Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — Q3 2024 Earnings Presentation
56 slides from Engie Energia Chile's earnings presentation, Nov 7, 2024
Slide 1: 3Q 2024 Investor Presentation
3Q 2024 INVESTOR PRESENTATION ENGIE ENERGÍA CHILE 07 Nov 2024
Slide 2: Summary
SUMMARY 9M24 RESULTS AND VIEW FOR THE FULL YEAR 9M24 results 1.0 GENERAL INFORMATION EECL and its transformation 2.0 ENERGY TRANSITION Project development and construction status 2.1 ESG Our sustainability strategy 2.2 TRANSMISSION A glance at EECL’s transmission business 2.3 INTRODUCTION TO EECL AN
Slide 3: 9M24 Highlights
9M24 HIGHLIGHTS Fuel prices falling from 2022 record highs Increased renewable generation + back-up PPA volumes Tariffs reflecting lower fuel prices PEC & MPC law Pivotal expansion move in battery storage. 369 MW committed Total exit of coal-fired generation announced Successful liability management
Slide 4: 6% Growth in Physical Sales
6% GROWTH IN PHYSICAL SALES GWh Unregulated customers 600 Unregulated customers 450 3% increase 300 Strong demand from mining clients 150 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2022 2023 2024 GWh Regulated customers 600 Regulated customers 450 9% increase 300 explained by higher pro- rata
Slide 5: Average Spot Prices ~58 USD/MWh in 9M24
AVERAGE SPOT PRICES ~58 USD/MWH IN 9M24 Improved hydrology and lower fuel prices US$/MWh Average marginal cost 280 260 @ 220 kV nodes 2022 average: 240 US$127/MWh 220 2021 average: 200 US$95/MWh 180 2023 average: 160 2017-2020 average: US$87/MWh US$52/MWh 140 120 2024 average: 100 US$58/MWh 80 60 40
Slide 6: Latest forecasts reduce probability of La Niña
LATEST FORECASTS REDUCE PROBABILITY OF LA NIÑA MOVING FORWARD TO A NEUTRAL CONDITION FOR 2025. 3,000 Hydro generation in Chile 2,700 2,400 2,100 GWh 1,800 1,500 1,200 900 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2024 2019 2020 2021 2022 2023 • In terms of hydraulic generation, as end of S
Slide 7: Significant Coal Price Decline
SIGNIFICANT COAL PRICE DECLINE Coal prices hit all-time highs in 2022 and stabilized at around US$ 111/Ton in 9M24 US$/Ton Coal price indices 2022 avg: US$314/Ton 460 API 2 (cif ARA) 420 380 API 6 (fob Newcastle) 2023 avg: 340 US$138/Ton 2021 avg: 4Q24 300 US$123/Ton Fwd. avg: 260 US$125/Ton 2019 av
Slide 8: Coal Plant Availability Has Stabilized at ~3.5GW
COAL PLANT AVAILABILITY HAS STABILIZED AT ~3.5GW IN LAST 2 YEARS Plant closures, limitations, planned and forced outages Coal plant availability in the system (3,560 MW avg. in 9M24) 4,324 MW avg.2020 3,875 MW avg.2021 3,497 MW avg.2022 3,560 MW 3,476 MW avg.2023 avg.9M24 Mar-20 Mar-21 Mar-22 Mar-23
Slide 9: Natural Gas Availability in the Chilean System
NATURAL GAS AVAILABILITY IN THE CHILEAN SYSTEM Argentine gas available for EECL since October 2023 LNG prices LNG international markets 60 HH 50 JKM ▪ In 2022 the supply-demand imbalance, aggravated by the 40 Russia-Ukraine war, led countries to struggle to re -build stocks US$/MBtu HH and secure en
Slide 10: Closing the Gap Through Back-up PPAs
CLOSING THE GAP THROUGH BACK-UP PPAS Contracted energy purchases climbing to 3.6 TWh in 2024, reducing exposure to spot risk Supply sources to meet demand under Engie’s contracted portfolio [twh] 13 12 11 10 9 8 7 6 5 4 0.4 0.5 0.4 0.3 0.3 3 0.2 2 0.3 2.9 3.1 3.1 3.1 3.2 2.6 2.6 2.6 1 1.9 0.9 0.1 1.
Slide 11: Demand Supplied with Own Generation and Energy Purchases
DEMAND SUPPLIED WITH OWN GENERATION AND ENERGY PURCHASES Portfolio balancing: More renewables, storage & back-up PPAs. Less coal and spot exposure Renewables 30% Coal 40% In 9M24, the average cost of energy supplied decreased by 29% compared Installed to 9M23 due to increased renewable production, l
Slide 12: 9M24 Energy Supply: Seeking Portfolio Balancing
9M24 ENERGY SUPPLY: SEEKING PORTFOLIO BALANCING Decreased energy supply cost: Increased renewable production, greater back-up PPA volumes US$/MWh 9M23 Avg. monomic price: 149 USD/MWh 150 9M24 Avg. monomic price: 125 USD/MWh Margin 9M23 Margin 100 9M24 9M23 Average fuel & electricity purchase cost 9M
Slide 13: EECL's Performance During the Energy Transition
EECL’S PERFORMANCE DURING THE ENERGY TRANSITION A closer look at 9M24 results 1Q23 2Q23 3Q23 9M23 4Q23 FY23 1Q24 2Q24 3Q24 9M24 YoY Var % Operating revenues (MUSD) 587.8 616.2 512.0 1,715.9 476.8 2,192.7 442.7 490.8 447.6 1.381.1 -20% EBITDA (MUSD) 102.0 87.1 123.0 312.0 90.9 402.9 138.3 156.3 129.4
Slide 14: Strong EBITDA Recovery
STRONG EBITDA RECOVERY More balanced spot exposure + lower fuel prices offsetting decrease in realized energy prices EBITDA (US$m) +17 +3 -8 -218 +16 +16 +65 Insurance Margin OPEX & Net Margin gas SG&A +101 transmission capacity business Physical purchases business +120 sales Lower increase Average
Slide 15: US$201M Net Income
US$201M NET INCOME Driven by stronger operating results Recurring results NET RESULTS -3 +3 -13 (US$m) +11 +24 FX diff. Insurance +19 Impairments (PD) Increase 201 & other recovery effective +81 Net non- tax rate financial operating D&A results (*) Net income before +9 one-offs 79 EBITDA 69 PEC-1 Fi
Slide 16: Healthier Cash Generation & PEC-2 Sales
HEALTHIER CASH GENERATION & PEC-2 SALES Cash needs financed w/operations, PEC sales and ~US$284m net debt increase NET DEBT & FUND FLOWS (US$m) +30 +3 -328 +127 +112 Taxes Insurance +399 Accrued (Income (Premium: -21, taxes: 22 Refund: +18) -59 PEC interest / MTM / FX Green Cash from Receivables Pro
Slide 17: Price Stabilization Laws: Effects on Engie
PRICE STABILIZATION LAWS: EFFECTS ON ENGIE First sale of PEC-3 documents: US$356m received in cash on 24-Oct-24 • PEC laws affected our liquidity and finance costs. • PEC-2 reached its global US$1.8 billion cap in Mar-24. First sale under PEC-3 in Oct-24 (~US$1.6 billion for the system). Second and
Slide 18: Financial Structure
FINANCIAL STRUCTURE Making progress in reducing ND/EBITDA and extending maturity profile Investment-grade ratings Net Debt / EBITDA Excluding IFRS-16 leases International: 8.7 Fitch (Mar 2024): BBB Stable S&P (Apr 2024): BBB Stable 4.6 4.1 National scale: 2.7 Fitch (Mar 2024): AA- Stable 1.1 Feller
Slide 19: EECL's Performance During the Energy Transition
EECL’S PERFORMANCE DURING THE ENERGY TRANSITION Recent Events and Action Plans – Portfolio balancing to prepare for future growth 3.6 TWh/y back-up PPAs in 2024, up from 2.3 TWh/y in 2023 ~1 TWh additional renewable generation since 2023, with wind production in southern node BESS Coya operating sin
Slide 20: Accelerating Investment in Renewables and BESS
ACCELERATING INVESTMENT IN RENEWABLES AND BESS 2.1 GW renewable + BESS investment pipeline, 0.9 GW ready and 0.6 GW in construction 0.9 GW 0.6 GW 0.6 GW* Already in portfolio Under Construction Under Development 2019 2020 2021 2022 2023 2024 (e) 2025-2027 (e) MW 46 82 265 369 137 574** 584 48 Monte
Slide 21: Accelerating Investment in Renewables and BESS
ACCELERATING INVESTMENT IN RENEWABLES AND BESS US$1.7 bn investment in renewables + BESS & US$0.2 bn in transmission through 2024 800 MUSD 700 650 Under internal approval 600 535 Renewables 500 286 394 Renewables 400 276 Renewables 28 390 300 BESS 179 BESS 190 237 Renewables 209 BESS 146 200 190 325
Slide 22: FY 2024 Guidance Upgraded
FY 2024 GUIDANCE UPGRADED 2024 EBITDA expected to reach high end of guidance • Lower fuel costs EBITDAE CAPEXE • LNG + Argentine gas sourcing • Lower average spot prices US$475-525 US$650 • Renewable generation increase million million • New storage projects • PEC receivables monetization ND/EBITDAE
Slide 23: Our Guidance
EECL’S PERFORMANCE DURING THE ENERGY TRANSITION Our guidance US$ millions 700 9.0 8.0 600 7.0 500 6.0 400 5.0 300 4.0 3.0 200 2.0 100 1.0 0 0.0 2018 2019 2020 2021 2022 2023 2024 (e) 2025 (e) EBITDA CAPEX ND/EBITDA 23 ENGIE ENERGIA CHILE – INVESTOR PRESENTATION 9M24
Slide 24: Key Messages and Action Plans
KEY MESSAGES AND ACTION PLANS Re-balancing portfolio Moving forward with Accelerating Accelerating Securing liquidity and through renewable energy transition with development of development of financing needs additions, back-up PPAs strong CAPEX in renewable projects renewable projects and and and L
Slide 25: 2.0 Additional Material
2.0 ADDITIONAL MATERIAL
Slide 26: 2.1 Energy Transition
2.1 ENERGY TRANSITION ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2023
Slide 27: Energy Transition
ENERGY TRANSITION EECL is embarked on a profound generation portfolio transformation 2018 2026 + 2.1 GW Renewables 1% 8% 34% Installed Installed - 58% 33% capacity capacity 1.2 GW Coal disconnection 66% 1.9 GW 3.1 GW Coal Gas Diesel Renewables Gas Renewables/ BESS 0.4 GW Conversion 27 ENGIE ENERGIA
Slide 28: Generation Portfolio Transformation
GENERATION PORTFOLIO TRANSFORMATION Addition of 2.1 GW renewables 0.9 GW / US$1.0 bn already done LOS LOROS MONTE REDONDO CALAMA TAMAYA CAPRICORNIO SAN PEDRO COYA BESS COYA 46 MWac – 2H19 82 MW – 2H20 151 MW – 4Q21 114 MWac – 1H22 88 MWac – 4Q22 101 MW – 4Q22 180 MWac – 1H23 137 MW/638 MWh – 4Q23 20
Slide 29: Generation Portfolio Transformation
GENERATION PORTFOLIO TRANSFORMATION 1.1 GW of coal capacity to be closed by 3Q26 U12 U13 U14 U15 CTM1 CTM2 CTA CTH IEM -171 MW – 2019 -268 MW – 2022 -334 MW – 2025 -356 MW –2Q26 =377MW –3Q26 2018: US$ 53 million 2019: US$ 134 million 2023: US$491 Million Coal to gas US$ 491 million after-tax non-rec
Slide 30: 773 MW Renewable Projects Added Since 4Q21
773 MW RENEWABLE PROJECTS ADDED SINCE 4Q21 1,242 GWh generated in 9M24 (1,670 GWh in FY 2023). BESS Coya in operation 151MW Calama 114MWac 88MWac wind farm Tamaya PV Capricornio PV US$160 million US$84 million US$100 million investment investment investment COD: 29-Oct-21 COD: 14-Jan-22 COD: 21-Nov-
Slide 31: 574 MW Wind and Battery Projects Under Construction
574 MW WIND AND BATTERY PROJECTS UNDER CONSTRUCTION Lomas de Taltal. 90% advance rate as of 30-Sept-24. Bess Tamaya 100% energized. 850 GWh/y additional renewable generation 2025e 342MW 68MW / 418 MWh 48MW / 254 MWh 116MW / 660 MWh Lomas de BESS Tamaya BESS Capricornio BESS Tocopilla Taltal Wind (st
Slide 32: Renewable Projects
RENEWABLE PROJECTS Environmental permit requests • Approved RCA: • Wind Entre Cerros (EID): 46,3 MW (Approved Aug-22) • PV Pampa Camarones II: Up to 300 MW ac Bifacial panels + 180 MW BESS (up to 6-hr storage) (Approved Sep-22) • Wind Lomas de Taltal: 353.4 MW (57 WTGs x 6.2 MW) • Wind Vientos del L
Slide 33: Network Projects
NETWORK PROJECTS Environmental permit requests • Approved RCA: • Dolores substation (Approved Sep-22) • Roncacho substation (Approved May-22) • Desalant substation (Approved May-22) • Charrúa- Temuco Increased transmission line capacity (Pertinence letter approved Mar-23) • Modification of the El Ro
Slide 34: 2.2 ESG
2.2 ESG
Slide 35: Our Sustainability Strategy
OUR SUSTAINABILITY STRATEGY Embedded in our business and aims to create value in our four sustainability pillars Our purpose is to act to accelerate the transition towards a In 2023 we… carbon-neutral economy, through reduced energy consumption and more environmentally friendly solutions PLANET PEOP
Slide 36: Sustainable Finance
SUSTAINABLE FINANCE The first Sustainability-linked loan of IFC in Chile A green loan that accounts for the work we do everyday hand in hand with the care of people and the environment US$400 million 10-year term financing available to refinance debt and finance green projects In line with ENGIE’s t
Slide 37: Progress on ESG at Engie Chile
PROGRESS ON ESG AT ENGIE CHILE People and Planet Climate change Renewable Gender Health mitigation energy balance & Safety GHG emissions 2030 Share of 2030 Gender diversity 2030 Frequency rate 2030 from energy GROUP renewables GROUP % of women in GROUP Lost time injury GROUP TARGET TARGET TARGET pro
Slide 38: ESG Rankings, Certifications and Initiatives
ESG RANKINGS, CERTIFICATIONS AND INITIATIVES To track our performance Corporate Commitments EECL “ESG” Certifications SET Label certified that EDGE Certification ECOVADIS is the ISO 40001 our project sets the leading largest global Environmental ENGIE Group is part of the development and global stan
Slide 39: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY A just energy transition to help communities thrive Just New Stakeholders Transition Projects Engagement Responsible coal-exit Accelerating renewables Our approach 1. Employment and new 1. Early citizen 1. Associativity Policy skills participation 2. Social investment
Slide 40: 2.3 Transmission
2.3 TRANSMISSION
Slide 41: EECL: A Relevant Player in Transmission
EECL: A RELEVANT PLAYER IN TRANSMISSION 2,128 Kms. transmission lines, 40 substations and 50% share in TEN Substations ENGIE’S transmission lines Transmission 12 substations 1,152 Generation MVA substations 13% 28 2,128 946 Kms AVI + COMA for National & Zonal systems 87% Owned & Operated Operated In
Slide 42: National / Zonal Transmission Projects Awarded
NATIONAL / ZONAL TRANSMISSION PROJECTS AWARDED Arica y Parinacota New Works CAPEX (MUSD) COD Nueva Chuquicamata Liqcau substation (ex La Negra) 36 TBD Antofagasta Albemarle SS La Ligua substation 30 2Q25 Capricornio SS Totihue new sectioning + new Totihue 2x66 kV transmission line 40 1Q26 Atacama Al
Slide 43: Transmisora Eléctrica del Norte S.A. (TEN)
TRANSMISORA ELÉCTRICA DEL NORTE S.A. (“TEN”) 600 km-long, double circuit 500kV national transmission system National HVAC transmission system interconnecting SIC and SING grids since Nov. 24, 2017 National system in 500 kV: - Substations: - Los Changos (220 and 500 kV) TEN 50% - Cumbre (500 kV) (COD
Slide 44: Transmisora Eléctrica del Norte S.A. (TEN)
TRANSMISORA ELÉCTRICA DEL NORTE S.A. (“TEN”) Tariff decree for the 2020-23 period published with delay in Feb-23 TEN revenue scheme Project finance as of 30-Sep-24 Regulated revenues on “national assets” (AVI) Senior 18-yr USD Loan Contractual toll with EECL on “dedicated assets” 26-yr USD Fixed-rat
Slide 45: 2.4 EECL and Market Information
2.4 EECL AND MARKET INFORMATION
Slide 46: ENGIE Energía Chile S.A.
ENGIE ENERGÍA CHILE S.A. A diversified asset base concentrated in Chile’s mining region 110/220kV Gasoducto Our operations Our sites Arica y (2,128 km) Norandino (1,066 km) Our largest clients Parinacota 4th largest GenCo in Chile TOCOPILLA Mining Gas (434MW) Antofagasta 2.7 GW gross capacity (500 k
Slide 47: Industry and Company Highlights 9M24
INDUSTRY AND COMPANY HIGHLIGHTS 9M24 EECL has 7% market share in terms of installed capacity and 16% in terms of electricity sales Gross capacity Generation Demand Market share Other Engie 7% Hydro 4% Solar Renewables AES SISTEMA 29% 21% Coal 34% Regulated 39% Enel Andes 16% 27% ELÉCTRICO 11% NACION
Slide 48: PPA Portfolio with 7-Year Remaining Average Life
PPA PORTFOLIO WITH 7-YEAR REMAINING AVERAGE LIFE Free clients: 7 yrs. Regulated clients: 6 yrs. 500 Unregulated contracts 450 Clients’ credit ratings Regulated contracts 400 (S&P/Moody’s/Fitch): Average demand (MW) - Codelco: BBB+/Baa1/BBB+ Distribution 350 Companies (South SEN) 300 - Freeport-MM (E
Slide 49: Heavily Contracted Position Provides Stable Sales Revenue
EECL’S HEAVILY CONTRACTED POSITION PROVIDES THE BASIS FOR STABLE SALES REVENUE The PPA price increase capturing high fuel prices has reversed since 2H23 Prices Energy sales GWh Energy sales and prices US$/MWh 200 3,000 2,500 150 2,000 100 1,500 1,000 50 500 0 0 1Q162Q163Q164Q161Q172Q173Q174Q171Q182Q
Slide 50: Volatile Marginal Costs Affected by Renewable Intermittency
VOLATILE MARGINAL COSTS AFFECTED BY RENEWABLE INTERMITTENCY A 10-day real example in the SEN grid (Sept 1 to 10, 2024) MW USD/MWh 300 10,000 250 8,000 200 6,000 150 4,000 100 2,000 50 0 0 1 6 11 16 21 2 7 12 17 22 3 8 13 18 23 4 9 14 19 24 5 10 15 20 1 6 11 16 21 2 7 12 17 22 3 8 13 18 23 4 9 14 19
Slide 51: Regulatory Initiatives
REGULATORY INITIATIVES GENERATION DISTRIBUTION • Tariff Normalization Law implementation (“PEC3”). • New Tariff Bill (Subsidy extension + PyMEs Price). • Tariff fixing process (VAD 2024-2028). • Bill Energy Transition & amendments (ITs reallocation, vertical integration limits). • Sectoral climate c
Slide 52: Financing Activity
FINANCING ACTIVITY Securing funding and liquidity for the energy transition PEC Accounts Receivable (ARs) Bank loans as of 30-Sep-24 Bonds as of 30-Sep-24 monetization programs US$1,074 million US$1,361 million US$484 million (o.w. US$93 mln < 1 yr.) (o.w. US$136 mln < 1 yr.) Cashed-in since 1Q21 o.
Slide 53: 7% Increase in Stock Price in Last 12 Months
7% INCREASE IN STOCK PRICE IN LAST 12 MONTHS No dividends paid on account of 2022 and 2023 results 30-Sep-23 30-Sep-24 EECL: CLP 817 EECL: CLP 871 (+7%) IPSA: 5,833 IPSA: 6,491 (+11%) Genco’s: 100 Genco’s: 100 (0%) up 7% to CLP 871 120 100 Colbun Enel ECL IPSA Genco's 80 Sep-23 Oct-23 Nov-23 Dec-23
Slide 54: Ownership Structure
OWNERSHIP STRUCTURE 50% Pension Local Foreign 59.99% 14.69% 17.94% 7.04% Individuals 0.34% funds institutions institutions ENGIE Energía Chile S.A. “EECL” Red Eléctrica Chile S.A. 50% Gasoducto Norandino SpA Central Termoeléctrica Inversiones Edelnor Transmisión Transmisora Eléctrica del Andina SpA
Slide 55: For More Information About ENGIE Energía Chile
FOR MORE INFORMATION ABOUT ENGIE ENERGÍA CHILE +562 2353 3200 inversionistas@engie.com https://engie-energia.cl/inversionistas/ More information on 9M2024 results in our web page Presentation Addenda Press Release Recorded Financial Analyst pack conference Report audiocast 55 ENGIE ENERGIA CHILE – I
Slide 56: Disclaimer
Disclaimer 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