Erg S.p.a. · MIL:ERG
Erg — Italian Infrastructure Day 2024
38 slides from Erg's conference presentation, Sep 12, 2024
Slide 1: ERG Company Overview
ERG COMPANY OVERVIEW Italian Infrastructure Day 12 September 2024
Slide 2: Disclaimer
DISCLAIMER This document contains certain forward-looking information that is subject to a number of factors that may influence the accuracy of the statements and the projections upon which the statements are based. There can be no assurance that the projections or forecasts will ultimately prove to
Slide 3: Agenda
AGENDA ❑ ERG Today ❑ Recent Developments, 2Q 2024 Results and 2024 Guidance ❑ Financials & Capital Structure ❑ Abstract of ERG's 2024-2026 Business Plan ❑ Management Profiles
Slide 4: ERG Today
ERG TODAY Teleborsa: distribution and commercial use strictly proh EMARI SDIR
Slide 5: A Long History…
A LONG HISTORY… Wind: ERG enters the Sweden market, and starts operation in U.K.. With the acquisition At year-end installed of Andromeda wind capacity On October 17 ERG Power’s assets (51MW), in Europe is 2,198MW. ERG sells the CCGT, combined cycle ERG increases On August 2, ERG signs becoming a pu
Slide 6: Group's Structure and Best-in-Class Governance Model
GROUP'S STRUCTURE AND BEST-IN-CLASS GOVERNANCE MODEL A new Shareholders' structure(1) ERG’s Governance Model SQ Renewables S.p.A. SHAREHOLDERS’ MEETING San Quirico S.p.A. IFM Investors SQ Renewables S.p.A. 34% Treasury shares 35% 49% Free Float 65% BOARD OF DIRECTORS BOARD OF STATUTORY AUDITORS 51%
Slide 7: ERG as of Today: A Solid and International Platform
ERG AS OF TODAY: A SOLID AND INTERNATIONAL PLATFORM Sweden: Installed Capacity (MW) ERG geographical Presence (MW) 62MW Wind 17% Solar 3,796 U.K.: 249MW 83% Iowa: 224.4MW Illinois: Germany: 92.4MW 42% 50% 8% 327MW 11% 21% 29% 1,594 1,885 317 Poland: 142MW 89% 79% 71% Romania: 70MW Pipeline (MW) 3% 5
Slide 8: Top Tier ESG Recognition
TOP TIER ESG RECOGNITION Advanced = Advanced A =A A+ AAA = AAA Negligible risk 100 = B+ = Low = 79 A 65 Robust B C High Weak D D- CCC Severe risk 0 Rating Scale ERG Rating Sector Average Rating ERG best-in-class in ESG: 28th worldwide and 1st in Italy in the Corporate Knights Global 100 8
Slide 9: Recent Developments, 2Q 2024 Results & 2024 Guidance
RECENT DEVELOPMENTS, 2Q 2024 RESULTS & 2024 GUIDANCE
Slide 10: Highlights: Key Figures
HIGHLIGHTS: KEY FIGURES(1) EBITDA(2) (€ mn) CAPEX (€ mn) 271 281 444 311 290 EBITDA Margin 246 International 116 107 Italy Corporate 1H 2023 1H 2024 2Q 2023 2Q 2024 1H 2023 1H 2024 2Q 2023 2Q 2024 Net Profit(3) (€ mn) NFP(4) (€ mn) 114 1,912 106 1,445 36 28 1H 2023 1H 2024 2Q 2023 2Q 2024 31/12/2023
Slide 11: Recent Achievements
RECENT ACHIEVEMENTS Repowering: Mineo-Militello-Vizzini (101MW) started up in Italy Growth US: Closing of Wind and Solar Portfolio acquisition (317MW in operation) Organic Growth in France: started up 29MW PV and 41MW Wind Sustainable Finance: issued ERG’s fourth €500mn Green Bond Fitch affirmed ERG
Slide 12: Execution Well on Track
EXECUTION WELL ON TRACK ~60 ~ 3,900 42 ~3,830 317 51 47 Storage 73 ~3,300 Solar Wind In operation In final phase of construction 2023 Falcon Roccapalumba Mineo-Militello Pinnacle(2) France @end of Under Expected Vizzini(1) Greenfield (3) August construction(4) FY 2024 2024 A secured and internationa
Slide 13: Building Up a Larger and Well Diversified Portfolio in Europe
BUILDING UP A LARGER AND WELL DIVERSIFIED PORTFOLIO IN EUROPE Reinsdorf (RPW) Salemi-Castelvetrano (RPW) Picardie 1 Corlacky 76MW to be, 18MW 47MW 50MW Δ vs as-is COD: 4Q 2024 COD: 1Q 2025 COD: 4Q 2025 Producibility: 2,300 heq Producibility: 2,670 heq Producibility: 3,760 heq Reinsdorf (RPW) Siena (
Slide 14: A Platform of PPA with Tier 1 Off-Takers to Stabilize Revenues
A PLATFORM OF PPA WITH TIER 1 OFF-TAKERS TO STABILIZE REVENUES Country & Asset Type Plants & Capacity Price Structure Tenor / Start Date Counterparty Volume Evishagaran / Craiggore 6 years ~250GWh/Y Greenfield Fixed Price tot. 70MW Jan ’22 Pay as Produced Asset Based Bois Bigot, Bois de l’Arche/Thet
Slide 15: Confirming 2024 Guidance
CONFIRMING 2024 GUIDANCE Adjusted EBITDA (€ mn) CAPEX (€ mn) Adjusted NFP(2) (€ mn) 1,912 1,750-1,850 520-580(1) 550-600 444 520(1) 281 1H 2024 2024 1H 2024 2024 1H 2024 2024 Actual Guidance Actual Guidance Actual Guidance Actual Guidance range (1) EBITDA guidance net of clawbacks. It includes IFRS
Slide 16: Financials & Capital Structure
FINANCIALS & CAPITAL STRUCTURE
Slide 17: EBITDA Evolution in the Plan Period
EBITDA EVOLUTION IN THE PLAN PERIOD 2023 2024 2026 19% 22% 25% Wind Technological €534 €520-580 €600-650 Solar diversification mn mn mn 81% 78% 4% 15% US 46% 36% 50% Geographical €534 €520-580 €600-650 Europe diversification mn mn 35% mn Italy 54% 60% 17% 15% 17% EBITDA Regulated €534 €520-580 €600-
Slide 18: 640MW Out of Incentives in the BP Period
640MW OUT OF INCENTIVES IN THE BP PERIOD Phasing out of incentives in the period (MW) Revenues Structure: production hedging (TWh) Wind Bulgaria Wind France Spot @ Pzon BL(1) CFD Wind Germany Wind Italy Hedging to close PPA closed 9.3 PPA to close Short Term Hedged 1.9 In 2024-2026 BP = 640MW 7.4 Co
Slide 19: A Solid Financial Structure
A SOLID FINANCIAL STRUCTURE Gross debt at 30/06/2024 Repayment Schedule based on stock as of June 2024 (€ bn) Corporate Loans 5% 8% 16% Green Bonds 19% ~0.7 ~2.2 Project Finance ~€2.2 bn ~0.4 Fully hedged and ~1.4 not exposed to 79% 73% June 2024 ~0.6 market volatility Issuer Default Rating: BBB- St
Slide 20: Still Headroom to Create Value…
STILL HEADROOM TO CREATE VALUE… Net debt & leverage over BP horizon Net financial position(1) Leverage (NFP/EBITDA) ~1.9 1.75 -1.85 (€ bn) 4.0 1.4 Financial Policy Net Debt/EBITDA 3.3 3.0 2.8 // 2023 2024 2026 // Cost of Gross Debt(3): 1.3% 1.5% // ~1.7% 2023 2024(2) 2026 Euribor 6m(4): 3.7% ~3.5% /
Slide 21: … Thanks to Highly Competitive Financing Costs
… THANKS TO HIGHLY COMPETITIVE FINANCING COSTS ERG having a near-term low cost of debt … … that leverages on sustainability also compared to the industry Sustainable Traditional & other ERG Panel of Utilities and Gencos - EU ERG (IG) ~95% ~5% Peer 1 (IG) ~75% ~25% Peer 2 (IG) ~70% ~30% (1) Peer 3 (I
Slide 22: A New Successful Green Bond Issuance
A NEW SUCCESSFUL GREEN BOND ISSUANCE • On June 26 ERG issued its 4th Green Bond (settled on July 3, 2024) • Very well received by the market: demand peaking >5x • Significant participation of international investors and national institutions 4.125% coupon €500mn size 6Y tenor UoP: ~3% pre-hedged The
Slide 23: Abstract of ERG's 2024-2026 BP
ABSTRACT OF ERG’S 2024-2026 BP
Slide 24: EU & US Are Still Growing Market for Renewables
EU & US ARE STILL GROWING MARKET FOR RENEWABLES Cumulative RES Capacity in Europe (GW, 2018-2028F) Cumulative RES Capacity in US (GW, 2018-2028F) ~890 +13% p.a. ~790 ~700 +13% p.a. ~600 ~620 +13% p.a. ~540 65% ~530 64% Solar ~470 ~470 62% Wind ~415 ~410 60% +15% p.a. ~360 ~360 64% 66% ~320 58% ~320
Slide 25: In a Context of Higher Capital Intensity and Cost of Capital...
IN A CONTEXT OF HIGHER CAPITAL INTENSITY AND COST OF CAPITAL... Context ERG's ability to react Avg. Solar & Wind Capex in Italy (€mn/MW, 2019-2023) ~60% Onshore Wind • A selective and flexible investment approach Solar Higher capital • Targeting a 200-400bps return over WACC intensity • Framework ag
Slide 26: Volatility in Natural Gas and Electricity Prices
VOLATILITY IN NATURAL GAS AND ELECTRICITY PRICES Electricity prices – 2024 daily fwd prices evolution (€/MWh) Volatility remains high even in FWD expectations and main providers scenario (€/MWh) FWD Oct/Nov '23 115 - 150€/MWh FWD Feb/Mar ‘24 60 - 95€/MWh 2024 2025 2026 Italy France Germany Price ran
Slide 27: Regulatory Framework in Evolution
REGULATORY FRAMEWORK IN EVOLUTION CFDs & PPAs Repowering Storage Grids ERG’s Policy • Solid CFDs support schemes in • Dedicated schemes/auctions • Support mechanisms • Increase investments Asks / What place or expected soon in ERG core • Relaxation of tip height limits • Bespoke regulatory framework
Slide 28: ERG's 2024-2026 Plan: Value over Volume
ERG’S 2024-2026 PLAN: VALUE OVER VOLUME ERG’S new targets to 2026 Ca. 4.5GW (+1.2GW) installed Capacity in 2026 (> 5.0GW in 2028) pursued via Selective growth a cherry-picking approach from our Pipeline and/or M&A Investments/EBITDA CAPEX: €1.2bn 2024-2026; EBITDA: €600-€650mn @2026 Route to market
Slide 29: ERG Is Aiming at Creating Value in a Complex Scenario
ERG IS AIMING AT CREATING VALUE IN A COMPLEX SCENARIO ❑ Targeting 200-400bps over WACC SELECTIVE GROWTH 2024→2026 60% Secured 1.2GW ❑ Visible growth ❑ Solid pipeline underpinning the target ❑ Assessing asset rotation to maximise value QUASI-REGULATED ❑ EBITDA range at €600-650mn BUSINESS MODEL New 2
Slide 30: Pursuing Growth with a "Value over Volume" Approach
PURSUING GROWTH WITH A "VALUE OVER VOLUME" APPROACH Pipeline (MW) Already permitted Technology Layer Flexible Approach 340 340MW Under Construction 350 50MW Greenfield at advanced stage Cherry Picking based on: • Route to mkt secured 750 250MW Repowering • Land secured • Proven technology • CAPEX se
Slide 31: A Flexible and Selective Approach to Growth
A FLEXIBLE AND SELECTIVE APPROACH TO GROWTH ERG's Key Priority country ERG's country & possible development • Focus on key core countries to consolidate ERG’s presence • Supportive regulatory framework as a key driver • US as a priority with a “learn & grow” approach • Assessing asset rotation oppor
Slide 32: Our Repowering Projects in Europe Are Gaining Visibility
OUR REPOWERING PROJECTS IN EUROPE ARE GAINING VISIBILITY Project MW as is MW to be Delta MW Delta Prod. VIA Decree AU Decree 1 10 20 2x 2x ✓ ✓ N. WTG 2 10 20 2x 3x ✓ ✓ 0.5X 3 50 100 2x 3x ✓ ✓ REPOWERING 4 30 60 2x 3x ✓ ✓ MW 2.0X ÷ 2.5X 5 10 20 2x 3x ✓ ongoing KW 6 30 35 1x 2x ✓ ongoing 7 40 120 3x 4
Slide 33: ESG Strategy 2024-2028
ESG STRATEGY 2024-2028 Net Zero • ERG Academy for Next Generation Circular Economy • Sharing Value for the Community E NG A Energy Efficiency ET • Top Tier ESG Recognition N G PLA EM EN Natural Capital preservation • Social Purpose for Solar Revamping T • Sustainability Incentives ERG Academy for ER
Slide 34: Management Profiles
MANAGEMENT PROFILES
Slide 35: Paolo Merli – Chief Executive Officer
PAOLO MERLI – CHIEF EXECUTIVE OFFICER Born in Milan on 24th June 1971, he graduated in Electrical Engineering from the University of Pavia in March 1996. After doing his national service at the Italian Red Cross, in June 1998 he was awarded an MBA in Finance from the Eni "Scuola Superiore Enrico Mat
Slide 36: Michele Pedemonte – Chief Financial Officer
MICHELE PEDEMONTE – CHIEF FINANCIAL OFFICER Born in Genoa on 2nd March 1975, he graduated in Economics from the University of Genoa. He joined the ERG Group in 2006 where he is currently Chief Financial Officer with the responsibility of Group Administration, Finance & Group Risk Management, Plannin
Slide 37: Emanuela Delucchi – Chief ESG, IR & Communication Officer
EMANUELA DELUCCHI – CHIEF ESG, IR & COMMUNICATION OFFICER Born in Genoa on 18th December 1975, she graduated in Economics from the University of Genoa in March 1999. She joined the ERG Group in February 2008 where she is currently Chief ESG, IR & Communication Officer, with the mission to develop an
Slide 38: Inspiring Change to Power the Future
INSPIRING CHANGE TO POWER THE FUTURE