Tc Energy Corporation · TSX:TRP
Tc Energy — TC Energy 2023 Sustainable Energy Forum
55 slides from Tc Energy's conference presentation, Jun 20, 2023
Slide 1: 2023 Sustainable Energy Forum
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Slide 2: Bruce Power land acknowledgement
Bruce Power acknowledges and honours the fact that its site lies within the traditional treaty territory of the Saugeen Ojibway Nation and the traditional harvesting territory of the Métis Nation of Ontario (Region 7) and the Historic Saugeen Métis. We continue to build relationships with our hosts
Slide 3: Safety First
NA Safety First BRUCE POWER’S NUMBER 1 VALUE Safety First is and always will be our number one value, and it is the first step in securing our future. Together, we need to look out for our peers, our plants and our communities, using the Bruce Power Excellence Model as our guide.
Slide 4: Operational Excellence
Operational Excellence • Excellence Model – nuclear professionalism and One Team approach • Federal regulation – Oversight and regulation by Canadian Nuclear Safety Commission • Nuclear Safety & Security Culture Assessment – Self assessment found strong nuclear safety culture; safety not compromised
Slide 5: A bit about Bruce Power
A bit about Bruce Power Canada’s only private-sector nuclear generator Two stations – eight CANDU units 6,550 MW site net peak 4,200 full-time employees 6,500 + contractors PAGE 6 6
Slide 6: Strategic Overview
FRANÇOIS POIRIER President and Chief Executive Officer STRATEGIC OVERVIEW TC ENERGY 2023 SUSTAINABLE ENERGY FORUM
Slide 7: Forward-looking information and non-GAAP measures
Forward-looking information and non-GAAP measures Thi s presentation includes certain forward-looking information, including butnot limited to, our financial and operational performance, statements related to future dividend and earnings growth, future EBITDA growth, the future growth of our core bu
Slide 8: Answering your top questions around TC Energy's approach to energy transition
Answering your top questions around TC Energy’s approach to energy transition How will you preserve your value proposition through energy transition? How do net zero by 2050 and a 1.5-degree scenario factor into your strategic plan? How much capital will you allocate to new technologies? How are you
Slide 9: A highly-integrated North American asset base
A highly-integrated North American asset base $114 billion in critical pipeline and power generation assets 7,000+ talented employees Synergistic business lines Low-risk business with ~95% of comparable EBITDA(1) from regulated/contracted assets 70+ years delivering the energy millions of people rel
Slide 10: Strategy grounded in fundamentals
WE ARE WELL POSITIONED ACROSS A RANGE OF FUTURE SCENARIOS Strategy grounded in fundamentals Primary energy consumption mix in North America Natural gas 2,763 MMtoe 2,780 MMtoe 1,670 MMtoe 2,489 MMtoe 2,606 MMtoe 100% 5% 6% 6% 6% LNG exports and N.A. growth drive consumption 5% 15% 9% 8% 11% Blue hyd
Slide 11: A North American energy transition enabler
A North American energy transition enabler Peer 1 Peer 2 Peer 3 Peer 4 Natural gas pipelines Natural gas pipelines Natural gas pipelines Natural gas pipelines Natural gas pipelines Liquids pipelines Products pipelines and terminals Liquids pipelines Liquids pipelines Gathering and processing Power C
Slide 12: Capitalizing on disruption
TRACK RECORD OF CAPTURING GROWTH OPPORTUNITIES CPG acquisition (2016) Capitalizing on disruption Why? Further diversifying natural gas pipeline business in emergent Appalachian shale basins NGTL System expansions Asset divestitures (2017-2020) (2010+) Reversed flow Why? >$11 billion in capital of AN
Slide 13: Navigating an evolving landscape to support global climate goals
Navigating an evolving landscape to support global climate goals TAILWINDS HEADWINDS Supports climate goals Constrains climate goals Technological improvements and further Global instability / energy security revitalized evolution of emerging technologies; including Global hydrogen, CCS, SMRs Supply
Slide 14: Our vision for North American energy
Our vision for North “Natural gas—and the infrastructure . . . that supports its delivery and use—can play an American energy important role as part of the clean energy transition” “Nuclear is going to be an important part of the energy mix going forward” - U.S. Secretary of Energy Jennifer Granholm
Slide 15: Looking to the future
OUR COMPETITIVE ADVANTAGE Looking to the future CONSERVATIVE RISK LONG-TERM VIEW PREFERENCES Strategic outlook is Disciplined approach to grounded in fundamentals growth and investing 2023 PRIORITIES Project execution RESILIENCE CAPITAL ALLOCATION Enhancing balance sheet strength and flexibility Fin
Slide 16: Financial Alignment
JOEL HUNTER Executive Vice-President and Chief Financial Officer FINANCIAL ALIGNMENT TC ENERGY 2023 SUSTAINABLE ENERGY FORUM
Slide 17: Performance on key priorities embedded in executive compensation
Performance on key priorities embedded in executive compensation Compensation for all employees and executives is aligned to priorities and commitments SHORT TERM* LONG TERM (ESU) 30% 25% Progressing ESG priorities, including GHG emissions, diversity and Distributable Cash Flow per share safety targ
Slide 18: Steady progress aligned with capital markets
Steady progress aligned with capital markets LIMITED ESG IMPROVED DATA FINANCING ASSURANCE RATINGS Developed corporate- Obtained limited Improved MSCI score Issued inaugural wide GHG reporting assurance of our from BBB to AA since $3 billion 5-year standard Scope 1 and Scope 2 2019 Sustainability-Li
Slide 19: Our role as a North American energy transition enabler
OUR APPROACH TO SCOPE 3 Our role as a North American energy transition enabler Applicability of Scope 3 categories to core business 1 Purchased goods and services Category 11 is not applicable to our core business, but we play 2 Capital goods an important role in reducing global emissions 3 Fuel and
Slide 20: Over 60% of sanctioned capital directly enabling energy transition
Over 60% of sanctioned capital directly enabling energy transition DECARBONIZING OUR ASSET BASE _ VR and WR projects; VNBR project; $2.8B 13% 50% Virginia Electrification OF $34B PROGRAM DISPLACING HIGHER OF $34B 13% LOW CARBON EMITTING FUELS $34B PROGRAM $14B INVESTMENTS Coastal GasLink(2) $4.4B So
Slide 21: Migrating the portfolio while living within our means
Migrating the portfolio while Annual capital spend 2025+ living within our means $6-$7B Balancing climate considerations with 2023 priorities ~$3 Discretionary growth Disciplined capital allocation and timing Balance affordability, reliability $0.7 Bruce Power and sustainability Maintenance, moderni
Slide 22: Carbon-competitiveness while helping others decarbonize
We’re working to ensure the carbon-competitiveness of our business while profitably helping others decarbonize in pursuit of a sustainable energy future. 23
Slide 23: Role of Natural Gas
TINA FARACA President, U.S. Natural Gas Pipelines ROLE OF NATURAL GAS TC ENERGY 2023 SUSTAINABLE ENERGY FORUM
Slide 24: Natural gas powers our energy future
Natural gas Natural gas is an essential energy source across a wide range of energy outlooks, including the IEA’s Net Zero Emissions by 2050 scenario powers our We have delivered safe, responsible and secure natural energy future gas across North America for decades, displacing higher emitting fuels
Slide 25: Growing demand for a sustainable, reliable, affordable energy source
Growing demand for a sustainable, reliable, affordable energy source GLOBAL ACCESS TO NATURAL GAS IS CRITICAL NATURAL GAS VS. COAL(3) 35% OF GLOBAL POWER GENERATION FROM COAL Global natural gas demand(1) Bcf/d 450 Global LNG demand(2) Bcf/d 120 2X ENERGY DENSITY 400 48% 100 350 300 250 U.S. 80 Rest
Slide 26: LNG: Fuel for the world
LNG Fuel for the world U.S. deliveries to Europe increased +140% from 2021-2022 Asian LNG imports forecast to double by 2050 TC Energy currently transports nearly 30% of the LNG feedgas in the U.S. 27 Governance score: Aggregated using equal weighting for each of six World Bank Governance Indicators
Slide 27: Decarbonizing our system and displacing higher emitting fuels
Decarbonizing our system and displacing higher emitting fuels TC Energy’s natural gas emissions Current sanctioned capital reductions 2019 – 2022(1) enabling energy transition 15% Reduction in absolute $6.0B methane emissions Coastal GasLink(2), VNBR 15% Reduction in absolute US$2.4B VR, WR, Virgini
Slide 28: Supporting global and jurisdictional climate goals
Supporting global and jurisdictional climate goals CANADA UNITED STATES MEXICO Alberta power sector emissions declined 65% of 2005-2019 reductions in U.S. From 2012 to 2022, fuel oil and coal by ~50% from 2015-2021 from power sector emissions attributable to demand for the power sector declined by c
Slide 29: Focused on methane reduction
Focused on methane reduction Global Methane Pledge A global coalition to collectively reduce methane emissions by at least 30% below 2020 levels by 2030 Natural Gas Pipelines Canada, U.S. and Mexico are all signatories Throughput Methane (Bcf/year) comparable EBITDA(1) (tonnes CH4) +20% $6.4B $7.6B
Slide 30: North American energy is in the world's best interest
North American energy is in the world’s best interest Governance scores of top natural gas reserve holders Aggregated from the World Bank Governance Index 92 Connecting the best-governed natural 90% of our top natural gas customers gas reserves in the world to markets in have stated climate commitme
Slide 31: Moving forward together
Moving forward together Traditional energy sources are critical Natural gas will continue to play an important role in the energy mix The industry is primed to capture growth tied to the next wave of LNG exports Synergies across business segments support extended low-carbon solutions 32
Slide 32: Low-Carbon Growth
COREY HESSEN Executive Vice-President and President, Power & Energy Solutions LOW-CARBON GROWTH TC ENERGY 2023 SUSTAINABLE ENERGY FORUM
Slide 33: Power & Energy Solutions is a key enabler of our corporate strategy
Power & Energy Solutions is a key enabler of our corporate strategy ACTING ON OUR CONTRIBUTION TO TC ENERGY GOALS STRATEGIC PRIORITIES Portfolio diversification while maintaining value proposition Develop new capabilities for low-carbon growth Toolkit to decarbonize core assets and support customers
Slide 34: Our competitive advantage is integrated energy solutions
Our competitive advantage is integrated energy solutions Positioned at the intersection of electrons and molecules Single source for internal and external customers across a range of decarbonization solutions Well-established relationships with stakeholders & Natural Gas Pipelines Liquids Pipelines
Slide 35: Delivering growth through low-carbon energy solutions
Delivering growth through low-carbon energy solutions Nuclear power generation Bruce Power Brownfield expansion and Small Modular Reactors OUR GOAL Storage and firming resources Ontario Pumped Storage Project Tailor the right financial and 24x7 Carbon -Free Power Solution Natural gas storage partner
Slide 36: Growth weighted to nuclear and pumped hydro
Growth weighted to nuclear and pumped hydro Comparable EBITDA(1) outlook 10% WEIGHTED AVG. UNLEVERED AFTER-TAX IRR OF CAPITAL PROJECTS ANNOUNCED 2021-2023 CAGR 9% 2030E comparable EBITDA CAGR • 50%+ from Bruce Power 5% Yet-to-be sanctioned capital Other P&ES • 25%+ from firming resources Bruce Power
Slide 37: Ontario Pumped Storage
Ontario Pumped Storage A DEEP DIVE Project facts ~$250 million expected annual savings for Ontario electricity consumers Expected to reduce ~500,000 tonnes CO2e/year equivalent to taking 150,000 cars off Ontario’s roads Prospective partner, Saugeen Ojibway Nation (SON), will jointly own, design, bui
Slide 38: Bruce Power
HIGHLIGHTS Emission-less electricity generation supports Bruce Power Ontario’s decarbonization plan A KEY ASSET IN A LOW-CARBON FUTURE Strong return on investment Capital requirements largely funded through Low double-digit returns, backed by an distributions investment-grade counterparty and a long
Slide 39: Bruce Power
Bruce Power STRONG RETURN ON INVESTMENT CONTINUES TO CREATE ENDURING VALUE • Capital requirements largely funded through distributions • Increasing free cash flow potential $Millions Significant sustainable free cash following completion of MCR Equity income flow when MCR program is program Total ca
Slide 40: Bruce Power
MIKE RENCHEK President and CEO of Bruce Power BRUCE POWER TC ENERGY 2023 SUSTAINABLE ENERGY FORUM
Slide 41: Powering Ontario Forward: Building a Clean Energy Future
Powering Ontario Forward: Building a Clean Energy Future TC Energy Sustainable Energy Forum June 20, 2023
Slide 42: Securing Decades of Clean, Reliable Electricity
Securing Decades of Clean, Reliable Electricity • 6,550 MW (uprate from 6,300 MW) from 8 CANDU units – all output Unit 3 MCR sold under IESO contract to 2064 Breaker Open March 1, 2023 • Life-Extension Program – Inspection, Asset Management, Major Component Replacement Unit 6 MCR • Contract price ad
Slide 43: Life-Extension Program
Life-Extension Program Investing in our assets – transaction through 2064 44
Slide 44: Contract Price – Life-Extension MCR + Asset Management
Contract Price – Life-Extension MCR + Asset Management Price adjusted prior to Asset Management Period and MCR 45
Slide 45: Helping meet future energy demand
More Power Output - Project 2030 Helping meet future energy demand 2016 2018 2022 Early 2030s 6,300 MW 6,430 MW 6,550 MW 7,000 MW+ SITE NET PEAK SITE NET PEAK SITE NET PEAK TARGET SITE NET PEAK (Project 2030 start) About equivalent to adding large-scale reactor with current infrastructure 46
Slide 46: Strong Financial Performance
Strong Financial Performance • Contract with IESO provides financial support up front for our investments • Strong operational performance and cost control – contributing to strong financial performance • Green Bonds – $500M in 2021 (global first for nuclear) and $600M in 2023 • Strong and improving
Slide 47: More Than Power
More Than Power • Net Zero 2027 – net zero from site operations (avoid and reduce, substitute, offset) • Clean Energy Credit protocol – new incremental power – partner with difficult to decarbonize sectors • Economic Development– support local initiatives, partner with Indigenous communities, econom
Slide 48: Ontario's Pathway to Decarbonization
Ontario’s Pathway to Decarbonization • Federal commitment to net zero grid by 2035 Electricity output by fuel type - 2022 • Pathways to Decarbonization: Ontario needs more than double its nuclear capacity by 2050 9% Wind • Stable policy environment: • Federal ITC expanded to include nuclear in Budge
Slide 49: Looking forward
Reaching 2050 and Beyond Pathway Scenario – Installed Capacity in 2050 Looking forward • Large-scale nuclear • Large-scale storage • Small Modular Reactors • Advanced nuclear • Complementary technologies such as hydrogen Reaching Net Zero will require a clean energy mix with strong baseload nuclear_
Slide 50: Innovation at work
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Slide 51: Key takeaways
Key takeaways An orderly transition is paramount All forms of energy will be required Resilient across a range of future outcomes; proven track record of navigating disruption Key role enabling energy transition and reducing global emissions Disciplined approach to capital allocation 52
Slide 52: Final Q&A
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Slide 53: Appendix A
2 0 23 S U S T AI NA BL E E N ER GY F O R UM Appendix A (Millions of dollars) Year ended December 31 2022 2021 Segmented earnings Canadian Natural Gas Pipelines (1,440) 1,449 U.S. Natural Gas Pipelines 2,617 3,071 Mexico Natural Gas Pipelines 491 557 Liquids Pipelines 1,123 (1,600) Power and Energy
Slide 54: Appendix B
2 0 23 S U S T AI NA BL E E N ER GY F O R UM Appendix B Year ended (Millions of dollars) December 31 2022 2021 Comparable EBITDA(1) 9,901 9,368 Depreciation and amortization (2,584) (2,522) Interest expense included in comparable earnings (2,588) (2,354) Allowance for funds used during construction
Slide 55: Appendix C
2 0 23 S U S T AI NA BL E E N ER GY F O R UM Appendix C (Millions of dollars) Year ended December 31 2022 2020 Bruce Power revenue 1,848 1,672 Bruce Power operating expenses (924) (884) Bruce Power EBITDA 924 788 Canadian Power comparable EBITDA 322 213 Natural Gas Storage and other comparable EBITD