Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — 9M20 Earnings Presentation
57 slides from Engie Energia Chile's earnings presentation, Oct 28, 2020
Slide 1: ENGIE Energía Chile S.A. Investor Presentation 9M20
ENGIE Energía Chile S.A. Investor Presentation 9M20 ENGIE Energía Chile – Investor Presentation 9M20 October 28, 2020
Slide 2: Snapshots
Snapshots ENGIE Energía Chile – Investor Presentation – 9M20 October 28, 2020
Slide 3: A global reference in low carbon energy and services
Project update A global reference in low carbon energy and services FOCUSED ON FOUR GLOBAL BUSINESS LINES, 20 COUNTRIES, 30 URBAN AREAS AND 500 GLOBAL CLIENTS CLIENT SOLUTIONS NETWORKS RENEWABLES THERMAL Unique integrated solutions to Upstream presence in the gas and Generation and marketing of Redu
Slide 4: ENGIE Energía Chile in the Chilean power market
Project update As of September 30, 2020 or for the first 9 months of 2020 Gross capacity Generation Demand Market share Solar Wind 13% Hydro Hydro 7% Engie 9% 23% Solar 27% Regulated 9% Enel AES Gener Wind 40% 29% 13% SISTEMA 9% ELÉCTRICO 25.8 58.2 53.5 25.8 NACIONAL GW TWh TWh GW (SEN) Thermal Colb
Slide 5: Assets and ownership as of September 30, 2020
Project update Technology Ownership as of 30-Sep-20 CH Chapiquiña (11MW) Coal PV El Aguila I (2MW) Diesel/Fuel oil Natural gas PV Pampa Camarones (6MW) Collahuasi Solar PV Float Wind 24.55% Baterías - Arica (2MW) El Abra Chuquicamata PV Tamaya (114MWp) Hydro Pension 52.76% Diesel Arica (14MW) funds
Slide 6: Key Messages
Key Messages ENGIE Energía Chile – Investor Presentation – 9M20 October 28, 2020
Slide 7: Key messages
Key messages Key messages Resilience in COVID-19 context Results within low end of pre-COVID guidance Building our future together with our clients AMSA PPA renegotiation + new green corporate PPAs Advancing in our energy transformation plan 3 renewable projects in construction, EMR acquisition, dev
Slide 8: 2020: Working on our reconversion
Key messages 2020: Working on our reconversion To reduce CO2 emissions and our average supply cost OUR PERFORMANCE Renegotiated and New green corporate PPAs • Contracted portfolio of more than 12 TWh/y • Balanced regulated vs. unregulated portfolio 9M18 9M19 9M20 Interconnected market (SIC + SING =
Slide 9: Regulated demand impacted by COVID-19
Key messages Regulated demand impacted by COVID-19 EBITDA decrease explained by one-off revenue in 2019 9M19 9M20 Variation Operating Revenues (US$ million) 1,119.5 996.0 -11% EBITDA (US$ million) 429.2 337.8 -21% EBITDA margin (%) 38.3% 33.9% -4.4 pp Net income (US$ million) 143.0 123.3 -18% Net in
Slide 10: Demand met w/generation and energy purchases
Key messages Demand met w/generation and energy purchases Coal plant decommissioning schedule US$/MWh Unit (MW) Date % 9M20 supply 140 U14-U15 268 Dec-21 1.1% CTM1-CTM2 334 Dec-24 2.8% 120 Average monomic price US$101/MWh 100 Diesel 80 Average fuel & electricity purchase cost: 60 US$54/MWh U15 U14 T
Slide 11: PPA life extension and decarbonization
Key messages PPA life extension and decarbonization Sound contract portfolio with average remaining life of 11 years 500 ● Regulated contracts 450 ● Unregulated contracts Renegotiated contracts 400 Distribution Average demand (MW) Companies Clients’ credit ratings (S&P/Moody’s/Fitch): (South SEN) 35
Slide 12: PPA life extension and decarbonization
Key messages PPA life extension and decarbonization 0.7 GW or ~75% of unregulated PPAs renegotiated since 2018. Minera Centinela Price discount, Price discount, CPI-indexed + new PPA w/extended life 186MW coal-indexed Antucoya 50MW Price discount, Price discount, & others PPA life extension coal-ind
Slide 13: Contracted demand: our vision through 2030
Key messages Contracted demand: our vision through 2030 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
Slide 14: Room to finance projects on balance sheet
Key messages Room to finance projects on balance sheet Completion of 2015-2019 investment program has released capacity to finance transformation MUSD 4.0 500 TEN 30 3.5 3.0 400 Net debt capacity: TEN 35 ~US$1.2bn @ 2.5x Net Debt/EBITDA 2.5 300 IEM & Port 2.0 436 Renewables IEM & Port 330 200 314 1.
Slide 15: Our guidance before COVID-19 pandemic
Key messages Our guidance before COVID-19 pandemic Actual results within guidance despite the pandemic Demand & prices + New PPAs US$ 244 mln US$ 160 to 180 mln - COVID-19 pandemic US$ 75 mln LDs (*) - Client migration & lower demand US$ 450 to - PPA renegotiation US$ 161 mln 470 mln US$ 460 mln Mar
Slide 16: COVID-19 impacts on demand
Key messages COVID-19 impacts on demand Actual 9M demand and sensitivities GWh 9M Unregulated customers demand GWh 9M Regulated customers demand 600 600 400 400 200 200 - - Jan Feb Mar Apr May Jun Jul Aug Sep Jan Feb Mar Apr May Jun Jul Aug Sep 2019 2020 2019 2020 Potential impact of demand decrease
Slide 17: Decarbonization
Key messages Decarbonization A decisive, gradual and responsable path Early steps OUR PERFORMANCE • Development of TEN project to facilitate renewable power transmission • Decision not to build any new coal plants RENEGOTIATED + NEW PPA renegotiation with mining companies GREEN CORPORATE PPAs • New
Slide 18: Asset rotation
Key messages Asset rotation IN 1 GW COMMITTED PIPELINE + 1 GW FURTHER GROWTH POTENTIAL OU LOS LOROS MONTE REDONDO CAPRICORNIO CALAMA TAMAYA READY TO BUILD GROWTH 55 MWp 82 MW 97 MWp 151 MW 114 MWp 539 MW 1,000 MW COD(*) 2019 2020 2021 2022 2023 - 2025 ACQUISITIONS + FIRST 3 PROJECTS UNDER DEVELOPMEN
Slide 19: Asset rotation: our vision by 2022
Key messages Asset rotation: our vision by 2022 Year-end 2018 + 1.0 GW Renewables Year-end 2022 (*) 8% 1% 0.6 0.4 GW GW 29% Installed WIND SOLAR PV Installed 42% capacity 58% capacity 33% 1,928 MW 2,481 MW (Dec-18) (Dec-22) 0.8 GW Coal 4% 25% Coal Gas Diesel Renewables 0.8 Coal Gas Diesel Renewables
Slide 20: Current evolution
Current evolution ENGIE Energía Chile – Investor Presentation – 9M20 October 28, 2020
Slide 21: Covid-19 pandemic
Current evolution Covid-19 pandemic Focus on safety, operational continuity and reconversion strategy Safety first Operational continuity Projects in progress Caring for others • +70% home office • +131 internal communications • Crisis committee • US$700k donation • Strict protocols • CLP179M 1+1 fu
Slide 22: Commercial activity: AMSA (Centinela) PPA
Current evolution Commercial activity: 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 Esper
Slide 23: Commercial activity: New green corporate PPAs
Current evolution Commercial activity: New green corporate PPAs In 2020: Ongoing commercial and development activity 420 GWh/y 15 years 114 GWh/y 5 years 2,347-hectare land in Tal-Tal Others awarded by Ministry of National Assets to develop up 252 GWh/y to 320 MW of renewable 5-year avg. energy proj
Slide 24: Asset rotation: Eólica Monte Redondo SpA
Current evolution Asset rotation: 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
Slide 25: Regulation: Price stabilization mechanism
Current evolution Regulation: 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 • Law #21,185 (Nov-19): Electricity price consumers in nominal CLP @ 1H19 leve
Slide 26: Regulatory initiatives in 2020
Current evolution Regulatory initiatives in 2020 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 com
Slide 27: Project Update
Project Update ENGIE Energía Chile – Investor Presentation – 9M20 October 28, 2020
Slide 28: 1 GW plus 1 GW growth projects under development
Project update 1 GW plus 1 GW growth projects under development 1 GW (**) GROWTH PROJECTS UNDER 1 GW DEVELOPMENT (NOT YET APPROVED) 2019 2020 2021 2022 2023-2025 COD/YEAR (MW) 55 82 362 539 1,000 48 Monte Redondo 151 Calama 359 RTB(*) 700 RTB (*) MW MW MW MW WIND 55 Los Loros Andacollo 211 Capricorn
Slide 29: Project update: projects by stage
Project update 1 GW PROJECTS UNDER DEVELOPMENT (NOT YET APPROVED) 137 MW 362 MW 539 MW 1,000 MW (*) UNDER IMPLEMENTED READY TO BUILD GROWTH CONSTRUCTION 48 MW 151 MW 359 MW 700 MW WIND 55 MWp 211 MWp 180 MWp 300 MWp SOLAR PV 34 MW HYDRO (*) This figure is provided as an indication of our development
Slide 30: US$159 million CAPEX / COD: 3Q21
Project update US$159 million CAPEX / COD: 3Q21 Global advance: 49% Main milestones: WTGs* erection started. Power transformer assembled Main contractors: Siemens Gamesa & GES *WTG = Wind turbine generator ENGIE Energía Chile – Investor Presentation – 9M20 30 October 28, 2020
Slide 31: US$64 million CAPEX / COD: 2Q21
Project update US$ 64 million CAPEX / COD: 2Q21 Global advance: 75% Milestones: Main transformer on site Main contractors: GES, Trina Pro, Sungrow ENGIE Energía Chile – Investor Presentation – 9M20 31 October 28, 2020
Slide 32: US$68 million CAPEX / COD: 2Q21
Project update US$ 68 million CAPEX / COD: 2Q21 Global advance: 61% Milestones: Substation works started; 60% equipment on site Main contractors: Tozzi, Trina Pro, Sungrow ENGIE Energía Chile – Investor Presentation – 9M20 32 October 28, 2020
Slide 33: US$53 million Total Investment Value
Project update US$ 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: Dec. 2020 / TL:
Slide 34: US$28 million Total Investment Value
Project update US$ 28 million Total Investment Value Arica y Parinacota Antofagasta By-Pass Antofagasta By-Pass Antofagasta • Multi-circuit transmission line 2x110 kV, 1x220 kV. La Negra • COD: 2023 • Awaiting Decree issuance Atacama • Development engineering in bidding process Coquimbo O’Higgins La
Slide 35: Financial update
Financial update ENGIE Energía Chile – Investor Presentation – 9M20 October 28, 2020
Slide 36: EBITDA evolution
Financial update EBITDA evolution Decrease primarily explained by liquidated damages received in 2019 By main effect In US$ Million +29 (5) (12) +75 (87) OPEX & Spot Physical SG&A Transmission 429 sales Gas (75) Lower Average energy realized electricity (5) (11) 338 purchases prices Liquidated
Slide 37: Net income evolution
Financial update Net income evolution 2019: Impairments + income from LDs 2020: Make-whole on early bond redemption By main effect Recurring Results In US$ Million 207 +7 minority 64 interest (59) 143 +7 minority (14) interest EBITDA (8) Impairment Decrease 133 (10) U14+U15 (LDs in 2019) Other Finan
Slide 38: Net debt evolution
Financial update Net debt evolution Net debt increased due to CAPEX, acquisitions, taxes and premium on 144-A bond prepayment Main cash flows In US$ Million +73 (8) (200) Cash +27 payment +28 Income from TEN +56 +14 Leases Taxes Make-whole Accrued (IFRS 16) + Green +136 Interest/ Taxes 809 early bon
Slide 39: Successful liability management
Financial update Successful liability management Jan 28, 2020: New 10 yr., 3.4%, US$500 million 144A/RegS bond to refinance US$400 million notes due Jan-2021 600.000 7% 500 500.000 Before: 5.34% 6% 400 350 400.000 5% 300.000 4% 200.000 After: 3.85% 100.000 3% 0.000 2% 2020 2021 2022 2023 2024 2025 2
Slide 40: Robust financial structure
Financial update Robust financial structure Net debt/EBITDA well below 2.5x NET DEBT/EBITDA @ 1.8 X 2.8 2.2 Rating upgraded to BBB+ by Fitch 1.7 1.8 1.3 • International: • Fitch (Jun 2020): BBB+ Stable • S&P (Jan 2020): BBB Stable • National scale: Dec 16 Dec 17 Dec 18 Dec 19 LTM Sep 20 • Fitch (Jan
Slide 41: US$67 million provisional dividend 30-Nov-20
Financial update US$67 million provisional dividend 30-Nov-20 DIVIDENDS PAID MARKET CAP & DIVIDEND YIELD (*) In US$ Millions In US$ Millions 120 100% 112 100% 7.0% 90% 100 81% 22 80% 2,000 5.4% 5.8% 6.0% 80 78 70% 5.0% 7 67 60% 1,500 4.0%Provisional 4.1% 60 56 47% 56 50% 3.4% 47 2.3% 2,265 3.0% 1,00
Slide 42: Key take aways
Financial update Key take aways Resilience in COVID-19 context Results within low end of pre-COVID guidance Caring for our stakeholders: health and safety above all Building our future together with our clients AMSA PPA renegotiation + new green corporate PPAs signed in 2020 ≈ 2 TWh/y Advanced reneg
Slide 43: Addenda
Addenda ENGIE Energía Chile – Investor Presentation – 9M20 October 28, 2020
Slide 44: Long-term contracts
Key messages Long-term contracts The basis for stable sales and prices ENERGY SALES AND PRICES Energy sales Prices GWh US$/MWh 3,000 150 2,500 2,000 100 1,500 1,000 50 500 0 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Unregulat
Slide 45: Demand supplied with own generation and energy purchases
Key messages Demand supplied with own generation and energy purchases hedged by our installed capacity Renewables Diesel 7% 4% • Energy purchases decreased due to IEM, but remain high due to (i) Installed Coal efficient capacity additions in the grid and (ii) PPA with distribution 61% companies in c
Slide 46: Generation and spot price history – North SEN
Key messages Generation and spot price history – North SEN • Limited exposure to hydrologic risk until interconnection became fully operative • Long-term contracts with unregulated clients (mining companies) accounting for 89% of demand • Maximum demand: ~3,360 MW in June 2020; expected 2.3% compoun
Slide 47: Regulatory and grid coordination challenges
Key messages Regulatory and grid coordination challenges Generation North SEN – September 1 to 10, 2020 MW 3,500 200 US$/MWh 180 3,000 160 2,500 140 120 2,000 100 1,500 80 1,000 60 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 17 21 1 5 9 13 17 21 1 5 9 13 17 21
Slide 48: Sistema Eléctrico Nacional - SEN
Key messages Sistema Eléctrico Nacional - SEN SEN – September 2020 SING 25,848 MW 8,845 MW SEN “Sistema Eléctrico 7,370 MW Nacional” 1,100 4,889 SIC 3,450 3,609 MW 3,310 MW 275 45 267 2,182 MW 1,370 58 127 1,611 105 44 91 2,033 610 3,009 2,586 (*) 1,304 532 MW 1,332 660 532 350 Enel Generación AES G
Slide 49: IEM and Puerto Andino
Key messages 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$122 million investment at CTA subsidi
Slide 50: PPA portfolio indexation
Key messages PPA portfolio indexation Shifting away from coal Indexation applicable to Indexation applicable to electricity and capacity sales electricity and capacity sales (as of Sep 2020) (2021, proforma PPA U.S. CPI renegotiation) U.S. PPI U.S. CPI Gas 11% U.S. PPI Node Price Node Price 57% 75%
Slide 51: EECL, a relevant player in transmission
Key messages EECL, a relevant player in transmission 2,293 kms Substations 23 substations - 821 MVA US$ 16.7 million regulated revenue p.a. 5 Transmission substations 821 Generation substations MVA Transmission lines 18 8% 891 2,293 Kms. AVI + COMA for National & Zonal systems 92% (in millions of US
Slide 52: Transmisora Eléctrica del Norte (TEN)
Key messages Transmisora Eléctrica del Norte (« TEN ») • Double circuit, 500 kV, alternate current TEN annual revenue: (HVAC), 1,500 MW, 600-km long (in USD millions transmission line at Sep 30, 2020 FX rates) • National transmission system AVI (VI annuity): 73.8 interconnecting SIC and SING grids s
Slide 53: Copper industry
Key messages Copper industry Copper production in Chile ('000 tons) 6,500 US¢/lb 500 8,000 GWh Copper price LME (US¢/lb) SEN monthly electricity demand 450 7,000 5,500 400 6,000 4,500 350 5,000 300 3,500 250 4,000 5,776 5,761 5,772 5,832 5,787 5,413 5,321 5,361 5,557 5,328 5,394 5,419 5,434 5,553 5,
Slide 54: Ownership structure
Key messages Ownership structure Pension funds Local institutions Foreign institutions Individuals 52.76% 22.69% 14.89% 9.24% 0.42% ENGIE ENERGÍA CHILE S.A. Minera Centinela (“EECL”) Red Eléctrica Chile S.A. 40% 50% Central Termoeléctrica Central Termoeléctrica Gasoducto Edelnor Transmisora Hornitos
Slide 55: EECL organizational structure
Key messages 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
Slide 56: For more information about ENGIE Energía Chile
Key messages For more information about ENGIE Energía Chile Ticker: ECL +562 2783 3307 inversionistas@engie.com http://www.engie-energia.cl MORE INFORMATION ON 3Q 2020 RESULTS IN OUR WEB PAGE 3Q 2020 Presentation Addenda Press Recorded Financial Analyst Release conference report pack audiocast ENGIE
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-