Erg S.p.a. · MIL:ERG
Erg — ESG Presentation (September 2024)
46 slides from Erg's sustainability presentation, Sep 10, 2024
Slide 1: Euronext Sustainability Week 2024
EURONEXT SUSTAINABILITY WEEK 2024 10 September 2024
Slide 2: Disclaimer
DISCLAIMER This document contains certain forward-looking information that is subject to a number of factors that may influence the accuracy of the statements and the projections upon which the statements are based. There can be non assurance that the projections or forecasts will ultimately prove t
Slide 3: Agenda
AGENDA ❑ ERG as a pioneer in the Energy Transition ❑ A best-in-class Governance Model ❑ ERG Tomorrow ❑ 2024 Guidance & 2024-2026 BP Key Figures ❑ ESG as a concrete and substantial Choice
Slide 4: ERG as a pioneer in the energy transition
ERG AS A PIONEER IN THE ENERGY TRANSITION
Slide 5: Group's structure and top management
GROUP'S STRUCTURE AND TOP MANAGEMENT A new Shareholders' structure(1) Top Management SQ Renewables S.p.A. San Quirico S.p.A. IFM Investors SQ Renewables S.p.A. 35% Edoardo Garrone Alessandro Garrone Giovanni Mondini Treasury shares Chairman of the Board Executive Vice President Vice President 35% 49
Slide 6: A long history…
A LONG HISTORY… Wind: ERG enters the Sweden market, and starts operation in U.K.. With the acquisition At year-end installed of Andromeda wind capacity On October 17 ERG Power’s assets (51MW), in Europe is 2,198MW. ERG sells the CCGT, combined cycle ERG increases On August 2, ERG signs becoming a pu
Slide 7: Completion of our energy transition
COMPLETION OF OUR ENERGY TRANSITION Wind & Solar Installed Capacity (GW) CCGT divestment crucial for ‘Net Zero’ Target Carbon Index % [g CO2 e/KWh] (Scope 1+2+3) ERG Net Zero 3.3 Scope 1 and 2 STRONG 100% (Δ vs Base year) 2.1 90% EXECUTION (-10%) 12% (-88%) // 2020 2022 2023 2020 2023 (Base year) As
Slide 8: Top tier ESG recognition
TOP TIER ESG RECOGNITION Advanced = Advanced A =A A+ AAA = AAA Negligible risk 100 = B+ = Low = 79 A 65 Robust B C High Weak D D- CCC Severe risk 0 Rating Scale ERG Rating Sector Average Rating ERG best-in-class in ESG: 28th worldwide and 1st in Italy in the Corporate Knights Global 100 8
Slide 9: ERG as of today: a solid and international platform
ERG AS OF TODAY: A SOLID AND INTERNATIONAL PLATFORM Sweden: Installed Capacity (MW) ERG geographical Presence (MW) 62MW Wind 17% Solar 3,796 U.K.: 249MW 83% Iowa: 224.4MW Illinois: Germany: 92.4MW 42% 50% 8% 327MW 11% 21% 29% 1,594 1,885 317 Poland: 142MW 89% 79% 71% Romania: 70MW Pipeline (MW) 3% 5
Slide 10: Execution well on track
EXECUTION WELL ON TRACK ~60 ~ 3,900 42 ~3,830 317 51 47 Storage 73 ~3,300 Solar Wind In operation In final phase of construction 2023 Falcon Roccapalumba Mineo-Militello Pinnacle(2) France @end of Under Expected Vizzini(1) Greenfield (3) August construction(4) FY 2024 2024 A secured and internationa
Slide 11: Building up a larger and well diversified portfolio in Europe
BUILDING UP A LARGER AND WELL DIVERSIFIED PORTFOLIO IN EUROPE Reinsdorf (RPW) Salemi-Castelvetrano (RPW) Picardie 1 Corlacky 76MW to be, 18MW 47MW 50MW Δ vs as-is COD: 4Q 2024 COD: 1Q 2025 COD: 4Q 2025 Producibility: 2,300 heq Producibility: 2,670 heq Producibility: 3,760 heq Reinsdorf (RPW) Siena (
Slide 12: A platform of PPA with Tier 1 off-takers to stabilize revenues
A PLATFORM OF PPA WITH TIER 1 OFF-TAKERS TO STABILIZE REVENUES Country & Asset Type Plants & Capacity Price Structure Tenor / Start Date Counterparty Volume Evishagaran / Craiggore 6 years ~250GWh/Y Greenfield Fixed Price tot. 70MW Jan ’22 Pay as Produced Asset Based Bois Bigot, Bois de l’Arche/Thet
Slide 13: A best-in-class governance model
A BEST-IN-CLASS GOVERNANCE MODEL
Slide 14: A best-in-class governance model
A BEST-IN-CLASS GOVERNANCE MODEL ERG’s Governance Model Managers Committees to oversee strategy Key elements of the new BoD: • 5 independent members out of 12 • 6 female members out of 12 • 100% independent members in both Control, Risk & Sustainability and Nominations & Remuneration Committees SHAR
Slide 15: ESG governance model
ESG GOVERNANCE MODEL Control, Risk and Sustainability Committee A renewed Control, Risk and Sustainability Committee, appointed by the Board of Directors on 23 April 2024, that is responsible to support the Board in its decisions about: Board of Directors • the approval of the ESG LT strategy and it
Slide 16: Our sustainability policies
OUR SUSTAINABILITY POLICIES In 2023, ERG adopted three new policies: • The "Code of Ethics" was renewed in December 2023, following the completion of the transformation process into a Pure Wind and solar operator. • The "Gender Equality Policy" was established as an executive document of the Diversi
Slide 17: An advanced system of reward policy, succession and career planning
AN ADVANCED SYSTEM OF REWARD POLICY, SUCCESSION AND CAREER PLANNING Job Mobility Rewarding Policy: • A remuneration system for CEO to enhance correlation with Succession strategy execution and share performance Planning Acquisition • An enlarged LTI system based on: ➢ Share Price (60%) ➢ ESG (20%) ➢
Slide 18: Rewarding policy - ESG target (MBO / LTI)
REWARDING POLICY - ESG TARGET (MBO / LTI) Weight Weight Weight objective indcator Pillars 2024 Target - MBO System Pillars 2024-2026 Target - LTI System indcator Circular Wind: Repowering recovery of materials 10% and/or energy Target Net Zero: % Green Energy on Total consumption 20% Planet 20% Plan
Slide 19: ERG Tomorrow
Teleborsa: distribution and commercial use strictly prohibited ERG TOMORROW EMARI SDIR
Slide 20: ERG's 2024-2026 plan: value over volume
ERG’S 2024-2026 PLAN: VALUE OVER VOLUME ERG’S new targets to 2026 Ca. 4.5GW (+1.2GW) installed Capacity in 2026 (> 5.0GW in 2028) pursued via Selective growth a cherry-picking approach from our Pipeline and/or M&A Investments/EBITDA CAPEX: €1.2bn 2024-2026; EBITDA: €600-€650mn @2026 Route to market
Slide 21: Pursuing growth with a "value over volume" approach
PURSUING GROWTH WITH A "VALUE OVER VOLUME" APPROACH Pipeline (MW) Already permitted Technology Layer Flexible Approach 340 340MW Under Construction 350 50MW Greenfield at advanced stage Cherry Picking based on: • Route to mkt secured 750 250MW Repowering • Land secured • Proven technology • CAPEX se
Slide 22: A flexible and selective approach to growth
A FLEXIBLE AND SELECTIVE APPROACH TO GROWTH ERG's Key Priority country ERG's country & possible development • Focus on key core countries to consolidate ERG’s presence • Supportive regulatory framework as a key driver • US as a priority with a “learn & grow” approach • Assessing asset rotation oppor
Slide 23: Our repowering projects in Europe are gaining visibility
OUR REPOWERING PROJECTS IN EUROPE ARE GAINING VISIBILITY Project MW as is MW to be Delta MW Delta Prod. VIA Decree AU Decree 1 10 20 2x 2x ✓ ✓ N. WTG 2 10 20 2x 3x ✓ ✓ 0.5X 3 50 100 2x 3x ✓ ✓ REPOWERING 4 30 60 2x 3x ✓ ✓ MW 2.0X ÷ 2.5X 5 10 20 2x 3x ✓ ongoing KW 6 30 35 1x 2x ✓ ongoing 7 40 120 3x 4
Slide 24: First step in storage and hybridization to increase asset flexibility
FIRST STEP IN STORAGE AND HYBRIDIZATION TO INCREASE ASSET PTF FLEXIBILITY Leveraging on ERG’s >200MW pipeline in storage >150MW of Hybridization Pipeline in Italy 14.000 Monthly Profile (MWh) • Building a Pipeline >200MW in batteries in Italy, Spain, France and UK 12.000 10.000 Solar • Regulatory fr
Slide 25: 2024 Guidance & 2024-2026 BP key figures
2024 GUIDANCE & 2024-2026 BP KEY FIGURES
Slide 26: Confirming 2024 guidance
CONFIRMING 2024 GUIDANCE Adjusted EBITDA (€ mn) CAPEX (€ mn) Adjusted NFP(2) (€ mn) 1,912 1,750-1,850 520-580(1) 550-600 444 520(1) 281 1H 2024 2024 1H 2024 2024 1H 2024 2024 Actual Guidance Actual Guidance Actual Guidance Actual Guidance range (1) EBITDA guidance net of clawbacks. It includes IFRS
Slide 27: ERG is aiming at creating value in a complex scenario
ERG IS AIMING AT CREATING VALUE IN A COMPLEX SCENARIO ❑ Targeting 200-400bps over WACC SELECTIVE GROWTH 2024→2026 60% Secured 1.2GW ❑ Visible growth ❑ Solid pipeline underpinning the target ❑ Assessing asset rotation to maximise value QUASI-REGULATED ❑ EBITDA range at €600-650mn BUSINESS MODEL New 2
Slide 28: ESG as a concrete and substantial choice
ESG AS A CONCRETE AND SUBSTANTIAL CHOICE
Slide 29: A new approach to ESG as of 2021
A NEW APPROACH TO ESG AS OF 2021 ESG, IR & Communication directly reporting to CEO in place as of 2021 focused on ESG Strategy & Reporting Governance Best in class with Board Committee and Managerial Committee overseeing the ESG strategy and achievements ESG Plan developed internally and embedded in
Slide 30: ESG strategy 2024-2028
ESG STRATEGY 2024-2028 Net Zero • ERG Academy for Next Generation Circular Economy • Sharing Value for the Community E NG A Energy Efficiency ET • Top Tier ESG Recognition N G PLA EM EN Natural Capital preservation • Social Purpose for Solar Revamping T • Sustainability Incentives ERG Academy for ER
Slide 31: With SDGs at the core
WITH SDGs AT THE CORE Social purpose for Solar HSE objective ERG Academy for Next generation Diversity & Inclusion target on Revamping (Circular Economy of Employees’ well-being target (24.5k students by 2026 involved ESG Plan and certification PV modules) in Educational Activities). program. One of
Slide 32: ERG strategy in planet
ERG STRATEGY IN PLANET CCGT divestment crucial for ‘Net Zero’ Target Towards Zero Waste Carbon Index % [g CO2 e/KWh] (Scope 1+2+3) 2021 2022 2023 2024 2025 2026 2027 2028 100% (Δ vs Base year) 90% -72% (-10%) Zero waste to landfill from Wind Repowering -96% 12% (-88%) 10% 100% 100% 100% (-90%) 1% (-
Slide 33: Sustainable supply chain
SUSTAINABLE SUPPLY CHAIN 2023 2024 2025 2026 2027 2028 Average Scoring 64.1% ≥64% Average Scoring on Supply Chain New Suppliers with Carbon Footprint 44% (1) 46% 48% 50% 52% 54% New Suppliers with D&I Strategy / Plan 63% 65% 67% 69% >70% >70% New 18 desk Audit on Supplies Audit At least 10 a year (o
Slide 34: Strategy for the "natural capital" preservation
STRATEGY FOR THE “NATURAL CAPITAL” PRESERVATION No Net loss on Biodiversity No net deforestation Committment No Go in UNESCO Areas @2030 @2025 Strategy for preserving Natural Capital in all new installations developed internally by ERG: ✓ Biodiversity impact assessment for 100% of projects developed
Slide 35: Social purpose for solar revamping
SOCIAL PURPOSE FOR SOLAR REVAMPING Multi-year project, fully integrated in the ERG’s ESG Plan, which envisages the reuse of PV modules in new plants on behalf of the NGOs with “Social Value Purpose” Circular Economy High Social Impact Stakeholder engagement ✓ To support the energy transition through
Slide 36: Sharing value for communities
SHARING VALUE FOR COMMUNITIES COMMITMENT Sharing Value for Local Communities where ERG is operating STRATEGY ESG Plan Target: At least 1% of ERG Tournover shared with Community at the Group Level Guidelines on Local Communities ESG Investment Continuos INSTRUMENTS sharing value Engagement Plan evalu
Slide 37: Our path for an inclusive and cultural evolution
OUR PATH FOR AN INCLUSIVE AND CULTURAL EVOLUTION New New 24-26 BP 24-28 BP 2020 2023 2026 2028 Students involved in educational activities Women in workforce 22% 31% ~30% ≥30% 26,000 24,500 23,407 Key Leaders Women 17,000 9% 18% ≥ 20% 20-25% Key Leaders abroad 2023 2023 // 2026 // 2028 7% 22% 20-25%
Slide 38: ERG's diversity & inclusion journey
ERG'S DIVERSITY & INCLUSION JOURNEY 2019 2020 2021 2022 2023 CHANGE DESIGN FOR D&I A KEY ELEMENT IMPLEMENTATION PEOPLE AND PARTNERSHIP AWARENESS CULTURE AND PROCESSES OF OUR ESG PLAN OF OUR ESG PLAN PROCESSES UPDATE • Endorsement of Valore D • Human Capital Committee: • Increase of women on the BoD
Slide 39: ESG certifications @2028
ESG CERTIFICATIONS @2028 ✓ International Certification on DE&I (EDGE or UNI PdR or equivalent) 1H 2023 within 2H 2026 1H 2022 1H 2024 within 2H 2027 Italian Certification on Disabilities ✓ ✓ ✓ (UNI Pdr 159:2024 ) Italian Certification for Gender Equality Adherence to UN (Uni PdR 125:2022) Adherence
Slide 40: ERG perfectly aligned with EU green taxonomy
ERG PERFECTLY ALIGNED WITH EU GREEN TAXONOMY 40
Slide 41: Financials & capital structure
FINANCIALS & CAPITAL STRUCTURE
Slide 42: EBITDA evolution in the plan period
EBITDA EVOLUTION IN THE PLAN PERIOD 2023 2024 2026 19% 22% 25% Wind Technological €534 €520-580 €600-650 Solar diversification mn mn mn 81% 78% 4% 15% US 46% 36% 50% Geographical €534 €520-580 €600-650 Europe diversification mn mn 35% mn Italy 54% 60% 17% 15% 17% EBITDA Regulated €534 €520-580 €600-
Slide 43: A solid financial structure
A SOLID FINANCIAL STRUCTURE Gross debt at 30/06/2024 Repayment Schedule based on stock as of June 2024 (€ bn) Corporate Loans 5% 8% 16% Green Bonds 19% ~0.7 ~2.2 Project Finance ~€2.2 bn ~0.4 Fully hedged and ~1.4 not exposed to 79% 73% June 2024 ~0.6 market volatility Issuer Default Rating: BBB- St
Slide 44: Still headroom to create value…
STILL HEADROOM TO CREATE VALUE… Net debt & leverage over BP horizon Net financial position(1) Leverage (NFP/EBITDA) ~1.9 1.75 -1.85 (€ bn) 4.0 1.4 Financial Policy Net Debt/EBITDA 3.3 3.0 2.8 // 2023 2024 2026 // Cost of Gross Debt(3): 1.3% 1.5% // ~1.7% 2023 2024(2) 2026 Euribor 6m(4): 3.7% ~3.5% /
Slide 45: A new successful green bond issuance
A NEW SUCCESSFUL GREEN BOND ISSUANCE • On June 26 ERG issued its 4th Green Bond (settled on July 3, 2024) • Very well received by the market: demand peaking >5x • Significant participation of international investors and national institutions 4.125% coupon €500mn size 6Y tenor UoP: ~3% pre-hedged The
Slide 46: Inspiring change to power the future
INSPIRING CHANGE TO POWER THE FUTURE