Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — 9M 2022 Earnings Presentation
62 slides from Engie Energia Chile's earnings presentation, November 2022
Slide 1: ENGIE Energía Chile Investor presentation 9M 2022
ENGIE ENERGÍA CHILE Investor presentation 9M 2022 RESTRICTED INTERNAL SECRET
Slide 2: Results and guidance
1 Results and guidance ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2022 2
Slide 3: Key messages
Key messages Challenges of the period: What’s next: Extremely high fuel prices and Improved hydrology and persistent drought availability of Argentine Gas Coal and gas prices at record highs Improved predictions for thaw and added to poor hydro generation => 2023 hydrological year, added to 6.5 – hi
Slide 4: Challenging 2022, with positive turning point in August
Challenging 2022, with positive turning point in August 1Q21 2Q21 3Q21 9M-2021 1Q22 2Q22 3Q22 9M-2022 Var % Operating revenues (MUSD) 332.2 388.5 365.7 1,086.4 417.9 481.4 499.7 1,398.9 29% EBITDA (MUSD) 66.0 121.7 55.6 243.3 68.5 (8.0) 57.3 117.8 -52% EBITDA margin (%) 19.8% 31.3% 15.2% 22.4% 16.4%
Slide 5: Physical sales evolution
Physical sales evolution GWh Unregulated customers 600 Unregulated customers 450 Strong demand, with 2022 exceeding previous 300 years due to recovery in mining activity and higher 150 copper prices - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 2022 GWh Regulated customers Regulated custome
Slide 6: Highest marginal costs in +5 years
Highest marginal costs in +5 years Extreme drought, unprecedented fuel prices => high spot prices US$/MWh 9M22 average: Average marginal cost US$140/MWh SIC-SING Interconnection 280 @ 220 kV nodes 260 North 240 220 2021 average: Center 200 US$95/MWh South 180 160 140 2020 average: 120 US$41/MWh 100
Slide 7: April 21 – March 22: One of driest in +60 years
April 21 – March 22: One of driest in +60 years Hydro generation in recovery, exceeding prior years since July 2,600 Hydro generation in Chile 2,200 1,800 GWh 1,400 1,000 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2022 2019 2020 2021 Apr-21 – Mar-22 hydrological year: ~96.8% exceedance prob
Slide 8: Coal prices hitting all-time highs
Coal prices hitting all-time highs US$/Ton Coal price indices Jan-Sep 22 avg: 4Q22-1Q23 US$327/Ton Fwd. avg: 460 API 2 (cif ARA) US$296/Ton 420 API 6 (fob Newcastle) 380 340 API 10 (fob Puerto Bolivar) 4Q21 avg: 300 US$178/Ton 260 220 Jan-Sep 21 avg: 180 US$106/Ton 140 2020 average: 100 US$52/Ton 60
Slide 9: Declining coal plant availability in the system
Declining coal plant availability in the system Plant closures, limitations, planned and forced outages Coal plant availability in the system (MW gross) 4,324 MW avg.2020 3,875 MW avg.2021 3,655 MW avg.9M22 Engie Other ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2022 9
Slide 10: LNG prices at all-time highs
LNG prices at all-time highs Supply cuts due to Russia-Ukraine conflict & rising demand LNG international markets LNG prices COVID-19-containment measures led to record low spot LNG prices 60 HH in May 2020 and delays in gas field maintenance and new investment 50 Global demand has surged since then
Slide 11: High and volatile marginal costs
High and volatile marginal costs A 10-day real example in the SEN grid (Sept. 1 to 10, 2022) MW USD/MWh 250 10,000 200 8,000 150 6,000 100 4,000 2,000 50 0 0 1 6 11 16 21 2 7 12 17 22 3 8 13 18 23 4 9 14 19 24 5 10 15 20 1 6 11 16 21 2 7 12 17 22 3 8 13 18 23 4 9 14 19 24 5 10 15 20 1 2 3 4 5 6 7 8
Slide 12: Contracted demand through 2035
Contracted demand through 2035 ~12 TWh with 9-year average remaining life 12,000 10,000 8,000 6,000 4,000 2,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Regulated SING Regulated SIC Free clients-renegotiated+new free clients Other free clients
Slide 13: Managing supply risk
Managing supply risk Contracted energy purchases for ~25% of demand TWh 13 12 11 10 9 8 7 6 5 4 3 0.9 0.9 0.7 0.6 0.6 2 0.6 0.6 0.6 1.0 1 1.9 1.9 1.9 1.9 1.9 1.6 1.6 1.6 0.9 0.2 1.1 0.6 0.6 0.6 0.6 0.6 0.5 0.5 0.5 0.1 0.1 0.1 0.1 0.1 - 0.0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Slide 14: Demand met with generation and energy purchases
Demand met with generation and energy purchases Supply curve 9M22 Coal units to be decommissioned Unit MW Date % 9M22 supply US$/MWh U14 136 Jun-22 (*) 0.1% U15 132 Sep-22 (*) 2.3% CTM1-CTM2 334 Dec-24 4.6% 250 (*) U14-U15 decommissioning postponed from Dec-21 to Jun-22 (U14) and Sep-22 (U15) for sy
Slide 15: 2022 Guidance
2022 Guidance 9M EBITDA 4Q EBITDA US$118 million US$70 – 90 million Hydrologic conditions – reserve Hydrologic conditions: drought + hydro reserve Mar-May release – thaw period Coal prices ~US$200-350/ton Coal prices ~US$350/ton Argentine gas supply Argentine gas supply LNG supply Force Majeure @ Fr
Slide 16: Accelerating investment in renewables
Accelerating investment in renewables ND/EBITDA temporarily exceeding targets in 2022 600 MUSD 8.0 TEN 30 7.0 500 6.0 400 TEN 35 5.0 300 IEM & Port 436 4.0 Renewables 200 IEM & Port 295 314 3.0 IEM & Port Renewables 64 Renewables Renewables 183 Transmission 13 202 100 171 IEM & Port 2.0 78 Transmiss
Slide 17: Financial update
2 Financial update ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2022 17
Slide 18: EBITDA evolution
EBITDA evolution Decline explained by higher marginal costs and fuel prices By main effect In US$ Million 37 13 142 18 Transmission 62 margin Gas Physical margin 231 sales 234 Increase Fuel in spot costs sales 243 79 Average realized Increase in energy prices purchase 26 volumes Increase 5 118 in en
Slide 19: Net income evolution
Net income evolution Operating margin shrinkage and PEC-related financial expenses(*) Main variations Recurring Results In US$ Million 36 75 -105 39 One-off Net financial income Net before expenses Income one-offs Discount 9M21 on sale of 9M21 -47 accounts receivable -40 Net loss -13 before Net one-
Slide 20: Net debt evolution
Net debt evolution Increase due to financing of CAPEX and operations Main cash flows + net debt variations In US$ Million 42 39 37 19 1,613 143 Accrued Proceeds Decrease Income + interest / from sale of CO2 tax IFRS 16 MTM / L.T.PEC 405 deferred regulated Leases CAPEX financial receivables cost 1,04
Slide 21: Financial structure
Financial structure Investment-grade ratings: BBB+/BBB Net Debt/EBITDA 8.5 International: Fitch (Jun 2022): BBB+ Stable S&P (Aug 2022): BBB Stable 3.3 National scale: 2.2 1.8 Fitch (Jun 2022) AA Stable 1.3 Feller Rate (Dec 2021): AA- Stable Dec 18 Dec 19 Dec 20 Dec 21 LTM Sep 22 Debt details US$ 850
Slide 22: US$93 million dividends paid in 2021; no dividends in 2022
US$93 million dividends paid in 2021 No dividends paid in 2022 Dividends paid In US$ Millions 120 100% 112 100% 90% Share price evolution 100 22 81% 72% 93 80% 30-Sep-21 30-Sep-22 80 79 70% EECL: CLP 542 EECL: CLP 455 (-16%) 7 67 60% IPSA: 4,363 IPSA: 5,114 (+17%) 47% 56 51 150 Genco’s: 100 Genco’s:
Slide 23: Projects in progress
3 Projects in progress ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2022 23
Slide 24: 88 MWac Capricornio solar PV plant
88 MWac Capricornio solar PV plant Global advance: 100% 100% energization: 19-Aug-22 38.7 GWh injected to grid in 2Q+3Q22 Main contractors: ▪ Trackers: Trina Pro ▪ Inverters: Sungrow ▪ BOP construction staff: Inneria ▪ HV connection: EMEC Capricornio solar PV plant US$ 101 million investment Schedul
Slide 25: 180 MWac Coya solar PV plant
180 MWac Coya solar PV plant Global advance: 97.42% 100% energization: Oct-22 Trackers commissioning and solar panel washing: Nov-22 Main contractors: ▪ Trackers: Soltec ▪ Inverters: Sungrow ▪ Panels: VSun ▪ BOP: OHL ▪ HV connection: Siemens-Ingecoz Coya solar PV plant US$ 158 million investment Sch
Slide 26: 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: ▪ Up to 560 MW: Wind ▪ Up to 636 MWac:PV ▪ Up to 255 MW: BESS (up to 6-hour storage) Pampa Fidelia and Pampa Yolanda Land-use concessions in Taltal awarded in 2021 public auct
Slide 27: 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 September 2022) ▪ 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 submitte
Slide 28: Network projects environmental permit requests
Network projects Environmental permit requests Approved RCA: ▪ Substation Dolores (Approved September 2022) ▪ Substation Roncacho (Approved May 2022) ▪ Substation Desalant (Approved May 2022) ▪ Substation La Negra (Approved April 2022) ▪ Substation Algarrobal (Pertinence letter approved February 202
Slide 29: Transmission
4 Transmission ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2022 29
Slide 30: EECL: A relevant player in transmission
EECL: A relevant player in transmission 2,413 Kms. transmission lines, 24 substations, 50% share in TEN Substations ENGIE’S transmission lines 5 Transmission substations Generation 977 substations MVA 11% 19 2,413 946 Kms 89% AVI + COMA for National & Zonal systems Owned & Operated Operated In milli
Slide 31: Expansion into regulated transmission
Expansion into regulated transmission New regulated projects to contribute +US$10mln EBITDA p.a. Regulated assets VATT in US$ 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 Zonal
Slide 32: National / zonal transmission projects completed
National / zonal transmission projects completed US$2.4 million annual revenue (VATT) / US$41.5 million CAPEX Arica y Parinacota Nueva Algarrobal Chuquicamata Nueva Chuquicamata 06-Jul-21 06-Dec-21 Antofagasta Capricornio SS expansion Substation + 2x220 kV National 220 kV transmission line sectionin
Slide 33: National / zonal transmission projects awarded
National / zonal transmission projects awarded US$110 million CAPEX Antofagasta La Negra Roncacho Tamarugal SS Arica-Pozo By-Pass Jan-21 decree Substation expansion + Almonte TL Arica y Jan-21 decree Jun-21 decree 1x66 kV Pozo sectioning at Parinacota Almonte- Dolores SS Nueva Tamarugal TL Apr-21 de
Slide 34: Transmisora Eléctrica del Norte S.A. (TEN)
Transmisora Eléctrica del Norte S.A. (“TEN”) 600 km-long, double circuit 500kV national transmission system National HVAC transmission system interconnecting SIC and SING grids since Nov. 24, 2017 National system in 500 kV: - Substations: - Los Changos (220 and 500 kV) TEN 50% - Cumbre (500 kV) (COD
Slide 35: TEN: A new tariff decree for the 2020-23 period
Transmisora Eléctrica del Norte S.A. (“TEN”) A new tariff decree for the 2020-23 period pending publication Regulated revenues on “national assets” TEN: Annual estimated revenue (AVI) + contractual toll with EECL on per CNE Technical Report “dedicated assets” (in millions of US$ @ 30-Sep-22 FX rates
Slide 36: Key take-aways
Key take-aways Challenging international environment w/demand-supply imbalance in fuel and equipment markets with relief coming from better hydrologic conditions and firm Argentine gas imports Results challenged by unprecedented fuel prices 268MW Coya & Capricornio PVs plus potential 101MW Wind to b
Slide 37: Addenda
5 Addenda ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2022 37
Slide 38: Industry and company highlights
Industry and company highlights For the first half of 2022 Gross capacity Generation Demand Market share Others 5% Wind 11% Engie 8% Solar Hydro 23% 22% Hydro Enel SISTEMA Regulated AES 21% 26% 41% Andes ELÉCTRICO Solar 17% 16% NACIONAL 33.1 GW 62.3 TWh 57.5 TWh 62.3 GW Wind (SEN) 13% Colbún Thermal
Slide 39: Sistema Eléctrico Nacional (SEN)
Sistema Eléctrico Nacional - SEN 15,461 MW SEN – September 2022 ’SEN’ Sistema Eléctrico Nacional 33,172 M W SING 9,574 8,054 MW 2,103 SIC 386 1,576 3,564 3,513 MW 3,437 MW 212 75 248 267 58 2,175 MW 2,648 1,627 423 108 55 2,039 2,901 639 1,104 532 MW 1,091 1,059 348 350 532 186 Enel Generación AES A
Slide 40: A diversified asset base in Chile's mining region
ENGIE Energía Chile S.A. A diversified asset base in Chile’s mining region Our operations Our sites Our largest clients 4th largest GenCo in Chile TOCOPILLA Mining 2.2 GW gross capacity Gas (394MW) Port 0.4 GW add’l renewables in 4Q22 11.6 TWh sold under PPAs in 2021 MEJILLONES Coal (1,059MW) 3rd la
Slide 41: Long-term PPAs: the basis for stable sales revenue
Long-term PPAs: the basis for stable sales revenue Prices are on the rise Energy sales Energy sales and prices 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 1
Slide 42: Demand supplied with own generation and energy purchases
Demand supplied with own generation and energy purchases Our installed capacity is our physical hedge Renewables 20% Coal 49% Average supply cost depends on fuel prices, power demand, gas supply, Diesel 2% Installed transmission congestions, renewable output, plant performance and Capacity (*) hydro
Slide 43: Working in our transformation
Working in our transformation To become greener and reduce supply costs Reshaping our PPA portfolio - ~12 TWh/y contracted portfolio w/9-year average life Our performance - Balanced regulated vs. unregulated portfolio 2020 2021 LTM 09-2022 Phasing out coal generation - 0.8 GW closed + committed coal
Slide 44: Our transformation: a four-track road
Our transformation A four-track road Extending 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 Wind, Solar and Storage Remaining 3
Slide 45: PPA life extension and decarbonization
PPA life extension and decarbonization 75% of mining PPAs already transformed Corporate clients 6.5 TWh/y Regulated clients 5.5 TWh/y PPAs EL ABRA DISCO DISCO CODELCO AMSA GLENCORE OTHER FREEPORT NORTH CENTER ~12 TWh/y Transformed PPAs: ~4.8 TWh/y Minera Centinela Price discount, Price discount, CPI
Slide 46: PPA portfolio with 9-year average remaining life
PPA portfolio with 9-year average remaining life Free clients: 10 yrs. Regulated clients: 8 yrs. 500 ● Unregulated contracts Clients’ credit ratings ● Regulated contracts 400 (S&P/Moody’s/Fitch): Average demand (MW) Distribution - Codelco: A/A3/A- Companies (South SEN) 300 Codelco - Freeport-MM (El
Slide 47: AMSA (Centinela) PPA
AMSA (Centinela) PPA PPA renegotiation + new PPA signed March 31, 2020 Old PPA New PPA Esperanza Amendment of PPA Centinela New 11-year 186MW 150MW between Inversiones 186MW PPA between EECL and El Tesoro Hornitos (CTH) and Minera Centinela from 1- 36MW Centinela for its Jan-22 to 31-Dec-33 Esperanz
Slide 48: Greening our PPA portfolio
Greening our PPA portfolio Shifting away from coal price indexation Indexation applicable to contracted electricity and capacity sales (*) 2020 2022 2025 Gas U.S. CPI U.S. CPI U.S. CPI 11% 60% 79% 79% Coal 2,026 MW 1,936 MW Gas 1,820 MW Gas 29% 10% 11% Coal Coal 11% 10% Free clients’ PPAs: Tariff ad
Slide 49: Our transformation: +2 GW renewables, coal phase out
Our transformation +2 GW renewables - 1.5 GW coal phase out / reconversion LOS LOROS MONTE REDONDO CALAMA TAMAYA CAPRICORNIO COYA SAN PEDRO (*) ADVANCED STAGE +46 MWac – 2H19 +82 MW – 2H20 +151 MW – 4Q21 +114 MWac – 1Q22 +88 MWac – 4Q22 +180 MWac – 4Q22 +101 MW – 4Q22 +857 MW ACQUISITIONS + 4 GREENF
Slide 50: Renewables acceleration
Renewables acceleration 0.8GW in full production by YE-22 + 1.2GW in development 0.8 GW 1.2 GW Under development 2019 2020 2021 2022 2023-2026 MW in operation 46 82 265 369 1.2 GW 48 Monte Redondo 151 Calama 101 San Pedro (*) WIND MW MW MW 46 Los Loros Andacollo 114 Tamaya 268 Coya Capricornio MWac
Slide 51: 151 MWac Calama wind farm
151 MWac Calama wind farm In operation since 2H 2021 36 WTGs (wind turbine generators) 237.3 GWh injected to SEN in 9M22 160.3 GWh injected to SEN in 2021 Main contractors: ▪ WTGs: Siemens Gamesa ▪ BOP: GES Calama wind farm US$ 160 million investment COD = 29-Oct-21 ENGIE ENERGÍA CHILE S.A. – INVEST
Slide 52: 114 MWac Tamaya solar PV plant
114 MWac Tamaya solar PV plant In operation since 4Q 2021 100% connected to the grid since 22-Nov-21 207.7 GWh injected to SEN in 9M22 57.1 GWh injected to SEN in 2021 Main contractors: ▪ Trackers: Trina Pro ▪ Inverters: Sungrow ▪ BOP construction staff: Inneria Tamaya solar PV plant US$ 84 million
Slide 53: Unit conversion
Unit conversion 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 adjustment CAPEX 52 MUSD 2 11 20.4 19 permits(*), engineering, reco
Slide 54: Generation portfolio transformation
Generation portfolio transformation 2018 2025 + 2.0 GW Renewables 1% 10% 8% Installed Installed 33% 58% 59% 29% capacity capacity 1.9 GW - 0.8 GW Coal disconnection 3.4 GW 2% Coal Gas Diesel Renewables Biomass Gas Diesel Renewables 0.7 GW Conversion ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9
Slide 55: Regulatory initiatives under way
Regulatory initiatives under way GENERATION DISTRIBUTION Energy transition Electric portability: Flexibility strategy - Energy dealer - New types of energy auctions Accelerated retirement of coal-fired units - Information manager Emission compensation mechanism in green taxes Tariff fixing (VAD 2020
Slide 56: Price stabilization mechanism (PEC-1)
Price stabilization mechanism (“PEC-1”) US$64 million direct financial cost so far 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 stabilization mechanism for regulated consumers in no
Slide 57: Mechanism for the protection of end users (MPC law or PEC-2)
Mechanism for the protection of end users (MPC law or “PEC-2”) A new mechanism to stabilize consumer prices beyond PEC-1 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 Treasury consumers accordin
Slide 58: Financing activity
Financing activity Securing liquidity and funding for our transformation 2021/22 Monetization of PEC Jan-2020 - Liability Management Dec-2020 – IDB Green Loan Jul-2022 – Scotiabank green loan receivables (“ARs”) 10-yr, 3.4%, US$500 million 144A/RegS bond US$125 million financing US$250 million 5-yea
Slide 59: Copper: a resilient industry
Copper A resilient industry representing ~50% of EECL’s physical sales Copper production in Chile ('000 tons) 500 8,000 Copper price LME (US¢/lb) 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 5,627 5,413 5,321 5,361 5,557 5,328 5,394 5,419 5,263 5,434 5,553 5,504 20
Slide 60: Ownership structure
Ownership structure Pension Local Foreign 59.99% 12.51% 18.50% 8.60% 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 61: 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 9M 2022 results in our web page Presentation Addenda Press Release Recorded Financial Analyst pack conference Report audiocast ENGIE ENERGÍA CHILE S.A.
Slide 62: 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