Orsted · OMXCOP:ORSTED
Orsted — Ørsted — Investor Day (November 2018)
150 slides from Orsted's investor day presentation, Nov 28, 2018
Slide 1: Capital Markets Day 2018
Orsted Capital Markets — Day 2018 Hf f a) i \\ \ L/L WAM
Slide 2: Disclaimer
DISCLAIMER This presentation contains certain forward-looking statements, including but not limited to, the statements and expectations contained in the “Financial Outlook” section of this presentation. Statements herein, other than statements of historical fact, regarding our future results of oper
Slide 3: Agenda
Agenda Time Agenda Speaker Page 09:00-09:05 Welcome 09:05-10:10 Update on Strategy & Capital Allocation Henrik Poulsen 5 10:10-10:35 US Acquisition – Deepwater Wind Thomas Brostrøm & Jeff Grybowski 29 10:35-11:00 US Acquisition – Lincoln Clean Energy Ole Kjems Sørensen & Declan Flanagan 41 11:10-15:
Slide 4: Ørsted
Orsted
Slide 5: Update on Strategy & Capital Allocation
Update on Strategy & Capital Allocation Capital Markets Day 28 November 2018
Slide 6: Henrik Poulsen, CEO and President
Henrik Poulsen CEO and President Born: 1967 Education: M.Sc., Finance and Accounting, Aarhus School of Business, Denmark, 1994 2012 – Ørsted A/S CEO and President 2008 – 2012 TDC A/S CEO and President 2006 – 2008 KKR Capstone, London Operating Partner Offshore 1999 – 2006 LEGO Executive Vice Preside
Slide 7: 7
7
Slide 8: Let's create a world that runs entirely on green energy
Let’s create a world that runs entirely on green energy
Slide 9: We have transformed Ørsted to a green energy company
We have transformed Ørsted to a green energy company Capital employed Operating profit (EBITDA) CO2-emissions DKKbn Renewables DKKbn Remaining business g/kWh Renewables -67% 63 13-14 452 57 12.7 9.3 94% 151 16% 2007 2017 2007 20171 2018E 2007 2017 9 1. Excludes Distribution and B2C businesses, curre
Slide 10: Vision opens up a massive market opportunity in renewable energy
Vision opens up a massive market opportunity in renewable energy Global renewable capacity by geography Global renewables capacity by technology GW, installed Latin America North America GW, installed Offshore wind Small-scale PV Rest of APAC Europe Biomass Utility-scale PV India China Storage Onsho
Slide 11: Ørsted is strongly positioned to tap into long-term growth
Ørsted is strongly positioned to tap into long-term growth Global installed renewables1 top 8 Onshore wind Utility-scale solar PV Other3 Installed and under construction2 capacity, GW Offshore wind Biomass Awarded 18.1 17.7 16.6 ~4.7GW awarded 14.9 renewable projects4 13.3 11.9 10.8 10.6 9.9 Iberdro
Slide 12: Ørsted's strategic playing field
Ørsted’s strategic playing field Renewables generation Storage T&D Consumption Wholesale Offshore wind Corporate customers Electricity storage Electricity Onshore wind transmission Residential customers and distribution Solar PV Electric heating Power-to-gas Bioenergy Electric vehicles Invest to gro
Slide 13: Portfolio changes support main focus on renewables generation
Portfolio changes support main focus on renewables generation Offshore Entering Ørsted portfolio Exiting Ørsted portfolio Lincoln Clean Deepwater Onshore Distribution and Oil and gas Energy Wind B2C Customer pipeline businesses infrastructure – Transaction – Transaction – Transaction – Transactions
Slide 14: Strategic growth platform
Strategic growth platform Estimated CAPEX Europe Americas Asia allocation 2019-2025 Offshore Global leader in offshore wind – Wind – Strategic core – Transmission – Storage – Growth and value creation – Scale 75-85% – Keep pioneering and innovating Onshore Leading US renewable – Wind company – Solar
Slide 15: Ørsted remains uniquely positioned in offshore wind
Ørsted remains uniquely positioned in offshore wind Global offshore wind capacity Constructed Under Construction Awarded GW Share of capacity constructed and under construction 30% 16% 7% 4% 3% 3% 3% 2% 2% 2% 12.8 3.8 3.4 5.1 0.3 0.9 3.5 5.6 1.4 2.0 1.8 1.8 3.9 0.8 1.4 0.9 0.9 0.5 0.3 0.8 1.1 0.6 0.
Slide 16: Ørsted's competitive position in offshore wind has proven its resilience
Ørsted’s competitive position in offshore wind has proven its resilience Offshore wind capacity secured in competitive processes since 2015 MW 5,099 600 5,699 Vattenfall 2,102 Deepwater Wind Iberdrola 1,600 RWE 1,185 WPD 1,058 Northland 1,044 Power CIP 1,000 EDPR 950 EnBW 900 Shell / Eneco / 731 Van
Slide 17: Strong execution track-record in offshore wind
Strong execution track-record in offshore wind Unlevered project IRR development since FID In operation Under construction Percentage points 3.8% 3.6% 3.1% 2.5% 2.3% 1.7% 1.1% Driven by FX 0.6% 0.1% -0.3% -0.8% 17
Slide 18: Significant value creation from offshore wind projects secured in competitive processes
Significant value creation from offshore wind projects secured in competitive processes Wind farms secured in competitive processes Average unlevered lifecycle IRR on wind farms secured in competitive processes – Borssele 1&2 – Hornsea 2 7.5-8.5% Lifecycle IRR includes: – German Cluster 1 – All deve
Slide 19: Green growth investments towards 2025
Green growth investments towards 2025 Estimated gross investments, 2019-2025 DKKbn ~200 40-45 Committed capital 3.8GW awarded Offshore wind pipeline Onshore Bioenergy + Expected growth spend without continued offshore wind Customer Solutions capital spend European farm-downs 19
Slide 20: We extend our commitment to shareholder remuneration
We extend our commitment to shareholder remuneration Dividend policy Paid dividend per share, DKK High single digit annual growth in dividend 9.0 6.0 2017 2018 2020 2025 Current dividend horizon New dividend horizon 20
Slide 21: Current financial headroom will be utilized to fuel green growth
Current financial headroom will be utilized to fuel green growth Credit metric Debt ratio1 based on Capital allocation Current financial headroom market values priorities: FFO/NIBD will be consumed by build- out of offshore and onshore – Maintain existing 70% wind post acquisitions of ~25% 64% credi
Slide 22: Expected average return on capital employed of ~10% towards 2025
Expected average return on capital employed of ~10% towards 2025 ROCE % 12-14 ~13 ~10% Current guidance Current estimate Effect of excluding 2018 Acquisition of Acquisition of Updated (2018-2023) (2018-2023) with Hornsea 1 farm- Lincoln Clean Deepwater Wind guidance down, and no further Energy and a
Slide 23: Profit from operating wind farms expected to grow by an average ~20% towards 2023
Profit from operating wind farms expected to grow by an average ~20% towards 2023 EBITDA from wind farms (offshore + onshore) in operation DKKbn 25-26 2017-2023 CAGR: ~20% 3x 8.5 2017 2018 2019 2020 2021 2022 2023 Note: Assumes no European farm-downs post Hornsea 1 and COD of Borssele 1&2 in Q4 2020
Slide 24: Green growth ambition for 2030
Green growth ambition for 2030 Installed renewables capacity Offshore wind Onshore wind Bioenergy Renewables1 GW +30 Volume growth not an objective in itself – focus is on value creation 10 2 2010 2020 2030 Note: 2020 includes Borssele 1&2 capacity, COD expected in Q4 2020/Q1 2021 24 1. Includes ons
Slide 25: Green share of power generation ~99% in 2025
Green share of power generation ~99% in 2025, approximating zero emissions Share of green power and heat gCO2e/kWh % 99 600 95 80 500 Global energy sector emission target to stay below 2-degree global warming 64 400 300 Ørsted CO2 emissions 200 17 100 0 2006 2017 2020 2023 2025 2010 2015 2020 2025 2
Slide 26: New strategic estimates towards 2025
New strategic estimates towards 2025 Metric Strategic estimates Total CAPEX spend, 2019-2025 DKK 200bn CAPEX allocation split, 2019-2025 – Offshore 75-85% – Onshore 15-20% – Bioenergy + Customer Solutions 0-5% Average ROCE, 2019-2025 ~10% Average yearly growth in EBITDA from wind farms (offshore ~20
Slide 27: Purpose-driven, global, green energy leader
Purpose-driven, global, green energy leader delivering market leading returns through scale, innovation, superior execution, and financial discipline
Slide 28: 2019 key milestones
2019 key milestones – Commissioning of Hornsea 1 – FID on Changhua 1&2a in Taiwan Offshore – Outcome of NJ, NY, RI and MA solicitations – Full consent for Hornsea 3 project – Successful integration of Deepwater Wind – Successful integration of Lincoln Clean Energy – Commissioning of Lockett (184MW)
Slide 29: Deepwater Wind
Deepwater Wind Capital Markets Day 28 November 2018
Slide 30: Thomas Brostrøm
Thomas Brostrøm President, Ørsted North America. CEO, Ørsted US Offshore Born: 1979 Education: M.Sc. in Finance and International Business 2015 – Ørsted A/S President & CEO, Ørsted North America 2014 – 2015 Ørsted A/S Director, Markets and Pipeline 2012 – 2014 Ørsted A/S Senior Manager, Head of Proj
Slide 31: Jeffrey Grybowski
Jeffrey Grybowski Co-CEO, Ørsted US Offshore Born: 1971 Education: J.D. in Law 2018 – Ørsted A/S Co-CEO, Ørsted North America 2012 – 2018 Deepwater Wind CEO 2010 – 2012 Deepwater Wind Chief Administrative Officer and Senior Vice President, Strategy and External Affairs Development, Regulatory & 2007
Slide 32: The integration of Deepwater Wind creates the leading US offshore wind platform
The integration of Deepwater Wind creates the leading US offshore wind platform Net capacity of US projects Portfolio MW – One 30MW project in operation, three projects with 850MW PPA’s secured and 1,700MW net 7,080 development pipeline 1,700 30 850 850 Pioneer 4,500 30 – Permitting and operational
Slide 33: Uniquely positioned with large adjacent projects and attractive partners
Uniquely positioned with large adjacent projects, comprehensive geographic coverage and attractive partners Ørsted projects North East Scale Deepwater Wind projects Partner projects Atlantic Large scale cluster projects in the Competitor projects Cluster North East (MA, CT, RI, NY) and Mid New lease
Slide 34: Block Island provides valuable experience for next rounds of projects
Block Island provides valuable experience for next rounds of projects Tax credit First offshore wind project to obtain tax credit Block Island Federal permitting (30MW) First offshore wind project to go through federal permitting. Significant Power sold to Rhode Island stakeholder engagement and loc
Slide 35: Multiple projects with separate PPAs constructed as one 730MW project
Multiple projects with separate PPA’s constructed as one 730MW project South Fork Revolution Wind Revolution Wind (90 + 40MW) (200MW) (400MW) Revolution Power sold to New York Connecticut Rhode Island Wind COP 2019/2020 2020/2021 2020/2021 South FID/COD ~2020/2022 ~2021/2023 ~2021/2023 Fork Turbines
Slide 36: Well positioned for further development in Mid Atlantic
Well positioned for further development in Mid Atlantic Coastal Virginia1 Skipjack (12MW) (120MW) Skipjack Power sold to Virginia Maryland COP Approval of 2020 amendment pending FID/COD N/A / 2020 ~Post COP-award/2022 Turbines SGRE 6MW To be decided Tax credit N/A To be decided Offtake N/A 20-year O
Slide 37: 6,200MW development pipeline across the east coast
6,200MW development pipeline across the east coast Net project pipeline1 MW Ørsted projects North East Bay State Wind 1,000 Partner projects Atlantic Competitor projects Cluster New leases Revolution Wind 1,300 Ocean Wind 3,500 Mid Atlantic Cluster Garden State 400 Total pipeline 6,200 1. Net capaci
Slide 38: Significant political ambitions and upcoming opportunities
Significant political ambitions and upcoming opportunities State targets Upcoming opportunities GW 12-13 Sep 20182 Dec 2018 H1 2019 H2 2020 H1 2021 Maryland 0.4 Connecticut zero- New Jersey 1st Massachusetts 2nd New Jersey 2nd Massachusetts 3rd 0.4-0.8 Rhode Island1 carbon solicitation 300-1,100MW o
Slide 39: Largest project pipeline, widest geographic reach and strong partnerships
Largest project pipeline, widest geographic reach and strong partnerships Net capacity by developer1 MW First mover ~7,100 82 Ørsted in a front-runner position by moving early into the US Avangrid ~3,900 5 Attractive partners CIP ~1,500 4 Selecting strong local partners provides robustness and compl
Slide 40: The leading offshore wind developer in the US
The leading offshore wind developer in the US Combined portfolio of Ørsted and Deepwater Wind creates the largest project pipeline in the US Attractive PPA’s secured with further opportunities for optimisation Strong organisation with complementary skills 40
Slide 41: Lincoln Clean Energy
Lincoln Clean Energy Capital Markets Day 28 November 2018
Slide 42: Ole Kjems Sørensen
Ole Kjems Sørensen Executive Vice President, Onshore and M&A Born: 1972 Education: Master of Law, Aarhus University 2018 – Ørsted A/S EVP Onshore and M&A 2016 – 2018 Ørsted A/S Senior Vice President, Head of Partnerships, M&A & Asset Management in Wind Power 2014 – 2016 Ørsted A/S Vice President, He
Slide 43: Declan Flanagan
Declan Flanagan CEO, Lincoln Clean Energy Born: 1974 Education: B.Sc., National University of Ireland, M.Sc., University of Ulster and MBA, Kellogg School of Management, Northwestern University 2009 – Lincoln Clean Energy Founder and CEO 2007 – 2009 E.ON Climate & Renewables North America Inc. CEO &
Slide 44: Lincoln Clean Energy at time of acquisition
Lincoln Clean Energy at time of aquisition Portfolio Overview1 Geographic footprint Capacity in MW % split by MW3 ~1,000 ~2,500 ERCOT SPP MISO 714 1,527 ~30% 300 ~2,500MW ~60% 513 ~10% Opera- Construc- Near-term Total by Pipeline Total by tional2 tion develop- 2020 (post-2020) 2022 ment 100% PTC 60%
Slide 45: Acquisition price based on prudent assumptions
Acquisition price based on prudent assumptions, expect to achieve high single digit IRR Purchase price breakdown Illustrative Upside opportunities Probability adjusted Operating portfolio Pipeline to 2020 Pipeline to 2022 Acquisition price All pipeline to Grow pipeline 100% PTC PTC Glide Path1 2022
Slide 46: Operating portfolio 813MW
Operating portfolio 813MW Tahoka Wind Willow Springs Wind Amazon Windfarm Willow Springs Wind Tahoka Wind Amazon Windfarm Texas Texas (Dermott) (253MW) (250MW) (300MW) ISO ERCOT ERCOT ERCOT COD 2017 2017 2018 Texas Turbines 110 GE / 2.3MW 100 GE / 2.5MW 120 GE / 2.5MW Tax Equity 50% GE EFS1 50% BHE3
Slide 47: Large scale, low capex portfolio with solid offtake
Large scale, low capex portfolio with solid offtake Key metrics Portfolio highlights ~45% Average historic load factor – Large scale assets with top tier partners – Over $1 billion in tax equity raised representing c. 80% of <1.5 CAPEX multiples lower than USDm/MW BNEF 2017 benchmarks total capex at
Slide 48: Near term pipeline 714MW
Near term pipeline 714MW Plum Creek Wind Lockett Wind (184MW) Sage Draw Wind (300MW) Plum Creek Wind (230MW) Nebraska ISO ERCOT ERCOT SPP FID/COD Q4 18/Q3 19 Q2 19/Q1 20 Q4 19/Q4 20 Turbines 75 GE/2.45MW 120 GE/2.5MW GE +2.5MW Tax Equity 100% BHE1 Expected 2019 Expected 2019 Offtake PPA with Allianz
Slide 49: Capex and load factor improvements drive lower LCOE
Capex and load factor improvements drive lower LCOE Key metrics Key developments since acquisition ~47 % Expected average load factor1 All major contracts in place for near term pipeline with 80% volume contracted3: <1.2 $m/MW Capex multiples lower than BNEF 2019 benchmarks Lockett: Final Investment
Slide 50: Well positioned to realise an additional 1GW between 2020 and 2022
Well positioned to realise an additional 1GW between 2020 and 2022 Pipeline to 2022 Targeting 1GW growth to 2022 from: MW – Regionally diverse portfolio: ~2,500 • ERCOT South • MISO • ERCOT West • SPP ~1,000 – Multi-technology projects: 1,527 Wind Average size 300MW, eligible for at least 60% PTC So
Slide 51: 500MW of wind and solar PPAs with ExxonMobil
Today we are announcing 500MW of wind and solar PPAs with ExxonMobil Sage Draw Wind Permian Solar The two long term PPA’s executed in Texas 300MW 350MW with ExxonMobil are a case study of where 250MW PPA 250MW PPA onshore renewables is heading COD Q1 2020 COD Q2 2021 – Multi-technology to meet corpo
Slide 52: LCE in a strong position to meet demand in the post subsidy era
LCE in a strong position to meet demand in the post subsidy era US net wind capacity additions GW 10.2 11.4 18.5 41.8 GW 8.4 GW 8.2 8.0 8.2 5.9 6.0 5.7 4.6 4.5 4.9 4.2 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 PTC era PTC Glide Path Post PTC era Unprecedented buildout Some mar
Slide 53: LCE has development capabilities to be competitive in the post PTC era
LCE has development capabilities to be competitive in the post PTC era Maximising Executing Multi- Proven Financing value of corporate technology execution innovation acquisitions solutions solutions Willow Springs Wind Tahoka Wind Amazon Windfarm Texas Lockett Wind Multi-project – Phase 2 of a prio
Slide 54: LCE and Ørsted a powerful combination to succeed in US market
LCE and Ørsted a powerful combination to succeed in US market LCE Relationships and Market Knowledge Balance Sheet Strength Successful track record in multiple US states, over 150 Credit assurance and funding availability years of combined experience in the US market Tax Equity Capabilities Scale Cl
Slide 55: The leading onshore wind developer in the US
The leading onshore wind developer in the US Significant progress since acquisition Tahoka fully operational Final Investment Decision taken for Lockett Executed PPA on Sage Draw for 83% capacity >70% offtake secured for Plum Creek LCE/Ørsted have the right capabilities to be competitive in the post
Slide 56: Ørsted
Orsted
Slide 57: Global Offshore Wind Markets
Global Offshore Wind Markets Capital Markets Day 28 November 2018
Slide 58: Martin Neubert
Martin Neubert Executive Vice President, CEO Offshore Born: 1973 Education: M.Sc. in Economics and Finance (FAU) & CFA 2018 – Ørsted A/S Executive Vice President, CEO Offshore 2016 – 2018 Ørsted A/S Chief Strategy Officer, Head of Strategy, Development and Regulatory, Offshore Wind 2012 – 2016 Ørste
Slide 59: Thyge Boserup
Thyge Boserup Senior Vice President, Head of Development, Regulatory & Markets, Offshore Born: 1970 Education: M.Sc. in Economics 2018 – Ørsted A/S Senior Vice President, Head of Development, Regulatory & Markets, Offshore 2016 – 2018 Ørsted A/S Senior Director, Head of Market & Project Development,
Slide 60: Unprecedented track record in capturing valuable growth in competitive allocations
Unprecedented track record in capturing valuable growth in competitive allocations Competitive tenders and auctions by market 2016-2018 Net offshore wind capacity secured2 MW secured since 2015 Auction hit rate3 5,099 600 5,699 8/12 2016 2017 2018 Vattenfall4 2,102 4/7 2025 ambition set 2025 ambitio
Slide 61: Market leader with the largest asset base
Market leader with the largest asset base in operation, in construction and in development Offshore wind competitive picture Global offshore wind capacity (gross)2 2018 market share of global capacity constructed and under Constructed, under construction, awarded and pipeline3, GW construction, % ~2
Slide 62: 11-12 GW ambition secured ahead of time – new ambition towards 2025
11-12 GW ambition secured ahead of time – new ambition set towards 2025 Ørsted Offshore capacity (gross) Ørsted Offshore capacity – updated ambition GW GW ~15 0.9 ✓ 2-3 Additional capacity 1.8 +2-3 1.1 1.4 12.8 GW 11.9 12.8 ✓ 7.5 5.6 2018 20201 Hornsea 2 German Greater 2025 Deepwater 2025 incl. proj
Slide 63: Increased 2025 ambition on the back of a strong short-term opportunity pipeline
Increased 2025 ambition on the back of a strong short-term opportunity pipeline Upcoming firm opportunities in regions with existing footprint for Ørsted Offshore ~16 ~15 Sep 2018 Dec 20183 Jan 2019 H1 2019 H2 2020 H2 2020 H2 2020 2021 Connecticut zero- New Jersey 1st Holland Coast 3rd CfD round New
Slide 64: Accelerated global growth towards 2030
Accelerated global growth towards 2030 – a substantial part is already backed by political commitments Offshore wind installed capacity forecast excl. China Offshore wind capacity with firm political commitment3 GW Targets in existing footprint markets The UK government has a CfD roadmap with bi-yea
Slide 65: Dedicated front end organisation managing the global development portfolio
Dedicated front end organisation managing the global development portfolio across the globe Develop Build Operate Own DEVEX breakdown 100% Project management, design and procurement – Development and optimisation of projects through the +250 FTEs focused on market, project and development cycle busi
Slide 66: Successful market and project development approach
Successful market and project development approach established to ensure value creation when entering new markets Market and project development approach Market examples Strong stakeholder engagement and involvement in the development and build-up of 1 UK offshore wind market Early stakeholder engag
Slide 67: Strong position in the UK with +4 GW pipeline opportunities
Strong position in the UK with +4 GW pipeline opportunities Ørsted Offshore´s activities at UK East Coast Market update and Ørsted opportunities UK 1st and 2nd CfD auction outcome Hornsea 4 MW – 1,200MW potential capacity 1,386 – ~100km from shore Hornsea 3 EDPR, Engie, 950 Westermost DGE1 – Water d
Slide 68: Largest capacity secured in highly competitive German auctions
Largest capacity secured in highly competitive German auctions Ørsted Offshore´s activities in Germany Market update and Ørsted opportunities Nördlicher Grund1 German transitional auctions outcome MW Cluster 1 590 552 1,142 – 900MW capacity awarded – ~65km from shore EnBW 900 – Water depths of ~30m
Slide 69: Market leading position in Taiwan with 1.8GW secured capacity
Market leading position in Taiwan with 1.8GW secured capacity Ørsted Offshore´s activities in Taiwan Market update and Ørsted opportunities Taiwan allocation and auction outcome Formosa 1 MW – 128MW capacity 900 920 1,820 – 2-6km from shore WPD 1,058 – Water depths of 15-35m Northland Power, Yushan
Slide 70: Selected next horizon markets for offshore wind
Selected next horizon markets for offshore wind Japan South Korea – 90% of energy consumption is – 94% of energy consumption is imported imported – Lack of space onshore – Lack of space onshore – Strong public pressure to phase out – Strong public pressure to phase out nuclear nuclear and coal – Cle
Slide 71: Selected next horizon markets for offshore wind
Selected next horizon markets for offshore wind Poland India – Coal phase out (60% of electricity – Overall target of 175GW consumption by 2030) renewables by 2022 – Strong supply chain in place ready – Mature onshore wind power supply to expand if home market chain to be leveraged materialises – Ex
Slide 72: Monitoring early stage development in floating wind
Monitoring early stage development in floating wind Different technical concepts Limited pipeline visibility with only Key floating markets in areas with small scale projects significant bottom fixed potential EXAMPLES Floating wind projects Floating wind areas and activities MW Global regions with
Slide 73: Ørsted is the clear market leader in a rapidly growing industry
Ørsted is the clear market leader in a rapidly growing industry Leading position in a high growth industry Strong market fundamentals to support increased growth ambition Proven methodology and track record in securing high value projects 73
Slide 74: Ørsted
Orsted
Slide 75: EPC Excellence
EPC Excellence Capital Markets Day 28 November 2018
Slide 76: Anders Lindberg
Anders Lindberg Executive Vice President, Head of EPC & QHSE Born: 1965 Education: EMBA in Business Administration (SSE) & MSc. in Electrical Engineering (KTH) 2018 – Ørsted A/S Executive Vice President, Head of EPC & QHSE in Offshore 2015 – 2018 Ørsted A/S Senior Vice President, Head of EPC in Offs
Slide 77: Strong inhouse capabilities and first mover on new technologies
Strong inhouse capabilities and first mover on new technologies Large integrated EPC organisation with ~1,400 FTEs Strong technical capability with proprietary tools (layout, foundation, electrical system analysis, etc.) First mover on innovation, e.g. turbine platforms, foundations and cables Syste
Slide 78: Strong track record delivering offshore wind farm projects on time and on budget
Ørsted has a strong track record in delivering offshore wind farm projects on time and on budget Global offshore wind farm projects Strong track record delivering projects # of projects below budget and on time 6 4 5 1 1 FID budget Time schedule2 COD Borkum Riffgrund 2 Below ✓ 2018 5 Walney Extensio
Slide 79: Confidence in delivering the current project portfolio
Ørsted has strong confidence in delivering the current project portfolio and updates the expected completion dates Projects Hornsea 1 Borssele 1&2 Virginia (EPC) Hornsea 2 Changhua 1&2a (Expected FID Q1 2019) Country Capacity 1,218MW 752MW 12MW 1,386MW 900MW Expected completion 2020 2020/2021 2020/2
Slide 80: Ørsted continues to drive down cost while creating a strong safety culture
Ørsted continues to drive down cost while creating a strong safety culture CAPEX Load factor Safety record DKKm/MW, real 20191 % TRIR5 and LTI6, 12 months rolling (Oct) 20.8 48-50 48-50 3.6 2.5 13.5 0.9 0.4 IPO portfolio Ørsted European IPO portfolio Updated TRIR TRIR LTIF LTIF at CMD 20172 projects
Slide 81: LCoE has decreased substantially since the first large scale wind farms
LCoE has decreased substantially up to today since the first large scale wind farms LCoE for EPC areas1 Continuous improvements – reduced LCoE for EPC areas by more than 40% between 2013-18 2013 – today, Index Turbines Introduction of larger turbines MHI Vestas Offshore Wind introduced as new suppli
Slide 82: Working with turbine suppliers to bring new technology to market
Continue working with turbine suppliers to be first movers in bringing new technology to the offshore wind market Technological updates LCoE for turbines towards 2025 Today Rotor: >160m – 8MW turbines deployed – 10MW turbines commercially available but not deployed yet Rated power: 13-15MW 2025 – 12
Slide 83: Larger turbines are always better – a truth with modifications
Larger turbines are always better – a truth with modifications Rotor size Swept area LCoE illustrative m2 per MW DKKm/MWh 103 +23% 100 -3 11 2,738 -3 2,223 -2 Rotor: 167m Rotor: 164m 8.0MW 9.5MW 8.0MW Turbine BoP OPEX Lost 9.5MW Number of turbines CAPEX CAPEX1 AEP2 1,000 MW site 100 98 +19% -4 -4 9
Slide 84: Foundation costs will decrease even further
Foundation costs will decrease even further by focusing on steel weight and fabricator specific design Technological updates LCoE for foundations towards 2025 Today Grouted Bolted – Optimised diameter/thickness ratio of steel – Improved design tools 2025 – Continue optimising diameter/ Today 2025 th
Slide 85: Increasing capacity of transmission systems will continue to decrease LCoE
Increasing capacity of transmission systems will continue to decrease LCoE Technological updates LCoE for transmission towards 2025 Today – Export cables with dynamic rating with a capacity of up to 230kV – Reduced number of substations 2025 – Increase capacity of export cables by increasing voltage
Slide 86: Leverage supply chain and inhouse capabilities to decrease logistics LCoE
Leverage supply chain and inhouse capabilities to further decrease logistics LCoE Technological updates LCoE for logistics towards 2025 Today – Purpose-built vessels – Improved vessel capabilities and dual turbine vessels to reduce installation time – Work with the supply chain to promote new market
Slide 87: Ørsted continues to optimise each project after FID
Ørsted continues to optimise each project after FID to further reinforce economics Value enhancement areas Hornsea 1 achievements1 – Enhanced foundation design, logistics and installation process improvements – CAPEX reduction of DKK 0.7bn Cost reductions – Optimised O&M setup with new processes and
Slide 88: Pushing to deliver even faster
In addition to bringing down cost, Ørsted also pushes to deliver even faster Installation duration (normalised)1 Days from first foundation installation to first power – Smaller projects with 32 or 35 of last turbine turbines each – Both parks deployed a new turbine platform with delays 1,543 54% 64
Slide 89: Our capabilities enable us to handle issues arising on all projects
Our capabilities enable us to handle issues arising on all projects Hornsea 1 Borkum Riffgrund 2 Issue Issue Manufacturing delays, quality and HSE issues Financial restructuring (bankruptcy risk) at for Reactor Compensation Station (RCS) at supplier of the 20 jacket structures for the supplier sucti
Slide 90: Establishing a presence in a new market takes time and hard work
Establishing a presence in a new market takes time and hard work Selected key milestones in establishing Ørsted’s presence in Taiwan 2013/14 Taiwan 2016 EoY 2017 EoY 2018 EoY 2019 EoY market Jun 2016 13 people on Jan 2017 24 people on 49 people on ~100 people develop- Taipei the ground Head of the g
Slide 91: Developing the supply chain in Taiwan
Ørsted’s capabilities and in depth knowledge enable the development of the supply chain in Taiwan Key parameters within organisation when Major local contracts entered entering new markets Contract Supplier Localisation Robust and experienced organisation to develop Turbines Siemens Gamesa Locally p
Slide 92: Ørsted has a leading EPC and innovation capability in offshore wind
Ørsted has a leading EPC and innovation capability in offshore wind Delivering continuous reduction in LCoE On time and within budget Fully capable of delivering in new markets 92
Slide 93: O&M Excellence
O&M Excellence Capital Markets Day 28 November 2018
Slide 94: Mark Porter
Mark Porter Senior Vice President, Head of Operations Born: 1972 Education: BSc(Hons) Engineering & Management (Durham University), MBA (Warwick University), Fellow of the Institution of Mechanical Engineers 2018 – Ørsted A/S Senior Vice President, Head of Operations in Offshore 2016 – 2018 E.ON Cli
Slide 95: Largest offshore wind O&M owner/operator globally
Largest offshore wind O&M owner/operator globally with growth of >50% since 2016 and operation across 3 hubs of 1-2GW each Operated by Ørsted Operations FTEs Total Capacity1 Turbines1 Sites2 2018 4.9GW ~1,100 21 ~850 Global Engineering & 2016 3.2GW ~860 18 ~720 Commercial Support UK West O&M hub (Ba
Slide 96: Portfolio based on few turbine platforms with increasing self-operation
Portfolio based on few turbine platforms with increasing self- operation share delivering sustainable performance improvements Number of turbines in operation Share of turbines self-operated ~50% ~1,300 ~1,100 40% 59% ~860 74% 60% 41% 26% 2016 2018 2020 2016 2018 2020 MVOW 8.0MW SGRE 3.6MW SGRE 2.3M
Slide 97: Ørsted Operations Framework
Ørsted Operations Framework combines several elements to deliver world-class performance Ørsted Offshore Operations Framework Solid & Compliant ✓ Good Practice ✓ Best Practice ✓ + World-class Standard Operating Model Operational Excellence + Digitalisation & Innovation = Performance Operations Exter
Slide 98: Consistent improvement in safety, yield and cost performance
Consistent improvement in safety, yield and cost performance after full take-over of operations from OEMs Safety Yield Cost Index, Production Based Availability, portfolio Index, OPEX/MW (normalised), portfolio average Total Recordable Incident Rate average 2016-2018 2016-2018 (TRIR1), 2015-2018 TRI
Slide 99: Standardised (ISO certified) O&M system
Standardised (ISO certified) O&M system enabling portfolio wide optimization and a blueprint for globalization 6 Sites certified 55001:2014 9001:2015 Asset Management Quality 148 Work Instructions (O&M & Integrity) Management 14001:2015 45001:2018 63 Troubleshooting guides Environmental Health & Saf
Slide 100: Operations 'Production System' implemented
Operations ‘Production System’ implemented delivering operational excellence methods at site Industrializing Example benefits from sites with Production System implemented O&M setup Improvement (9 month average comparable periods pre and post implementation) Average vessel Before After Changes imple
Slide 101: Regional hub structure being implemented across portfolio
Regional hub structure being implemented across portfolio to reap full scale and synergy benefit from clusters Simple site focus Hub focus SITE YIELD SITE SITE YIELD YIELD HUB YIELD SITE SITE YIELD YIELD Example hub benefits Shore-based support organisation consolidated allowing for Growing cluster
Slide 102: More than 40 MVPs released by the Ørsted Lab
More than 40 Minimum Viable Products (MVPs1) released by the Ørsted Lab in 2018, including solution correcting yaw misalignments Situation pre and post solution MVP & solution introduced Results achieved Uplift in production 1 Smart wind sensors installed replacing wind vanes (at low cost) 0.2-0.3%
Slide 103: Blade maintenance
Ørsted fast to identify, assess and implement 3rd party technology developments and innovations Ex. Before After 1 day 18 min. out of operation out of operation Blade inspections Blade inspection now performed via autonomous drones equipped with HD cameras capturing close up blade images 1-2 days Mi
Slide 104: OPEX divided into three different cost categories
OPEX divided into three different cost categories with very different cost drivers Key cost categories1 Examples Drivers Owner’s – Seabed and cable lease Seabed lease costs Cost are primarily driven cost – Land lease 2% of revenue or MWh tariff by country specific factors – Property damage insurance
Slide 105: Offshore wind OPEX/MW continues to decrease
Offshore wind OPEX/MW continues to decrease driven by scale and continuous operational optimization Categories OPEX/MW Development Lifetime OPEX/MW guidance (portfolio level) Owner’s Guidance given at IPO cost Roughly flat 15-17 operating portfolio development per OPEX/MW for existing MW on portfoli
Slide 106: World-class offshore wind operations
World-class offshore wind operations Leverage market leading scale to implement industry best practices and technologies Standard Ørsted Operations framework delivering superior operational performance and platform for global growth World-class offshore wind operations creating value for our partner
Slide 107: Customer Solutions
Customer Solutions Capital Markets Day 28 November 2018
Slide 108: Morten Hultberg Buchgreitz
Morten Hultberg Buchgreitz Executive Vice President, CEO Customer Solutions Born 1967 Education: M.Sc., Business Administration and Computer Science, Copenhagen Business School, 1992 2013 – Ørsted A/S Executive Vice President, Distribution & Customer Solutions 2013 – 2013 Ørsted A/S Executive Vice P
Slide 109: Customer Solutions is the route-to-market for Ørsted
Customer Solutions is the route-to-market for Ørsted Energy generation… … packaged as products… …sold across customer groups • Commodities Small and medium sized Offshore enterprises • Corporate PPA • Certificates trading • Balancing Service Commercials & Industrials Onshore • Solutions • Green gas
Slide 110: Commodities: The backbone
Commodities: The backbone Commodity sales is the foundation… … for building customer relationships B2B sales volumes1 Power Gas TWh 43 +7% Highly competitive market 41 39 38 7 6 8 32 6 30 6 7 35 34 32 35 25 26 Point of access to customers FY2014 FY2015 FY2016 FY2017 9M2017 9M2018 B2B gross margin Gr
Slide 111: Corporate PPA: Mitigates Ørsted's merchant price risk
Corporate PPA: Mitigates Ørsted’s merchant price risk Different sources of merchant risk Different markets to mitigate merchant risk Existing offshore wind portfolio (UK) UK ROC wind farms Merchant risk can be mitigated • Exposed to merchant power prices through traded markets • Need to reduce merch
Slide 112: Corporate PPA framework
Corporate PPA framework: Fixed price PPAs with C&Is from Ørsted offshore wind farms Fixed price Corporate PPA Customers Benefits Long-term power Sustainability focused Ørsted purchase agreement – Consumer facing companies (e.g. retail, – Long term price certainty for under a fixed price water, telec
Slide 113: Certificates trading – ROCs
Certificates trading – ROCs: OFGEM rewards renewable UK assets with tradeable ROCs OFGEM - UK Office of Gas and Electricity Markets Issuing ROCs Utilities required to present a defined number of ROCs Renewable Generators Sale of ROCs Utilities per GWh of power sold and power Non-Renewable Generators
Slide 114: Certificates trading – ROC Auction
Certificates trading – ROC Auction: Ørsted tenders ROCs from UK offshore wind portfolio ROC tender Customers Benefits Annual ROC tender – UK supply companies Ørsted selling excess ROCs from – Effectively sells large volumes wind farms – Without sufficient renewable generation, supply companies with
Slide 115: Balancing Service: Balancing is a cost for power generators
Balancing Service: Balancing is a cost for power generators Actual wind generation Traded position (Day-ahead Auction) Long imbalances Short imbalances MWh 3,500 3,000 2,500 2,000 1,500 Deliver less power than sold Deliver more power than sold 1,000 500 0 -500 -1,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Slide 116: Balancing Service example: Triton Knoll
Balancing Service example: Triton Knoll - balances wind farms leveraging our existing setup Balancing services to Triton Knoll Triton Knoll Benefits Year contract – 860 MW offshore wind farm to Ørsted go into operation in 2021 – Obtains balancing fee less – Owners imbalance cost – Innogy 59% – Lever
Slide 117: Solutions – peak shaving
Solutions – peak shaving: Integration of behind the meter technologies reduces grid load kWh Peak reduction Reduced grid load DSO Peak reduction Reduced grid fees Partnership Ancillary services Industrial manufacturer TSO & Ørsted Income from ancillary services Power consumption, no peak shaving ~5,
Slide 118: Peak shaving solutions for material manufacturer's German sites
Solutions – example: Peak shaving solutions for material manufacturer’s German sites Peak shaving at production sites Customer Benefits Year peak shaving contract – Material manufacturer Ørsted – Germany-based – Obtains share of grid fee Solutions consist of reduction – Batteries – Global production
Slide 119: Green gas: destination fuel in the green transformation
Green gas: destination fuel in the green transformation Biomethane1 growth expectations are high Key steps in biomethane production process Expected annual biomethane supply in the EU, BCM2 Different input sources require different process steps CAGR +20% Unsorted Industrial waste Agricultural manur
Slide 120: Green gas example: Kalundborg Bioenergy
Green gas example: Kalundborg Bioenergy – an industrial waste biogas plant Annual figures Customers Benefits Capacity: 300,000 tonnes – World-leading manufacturer of Ørsted of by-products insulin Novo Nordisk – Monetize the value in industrial – World-leading manufacturer of by-products enzymes Novo
Slide 121: Ambition to co-create strong, green energy partnerships
Ambition to co-create strong, green energy partnerships Novo Nordisk and Ørsted partners… … for a greener future The full power consumption of Novo Nordisk’s Years of climate partnership Danish production facilities has been covered by renewables since 2011 Partnership with Novo Nordisk supported Ør
Slide 122: Customer Solutions enables Ørsted's green growth
Customer Solutions enables Ørsted’s green growth Route-to-market for Ørsted’s product portfolio Mitigates merchant risk through trading and green energy partnerships with customers Drives incremental profits by supporting customers in becoming greener 122
Slide 123: Financials
Financials Capital Markets Day 28 November 2018
Slide 124: Marianne Wiinholt
Marianne Wiinholt Chief Financial Officer Born: 1965 Education: MSc in Business Administration and Auditing, Copenhagen Business School. State Authorised Public Accountant 2013 – Ørsted A/S CFO 2006 – 2013 Ørsted A/S SVP, Group Finance incl. periods as Business Unit CFO at DCS & Energy Markets 2004
Slide 125: Follow-up on 2018 EBITDA
Follow-up on 2018 EBITDA Group EBITDA Significantly higher DKKbn ~27.5-29.3 Non-recurring items 22.5 Offshore new partnerships Guidance range 14.5-15.31 19.1 Existing activities Hornsea 1 farm-down 4.7 9.8 13-14 5.0 12.7 9.4 2016 2017 2018 2018 incl. new Guidance offshore partnerships 125 1. Based o
Slide 126: Follow-up on business unit EBITDA and gross investments for 2018
Follow-up on business unit EBITDA and gross investments for 2018 Business unit directional EBITDA guidance Gross investments 2018 guidance FY2018 vs. FY2017 Offshore Bioenergy Customer Solutions 23-25 DKKbn incl. Lincoln Clean Energy Higher Higher In line and Deepwater Wind acquisitions Full year EB
Slide 127: Offshore financials
Offshore financials Sites generation capacity Construction agreements and Project development and other divestment gains GW New partnerships agreements EBITDA, DKKbn Project development 44% EBITDA, DKKbn Current partnerships Other Hornsea 1 farm-down 3.6 3.0 2.5 13.7 ~1.8 14.5-15.3 9.8 -1.6 2.6-2.7
Slide 128: Update on Offshore CAPEX guidance
Update on Offshore CAPEX guidance CAPEX cost development excluding transmission asset costs DKKm/MW1 Guidance at IPO Updated guidance at FY2017 Guidance at CMD 2018 22.9-25.0 20.8 13.5 Real 2019 Real 2019 Real 2019 22-24 20 13.0 Real 2015 Real 2015 Real 2015 Average CAPEX/MW for the FID’ed Updated g
Slide 129: Significant higher CAPEX for the Changhua 1&2a project in Taiwan
Significant higher CAPEX for the Changhua 1&2a project in Taiwan CAPEX per MW for the Changhua 1&2a project is expected to be approx. twice as high as the CAPEX multiple of European projects under construction and development Factor Comment Impact − Adaptation of key components Design revisions • Tu
Slide 130: Offshore wind OPEX/MW continues to decrease
Offshore wind OPEX/MW continues to decrease driven by scale OPEX/MW Average lifetime OPEX/MW guidance DKKm/MW 3-4MW 6-8MW Owner’s cost 3-4MW 3-4MW 6-8MW Guidance at IPO Guidance at CMD 2018 Guidance at CMD 2018 Logistics ~ -50% 15.6-17.7 15 10 Real 2019 Real 2019 Real 2019 15-17 14.3 Real 2015 Real
Slide 131: Strong load factors across Offshore portfolio
Strong load factors across Offshore portfolio Load factors IPO portfolio marked a step-up in load factor Capacity weighted average − Load factor of 48-50% − Burbo Bank Extension as a negative outlier with lower than average expected load factor 48-50% 48-50% 44% Updated portfolio with equivalent loa
Slide 132: High visibility on future earnings
High visibility on future earnings Offshore wind farms – Average subsidy/PPA lifetime Key metrics Ørsted ownership, GW In operation Under construction Awarded ~15 0.0 Average subsidy lifetime 1.0 Projects in operation, under years construction and awarded 2.0 ~90 3.0 Group regulated and contracted 4
Slide 133: Onshore Wind key metrics
Onshore Wind key metrics Operational portfolio – 813MW ~45 % Average historical load factor Tahoka Willow Springs Amazon Windfarm Texas Texas <1.5 USDm/MW CAPEX multiples lower than BNEF 2017 benchmarks 22 USD/MWh Avg. nominal offtake pricing for operational portfolio1 133 1Weighted average includin
Slide 134: Onshore Wind key metrics
Onshore Wind key metrics Plum Creek Near-term portfolio – 714MW Nebraska ~47 % Expected average load factor1 <1.2 USDm/MW CAPEX multiples lower than BNEF 2019 benchmarks 12-15 Avg. nominal offtake pricing USD/MWh for development portfolio2 Lockett Sage Draw 1. Weighted average expected load factor T
Slide 135: Onshore wind farm including tax equity partner
Onshore wind farm including tax equity partner Cash flow profile - Illustrative CAPEX EBITDA, market price Tax equity partner upfront payment Paid tax EBITDA, PPA/hedge (net of partner share of PTCs and Tax incentives) Pay go1 PPA/hedge agreement typically run 12-15 years Market price PTCs run for 1
Slide 136: Onshore Wind – Acquisition, EBITDA and Operating cash flow
Onshore Wind – Acquisition, EBITDA and Operating cash flow Lincoln Clean Energy EBITDA full consolidation Operating cash flow Deal financials Illustrative 2019 Illustrative 2019 − Acquired 100% of equity placing an enterprise value on LCE at USD 580 Derivative run off1 million − Tax equity end of ye
Slide 137: Bioenergy expected to quadruple EBITDA from 2017 to 2020
Bioenergy expected to quadruple EBITDA from 2017 to 2020 Bioenergy EBITDA Directional 2020 EBITDA guidance Ancillary Services DKKbn Heat & Power Heat & Power – Higher − Recovery in power prices and spreads over the medium- term 4x − Bioconversions of CHP plants increase EBITDA driven by ~0.60 long-t
Slide 138: Structural change to Customer Solutions portfolio
Structural change to Customer Solutions portfolio Strategic divestments Divestments agreed ahead of IPO Ongoing business Power distribution and residential Oil and gas pipeline infrastructure Enabling Ørsted through market access businesses Power B2C Sales City Light Oil pipe Gas pipe Markets B2B LN
Slide 139: Customer Solutions financials
Customer Solutions financials Customer Solutions EBITDA Mid-term EBITDA expected to be significantly lower DKKbn Compared to adjusted 2017 2.1 Sales <0.1 Markets - Significantly lower − In 2017 Markets was positively affected by high portfolio and trading gains − From 2018 negative effect from lower
Slide 140: Net Working Capital development
Net Working Capital development Capital employed - Net working capital Work-in-progress – We tie up significant funds in offshore transmission assets in the UK. DKKbn The duration of the construction period until divestment is up to 3-4 5.5 years1 Work in progress – Construction of offshore wind far
Slide 141: Ørsted leverage compared to project finance
Ørsted leverage compared to project finance ~70% A Lower risk and higher parent rating enables benefits for Ørsted through Lower return Lower Flexibility Business A requirement direct costs ~25% - Lower company - Lower - Simple and - Easy access to risk profile structuring and transparent debt capit
Slide 142: Key drivers of long-term wind capture power prices
Key drivers of long-term wind capture power prices Comment Correlation Impact Gas, CO2 and Gas, coal and CO2 prices are key when forecasting long-term wind capture prices Positive coal prices Thermal Phase-out of baseload power plants (nuclear, lignite, coal) would increase wind capture prices. Fina
Slide 143: Fossil fuel expected to be price setting in 80-90% of hours in 2040
Fossil fuel expected to be price setting in 80-90% of hours in 2040 Power generation mix for UK and DE Prices above 10 EUR/MWh in UK and DE % Share of all hours, % UK DE Wind capture price (real 2017), EUR/MWh Nuclear UK DE Renewables UK DE 52 30 79 76 0 12 50 44 21 12 100 79 95 88 63 81 29 32 20171
Slide 144: Key metrics, financial targets and policies
Key metrics, financial targets and policies Financial targets Financial policies Total CAPEX spend, 2019-2025 DKK 200bn Corporate rating Baa1/BBB+/BBB+ (Moody’s/S&P/Fitch) CAPEX allocation split, 2019-2025 Ambition to increase the dividend paid by Offshore 75-85% a high single-digit rate compared to
Slide 145: Wrap-up
Wrap-up Capital Markets Day 28 November 2018
Slide 146: Summing it all up
Summing it all up Leverage industry leading market positions and capabilities in green energy and balance sheet capacity. Invest DKK 200bn in value creating, global growth towards 2025 with a strong emphasis on wind energy. Grow dividend by high single digit annually and maintain financial strength
Slide 147: Appendix
Appendix Capital Markets Day 28 November 2018
Slide 148: Onshore wind farm including tax equity partner
Onshore wind farm including tax equity partner Accounting treatment for new wind farms – Illustrative, excl. derivatives run-off Impact on accounts Y0 Y1 … Y11+12 Y13 → Accounting considerations Ørsted cash ownership 70% 70% 100% 100% Ørsted tax ownership 1% 1% 100% 100% Revenue from years 1-12 refl
Slide 149: Structural change to Customer Solutions portfolio
Structural change to Customer Solutions portfolio Strategic divestments Regulatory divestments - Power distribution and residential business - Oil and gas pipeline infrastructure Power Distribution Oil pipe system 2017 EBITDA DKK 1.2bn 2017 EBITDA DKK <0.1bn 2017 RAB DKK 10.6bn Oil pipeline with a t
Slide 150: Investor Relations contacts
Daniel Lerup Head of Investor Relations DANIL@orsted.com Dennis Callesen Lead Investor Relations Officer DECAL@orsted.com Rasmus Hærvig Senior Investor Relations Officer RAKOL@orsted.com Sabine Lohse Senior Investor Relations Officer SABLO@orsted.com