Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — H1 2024 Earnings Presentation
56 slides from Engie Energia Chile's earnings presentation, Aug 14, 2024
Slide 1: 1H 2024 Investor Presentation ENGIE Energía Chile
1H 2024 INVESTOR PRESENTATION ENGIE ENERGÍA CHILE 14 Aug 2024
Slide 2: Summary
SUMMARY 1H24 RESULTS AND VIEW FOR THE FULL YEAR 1H24 results 1.0 ADDITIONAL INFORMATION EECL and its transformation 2.0 ENERGY TRANSITION Project development and construction status 2.1 ESG Our sustainability strategy 2.2 TRANSMISSION A glance at EECL’s transmission business 2.3 INTRODUCTION TO EECL
Slide 3: 1H24 Highlights
1H24 HIGHLIGHTS Fuel prices falling from 2022 record highs Increased renewable generation + back-up PPA volumes Tariffs reflecting lower fuel prices Lower dispatch of coal plants PEC & MPC law Pivotal expansion move in battery storage. 369 MW committed Total exit of coal-fired generation announced S
Slide 4: 6% Growth in Physical Sales
6% GROWTH IN PHYSICAL SALES GWh Unregulated customers 600 Unregulated customers 450 3% increase 300 Strong demand from mining clients 150 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2022 2023 2024 GWh Regulated customers 600 Regulated customers 450 11% increase 300 explained by higher pro- rat
Slide 5: Average Spot Prices ~62 USD/MWh in 1H24
AVERAGE SPOT PRICES ~62 USD/MWH IN 1H24 Improved hydrology and lower fuel prices US$/MWh Average marginal cost 280 260 @ 220 kV nodes 2022 average: 240 US$127/MWh 220 2021 average: 200 US$95/MWh 180 2023 average: 160 2017-2020 average: US$87/MWh US$52/MWh 140 120 2024 average: 100 US$62/MWh 80 60 40
Slide 6: Conditions Expected to Evolve to Neutral La Niña by Year End
DESPITE LATEST RAINFALLS, CONDITIONS ARE EXPECTED TO EVOLVE TO NEUTRAL “LA NIÑA” BY YEAR END – ENTERING 2025 3,000 Hydro generation in Chile 2,700 2,400 2,100 GWh 1,800 1,500 1,200 900 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2024 2019 2020 2021 2022 2023 • In terms of hydraulic generatio
Slide 7: Significant Coal Price Decline
SIGNIFICANT COAL PRICE DECLINE Coal prices hit all-time highs in 2022 and stabilized at around US$ 109/Ton in 1H24 US$/Ton Coal price indices 2022 avg: US$314/Ton 460 API 2 (cif ARA) 420 380 API 6 (fob Newcastle) 2023 avg: 340 US$138/Ton 2024 2021 avg: Fwd. avg: 300 US$123/Ton US$114/Ton 260 220 201
Slide 8: Coal Plant Availability Stable at 3.5GW
COAL PLANT AVAILABILITY REMAINED STABLE AT 3.5GW IN LAST 2 YEARS Plant closures, limitations, planned and forced outages Coal plant availability in the system (3,573 MW avg. in 1H24) 4,324 MW avg.2020 3,875 MW avg.2021 3,497 MW avg.2022 3,573 MW 3,476 MW avg.2023 avg.1H24 Mar-20 Mar-21 Mar-22 Mar-23
Slide 9: Natural Gas Availability in the Chilean System
NATURAL GAS AVAILABILITY IN THE CHILEAN SYSTEM Argentine gas available for EECL since October 2023 LNG prices LNG international markets 60 HH ▪ In 2022 the supply-demand imbalance, aggravated by the 50 Russia-Ukraine war, led countries to struggle to re -build stocks JKM 40 and secure energy supply.
Slide 10: Closing the Gap Through Back-up PPAs
CLOSING THE GAP THROUGH BACK-UP PPAS Contracted energy purchases climbing to 3.6 TWh in 2024, reducing exposure to spot risk Supply sources to meet demand under Engie’s contracted portfolio [twh] 13 12 11 10 9 8 7 6 5 4 0.4 0.5 0.4 0.3 0.3 3 0.2 2 0.3 2.9 3.1 3.1 3.1 3.2 2.6 2.6 2.6 1 1.9 0.9 0.1 1.
Slide 11: Demand Supplied with Own Generation and Energy Purchases
DEMAND SUPPLIED WITH OWN GENERATION AND ENERGY PURCHASES Portfolio balancing: More renewables, storage & back-up PPAs. Less coal and spot exposure Renewables 30% In 1H24, the average cost of energy supplied decreased by 34% compared to Coal 40% Installed 1H23 due to increased renewable production, l
Slide 12: 1H24 Energy Supply: Seeking Portfolio Balancing
1H24 ENERGY SUPPLY: SEEKING PORTFOLIO BALANCING Decreased energy supply cost: Increased renewable production, greater back-up PPA volumes US$/MWh 1H23 Avg. monomic price: 157 USD/MWh 150 Margin 1H24 Avg. monomic price: 128 USD/MWh 1H23 1H23 Average fuel & electricity purchase cost 111 USD/MWh Margin
Slide 13: EECL's Performance During the Energy Transition
EECL’S PERFORMANCE DURING THE ENERGY TRANSITION A closer look at 1H24 results 1Q23 2Q23 1H23 3Q23 4Q23 FY23 1Q24 2Q24 1H24 HoH Var % Operating revenues (MUSD) 587.8 616.2 1,204.0 512.0 476.8 2,192.7 442.7 490.8 933.5 -22% EBITDA (MUSD) 102.0 87.1 189.1 123.0 90.9 402.9 138.3 156.3 294.6 56% EBITDA m
Slide 14: Strong EBITDA Recovery
STRONG EBITDA RECOVERY More balanced spot exposure + lower fuel prices offset decrease in realized energy prices EBITDA (US$m) +16 -174 +7 +20 +50 Insurance +88 Net Margin capacity transmission Physical purchases business sales +101 -3 Lower Average Margin 294 energy realized gas purchases prices bu
Slide 15: US$150M Net Income
US$150M NET INCOME Driven by stronger operating results Recurring results NET RESULTS +35 -3 -6 (US$m) Insurance (PD) FX 150 +13 recovery difference +76 Net D&A financial results (*) Net income before +9 one-offs 36 EBITDA PEC-1 27 Financial expense 1H23 1H23 -491 1H24 (*) Includes US$37m after-tax
Slide 16: Healthier Cash Generation & PEC-2 Sales
HEALTHIER CASH GENERATION & PEC-2 SALES Cash needs financed w/operations, PEC sales & ~US$158m net debt increase NET DEBT & FUND FLOWS +65 +30 -181 (US$m) +78 +231 Taxes -49 Accrued (Income -17 PEC interest / MTM taxes: 22 Cash from Receivables / FX / leasing Green operations Proceeds Insurance 2,00
Slide 17: Price Stabilization Laws (PEC)
PRICE STABILIZATION LAWS (PEC) Effects on liquidity and financial cost. US$329m nominal amount pending to be monetized • PEC laws have affected our liquidity and finance costs, with $329m ARs pending to be monetized as of 30-Jun-24 + $69m interest and inflation adjustments per PNP-Jan24 tariff decre
Slide 18: Financial Structure
FINANCIAL STRUCTURE Making progress in reducing ND/EBITDA and extending maturity profile Investment-grade ratings Net Debt / EBITDA Excluding IFRS-16 leases International: 8.7 Fitch (Mar 2024): BBB Stable S&P (Apr 2024): BBB Stable 4.6 3.9 National scale: 2.7 Fitch (Mar 2024): AA- Stable 1.1 Feller
Slide 19: Recent Events and Action Plans
EECL’S PERFORMANCE DURING THE ENERGY TRANSITION Recent Events and Action Plans – Portfolio balancing to mark the road ahead 3.6 TWh/y back-up PPAs in 2024, up from 2.3 TWh/y in 2023 ~1 TWh additional renewable generation since 2023, with wind production in southern node BESS Coya operating in 4Q23.
Slide 20: Accelerating Investment in Renewables and BESS
ACCELERATING INVESTMENT IN RENEWABLES AND BESS 2.1 GW renewable + BESS investment pipeline, 0.9 GW ready and 0.6 GW in construction 0.9 GW 0.6 GW 0.6 GW* Already in portfolio Under Construction Under Development 2019 2020 2021 2022 2023 2024 (e) 2025-2027 (e) MW 46 82 265 369 137 574** 584 48 Monte
Slide 21: Accelerating Investment in Renewables and BESS
ACCELERATING INVESTMENT IN RENEWABLES AND BESS US$1.6 bn investment in renewables+BESS & US$0.2 bn in transmission through 2024 700 MUSD 650 600 535 Renewables 500 286 390 394 Renewables 400 Renewables 28 276 300 237 BESS 190 BESS 179 209 Renewables 190 325 200 BESS 146 Renewables 64 Renewables Rene
Slide 22: FY 2024 Guidance Upgraded
FY 2024 GUIDANCE UPGRADED • Lower fuel costs EBITDAE CAPEXE • LNG + Argentine gas sourcing • Lower average spot prices US$475-525 US$650 • Renewable generation increase million million • New storage projects • PEC receivables monetization ND/EBITDAE • Improving debt maturity profile 4.0 times 2024 g
Slide 23: Our Guidance for 2024
EECL’S PERFORMANCE DURING THE ENERGY TRANSITION Our guidance for 2024 US$ millions 600 9.0 8.0 500 7.0 400 6.0 5.0 300 4.0 200 3.0 2.0 100 1.0 0 0.0 2018 2019 2020 2021 2022 2023 2024 (e) 2025 (e) EBITDA CAPEX ND/EBITDA 23 ENGIE ENERGIA CHILE – INVESTOR PRESENTATION 1H24
Slide 24: Key Messages and Action Plans
KEY MESSAGES AND ACTION PLANS Re-balancing portfolio Moving forward with Accelerating Accelerating Securing liquidity and through renewable energy transition with development of development of financing needs additions, back-up PPAs strong CAPEX in renewable projects renewable projects and and and L
Slide 25: 2.0 Additional Material
2.0 ADDITIONAL MATERIAL
Slide 26: 2.1 Energy Transition
2.1 ENERGY TRANSITION ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2023
Slide 27: Energy Transition
ENERGY TRANSITION EECL is embarked on a profound generation portfolio transformation 2018 2026 + 2.1 GW Renewables 1% 8% 34% Installed Installed - 58% 33% capacity capacity 1.2 GW Coal disconnection 66% 1.9 GW 3.1 GW Coal Gas Diesel Renewables Gas Renewables/ BESS 0.4 GW Conversion 27 ENGIE ENERGIA
Slide 28: Generation Portfolio Transformation
GENERATION PORTFOLIO TRANSFORMATION Addition of 2.1 GW renewables 0.9 GW / US$1.0 bn already done LOS LOROS MONTE REDONDO CALAMA TAMAYA CAPRICORNIO SAN PEDRO (*) COYA BESS COYA 46 MWac – 2H19 82 MW – 2H20 151 MW – 4Q21 114 MWac – 1H22 88 MWac – 4Q22 101 MW – 4Q22 180 MWac – 1H23 139 MW/638 MWh – 4Q2
Slide 29: Generation Portfolio Transformation: Coal Closures
GENERATION PORTFOLIO TRANSFORMATION 1.2 GW of coal capacity to be closed by YE-2025 U12 U13 U14 U15 CTM1 CTM2 CTA CTH IEM -171 MW – 2019 -268 MW – 2022 -334 MW – 2025 -356 MW – 2025 =377MW – 2026 2018: US$ 53 million 2019: US$ 134 million 2023: US$491 Million Coal to gas US$ 491 million after-tax no
Slide 30: 773 MW Renewable Projects Added Since 4Q21
773 MW RENEWABLE PROJECTS ADDED SINCE 4Q21 784 GWh generated in 1H24 (1,670 GWh in 2023). BESS Coya in operation 151MW Calama 114MWac 88MWac wind farm Tamaya PV Capricornio PV US$160 million US$84 million US$100 million investment investment investment COD: 29-Oct-21 COD: 14-Jan-22 COD: 21-Nov-22 10
Slide 31: 574 MW Wind and Battery Projects Under Construction
574 MW WIND AND BATTERY PROJECTS UNDER CONSTRUCTION Lomas de Taltal. 80% advance rate as of 30-Jun-24. 850 GWh additional renewable generation 2025e 342MW 68MW / 418 MWh 48MW / 254 MWh 116MW / 660 MWh Lomas de BESS Tamaya BESS Capricornio BESS Tocopilla Taltal Wind (storage) (storage) (storage) US$4
Slide 32: Renewable Projects
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) • Wind Fidelia (EID):
Slide 33: Network Projects
NETWORK PROJECTS Environmental permit requests • Approved RCA: ▪ Dolores substation (Approved Sep-22) ▪ Roncacho substation (Approved May-22) ▪ Desalant substation (Approved May-22) ▪ Liqcau (ex-La Negra) substation (Approved April-22) ▪ Algarrobal substation (Pertinence letter approved Feb-22) ▪ Po
Slide 34: 2.2 ESG
2.2 ESG
Slide 35: Our Sustainability Strategy
OUR SUSTAINABILITY STRATEGY Embedded in our business and aims to create value in our four sustainability pillars Our purpose is to act to accelerate the transition towards a In 2023 we… carbon-neutral economy, through reduced energy consumption and more environmentally friendly solutions PLANET PEOP
Slide 36: Sustainable Finance
SUSTAINABLE FINANCE The first Sustainability-linked loan of IFC in Chile A green loan that accounts for the work we do everyday hand in hand with the care of people and the environment US$400 million 10-year term financing available to refinance debt and finance green projects In line with ENGIE’s t
Slide 37: Progress on ESG at Engie Chile
PROGRESS ON ESG AT ENGIE CHILE People and Planet Climate change Renewable Gender Health mitigation energy balance & Safety GHG emissions 2030 Share of 2030 Gender diversity 2030 Frequency rate 2030 from energy GROUP renewables GROUP % of women in GROUP Lost time injury GROUP TARGET TARGET TARGET pro
Slide 38: ESG Rankings, Certifications and Initiatives
ESG RANKINGS, CERTIFICATIONS AND INITIATIVES To track our performance Corporate Commitments EECL “ESG” Certifications SET Label certified that EDGE Certification ECOVADIS is the ISO 40001 our project sets the leading largest global Environmental ENGIE Group is part of the development and global stan
Slide 39: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY A just energy transition to help communities thrive Just New Stakeholders Transition Projects Engagement Responsible coal-exit Accelerating renewables Our approach 1. Employment and new 1. Early citizen 1. Associativity Policy skills participation 2. Social investment
Slide 40: 2.3 Transmission
2.3 TRANSMISSION
Slide 41: EECL: A Relevant Player in Transmission
EECL: A RELEVANT PLAYER IN TRANSMISSION 2,128 Kms. transmission lines, 37 substations and 50% share in TEN Substations ENGIE’S transmission lines Transmission 12 substations 1,032 Generation MVA substations 13% 25 2,128 946 Kms AVI + COMA for National & Zonal systems 87% Owned & Operated Operated In
Slide 42: National / Zonal Transmission Projects Awarded
NATIONAL / ZONAL TRANSMISSION PROJECTS AWARDED Arica y Parinacota New Works CAPEX (MUSD) COD Nueva Chuquicamata Liqcau substation (ex La Negra) 36 TBD Antofagasta Albemarle SS La Ligua substation 30 2Q25 Capricornio SS Totihue new sectioning + new Totihue 2x66 kV transmission line 40 1Q26 Atacama Al
Slide 43: 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 44: Transmisora Eléctrica del Norte S.A. (TEN)
TRANSMISORA ELÉCTRICA DEL NORTE S.A. (“TEN”) Tariff decree for the 2020-23 period published with delay in Feb-23 TEN revenue scheme Project finance as of 30-Jun-24 Regulated revenues on “national assets” (AVI) Senior 18-yr USD Loan Contractual toll with EECL on “dedicated assets” 26-yr USD Fixed-rat
Slide 45: 2.4 EECL and Market Information
2.4 EECL AND MARKET INFORMATION
Slide 46: ENGIE Energía Chile S.A.
ENGIE ENERGÍA CHILE S.A. A diversified asset base concentrated in Chile’s mining region 110/220kV Gasoducto Our operations Our sites Arica y (2,128 km) Norandino (1,066 km) Our largest clients Parinacota 4th largest GenCo in Chile TOCOPILLA Mining Gas (434MW) Antofagasta 2.7 GW gross capacity (500 k
Slide 47: Industry and Company Highlights
INDUSTRY AND COMPANY HIGHLIGHTS EECL has 7% market share in terms of installed capacity and 15% in terms of electricity sales Gross capacity Generation Demand Market share Other Engie 7% Hydro 4% Solar Renewables AES SISTEMA 29% 21% Coal 33% Regulated 39% Enel Andes 27% ELÉCTRICO 18% 11% NACIONAL 35
Slide 48: PPA Portfolio with 8-Year Remaining Average Life
PPA PORTFOLIO WITH 8-YEAR REMAINING AVERAGE LIFE Free clients: 10 yrs. Regulated clients: 6 yrs. 450 400 Clients’ credit ratings Distribution 350 Companies (S&P/Moody’s/Fitch): Average Demand (MW) (South, SEN) 300 Codelco - Codelco: BBB+/Baa1/BBB+ 250 Others - Freeport-MM (El Abra ): BB+/Baa2/BBB- 2
Slide 49: Heavily Contracted Position Provides Stable Sales Revenue
EECL’S HEAVILY CONTRACTED POSITION PROVIDES THE BASIS FOR STABLE SALES REVENUE The PPA price increase capturing high fuel prices has reversed since 2H23 Prices Energy sales GWh Energy sales and prices 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 4Q1
Slide 50: Volatile Marginal Costs Affected by Renewable Intermittency
VOLATILE MARGINAL COSTS AFFECTED BY RENEWABLE INTERMITTENCY A 10-day real example in the SEN grid (June 1 to 10, 2024) 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 17 22 3 8 13 18 23 4 9 14 19
Slide 51: Regulatory Initiatives
REGULATORY INITIATIVES GENERATION DISTRIBUTION • New Tariff Bill (Subsidy extension). • Tariff fixing process(VAD 2020- • Tariff Normalization Law implementation (“PEC3”). 2024). • Bill Energy Transition & amendments (ITs reallocation, vertical integration limits). • Update Coordination & Operation
Slide 52: Financing Activity
FINANCING ACTIVITY Securing funding and liquidity for the energy transition 144A / Reg S Bonds PEC Accounts Receivable (ARs) Bank loans as of 30-Jun-24 as of 30-Jun-24 monetization programs US$1,195 million US$1,136 million US$475 million (o.w. US$193 mln < 1 yr.) (o.w. US$136 mln < 1 yr.) Cashed-in
Slide 53: 10% Increase in Stock Price in Last 12 Months
10% INCREASE IN STOCK PRICE IN LAST 12 MONTHS No dividends paid on account of 2022 and 2023 results 30-Jun-23 30-Jun-24 EECL: CLP 768 EECL: CLP 842 (+10%) IPSA: 5,787 IPSA: 6,414 (+11%) Genco’s: 100 Genco’s: 102 (+2%) up 10% to CLP 842 120 100 Colbun Enel ECL IPSA Genco's 80 Jun-23 Jul-23 Aug-23 Sep
Slide 54: Ownership Structure
OWNERSHIP STRUCTURE 50% Pension Local Foreign 59.99% 15.07% 17.56% 7.04% Individuals 0.34% 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 del Andina SpA
Slide 55: 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 1H2024 results in our web page Presentation Addenda Press Release Recorded Financial Analyst pack conference Report audiocast 55 ENGIE ENERGIA CHILE – I
Slide 56: 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