Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — H1 2023 Earnings Presentation
61 slides from Engie Energia Chile's earnings presentation, August 2023
Slide 1: ENGIE Energía Chile Investor presentation 1H 2023
ENGIE ENERGÍA CHILE Investor presentation 1H 2023
Slide 2: Summary
Summary 1H23 Results and view for the full year 1H2023 results 1.0 Additional 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 EE
Slide 3: 1H23 Results & View for the Full Year
1.0 1H23 RESULTS & VIEW FOR THE FULL YEAR ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2023- 3
Slide 4: Following a challenging 2022, actions to reduce spot market exposure explain 2023 recovery
Following a challenging 2022 Actions to reduce spot market exposure explain 2023 recovery 1H23 Highlights What can we expect for 2H23 Fuel prices falling from record Increased renewable generation highs and persistent drought and back-up PPAs Generation based on high coal prices New 0.8 GW in operat
Slide 5: Contracted physical sales grew 1% in 1H23
Contracted physical sales grew 1% in 1H23 3% drop in free customer sales; 7% growth in regulated customers GWh Unregulated customers Unregulated customers 600 3% decrease (1H23 vs 1H22) 450 Decrease explained by 300 maintenance at Chuquicamata mining 150 operation - Jan Feb Mar Apr May Jun Jul Aug S
Slide 6: SIC-SING Interconnection marginal costs
High marginal costs due to drought, high fuel prices and transmission congestions Improved hydrology towards the end of 2Q augur falling spot prices in 2H23 US$/MWh Average marginal cost 2022 average: 2023 average: US$127/MWh US$129/MWh @ 220 kV nodes SIC-SING Interconnection 280 260 North 240 Cente
Slide 7: A very dry year following one of driest years in over 60 years
April 22 – March 23: A very dry year following one of driest years in over 60 years Hydro generation began to recover towards the end of 2Q; improved predictions for 2H23 2,600 Hydro generation in Chile 2,200 1,800 GWh 1,400 1,000 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2023 2019 2020 20
Slide 8: Coal prices hit all-time highs in 2022
Coal prices hit all-time highs in 2022 Significant coal price decline in spot and forward prices for 2023 US$/Ton Coal price indices 2022 avg: US$314/Ton 460 420 API 2 (cif ARA) 380 340 4Q21 avg: US$178/Ton 300 API 6 (fob Newcastle) 260 1H23 avg: 2023 220 Jan-Sep 21 avg: US$154/Ton Fwd. avg: US$106/
Slide 9: Declining coal plant availability in the system
Declining coal plant availability in the system Plant closures, limitations, planned and forced outages Coal plant availability in the system (falling to 3,344 MW avg, in 1H2023) 4,324 MW avg.2020 3,875 MW avg.2021 3,497 MW avg.2022 Nov-20 Feb-23 Feb-20 Jul-20 Aug-20 Sep-20 Dec-20 Feb-21 Jul-21 Aug-
Slide 10: Natural gas availability in the Chilean system
Natural gas availability in the Chilean system High volatility due to the Russia-Ukraine conflict & rising demand LNG prices LNG international markets 60 HH ▪ In 2022 the supply-demand imbalance, aggravated by the 50 Russia-Ukraine war, led countries to struggle to re-build stocks JKM 40 and secure
Slide 11: Closing the gap through back-up PPAs
Closing the gap through back-up PPAs Contracted energy purchases climbing to 3.3 TWh in 2023 (28% of contracted demand) TWh Supply sources to meet demand under Engie’s contracted portfolio [TWh] 13 12 11 10 9 8 7 6 5 4 3 0.4 0.5 0.4 0.3 0.3 0.1 2 0.3 2.9 2.9 3.0 3.0 3.0 2.5 2.6 2.6 1 1.9 0.9 0.1 1.1
Slide 12: Portfolio balancing strategy seeks to increase renewables, storage and back-up PPAs
Portfolio balancing strategy seeks to increase renewables, storage + back-up PPAs while phasing out coal, mitigating intermittence & curtailment and reducing spot exposure Energy sources and average supply cost GWh 150 3,000 100 2,000 50 1,000 0 0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q
Slide 13: 1H23 supply: back-up PPA and LNG volumes, high coal prices, IEM outage
1H23 supply: increased back-up PPA & LNG supply volumes, high coal prices, lEM outage Investment in renewables and portfolio balancing to lower future supply cost Coal units planned decommissioning US$/MWh Unit MW Date % 1H23 supply 300 CTM1-CTM2 334 Dec-24 0.7% 250 200 1H23 Average monomic Price 18
Slide 14: EECL's performance during the energy transition
EECL’s performance during the energy transition A closer look at 2023 results 1Q22 2Q22 1H22 3Q22 4Q22 FY-2022 1Q23 2Q23 1H23 Var % Operating revenues (MUSD) 417.9 481.4 899.3 499.7 521.3 1,920.3 587.8 616.2 1,204.0 34% EBITDA (MUSD) 68.5 (8.0) 60.5 57.3 71.3 189.0 102.0 87.1 189.0 212% EBITDA margi
Slide 15: EBITDA recovery despite market and operational challenges
EBITDA recovery despite market and operational challenges Higher energy prices, reduced exposure to spot market and falling fuel prices By main effect In US$ Million 46 90 18 110 Decrease Physical in energy 40 sales purchase Reg. +32 volumes Increase Free -15 in energy 24 purchase prices Fuel 14 150
Slide 16: Net income evolution
Net income evolution Stronger operating results, w/ increased interest and PEC expenses, and impairments Main variations In US$ Millions Recurring Results 101 3 1 -21 Insurance Depreciation, recoveries FX diff. other 46 -9 Interest -10 expense PEC (*) 27 Net income financial expenses Impairment befo
Slide 17: Net debt evolution
Net debt evolution Moderate increase due to CAPEX financing and build-up of PEC receivables Main cash flows + net debt variations In US$ Million 39 320 40 176 Income + Accrued CO2 taxes interest / 178 MTM / FX PEC 38 receivables 1,720 Cash from 1,646 build-up operations – Proceeds before PEC from sa
Slide 18: Financial structure
Financial structure Current strategy geared to reducing ND/EBITDA and extending debt maturity profile Investment-grade ratings: BBB/BBB Net Debt/EBITDA excluding IFRS-16 leases International: 8.7 Fitch (Jul 2023): BBB Stable S&P (Mar 2023): BBB Negative 5.0 National scale: 2.7 Fitch (Oct 2022): AA-
Slide 19: Recent Events and Action Plans
EECL’s performance during the energy transition Recent Events and Action Plans – Portfolio balancing to mark the road ahead Actions: 1 Increased gas generation: ~24 TBtu LNG supply secured + tolling w/3rd party CCGTs 2 Accelerated IEM plant repair (transitory solution ready in mid May, definitive so
Slide 20: Accelerating investment in renewables to match new portfolio indexation
Accelerating investment in renewables to match new portfolio indexation 2.1 GW renewable investment pipeline, 0.8 GW already done 0.8 GW 0.5 GW 0.8 GW* Already in portfolio Under Construction Under Development 2019 2020 2021 2022 2023-2024 2025-2027 MW in operation 46 82 265 369 481 860 48 Monte Red
Slide 21: Accelerating investment in renewables
Accelerating investment in renewables US$1.4 bn investment in renewables / US$0.2 bn investment in transmission through 2024 700 MUSD 11.0 10.0 600 9.0 500 TEN 30 8.0 7.0 400 Renewables 387 6.0 300 IEM & Port 5.0 436 Renewables Renewables 247 200 325 4.0 IEM & Port Renewables 64 Renewables Transmiss
Slide 22: Expectation to reach high-end of 2023 guidance
EECL’s performance during the energy transition Expectation to reach high-end of 2023 guidance, in line with reduced spot exposure Variables affecting EBITDA US$ millions + Coal & gas price decreases + Improved hydrologic conditions 600 9.0 + Argentine gas availability 8.0 500 - LNG contract supply
Slide 23: Financing plan focused on reducing ND/EBITDA and extending maturities
Financing plan focused on reducing ND/EBITDA and extending debt maturity profile While providing funds for CAPEX program EBITDA recovery MPC law (“PEC-2”) • 1H23 PPA prices capturing 2022 fuel price increases • Decrease in fuel prices • True sale of certificates of payment issued by Chilean Treasury
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: Additional Information
2.0 Additional Information ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2023- 25
Slide 26: Energy transition
2.1 Energy transition ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2023- 26
Slide 27: EECL is embarked on a profound generation portfolio transformation
Energy transition EECL is embarked on a profound generation portfolio transformation 2018 2026 + 2.1 GW Renewables 1% 10% 8% Installed Installed 58% 59% 29% 33% capacity 1.9 GW - 0.8 GW Coal disconnection capacity 3.4 GW 2% Coal Gas Diesel Renewables Biomass Gas Diesel Renewables 0.7 GW Conversion E
Slide 28: Generation portfolio transformation: addition of 2.1 GW renewables
Generation portfolio transformation Addition of 2.1 GW renewables 0.8 GW / US$0.8 bn already done LOS LOROS MONTE REDONDO CALAMA TAMAYA CAPRICORNIO SAN PEDRO (*) COYA 46 MWac – 2H19 82 MW – 2H20 151 MW – 4Q21 114 MWac – 1H22 88 MWac – 4Q22 101 MW – 4Q22 180 MWac – 1H23 ACQUISITIONS + 4 GREENFIELD PR
Slide 29: 0.8 GW of coal capacity to be closed by YE-2024
Generation portfolio transformation 0.8 GW of coal capacity to be closed by YE-2024 U12 U13 U14 U15 CTM1 CTM2 IEM CTA CTH -171 MW – 2019 -268 MW – 2022 -334 MW – 2025 =733 MW – 2026 IMPAIRMENTS (After-tax effect) RECONVERSION 2018: US$ 53 million 2019: US$ 134 million Coal to LNG and biomass Impairm
Slide 30: 0.7 GW of newer coal capacity to be converted
Generation portfolio transformation 0.7 GW of newer coal capacity to be converted 2021 2022 2023 2024 2025 2026 1H 2Q 3Q 4Q 1H 2Q 3Q 4Q 1H 2Q 3Q 4Q 1H 2Q 3Q 4Q 1H 2Q 3Q 4Q 2026 permits(*), engineering, procurement, off-site preparation outage IEM overhaul 375 MW coal generation +boiler burners gas a
Slide 31: 463 MW Renewable projects added since 4Q21
463 MW Renewable projects added since 4Q21 688 GWh(*) generated in 1H23 (723 GWh in FY 2022) 151MW Calama 114MWac 88MWac 101MW San 180MWac wind farm Tamaya PV Capricornio PV Pedro wind farms Coya PV US$160 million US$84 million US$100 million ~US$180 million US$160 million investment investment inve
Slide 32: 481 MW wind and battery projects under construction
180 MWac Coya PV full year of operations in 2023 481 MW wind and battery projects under construction 139MW / 638MWh 34MW Central 342MW Lomas BESS Coya (storage) Laja substation de Taltal Wind US$191 million investment US$33 million investment US$433 million investment COD: 1H24 COD: 1H24 COD: 4Q24 E
Slide 33: 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 • Wind: Up to 560 MW • Solar PV: Up to 636 MWac • BESS: Up to 255 MW (6-hr. storage) Pampa Fidelia Land-use concession in Taltal awarded in 2021 public auction Note regarding t
Slide 34: Renewable projects environmental permit requests
Renewable projects Environmental permit requests Approved RCA: ▪ PV Pampa Camarones II: Up to 300 MWac 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 Loa: 204.6 MW (33 WTGs x 6.2 MW) EID/EIA submitted: ▪ PV
Slide 35: Network projects environmental permit requests
Network projects Environmental permit requests Approved RCA: ▪ Dolores substation (Approved Sep-22) ▪ Roncacho substation (Approved May-22) ▪ Desalant substation (Approved May-22) ▪ La Negra substation (Approved April-22) ▪ Algarrobal substation (Pertinence letter approved Feb-22) ▪ Pozo Almonte sub
Slide 36: ESG
2.2 ESG ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2023- 36
Slide 37: 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 In 2022 we… towards a carbon-neutral economy, through reduced energy consumption and more environmentally friendly PLANET PEOPLE solutio
Slide 38: 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 39: 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 TAR
Slide 40: Transmission
2.3 Transmission ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2023- 40
Slide 41: EECL: A relevant player in transmission
EECL: A relevant player in transmission 2,409 Kms. transmission lines, 25 substations and 50% share in TEN Substations ENGIE’S transmission lines 5 Transmission substations 1,032 Generation substations MVA 11% 20 2,409 946 Kms 89% AVI + COMA for National & Zonal systems Owned & Operated Operated In
Slide 42: National / zonal transmission projects awarded
National / zonal transmission projects awarded US$171 million CAPEX New Works CAPEX (MUSD) COD Nueva La Negra substation 36 1H24 Arica y Parinacota Roncacho substation 19 1H24 Nueva Chuquicamata La Ligua substation 24 2Q25 Antofagasta Albemarle SS Totihue new sectioning + new Totihue 2x66 kV transmi
Slide 43: Transmisora Eléctrica del Norte (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) 50% - Cumbre (500 kV) TEN (COD
Slide 44: TEN: new tariff decree for 2020-23 period
Transmisora Eléctrica del Norte S.A. (“TEN”) A new tariff decree for the 2020-23 period published with delay in February 2023 TEN revenue scheme Regulated revenues on “national assets” (AVI) Contractual toll with EECL on “dedicated assets” Project Finance status as of 30-Jun-23 TEN: Annual estimated
Slide 45: EECL and Market Information
2.4 EECL and Market Information ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2023- 45
Slide 46: ENGIE Energía Chile S.A. diversified asset base
ENGIE Energía Chile S.A. A diversified asset base concentrated in Chile’s mining region 110/220kV Arica y Parinacota (2,409 km) Gasoducto Our operations Our sites Norandino (1,066 km) Our largest clients Antofagasta 4th largest GenCo in Chile TOCOPILLA Mining 2.5 GW gross capacity Gas (394MW) (500 k
Slide 47: Industry and company highlights 1H2023
Industry and company highlights – 1H2023 EECL has 7% market share in terms of installed capacity and 15% in terms of electricity sales Gross capacity Generation Demand Market share Other Hydro Engie 7% Solar 4% 22% Renewables AES 24% Regulated Enel SISTEMA Hydro 32% 39% Andes 19% 27% 11% ELÉCTRICO N
Slide 48: Sistema Eléctrico Nacional – SEN
Sistema Eléctrico Nacional – SEN Growing participation of renewables and smaller market players 15.2GW SEN – June 2023 ’SEN’ Sistema Eléctrico Nacional 33.6 GW SING 8.8 8.5 GW 3.0 SIC 0.3 1.6 3.6 3.5 GW 3.4 GW 0.3 0.5 0.2 2.5 GW 2.6 1.6 0.6 2.9 0.1 0.7 2.0 1.1 0.5 GW 1.1 1.1 0.4 0.5 0.2 Enel Generac
Slide 49: PPA portfolio with 9-year remaining average life
PPA portfolio with 9-year remaining average life Free clients: 10 yrs. Regulated clients: 7 yrs. 700 Unregulated contracts Clients’ credit ratings 600 Regulated contracts Distribution Companies (S&P/Moody’s/Fitch): Average demand (MW) (South SEN) 500 - Codelco: A/A3/A- 400 - Freeport-MM (El Abra ):
Slide 50: 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 begun to reverse Energy sales Energy sales and prices Prices GWh US$/MWh 200 3,000 2,500 150 2,000 100 1,500 1,000 50 500 0 0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1
Slide 51: Demand supplied with own generation and energy purchases
Demand supplied with own generation and energy purchases Our installed capacity and contracted energy purchases provide a physical hedge Renewables 31% Coal 42% Average supply cost depends on fuel prices, power demand, gas supply, Installed transmission congestions, renewable output, plant performan
Slide 52: High and volatile marginal costs in the SEN grid
High and volatile marginal costs affected by renewable intermittency and diesel dispatch A 10-day real example in the SEN grid (Jun. 1 to 10, 2023) 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
Slide 53: Portfolio balancing measures
EECL’s performance during the energy transition Portfolio balancing measures Short position during transition Portfolio balancing strategy Current contracted sales for ~12 TWh/y, falling to 1.4 GW of renewable newbuild to be delivered by 2027 (0.9 GW ~10 TWh/y starting 2027 wind, 0.3 GW BESS, 0.1 GW
Slide 54: Regulatory initiatives
Regulatory initiatives GENERATION DISTRIBUTION • Bill Energy Transition (several topics: Low GHG new • Tariff fixing (VAD 2020-2024) coordination principle, Massive BESS, ITs • Technical standard for Service Quality in reallocation, Max demand redefinition, Suspended distribution System under review
Slide 55: Price stabilization mechanism (PEC-1)
Price stabilization mechanism (“PEC-1”) Last sale of US$51 million PEC-1 receivables (US$38 million cash proceeds on 12-May-23) 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 stabiliz
Slide 56: Mechanism for the protection of end users (PEC-2)
Mechanism for the protection of end users (MPC law or “PEC-2”) to stabilize consumer prices beyond PEC-1 (~US$455 million accrued through 30-Jun-23) The MPC Law (Aug-22) seeks to stabilize electricity tariffs to final 1.- True sale by Generation Companies of Certificates of Payment issued by Chilean
Slide 57: Financing activity
Financing activity Securing liquidity and funding for our transformation 2021/23 Monetization of PEC-1 Dec-2020 – IDB green loan Jul-2022 – Scotiabank green loan Dec-2022 – Santander green loan receivables (“ARs”) US$125 million financing US$250 million 5-year loan US$170 million 5-year syndicated l
Slide 58: EECL stock price recovered, outpacing the market
EECL & utilities’ stock price recovered, outpacing the market average in last 12 months No dividends paid on account of 2022 results Dividends paid In US$ Millions 120 100% 112 100% 90% 100 22 81% 72% 93 80% Share price evolution 80 79 70% 30-Jun-22 30-Jun-23 7 67 60% EECL: CLP 357 EECL: CLP 768 (+1
Slide 59: Ownership structure
Ownership structure Pension Local Foreign 59.99% 13.44% 18.28% 7.89% Individuals 0.40% 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 Andina SpA (CTA) Ho
Slide 60: For more information
FOR MORE INFORMATION +56 2 23533200 inversionistas@engie.com ABOUT THE H12023 RESULT IN OUR WEB engie-energia.cl/inversionistas/ ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1H 2023 60
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