Scatec ASA · OSL:SCATC
Scatec ASA — Scatec Solar — Investor Presentation (October 2020)
48 slides from Scatec ASA's investor presentation, October 2020
Slide 1: Investor presentation October 2020
Investor presentation October 2020
Slide 2: Disclaimer
Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’). Any person who is not a relevant person should not rely, act or make assessment on the basis of this presentation or anything inc
Slide 3: Contents
Contents • Introduction • Acquisition of SN Power • The solar market • Project pipeline update • Our business model • Financials • Outlook and guidance The 47 MW Redsol project in Malaysia just started commercial operations. 3
Slide 4: A leading player in emerging markets
A leading player in emerging markets 1. 9 GW 374 7 GW operation & employees backlog & construction pipeline • Present in 18 countries globally Key facts • Develop, build, own & operate solar plants across emerging markets • Founded in 2007 – headquarters in Oslo, Norway Scatec Solar offices Plants i
Slide 5: Increased power production and growth in project pipeline
Q3’20: Increased power production and growth in project pipeline Power production (GWh) • Power production of 430 GWh, up 46 % from last year +46% • EBITDA* of NOK 319 million, down from NOK 433 430 million last year • Added 900 MW to project pipeline – several large Malaysia Mozambique projects mat
Slide 6: Diversified portfolio of 1.9 GW in operation and under construction
Diversified portfolio of 1.9 GW in operation and under construction 352 MW 1,552 MW in operation under construction: South Africa, 448 MW Egypt, 390 MW Malaysia, 244 MW Brazil, 162 MW Ukraine, 235 MW Ukraine, 101 MW Honduras, 95 MW Jordan, 43 MW Mozambique, 40 MW Argentina, 117 MW Czech Republic, 20
Slide 7: Our success is based on our business model and a strong entrepreneurial culture
Our success is based on our business model and a strong entrepreneurial culture Business model People Integrated – capturing full project Predictable Agile & lean value Working together Entrepreneurial culture Structuring & financing Driving results Passionate & empowered people Financial discipline
Slide 8: Our competence and track record will drive Scatec Solar's growth in renewables
Our competence and track record will drive Scatec Solar’s growth in renewables Success formula: Agility and cross functional teams Key competencies: • Energy & regulatory • Project structuring, Empowerment of teams to take a holistic frameworks tax and financing approach to the business case • Power
Slide 9: Acquisition of SN Power
Acquisition of SN Power 8 Scatec Solar Improving our fut:
Slide 10: Acquisition of SN Power
Acquisition of SN Power • On 16 October, Scatec Solar announced the acquisition of SN Power from Norfund for a total consideration of USD 1,166 million • The transaction is expected to close in the first half of 2021 • More information and full presentation here 10
Slide 11: Scatec Solar acquires SN Power - a leading hydropower developer and IPP
Scatec Solar acquires SN Power - a leading hydropower developer and IPP • Scatec Solar has signed an agreement to acquire 100% of the shares in SN Power from Norfund for a total consideration of USD 1,166 million (NOK 10,948 million) The acquisition of • Includes SN Power’s hydropower assets in the
Slide 12: Strategic rationale
Strategic rationale 1 Building a global leader in renewable energy 2 Adding significant cash flow from operating plants 3 Solid hydro assets in attractive power markets 4 Accelerating growth with new pipeline & market access 5 Cultural fit and strong focus on ESG 12
Slide 13: The energy transition is accelerating and Scatec Solar broadens its growth strategy
1 The energy transition is accelerating and Scatec Solar broadens its growth strategy Massive demand growth in renewables Scatec Solar’s broadened growth strategy: • Build an IPP across solar, hydro, wind and storage • New, high growth markets and broader offering More complex power markets • Mainta
Slide 14: Strengthening Scatec Solar's position as a leading renewable developer
1 Strengthening Scatec Solar’s position as a leading renewable developer + Scatec Solar + SN Power - in brief 450 employees globally SSO SNP 3.3 GW1 9.5 GW1 2.5 TWh2 HQ In operation & under Backlog & pipeline 2019 net power construction production 8,108 2,720 1,336 MNOK2 MNOK2 MNOK 2019 proportionat
Slide 15: The Solar market
The Solar market 8 Scatec Solar Improving our fut:
Slide 16: Solar & wind expected to provide 50% of all power globally by 2050
Solar & wind expected to provide 50% of all power globally by 2050 The global power 62% sector towards 2050: 77% Increase in global Of new demand to be electricity demand covered by renewables 12,000 GW 98% New power Demand growth in generation capacity non-OECD-countries Solar from to 2% 22% 64% 20
Slide 17: Solar is one of the world's most competitive sources of energy
Solar is one of the world’s most competitive sources of energy Cost of alternative energy sources (LCOE, USD/MWh) • Solar is now the lowest cost source of energy across the sun-rich regions globally • The levelised cost of solar has come down 85% 250 since 2010 – industry scale and technology 200 •
Slide 18: Solar market expected to reach 170 GW of annual installations in 2022
Solar market expected to reach 170 GW of annual installations in 2022 Multiple governmental drivers for solar demand Annual global solar demand forecast - GW Europe Other Asia MENA Time-to- Mainland China North America & Caribbean Sub-Saharan Africa market India Central & South America Rest of the w
Slide 19: Battery costs expected to be reduced by almost 60% by 2030
Battery costs expected to be reduced by almost 60% by 2030 Expected battery cost development 600 GW of large scale diesel/HFO installed globally 325 Installed large scale diesel/HFO (GW) 250 255 USD/kWh 219 183 161 130 130 149 137 100 2018 2020 2022 2024 2026 2028 2030 Americas Africa Europe Asia So
Slide 20: Project pipeline update
Project pipeline update ~ eS Scatec Solar Improving our future™
Slide 21: Project pipeline increased by 900 MW – several new large projects maturing
Project pipeline increased by 900 MW – several new large projects maturing Europe & Central Asia 430 MW Backlog & Africa & Middle East Rest of Asia pipeline 2,516 MW 2,340 MW 7,040 MW Latin America 1,234 MW 2021 target 4,500 MW All figures are as of Q3 2020 reporting date. 21
Slide 22: Project opportunities in key pipeline markets
Project opportunities in key pipeline markets South Africa (1,338 MW) Vietnam (930 MW) Development Status Market Opportunities Development Status Market Opportunities • Large ready to bid portfolio • RMIPPP* in 2020 • Broad set of projects • Targets 20+ GW by 2025 • Permits to also include batteries
Slide 23: Project opportunities in key pipeline markets
Project opportunities in key pipeline markets Brazil (1,100 MW) India (900 MW) Development Status Market Opportunities Development Status Market Opportunities • Large PV project in mature • Auctions • Negotiating participation in • A large growth markets stage • Corporate PPAs large projects • Acqui
Slide 24: Our business model
Our business model 8 Scatec Solar Improving our fut:
Slide 25: Scatec Solar's value chain
Scatec Solar’s value chain We develop, build, own & operate solar plants for 20 years Project development Financing Construction Operations Ownership (IPP) • Site development & • Debt/Equity structuring • Engineering and • Maximise performance and • Asset management permitting procurement availabili
Slide 26: Partnering with Development Banks for project finance and risk mitigation
Partnering with Development Banks for project finance and risk mitigation • Multilateral development banks (DFIs) are providing project debt to infrastructure in emerging markets • DFIs are often advising governments on design of renewable programmes to promote private / public partnerships • Projec
Slide 27: Our business model and typical project structure
Our business model and typical project structure Simplified illustration of company structure and main contracts in place Equity co- Scatec Solar investors 100% 39%-100% Shareholders agreement Component Land lease Land owners Suppliers agreements Scatec Solar Single Purpose O&M / EPC • EPC contract
Slide 28: Scatec Solar's growth capacity continues to increase
Scatec Solar’s growth capacity continues to increase Our business model and typical project capital structure: Scatec Solar’s growth capacity • As the asset portfolio grows, more dividends/operating cash flow is available for investments 75 • In addition the integrated business model adds to (75%) o
Slide 29: Utilising new technology to reduce costs and improve power plant performance
Utilising new technology to reduce costs and improve power plant performance Operation & Maintenance (O&M) Global control & monitoring centre, Cape Town • Improved workflows through automation of processes • Leveraging economies of scale - MW/FTE doubled from 2018 • Actionable analysis sent directly
Slide 30: Improving cost, design and performance for future solar plants
Improving cost, design and performance for future solar plants Bi-facial solar panels Larger PV modules Self-powered trackers Joint initiatives • 390 MW Benban project, • 500Wp+ modules available • Incudes wireless • Improve operations’ Egypt - world’s largest solar • Working with leading communicat
Slide 31: ESG is integrated in our operating model
Environmental, Social & Governance (ESG) is integrated in our operating model Project Power Opportunity Financing Delivery Development Production Continuous compliance risk assessment, integrity due diligence and monitoring Conduct E&S due diligence CO2 emissions Identify, mitigate and monitor envir
Slide 32: 22 sustainability targets for 2020
Sustainability Key ambitions 2020: 22 sustainability targets for 2020 Responsible Climate procurement action Engaging key suppliers Setting and pursuing an to capture more of our emission reduction value chain’s total target for our company environmental impact
Slide 33: Climate reporting: Strategic priority and key stakeholder focus
Climate reporting: Strategic priority and key stakeholder focus Scope 1 Scope 2 Scope 3 Vehicles & CO2 emissions from Equipment our business 2019: 10,972 tons 2019 Diesel generators Purchased Electricity Business Air Travel CO2 emissions avoided from our solar plants in Transformer stations operatio
Slide 34: Financials
Financials eS Scatec Solar Improving our future™ 34
Slide 35: Our priorities when investing in solar stay firm
Our priorities when investing in solar stay firm Continue to stay selective - Focus on value and risk adjusted returns - Secure D&C margin – key for equity funding Transactional and operational control - Scatec Solar – the lead developer and investor Debt & Equity partnerships - Maximise return on e
Slide 36: Increased power production – strong growth in project pipeline
Increased power production – strong growth in project pipeline Proportionate financials Quarterly (NOK million) Last 12 months (NOK million) Third quarter 2020 6,365 EBITDA Revenues • Year on year increase in Power Production revenues and EBITDA • Continued strong focus on project development – 3,98
Slide 37: Steadily increasing power production
Power Production Steadily increasing power production Quarterly (NOK million) Last 12 months (NOK million) 1,671 EBITDA Revenues 1,388 969 807 457 343 379 291 Q3 19 Q3 20 Q3 19 Q3 20 EBITDA 85% 83% 83% 83% The 162 MW Apodi solar plant in Brazil. • Year on year increase in production mainly from Sout
Slide 38: Revenues growth while EBITDA is affected by O&M contract mix effects
Services Revenues growth while EBITDA is affected by O&M contract mix effects Quarterly (NOK million) Last 12 months (NOK million) EBITDA Revenues 234 144 60 88 49 53 23 22 Q3 19 Q3 20 Q3 19 Q3 20 EBITDA 47% 37% 37% 38% 38
Slide 39: Low construction activity – strong project pipeline development
Development & Construction Low construction activity – strong project pipeline development Quarterly (NOK million) Last 12 months (NOK million) 5,223 EBITDA Revenues 2,049 1,121 659 133 142 30 -27 Q3 19 Q3 20 Q3 19 Q3 20 Gross margin 15% 13% 15% 14% The 117 MW Guanizuil project in Argentina. EBITDA
Slide 40: A solid financial position – NOK 3.5 billion of available liquidity
A solid financial position – NOK 3.5 billion of available liquidity Consolidated financial position (NOK million) • Group free cash of NOK 1,885 million As of 31.12.2019 As of 30.09.2020 • Undrawn credit facilities of NOK 1,600 million 23,919 23,919 • Group* book equity of NOK 7,158 million – 21,578
Slide 41: Q3'20 movement of free cash
Q3’20 movement of free cash NOK million 70 -19 17 -52 1,933 1,884 -104 -67 -131 237 Ukraine End Q2 Distributions Cash flow to Cash flow to Cash flow Project equity Project Dividend Working End Q3 from operating equity D&C equity Services to equity Development distribution Capital/other power plants
Slide 42: Short term guidance
Short term guidance • D&C value of portfolio under construction: NOK 1.1 billion • Remaining NOK 45 million value to be recognised • Low D&C revenues expected in Q4 2020 • Power production from plants in operation end of Q3 2020: GWh Q3’20 Q4’20e 2020e Proportionate 430 410-425 1,580-1,630 100% basi
Slide 43: Outlook and summary
Outlook and summary Raymond Carlsen, CEO 43
Slide 44: Building a global leader in renewable energy
Building a global leader in renewable energy Where we come from Where we are now Where we are going Regional solar Global top-tier A global multi-technology developer/IPP developer/IPP renewables developer/IPP Solar Solar Solar Hydro Hydro Wind Wind Storage Storage 44
Slide 45: Stable production and strong growth in project pipeline
Stable production and strong growth in project pipeline • Acquiring SN Power – building a global leader in renewable energy • Project pipeline increased to 6.5 GW – new project additions in large growth markets • Solid financial position - available liquidity of NOK 3.5 billion • Targeting installed
Slide 46: Thank you!
CCC ANN KI AS AN j}/ “if Hii Thank you! )Scatec Solar Improving our future™
Slide 47: Scatec Solar
Scatec Solar Improving our future™
Slide 48: Our asset portfolio – July 2020
Our asset portfolio – July 2020 In operation: Under construction: Project backlog: CAPACITY ECONOMIC CAPACITY ECONOMIC CAPACITY ECONOMIC MW INTEREST MW INTEREST MW INTEREST Egypt: Benban 390 51% Ukraine: Kamianka, Tunisia 360 65% South Africa: Upington 258 46% Progressovka, Chigirin 289 96% Ukraine