Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — FY2022 Earnings Presentation
61 slides from Engie Energia Chile's earnings presentation, Mar 7, 2023
Slide 1: ENGIE Energía Chile Investor Presentation FY 2022
ENGIE ENERGÍA CHILE Investor presentation FY 2022
Slide 2: Summary
Summary Results and challenges ahead Zoom on 2022 and outlook for 2023 1.0 Additional information A glance at EECL and its transformation 2.0 Energy transition Project development and construction status 2.1 Transmission A glance at EECL’s transmission business 2.2 Introduction to EECL and market in
Slide 3: 2022 Results & Challenges Ahead
1.0 2022 RESULTS & CHALLENGES AHEAD ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION FY 2022 - 3
Slide 4: Main challenges in 2022 and recovery expected for 2023
Main challenges in 2022 Recovery expected for 2023 Challenges of the period What’s next Extremely high fuel prices and Tariff increases persistent drought Higher fuel prices captured with Coal and gas prices at record highs certain lag in PPA tariffs added to poor hydro generation => Increased renew
Slide 5: Physical sales grew 3% in 2022, increasing pressure on short position
Physical sales grew 3% in 2022, increasing pressure on short position 4% drop in regulated sales; 6% growth in free customers GWh Unregulated customers 600 Unregulated customers 450 6% growth Strong demand, with 2022 300 exceeding previous years 150 due to recovery in mining activity and higher copp
Slide 6: SIC-SING Interconnection: highest marginal costs in 5+ years
Highest marginal costs in +5 years Extreme drought, unprecedented fuel prices => high spot prices US$/MWh Average marginal cost 2022 average: @ 220 kV nodes SIC-SING Interconnection 280 US$127/MWh 260 North 240 220 2021 average: Center 200 US$95/MWh South 180 160 140 2020 average: 120 US$41/MWh 100
Slide 7: One of the driest years in 60+ years; hydro generation in recovery
April 21 – March 22: One of driest in +60 years Hydro generation in recovery, exceeding prior years since July 2,600 Hydro generation in Chile 2,200 1,800 GWh 1,400 1,000 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2022 2019 2020 2021 ▪ Apr-21 – Mar-22 hydrological year: ~96.8% exceedance pr
Slide 8: Coal prices hit all-time highs in 2022
Coal prices hit all-time highs in 2022 Significant decline in spot and forward prices for 2023 US$/Ton Coal price indices 2022 avg: US$314/Ton 460 420 API 2 (cif ARA) 1H23 380 Fwd. avg: 340 4Q21 avg: US$185/Ton US$178/Ton 300 API 6 (fob Newcastle) 260 220 Jan-Sep 21 avg: US$106/Ton 180 140 2020 aver
Slide 9: Declining coal plant availability in the system
Declining coal plant availability in the system Plant closures, limitations, planned and forced outages Coal plant availability in the system (MW gross) 4,324 MW avg.2020 3,875 MW avg.2021 3,497 MW avg.2022 Engie Other ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION FY 2022 - 9
Slide 10: Natural gas availability in the Chilean system
Natural gas availability in the Chilean system High volatility due to the Russia-Ukraine conflict & rising demand LNG prices 60 HH LNG international markets 50 ▪ In 2022 the supply-demand imbalance, aggravated by the JKM Russia-Ukraine war, led countries to struggle to re-build stocks 40 US$/MBtu an
Slide 11: Closing the gap through back-up PPAs
Closing the gap through back-up PPAs Contracted energy purchases for 27% to 30% of demand TWh 1 TWh increase to 3.2 TWh contracted volume for 2023 13 12 11 10 9 8 7 6 5 4 3 0.4 0.4 0.3 0.2 0.2 0.1 2 0.3 2.8 2.9 3.1 3.0 3.0 2.6 2.6 2.6 2.6 1 1.9 0.9 0.1 1.1 0.7 0.7 0.7 0.5 0.5 0.5 - 2017 2018 2019 20
Slide 12: Portfolio balancing strategy to increase renewables and storage
Portfolio balancing strategy seeks to increase renewables, storage + back-up PPAs while phasing out coal, mitigating intermittence & curtailment and reducing spot exposure Energy sources and average supply cost GWh 150 3,000 100 2,000 50 1,000 0 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q
Slide 13: Supply curve in 2022 impacted by high fuel prices and lower gas supply
Supply curve in 2022 impacted by high fuel prices and lower gas supply Investment in renewables and portfolio balancing to lower future supply cost Coal units decommissioning US$/MWh Unit MW Date % 2022 supply 250 U14 136 Jun-22 (*) 0.1% U15 132 Sep-22 (*) 1.7% CTM1-CTM2 334 Dec-24 3.5% 200 (*) U14-
Slide 14: A closer look at 2022 results
EECL’s performance during the energy transition A closer look at 2022 results 1Q21 2Q21 3Q21 4Q21 FY-2021 1Q22 2Q22 3Q22 4Q22 FY-2022 Var % Operating revenues (MUSD) 332.3 388.5 365.8 392.1 1,478.6 417.9 481.4 499.7 521.3 1,920.3 30% EBITDA (MUSD) 65.9 121.7 55.6 71.3 314.5 68.5 (8.0) 57.3 71.3 189.
Slide 15: EBITDA affected by market and operational challenges
EBITDA affected by market and operational challenges Decline explained by higher marginal costs and fuel prices By main effect In US$ Million 21 179 30 84 11 Transmission Physical Gas margin 340 sales margin Increase 266 in spot Fuel sales costs 123 315 Increase Average in energy realized purchase 3
Slide 16: Net income evolution
Net income evolution Operating margin reduction, impairments, PEC financial expenses(*) Main variations In US$ Millions Recurring Results 36 84 -92 47 One-off -29 -52 -389 Net financial Net expenses EBITDA -6 -11 -325 Income income Discount Depreciation, Insurance Net loss 2021 before on sale of FX
Slide 17: Net debt evolution
Net debt evolution Increase due to CAPEX financing, build-up of PEC receivables and operational challenges 56 39 Main cash flows + net debt variations 1,646(*) 40 In US$ Million 79 Accrued Proceeds Income + interest / from sale of 64 CO2 taxes PEC MTM / 294 San Pedro II deferred regulated loan finan
Slide 18: Financial structure
Financial structure Current strategy geared to reducing ND/EBITDA and extending debt maturity profile Investment-grade ratings: BBB/BBB Net Debt/EBITDA (*) excluding IFRS-16 leases International: 8.7 (*) Fitch (Oct 2022): BBB Stable S&P (Aug 2022): BBB Stable National scale: 2.7 Fitch (Oct 2022): AA
Slide 19: Recent events and action plans: portfolio balancing
EECL’s performance during the energy transition Recent Events and Action Plans – Portfolio balancing to mark the road ahead Coal prices - US$/Ton Avg. LNG prices US$/MMBtu feb-23 feb-23 Context: 2022 2022 Decrease in fuel prices 2021 2021 2020 JKM HH API 2 0 50 100 150 200 250 300 350 0 5 10 15 20 2
Slide 20: Accelerating investment in renewables to match new portfolio indexation
Accelerating investment in renewables to match new portfolio indexation 2.1 GW renewable investment pipeline, 0.8 GW already done 0.8 GW 0.5 GW 0.8 GW* Already in portfolio Under Construction Under Development 2019 2020 2021 2022 2023-2024 2025-2027 MW in operation 46 82 265 369 481 860 48 Monte Red
Slide 21: Accelerating investment in renewables
Accelerating investment in renewables US$1.4 bn investment in renewables / US$0.2 bn investment in transmission through 2024 700 MUSD 11.0 10.0 600 9.0 500 TEN 30 8.0 7.0 400 Renewables 387 6.0 300 IEM & Port 5.0 436 Renewables Renewables 247 200 325 4.0 IEM & Port Renewables 64 Renewables Transmiss
Slide 22: Where we come from, where we are, where we are heading
EECL’s performance during the energy transition Where we come from, where we are, where we are heading at Variables affecting EBITDA US$ millions + Coal & gas price decreases 600 9.0 + Improved hydrologic conditions 8.0 + Argentine gas availability 500 7.0 - LNG contract supply 400 6.0 + Spot LNG av
Slide 23: Financing plan focused on reducing ND/EBITDA
Financing plan focused on reducing ND/EBITDA and extending debt maturity profile While providing funds for CAPEX program Expected EBITDA recovery MPC law (“PEC-2”) • 1H23 PPA prices capturing 2022 fuel price increases • Decrease in fuel prices • True sale of certificates of payment issued by Chilean
Slide 24: Key Messages and Action Plans
Key Messages and Action Plans Re-balancing of portfolio through renewable additions, back -up PPAs and LNG generation 0.9 TWh of new renewable capacity, 3.1 TWh of Back Up PPAs and LNG volumes secured for 2023 Moving forward with energy transition with strong CAPEX in renewables for 2023 -2024 BESS
Slide 25: Additional Information
2.0 Additional Information ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION FY 2022 - 25
Slide 26: Energy transition
2.1 Energy transition ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION FY 2022 - 26
Slide 27: Generation portfolio transformation
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 1.9 GW - 0.8 GW Coal disconnection capacity 3.4 GW 2% Coal Gas Diesel Renewables Biomass Gas Diesel Renewables 0.7 GW Conversion E
Slide 28: Addition of 2.1 GW renewables
Generation portfolio transformation Addition of 2.1 GW renewables 0.8 GW / US$0.8 bn already done LOS LOROS MONTE REDONDO CALAMA TAMAYA CAPRICORNIO COYA SAN PEDRO (*) 46 MWac – 2H19 82 MW – 2H20 151 MW – 4Q21 114 MWac – 1Q22 88 MWac – 4Q22 180 MWac – 4Q22 101 MW – 4Q22 ACQUISITIONS + 4 GREENFIELD PR
Slide 29: 0.8 GW of coal capacity to be closed by YE-2024
Generation portfolio transformation 0.8 GW of coal capacity to be closed by YE-2024 U12 U13 U14 U15 CTM1 CTM2 IEM CTA CTH -171 MW – 2019 -268 MW – 2022 -334 MW – 2025 =733 MW – 2026 IMPAIRMENTS (After-tax effect) RECONVERSION 2018: US$ 53 million 2019: US$ 134 million Coal to LNG and biomass Impairm
Slide 30: 0.7 GW of newer coal capacity to be converted
Generation portfolio transformation 0.7 GW of newer coal capacity to be converted 2021 2022 2023 2024 2025 2026 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2026 permits(*), engineering, procurement, off-site preparation outage IEM overhaul 375 MW coal generation +boiler burners gas a
Slide 31: 463 MW renewable projects added since 4Q21
463 MW Renewable projects added since 4Q21 723 GWh(*) generated in 2022 (217 GWh in 2021) COD: 29-Oct-21 COD: 14-Jan-22 151MW Calama 114MWac wind farm Tamaya PV US$160 million investment US$84 million investment COD: 21-Nov-22 Acquired: 15-Dec-22 88MWac 101MW San Pedro Capricornio PV wind farms US$1
Slide 32: Projects under construction
180 MWac Coya PV full year of operations in 2023 481 MW wind and battery projects under construction COD: 1Q23 COD: 4Q24 180MWac 342MW Lomas Coya PV de Taltal Wind US$159 million investment US$433 million investment COD: 1Q24 COD: 3Q23 139MW / 638MWh 34MW Central BESS Coya (storage) Laja substation
Slide 33: Land concessions for renewable projects
Land concessions for the development of renewable projects Potential to develop hybrid projects with up to 1.45 GW capacity • Wind: Up to 560 MW • Solar PV: Up to 636 MWac • BESS: Up to 255 MW (6-hr. storage) Pampa Fidelia and Pampa Yolanda Land-use concessions in Taltal awarded in 2021 public aucti
Slide 34: Renewable projects environmental permit requests
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 September 2022) ▪ 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) EID/EIA submitte
Slide 35: Network projects environmental permit requests
Network projects Environmental permit requests Approved RCA: ▪ Substation Dolores (Approved September 2022) ▪ Substation Roncacho (Approved May 2022) ▪ Substation Desalant (Approved May 2022) ▪ Substation La Negra (Approved April 2022) ▪ Substation Algarrobal (Pertinence letter approved February 202
Slide 36: Transmission
2.2 Transmission ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION FY 2022 - 36
Slide 37: EECL: A relevant player in transmission
EECL: A relevant player in transmission 2,413 Kms. transmission lines, 24 substations and 50% share in TEN Substations ENGIE’S transmission lines 5 Transmission substations Generation 977 substations MVA 11% 19 946 2,413 Kms 89% AVI + COMA for National & Zonal systems Owned & Operated Operated In mi
Slide 38: Expansion into regulated transmission
Expansion into regulated transmission New regulated projects to contribute +US$10 million EBITDA p.a. Regulated assets VATT in US$ millions Expansion CAPEX 2020-2026: 8 10 10 6 3 - National: ~US$67 million 13 13 13 13 13 - Zonal: ~US$83 million 10 10 10 10 10 2022 2023 2024 2025 2026 National VATT Z
Slide 39: National / zonal transmission projects completed
National / zonal transmission projects completed US$2.4 million annual revenue (VATT) / US$41.5 million CAPEX COD: 06-Dec-21 COD: 06-Jul-21 Nueva Algarrobal Chuquicamata National 220 kV sectioning substation Substation + 2x220 kV T.Line US$13 million CAPEX US$22 million CAPEX COD: 06-Mar-21 El Rosal
Slide 40: National / zonal transmission projects awarded
National / zonal transmission projects awarded US$110 million CAPEX New Works CAPEX (MUSD) COD Nueva La Negra substation 32 1Q24 Arica y Parinacota Roncacho substation 19 1Q24 Nueva Chuquicamata La Ligua substation 24 2Q25 Antofagasta Albemarle SS Totihue new sectioning + new Totihue 2x66 kV transmi
Slide 41: Transmisora Eléctrica del Norte (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) 50% - Cumbre (500 kV) TEN (COD
Slide 42: TEN: new tariff decree for 2020-23 period
Transmisora Eléctrica del Norte S.A. (“TEN”) A new tariff decree for the 2020-23 period not published until February 2023 TEN revenue scheme Regulated revenues on “national assets” (AVI) Contractual toll with EECL on “dedicated assets” Project Finance status as of 31-Dec-22 TEN: Annual estimated rev
Slide 43: EECL and Market Information
2.3 EECL and Market Information ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION FY 2022 - 43
Slide 44: Introduction: ENGIE Energía Chile S.A.
Introduction ENGIE Energía Chile S.A. (“EECL”) 60% owned by ENGIE S.A., a leading international ENGIE S.A. player in the energy transition, seeking to +100 GW of installed generation capacity, with achieve Net Zero Carbon target by 2045 ambitious goals for the energy transition To add +4GW p.a. of r
Slide 45: A diversified asset base concentrated in Chile's mining region
ENGIE Energía Chile S.A. A diversified asset base concentrated in Chile’s mining region Our operations Our sites Our largest clients 4th largest GenCo in Chile TOCOPILLA Mining Gas (394MW) 2.3 GW gross capacity Port 0.5 GW renewables added 2022 12.0 TWh sold under PPAs in 2022 MEJILLONES Coal (1,059
Slide 46: Industry and company highlights - 2022
Industry and company highlights - 2022 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 5% Renewables 24% 22% Hydro AES SISTEMA 29% Regulated Enel Andes 24% 40% 27% 11% ELÉCTRICO NAC
Slide 47: Sistema Eléctrico Nacional - SEN
Sistema Eléctrico Nacional – SEN Growing participation of renewables and smaller market players 14.5 GW SEN – December 2022 ’SEN’ Sistema Eléctrico Nacional 33.2 G W SING 8.6 8.6 GW 3.0 SIC 0.3 1.6 3.6 3.5 GW 3.6 GW 0.3 0.5 0.2 2.4 GW 2.6 1.6 0.6 2.9 0.1 0.7 2.0 1.1 0.5 GW 1.1 1.1 0.4 0.5 0.2 Enel G
Slide 48: EECL's performance during the transition
EECL’s performance during the transition 2022 “perfect storm” with impact on temporary short position (sales vs. generation) Our PPA portfolio ~12 TWh/y contracted portfolio w/9-year average life Our Performance 2020 2021 2022 ~4 TWh/y spot market purchases in 2022 Total energy sales (TWh) 11.1 11.7
Slide 49: PPA portfolio with 9-year average remaining life
PPA portfolio with 9-year average remaining life Free clients: 10 yrs. Regulated clients: 8 yrs. 600 Unregulated contracts Clients’ credit ratings Distribution Regulated contracts Companies 500 (South SEN) (S&P/Moody’s/Fitch): Average demand (MW) - Codelco: A/A3/A- 400 Codelco - Freeport-MM (El Abra
Slide 50: Heavily contracted position provides stable sales revenue
EECL’s heavily contracted position provides the basis for stable sales revenue PPA prices on the rise as they capture fuel price increases Energy sales Energy sales and prices Prices GWh US$/MWh 3,000 2,500 150 2,000 100 1,500 1,000 50 500 0 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4
Slide 51: Demand supplied with own generation and energy purchases
Demand supplied with own generation and energy purchases Our installed capacity is our physical hedge Renewables 26% Average supply cost depends on fuel prices, power demand, gas supply, Installed Coal 45% transmission congestions, renewable output, plant performance and Diesel 2% Capacity hydrologi
Slide 52: High and volatile marginal costs affected by renewable intermittency
High and volatile marginal costs affected by renewable intermittency A 10-day real example in the SEN grid (Dec. 1 to 10, 2022) MW USD/MWh 400 10,000 350 8,000 300 250 6,000 200 4,000 150 100 2,000 50 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 17 22 3 8 13
Slide 53: Portfolio balancing measures
EECL’s performance during the energy transition Portfolio balancing measures Short position during transition Portfolio balancing strategy Current contracted sales for ~12 TWh/y, falling to 1.4 GW of renewable newbuild to be delivered by 2027 (0.9 GW ~10 TWh/y starting 2027 wind, 0.3 GW BESS, 0.1 GW
Slide 54: Regulatory initiatives
Regulatory initiatives GENERATION DISTRIBUTION Energy transition Electric portability: Flexibility strategy - Energy dealer Accelerated retirement of coal-fired units - New types of energy auctions Emission compensation mechanism in green taxes - Information manager Price stabilization mechanism Tar
Slide 55: Price stabilization mechanism (PEC-1)
Price stabilization mechanism (“PEC-1”) US$64 million direct financial cost so far Law #21,185 (Nov-19): Electricity price PEC = Adjusted upwards PEC = Adjusted upwards Dec 2020 PEC = Fixed price to PEC = Fixed price to Dec 2025 Jul 2023 stabilization mechanism for regulated consumers in nominal con
Slide 56: Mechanism for the protection of end users (PEC-2)
Mechanism for the protection of end users (MPC law or “PEC-2”) A new mechanism to stabilize consumer prices beyond PEC-1 The MPC Law (Aug-22) seeks to stabilize electricity tariffs to final 1.- True sale by Generation Companies of Certificates of Payment issued by Chilean Treasury (CPs) consumers ac
Slide 57: Financing activity
Financing activity Securing liquidity and funding for our transformation 2021/22 Monetization of PEC Dec-2020 – IDB green loan Jul-2022 – Scotiabank green loan Dec-2022 – Santander green loan receivables (“ARs”) US$125 million financing US$250 million 5-year loan US$170 million 5-year loan US$158 mi
Slide 58: Dividends paid and share price evolution
US$93 million dividends paid in 2021 No dividends paid in 2022 Dividends paid In US$ Millions 120 100% 112 100% 90% Share price evolution 100 22 81% 72% 93 80% 31-Dec-21 31-Dec-22 80 79 70% EECL: CLP 502 EECL: CLP 490 (-2%) 7 67 60% IPSA: 4,308 IPSA: 5,262 (+22%) 51 150 60 56 47% 56 50% Genco’s: 100
Slide 59: Ownership structure
Ownership structure Pension Local Foreign 59.99% 13.20% 18.61% 7.80% Individuals 0.40% 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 60: 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 FY 2022 results in our web page Presentation Addenda Press Release Recorded Financial Analyst pack conference Report audiocast ENGIE ENERGÍA CHILE S.A.
Slide 61: 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