Infratil Limited · NZX:IFT
Infratil — Investor Day (September 2023)
62 slides from Infratil's investor day presentation, Sep 8, 2023
Slide 1: Longroad Energy Investor Day
8 September 2023 Longroad Energy Investor Day Infratil Limited (‘Infratil’) (NZX/ASX: IFT) is pleased to release the presentation materials in advance of next week’s Longroad Energy investor day in Phoenix, Arizona. The investor day also includes a site visit to Longroad Energy’s Sun Streams solar p
Slide 2: Longroad Energy: Infratil Investor Presentation
For personal use only Longroad Energy: Infratil Investor Presentation Phoenix, Arizona 12 September 2023
Slide 3: Safety
Longroad Energy: Infratil Investor Day Safety Hotel Emergencies For personal use only • Dial 9-1-1 for any emergency • Primary muster point is on Southwest corner of East 7th St. and S. Mills Ave. • Secondary muster point is on the south lawn of Tempe City Hall • Nearest Medical Facility is 2 blocks
Slide 4: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time For personal use only Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alv
Slide 5: Market Overview: Market Commentary
Market Overview Market Commentary • Policy on target: increasing domestic For personal use only manufacturing, decreasing reliance on China • Treasury guidance imperfect and delayed • Start-up time to establish domestic manufacturing • Transmission build out required • Permitting reform • Workforce
Slide 6: Game Changing Legislation – IRA 2022
Market Overview Game Changing Legislation – IRA 2022 GW Multiple of 2022 Capacity Solar 364 (3x) For personal use only 2023-2030 Projected Wind 137 (2x) Additions Storage 111 (9x) Total 606 or about ~75 GW p.a. Source: BNEF 1H 2023 US Clean Energy Market Outlook Need ~100 GW p.a. to hit 80% clean po
Slide 7: Five-Year Goal
Five-Year Goal Reformat ~10 GW by 2027 $500m EBITD??A Annual MW Deployed by FNTP Year 10.0 9.5 For personal use only 8.0 2-3% market share MW Deployment 8.0 6.5 6.0 5.1 4.0 3.6 2.5 2.0 1.4 1.5 1.5 1.5 1.5 1.1 1.1 - (1) 2021 2022 2023 2024 2025 2026 2027 Annual MW Deployed Cumulative MW Deployed (Inc
Slide 8: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time For personal use only Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alv
Slide 9: Operating Assets
Operating Assets 2.4 GW / 30 Projects GW Longroad Sold, Owned (Operating + In-Construction), and LES-Managed Assets 3.8 For personal use only Developed (4) 0.5 Acquired 4.3 Total (1.9) Sold 2.4 Net Owned (30) 1.9 Services 401+ MW Solar Assets Sold Wind Assets Sold Storage Assets Sold 201 – 400 MW So
Slide 10: 2023 Performance update
Operating Assets 2023 Performance update Key 2023 Performance Drivers • Prospero Solar 1 and 2 hail repairs completed ahead of schedule • Milford Wind repower nearing completion (September COD) For personal use only • Maine DG Solar overperforming investment case so far primarily due to strong power
Slide 11: 2023+ Opco Execution Plan
Operating Assets 2023+ Opco Execution Plan 2023 2023 & beyond • Safe execution is the Highest Priority Key Issues to Address for Growth to For personal use only Opco run rate EBITDA of US$500 million • 2023 Opco EBITDA is forecast to be ~US$147 million across 30 projects • Congestion/basis and Energ
Slide 12: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time For personal use only Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alv
Slide 13: Features of the IRA
Understanding The Inflation Reduction Act Features of the IRA The IRA directs nearly US$400 billion in federal funding to clean energy, with the goal of substantially lowering the For personal use only nation’s carbon emissions by the end of this decade Key Features: • 10-year Production Tax Credit
Slide 14: IRA Economic Impact
Understanding The Inflation Reduction Act Economic Impact Potential Value +Unlev PPA Price 1 IRR% Discount For personal use only • 110% multiplier for PTC $/MWh Domestic • +10 percentage points adder to ITC • FSLR procurement of US-made modules for under-construction Content solar-only projects +4%
Slide 15: Prevailing Wage and Apprenticeship
Understanding The Inflation Reduction Act Prevailing Wage and Apprenticeship Specific Guidance Longroad Implications • Projects must pay prevailing wage and • Longroad’s 2022 NTP projects exempt For personal use only 10-15% apprenticeship labor hours for construction and alterations/repairs during •
Slide 16: Energy Community
Understanding The Inflation Reduction Act Energy Community Specific Guidance Longroad Implications • Qualify one of three ways: • Opportunity to secure qualification status For personal use only 1. Brownfield site under method #2 at start of construction 2. O&G employment + general unemployment, or
Slide 17: Energy Community Map
Understanding The Inflation Reduction Act Energy Community Map For personal use only Weaver USA Coal Closure Energy Communities – DOE USA MSA/Non-MSAs that are Energy • Census tract directly adjoining a census tract with a coal Communities - DOE closure • Is an energy community, as it meets both the
Slide 18: Made in America
Understanding The Inflation Reduction Act Made in America Specific Guidance Longroad Implications • Issued proposed guidance (can be utilized • Direct cost methodology not anticipated or For personal use only interim), formal guidance expected 1H ‘24 based on Made in America precedent. Industry lobb
Slide 19: Made in America Examples
Understanding The Inflation Reduction Act Made in America Examples Potential Value +Unlev PPA Price IRR% Discount 1 $/MWh For personal use only • 110% multiplier for PTC +0.2% $(0.50) Solar • +10 percentage points for ITC +4% $(10) 2 • PTC less accretive in general. Most wind • 110% multiplier for P
Slide 20: Transferability
Understanding The Inflation Reduction Act Transferability Specific Guidance Longroad Implications • Tax credit sale proceeds are tax exempt • Credit unable to be transferred using For personal use only lease-passthrough structure due to • Seller (i.e., project) unable to sell only “double sale” rest
Slide 21: IRA: Transferability vs. Tax Equity
Understanding The Inflation Reduction Act IRA: Transferability vs. Tax Equity For personal use only Weaver Source: CohnReznick Capital August 2022 presentation, “Inflation Reduction Act: Tax Credit Monetization Analysis” COPYRIGHT © LONGROAD ENERGY HOLDINGS, LLC. 20
Slide 22: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time For personal use only Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alv
Slide 23: Construction projects map
Execution: Supply Chain and EPC Construction: 8 projects/2.4 GW/$3.1 B Key: Project Name (COD Year), MW 3 Corners (2024), 150 MW For personal use only Maine DG (2023), 7 MW Milford Wind (2023), 306 MW Foxhound (2024), 108 MW Sun Streams 4 (2025), 677 MW Pre-Construction Sun Streams 3 (2024), 500 MW
Slide 24: Construction: Three Corners (Maine)
Execution: Supply Chain and EPC Construction: 3 Corners (Maine) March 2023 For personal use only August 2023 COPYRIGHT © LONGROAD ENERGY HOLDINGS, LLC. 23
Slide 25: Construction: Umbriel (Texas)
Execution: Supply Chain and EPC Construction: Umbriel (Texas) For personal use only March 2023 August 2023 COPYRIGHT © LONGROAD ENERGY HOLDINGS, LLC. 24
Slide 26: EPC Suppliers
Execution: Supply Chain and EPC EPC Suppliers • Longroad partners with six EPC contractors, principally using a Guaranteed Maximum Price (GMP) contract structure For personal use only • Tier 1 EPC firms are in high demand given IRA tailwinds, with most being awarded a portfolio of deals or have pivo
Slide 27: Equipment – PV Modules
Execution: Supply Chain and EPC Equipment – PV Modules • Longroad continues to leverage the strategic partnership with First Solar via a frame agreement For personal use only • Frame capacity plus previous procurement totals multi-GW • Current frame agreement: • Successfully contracted and/or suppli
Slide 28: Equipment – Inverters
Execution: Supply Chain and EPC Equipment – Inverters • Longroad’s current prequalified inverter manufacturers include Power Electronics, SMA, TMEIC, and Sungrow For personal use only • Will not look to procure inverters direct given consequences of essentially taking on all commissioning/performanc
Slide 29: Equipment – Trackers
Execution: Supply Chain and EPC Equipment – Trackers • Longroad sources field-proven single axis tracker system from financially stable vendors For personal use only • Longroad has successfully contracted multi-GW of single-axis trackers between 2016 – 2023, primarily with NEXTracker • Longroad is c
Slide 30: Equipment – Storage
Execution: Supply Chain and EPC Equipment – Storage • Powin is supplying BESS integrations services for Sun Streams 3 & 4 and Serrano • Longroad Energy storage team evaluating alternative BESS suppliers For personal use only ― Current short list includes two other suppliers • IRA domestic content gu
Slide 31: Equipment – Wind Turbines
Execution: Supply Chain and EPC Equipment – Wind Turbines • All major original equipment manufacturers (OEMs) are struggling through a combination of higher-than-expected supply chain costs and unexpected warranty costs on turbines that were rushed to market over the past few years; resulting in For
Slide 32: Equipment – Main Power Transformers
Execution: Supply Chain and EPC Equipment – Main Power Transformers Example of Market • Historically Main Power Transformers (MPT) were wrapped within EPC For personal use only agreements, except when pursuing a safe harbor play, which kept any delays on the EPC to manage • With lead times and costs
Slide 33: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time For personal use only Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alv
Slide 34: Near Term Plan Candidate Projects
Development Plan Near Term Plan Candidate Projects Key: Project Name (FNTP Year), MW For personal use only Mountain 4 (2025), 360 CA 1 (2024), 367 Mountain 3 (2025), 540 GW 1.1 DSW 3 (2025), 1,035 Mountain 1 (2024), 180 2023 (2) Mountain 2 (2024), 180 CA 2 (2024), 176 2.3 DSW 1 (2024), 195 Mid-Atlan
Slide 35: Near Term Plan Projects (2023)
Development Plan Near Term Plan Projects (2023) Project Market Technology Wind/Solar BESS Total Land Interconnect MW MW MW Initiated Sun Streams 4 AZ/CAISO PV + BESS 377 300 677 Yes Yes For personal use only Serrano AZ PV + BESS 230 214 444 Yes Yes Total 607 514 1,121 • Both projects are in Arizona
Slide 36: Near Term Plan Candidate Projects (2024)
Development Plan Near Term Plan Candidate Projects (2024) Project Market Technology Wind/Solar BESS Total Land Interconnect MW MW MW Initiated TX 1 SPP PV 388 - 388 Yes Yes For personal use only DSW 1 AZ/CAISO PV + BESS 110 85 195 No Yes CA 1 SCPPA PV + BESS 267 100 367 Yes Yes Mountain 1 PAC PV + B
Slide 37: Near Term Plan Candidate Projects (2025)
Development Plan Near Term Plan Candidate Projects (2025) Project Market Technology Wind/Solar BESS Total Land Interconnect MW MW MW Initiated CA 3 SCPPA PV + BESS 268 100 368 Yes Yes For personal use only HI 1 HI PV + BESS 160 120 280 No Yes HI 2 HI PV + BESS 26 20 46 Yes Yes HI 3 HI PV + BESS 38 3
Slide 38: Total Pipeline Growth
Development Plan Total Pipeline Growth January 2022 to June 2023, Pipeline Change 35,000 For personal use only +60% 28.5 GW 30,000 25,000 +38% 17.8 GW 20,000 15,000 12.9 GW 10,000 5,000 - Jan. 2022 Jan. 2023 Jun. 2023 CAISO AZ PAC SCPPA/LA NVE MTN West HI ISONE SPP MISO PJM ERCOT Other COPYRIGHT © L
Slide 39: Pipeline Breakdown by Year (GW)
Development Plan Pipeline Breakdown by Year (GW) Pipeline Breakdown by Project Total MW and FNTP Year 35,000 For personal use only 9.2 GW 30,000 72 Active Projects 15 Projects Out to 2028+ 25,000 5.4 GW 14 Projects 20,000 7.3 GW 15,000 16 Projects Weaver 10,000 3.3 GW 15 Projects 2.3 GW 5,000 10 Pro
Slide 40: Origination Big Picture
Development Plan Origination Big Picture There continues to be a sustained demand for renewables; Longroad has increased its opportunity set via an expanded development footprint For personal use only Longroad RFP Participation by Year 2023 Longroad RFP Participation by Offtaker Type 39 33 29 18 21
Slide 41: Agreement with Black Stone Minerals
Development Plan Agreement with Black Stone Minerals The agreement provides Longroad with exclusive rights to several thousand acres of Black Stone Minerals (BSM) assets For personal use only • BSM is one of the largest owners of mineral rights with 20+ million acres under management • Relationship
Slide 42: M&A Environment
Development Plan M&A Environment • 12 large platform transactions since Q4 2021 • Significant number of asset level opportunities in market of For personal use only varying quality, constraining investors’ bandwidth • Longroad M&A focus in line with portfolio rebalancing strategy and/or opportunisti
Slide 43: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time For personal use only Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alv
Slide 44: Longroad Today (pro forma December 23)
Capital Requirements Longroad Today (pro forma December 23) • 3.5 GW operating and in-construction on December 31, 2023 ̶ 2.4 GW operating and in-construction today For personal use only ̶ 1.1 GW (Sun Streams 4 and Serrano) achieving FNTP in the balance of the year • Equity in 3.5 GW fleet fully fun
Slide 45: Capital to Fund 2024-27 Plan (~6 GW)
Capital Requirements Capital to Fund 2024-27 Plan (~6 GW) Equity Funding Requirement 2027 NTP $1.0 B 2024-27 Plan ~6 GW For personal use only Projects $2.0 B • ~US$8 billion capex Project Debt plan Financing $3.1 B 2026 NTP • 85% to 90% via tax Projects equity and debt $2.0 B financing • 10 – 15% fu
Slide 46: Raising Capital in New World of IRA
Capital Requirements Raising Capital in New World of IRA • Longroad has raised US$10 billion since inception • Development plan through 2027 will require ~US$8 billion of incremental capex investment For personal use only • Expect 85-90%, or US$7.0 billion, of capex to be funded via non-recourse pro
Slide 47: Longroad Today vs. ~10 GW (2027)
Capital Requirements Longroad Today vs. ~10 GW (2027) • Operating fleet growing from 3.5 GW today to 10 GW in 2027 For personal use only • EBITDA increases from US$200 million to US$600 million on a run-rate basis • ~6 GW of new projects requires ~US$8 billion of new capital ̶ US$7 billion funded by
Slide 48: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time For personal use only Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alv
Slide 49: Sun Streams Overview
Sun Streams Overview Sun Streams Overview • Sun Streams are located at a major transmission hub For personal use only associated with Palo Verde, the largest nuclear plant in the U.S. • Longroad has 20-year contracts with Phoenix-based utility Arizona Public Service for offtake of energy and capacit
Slide 50: Operational Highlights
Sun Streams Overview Operational Highlights Annual BESS MWh BESS MWh # BESS PV MW # panels generation # piles BESS MW Acres (nameplate) (installed) Cells (MWh) For personal use only SS2 199 452,790 465,359 70,024 - - - - 1,388 SS3 285 606,492 656,259 87,520 215 860 1,308 1,340,640 2,172 SS4 377 793,
Slide 51: Tour Overview: Stops
Sun Streams Overview Tour Overview: 4 Stops • SS2: solar arrays at operational project For personal use only • SS3 north: solar arrays under construction adjacent to Palo Verde nuclear plant • SS3 BESS yard and Chukar substation: battery storage area next to 500 kV step-up substation Weaver shared b
Slide 52: BESS
Sun Streams Overview BESS 101 For personal use only Cell Module Container (DC Rack Package) Inverter Weaver Transformer Control Full BESS System COPYRIGHT © LONGROAD ENERGY HOLDINGS, LLC. 51
Slide 53: Longroad Energy: Infratil
For personal use only Longroad Energy: Infratil Investor Presentation Phoenix, Arizona 12 September 2023
Slide 54: Infratil Update: US Renewables Market and Illustrative Valuation Guidance
Infratil Update September 2023 US Renewables Market and Illustrative Valuation Guidance For personal use only
Slide 55: Industry Dynamics
Industry Dynamics For personal use only Our outlook on • Significant and growing total addressable market with global investment in renewables reaching ~US$500 billion in 2022, with the U.S. forecasted to be the second-largest market in the US renewable the world for renewables investment. Solar and
Slide 56: Comparable Companies
For personal use only Comparable Companies
Slide 57: Competitive Landscape
Competitive Landscape Comparison of Longroad Against its Private Peers of Similar Scale For personal use only • Similarly large growth-oriented private renewables companies include Apex Clean Energy, ConnectGen, Similar large-scale Cypress Creek Renewables, and D. E. Shaw Renewable Investments (DESR
Slide 58: Broad Public Comparables
Broad Public Comparables Comparing Longroad Directly to Publicly-Listed Renewables Companies is Challenging For personal use only An available set • While public IPPs and YieldCo’s serve as valuable operating benchmarks, Longroad is not directly comparable due to reasons such as scale or portfolio &
Slide 59: US Renewables Illustrative Valuation Guidance
US Renewables Illustrative Valuation Guidance For personal use only
Slide 60: Valuation Methodology
Valuation Methodology Illustrative Sum-of-the-Parts (“SOTP”) Valuation Approach For personal use only • The primary valuation approach for private and public renewable developers is a SOTP risk-adjusted The primary Discounted Cash Flow (“DCF”) analysis, including the operating & under construction a
Slide 61: Simple Desktop Valuation
Simple Desktop Valuation Illustrative Desktop Valuation Approach using Broad Public Comparables For personal use only • If only limited information is available, an illustrative desktop valuation approach can be performed If only limited to calculate a SOTP valuation by valuing the OpCo (by using br
Slide 62: DevCo/Platform Valuations
DevCo/Platform Valuations Illustrative DevCo / Platform Valuation Approach For personal use only • A widely-adopted private market approach to valuing the DevCo / Platform is a Discounted Cash Flow A widely-adopted analysis of the future development pipeline growth, less the platform and development