Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — Q1 2023 Earnings Presentation
59 slides from Engie Energia Chile's earnings presentation, May 2023
Slide 1: ENGIE Energía Chile Investor presentation 1Q 2023
ENGIE ENERGÍA CHILE Investor presentation 1Q 2023
Slide 2: Summary
Summary 1Q23 Results and view for the full year 1Q2023 results 1.0 Additional information EECL and its transformation 2.0 Energy transition Project development and construction status 2.1 Transmission A glance at EECL’s transmission business 2.2 Introduction to EECL and market information Company an
Slide 3: 1Q23 Results & View for the Full Year
1.0 1Q23 RESULTS & VIEW FOR THE FULL YEAR ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1Q 2023- 3
Slide 4: Following a challenging 2022, actions to reduce spot exposure explain 2023 recovery
Following a challenging 2022 Actions to reduce spot market exposure explain 2023 recovery prospects Challenges of the period What can we expect for 2023 Fuel prices falling from record Tariff increases highs and persistent drought Higher fuel prices captured with certain Generation based on 2022 rec
Slide 5: Contracted physical sales grew 3% in 1Q23
Contracted physical sales grew 3% in 1Q23 2% drop in free customer sales; 11% growth in regulated customers GWh Unregulated customers Unregulated customers 600 2% decrease (1Q23 vs 1Q22) 450 Decrease explained by 300 maintenance at Chuquicamata mining 150 operation - Jan Feb Mar Apr May Jun Jul Aug
Slide 6: Marginal costs remain at highest levels in years
Marginal costs remain at highest levels in 7 years Extreme drought, high fuel prices, transmission congestions => high spot prices US$/MWh Average marginal cost 2023 average: US$141/MWh @ 220 kV nodes SIC-SING Interconnection 280 260 2022 average: North 240 US$127/MWh 220 Center 200 South 180 2021 a
Slide 7: A very dry year following one of driest years in over 60 years
April 22 – March 23: A very dry year following one of driest years in over 60 years Hydro generation might recover in 2H23 2.600 Hydro generation in Chile 2.200 1.800 GWh 1.400 1.000 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2023 2019 2020 2021 2022 • In terms of hydraulic generation, as o
Slide 8: Coal prices hit all-time highs in 2022
Coal prices hit all-time highs in 2022 Significant coal price decline in spot and forward prices for 2023 US$/Ton Coal price indices 2022 avg: US$314/Ton 460 1Q23 avg: 420 US$177/Ton API 2 (cif ARA) 380 340 4Q21 avg: US$178/Ton 2023 300 API 6 (fob Newcastle) Fwd. avg: 260 US$161/Ton 220 Jan-Sep 21 a
Slide 9: Declining coal plant availability in the system
Declining coal plant availability in the system Plant closures, limitations, planned and forced outages Coal plant availability in the system (falling to 3,169 MW avg, in Jan-Feb 2023) 4,324 MW avg.2020 3,875 MW avg.2021 3,497 MW avg.2022 Feb-20 Feb-21 Feb-22 Feb-23 Jul-20 Aug-20 Sep-20 Nov-20 Dec-2
Slide 10: Natural gas availability in the Chilean system
Natural gas availability in the Chilean system High volatility due to the Russia-Ukraine conflict & rising demand LNG prices LNG international markets 60 HH ▪ In 2022 the supply-demand imbalance, aggravated by the 50 Russia-Ukraine war, led countries to struggle to re-build stocks JKM 40 and secure
Slide 11: Closing the gap through back-up PPAs
Closing the gap through back-up PPAs Contracted energy purchases climbing to 3.3 TWh in 2023 (28% of contracted demand) TWh Supply sources to meet demand under Engie’s contracted portfolio [TWh] 13 12 11 10 9 8 7 6 5 4 3 0,4 0,5 0,4 0,3 0,2 0,1 2 0,3 2,9 2,9 3,0 3,0 3,0 2,5 2,6 2,6 1 1,9 0,9 0,1 1,1
Slide 12: Portfolio balancing strategy seeks to increase renewables, storage and back-up PPAs
Portfolio balancing strategy seeks to increase renewables, storage + back-up PPAs while phasing out coal, mitigating intermittence & curtailment and reducing spot exposure Energy sources and average supply cost GWh 150 3.000 100 2.000 50 1.000 0 0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q
Slide 13: 1Q23 supply: back-up PPA and LNG volumes, high coal prices, IEM outage
1Q23 supply: increased back-up PPA & LNG supply volumes, high coal prices, lEM outage Investment in renewables and portfolio balancing to lower future supply cost Coal units planned decommissioning US$/MWh Unit MW Date % 1Q23 supply 300 CTM1-CTM2 334 Dec-24 1.0% 250 200 1Q23 Average monomic Price 18
Slide 14: EECL's performance during the energy transition: closer look at 2023 results
EECL’s performance during the energy transition A closer look at 2023 results 1Q22 2Q22 3Q22 4Q22 FY-2022 1Q23 Var % Operating revenues (MUSD) 417.9 481.4 499.7 521.3 1,920.3 587.8 41% EBITDA (MUSD) 68.5 (8.0) 57.3 71.3 189.0 102.0 49% EBITDA margin (%) 16.4% -1.7% 11.5% 13.7% 9.8% 17.3% 0.9 pp Net
Slide 15: EBITDA improvement despite market and operational challenges
EBITDA improvement despite market and operational challenges Recovery explained by higher prices and reduced exposure to spot market By main effect In US$ Million 27 68 20 35 Decrease in energy Physical purchase 49 sales 112 volumes Increase Increase in energy in spot purchase prices 16 sales Fuel 1
Slide 16: Net income evolution
Net income evolution Operating margin recovery with increase in interest expense Main variations In US$ Millions Recurring Results 3 -12 4 Insurance 23 recoveries Depreciation, FX difference, 25 -6 other Interest 3 expense 20 (*) One-off financial Impairment intangibles -40 expenses Discount on sale
Slide 17: Net debt evolution
Net debt evolution Increase due to CAPEX financing and build-up of PEC receivables Main cash flows + net debt variations In US$ Million 111 15 3 179 Accrued Income + 113 interest / CO2 taxes MTM 1,708 PEC 1,646 receivables Cash from build-up operations - CAPEX net Net Debt Net Debt as of as of 12/31
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 7.7 Fitch (Oct 2022): BBB Stable S&P (Mar 2023): BBB Negative National scale: 2,7 Fitch (Oct 2022): AA-
Slide 19: Recent events and action plans: portfolio balancing
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 (ready as of early May, just waiting for CEN approva
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: capex through 2024
Accelerating investment in renewables US$1.4 bn investment in renewables / US$0.2 bn investment in transmission through 2024 700 MUSD 11,0 10,0 600 9,0 500 TEN 30 8,0 7,0 400 Renewables 387 6,0 300 IEM & Port 5,0 436 Renewables Renewables 247 200 325 4,0 IEM & Port Renewables 64 Renewables Transmiss
Slide 22: Our guidance for 2023 remains in line with reduced spot exposure
EECL’s performance during the energy transition Our guidance for 2023 remains in line with our reduced exposure to the spot market Variables affecting EBITDA US$ millions + Coal & gas price decreases 600 9,0 + Improved hydrologic conditions 8,0 + Argentine gas availability 500 7,0 - LNG contract sup
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 Expected 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
Slide 24: Key Messages and Action Plans
Key Messages and Action Plans Re-balancing portfolio through renewable additions, back -up PPAs and LNG generation 0.9 TWh of new renewable capacity, 3.3 TWh of Back Up PPAs and LNG volumes secured for 2023 Moving forward with energy transition with strong CAPEX in renewables for 2023 -2024 BESS Coy
Slide 25: Additional Information
2.0 Additional Information ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1Q 2023- 25
Slide 26: Energy transition
2.1 Energy transition ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1Q 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$0.8 bn already done LOS LOROS MONTE REDONDO CALAMA TAMAYA CAPRICORNIO SAN PEDRO (*) COYA 46 MWac – 2H19 82 MW – 2H20 151 MW – 4Q21 114 MWac – 1Q22 88 MWac – 4Q22 101 MW – 4Q22 180 MWac – 1Q23 ACQUISITIONS + 4 GREENFIELD PR
Slide 29: 0.8 GW of coal capacity to be closed by YE-2024
Generation portfolio transformation 0.8 GW of coal capacity to be closed by YE-2024 U12 U13 U14 U15 CTM1 CTM2 IEM CTA CTH -171 MW – 2019 -268 MW – 2022 -334 MW – 2025 =733 MW – 2026 IMPAIRMENTS (After-tax effect) RECONVERSION 2018: US$ 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 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 a
Slide 31: 463 MW renewable projects added since 4Q21
463 MW Renewable projects added since 4Q21 350 GWh(*) generated in 1Q23 (723 GWh in FY 2022) COD: 29-Oct-21 COD: 14-Jan-22 151MW Calama 114MWac wind farm Tamaya PV US$160 million investment US$84 million investment COD: 21-Nov-22 Acquired: 15-Dec-22 88MWac 101MW San Pedro Capricornio PV wind farms U
Slide 32: 180 MWac Coya PV and projects under construction
180 MWac Coya PV full year of operations in 2023 481 MW wind and battery projects under construction COD: 24-Mar-23 COD: 4Q24 180MWac 342MW Lomas Coya PV de Taltal Wind US$160 million investment US$433 million investment COD: 1Q24 COD: 1Q24 139MW / 638MWh 34MW Central BESS Coya (storage) Laja substa
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 and Pampa Yolanda Land-use concessions in Taltal awarded in 2021 public aucti
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: Transmission
2.2 Transmission ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1Q 2023- 36
Slide 37: EECL: A relevant player in transmission
EECL: A relevant player in transmission 2,448 Kms. transmission lines, 25 substations and 50% share in TEN Substations ENGIE’S transmission lines 5 Transmission substations 1,032 Generation substations MVA 11% 20 946 2,448 Kms 89% AVI + COMA for National & Zonal systems Owned & Operated Operated In
Slide 38: Expansion into regulated transmission
Expansion into regulated transmission New regulated projects to contribute +US$10 million EBITDA p.a. Regulated assets VATT in US$ 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 National VATT Z
Slide 39: National / zonal transmission projects awarded
National / zonal transmission projects awarded US$171 million CAPEX New Works CAPEX (MUSD) COD Nueva La Negra substation 32 1Q24 Arica y Parinacota Roncacho substation 19 1Q24 Nueva Chuquicamata La Ligua substation 24 2Q25 Antofagasta Albemarle SS Totihue new sectioning + new Totihue 2x66 kV transmi
Slide 40: 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 41: TEN: new tariff decree for the 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 31-Mar-23 TEN: Annual estimated
Slide 42: EECL and Market Information
2.3 EECL and Market Information ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 1Q 2023- 42
Slide 43: Introduction: ENGIE Energía Chile S.A.
Introduction ENGIE Energía Chile S.A. (“EECL”) 60% owned by ENGIE S.A., a leading international ENGIE S.A. player in the energy transition, seeking to +100 GW of installed generation capacity, with achieve Net Zero Carbon target by 2045 ambitious goals for the energy transition To add +4GW p.a. of r
Slide 44: A diversified asset base concentrated in Chile's mining region
ENGIE Energía Chile S.A. A diversified asset base concentrated in Chile’s mining region 110/220kV Arica y Parinacota (2,448 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 45: Industry and company highlights – 1Q2023
Industry and company highlights – 1Q2023 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 5% 24% 22% Renewables AES SISTEMA Regulated Enel Hydro 32% Andes 39% 27% ELÉCTRICO 17% 11% N
Slide 46: Sistema Eléctrico Nacional – SEN
Sistema Eléctrico Nacional – SEN Growing participation of renewables and smaller market players 15 GW SEN – March 2023 ’SEN’ Sistema Eléctrico Nacional 33.5 GW SING 8.6 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 47: PPA portfolio with 9-year average remaining life
PPA portfolio with 9-year average remaining life Free clients: 10 yrs. Regulated clients: 8 yrs. 600 Unregulated contracts Clients’ credit ratings Regulated contracts 500 (S&P/Moody’s/Fitch): Average demand (MW) - Codelco: A/A3/A- 400 Distribution Companies - Freeport-MM (El Abra ): BB+/Baa3/BBB- (S
Slide 48: Heavily contracted position provides stable sales revenue
EECL’s heavily contracted position provides the basis for stable sales revenue PPA prices on the rise as they capture fuel price increases 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 1Q18 2Q18 3Q
Slide 49: 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 50: High and volatile marginal costs affected by intermittency and diesel dispatch
High and volatile marginal costs affected by renewable intermittency and diesel dispatch A 10-day real example in the SEN grid (Mar. 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 51: 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 52: Regulatory initiatives
Regulatory initiatives GENERATION DISTRIBUTION Battery Storage Promotion Tariff fixing (VAD 2020-2024) Accelerated retirement of coal-fired units Technical standard for ServiceQuality in Risk mitigation for suppliers distribution System under review Operational flexibility Emission compensation mech
Slide 53: 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 54: 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$390 million accrued through 31-Mar-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 55: 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$170 million 5-year syndicated l
Slide 56: 22% stock price recovery in last twelve months
22% stock price recovery in last twelve months No dividends paid on account of 2022 results Dividends paid In US$ Millions 120 100% 112 100% 90% 100 22 81% 72% 93 80% Share price evolution 80 79 70% 31-Mar-22 31-Mar-23 7 67 60% EECL: CLP 479 EECL: CLP 584 (+22%) 47% 56 51 60 56 50% IPSA: 4,937 IPSA:
Slide 57: Ownership structure
Ownership structure Pension Local Foreign 59.99% 13.39% 18.42% 7.80% 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 58: For more information about ENGIE Energía Chile
For more information about ENGIE Energía Chile +562 2353 3200 inversionistas@engie.com https://engie-energia.cl/inversionistas/ More information on 1Q2023 results in our web page Presentation Addenda Press Release Recorded Financial Analyst pack conference Report audiocast ENGIE ENERGÍA CHILE S.A. –
Slide 59: 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