Edp Renewables Sa · EURONEXT:EDPR
Edp Renewables Sa — EDP Renováveis — Non-Deal Roadshow (September 2016)
55 slides from Edp Renewables Sa's roadshow presentation, September 2016
Slide 1: João Manso Neto, EDP Renováveis
João Manso Neto EDP Renováveis
Slide 2: #4 worldwide wind player
#4 worldwide wind player EDP Group company focused 77.5% on wind and solar investments EDP SHAREHOLDING Leader in the most competitive WIND 4,412 MW 5,105 MW renewable technology ONSHORE Worldwide portfolio 12 COUNTRIES Young assets with long residual life 6 YEARS AVG. LIFE 204 MW Quality asset base
Slide 3: 2014-2015 on target
1. Selective growth 2. Operational excellence 3. Self-funded business 2014-2015 on target 2014 to date Capacity Additions Load Factor (MW) (2015; MW) Previous Target: RoE 29% €0.7bn below avg. wind year Asset Rotation BP 2014-17 PT +1.1 GW NA Availability 2014-15 (2015; %) Proceeds secured2 97.6% €1
Slide 4: Value accretive investments supported strong growth
Value accretive investments over the last 2 years… …supported strong growth Adj. EBITDA growth1 Target CAGR 13-172 MW Growth in Robust Contributing to +20% +9% 2014-15 Asset ROIC YoY EBITDA growth +10% yoy 9.0% to 9.5% +13% €1.07bn avg. MW growth 1st year full operations (vs. 10% in avg. MW) €0.9bn
Slide 5: Lower Core Opex on superior efficiency and optimization
Lower Core Opex on the back of superior efficiency and optimization Unique drivers for Opex efficiency Operating costs breakdown1 Core Opex/MW2 (€k) M33 & Distinctive O&M strategy (%; €m) (Supplies & Services and Personnel Costs) Self-perform that keeps in-house high -2% strategy valued-added activi
Slide 6: Retained Cash Flow: a self-funding and value accretive model
Retained Cash Flow1: strong cash generation capabilities A self-funding and value accretive model (€ billion) 2014-2015 Asset Rotation 2014 to date2 Avg. Selling IRR €2.0 bn c.6.5% €0.6bn in 2015 (cost of equity) RoE last 2 years: decreasing 200bps €1.2 bn 1.3 GW NA Reinvesting IRR double digit PT (
Slide 7: Wind already competes with all sources of energy
Wind already competes with all sources of energy… …and Solar PV is structurally set to increase its attractiveness Levelised Cost of Energy1 (LCoE) Indexed LCoE2 (€/MWh) (€/MWh, 2016) (10%) (22%) Wind Onshore 90 -168 Long-lasting technology with 95-117 92-100 61-106 69-98 decreasing LCoE 76-86 50-70
Slide 8: Solid growth drivers in addition to competitiveness
Solid growth drivers in addition to its competitiveness 2016-2020: Renewables Worldwide Additions1 (GW) Environmental concerns Wind 128 Onshore • New global agreement under COP21 • CO2 reduction targets in EU, US and China Solar PV 66 • Replacement of old/retiring capacity (namely Coal) Utility Sola
Slide 9: Wind and Solar PV to sum 70% of US additions thru 2030
Wind Onshore & Solar PV (utility scale) Wind and Solar PV (utility scale) to sum 70% of additions thru 2030 Regulatory support certainty (PTCs/ITCs) Technological progress 152 GW 70 GW Other 2% 7% Coal retirement Solar PV 26% (non-utility) 29% RPS demand Solar PV 37% (utility) 27% c.7 GW expected an
Slide 10: Europe short term opportunities to escalate medium term
Europe short term opportunities to… …escalate medium term, supported by: EU 2030 targets 2016-2020: Wind and Solar additions in Europe • 40% cut in greenhouse gas emissions compared to 1990 levels Expected additions in EDPR geographies • ≥27% share of renewable energy consumption 60% Wind Onshore De
Slide 11: Growth in selective countries with strong fundamentals
EDPR’s strategy… …for growth in selective countries with strong fundamentals Strong renewable BRAZIL MEXICO electricity demand +13% Wind the main +10% Mainly from CAGR 15-20 growth driver CAGR 15-20 wind onshore Good natural resources (load factor) c.50% Top-notch 34%-45% Competitive Load factor win
Slide 12: Selective growth, operational excellence, self-funding
1. Selective growth 2. Operational excellence 3. Self-funding business 2016-2020 2016-2020 2016-2020 Prioritize quality investments c.700 Technical expertise to >97.5% Investing in visible growth €4.8bn in our core markets MW/year maximize production availability opportunities investments High visib
Slide 13: New Business Plan with stronger capacity additions
Increasing 2014-17 Business Plan… …into a new Business Plan with stronger capacity additions and technological mix Capacity Additions Capacity Additions Drivers (MW; %) (MW; %) Solar PV Emerging 10% Markets 20% Wind Onshore: fully competitive technology Brazil 10% Europe 20% 500 MW/year United Europ
Slide 14: PTC phase-down and safe-harbour strategy
Production Tax Credits scheme phase-down EDPR strategy under “safe-harbour conditions” to maximizing projects returns Capacity additions (GW) Project Name MW State CoD Start of construction… …end of construction secured under negotiation/identified Hidalgo 250 Texas 2016 2016 2017 2018 2019 2020 202
Slide 15: Platforms for future growth in Canada and Mexico
CANADA MEXICO 100 MW wind farm in Ontario Completion of 200 MW1 20-year supply contract wind farm with 25-year PPA 200 MW Eólica de Coahuila Under development Under construction 2019 project 100 MW 2016 project Nation Rise Wind Farm All projects with PPAs already awarded Platforms for future growth
Slide 16: Europe to represent c.15% of growth plan
Europe to represent c.15% of EDPR growth plan Portugal France Capacity Additions (MW) Completion of Ventinvest projects Identified & pipeline projects Spain 20-year feed-in tariff 15-year feed-in tariff Portugal +0.2 GW +0.2 GW Italy Italy Spain Known projects & pipeline opportunities Projects award
Slide 17: Brazil projects
BRAZIL 120 MW Baixa do Feijão > 45 % load factor project completed in 1Q16 117 MW awarded in 2011 JAU + Aventura 120 MW Baixa do Feijão mid/high double digit IRR 140 MW 257 MW Babilônia 2017-18 projects PPA price inflation linked awarded in 2013-15 Increased profitability due to higher Projects with
Slide 18: EDPR 2016-20 additions breakdown
EDPR 2016-20 additions breakdown Different markets dynamics US: ITC scheme1 By technology (MW) Start of construction… United States 2016 … 2020 2021 2022 2023 Solar …end of construction PV The core growth market 10% Full ITC (30% capex) boosted by ITC extension Wind +3.5 GW Onshore 2016-2020 26% ITC
Slide 19: Offshore projects: United Kingdom and France
UNITED KINGDOM FRANCE Le Tréport Moray Firth 500 MW + 500 MW 1.1 GW Iles d’Yeu et de max. Noirmoutier Consent granted for offshore wind development; Partnership with Engie allows de-risking Partnership with CTG (up to 30%) and complementary skills Next step: CfD1 allocation Selected in May-14 for th
Slide 20: Delivering second-to-none load factor and availability
Delivering second-to-none metrics based on unique wind assessment know-how… …to maximize asset value Load Factor Technical Availability Production (%) (%) (TWh) +3pp +10% 97.6% > 97.5% CAGR 30% 21.4 2015 (P50) 2020E 2015 2020E 2015 2020E Accretive contribution from Predictive maintenance and O&M Gro
Slide 21: Keep high levels of availability
Ongoing implementation of innovative Keep high levels power enhancing products of availability Revenue cut-out retrofits max uprate >97.5% Maximization add power vortex Maximizing operating wind farms output Reduction of downtimes by managing (+100 GWh already in 2015) warehousing of critical compon
Slide 22: Operating Costs breakdown
Operating Costs breakdown (2016-2020) Core Opex1 per MW Strong focus on efficiency -1% and cost control benefiting from Levies & Other CAGR economies of scale and… 2015 2020E …supported by a superior and higher efficient O&M strategy… Core Opex Core Opex1 per MWh -3% ~80% CAGR …leading to improvemen
Slide 23: Unique comprehensive O&M strategy
Unique comprehensive O&M strategy at the end of initial contract warranty EDPR portfolio by O&M contract type (%; MW) Modular Maintenance Model (M3) lower costs Segregate & insource main maintenance EDPR ISP1 OEM2 activities Full ~50% 100% scope ~70% Self-perform (SP) 90%-70% Insource more activitie
Slide 24: EBITDA growth supported by new capacity and efficiency
EBITDA growth supported by new and accretive capacity additions along with increased efficiency EBITDA growth (vs. 2015 Adjusted) Expected EBITDA growth drivers (€ million) +8% MW Addition Efficiency Other Items1 CAGR +11% +0.5% -3.5% CAGR CAGR CAGR New MW Ex-MW growth US 10-yr PTCs €1.07bn in opera
Slide 25: Quality portfolio generating robust Retained Cash Flow
Quality portfolio generating robust Retained Cash Flow A rigorous investment plan set to deliver solid returns Retained Cash Flow Cumulative for 2016-2020 2016-2020 (€ billion) 6.8 Capex and Financial Investments €4.8bn Onshore + Solar PV > 90% Offshore < 10% 3.9 New Asset Rotation up to €0.6bn (bas
Slide 26: Self-funding leveraging Net Profit
Self-funding leveraging Net Profit1 Net Financial Expenses +5% CAGR 2015-20 CAGR 2015-20 increasing below EBITDA +8% Non-controlling Interests business growth Net Profit +16% Lower cost of Debt Declining IRR on Asset Rotation Growth funded through Asset Rotation and Retained Cash Flow Accretive Busi
Slide 27: Selective and profitable growth: 2015-2020 targets
1 GWh Selective and profitable growth generating higher production CAGR 2015-2020 +10% 2 EBITDA Higher efficiency and accretive capacity additions CAGR 2015-20201 +8% 3 RCF Quality portfolio with sound cash flow generation 2020E €0.9bn 4 Net Profit Increasing profitability for EDPR shareholders CAGR
Slide 28: EDPR Sustainability
& renovaveis EDPR Sustainability 28
Slide 29: Key elements of the Paris agreement
Key elements of the Paris agreement Background Agreed to curb greenhouse gas emissions Existence of anthropogenic climate 196 in order to avoid the worst impacts 1992 change acknowledged countries of global warming Binding GHG emissions reduction 1997 targets for industrialized countries <2°C Reaffi
Slide 30: Sustainability targets
• Growth in installed capacity: 700 MW /year 1 Maintain leadership in renewable energy production of electricity • Avoided CO2: +10% (CAGR 2015-20); Emitted/avoided CO2 < 1% • EBITDA: +8% (CAGR 2015-20); 2 Create value, while maintaining a low risk profile • Core OPEX/MW: -1% (CAGR 2015-20) • Net Pr
Slide 31: 1H 2016 Results
& renovaveis 1H 2016 Results 31
Slide 32: Installed Capacity
Installed Capacity1 (EBITDA MW + Equity Consolidated) Rest of 1H16 +84 MW Portugal Europe Additions 13% 15% Brazil 2% +429 MW Spain 24% 9.7 GW +200 MW North Under America Construction 46% +28 MW Average Installed Capacity increased +656 MW +14% YoY 2016 expected execution above expectations: 84 MW a
Slide 33: Revenues
Revenues Main drivers for Revenues performance (€ million) +15% Quality assets: +1,153 MW (Avg. EBITDA) YoY Load factor: 33% High availability: 97.9% 889 773 Higher Electricity output: +23% YoY EU +23%; NA +21%; BR +118% Lower average selling price: -7% YoY EU -4%; NA -11% (in $); BR -28% (in R$) 1H
Slide 34: Opex and Core Opex/MW
Opex (excludes Other Operating Income) Core Opex/MW (€k) (€ million) (Supplies & Services and Personnel Costs) +9% -4% 262 241 21.3 20.3 Levies & Non-current Core +9% Opex(1) 1H15 1H16 1H15 1H16 Core Opex per average MW decreasing 4% YoY boosted by EDPR’s control over costs (1) Includes Supplies and
Slide 35: EBITDA and EBITDA per Region
EBITDA EBITDA per Region (€ million) (%) +18% Rest of Portugal Europe 648 22% 17% 548 Brazil 1% €648m Spain 17% North America 43% 1H15 1H16 EBITDA delivered a solid growth of +18% YoY 35
Slide 36: Net Financial Expenses
Net Financial Expenses Net interest costs of debt (€ million) (€ million) +20% -5% -3% ex-ENEOP, one-offs & FX 179 149 +19 +5 97.5 92.4 (5) +12 (6.5) +1.2 +0.2 Includes €27m of one-off in the 2H16 mainly from Cost of Debt: project finance restructuring -20bps YoY to 4.4% in Jun-16 1H15 Net ENEOP1
Slide 37: 1H16 EBITDA to Net Profit
1H16 EBITDA to Net Profit (€ million) r€m YoY EBITDA 648 +€101m Top-line evolution & ongoing efficiency D&A 294 +€39m Higher capacity YoY (+14% average MW) EBIT 354 +€61m Reflecting top-line growth (1) Financial 182 Higher financial costs due to one-offs from project finances restructuring +€39m Res
Slide 38: Adjusted Net Profit
(€ million) 1H15 1H16 Adjusted Net Profit Reported 69.4 58.8 (15%) (€ million) Net Profit +9% Project Finance +6.2 +19.8 78 Renegotiation 72 Write-offs/ (3.4) +4.6 Impairments Forex losses (gains) & +1.6 (0.1) Forex derivatives Provisions & other (2.0) (5.1) Adjustments Adjusted 1H15 1H16 71.9 78.1
Slide 39: From EBITDA to Retained Cash Flow and Debt
1H16: From EBITDA to Retained Cash Flow (RCF) and Debt (€ million) (378) 829 (4) (36) (398) (139) +34% (84) (44) +10 648 385 404 EBITDA Non-cash Taxes Interests Minorities RCF Asset Capex Other Net Dividends Forex Debt & TEI items & TEI costs payments1 Rotation Investing to EDPR & Other reduction ac
Slide 40: Cost of Debt evolution and Debt breakdown
Cost of Debt evolution 1H16 Debt and TEI Breakdown (%) (end of period; %) -80bps 5.2% TEI Other & 4.4% €1.2bn TEI 53% 43% Debt Loans €3.8bn with EDP 41% 57% Dec-14 Jun-16 Debt and TEI Currency Type Includes: (1) Financial Investment/divestments, Changes in working capital related with PPE suppliers
Slide 41: 2016 Expected capacity additions and outlook
2016 Expected capacity additions MW Under construction On Target Installed YTD Outlook 1H16 realized price €59.9/MWh Avg. c.€60 84 MW per MWh 96% of revenues fixed in 2016 Price (SP: 2H16 1.9 TWh @ €46/MWh) 28 MW +18% 1H16 from new MW, 429 MW >0.7 GW 200 EBITDA double digit ENEOP & hedging strategy
Slide 42: EV Multiple & Asset Rotation Transactions
& renovaveis EV Multiple & Asset Rotation Transactions 42
Slide 43: Self-funding Strategy
Self-funding Strategy (1) Accelerate value growth 1 2 Asset Allowing the execution of Crystallise projects’ Rotation additional market Investment NPV, capturing value created & opportunities with superior returns Operating Cash-Flow Dividends IRR Source Use Interests double-digit Re-investing > IRR
Slide 44: Asset rotation proceeds and implied EV/MW
Proceeds are re-invested in the development of quality and value accretive projects, enhancing its growth and accelerating value creation Total proceeds of €0.8bn Secured BP 2016-2020: €550m already secured 348 MW 191 MW 71 MW 54 MW Scope 270 MW 30 MW 1,101 MW 30 MW 1,002 MW 100 MW2 49% 49% 36% 49%
Slide 45: EDPR Market Valuation
EDPR Market Valuation EV/MW implicit in share price (€m) (€m/MW) Equity @ 7.0€/share 6,106 + Net Debt (1H16) + 3,303 1.20 1.24 1.26 1.14 1.16 1.17 + Inst. Partnerships (1H16) + 1,165 + Non-controlling interests (1H16) + 1,267 = Enterprise Value = 11,840 - Net Debt 1H16 Related to Assets Under Constr
Slide 46: US wind competitiveness
& renovaveis US wind competitiveness 46
Slide 47: Wind vs CCGT: Levelised Cost of Energy
Wind competes for PPAs Wind vs CCGT: Levelised Cost of Energy mainly in two different segments LCoE Wind $/MWh Load factor 110 1 RPS demand for new renewable builds 100 23% 90 • Several Sates need to comply with renewable quotas 80 29% • Market is based on REC systems and long-term PPA 70 34% 60 40%
Slide 48: Spanish Regulation
& renovaveis Spanish Regulation 48
Slide 49: Spanish wind regulation: pool price and complement
1 Wind energy assets …setting significantly different equivalent will sell power on the market… 3 selling prices (2) Complement Production x Pool Price €/MWh Pool price 125 Pool price with caps and floors Tariff in place Compensation mechanism to encompass 100 €81 for 1H13 deviations from base case
Slide 50: Spanish Volumes & Prices
Spanish Volumes & Prices Price per GWh w/o complement vs. pool price (% total capacity) €/MWh 65 Selling price 55 2.2 GW 45 W/o • Production: pool price (€/MWh) 9% 35 complement 37 41 45 49 53 57 • Standard production selling price: Pool price Regulatory price for 2016: €49.8/MWh (reg. collar €57.8-
Slide 51: European Competitiveness & Targets
& renovaveis European Competitiveness & Targets 51
Slide 52: Wind competes with efficient conventional technology
Wind Energy competes with the most efficient conventional technology Wind vs CCGT: LCoE1 LCoE Wind Recent oil €/MWh load factor prices 120 Wind Energy Costs are unrelated to 110 commodities, providing greater visibility 100 21% 90 23% 80 25% 70 29% 60 34% Legend: 50 CCGT load factor @ 23% 40 30 CCGT
Slide 53: Share of renewable energy targets for 2020
Share of renewable energy targets for 2020 (2014, in % gross final energy consumption) 68% 49% 38% 40% 34% 30% 69% 31% 20% 25% 23% 23% 24% 25% 16% 18%18% 20% 53% 39% 16%17% 39% 14% 15% 14% 15% 33% 13% 13%13% 13% 11%10% 28% 29% 27% 27% 25% 24% 22% 18% 17% 16% 13% 14% 14% 15% 11% 12% 8% 9% 10% 9% 7% 5
Slide 54: Disclaimer
This presentation has been prepared by EDP Renováveis, S.A. (the "Company") solely for use at the presentation to be made on September, 2016. By attending the meeting where this presentation is made, or by reading the presentation slides, you acknowledge and agree to be bound by the following limita
Slide 55: EDP Renováveis, powered by nature
renovaveis powered by nature