FINANCIAL STRUCTURE Making progress in reducing ND/EBITDA and extending maturity profile Investment-grade ratings Net Debt / EBITDA Excluding IFRS-16 leases International: 8.7 Fitch (Aug 2023): BBB Stable S&P (Sep 2023): BBB Stable 4.6 National scale: 2.7 Fitch (Aug 2023): AA- Stable 1.1 1.4 Feller
Slide 19: Recent Events and Action Plans
EECL’S PERFORMANCE DURING THE ENERGY TRANSITION Recent Events and Action Plans – Portfolio balancing to mark the road ahead Increased gas generation: ~24 TBtu LNG supply secured + tolling w/3rd party CCGTs Accelerated IEM plant repair 3.3 TWh/y back-up PPAs in 2023, up from 2.2 TWh/y in 2022 ~0.9 TW
Slide 20: Accelerating Investment in Renewables
ACCELERATING INVESTMENT IN RENEWABLES 2.1 GW renewable investment pipeline, 0.9 GW already done 0.9 GW 0.5 GW 0.7 GW* Already in portfolio Under Construction Under Development 2019 2020 2021 2022 2023 2024 (e) 2025-2027 (e) MW in operation 46 82 265 369 139 459 700 48 Monte Redondo 151 Calama 101 Sa
Slide 21: Accelerating Investment in Renewables: Capex
ACCELERATING INVESTMENT IN RENEWABLES US$1.6 bn investment in renewables & US$0.2 bn in transmission through 2024 MUSD 600 500 400 Renewables Renewables 380 300 422 Renewables Development Renewables 180 325 200 Renewables 64 Renewables 80 Renewables Transmission Renewables Transmission 13 202 50 100
Slide 22: What Can We Expect for 2024
WHAT CAN WE EXPECT FOR 2024 • Lower fuel costs EBITDAE CAPEXE • LNG + Argentine gas sourcing • Lower average spot prices US$450-500 US$530 • Renewable generation increase million million • New storage projects • PEC receivables monetization ND/EBITDAE • Improving debt maturity profile 3.8 times 2024
Slide 23: Our Guidance for 2024
EECL’S PERFORMANCE DURING THE ENERGY TRANSITION Our guidance for 2024 US$ millions 600 9.0 8.0 500 7.0 400 6.0 5.0 300 4.0 200 3.0 2.0 100 1.0 0 0.0 2018 2019 2020 2021 2022 2023 2024 (e) 2025 (e) EBITDA CAPEX ND/EBITDA 23 ENGIE ENERGIA CHILE – INVESTOR PRESENTATION 12M23
Slide 24: Key Messages and Action Plans
KEY MESSAGES AND ACTION PLANS Re-balancing portfolio Moving forward with Accelerating Accelerating Securing liquidity and through renewable energy transition with development of development of financing needs additions, back-up PPAs strong CAPEX in renewable projects renewable projects and and and L
Slide 25: 2.0 Additional Material
2.0 ADDITIONAL MATERIAL
Slide 26: 2.1 Energy Transition
2.1 ENERGY TRANSITION ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2023
Slide 27: Energy Transition
ENERGY TRANSITION EECL is embarked on a profound generation portfolio transformation 2018 2026 + 2.1 GW Renewables 1% 10% 8% Installed Installed - 58% 59% 29% 33% capacity capacity 0.8 GW Coal disconnection 1.9 GW 3.4 GW 2% Coal Gas Diesel Renewables Others Gas Diesel Renewables 0.7 GW Conversion 27
Slide 28: Generation Portfolio Transformation
GENERATION PORTFOLIO TRANSFORMATION Addition of 2.1 GW renewables 0.9 GW / US$1.0 bn already done LOS LOROS MONTE REDONDO CALAMA TAMAYA CAPRICORNIO SAN PEDRO (*) COYA BESS COYA 46 MWac – 2H19 82 MW – 2H20 151 MW – 4Q21 114 MWac – 1H22 88 MWac – 4Q22 101 MW – 4Q22 180 MWac – 1H23 139 MW/638 MWh – 4Q2
Slide 29: Generation Portfolio Transformation: Coal Closures
GENERATION PORTFOLIO TRANSFORMATION 0.8 GW of coal capacity to be closed by YE-2025 U12 U13 U14 U15 CTM1 CTM2 CTA CTH IEM -171 MW – 2019 -268 MW – 2022 -334 MW – 2025 =356 MW – 2026 =377MW – 2026 2018: US$ 53 million 2019: US$ 134 million IEM: Coal to gas US$ 491 million after-tax non-recurring impa
Slide 30: 773 MW Renewable Projects Added Since 4Q21
773 MW RENEWABLE PROJECTS ADDED SINCE 4Q21 1,510 GWh generated in 2023 (723 GWh in FY 2022). BESS Coya in operation 151MW Calama 114MWac 88MWac wind farm Tamaya PV Capricornio PV US$160 million US$84 million US$100 million investment investment investment COD: 29-Oct-21 COD: 14-Jan-22 COD: 21-Nov-22
Slide 31: 458 MW Wind and Battery Projects Under Construction
458 MW WIND AND BATTERY PROJECTS UNDER CONSTRUCTION Lomas de Taltal. 46% advance rate as of 31-Dec-23 343MW 68MW / 418 MWh 48MW / 264 MWh Lomas de BESS Tamaya BESS Capricornio Taltal Wind (storage) (storage) US$433 million US$125 million US$88million investment investment investment COD: 4Q24 COD: 1
Slide 32: Renewable Projects
RENEWABLE PROJECTS Environmental permit requests • Approved RCA: • PV Pampa Camarones II: Up to 300 MWac Bifacial panels + 180 MW BESS (up to 6-hr storage) (Approved Sep-22) • Wind Lomas de Taltal: 353.4 MW (57 WTGs x 6.2 MW) • Wind Vientos del Loa: 204.6 MW (33 WTGs x 6.2 MW) • Wind Fidelia (EID):
Slide 33: Network Projects
NETWORK PROJECTS Environmental permit requests • Approved RCA: • Dolores substation (Approved Sep-22) • Roncacho substation (Approved May-22) • Desalant substation (Approved May-22) • La Negra substation (Approved April-22) • Algarrobal substation (Pertinence letter approved Feb-22) • Pozo Almonte s
Slide 34: 2.2 ESG
2.2 ESG
Slide 35: Our Sustainability Strategy
OUR SUSTAINABILITY STRATEGY Embedded in our business and aims to create value in our four sustainability pillars Our purpose is to act to accelerate the transition In 2022 we… towards a carbon-neutral economy, through reduced energy consumption and more environmentally friendly PLANET PEOPLE solutio
Slide 36: Sustainable Finance
SUSTAINABLE FINANCE The first Sustainability-linked loan of IFC in Chile A green loan that accounts for the work we do everyday hand in hand with the care for people and the environment US$400 million 10-year term financing available to re-leverage and finance green projects In line with ENGIE’s tra
Slide 37: Progress on ESG at ENGIE Chile
PROGRESS ON ESG AT ENGIE CHILE People and Planet Climate change Renewable Gender Health mitigation energy balance & Safety GHG emissions 2030 Share of 2030 Gender diversity 2030 Frequency rate 2030 from energy GROUP renewables GROUP % of women in GROUP Lost time injury GROUP TARGET TARGET TARGET pro
Slide 38: ESG Rankings, Certifications and Initiatives
ESG RANKINGS, CERTIFICATIONS AND INITIATIVES To track our performance Corporate Commitments EECL Certifications Securing high standards The Certification for Global assessment regarding social, nature Workplace Diversity, platform for and climate. Equity, and Inclusion. businesses' sustainability ra
Slide 39: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY A just energy transition to help communities thrive Just New Stakeholders Transition Projects Engagement Responsible coal-exit Accelerating renewables Our approach 1. Employment and new 1. Early citizen 1. Associativity Policy skills participation 2. Social investment
Slide 40: 2.3 Transmission
2.3 TRANSMISSION
Slide 41: EECL: A Relevant Player in Transmission
EECL: A RELEVANT PLAYER IN TRANSMISSION 2,409 Kms. transmission lines, 32 substations and 50% share in TEN Substations ENGIE’S transmission lines Transmission 12 substations 1,032 Generation MVA substations 11% 25 2,409 946 Kms 89% AVI + COMA for National & Zonal systems Owned & Operated Operated In
Slide 42: National / Zonal Transmission Projects Awarded
NATIONAL / ZONAL TRANSMISSION PROJECTS AWARDED US$136 million CAPEX New Works CAPEX (MUSD) COD Liqcau substation (ex La Negra) 36 1H24 Arica y Parinacota Roncacho substation 19 1H24 Nueva Chuquicamata La Ligua substation 24 2Q25 Antofagasta Albemarle SS Totihue new sectioning + new Totihue 2x66 kV t
Slide 43: Transmisora Eléctrica del Norte S.A. (TEN)
TRANSMISORA ELÉCTRICA DEL NORTE S.A. (“TEN”) 600 km-long, double circuit 500kV national transmission system National HVAC transmission system interconnecting SIC and SING grids since Nov. 24, 2017 National system in 500 kV: - Substations: - Los Changos (220 and 500 kV) TEN 50% - Cumbre (500 kV) (COD
Slide 44: Transmisora Eléctrica del Norte S.A. (TEN)
TRANSMISORA ELÉCTRICA DEL NORTE S.A. (“TEN”) Tariff decree for the 2020-23 period published with delay in Feb-23 TEN revenue scheme Project finance as of 31-Dec-23 Regulated revenues on “national assets” (AVI) Senior 18-yr USD Loan Contractual toll with EECL on “dedicated assets” 26-yr USD Fixed-rat
Slide 45: 2.4 EECL and Market Information
2.4 EECL AND MARKET INFORMATION
Slide 46: ENGIE Energía Chile S.A.
ENGIE ENERGÍA CHILE S.A. A diversified asset base concentrated in Chile’s mining region 110/220kV Gasoducto Our operations Our sites Arica y (2,409 km) Norandino (1,066 km) Our largest clients Parinacota 4th largest GenCo in Chile TOCOPILLA Mining Gas (394MW) Antofagasta 2.5 GW gross capacity (500 k
Slide 47: Industry and Company Highlights
INDUSTRY AND COMPANY HIGHLIGHTS EECL has 7% market share in terms of installed capacity and 16% in terms of electricity sales Gross capacity Generation Demand Market share Other Hydro Engie 7% Solar 3% 22% Hydro Renewables AES SISTEMA 27% 29% 32% Regulated 39% Enel Andes 27% ELÉCTRICO 11% NACIONAL 3
Slide 48: PPA Portfolio with 9-Year Remaining Average Life
PPA PORTFOLIO WITH 9-YEAR REMAINING AVERAGE LIFE Free clients: 10 yrs. Regulated clients: 6 yrs. 450 Clients’ credit ratings 400 Distribution 350 Companies (S&P/Moody’s/Fitch): Average Demand (MW) (South, SEN) 300 - Codelco: BBB+/Baa1/BBB+ Codelco 250 - Freeport-MM (El Abra ): BB+/Baa2/BBB- 200 Dist
Slide 49: Heavily Contracted Position Provides Stable Sales Revenue
EECL’S HEAVILY CONTRACTED POSITION PROVIDES THE BASIS FOR STABLE SALES REVENUE The PPA price increase capturing high fuel prices has begun to reverse Prices Energy sales GWh Energy sales and prices US$/MWh 200 3,000 2,500 150 2,000 100 1,500 1,000 50 500 0 0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1
Slide 50: Demand Supplied with Own Generation and Energy Purchases
DEMAND SUPPLIED WITH OWN GENERATION AND ENERGY PURCHASES Our installed capacity and contracted energy purchases provide a physical hedge Renewables 31% Coal 42% Average supply cost depends on fuel prices, power demand, gas Installed Capacity supply, transmission congestions, renewable output, plant
Slide 51: Volatile Marginal Costs Affected by Renewable Intermittency
VOLATILE MARGINAL COSTS AFFECTED BY RENEWABLE INTERMITTENCY A 10-day real example in the SEN grid (Dec. 1 to 10, 2023) MW USD/MWh 10,000 300 9,000 250 8,000 7,000 200 6,000 5,000 150 4,000 100 3,000 2,000 50 1,000 0 0 1 6 11 16 21 2 7 12 17 22 3 8 13 18 23 4 9 14 19 24 5 10 15 20 1 6 11 16 21 2 7 12
Slide 52: Regulatory Initiatives
REGULATORY INITIATIVES GENERATION DISTRIBUTION • Tariff fixing (VAD 2020-2024) • Bill Tariff Normalization (“PEC3”) • Bill Energy Transition amendments • Decarbonization plan working tables. • Consultation to the TDLC to lower the limit for regulated/free clients TRANSMISSION OTHER • Bill Energy Tra
Slide 53: Financing Activity
FINANCING ACTIVITY Securing funding and liquidity for the energy transition 2021-23 Monetization of PEC-1 Dec-2020 – IDB green loan Jul-2022 – Scotiabank green loan Dec-2022 – Santander green loan accounts receivable (“ARs”) US$125 million financing US$196 million received on US$250 million 5-year l
Slide 54: Stock Price Recovery
STOCK PRICE RECOVERY No dividends paid on account of 2022 results 31-Dec-22 31-Dec-23 EECL: CLP 490 EECL: CLP 920 (+88%) IPSA: 5,262 IPSA: 6,198 (+18%) 200 Genco’s: 100 Genco’s: 165 (+65%) up 88% to CLP 920 180 160 140 120 100 IPSA ECL Genco's 80 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-
Slide 55: Ownership Structure
OWNERSHIP STRUCTURE Pension Local Foreign 59.99% 14.70% 17.14% 7.80% Individuals 0.37% funds institutions institutions ENGIE Energía Chile S.A. “EECL” Red Eléctrica Chile S.A. 50% Gasoducto Norandino SpA Central Termoeléctrica Inversiones Edelnor Transmisión Transmisora Eléctrica Andina SpA (CTA) Ho
Slide 56: For More Information About ENGIE Energía Chile
FOR MORE INFORMATION ABOUT ENGIE ENERGÍA CHILE +562 2353 3200 inversionistas@engie.com https://engie-energia.cl/inversionistas/ More information on 12M2023 results in our web page Presentation Addenda Press Release Recorded Financial Analyst pack conference Report audiocast 56 ENGIE ENERGIA CHILE –
Slide 57: Disclaimer
Disclaimer Forward-Looking statements This presentation may contain certain forward-looking statements and information relating to ENGIE Energía Chile S.A. (“EECL” or the “Company”) that reflect the current views and/or expectations of the Company and its management with respect to its business plan