EDP Renewables SA · EURONEXT:EDPR
EDP Renewables SA — EDP Renováveis — Investor Presentation (September 2013)
54 slides from EDP Renewables SA's investor presentation, September 2013
Slide 1: EDP Renováveis Presentation
EDP Renováveis Presentation September, 2013 www.edpr.com 1
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by EDP Renováveis, S.A. (the "Company") solely for use at the presentation to be made on September, 2013. By attending the meeting where this presentation is made, or by reading the presentation slides, you acknowledge and agree to be bound by the follo
Slide 3: EDP Renováveis
& renovaveis EDP Renovaveis
Slide 4: EDPR top quality and diversified portfolio of 8.1 GW in 1H13
EDPR top quality and diversified portfolio of 8.1 GW in 1H13 Canada Building the first wind farm 30 MW Belgium UK Offshore 57 MW Poland #1 #3 US under dev. up to 2.4 GW 320 MW 3,637 MW France 314 MW Romania #2 Italy 378 MW Brazil #1 Portugal Spain #3 40 MW 1,010 MW 2,310 MW 84 MW Notes: 1H13 Figures
Slide 5: EDPR a worldwide renewable market leader
EDPR a worldwide renewable market leader An outstanding growth rate over the last 5 years #3 worldwide wind energy producer Electricity Production Evolution Top Wind Players (TWh) (TWh, 2012) +24% 31.0 CAGR 25.8 18.4 18.4 16.8 16.8 14.4 15.2 10.9 7.8 2008 2009 2010 2011 2012 Iberdrola Nextera EDPR L
Slide 6: Solid key metrics drivers…
Solid key metrics drivers… 1H13 Operating Metrics 1H13 Financial Metrics Electricity Output 10.7 TWh EBITDA €560m Ongoing growth +8% YoY Solid returns +11% YoY Load Factor 33% Net Profit €129m Quality assets +0.7bps YoY Increased profitability +29% YoY Selling Price €64.3/MWh Free Cash-Flow Low risk
Slide 7: Executing a clear strategy to enhance shareholder returns
Executing a clear strategy to enhance shareholder returns Quality assets delivering increased profitability Ongoing premium performance on key operating metrics: Load Factor, Availability and Cost Control Better visibility in the US: +250 MW PPA signed in the 1H13 for operating capacity Selective an
Slide 8: Quality assets delivering increased profitability
Quality assets delivering increased profitability
Slide 9: First-class assets with 4.4 average years of age set to deliver premium returns
First-class assets with 4.4 average years of age set to deliver premium returns Assets’ Average Age and Residual Useful Life Asset Base Invested Capital (Years; weighted average) (MW) (€ million) EDPR Assets Age Spain 5.8 2,310 Portugal 4.8 1,011 Property, Plant and Equipment France 4.1 314 Belgium
Slide 10: Premium performance based on a distinctive expertise
Premium performance based on a distinctive expertise Spanish Load Factor: EDPR vs. Market Average Energy Assessment & Engineering 28% 26% 27% 27% 25% 25% Spanish Market Wind assessment is knowledge-based and difficult to replicate Provides site selection criteria 2007 2008 2009 2010 2011 2012 Load F
Slide 11: A diversified portfolio delivering balanced output
A diversified portfolio delivering balanced output 1H13 Electricity Output Breakdown Electricity Output Breakdown (GWh; %) (GWh, %) Brazil 6% 9% RoE US PPA 10% 8% Portugal 41% Brazil 1% 30% 28% Spain 37% 40% US PPA Spain US Spot 29% 11% 16% Portugal 14% US Spot Rest of 8% Europe 2010 2011 2012 9% Ba
Slide 12: Diversified portfolio with 88% of PPA/Regulated frameworks with a long-term maturity
Diversified portfolio with 88% of PPA/Regulated frameworks with a long-term maturity Capacity under Long-Term Remuneration Frameworks (MW; 1H13) Spot Maturity Portfolio exposed to a diversified set of economic regimes 44% 49% 44% 45% 88% of PPA/Regulated Frameworks with a long-term maturity beyond 2
Slide 13: Solid price performance supported by low risk portfolio
Solid price performance supported by low risk portfolio EDPR Average Selling Price Breakdown of Average Selling Price per MWh (€/MWh) 2010 2011 2012 1H13 YoY% €79 €83 €88 €85 -3% +5% YoY €94 €99 €102 €108 +1% 63 64 58 58 RoE €94 €96 €107 €111 +4% PPA/ Hedge $54 $51 $52 $52 +1% Spot $31 $30 $31 $31
Slide 14: Operational excellence is at the core of EDPR throughout the projects' life cycle
Operational excellence is at the core of EDPR throughout the projects’ life cycle 1. Performance Optimisation Innovative product Continuous improvement enhancements Remote control system and Power-enhancing retrofits performance management Systematic review of pioneered by EDPR to boost underperform
Slide 15: EDPR's O&M strategy is successfully implemented, resulting in lower O&M costs
EDPR’s O&M strategy is successfully implemented, resulting in lower O&M costs Breakdown by O&M Contracts Latest O&M Service Tenders (GW; 2012) (€k per MW) 8.0 GW M3 -20% Contracts Expiration Date -15% >2015 Full scope contracts 68% Adequate for Initial wind farms with 6% very stable warranty 16% 10%
Slide 16: Strong discipline of controllable operating costs
Strong discipline of controllable operating costs Operating costs breakdown(1) Opex/MW Evolution (€ million, %) (€k) 10% 13% 14% 21% Levies -3% 48.8 47.3 90% 87% 86% 79% Opex O&M represent 40% of opex (2010-1H13) 2010 2011 2012 1H13 2010 2012 Operating costs have been mostly penalised by the …while
Slide 17: Stronger business metrics resulting in higher profitability since 2011
Stronger business metrics resulting in higher profitability since 2011 EBITDA per Average Installed Capacity (€k) 2011 131 +5% YoY • Decreasing merchant exposure and 129 electricity price depressing EBITDA 120 2012… • Increased exposure to the higher realised prices in Eastern Europe • PPAs signed i
Slide 18: Selective and profitable growth
Selective and profitable growth
Slide 19: EDPR to keep benefiting from a diversified portfolio…
EDPR to keep benefiting from a diversified portfolio… • Decree-Law published in Feb-13 respecting the agreement reached between the wind sector and the government to extend Win-win solution and the remuneration framework improved visibility Portugal • RDL 9/2013 changes the remuneration framework
Slide 20: …to execute a flexible growth model…
…to execute a flexible growth model… 2014-15 Growth Breakdown (MW) New New Markets Markets PPA based growth to provide & Techs & Techs very high visibility on future returns Strong interest from institutional investors on US PPA assets to enhance asset rotation program US to be at the core of EDPR g
Slide 21: US emerging after PTC extension and improved fundamentals
US emerging after PTC extension and improved fundamentals PTC extension Increasing demand EDPR competitive projects RFPs by Utilities for new PPA (GW) 2013YTD EDPR New PPAs • 10-year PTC starting from COD 2.3 Operating • Start of construction to begin 250 MW before YE2013 projects 1.6 Wind (no time
Slide 22: EDPR is securing PPAs for 2014-15 projects at attractive returns
EDPR is securing PPAs for 2014-15 projects at attractive returns EBITDA per MW - Portfolio vs New PPAs 2013: PPAs for new projects in US ($k) Headwaters Rising Tree Arbuckle +50% MW 200 80 100 State Indiana California Oklahoma c180 RPS Yes Yes No COD 2014 2014 2015 PPA 117 Duration 20yr 20yr 20yr Ne
Slide 23: Self-funding business model
Self-funding business model
Slide 24: Operating cash-flow and asset rotation as key sources of funding of EDPR
Operating cash-flow and asset rotation as key sources of funding of EDPR Operating Cash-Flow Balance sheet discipline to clearly cover Capex needs EDPR to keep debt levels and cost of debt under >120% control in a growth environment Operating Cash-Flow as % CAPEX (2012-15E) Sources of funds to both
Slide 25: EDPR's high quality and low risk projects to be the focus of asset rotation
EDPR’s high quality and low risk projects to be the focus of asset rotation and value crystallisation Cost of Capital throughout the life cycle of a wind farm (WACC; %) Operating Assets Cumulative value creation Accelerate value growth through asset rotation: 1. Crystallise existing projects’ NPV (c
Slide 26: EDPR has already executed two significant asset rotation transactions
EDPR has already executed two significant asset rotation transactions November 2012: China Three Gorges December 2012: Borealis acquires a 49% Corporation CTG acquires a 49% interest in US wind farms in equity shareholding and Oregon, Minnesota, Texas 25% of the outstanding and Illinois shareholder
Slide 27: Asset rotation program to be enhanced by Institutional Investors and US strategy
Asset rotation program to be enhanced by Institutional Investors and US strategy China Three Gorges Institutional Investors • Looking for top quality projects with stable and visible • Looking for projects with electricity output contracted cash flows mainly through PPA/LT Hedges schemes • Partnerin
Slide 28: Spanish Regulation
& renovaveis Spanish Regulation
Slide 29: New framework in Spain still to be implemented structurally changes the remuneration scheme
New framework in Spain still to be implemented structurally changes the remuneration scheme Spanish Energy Reform consists of several events with impact on Renewable Energy Royal-Decree Law Royal-Decree Ministerial Order Approved Draft Published Pending RDL 9/2013 Draft of RD sent to the Government
Slide 30: Ministerial Order will define key parameters to yield an average 7.5% return
Ministerial Order will define key parameters for each group of assets to yield an average 7.5% return How to compute the 7.5% return for a standard asset? 1 COD Today 1 Define the standard asset standard capex • When was the asset installed? A • What was the standard investment cost? (MW x average l
Slide 31: EDPR has younger assets with above market operating metrics
EDPR has younger assets with above market operating metrics Installed Capacity in Spain EDPR continuously delivering better load factors (%, MW) Spanish Load Factor: EDPR vs. Market Average Installed Capacity: EDPR vs. Market Average % Average annual premium of 230bps EDPR: 5.8 years; Market: 7.2 ye
Slide 32: 1H13 Results
& renovaveis 1H13 Results
Slide 33: Delivering a sound 1H13 performance
Delivering a sound 1H13 performance • 8.1 GW of installed capacity (+648 MW YoY and +163 MW YTD) Premium assets and • Top-notch load factors of 33% (wind index at 105%) diversified portfolio • +8% YoY on electricity output growth to 10.7 TWh • Revenues up 12% YoY: Output (GWh) +8% and Avg. Price +5%
Slide 34: Strong growth allied to top performing assets
Strong growth allied to top performing assets Electricity Production Load Factor and Technical Availability (TWh) 1H12 1H13 1H3 vs. +8% average 10.7 27% 31% 110% 9.9 +0.2 +0.6 38% 36% 101% 25% 27% 96% 32% 33% 105% EDPR Technical 97.6% 97.7% 1H12 Capacity Load Factor 1H13 Availability Growth Performa
Slide 35: Selling price increased +5% YoY to €64/MWh supported on higher output from Europe
Selling price increased +5% YoY to €64/MWh supported on higher output from Europe EDPR Price Evolution (€/MWh) 1H13 % YoY +5% Higher prices in RoE EU €94 -0.4% hampered by the end of the Transitory Regime (SP) 64.3 61.4 Mix impact: +€2.4/MWh Benefiting from higher US $48 +5% Forex impact: PPA price
Slide 36: Revenues increased 12% YoY to €756m...
Revenues increased 12% YoY to €756m... Revenues Main drivers for Revenues performance (€ million) +12% Quality assets: +648 MW YoY 756 Top-notch load factor: 33% High availability: 97.7% 673 Solid electricity output: +8% YoY EU +19%; US +0.2%; BR +5% Stronger average selling prices: +5% YoY EU -0.4%
Slide 37: Strong discipline of operating costs with performance penalised by new 7% tax in Spain
Strong discipline of operating costs with performance penalised by new 7% tax in Spain Opex (excluding Other Operating Income) (€ million) Opex/MW +20% (€k) +13% 221 7% Tax 184 19 in Spain 1H12 1H13 Opex/MW (ex-7% Tax in Spain & write-offs) 202 (€k) +10% +1% 1H12 1H13 1H12 1H13 Other Operating 14 +€
Slide 38: Solid financial growth from top to bottom
Solid financial growth from top to bottom EBITDA to Net Profit (€ million) D% YoY EBITDA 560 +11% Strong top-line growth and costs under control D&A 233 +5% New capacity, impairments and grants amort. EBIT 327 +16% Performance benefiting from operational leverage Financial 121 -6% Lower interest cos
Slide 39: Operating Cash-Flow increased 31% YoY, Free Cash-Flow totalled €298m
Operating Cash-Flow increased 31% YoY Free Cash-Flow totalled €298m 1H13: Source and Use of Funds (€ million) Source of Funds Use of Funds 93 Free Cash-Flow 104 €298m 368 +31% 337 92 100 35 472 263 Operating Cash Asset Rotation Net Interest Capex PP&E Other Dividends Debt Cash-Flow Grant (CTG) Costs
Slide 40: Debt reduction and lower cost of debt leading to a decrease of Net Interest Costs
Debt reduction and lower cost of debt leading to a decrease of Net Interest Costs 1H13 Debt Breakdown 1H13 Operating Metrics (%) 4% Bank <2018 €3,042m Cash Loans Net Financial Debt 19% Avg. €3,382m (-3% YoY) 36% 23% 5.2% Cost of Debt Loans >=2018 -10bp YoY Net Debt €3,042m with EDP 81% 60% 77% €101m
Slide 41: Annex
& renovaveis Annex
Slide 42: IFRS 11
& renovaveis IFRS 11
Slide 43: IFRS 11 rules and impact in EDPR
IFRS 11 rules and impact in EDPR IFRS 11 rules… …with impact in EDPR from 2014 onwards Joint ventures previously consolidated EDPR his currently consolidating using proportional method will be proportionally assets in the US and in Spain consolidated by equity method from 50/50 partnerships Capacity
Slide 44: Regulation Pack
& renovaveis Regulation Pack
Slide 45: Spain: New regulatory review yet to be fully disclosed
Spain: New regulatory review yet to be fully disclosed 7% General Tax over electricity sales generated in Spain was introduced in January, 2013 RD 2/2013 RD 9/2013 Compulsory for all the assets RD 2/2013 to lose its effect once under the special regime full framework enters into force (reference dat
Slide 46: Portugal: Feed-in tariff according to wind farms' COD
Portugal: Feed-in tariff according to wind farms’ COD All the capacity contributing to EDPR’s EBITDA is ENEOP’s capacity is remunerated under the “old” regime under the “new” regime Before DL 33A/2005 After DL 33A/2005 Applicable to wind farms Applicable to licensed until February, 2006. ENEOP’s win
Slide 47: France and Belgium: Stable regulatory environment
France and Belgium: Stable regulatory environment France Belgium Feed-in Tariff Market Price + Green Certificates • First 10 years: Feed-in tariff is fixed at €82/MWh, • National market for electricity or bilateral contracts inflation-type adjusted. • 1 GC /MWh for wind during 10 years, with 5-year
Slide 48: Italy: Remuneration with long-term profile
Italy: Remuneration with long-term profile COD before 2013 COD equal to 2013 or later Market Price + Green Certificates / Feed-in Premium PPA through competitive auctions • Market price + GC until 2015. GCs are bankable for 3 • Competitive annual tenders awarding 20-year PPAs years. • GSE has obliga
Slide 49: Poland: Green Certificate system
Poland: Green Certificate system Framework for Existing Assets Draft for New Assets Market Price + Green Certificates Market Price + Green Certificates • Price achieved in market, bilateral contracts or selling to • Enactment of the new RES Law has been suffering delays. distributor at regulated pri
Slide 50: Romania: Green Certificate system
Romania: Green Certificate system Framework for Existing Assets Draft for New Assets Market Price + Green Certificates Market Price + Green Certificates • Wind assets receive until 2017 2GC/MWh and after 2017 • Draft proposal for new wind farms: 1.5 GC until 2017 and until completing 15 years receiv
Slide 51: US: Electricity Sales + Tax Incentives
US: Electricity Sales + Tax Incentives Framework for Existing Assets Draft for New Assets Market Price + Green Certificates Market Price + Green Certificates • Sales can be agreed under PPAs, Hedges or Merchant • Sales can be agreed under PPAs, Hedges or Merchant prices. prices, with region being a
Slide 52: Brasil: Long-term PPA
Brasil: Long-term PPA Framework for Existing Assets New Assets PPA PPA through competitive auctions • Electricity sold under 20-year PPA with price annualy • Competitive annual tenders awarding 20-year PPAs updated according with inflation-type adjustment. • Contracts established under incentive pro
Slide 53: IR Contacts
IR Contacts Rui Antunes, Head of IR Francisco Beirão Maria Fontes Emanuel Sousa E-mail: ir@edpr.com Phone: +34 914 238 402 Fax: +34 914 238 429 Serrano Galvache 56, Edificio Olmo, 7th Floor 28033, Madrid - Spain EDP Renováveis online Next Events Site: www.edpr.com September 10th – Roadshow London Se
Slide 54: renovaveis
renovaveis powered by nature
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