Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — Q1 2021 Earnings Presentation
57 slides from Engie Energia Chile's earnings presentation, Apr 28, 2021
Slide 1: ENGIE Energía Chile S.A. Investor Presentation 1Q21
ENGIE Energía Chile S.A. Investor Presentation 1Q21 ENGIE Energía Chile – Investor Presentation 1Q 2021 April 28, 2021
Slide 2: Company overview
Company overview ENGIE Energía Chile – Investor Presentation – 1Q 2021 April 28, 2021
Slide 3: A global reference in low carbon energy services
Company overview A global reference in low carbon energy services FOCUSED ON FOUR GLOBAL BUSINESS LINES AND 20 COUNTRIES - 170,000 EMPLOYEES WORLDWIDE CLIENT SOLUTIONS INFRASTRUCTURE RENEWABLE ENERGIES THERMAL Supporting the carbon-neutral Strengthen our presence across the Create value by developin
Slide 4: 60% owned by ENGIE, 4th largest generation company
Company overview As of March 31, 2021, or for the first quarter of 2021 Gross capacity Generation Demand Market share Solar Wind 15% Hydro Hydro 7% Engie 8% 26% 22% Regulated Solar Enel AES Gener 13% 38% 26% 13% SISTEMA Wind ELÉCTRICO 10% 27.7 19.9 18.4 27.7 NACIONAL GW TWh TWh Colbún GW (SEN) 12% O
Slide 5: A diversified asset base in Chile's mining region
Company overview A diversified asset base in Chile’s mining region Our operations Our sites Our largest clients Generation TOCOPILLA Coal (269MW) Mining Gas (399MW) 4th largest GenCo in Chile Port 2.2 GW gross capacity 0.6 GW renewables in construction MEJILLONES Coal (711MW) 11.4 TWh sold under PPA
Slide 6: A challenging 1st quarter: high marginal costs and one-shot financial expenses
Company overview A challenging 1st quarter: high marginal costs and one-shot financial expenses After resilient 2020 results, our efforts are focused on reaching low-end of 2021 guidance Advancing in Phase 1 of our transformation: 0.6 GW renewables under construction 151MW wind (2Q & 3Q21); 57MWp PV
Slide 7: To become greener and reduce our supply cost
Company overview To become greener and reduce our supply cost OUR 1Q PERFORMANCE Renegotiated and New green corporate PPAs • Contracted portfolio of more than 12 TWh/y • Balanced regulated vs. unregulated portfolio 1Q19 1Q20 1Q21 Interconnected market (SIC + SING = SEN) • 50%-owned TEN since Nov. 20
Slide 8: Coal plant decommissioning schedule and supply costs
Company overview US$/MWh 160 Coal plant decommissioning schedule Unit (MW) Date % 1Q21 supply 140 U14-U15 268 Dec-21 4.7% CTM1-CTM2 334 Dec-24 5.6% 120 Average monomic price 1Q20: 103 USD/MWh 101 USD/MWh 100 80 Average fuel & electricity purchase cost 68 USD/MWh 60 1Q20: 59 USD/MWh 40 CTM2 CTM1 U15
Slide 9: Ongoing commercial activity
Company overview Ongoing commercial activity 1,300 GWh/y 420 GWh/y exp. 31-Dec-33 Price discount, coal-indexed 15 years Others 328 GWh/y 114 GWh/y 4-year avg. 5 years ENGIE Energía Chile – Investor Presentation – 1Q 2021 9 April 28, 2021
Slide 10: Renegotiated PPAs and new green corporate PPAs
Company overview Renegotiated PPAs (extended lives and decarbonized tariffs) and new green corporate PPAs GWh 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Regulated SING Regulated SIC Free clients-renegotiated+new free clients O
Slide 11: 1 GW committed pipeline and 0.8 GW coal exit
Company overview IN 1 GW COMMITTED PIPELINE, of which 0.7 GW UNDER WAY OU LOS LOROS MONTE REDONDO CALAMA TAMAYA COYA CAPRICORNIO ADVANCED STAGE 55 MWp 82 MW 151 MW 114 MWp 198 MWp 95 MWp 359 MW COD(*) 2019 2020 2021 2022 2023-2024 ACQUISITIONS + FIRST 4 PROJECTS UNDER DEVELOPMENT 2019-2022: US$500 M
Slide 12: Results & Guidance
Results & Guidance ENGIE Energía Chile – Investor Presentation – FY 2020 January 27, 2021
Slide 13: 1Q21 – Higher than expected marginal costs
Results & guidance 1Q21 – Higher than expected marginal costs Dry season, unavailability of efficient thermal plants, gas interruptions 1Q20 1Q21 Variation Operating Revenues (US$ million) 335.3 332.3 -1% EBITDA (US$ million) 99.1 66.0 -33% EBITDA margin (%) 29.6% 19.8% -9.8 pp Net income (US$ milli
Slide 14: 1Q21: A challenging quarter
Results & guidance 1Q21: A challenging quarter Dry season, unavailability of efficient thermal plants, gas interruptions => high spot prices Average marginal cost 1Q21: A combination of unfortunate events for the power industry 80 Crucero & Polpaico nodes • Record low hydrology => decrease of low-co
Slide 15: 1Q21: A 10-day real example in the north SEN grid
Results & guidance 1Q21: A challenging quarter A 10-day real example in the north segment of the SEN grid (March 3 to 13, 2021) MW 4,500 200 US$/MWh 4,000 180 3,500 160 140 3,000 120 2,500 100 2,000 80 1,500 60 1,000 40 500 20 0 0 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13 17 21 1 5 9 13
Slide 16: Our guidance
Results & guidance Our guidance Best efforts to approach low range of 2021 guidance after a challenging first quarter Demand & prices + New PPAs 244 170 - COVID-19 pandemic 181 75 LDs (*) - Client migration & lower demand 460 Marginal cost risks 156 455 460 - Coal & gas price increases - Dry hydrolo
Slide 17: Room to finance projects on balance sheet
Results & guidance Room to finance projects on balance sheet MUSD 600 4.5 4.0 500 TEN 30 3.5 400 3.0 TEN 35 Net debt capacity: ~US$1.2bn @ 2.5x Net Debt/EBITDA 2.5 300 IEM & Port 436 2.0 Renewables IEM & Port 256 200 314 1.5 Renewables Renewables 64 233 IEM & Port 1.0 183 Transmission 13 Renewables
Slide 18: Regulatory initiatives under way
Results & guidance Regulatory initiatives under way GENERATION DISTRIBUTION • Energy transition • Electric portability: • Energy dealer • Flexibility strategy • New types of energy auctions • Information manager • Energy policy update – 2050 vision • Basic services (contingency measures) • Emission
Slide 19: Effects of price stabilization mechanism
Results & guidance Effects of price stabilization mechanism PEC = Adjusted upwards Dec. 2020 Dec. 2025 PEC = Fixed price to PEC = Adjusted upwards if Jul. 2023 PEC = Fixed price to consumers in if necessary to permit full consumers in nominal necessary to avoid breaching • Law #21,185 (Nov-19): Elec
Slide 20: Project Update
Project Update ENGIE Energía Chile – Investor Presentation – 1Q 2021 April 28, 2021
Slide 21: Wind project: US$159 million CAPEX
Project update US$159 million CAPEX / COD: Stage 1: 2Q21 Stage 2: 3Q21 Global advance: 92% Main milestones: 32 WTGs(*) fully assembled + 2 on site. 23 pre-commissioned Main contractors: Siemens Gamesa & GES *WTG = Wind turbine generator ENGIE Energía Chile – Investor Presentation – FY 2020 21 Januar
Slide 22: Solar project: US$64 million CAPEX, delayed COD
Project update US$ 64 million CAPEX / COD: Delayed to 4Q21-1Q22 Global advance: 86% Milestones: Main transformer installed. Civil Works control building finished Main contractors: Trina Pro, Sungrow, BOP being replaced ENGIE Energía Chile – Investor Presentation – FY 2020 22 January 27, 2021
Slide 23: Solar project: US$68 million CAPEX
Project update US$ 68 million CAPEX / COD: Stage 1: 3Q21 Stage 2: 4Q21 Global advance: 83% Milestones: Main transformer installed. Trackers and panels installation started Main contractors: Tozzi, Trina Pro, Sungrow ENGIE Energía Chile – Investor Presentation – FY 2020 23 January 27, 2021
Slide 24: Solar project: US$117 million CAPEX, COD 1Q22
Project update US$ 117 million CAPEX / COD: 1Q22 Global advance: 5% Milestones: Earthmoving works started Main contractors: Siemens-Ingecoz, OHL (BOP), Sungrow, Soltec, VSun ENGIE Energía Chile – Investor Presentation – FY 2020 24 January 27, 2021
Slide 25: Transmission projects: US$53 million total investment
Project update US$ 53 million Total Investment Value Arica y Parinacota Nueva Chuquicamata Antofagasta Capricornio SS expansion Atacama Algarrobal Nueva Chuquicamata (National) Algarrobal (National) • Substation + 2 x 220 kV transmission line • 220 kV sectioning substation • COD: SS: Completed Apr-2
Slide 26: Transmission projects: US$43 million total investment
Project update US$ 43 million Total Investment Value Antofagasta By-Pass La Negra Pozo Almonte SS Expansion Arica-Pozo Roncacho Sectioning • Zonal • Zonal • Zonal Pozo • Multi-circuit transmission line • Substation + 2 x 220 kV • 110 kV Substation Almonte SS 2x110 kV, 1x220 kV. transmission line • C
Slide 27: Our transformation
Our transformation ENGIE Energía Chile – Investor Presentation – 1Q 2021 April 28, 2021
Slide 28: Our transformation: Phase 2
Our transformation Our transformation: Phase 2 A four-track road To green existing To close Old Coal To convert Newer To develop more corporate PPAs Units Coal Units Wind and Solar Restructuring 800 MW/y closing 0.8 GW of remaining 3 coal power 1 GW of wind and PV of long-term corporate coal power p
Slide 29: Greening existing corporate PPAs
Our transformation Greening existing corporate PPAs 75% of mining PPAs transformed: strong long-term relationships for more sustainable mining PPAs Corporate Clients [6.5 TWh] Regulated Clients [5.5 TWh] 12 TWh CODELCO AMSA GLENCORE EL ABRA OTHER DISCO NORTH DISCO CENTER [2020] FREEPORT Sound portfo
Slide 30: Greening our PPA portfolio
Our transformation Greening our PPA portfolio Shifting away from coal-price indexation Indexation applicable to contracted electricity and capacity sales (*) 2020 2022 2025 U.S. CPI U.S. CPI U.S. CPI Gas 10% 60% 79% 78% Coal 29% 2,026 MW 1,815 MW 1,737 MW Coal Coal 11% 11% Gas 10% Gas 11% PPAs with
Slide 31: Generation portfolio transformation by 2025
Our transformation Generation portfolio transformation by 2025 2018 + 2.0 GW Renewables 2025 1.4 GW 0.6 GW 1% 58% 58% 8% WIND SOLAR PV 1% 10% Installed 0.8 GW Coal disconnection Installed 58% 33% capacity capacity 29% 1.9 GW U12 U13 U14 U15 CTM1 CTM2 58% 3.4 GW 171 MW 268 MW 334 MW 2% 0.7 GW Convers
Slide 32: Renewables acceleration
Our transformation Renewables acceleration Achievements so far paving the way to reach our goals 0.7 GW approved and committed plus 1.1 GW projects under development 1.3 GW PROJECTS UNDER DEVELOPMENT 0.7 GW (NOT YET APPROVED) 2019 2020 2021 2022 2023-2025 COD/YEAR (MW) 55 82 360 198 1.3 GW 48 151 1
Slide 33: Unit conversion
Our transformation Unit conversion Permits full exit from coal, while providing back-up for renewables expansion 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 permits, engineering, procurement, off-site preparation IEM outage overhaul 375 MW coal generatio
Slide 34: Financial update
Financial update ENGIE Energía Chile – Investor Presentation – 1Q 2021 April 28, 2021
Slide 35: EBITDA evolution
Financial update EBITDA evolution Margin compression largely explained by higher marginal costs By main effect In US$ Million +7 (11) +5 +10 (8) OPEX, 99 Insurance Lower (23) SG&A + (BI) Other volume Lower Lower sales energy average purchase realized (11) volume prices Increase in marginal (2) 66 co
Slide 36: Net income evolution
Financial update Net income evolution Narrower first quarter operating margin and one-time financial expenses from sale of PEC receivables By main effect Recurring Results In US$ Million 10 36 1 (26) Other Depreciation (-) 26 FX Diff. (+) Make-whole on early bond redemption Net Net Income Recurring
Slide 37: Net debt evolution
Financial update Net debt evolution Net debt increase due to higher operating cash uses offset by proceeds from sale of long-term receivables Main cash flows In US$ Million +7 +10 -8 -98 +17 +40 Accrued Cash Leases Income Interest/ payment +66 Taxes (IFRS 16) from TEN deferred CAPEX financial 833 79
Slide 38: Robust financial structure
Financial update Robust financial structure Investment-grade ratings: BBB+/BBB NET DEBT/EBITDA @ 2.0 X • International: 2.8 • Fitch (Jun 2020): BBB+ Stable 2.2 • S&P (Jan 2021): BBB Stable 1.8 2.0 • National scale: 1.3 • Fitch (Jun 2020) AA Stable • Feller Rate (Jan 2021): AA- Positive Dec 17 Dec 18
Slide 39: Financing activity
Financial update Financing activity Securing liquidity and funding for our transformation strategy Jan-2020 - Liability Management Dec-2020 - IDBI Loan Jan-2021 – Monetization of PEC account receivables (“AR”) • New 10-yr, 3.4%, US$500mln • US$125 million financing: 144A/RegS bond • US$110mln funded
Slide 40: 72% of 2020 net income dividend distribution
Financial update 72% of 2020 net income dividend distribution DIVIDENDS PAID MARKET CAP & DIVIDEND YIELD (*) In US$ Millions In US$ Millions 120 100% 112 100% 7.0% 90% 100 22 81% 80% 2,000 5.4% 5.8% 6.0% 72% 79 70% 5.1% 5.0% 80 7 67 60% 1,500 4.0% 60 56 47% 56 50% 3.4% 51 2,265 47 1,000 2.3% 3.0% 17
Slide 41: Key take aways
Financial update Key take aways A challenging first quarter with room for improvement and best efforts to approach the low end of our 2021 EBITDA guidance A growing renewable portfolio to support decarbonization strategy and our strong PPA portfolio with 11-year average life Phase 2 of our transform
Slide 42: Addenda
Addenda ENGIE Energía Chile – Investor Presentation – 1Q 2021 April 28, 2021
Slide 43: Covid-19 pandemic
Addenda Covid-19 pandemic Focus on safety, operational continuity and reconversion strategy Safety first Operational continuity Projects in progress Caring for others • +70% home office • Daily internal communications • Crisis committee • US$700k donation • Strict protocols • CLP179M 1+1 fund • Site
Slide 44: Sound contract portfolio
Addenda Sound contract portfolio 11-year remaining average life 500 ● Regulated contracts Clients’ credit ratings (S&P/Moody’s/Fitch): 450 ● Unregulated contracts • Codelco: A/A3/A- Renegotiated contracts • Freeport-MM (El Abra ): BB/Ba1/BB+ 400 Distribution • Antofagasta PLC (AMSA): BBB/--/BBB+ Com
Slide 45: Long-term contracts
Addenda Long-term contracts The basis for stable sales and prices ENERGY SALES AND PRICES Energy sales Prices GWh US$/MWh 3,000 150 2,500 2,000 100 1,500 1,000 50 500 0 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 Unre
Slide 46: Demand supplied with own generation and energy purchases
Addenda Demand supplied with own generation and energy purchases hedged by our installed capacity Renewables Diesel 7% 4% • Energy purchases decreased due to IEM, but remain high due to (i) efficient capacity additions in the grid and (ii) PPA with distribution Installed Coal 61% companies in centra
Slide 47: Sistema Eléctrico Nacional - SEN
Addenda Sistema Eléctrico Nacional - SEN SEN – March 2021 11,030 MW 27,726 MW SING SEN “Sistema Eléctrico Nacional” 7,160 MW 7,074 1,100 SIC 3,600 3,512 MW 3,310 MW 212 45 2,182 MW 1,370 267 58 1,611 105 127 44 91 610 2,033 2,901 2,586 (*) 1,304 532 MW 1,332 300 350 532 Enel Generación AES Gener Col
Slide 48: AMSA (Centinela) PPA
Addenda AMSA (Centinela) PPA Renegotiation of existing agreement + new green PPA signed on March 31, 2020 Amendment of existing PPA New 11-year 186MW PPA between Inversiones Hornitos between EECL and Minera (CTH) and Centinela for its Centinela beginning 1-Jan-22 Esperanza (150MW) and El and maturin
Slide 49: Eólica Monte Redondo SpA
Addenda Eólica Monte Redondo SpA 82MW of renewable capacity acquired on July 1, 2020 • Acquired from ENGIE Latam: US$53 million+cash, on debt-free basis. Approved by independent board members (“Comité de Directores”) • 275 GWh/yr PPAs w/CGE (100 GWh maturing Dec-2021 + 175 GWh/yr PPA maturing Dec-20
Slide 50: IEM and Puerto Andino
Addenda IEM and Puerto Andino Puerto Andino • Mechanized port. 6 million TPY transfer capacity, 3,000 TPH unloading speed => lower demurrage costs • Conventional & tubular conveyor belts => better environmental standards • Diversification opportunities • US$122 million investment at CTA subsidiary,
Slide 51: EECL, a relevant player in transmission
Addenda EECL, a relevant player in transmission 2,330 kms 24 substations - 977 MVA Substations US$ 16.7 million regulated 5 revenue p.a. Transmission substations 977 Generation substations MVA 18 Transmission lines 8% 2,330 912 Kms. AVI + COMA for National & Zonal systems 92% (in millions of US$) Ow
Slide 52: Transmisora Eléctrica del Norte (TEN)
Addenda Transmisora Eléctrica del Norte (« TEN ») TEN annual revenue • Double circuit, 500 kV, alternate current (HVAC), per old decree: 1,500 MW, 600-km long transmission line (in USD millions • National transmission system interconnecting at Mar. 31, 2021 FX rates) SIC and SING grids since Nov. 24
Slide 53: Copper industry
Addenda Copper industry US¢/lb 500 Copper price LME (US¢/lb) SEN monthly electricity demand 8,000 GWh Copper production in Chile ('000 tons) 450 7,000 400 6,000 350 5,000 300 250 4,000 5,776 5,761 5,772 5,832 5,787 5,732 5,413 5,321 5,361 5,557 5,328 5,394 5,419 5,434 5,553 5,504 200 5,263 4,739 4,9
Slide 54: Ownership structure
Addenda Ownership structure Pension funds Local institutions Foreign institutions Individuals 59.99% 16.87% 14.04% 8.60% 0.50% ENGIE ENERGÍA CHILE S.A. (“EECL”) Red Eléctrica Chile S.A. 50% Central Termoeléctrica Central Termoeléctrica Gasoducto Edelnor Transmisora Hornitos SpA (“CTH”) Andina S.A. (
Slide 55: EECL organizational structure
Addenda EECL organizational structure Shareholders’ assembly Committee Functional committees: Board of directors - Management of directors - Commercial origination - Development - Business knowledge CEO - Stakeholders & Regulation - Change management - Construction - Portfolio & risk management Inte
Slide 56: For more information about ENGIE Energía Chile
Addenda For more information about ENGIE Energía Chile Ticker: ECL +562 2783 3307 inversionistas@engie.com http://www.engie-energia.cl MORE INFORMATION ON 1Q 2021 RESULTS IN OUR WEB PAGE 1Q 2021 Presentation Addenda Press Recorded Financial Analyst Release conference report pack audiocast ENGIE Ener
Slide 57: Forward-Looking statements
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. Forward-