Redes Energeticas Nacionais Sa · EURONEXT:RENE
Redes Energeticas Nacionais Sa — REN - Redes Energéticas Nacionais — Investor Day (2010)
45 slides from Redes Energeticas Nacionais Sa's investor day presentation, 2010
Slide 1: Investor Day 2010
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Slide 2: Strategy 2016
Strategy gy 2016 Rui Cartaxo CEO 2
Slide 3: The TSOs in the crossroads
The TSOs in the crossroads Status Quo Change Growing energy interdependence Conservative culture Technological challenges Ageing Mitigation of workforce TSOs environmental impacts Regulatory constraints Privatisation 3
Slide 4: Energy transmission infrastructure is essential to integrate diversified regional energy profiles
Energy transmission infrastructure is essential to integrate diversified regional energy profiles HYDRO+ Geographic l nuclear specialization in WIND different production WIND COAL COAL+ technologies calls CCGT for stronger and COAL + NUCLEAR + smarter RENEWABLES Transmission NUCLEAR Infrastructures
Slide 5: Transmission plays a key role in all the pathways towards a decarbonised power sector
Transmission plays a key role in all the pathways towards a decarbonised power sector • Incorporating large shares of intermittent renewables without loss of reliability and without excessive back-up costs requires significant g increases in transmission capacity p y between g geographic g p areas.
Slide 6: Strong CAPEX in transmission is needed to avoid excessive costs in decarbonisation
Strong CAPEX in transmission is needed to avoid excessive costs in the decarbonisation of the power sector Transmission CAPEX Balacing costs and RES curtailment Back-up generation 6
Slide 7: Natural Gas assets will play a key role in the transition towards decarbonisation
Natural Gas assets will play a key role in the transition towards decarbonisation • Natural Gas will play a large and crucial role in the transition. transition • The required backup capacity in 2050 is forecast to be 230 GW. Most of that capacity will be NG plants, plants specially OCGT. OCGT • Two
Slide 8: REN's case: a TSO with a distinctive profile
REN’s case : a TSO with a distinctive profile • O One off the th few f TSO that TSOs th t integrates i t t electricity l t i it and d natural t l gas infrastructures. • Located in a geographic region with predominant renewable resources. • Specialized skills in the integration of renewables in the e
Slide 9: REN is among the few EU TSOs fully unbundled and integrated
REN is among the few EU TSO’s that are 1)fully unbundled and 2) integrated power & gas transmission assets Source: European Commission Besides Portugal, only the UK and Denmark have fully unbundled and i t g t d power & g integrated gas ttransmission i i assets In Sweden and Finland part of the tran
Slide 10: Portugal is the second country in the world with the highest weight of wind
Portugal is the second country in the world with the highest weight of wind in electricity production Denmark Portugal Spain Ireland Germany Greece Netherlands Austria Italy USA Sweden Canada UK Australia 0% 5% 10% 15% 20% 25% Source: National Statistics of the IEA Wind Member Countries for 2009 10
Slide 11: REN is among the best in quality of service
REN is among the best in quality of service Overall Composite Benchmark – Weighted Average** Overall Composite Performance Scatter Plot* Strong T AB K AC P C E D O B mposite Service Leevel R L X SCAN W Q EUR ASP A J U I Com S NA G V H Y F N Weak M High Composite Cost Measure Low Source: ITOMS 11
Slide 12: Portugal faces significant energy demand ahead
Portugal faces significant energy demand ahead Electricity and natural gas consumption in Portugal Vs Europe (15) Portugal Portugal has the lowest 4.5 Sweden 0.7 per capita electricity Portuguese per capita Greece 5.0 consumption of European Greece 0.8 natural gas countries (15) consumption is 4 X I
Slide 13: REN's strategic guidelines
REN’s strategic guidelines • First priority: maximizing value from existing concessions • Rigorous execution of CAPEX plan • Aggressive cost efficiency programmes: OPEX & CAPEX • Work towards regulatory convergence with EU peers • Second priority: positioning REN to ensure long term growth • Create
Slide 14: REN will invest €3.2B in 2010-2016
REN will invest €3.2B in 2010-2016 Total projected CAPEX 2010 2010-16: 16: €3.2B Electricity Concession €2.3B Natural Gas Concession €0 9B €0.9B Other activities €50M RAB accumulated l t d growth th 2009-16: 2009 16 60% 14
Slide 15: Business Plan 2010-2016: Main Financials
Business Plan 2010-2016 : Main Financials Yearly growth CAGR 2009-16 RAB Total 7% EBITDA 9% Net Income (recurrent) 9% Credit metrics 2010F 2016P FFO / Net Debt 11.0% 13.2% Net Debt / EBITDA 59X 5.9 50X 5.0 15
Slide 16: Conclusion: REN is a compelling investment case
Conclusion: REN is a compelling investment case • Power transmission P t i i will ill be b increasingly i i l important i t t worldwide ld id in i a context of decarbonisation of the power sector • Natural gas assets will be of great value during the transition to a decarbonised energy world • Stron
Slide 17: 2010 – 2016 Business Plan
2010 – 2016 Business Plan João Faria Conceição 17
Slide 18: Business Plan driven by three core competences
REN’s 2010 – 2016 Business Plan driven by three core competences REN’s core competences • IIntegratedd online li didispatch h center (b (both h iin • Integrated management of electricity electricity and NG national systems) and NG transmission networks 9 Know-how in online dispatching of a highly 9
Slide 19: Three complementary drivers to sustain growth
Three complementary drivers to sustain growth Forecasted drivers to sustain growth 3 Growth by M&A & international greenfield development 2 Growth beyond existing Opportunities pp to foster REN’s regulated core competences business 1 Organic growth driven by the regulated Strong focus on the Electri
Slide 20: €3.2B CAPEX Plan between 2010 and 2016
€3.2B CAPEX Plan between 2010 and 2016 REN’ss CAPEX Plan REN €Million 4000 860 50 3,200 2,290 2000 0 Electricity Natural Gas Other Business TOTAL 20
Slide 21: Commitment to maintain high CAPEX execution rate
Commitment to maintain the track record of high execution rate regarding REN REN’ss CAPEX Plans 500 450 400 350 300 250 200 150 100 50 0 2005 2006 2007 2008 2009 2010F Executed Planned 21
Slide 22: €1.7B net increase in the RAB until 2016
€1.7B net increase in the RAB until 2016 Regulated Asset Base (RAB) € Million 5000 1,450 4,565 4000 3,115 960 2,860 3000 1 900 1,900 2000 1000 0 Electricity Natural Gas Total Electricity Natural Gas TOTAL 2009 2016 RAB from 2009’s existing assets RAB from new investments 22
Slide 23: Growth metrics in line with previous 2009–2014 Business Plan
Growth metrics in line with previous 2009 – 2014 Business Plan 2010 – 2016 2009 – 2014 Business Plan Business Plan Growth CAGR 2009-16 CAGR 2009-14 Total RAB 7% 8% EBITDA 9% 9% Net Income (recurrent) 9% 10% 23
Slide 24: The electricity and NG regulated businesses: four major priorities
The electricity and NG regulated businesses: four major priorities 1 Excelling E lli g in i regulatory g l t management 2 How to sustain growth 3 Optimizing CAPEX Maximizing OPEX execution in the h regulated l d efficiency and cost business? reduction measures 4 Promoting innovation inno ation 24
Slide 25: Beating regulatory cost targets both in CAPEX and OPEX
Beating regulatory cost targets both in CAPEX and OPEX Electricity CAPEX Reference Costs Deviation [[2009-2010,, ((Ref cost – Real cost ))/ Real cost ] Regulatory efficiency 12% incentives set to: 9% 1.CAPEX in Electricity 9 Transmission grid assets 6% 9 Reference costs methodology set by the Regula
Slide 26: CAPEX in electricity for a more robust, integrated and technological infrastructure
CAPEX in electricity to cope with the need for a more robust, integrated and technological infrastructure … more robust and integrated g • Better regional network integration • Interconnection capacity increase • Higher reception capacity REN’s infrastruct. • Links to new hydro & wind power • More r
Slide 27: Electricity: €2.3B CAPEX plan until 2016
Electricity: €2.3B CAPEX plan until 2016 €2.3B CAPEX plan in the Electricity Business New lines & Substations upratings • >2.150km of new lines • 30 new substations 9 30% increase from 2010 9 50% increase from 2010 • >90 new trabsformers Examples from the Underground CAPEX Plan Pl New technolog. cab
Slide 28: Five drivers for NG infrastructure development
Five drivers for NG infrastructure development 1 LNG Terminal expansion (Sines) Iberian • 3rd LNG tank hub • Emission capacity increase Mibgas 2 Underground storage integration infrastructure expansion • 5 new caverns • Injection/extraction capacity reinforcement Competition in the wholesale market
Slide 29: Increased underground storage capacity at Carriço
Significant increased forecasted for REN’s underground storage capacity at Carriço Carriço’ss infrastructre 2010-16 Business Plan CAPEX REN’s underground Impacts (NG underground storage only) storage capacity • Increase the NG national • 5 new caverns security reserve capacity • Increase injection/
Slide 30: New NG interconnection to reinforce Iberian market integration
New NG interconnection to reinforce Iberian market integration and foster NG Iberian hub New Mangualde – Zamora interconnection Valença • T t l investment: Total i t t €300M (2nd interconnection) • Pipeline length (Portugal only): 290 km Zamora 9 23% increase regarding the total length of current (n
Slide 31: Promote infrastructure integration to reduce costs and provide better services
Promote infrastructure integration to reduce costs and to provide better services Global System Management LNG Terminal Pipeline Storage Regulated Regulated Regulated access access access REN – NG integrated i t t d iinfrastructure f t t Capacity - Flexibility – Service provider to shippers and trad
Slide 32: New opportunities beyond REN's regulated business
New opportunities beyond REN’s regulated business1: despite limited CAPEX an increasing impact on the P&L €50M CAPEX Plan for opportunities beyond regulated business1 (2% of global 2010-16 2010 16 CAPEX Plan) Weight of opportunities beyond regulated Weight of opportunities beyond regulated business(
Slide 33: Technical consultancy beyond regulated business
An example of business beyond existing regulated business: technical consultancy 5 priority regions to look for business opportunities for REN’s technical consultancy services (infrastructure management, renewables integration, security of supply assessment) • EUA, EUA Brazil, B il Southern S th Afr
Slide 34: CFO Presentation
CFO Presentation João Nuno Palma 34
Slide 35: The new CAPEX plan represents a 7% average yearly increase
The new CAPEX plan represents a 7% average yearly increase versus the previous plan... plan CAPEX Plan (2010-2016) Average yearly CAPEX +7% (€B) (€M) 3.2 456 424 2.3 0.9 Electricity Gas Total REN 2009 2014 plan 2009-2014 2010 2016 plan 2010-2016 35
Slide 36: 60% cumulative increase in total RAB, net debt growth under 50%
...leading to a 60% cumulative increase in total RAB, with net debt total growth under 50% RAB Net Debt (€B) (€B) +54% +60% 4.6 3.3 15 1.5 €1 2B €1.2B €1.7B 2.1 2.9 10 1.0 3.1 1.9 2009 2016F 2009 2016F Gas Electricity REN will finance ~2/3 of its ~€3.2B CAPEX plan with own funds (excluding refinanci
Slide 37: CAPEX plan supported by growing capacity to generate stable cash-flows
CAPEX plan is supported by a solid and growing capacity to generate stable cash cash-flows flows 7% per year RAB 98.5% of CAPEX average growth Stable regulatory invested in between 2010 and framework regulated activities 2016 Funds from Operations1 will grow at 8% CAGR, reaching ~ €400M in 2016 (up
Slide 38: Strong credit story with limited downside risk (I)
Additionally, REN has a strong credit story with limited downside risk (I) Strategic role in • Strong interconnection among TSOs and networks at European level the European • REN will play an important role in the compliance of the European internal integrated energy market “security of supply” dire
Slide 39: Strong credit story with limited downside risk (II)
Additionally, REN has a strong credit story with limited downside risk (II) • Revenues and operating performance are capacity (RAB) driven rather than consumption driven Revenue stream • Natural hedging in electricity’s regulated revenues model against changes in the and operating S Sovereign i cost
Slide 40: REN continues to reshape its debt
REN continues to reshape its debt Cost and debt maturity Average cost of debt (%) 2008 Loans/issues during 2008-10 Amount 2010 (June) Reduction EIB 17 yr (2008) €250M from 4,8% to 3.9% EMTN 5 yr benchmark (2008) €500M Average maturity EMTN bond tap of 5 yr (2009) €300M (years) Increase from 2 P i t
Slide 41: Strategy will focus on access to bond markets
Strategy will focus in access to bond markets and reduced exposure to short short-term term credit lines... lines Net debt mix by funding source Strategy guidelines • Focus on medium/long term bonds and other debt instruments (%) in order to balance price and refinancing risk • Reduce exposure to co
Slide 42: Keeping credit metrics associated with a higher rating
...while focusing in keeping credit metrics associated with a higher rating than the current one Rating affected by • Recent REN downgrades caused solely by the downgrade of the Sovereign Portugal’s rating downgrade • REN will maintain an adequate level of liquidity for its business profile and Liqu
Slide 43: Highlights of the 2010-2016 plan
Highlights of the 2010-2016 plan • €3.2B CAPEX plan for the 2010-2016 period Strong CAPEX • €456M p per yyear,, an increase of 7% vs the p previous 2009-2014 p plan ((€424M p per yyear)) plan • Leading to an increase in net debt of €1.2B (between 2009 and 2016F) Solid cash • 98.5% of the CAPEX will
Slide 44: Disclaimer
Disclaimer This presentation and all materials, documents and information used therein or distributed to investors in the context of this p presentation do not constitute,, or form ppart of,, a p public offer,, p private p placement or solicitation of any kind by REN, or by any of REN’s shareholders
Slide 45: Thank you
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