Colbun Sa · BCS:COLBUN
Colbun Sa — Investor Day (November 2020)
52 slides from Colbun Sa's investor day presentation, Nov 26, 2020
Slide 1: Investor Day Virtual Conference
Colbun INVESTOR DAY Virtual Conference Nov. 26 2020 10:00 hrs.
Slide 2: Welcome Remarks; Strategy Update; Commercial and Regulatory Update; Growth Opportunities
1. Welcome Remarks Hernán Rodríguez 2. Strategy Update & 2020 Highlights Thomas Keller Commercial and 3. Regulatory Update Juan Eduardo Vásquez 4. Growth Opportunities Eduardo Lauer and Olivia Heuts
Slide 3: Welcome Remarks
Welcome Remarks HERNÁN RODRÍGUEZ CHAIRMAN OF THE BOARD
Slide 4: Agenda
1. Welcome Remarks Hernán Rodríguez 2. Strategy Update & 2020 Highlights Thomas Keller Commercial and 3. Regulatory Update Juan Eduardo Vásquez 4. Growth Opportunities Eduardo Lauer and Olivia Heuts
Slide 5: Strategy Update & 2020 Highlights
Strategy Update & 2020 Highlights THOMAS KELLER CHIEF EXECUTIVE OFFICER
Slide 6: Strategic Agenda: Our Ambition
STRATEGY UPDATE & 2020 HIGHLIGHTS Strategic Agenda OUR AMBITION To be a leading energy company, focused on commercial and industrial costumers, providing customized power solutions through a 24/7 competitive, sustainable and reliable energy portfolio, flexibly and selectively entering new growth pat
Slide 7: Strategic Agenda: Value Proposition
STRATEGY UPDATE & 2020 HIGHLIGHTS Strategic Agenda VALUE PROPOSITION Cost Flexible Competitive Reliable Customer- 7 24/7 focused
Slide 8: 2020 Strategy update
STRATEGY UPDATE & 2020 HIGHLIGHTS 2020 Strategy update Focus on 1 unregulated Clients 45 new clients and 630 GWh contracted D. Almagro and Machicura under construction Growth in solar & wind Inti Pacha environmental approval secured 2 generation Horizonte good progress on environmental approva
Slide 9: 2020 Strategy update
STRATEGY UPDATE & 2020 HIGHLIGHTS 2020 Strategy update Focus on 1 unregulated Clients 45 new clients and 630 GWh contracted D. Almagro and Machicura under construction Growth in solar & wind Inti Pacha environmental approval secured 2 generation Horizonte good progress on environmental approva
Slide 10: 2020 Strategy update
STRATEGY UPDATE & 2020 HIGHLIGHTS 2020 Strategy update Focus on 1 unregulated Clients 45 new clients and 630 GWh contracted D. Almagro and Machicura under construction Growth in solar & wind Inti Pacha environmental approval secured 2 generation Horizonte good progress on environmental approva
Slide 11: 2020 Strategy update
STRATEGY UPDATE & 2020 HIGHLIGHTS 2020 Strategy update Focus on 1 unregulated Clients 45 new clients and 630 GWh contracted D. Almagro and Machicura under construction Growth in solar & wind Inti Pacha environmental approval secured 2 generation Horizonte good progress on environmental approva
Slide 12: 2020 Strategy update
STRATEGY UPDATE & 2020 HIGHLIGHTS 2020 Strategy update Focus on 1 unregulated Clients 45 new clients and 630 GWh contracted D. Almagro and Machicura under construction Growth in solar & wind Inti Pacha environmental approval secured 2 generation Horizonte good progress on environmental approva
Slide 13: 2020 Strategy update
STRATEGY UPDATE & 2020 HIGHLIGHTS 2020 Strategy update Focus on 1 unregulated Clients 45 new clients and 630 GWh contracted D. Almagro and Machicura under construction Growth in solar & wind Inti Pacha environmental approval secured 2 generation Horizonte good progress on environmental approva
Slide 14: 2020 Highlights
2020 Highlights STRATEGY UPDATE & 2020 HIGHLIGHTS 1 2 3 4 5 A Regulatory A still ESG / Financial “different challenges challenging Environmental Performance country” and Peruvian Performance context opportunities market 14
Slide 15: A "different country" context
2020 Highlights A “different country” context STRATEGY UPDATE & 2020 HIGHLIGHTS 1. 4. OUR Flexibility 2. Dialogue 3. Inclusion Improvement APPROACH in labor standards October-19 Social Unrest COVID-19 ✓ Safety and flexibility measures for ✓ Home-office model and special employees and contractors measu
Slide 16: COVID-19: Power demand impact
2020 Highlights COVID-19: Power demand impact STRATEGY UPDATE & 2020 HIGHLIGHTS Decrease experienced during the second and third quarter begins to reverse… SEN Sales Growth Unregulated and Regulated 1 Clients Growth (GWh/year 2020 vs 2019) (GWh/year 2020 vs 2019) 6,6% 5,2% 3,1% 2,7% 2,2% 2,6% 1,8% 0
Slide 17: Regulatory challenges and opportunities
2020 Highlights Regulatory challenges and opportunities STRATEGY UPDATE & 2020 HIGHLIGHTS Power Supply Power Matrix Portability Bill Decarbonization System Power Tariff Flexibility Stabilization Complementary Basic Services Services Payment Deferral 17
Slide 18: A still challenging Peruvian market
2020 Highlights A still challenging Peruvian market STRATEGY UPDATE & 2020 HIGHLIGHTS Power demand has been severely Starting 2017, Peru has been impacted by affected by the pandemic corruption cases, negatively affecting economic performance and power demand SEIN Demand Evolution Low marginal cost
Slide 19: ESG/Environmental Performance
2020 Highlights ESG/Environmental Performance STRATEGY UPDATE & 2020 HIGHLIGHTS Special focus on Colbún’ s performance Environmental Footprint continues to improve reduction Percentile in Electric Utilities 1 Lower CO2 emissions factor 82 Efficient 76 73 water use 2018 2019 2020 Highlighted criteria
Slide 20: Financial Performance
2020 Highlights Financial Performance STRATEGY UPDATE & 2020 HIGHLIGHTS Low leverage Net Debt / EBITDA Debt / EBITDA Strong Cash 1.2 x 2.6 x liquidity US$ 966 mm Stock Price YTD EBITDA LTM (as of Sep20) 140 120 104 100 98 80 US $686 76 mm 60 40 20 Chile Gx 0 Peru Gx Jan Feb Mar Apr May Jun Jul Aug S
Slide 21: Agenda
1. Welcome Remarks Hernán Rodríguez 2. Strategy Update & 2020 Highlights Thomas Keller Commercial Strategy and 3. Regulatory Update Juan Eduardo Vásquez 4. Growth Opportunities Eduardo Lauer and Olivia Heuts
Slide 22: Commercial and Regulatory Update
Commercial and Regulatory Update JUAN EDUARDO VÁSQUEZ CHIEF BUSINESS AND ENERGY MANAGER
Slide 23: Our Commercial Strategy
OUR COMMERCIAL AND REGULATORY UPDATE Secure cash flows with new PPAs COMMERCIAL STRATEGY Backup contracts with secure technologies Increase contracts with renewable energy Certify contracts with new solar and wind generation 23
Slide 24: Risk Management: Key considerations
Risk Management: Key considerations COMMERCIAL AND REGULATORY UPDATE 1. GAS-FIRED POWER PLANTS 2. HYDROELECTRIC POWER PLANTS 3. FUEL PRICES Hedge for years of Balanced cost Hedge for significant poor hydrology structure changes in fuel prices Hedge for wind and Complementary solar intermittency Serv
Slide 25: How are we progressing?
How are we progressing? We have significantly increased sales to unregulated clients COMMERCIAL AND REGULATORY UPDATE Unregulated clients Sales to unregulated Supply points increase number growth clients (US$ mm) 2019 vs 2020 296 230 4% 69% 2014 20201 578 to 676 4 17% 2014 2019 2020 1 Cumulative reve
Slide 26: Focusing growth on the unregulated segment
Focusing growth on the unregulated segment Unregulated clients Regulated clients COMMERCIAL AND REGULATORY UPDATE Consumption • Stable consumption and • Peak demand when lower supply cost marginal cost is higher profile 24 hours 24 hours 100% • Limited to non-existent 100% • The current oversupply o
Slide 27: Increasingly challenging Electricity Sector
Increasingly challenging Electricity Sector COMMERCIAL AND REGULATORY UPDATE Other Expertise to industries are manage and entering the satisfy a growing High level power market number of of clients competition Participants in the power market already offer "energy solutions" Colbún addresses these c
Slide 28: Colbún as an Energy Partner
Colbún as an Energy Partner COMMERCIAL AND REGULATORY UPDATE Offer competitive and renewable power supply Provide a range of products and services tailored to the needs of each client Client Multidisciplinary team available for our clients 28
Slide 29: "Customer-Centric" Approach
“Customer-Centric” Approach COMMERCIAL AND REGULATORY UPDATE Expand products and services 1. 2. Increase loyalty Client Incorporate new clients 3. 4. Reduce after-sale costs to clients 29
Slide 30: Strengthening our Value Proposition
Strengthening our Value Proposition COMMERCIAL AND REGULATORY UPDATE Efizity New value-added Customer Competitive acquisition services relationship platform value proposition enhancement These features will allow us to be successful in a constantly changing power market 30
Slide 31: Regulatory challenges and opportunities
Regulatory challenges and opportunities COMMERCIAL AND REGULATORY UPDATE Power Supply System Portability Bill Flexibility Complementary Power Matrix Services Decarbonization 31
Slide 32: Power Supply Portability Bill
Regulatory challenges and opportunities Power Supply Portability Bill Aims to increase competition in the regulated clients segment COMMERCIAL AND REGULATORY UPDATE Summary Relevant principles Every user will have the right to • Ensure effective division of activities to be choose its preferred supp
Slide 33: System Flexibility
Regulatory challenges and opportunities System Flexibility Seeks to adapt our system to the operational challenges of the coming years COMMERCIAL AND REGULATORY UPDATE Summary Relevant principles Define guidelines to face • Review the mechanism of capacity payment, regulatory and operational applying
Slide 34: Complementary Services
Regulatory challenges and opportunities Complementary Services In Jan20, a new regulation for the Complementary Services Market entered into force COMMERCIAL AND REGULATORY UPDATE Summary Relevant principles The regulations introduced • System stability as a key criteria for decision modifications to
Slide 35: Power Matrix Decarbonization
Regulatory challenges and opportunities Power Matrix Decarbonization An agreement was signed with the Government, but initiatives seek to further accelerate the process COMMERCIAL AND REGULATORY UPDATE Summary Relevant principles The Chilean power sector is • The agreed decommissioning timetable pro
Slide 36: 2025 Outlook
2025 Outlook 12-15 TWh/year The commercial portfolio would COMMERCIAL AND REGULATORY UPDATE be largely backed by renewable Sold under new contracts energy with an average supply largely backed by cash cost close to 100% renewable energy 18 USD/MWh RUN-OF- RESERVOIR WIND SOLAR PV THE-RIVER POWER FARM
Slide 37: 2025 Outlook
2025 Outlook Colbún’s strategy addresses the new challenges on the basis of a competitive cost structure COMMERCIAL AND REGULATORY UPDATE 2019 2025 (TWh/year) (TWh/year) • Sufficiency capacity • Ancillary services • Hedges 15 15 Sales 12 Diesel 11 LNG Coal REVS Hydro Generation Commitments Generatio
Slide 38: Agenda
1. Welcome Remarks Hernán Rodríguez 2. Strategy Update & 2020 Highlights Thomas Keller Commercial and 3. Regulatory Update Juan Eduardo Vásquez 4. Growth Opportunities Eduardo Lauer and Olivia Heuts
Slide 39: Growth Opportunities: Project Pipeline
Growth Opportunities Project Pipeline EDUARDO LAUER CHIEF ENGINEERING AND PROJECT MANAGER
Slide 40: Project Pipeline
Project Pipeline OBJECTIVE: TO DEVELOP PROJECTS WITH LCOEs IN THE FIRST QUARTILE OF THE INDUSTRY GROWTH OPPORTUNITIES DEVELOPMENT PHASE EXECUTION AND OPERATION SEARCH PERMITTING CONSTRUCTION OPERATION CRITERIA ❯ High Capacity ❯ Diligence in permitting ❯ Colbún as EPC integrator ❯ Automatization Fact
Slide 41: Project Pipeline: non-commoditized LCOE determinants
Project Pipeline Special focus on managing the “non-commoditized” determinants of LCOE WIND SUPPLY CURVE SOLAR SUPPLY CURVE GROWTH OPPORTUNITIES (best 4,000 MW analyzed) (best 6,000 MW analyzed) 140% Target Target Projects 150% Projects 120% ∆ 15% 125% ∆ 40% 100% “NON - COMMODITY” LCOE % (base 100%)
Slide 42: Project Pipeline update
Project Pipeline update 1,700 MW 1,800 MW Wind farms PV plants GROWTH OPPORTUNITIES DIEGO DE ALMAGRO HORIZONTE Located in one of the With up to 980 MW of 150 MW INTI PACHA areas with the best installed capacity this 925 MW radiation in Chile, the project would become DIEGO DE project is under one of
Slide 43: PV Project Diego de Almagro
Project Pipeline PV Project Diego de Almagro GROWTH OPPORTUNITIES KEY INDICATORS Chañaral Copiapó Estimated capacity 232 MW Net annual generation 648 GWh Estimated capacity factor 35% Land surface 330 ha S/S Illapa 220 kV Connection point (2.6 km) Env. Impact Study Approved Location: Estimated COD M
Slide 44: PV Project Diego de Almagro Field Work
Project Pipeline PV Project Diego de Almagro Field Work GROWTH OPPORTUNITIES LAND PREPARATION FOR PHOTOVOLTAIC FIELD 44 44
Slide 45: PV Project Machicura
Project Pipeline PV Project Machicura GROWTH OPPORTUNITIES KEY INDICATORS Talca PV Machicura Estimated capacity 9 MW Net annual generation 20.5 GWh Estimated capacity factor 26% Land surface 20 ha Connected to Connection point Colbún’s line Env. Impact Study Approved LOCATION: Estimated COD July 202
Slide 46: PV Project Inti Pacha
Project Pipeline update PV Project Inti Pacha GROWTH OPPORTUNITIES KEY INDICATORS Tocopilla Estimated capacity 480 MW PV Inti Pacha (first phase) Antofagasta Net annual generation 1,335 GWh Estimated capacity factor 35% Land surface 736 ha Crucero S/S 220 kV Connection point (9 km) Approved for Env.
Slide 47: Wind Farm Project Horizonte
Project Pipeline update Wind Farm Project Horizonte GROWTH OPPORTUNITIES KEY INDICATORS Estimated capacity 607 MW (first phase) Antofagasta Horizonte Taltal Net annual generation 2,029 GWh Estimated capacity factor 38% Land surface 8,000 ha Connection point Parinas S/S 500/220 kV Env. Impact Study I
Slide 48: Wind Farm Project Horizonte Field Work
Project Pipeline update Wind Farm Project Horizonte Field Work GROWTH OPPORTUNITIES Changos-Cumbres 500 kV TEN Line Render 48 48
Slide 49: Growth opportunities: M&A
Growth opportunities M&A OLIVIA HEUTS CHIEF DEVELOPMENT MANAGER
Slide 50: International expansion
International expansion Acquisition must create value to our shareholders Per capita energy consumption GROWTH OPPORTUNITIES Through internationalization we seek to Colombia grow and diversify risk and revenues 1.4 MWh Brasil Focus on countries with: • High per capita energy consumption potential 2.
Slide 51: Local potential expansion
Local potential expansion 1. Atomized property of solar & wind assets Solar & wind capacity increases (MW) 3,104 MW + 140 companies 3 7 214 330 581 630 582 358 397 GROWTH OPPORTUNITIES ~20% capacity owned by incumbents 18 60 94 20 97 446 174 126 269 399 275 41 2,019 MW + 20 companies ~44% capacity o
Slide 52: Gisemeas ‘?) Warasz0
Gisemeas ‘?) Warasz0 FTSE4Good HuellaChileg informereporta