Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — FY2021 Earnings Presentation
60 slides from Engie Energia Chile's earnings presentation, Jan 26, 2022
Slide 1: Investor Presentation FY 2021
Investor Presentation FY 2021
Slide 2: Results & Guidance
f . Results & Guidance
Slide 3: Key messages
3 Key messages Challenging 2021: extreme drought, record high fuel prices and high marginal costs 2021 results lagged behind guidance as underlying adverse conditions persisted through 4Q21 Improved supply prospects for 2022: 151MW Calama wind farm and 114MWac Tamaya PV plant fully energized; back-u
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 2019 2020 2021 TOTAL ENERGY SALES (TWh) Phas
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 1Q20 2Q20 3Q20 4Q20 2020 1Q21 2Q21 3Q21 4Q21 2021 Var. Operating revenues (MUSD) 335.3 322.0 338.7 365.3 1,361.3 332.3 388.5 365.7 383.4 1,469.9 8% EBITDA (MUSD) 99.1 103.0 135.7 117.5 455.3 66.0 121.7 55.6 71.2 314.5 -31% EBITDA margin (%)
Slide 8: SIC-SING Interconnection marginal costs
Highest marginal costs in +5 years 8 Extreme drought, unprecedented fuel prices =>high spot prices SIC-SING Interconnection US$/MWh 220 Average marginal cost 200 @ 220 kV nodes north of Santiago 2021 average: Crucero 180 US$75/MWh Cardones 160 Quillota 140 120 2020 average: Annual Average US$39/MWh
Slide 9: 2021 – One of driest in 60+ years
2021 – One of driest in 60+ years 9 The drop in hydro generation increases reliance on fossil fuels to secure power supply 2,600 Hydro generation in Chile 2,200 GWh 1,800 1,400 1,000 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2019 2020 2021 The Apr-21 – Mar-22 hydrological year is expected
Slide 10: Coal prices hit all-time highs in Oct-21
Coal prices hit all-time highs in Oct-21 10 US$/Ton Coal price indices 4Q21 average: US$173/Ton Jan-Apr 2022 260 FWD avg: US$145/Ton 220 Jan-Sep 2021 average: API 2 (cif ARA) 180 US$106/Ton API 6 (fob 140 Newcastle) 2020 average: 100 US$52/Ton API 10 (fob Puerto Bolivar) 60 Quarterly average 20 O N
Slide 11: LNG prices at all-time highs
LNG prices at all-time highs Rising demand due to weather, activity recovery, and suitability for 11 energy transition LNG prices LNG world markets: 40 36 32 • COVID-19-containment measures led to record low spot LNG prices in 28 HH May 2020 and delays in gas field maintenance and new investment US$
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 projected demand under contracts starting 2022 and ~30% 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 202
Slide 13: 2021: High and volatile marginal cost
13 2021: High and volatile marginal cost A 10-day real example in the north segment of the SEN grid (December 1 to 10, 2021) MW USD/MWh 3,500 200 180 3,000 160 2,500 140 120 2,000 100 1,500 80 1,000 60 40 500 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
Slide 14: Physical sales evolution
14 Physical sales evolution Strong demand from unregulated clients; regulated demand showing signs of recovery Unregulated customers GWh 600 450 300 150 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2018 2019 2020 2021 GWh Regulated customers 600 450 300 150 - Jan Feb Mar Apr May Jun Jul Aug Sep
Slide 15: Demand met with generation and energy purchases
Demand met with generation and energy 15 US$/MWh 160 purchases Coal plant decommissioning schedule Unit MW Date % 2021 supply 140 U14-U15 268 Jun-22 (*) 5.5% CTM1-CTM2 334 Dec-24 6.6% 120 Average monomic price (*) U14 + U15 decommissioning postponed until at least June 2022 at the CNE’s request for
Slide 16: Our guidance
Our guidance 16 New renewables and increased back-up PPA volumes behind 2022 recovery amid ongoing stressed conditions 2022 guidance 244 181 110 - 120 - Dry conditions to continue through 1H22 75 LDs (**) 55 156 455 322 410 - 420 460 - Coal and gas prices to remain high 87 375 New renewables: Full-y
Slide 17: Room to finance projects on balance sheet
Room to finance projects on 17 balance sheet 600 MUSD 4.5 4.0 500 TEN 30 3.5 400 3.0 TEN 35 Conversion 14 2.5 300 IEM & Port 436 2.0 Renewables 249 200 IEM & Port 1.5 314 Renewables 64 Renewables IEM & Port Renewables 1.0 183 Transmission 13 202 171 100 IEM & Port Transmission 53 78 0.5 Recurring 56
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 Note: IEM (375MW) started operations in
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 Vientos Loa 48 Monte Redondo 151 C
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$160 million investment / COD: 29-Oct-2021 Global advance: 99.98% - Main milestones: - 36 WTGs connected and generating - Provisional acceptance certificate extended - 160.3 GWh injected to SEN since Jun-2021 - Main contractors: Siemens Gamesa (WTGs) & GES (BOP) 26-Jan
Slide 26: 114 MWac Tamaya solar PV plant
26 114 MWac Tamaya solar PV plant US$ 84 million investment / Energization: 3Q21, COD: 1Q22 Global advance: 99.96% - Main milestones: - 100% connected to the grid since 22-Nov-21 - Dynamic model study approved by CEN on 14- Jan-22 in preparation for COD - 57.1 GWh injected to the SEN since Sep-2021
Slide 27: 88 MWac Capricornio solar PV plant
88 MWac Capricornio solar PV plant 27 US$ 85 million investment / Scheduled energization: 2Q22 / COD: 3Q22 Global advance: 93.31% - Main milestones: - Substation equipment 100% installed - Tracker reinforcement fabrication in progress - Post installation @ 97% - Main contractors: Trina Pro (trackers
Slide 28: 180 MWac Coya solar PV plant
28 180 MWac Coya solar PV plant US$ 146 million investment / Energization: 3Q22, COD: 4Q22 Global advance: 65.49% - Main milestones: - Pole installation works nearly final - Tracker assembly ongoing - 100% solar panels fabricated - Power transformer installed - Substation structures 97% assembled -
Slide 29: Securing land concessions for renewable projects
Securing land concessions for the 29 development of renewable projects Recently awarded slots 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$44 million CAPEX Arica y Parinacota Nueva Albemarle CH Laja Interconnection Chuquicamata West tap-off SS expansion New El Rosal SS Antofagasta Albemarle SS Capricornio SS Zonal Zonal 220 kV/23kV Substation + 23kV T.Line + Substation Atacama Algarrobal SS
Slide 34: Financial update
Financial update
Slide 35: EBITDA evolution
EBITDA evolution 35 Margin compression explained by higher marginal costs and higher fuel prices By main effect In US$ Million 21 6 5 1 196 98 Insurance OPEX & Transmission Physical (BI) SG&A (incl. TEN) & 104 energy Gas sales Lower 170 energy 455 purchase Fuel costs Average volume realized prices 7
Slide 36: Net income evolution
Net income evolution 36 Narrower operating margin and one-time financial expenses from sale of PEC receivables (*) By main effect Recurring Results In US$ Million 8 181 9 10 110 164 Impairments Other Make-whole Depreciation, on early bond write-offs, insurance redemption recoveries 17 4 83 36 Financ
Slide 37: Net Debt evolution
Net Debt evolution 37 Net debt increase due to CAPEX, dividends, and land leases, partly financed with proceeds from sale of long-term receivables Main cash flows In US$ Million 25 119 48 70 Income 91 Accrued taxes 36 24 Leases interest / Proceeds 8 1,044 199 (IFRS 16) MTM / from sale of Operating C
Slide 38: Healthy financial structure
38 Healthy financial structure Investment-grade ratings: BBB+/BBB NET DEBT/EBITDA @ 3.3 X 3.3 International: 2.8 2.2 Fitch (Jun 2021): BBB+ Stable 1.8 S&P (Jan 2021): BBB Stable 1.3 National scale: Fitch (Jun 2021) AA Stable Feller Rate (Dec 2021): AA- Stable Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 Debt
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-Dec-20 31-Dec-21 20 72 20% 20 39 35 13 42 EECL: CLP 870 EECL: CLP 502 (-42%) 2
Slide 40: Key take aways
Key take aways 40 Difficult year due to extreme drought and challenging international environment w/demand-supply imbalance in fuel and equipment markets Despite efforts and risk management measures, results lagged behind our revised 2021 EBITDA guidance The good news: 151 MW Calama wind farm and 11
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 year ended December 31, 2021 Gross capacity Generation Demand Market share Solar Hydro Hydro Wind 9% Engie 8% 20% 23% 20% Enel SISTEMA Regulated AES Gener Solar 39% 25% 11% ELÉCTRICO 13% NACIONAL Wind 11% 30.7 GW 81.3 TWh 74.5 TWh 30.7 GW (SEN) Colbún 11% T
Slide 44: Sistema Eléctrico Nacional (SEN)
Sistema Eléctrico Nacional - SEN 44 ‘SEN’ Sistema Eléctrico Nacional 13,280 MW SEN – December 2021 30,735 M W SING 7,399 7,770 MW 1,770 386 1,576 SIC 3,600 3,513 MW 212 3,310 MW 75 45 2,329 MW 267 58 256 (**) 2,648 1,611 600 46 55 639 2,901 1,500 1,304 532 MW 1,334 1,086 300 350 532 186 Enel Generac
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 2.3 GW gross capacity 0.4 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 Distribution 400 Renegotiated contracts Companies (S&P/Moody’s/Fitch): Average demand (MW) (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 3,000 150 2,500 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 13% Diesel 2% Coal 57% Installed Average supply cost depends on fuel prices, power demand, gas supply, Capacity (*) transmission congestions, renewable output, plant performance and Gas 28% 2,329
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 Basic services (cont
Slide 52: Price stabilization mechanism
52 Price stabilization mechanism: US$49.6 million financial cost in 2021 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 2023 necessary to avoid
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$119 million received on 144A/RegS bond US$167 million of monetized ARs - Early redemption of US$400mln - True sale to SPV of ARs related t
Slide 54: EECL, a relevant player in transmission
EECL, a relevant player in 54 transmission Substations 2,348 KMS 24 SUBSTATIONS - 977 MVA 5 Transmission US$ 19.9 MILLION REGULATED REVENUE P.A. substations Generation substations Transmission lines 977 MVA 9% 18 909 2,348 Kms AVI + COMA for National & Zonal systems 91% (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), TEN annual revenue per 1,500 MW, 600-km long transmission line old decree: National transmission system interconnecting SIC in USD millions and
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 13.17% institutions 18.09% institutions 8.10% Individuals 0.65% 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 CEO - Portfolio & risk management - COVID 19 crisis committee Int
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 FY 2021 results in our web page Presentation Addenda Press Release Recorded Financial Report Analyst pack conference audiocast 26-Jan-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