Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — Q1 2022 Earnings Presentation
60 slides from Engie Energia Chile's earnings presentation, Apr 26, 2022
Slide 1: Investor Presentation 1Q22
a CNGIC Investor Presentation 1Q22
Slide 2: Results & Guidance
f . Results & Guidance
Slide 3: Key messages
3 Key messages Challenging times: extreme drought, record high fuel prices and high marginal costs 1Q22 results are lagging behind guidance as underlying adverse conditions persist Improved supply prospects for 2022: 151MW Calama wind farm and 114MWac Tamaya PV plant in operations; back-up PPA volum
Slide 4: 2021: Working on our reconversion
4 2021: Working on our reconversion To become greener and reduce our supply cost Reshaping our PPA portfolio with green corporate PPAs OUR PERFORMANCE - Contracted portfolio of ~12 TWh/y, 10-year average life - Balanced regulated vs. unregulated portfolio 2020 2021 LTM 03-22 TOTAL ENERGY SALES (TWh)
Slide 5: Our transformation
Our transformation 5 2 GW RENEWABLE PIPELINE, of which 0.7 GW UNDER WAY + 1.3 GW IN DIFFERENT STAGES OF DEVELOPMENT LOS LOROS MONTE REDONDO CALAMA TAMAYA COYA CAPRICORNIO ADVANCED STAGE 46 MWac 82 M W 151M W 114 MWac 180 MWac 88 MWac 857 M W COD(*) 2019 2020 2021 2022 2023-2024 UNDER DEVELOPMENT ACQ
Slide 6: Contracted demand: our vision through 2030
Contracted demand: our vision through 6 2030 Renegotiated PPAs (extended lives / decarbonized tariffs) and new green corporate PPAs GWh 12,000 10,000 8,000 6,000 4,000 2,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Regulated SING Regulated SIC Free clients-renegotiated
Slide 7: Drought and high fuel prices posing continued challenges
Drought and high fuel prices posing 7 continued challenges 2Q20 3Q20 4Q20 1Q21 LTM 03-21 2Q21 3Q21 4Q21 1Q22 LTM 03-22 Var. Operating revenues (MUSD) 322.0 338.7 365.3 332.3 1,358.3 388.5 365.7 383.4 421.8 1,559.4 15% EBITDA (MUSD) 103.0 135.7 117.5 66.0 422.2 121.7 55.6 71.2 68.5 317.0 -25% EBITDA
Slide 8: Highest marginal costs in +5 years
Highest marginal costs in +5 years 8 Extreme drought, unprecedented fuel prices =>high spot prices Average marginal cost 1Q22 average: US$/MWh @ 220 kV nodes US$114/MWh SIC-SING Interconnection 280 260 North 240 220 Center 2021 average: 200 US$95/MWh South 180 160 140 2020 average: 120 US$41/MWh 100
Slide 9: Apr.21-Mar.22 – One of driest in 60+ years
Apr.21-Mar.22 – One of driest in 60+ years 9 Lower hydro generation increases reliance on fossil fuels to secure power supply 2,600 Hydro generation in Chile 2,200 GWh 1,800 1,400 1,000 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2019 2020 2021 2022 Apr-21 – Mar-22 hydrological year: ~96.8%
Slide 10: Coal prices hitting all-time highs
Coal prices hitting all-time highs 10 1Q22 average Apr-Dec 2022 US$/Ton Coal price indices US$241/Ton FWD avg. US$284/Ton 380 API 2 (cif ARA) 340 4Q21 average: API 6 (fob Newcastle) 300 US$178/Ton API 10 (fob Puerto Bolivar) 260 220 Jan-Sep 2021 average: 180 US$106/Ton 2020 average: 140 US$52/Ton 10
Slide 11: LNG prices at all-time highs
LNG prices at all-time highs Rising demand due to geopolitical conflict and suitability for energy 11 transition LNG prices LNG world markets: 40 36 32 • COVID-19-containment measures led to record low spot LNG prices in 28 HH May 2020 and delays in gas field maintenance and new investment US$/MBtu
Slide 12: Managing supply risk
Managing supply risk 12 Back-up PPAs, increasing renewable production, securing gas supply Back-up PPAs sufficient to supply ~20% of contracted demand in 2022 and ~25% starting 2023 12,000 10,000 8,000 GWh 6,000 4,000 2,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Back
Slide 13: 1Q22: High and volatile marginal cost
13 1Q22: High and volatile marginal cost A 10-day real example in the SEN grid (March 1 to 10, 2022) MW USD/MWh 200 10,000 180 160 8,000 140 120 6,000 100 80 4,000 60 2,000 40 20 0 0 1 4 7 10 13 16 19 22 1 4 7 10 13 16 19 22 1 4 7 10 13 16 19 22 1 4 7 10 13 16 19 22 1 4 7 10 13 16 19 22 1 4 7 10 13
Slide 14: Physical sales evolution
14 Physical sales evolution Strong demand from unregulated clients. Slower regulated customer sales due to lower pro-rata and maturity of 175 GWh regulated PPA at YE 2021 Unregulated customers GWh 600 450 300 150 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2019 2020 2021 2022 GWh Regulated cus
Slide 15: Demand met with generation and energy purchases
Demand met with generation and energy 15 US$/MWh 200 purchases Coal units to be decommissioned Supply curve – 1Q22 Unit MW Date % 1Q22 supply U14-U15 268 Jun-22(*) 2.1% CTM1-CTM2 334 Dec-24 3.3% (*) U14 + U15 decommissioning postponed until at least June 2022 at the CNE’s request for system security
Slide 16: Our guidance
Our guidance 16 Continued challenges could prevent fulfillment of 2022 guidance despite new renewables and increased back-up PPA volumes 2022 guidance 244 181 110 - 120 75 LDs (**) - Dry conditions to continue through 2022 156 455 55 315 410 – 420 (*) 460 87 375 - Coal high and gas prices to remain
Slide 17: ND/EBITDA could temporarily rise above 3.5x in 2022
ND/EBITDA could temporarily rise 17 above 3.5x in 2022 600 MUSD 4.5 4.0 500 TEN 30 3.5 400 3.0 TEN 35 2.5 300 IEM & Port 436 2.0 200 IEM & Port Renewables 1.5 314 191 Renewables 64 Renewables IEM & Port Renewables 1.0 183 Transmission 13 202 171 100 IEM & Port 78 Transmission 48 0.5 Recurring 56 Rec
Slide 18: Our transformation
y Our transformation
Slide 19: Our transformation: a four-track road
19 Our transformation A four-track road Greening existing corporate PPAs Closing Old Coal Units Restructuring 800 MW/y of long-term Closing 0.8 GW of coal power plants corporate PPAs with mining customers between 2019 and 2024 Converting Newer Coal Units Developing more Wind and Solar Remaining 3 co
Slide 20: Greening existing corporate PPAs
Greening existing corporate PPAs 20 75% of mining PPAs transformed: strong long-term relationships for more sustainable mining Corporate Clients [6.5 TWh] Regulated Clients [5.5 TWh] PPAs EL ABRA 12 TWh CODELCO AMSA GLENCORE FREEPORT OTHER DISCO NORTH DISCO CENTER [2021] Sound portfolio with average
Slide 21: Greening our PPA portfolio
Greening our PPA portfolio 21 Shifting away from coal-price indexation Indexation applicable to contracted electricity and capacity sales (*) 2020 2022 2025 U.S. CPI Gas U.S. CPI U.S. CPI 79% 11% 60% 79% Coal 2,026 MW Gas 1,936 MW Gas 1,820 MW 29% 10% 11% Coal Coal 11% 10% Free clients’ PPAs: Tariff
Slide 22: Generation portfolio transformation
Generation portfolio transformation 22 2018 2025 2.0 GW Renewables 8% 1% 58% + 59% 10% Installed Installed 33% capacity 58% 0.8 GW Coal disconnection 58% capacity 29% 1.9 GW 3.4 GW - 2% Coal Gas Biomass Gas Diesel Renewables Diesel Renewables 0.7 GW Conversion 27-Apr-2022
Slide 23: Renewables acceleration
Renewables acceleration 23 On our way to reach our energy transformation goals 0.7 GW in full production by 2022 plus 1.3 GW projects under development 1.3 GW 0.7 GW Under development not yet approved 2019 2020 2021 2022 2023-2026 COD/YEAR (MW) 46 82 265 268 1.3 GW 48 Monte Redondo 151 Calama 1.1 Lo
Slide 24: Unit conversion
Unit conversion 24 Allows for full exit from coal, while providing back-up for renewables expansion 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 permits(*), engineering, procurement, off-site preparation outage IEM overhaul 375 MW coal generation +boiler
Slide 25: 151 MWac Calama wind farm
151 MWac Calama wind farm 25 US$160 million investment / COD: 29-Oct-2021 In operation - Main milestones: - 36 WTGs connected and generating - 160.3 GWh injected to SEN in 2021 - 66.2 GWh injected to SEN in 1Q22 - Main contractors: Siemens Gamesa (WTGs) & GES (BOP) 27-Apr-2022
Slide 26: 114 MWac Tamaya solar PV plant
26 114 MWac Tamaya solar PV plant US$ 84 million investment / COD: 14-Jan-2022 In operation - Main milestones: - 100% connected to the grid since 22-Nov-21 - 57.1 GWh injected to the SEN in 2021 - 82 GWh injected to the SEN in 1Q22 - Main contractors: Trina Pro (trackers), Sungrow (inverters), Inner
Slide 27: 88 MWac Capricornio solar PV plant
88 MWac Capricornio solar PV plant 27 US$ 92 million investment / Scheduled energization: 2Q22 / COD: 3Q22 Global advance: 98.41% - Main milestones: - Substation energized 8-Mar-22 - Tracker reinforcements: most on site - Post installation @ 97% - Main contractors: Trina Pro (trackers), Sungrow (inv
Slide 28: 180 MWac Coya solar PV plant
28 180 MWac Coya solar PV plant US$ 148 million investment / Energization: 3Q22, COD: 4Q22 Global advance: 79.10% - Main milestones: - PV Park: All containers w/equipment shipped (411 units in transit / 211 in Chile) Power transformer installed - Substation energization expected for May-22 - Main co
Slide 29: Securing land concessions for the development of renewable projects
Securing land concessions for the 29 development of renewable projects Slots awarded in 2021 with excellent potential for hybrid projects Pampa Fidelia and Pampa Yolanda - Two land-use concessions in Taltal (Antofagasta) awarded in public auction - Potential to develop hybrid projects, with up to 1.
Slide 30: Environmental permit requests
Environmental permit requests 30 Preparing the ground for future projects VIENTOS DEL LOA LOMAS DE TALTAL Approved RCA(1) Approved RCA - Wind farm 20 km. SE Calama - 353.4 MW wind farm in Taltal-Antof. - 204.6 MW potential capacity - 57 turbines x 6.2 MW each - 33 turbines x 6.2 MW each - Undergroun
Slide 31: National / zonal transmission projects completed
National / zonal transmission projects 31 completed US$2.4 million annual revenue (VATT) / US$41.5 million CAPEX Arica y Parinacota Nueva Chuquicamata Antofagasta Capricornio SS expansion Atacama Algarrobal Coquimbo Nueva Chuquicamata (National) Algarrobal (National) Substation +2 x 220 kV transmiss
Slide 32: National / zonal transmission projects awarded
National / zonal transmission projects 32 awarded Arica-Pozo Roncacho US$ 5.3 million combined expected revenue p.a. (VATT) / US$ 66 million CAPEX Sectioning SS Pozo Almonte SS Tamarugal SS Antofagasta Antofagasta By-Pass La Negra Roncacho Substation By-Pass Zonal Zonal National Albemarle SS Multi-c
Slide 33: National / zonal transmission projects
National / zonal transmission projects 33 US$44 million CAPEX Arica y Parinacota Nueva Albemarle Chuquicamata West tap-off SS expansion Antofagasta Albemarle SS Capricornio SS Zonal 220 kV/23kV Substation + 23kV T.Line + Atacama Algarrobal SS 23kV/13.8kV SS Private (BOOT contract) SS: Civil works 69
Slide 34: Financial update
Financial update
Slide 35: EBITDA evolution
EBITDA evolution 35 Flat EBITDA explained by higher marginal costs and higher fuel prices By main effect In US$ Million 12 45 29 Transmission margin 13 2 45 66 Sufficiency Gas Fuel margin Increase capacity costs in spot sales 15 Increase 4 in energy 5 Increase 4 69 66 purchase in energy Decrease Ins
Slide 36: Net income evolution
Net income evolution 36 Operating margin under pressure and one-time financial expenses from sale of PEC receivables (*) By main effect Recurring Results In US$ Million 2 0 5 31 13 Depreciation EBITDA Net 1 3 income FX difference before Financial 1 7 3 one-offs expenses 4 Insurance Other Net 1Q21 re
Slide 37: Net Debt evolution
Net Debt evolution 37 Net debt increase mainly due to cash invested in CAPEX and operations Main cash flows In US$ Million 77 3 12 4 10 1,225 Income Leases Accrued Proceeds 94 (IFRS 16) interest / from sale of taxes 91 CAPEX MTM / L.T.PEC 1,044 deferred regulated Cash used in financial receivables o
Slide 38: Financial structure
38 Financial structure Investment-grade ratings: BBB+/BBB NET DEBT/EBITDA @ 3.86 X 3.9 International: 3.3 Fitch (Jun 2021): BBB+ Stable 2.2 S&P (Jan 2021): BBB Stable 1.8 1.3 National scale: Fitch (Jun 2021) AA Stable Feller Rate (Dec 2021): AA- Stable Dec 18 Dec 19 Dec 20 Dec 21 LTM Mar 22 Debt det
Slide 39: US$93 million dividends paid in 2021
39 US$93 million dividends paid in 2021 DIVIDENDS PAID In US$ Millions 120 100% 112 100% 90% 100 22 81% 72% 93 80% 80 79 70% 7 67 60% 60 56 47% 56 51 50% SHARE PRICE EVOLUTION 17 47 90 40% 40 12 30%34 30% 30% 30 67 30% 31-Mar-21 31-Mar-22 20 72 20% 20 39 35 13 42 EECL: CLP 820 EECL: CLP 479 (-42%) 2
Slide 40: Key take aways
Key take aways 40 Difficult times due to extreme drought and challenging international environment w/demand-supply imbalance in fuel and equipment markets Despite efforts and risk management measures, results will depend on the evolution of hydrology and fuel prices The good news: 151 MW Calama wind
Slide 41: Addenda
Addenda
Slide 42: The ENGIE Group
The ENGIE Group 42 A global reference in low carbon energy services FOCUSED ON FOUR GLOBAL BUSINESS LINES AND 20 COUNTRIES - 170,000 EMPLOYEES WORLDWIDE CLIENT SOLUTIONS INFRASTRUCTURE REVENUE BREAKDOWN EBITDA 2020 Supporting the carbon-neutral transition Strengthen our presence across the gas and o
Slide 43: Industry and company highlights
Industry and company highlights 43 For the quarter ended March 31, 2022 Gross capacity Generation Demand Market share Solar Others Engie 8% Hydro Wind 11% 20% Hydro 4% SISTEMA 23% 19% Regulated Enel AES Gener 39% 25% 11% ELÉCTRICO Solar NACIONAL 19% Wind 12% 31.7 GW 20.7 TWh 18.8 TWh 31.7 GW (SEN) C
Slide 44: Sistema Eléctrico Nacional (SEN)
Sistema Eléctrico Nacional - SEN 44 ‘SEN’ Sistema Eléctrico Nacional 13,730 MW SEN – March 2022 31,709 M W SING 7,848 8,054 MW 2,103 386 1,576 SIC 3,564 3,513 MW 212 3,437 MW 75 248 2,443 MW 267 58 370 (**) 2,648 1,627 46 55 108 639 2,039 2,901 1,104 1,334 532 MW 1,086 348 350 532 186 Enel Generació
Slide 45: ENGIE Energía Chile
ENGIE Energía Chile 45 A diversified asset base in Chile’s mining region Our operations Our sites Our largest clients TOCOPILLA Coal (269MW) MINING Gas (394MW) 4th largest GenCo in Chile Port 2.4 GW gross capacity 0.3 GW renewables in construction MEJILLONES Coal (711MW) 11.6 TWh sold under PPAs in
Slide 46: Sound contract portfolio
46 Sound contract portfolio 10-year remaining average life (Free clients: 11 yrs. Regulated clients: 9 yrs.) 500 ● Regulated contracts Clients’ credit ratings ● Unregulated contracts 400 Renegotiated contracts Distribution (S&P/Moody’s/Fitch): Average demand (MW) Companies (South SEN) - Codelco: A/A
Slide 47: AMSA (Centinela) PPA
AMSA (Centinela) PPA 47 Renegotiation of PPA + new green PPA signed on March 31, 2020 Old PPA New PPA Esperanza Amendment of PPA between New 11-year 186MW PPA Centinela 150MW Inversiones Hornitos (CTH) 186MW between EECL and Minera El Tesoro and Centinela for its Centinela from 1-Jan-22 to 36MW Espe
Slide 48: Long-term contracts
48 Long-term contracts The basis for stable sales and prices Energy sales and prices Energy sales Prices GWh US$/MWh 3,000 2,500 150 2,000 100 1,500 1,000 50 500 0 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21
Slide 49: Demand supplied with own generation and energy purchases
Demand supplied with own generation and energy 49 purchases hedged by our installed capacity Renewables 17% Diesel 2% Coal 55% Installed Average supply cost depends on fuel prices, power demand, gas supply, Capacity (*) transmission congestions, renewable output, plant performance and Gas 26% 2,443
Slide 50: Eólica Monte Redondo and Laja hydroelectric plant
Eólica Monte Redondo SpA 50 82MW of renewable capacity acquired on July 1, 2020 MONTE REDONDO WIND FARM - Acquired from ENGIE Latam: US$53 million+cash, on debt-free basis. Approved by independent board members (“Comité de Directores”) 48 MW (24 Vestas V90 WTGs(*), 80m hub height, 90m rotor diameter
Slide 51: Regulatory initiatives under way
51 Regulatory initiatives under way GENERATION DISTRIBUTION Energy transition Electric portability: Flexibility strategy - Energy dealer Accelerated retirement of coal-fired units - New types of energy auctions - Information manager Emission compensation mechanism in green taxes Tariff fixing (VAD 2
Slide 52: Price stabilization mechanism
52 Price stabilization mechanism: US$49 million financial cost in 2021 + US$4 million in 1Q22 Law #21,185 (Nov-19): Electricity price stabilization mechanism for regulated customers PEC = Adjusted upwards if PEC = Adjusted upwards if Dec 2020 Dec 2025 PEC = Fixed price to PEC = Fixed price to Jul 20
Slide 53: Financing activity
Financing activity 53 Securing liquidity and funding for our transformation strategy 2021 – Monetization of PEC receivables (“AR”) 10-yr, 3.4%, US$500 million US$128 million received on 144A/RegS bond US$181 million of monetized ARs - Early redemption of US$400mln - True sale to SPV of ARs related t
Slide 54: EECL, a relevant player in transmission
EECL, a relevant player in 54 transmission Substations 2,407 KMS 24 SUBSTATIONS - 977 MVA 5 Transmission US$ 22.3 MILLION REGULATED REVENUE P.A. substations Generation substations Transmission lines 977 MVA 11% 18 946 2,407 Kms AVI + COMA for National & Zonal systems 89% (in millions of US$) Owned &
Slide 55: Transmisora Eléctrica del Norte (TEN)
Transmisora Eléctrica del Norte («TEN») 55 A new tariff decree for the 2020-23 period pending publication Double circuit, 500 kV, alternate current (HVAC), 1,500 TEN annual estimated MW, 600-km long transmission line revenue per CNE National transmission system interconnecting SIC and Technical Repo
Slide 56: Copper industry
56 Copper industry US¢/lb Copper production in Chile ('000 tons) GWh 500 8,000 Copper price LME (US¢/lb) SEN monthly electricity demand 450 7,000 400 6,000 350 5,000 300 250 4,000 5,776 5,761 5,772 5,832 5,787 5,733 5,557 5,434 5,553 5,504 5,627 5,413 5,321 5,361 5,328 5,394 5,419 5,263 200 4,904 4,
Slide 57: Ownership structure
57 Ownership structure Pension Local Foreign 59.99% Funds 12.93% institutions 18.50% institutions 8.09% Individuals 0.48% ENGIE Energía Chile S.A. (EECL) Red Eléctrica Chile S.A. 50% Inversiones Hornitos Central Termoeléctrica Gasoducto Edelnor Transmisora Eléctrica Norandino SpA Transmisión S.A. de
Slide 58: EECL organizational structure
EECL organizational structure 58 Shareholders’ Functional assembly committees - Management - Commercial origination Committee of Board of - Development directors directors - Stakeholders & Regulation - Change management - Construction Internal auditor CEO - Portfolio & risk management - COVID 19 cri
Slide 59: For more information about ENGIE Energía Chile
For more information about ENGIE 59 Energía Chile +562 2783 3307 inversionistas@engie.com http://www.engie-energia.cl More information on 1Q 2022 results in our web page Presentation Addenda Press Release Recorded Financial Report Analyst pack conference audiocast 27-Apr-2022
Slide 60: 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