Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — H1 2022 Earnings Presentation
61 slides from Engie Energia Chile's earnings presentation, August 2022
Slide 1: ENGIE Energía Chile Investor presentation 1H 2022
ENGIE ENERGÍA CHILE Investor presentation 1H 2022 RESTRICTED INTERNAL SECRET
Slide 2: Results and guidance
1 Results and guidance ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2022 2
Slide 3: Key messages
Key messages Challenging times: extreme 1.35 GW wind, solar & BESS drought, record high fuel projects under development prices and high marginal costs 1H22 results impacted by Permit requests filed and land extraordinary events, and adverse secured for future wind and market conditions persist solar
Slide 4: Drought and high fuel prices posing continued challenges
Drought and high fuel prices posing continued challenges 3Q20 4Q20 1Q21 2Q21 LTM 06-21 3Q21 4Q21 1Q22 2Q22 LTM 06-22 Var % Operating revenues (MUSD) 338.7 365.3 332.2 388.5 1,424.7 365.7 383.4 417.9 481.4 1,648.4 16% EBITDA (MUSD) 135.7 117.5 66.0 121.7 440.9 55.6 71.2 68.5 (8.0) 187.3 -42% EBITDA m
Slide 5: Physical sales evolution
Physical sales evolution GWh Unregulated customers 600 Unregulated customers 450 Strong demand, with 2022 exceeding the three 300 previous years due to recovery in mining 150 activity and higher - copper prices Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 2022 GWh Regulated customers Regulat
Slide 6: Highest marginal costs in +5 years
Highest marginal costs in +5 years Extreme drought, unprecedented fuel prices => high spot prices US$/MWh 1H22 average: Average marginal cost US$139/MWh SIC-SING Interconnection 280 @ 220 kV nodes 260 North 240 220 Center 2021 average: 200 US$95/MWh South 180 160 140 2020 average: 120 US$41/MWh 100
Slide 7: April-21 – March 22: One of driest in +60 years
April-21 – March 22: One of driest in +60 years Lower hydro generation causes increased reliance on fossil fuels 2,600 Hydro generation in Chile 2,200 1,800 GWh 1,400 1,000 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2022 2019 2020 2021 Apr-21 – Mar-22 hydrological year: ~96.8% exceedance pr
Slide 8: Coal prices hitting all-time highs
Coal prices hitting all-time highs US$/Ton 2H22 Fwd. avg: Coal price indices 1H22 avg: US$371/Ton 460 US$305/Ton 420 API 2 (cif ARA) 380 340 API 6 (fob Newcastle) 4Q21 avg: 300 US$178/Ton 260 API 10 (fob Puerto Bolivar) 220 Jan-Sep 21 avg: 180 US$106/Ton 140 2020 average: 100 US$52/Ton 60 20 J F M A
Slide 9: Declining coal plant availability in the system
Declining coal plant availability in the system Plant closures, limitations, planned and forced outages Coal plant availability in the system (MW gross) 4,324 MW avg.2020 3,611 MW avg.2021 3,521 MW avg.1H22 Engie Other ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2022 9
Slide 10: LNG prices at all-time highs
LNG prices at all-time highs Supply cuts due to Russia-Ukraine conflict & rising demand LNG international markets LNG prices 45 COVID-19-containment measures led to record low spot LNG HH prices in May 2020 and delays in gas field maintenance and new 40 investment 35 JKM 30 Global demand has surged
Slide 11: High and volatile marginal costs
High and volatile marginal costs A 10-day real example in the SEN grid (June 1 to 10, 2022) MW USD/MWh 12,000 350 10,000 300 8,000 250 200 6,000 150 4,000 100 2,000 50 0 0 1 6 11 16 21 2 7 12 17 22 3 8 13 18 23 4 9 14 19 24 5 10 15 20 1 6 11 16 21 2 7 12 17 22 3 8 13 18 23 4 9 14 19 24 5 10 15 20 1
Slide 12: Managing supply risk
Managing supply risk Contracted energy purchases for ~25% of demand TWh 13 12 11 10 9 8 7 6 5 4 3 0.9 0.9 0.7 0.6 0.6 2 0.6 0.6 0.6 1.0 1 1.9 1.9 1.9 1.9 1.9 1.6 1.6 1.6 0.9 0.2 1.1 0.6 0.6 0.6 0.6 0.6 0.5 0.5 0.5 0.1 0.1 0.1 0.1 0.1 - 0.0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Slide 13: Demand met with generation and energy purchases
Demand met with generation and energy purchases Supply curve 1H22 Coal units to be decommissioned Unit MW Date % 1H22 supply US$/MWh U14 136 Jun-22 (*) 0.2% U15 132 Sep-22 (*) 2.5% CTM1-CTM2 334 Dec-24 5.6% 250 (*) U14-U15 decommissioning postponed from Dec-21 to Jun-22 (U14) and Sep-22 (U15) for sy
Slide 14: 2022 Guidance
2022 Guidance 1H EBITDA US$61 million 2H EBITDA US$130 – 150 million Hydrologic conditions: drought + hydro reserve Mar-May Hydrologic conditions – reserve release – thaw period Coal prices ~US$200-350/ton Coal prices ~US$350/ton Argentine gas supply Argentine gas supply LNG supply Force Majeure @ F
Slide 15: Investing activity
Investing activity ND/EBITDA rising exceeding targets in 2022 600 MUSD 7.0 500 TEN 30 6.0 400 5.0 TEN 35 4.0 300 IEM & Port 436 3.0 200 IEM & Port Renewables 314 Renewables 64 191 2.0 IEM & Port Renewables Renewables 183 Transmission 13 202 100 171 IEM & Port 1.0 78 Transmission 48 Recurring 56 Recu
Slide 16: Financial update
3 Financial update ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2022 16
Slide 17: EBITDA evolution
EBITDA evolution Decline explained by higher marginal costs and fuel prices By main effect 11 140 In US$ Million 29 38 6 Transmission margin Physical Gas 130 sales margin Increase in spot sales 103 Fuel costs 188 Average 78 realized prices Increase in energy purchase volumes 5 (Back-up 14 PPAs) Incr
Slide 18: Net income evolution
Net income evolution Operating margin shrinkage and PEC-related financial expenses(*) Main variations In US$ Million Recurring Results 36 66 -94 30 Net One-off income Net before financial Income expenses one-offs 1H21 1H21 Discount on sale of -37 -40 accounts receivable Net loss before Net -3 one-of
Slide 19: Net debt evolution
Net debt evolution Increase due to financing of CAPEX and operations Main cash flows + net debt variations In US$ Million 27 10 10 1,329 35 106 Leases Proceeds Accrued Income + (IFRS 16) from sale of interest / 137 CO2 tax MTM / L.T.PEC deferred regulated CAPEX financial receivables cost 1,044 Cash
Slide 20: Financial structure
Financial structure Investment-grade ratings: BBB+/BBB Net Debt/EBITDA 7.1 International: Fitch (Jun 2022): BBB+ Stable S&P (Jun 2022): BBB Stable 3.3 2.2 National scale: 1.3 1.8 Fitch (Jun 2022) AA Stable Feller Rate (Dec 2021): AA- Stable Dec 18 Dec 19 Dec 20 Dec 21 LTM Jun 22 Debt details US$ 850
Slide 21: US$93 million dividends paid in 2021
US$93 million dividends paid in 2021 No dividends paid in 2022 Dividends paid In US$ Millions 120 100% 112 100% 90% Share price evolution 100 22 81% 72% 93 80% 30-Jun-21 30-Jun-22 80 79 70% EECL: CLP 551 EECL: CLP 357 (-35%) 7 67 60% IPSA: 4,331 IPSA: 5,004 (+16%) 51 150 60 56 47% 56 50% Genco’s: 10
Slide 22: Our transformation
2 Our transformation ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2022 22
Slide 23: Contracted demand through 2035
Contracted demand through 2035 ~12 TWh with 10-year average remaining life 12,000 10,000 8,000 6,000 4,000 2,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Regulated SING Regulated SIC Free clients-renegotiated+new free clients Other free clients
Slide 24: Our transformation: A four-track road
Our transformation A four-track road Greening existing corporate PPAs Closing Old Coal Units Restructuring 800 MW/y of long-term Closing 0.8 GW of coal power plants corporate PPAs with mining customers between 2019 and 2024 Converting Newer Coal Units Developing Wind, Solar and Storage Remaining 3 c
Slide 25: +2 GW renewables -1.5 GW coal phase out / reconversion
Our transformation +2 GW renewables -1.5 GW coal phase out / reconversion LOS LOROS MONTE REDONDO CALAMA TAMAYA CAPRICORNIO COYA ADVANCED STAGE +46 MWac – 2H19 +82 MW – 2H20 +151 MW – 4Q21 +114 MWac – 1Q22 +88 MWac – 3Q22 +180 MWac – 4Q22 +857 MW ACQUISITIONS + 4 GREENFIELD PROJECTS +1.3 GW UNDER 20
Slide 26: Generation portfolio transformation
Generation portfolio transformation 2018 2025 + 2.0 GW Renewables 1% 10% 8% Installed Installed 33% 58% 59% 29% capacity capacity 1.9 GW - 0.8 GW Coal disconnection 3.4 GW 2% Coal Gas Diesel Renewables Biomass Gas Diesel Renewables 0.7 GW Conversion ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1
Slide 27: Greening our PPA portfolio
Greening our PPA portfolio Shifting away from coal price indexation Indexation applicable to contracted electricity and capacity sales (*) 2020 2022 2025 Gas U.S. CPI U.S. CPI U.S. CPI 11% 60% 79% 79% Coal 2,026 MW 1,936 MW Gas 1,820 MW Gas 29% 10% 11% Coal Coal 11% 10% Free clients’ PPAs: Tariff ad
Slide 28: Renewables acceleration
Renewables acceleration 0.7GW in full production by YE-22 + 1.3GW in development 0.7 GW 1.3 GW Under development 2019 2020 2021 2022 2023-2026 MW in operation 46 82 265 268 1.3 GW 48 Monte Redondo 151 Calama 1.1 WIND MW MW GW 46 Los Loros Andacollo 114 Tamaya 268 Coya Capricornio 0.2 MWac MWac MWac
Slide 29: Unit conversion
Unit conversion 2021 2022 2023 2024 2025 2026 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2026 permits(*), engineering, procurement, off-site preparation outage IEM overhaul 375 MW coal generation +boiler burners gas adjustment CAPEX 52 MUSD 2 11 20.4 19 permits(*), engineering, reco
Slide 30: 151 MWac Calama wind farm
151 MWac Calama wind farm In operation since 2H 2021 36 WTGs (wind turbine generators) 150.4 GWh injected to SEN in 1H22 160.3 GWh injected to SEN in 2021 Main contractors: ▪ WTGs: Siemens Gamesa ▪ BOP: GES Calama wind farm US$ 160 million investment COD = 29-Oct-21 ENGIE ENERGÍA CHILE S.A. – INVEST
Slide 31: 114 MWac Tamaya solar PV plant
114 MWac Tamaya solar PV plant In operation since 4Q 2021 100% connected to the grid since 22-Nov-21 141.0 GWh injected to SEN in 1H22 57.1 GWh injected to SEN in 2021 Main contractors: ▪ Trackers: Trina Pro ▪ Inverters: Sungrow ▪ BOP construction staff: Inneria Tamaya solar PV plant US$ 84 million
Slide 32: 88 MWac Capricornio solar PV plant
88 MWac Capricornio solar PV plant Global advance: 99.74% Substation energized 8-Mar-22 5.8 GWh injected to grid in 2Q22 11 of 13 subfields energized Main contractors: ▪ Trackers: Trina Pro ▪ Inverters: Sungrow ▪ BOP construction staff: Inneria ▪ HV connection: EMEC Capricornio solar PV plant US$ 97
Slide 33: 180 MWac Coya solar PV plant
180 MWac Coya solar PV plant Global advance: 92.09% Energization planned for July 100% of solar panels on site Main contractors: ▪ Trackers: Soltec ▪ Inverters: Sungrow ▪ Panels: VSun ▪ BOP: OHL ▪ HV connection: Siemens-Ingecoz Coya solar PV plant US$ 149 million investment Scheduled COD: 4Q22 ENGIE
Slide 34: Land concessions for the development of renewable projects
Land concessions for the development of renewable projects Potential to develop hybrid projects with up to 1.45 GW capacity: ▪ Up to 560 MW: Wind ▪ Up to 636 MWac:PV ▪ Up to 255 MW: BESS (up to 6-hour storage) Pampa Fidelia and Pampa Yolanda Land-use concessions in Taltal awarded in 2021 public auct
Slide 35: Environmental permit requests
Environmental permit requests Preparing the ground for future projects Wind farms with approved RCA: ▪ Lomas de Taltal: 353.4 MW (57 WTGs x 6.2 MW) ▪ Vientos del Loa: 204.6 MW (33 WTGs x 6.2 MW) Wind farm w/EIA under assessment (to be resubmitted 4Q22): ▪ Loma Verde: 173.6 MW (28 WTGs x 6.2 MW) PV p
Slide 36: Transmission
4 Transmission ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2022 36
Slide 37: EECL: A relevant player in transmission
EECL: A relevant player in transmission 2,413 Kms. transmission lines, 24 substations, 50% share in TEN Substations ENGIE’S transmission lines 5 Transmission substations Generation 977 substations MVA 11% 19 2,413 946 Kms 89% AVI + COMA for National & Zonal systems Owned & Operated Operated In milli
Slide 38: Expansion into regulated transmission
Expansion into regulated transmission New regulated projects to contribute +US$10mln EBITDA p.a. Regulated assets VATT in US$ millions Expansion CAPEX 2020-2026: 10 10 6 8 3 - National: ~US$67 million 13 13 13 13 13 - Zonal: ~US$83 million 10 10 10 10 10 2022 2023 2024 2025 2026 New National/Zonal V
Slide 39: National / zonal transmission projects completed
National / zonal transmission projects completed US$2.4 million annual revenue (VATT) / US$41.5 million CAPEX Arica y Parinacota Nueva Algarrobal Chuquicamata Nueva Chuquicamata 06-Jul-21 06-Dec-21 Antofagasta Capricornio SS expansion Substation + 2x220 kV National 220 kV transmission line sectionin
Slide 40: National / zonal transmission projects awarded
National / zonal transmission projects awarded US$110 million CAPEX Antofagasta La Negra Roncacho Tamarugal SS Arica-Pozo By-Pass Jan-21 decree Substation expansion + Almonte TL Arica y Jan-21 decree Jun-21 decree 1x66 kV Pozo sectioning at Parinacota Almonte- Dolores SS Nueva Tamarugal TL Apr-21 de
Slide 41: Transmisora Eléctrica del Norte S.A. (TEN)
Transmisora Eléctrica del Norte S.A. (“TEN”) 600 km-long, double circuit 500kV national transmission system National HVAC transmission system interconnecting SIC and SING grids since Nov. 24, 2017 National system in 500 kV: - Substations: - Los Changos (220 and 500 kV) TEN 50% - Cumbre (500 kV) (COD
Slide 42: TEN: A new tariff decree for the 2020-23 period
Transmisora Eléctrica del Norte S.A. (“TEN”) A new tariff decree for the 2020-23 period pending publication Regulated revenues on “national assets” TEN: Annual estimated revenue (AVI) + contractual toll with EECL on per CNE Technical Report “dedicated assets” (in millions of US$ @ 30-Jun-22 FX rates
Slide 43: Key take-aways
Key take-aways Difficult times due to extreme drought and challenging international environment w/demand -supply imbalance in fuel and equipment markets Results challenged by unprecedented fuel prices 268MW Coya & Capricornio PVs to become operational in 2H22 Renewables and contracted power supply t
Slide 44: Addenda
5 Addenda ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2022 44
Slide 45: Industry and company highlights
Industry and company highlights For the first half of 2022 Gross capacity Generation Demand Market share Solar Others 5% Wind 11% Engie 8% Hydro 20% Hydro AES 23% Regulated Enel SISTEMA 18% 39% Andes 25% ELÉCTRICO Solar 11% Wind 17% NACIONAL 32.2 GW 41.6 TWh 38.1 TWh 32.2 GW 12% (SEN) Colbún 11% The
Slide 46: Sistema Eléctrico Nacional - SEN
Sistema Eléctrico Nacional - SEN 14,410 MW SEN – June 2022 ’SEN’ Sistema Eléctrico Nacional 32,253 M W SING 8,523 8,054 MW 2,103 SIC 386 1,576 3,564 3,513 MW 3,437 MW 212 248 267 75 58 2,307 MW 2,648 1,627 370 55 46 2,039 2,901 108 639 1,104 532 MW 1,091 1,198 348 350 532 186 Enel Generación AES And
Slide 47: A diversified asset base in Chile's mining region
ENGIE Energía Chile S.A. A diversified asset base in Chile’s mining region Our operations Our sites Our largest clients 4th largest GenCo in Chile TOCOPILLA Mining 2.3 GW gross capacity Coal (133MW) Gas (394MW) 0.3 GW renewables in construction Port 11.6 TWh sold under PPAs in 2021 MEJILLONES Coal (
Slide 48: Working in our transformation
Working in our transformation To become greener and reduce supply costs Reshaping our PPA portfolio with green corporate PPAs Our performance - ~12 TWh/y contracted portfolio w/10-year average life - Balanced regulated vs. unregulated portfolio 2020 2021 LTM 06-2022 Phasing out coal generation Total
Slide 49: Greening existing corporate PPAs
Greening existing corporate PPAs 75% of mining PPAs extended for more sustainable mining Corporate clients 6.5 TWh/y Regulated clients 5.5 TWh/y PPAs CODELCO AMSA GLENCORE EL ABRA OTHER DISCO DISCO FREEPORT NORTH CENTER ~12 TWh/y Transformed PPAs: 4.8 TWh/y Minera Centinela Price 186MW 236 MW discou
Slide 50: PPA portfolio with 10-year average remaining life
PPA portfolio with 10-year average remaining life Free clients: 11 yrs. Regulated clients: 9 yrs. 500 ● Unregulated contracts Clients’ credit ratings ● Regulated contracts 400 Distribution (S&P/Moody’s/Fitch): Average demand (MW) Companies (South SEN) - Codelco: A/A3/A- 300 - Freeport-MM (El Abra ):
Slide 51: AMSA (Centinela) PPA
AMSA (Centinela) PPA PPA renegotiation + new green PPA signed March 31, 2020 Old PPA New PPA Esperanza Amendment of PPA Centinela New 11-year 186MW 150MW between Inversiones 186MW PPA between EECL and El Tesoro Hornitos (CTH) and Minera Centinela from 1- 36MW Centinela for its Jan-22 to 31-Dec-33 Es
Slide 52: Long-term PPAs: the basis for stable sales revenue
Long-term PPAs: the basis for stable sales revenue Prices are on the rise Energy sales Energy sales and prices Prices GWh US$/MWh 3,000 150 2,500 2,000 100 1,500 1,000 50 500 0 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1
Slide 53: Demand supplied with own generation and energy purchases
Demand supplied with own generation and energy purchases Our installed capacity is our physical hedge Renewables 18% Coal 52% Diesel 2% Average supply cost depends on fuel prices, power demand, gas supply, Installed transmission congestions, renewable output, plant performance and Capacity (*) hydro
Slide 54: Regulatory initiatives under way
Regulatory initiatives under way GENERATION DISTRIBUTION Energy transition Electric portability: Flexibility strategy - Energy dealer - New types of energy auctions Accelerated retirement of coal-fired units - Information manager Emission compensation mechanism in green taxes Tariff fixing (VAD 2020
Slide 55: Price stabilization mechanism (PEC)
Price stabilization mechanism (“PEC”) US$53 million financial cost so far Law #21,185 (Nov-19): Electricity price PEC = Adjusted upwards PEC = Adjusted upwards Dec 2 0 2 0 PEC = Fixed price to PEC = Fixed price to Dec 2 0 2 5 Jul 2 0 2 3 stabilization mechanism for regulated consumers in nominal con
Slide 56: Financing activity
Financing activity Securing liquidity and funding for our transformation 10-yr, 3.4%, US$500 million 2021/22 – Monetization of PEC receivables (“AR”) 144A/RegS bond - Early redemption of US$400mln notes due Jan-2021 US$125 million financing US$128 million received on US$181 million of monetized ARs
Slide 57: Copper: A resilient industry
Copper A resilient industry representing ~50% of EECL’s physical sales Copper production in Chile ('000 tons) 500 8,000 Copper price LME (US¢/lb) 450 7,000 400 6,000 350 5,000 300 250 4,000 5,776 5,761 5,772 5,832 5,787 5,733 5,627 5,413 5,321 5,361 5,557 5,328 5,394 5,419 5,263 5,434 5,553 5,504 20
Slide 58: Ownership structure
Ownership structure Pension Local Foreign 59.99% 12.93% 18.50% 8.09% Individuals 0.48% funds institutions institutions ENGIE Energía Chile S.A. “EECL” Red Eléctrica Chile S.A. 50% Inversiones Central Termoeléctrica Gasoducto Norandino Edelnor Transmisión Transmisora Eléctrica Hornitos SpA Andina SpA
Slide 59: Organizational structure
Organizational structure Shareholders’ Functional committees assembly - Management - Commercial origination Committee of Board of - Development independent directors directors - Stakeholders & regulation - Change management - Construction Internal auditor CEO - Portfolio & risk management - Crisis c
Slide 60: For more information about ENGIE Energía Chile
For more information about ENGIE Energía Chile +562 2783 3307 inversionistas@engie.com http://www.engie-energía.cl More information on 1H 2022 results in our web page Presentation Addenda Press Release Recorded Financial Analyst pack conference Report audiocast ENGIE ENERGÍA CHILE S.A. – INVESTOR PR
Slide 61: 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