Engie S.a. · EURONEXT:ENGI
Engie — Investor Day (July 2019)
59 slides from Engie's investor day presentation, Jul 9, 2019
Slide 1: ENGIE Renewables Investor Seminar
ENGIE RENEWABLES INVESTOR SEMINAR London, July 9th, 2019 1
Slide 2: ENGIE Renewables agenda
ENGIE Renewables 3 INTRODUCTION Market dynamics Gwenaëlle AVICE-HUET Ambition ENGIE capabilities & strategy Thierry KALFON 21 HYDRO Hydro in France Hydro in Brazil Eduardo SATTAMINI ENGIE capabilities & strategy Thierry KALFON France 28 WIND & SOLAR Jean-Claude PERDIGUES Brazil North America Andre C
Slide 3: Capacities: 24.4GW @100% and financial results
Capacities: 24.4GW(1)@100% Financial Results Hydro 16.4GW Top 1 position Emerging position Wind Renewables 5.4GW 22% EUROPE (exc. France) Solar 2.1GW COI 2018 2.0GW France €5.1bn NORAM 7.0GW Others(2) 0.8GW MESCAT 0.5GW Brazil 0.4GW 12.7GW ASIA 0.5GW LATAM AFRICA (exc. Brazil) 0.4GW 0.5GW ~500MW und
Slide 4: 24.4 GW installed capacity at 100% and consolidated
2018 installed capacity at 100% 2018 installed capacity at % of consolidation(2) 8% 7% 2% 3% 22% 24.4 GW 21% 68% Hydro(1) 17.5 GW 69% installed installed capacity Wind capacity Others(3) Solar in GW Hydro(1) Wind Solar Others(3) TOTAL in GW Hydro(1) Wind Solar Others(3) TOTAL EUROPE 4.0 3.6 1.0 0.3
Slide 5: Market dynamics
MARKET DYNAMICS 55
Slide 6: Global renewable power generation installed capacity
Global renewable power generation installed capacity (GW) 2017 vs. 2040 Solar & Wind • >2,400GW installed RES capacity in 2018, 4 500 4,240 (34% of total installed capacities) of which 32% x10 4 000 in China, 25% in Europe and 16% in North America 3 500 3 000 2,819 • Wind and solar PV are taking the
Slide 7: Falling LCOE of solar PV and wind
7 ~-90% IN SOLAR PV AND ~-50% IN ONSHORE WIND IN 10 YEARS LCOE(1) = Average cost per renewable power generation technologies LCOE ($/MWh, 2018 real) • Solar PV - wind onshore - wind offshore costs have 400 Utility PV, tracking dropped respectively by 88%, 50% and 57% since 350 Utility PV, no trackin
Slide 8: Trends driving the corporate PPA market
Duration of US utility scale solar PV PPA(1) portfolio • Trends driving Corporate PPA market 100% • US: Utility scale solar PV PPAs with a maximum 20 year tenor accounted for ~20% of signed PPAs 90% in 2018 vs. ~10% in 2016 80% • Mexico: Winning bids in the Nov. 2017 Mexican auction, had a 10% to 20
Slide 9: Fast development of corporate PPAs
9 Volume of corporate PPAs signed by year (GW) • Fast development of corporate PPAs(1) (mainly in the US): 13.4GW in 2018 from 6.1GW in 2017 • Driven by commitments by corporates and local governments for green energy supply (i.e. 161 companies’ members of “RE 100” committed for 100% renewable suppl
Slide 10: Investor returns for contracted renewables
Financial investors own almost 50% Investors’ unlevered IRR for onshore wind (May 2019) of European solar assets • Commoditized Spain (merchant) 10% renewables lead UK (merchant) Utility to a high competition 12% Financial Italy investors amongst investors Ireland 55% leading to lower returns UK (Cf
Slide 11: Ambition
AMBITION 1111
Slide 12: ENGIE's integrated value chain and client portfolio
Development Project origination and development with local teams in selective geographies Engineering & Construction Strong engineering and business expertise, project EPC run internally Pragmatic approach: when relevant &value creative, financial platforms put in place Partial Sell-Down to industri
Slide 13: COI 2018
COI 2018 Hydro • Largest contributor to renewables earnings, historically providing a stable and recurrent stream of revenues • Merchant exposure to provide additional growth Wind in the mid-term 31% Hydro 64% €1.1bn Wind & Solar Solar • To provide additional growth on the back of higher assets 6% c
Slide 14: Capex optimization through sell-down 2019-2021
Capex optimization through sell-down (€bn) 2019-2021 Growth Capex net DBSO ~9 Hydro ~0.4 Hydro 30% & other DBOO Wind & Solar ~8.2 WIND ~€2.5bn(1) & SOLAR ~2.5 ~0.4 70% ~1.7 DBSO Other + DSBO ~0.3 ~0.3 2019-2021 2019-2021 gross Capex Capex net DBSO (1) Mid-range of €2.3-2.8bn 14
Slide 15: Faster growth, higher value, better impact: COI 2021 target
Faster Growth Higher Value Better Impact Target of ~9 GW (100%) Corporate PPA Leader Access to energy to be added over 2019-21 • 2019-21: Almost 50% of new RES Storage projects linked to client solutions Cost-efficient renewables Tier 1 position in terms of development • 2/3 of new capacities dedica
Slide 16: Faster Growth: 1.3GW built at end of H1
Faster Growth 1.3GW BUILT AT THE END OF H1: ON TARGET FOR 3GW PER YEAR PLANNED IN CMD MAIN PROJECTS (MW @ 100%) In GW 0.5 9 3.0 8.5 4.2 1 Brazil: Umburanas (253) Inde: Kadapa (250) USA: Live Oaks (200) South Africa: Kathu (200) Brazil: Paracatu (158) 1.3 2 Installed H1 Under Secured Total Gap 2018-2
Slide 17: Faster Growth: ENGIE Renewables capacities excl. hydro
Faster Growth ENGIE RENEWABLES CAPACITIES EXCL. HYDRO At 100% At consolidation share(1) ~17GW ~9GW 15 8 5.4 10 7.9 4 5 0 0 2012 2015 2018 2021 2012 2015 2018 2021 Wind Other (Biomass, biogas) Solar Wind Other (biomass, biogas) Solar +3GW/year over 2019-2021 +1GW/year over 2019-2021 compared to an av
Slide 18: Faster Growth: installed capacity vs. competitors
Faster Growth Average installed RES capacity, GW/year @100% ENGIE vs. competitors (European and US RES developers) 3GW/yr 2016-2018 2019-2021 18
Slide 19: Higher Value: technologies and offers
Higher Value Technologies Offers TODAY’S NICHE MARKETS MAY TURN GLOBAL FROM “AS PRODUCED” TO “AS CONSUMED” Short Term Biomethane Geothermal Separated 2021 Standardized Short-Term Fixed wind offshore Upstream & Renewable Service Downstream Plants Contracts Models Grid scale Floating wind Medium Term
Slide 20: Higher Value: milestones in sophisticated technologies
Higher Value IMPORTANT MILESTONES IN SELECTED SOPHISTICATED TECHNOLOGIES MOMENTUM OF CORPORATE PPAs IN THE US Vol-V Biomasse acquisition: ENGIE becomes France's leading biomethane producer (80 projects, aim of producing 5 TWh/year of biomethane by 2030) 1.2 GW signed over the past 12 months with cor
Slide 21: Hydro
HYDRO 2121
Slide 22: Hydro operating models, France and Brazil
OPERATING MODELS (excluding Pump Storage) FRANCE & BRAZIL BRAZIL Reservoir power plant Run-of-river plant Central dispatcher Water is stowed and released through turbines Plant turbines run continuously the water coming In Brazil, the dispatch is centralized, & alternators to produce electric power
Slide 23: France: CNR and SHEM
FRANCE CNR SHEM 49.97% ENGIE ownership 100% ENGIE ownership 19 Hydro Power plants 56 Hydro Power plants & dams over Rhône River & 12 dams in the Pyrénées mountains & over Dordogne & Lot rivers 3,072MW – Production in 2018: 14.3TWh 783MW – Production in 2018: 1.8TWh Around 1,000 kT Nearly 600kT of CO
Slide 24: Brazil: ENGIE's operated hydro installed capacity
BRAZIL 6 1 10 STRONG POSITION IN BRAZIL, BEING THE LARGEST INDEPENDENT POWER 5 13 14 PRODUCER IN THE COUNTRY 12 7 8 42 113 9 Private Sector - Installed capacity (GW) Net ownership(1) ENGIE’s Operated Hydro Installed Capacity (MW) Offtaker Installed Commercial Hydro Power Plants (corporate or COD Cap
Slide 25: Brazil: hydrology risk mitigation mechanism and GSF
BRAZIL Hydrology risk mitigation mechanism (MRE)(1) Difficult hydro conditions since 2014 (GSF)(2) Strong performance despite hydro headwind 1.30 340 North 310 Secondary 1.20 1.13 280 1.10 1.09 1.08 1.09 1.08 250 Northeast 1.02 1.04 1.03 0.99 220 1.00 0.91 190 GSF 0.90 0.85 0.87 0.84 160 0.81 0.80 1
Slide 26: Brazil: €950M acquisition
BRAZIL COMMERCIALIZATION • Energy directed to free Market (30%) enhanced EBE’s(1) portfolio, enabling the creation of new products • First units of EBE in the system of quotas (no GSF risk on 70% of capacity) • PPA of 30 years indexed to inflation (IPCA) LEVERAGED INVESTMENT • Cash generation as of
Slide 27: Brazil: hydrology forecast and regulatory framework
BRAZIL HYDROLOGY FORECAST LONG TERM POWER PRICES STRUCTURAL GSF MECHANISM NEW REGULATORY FRAMEWORK Compensation for out Introduction of hourly prices of merit order dispatch (GFOM) Gradual reduction in subsidies Breakdown of the capacity and energy markets Valuation of plant additional services in t
Slide 28: Wind & Solar
WIND & SOLAR 2828
Slide 29: DBOO, SDBO, DSBO and DBSO models
DEPENDING ON IF & WHEN EQUITY IS PARTIALLY SOLD TO INVESTORS On balance sheet Deconsolidated DEVELOPMENT CONSTRUCTION OPERATION & MAINTENANCE 1 2 3 4 DBOO SDBO DSBO DBSO Develop Build Own Operate Share Develop Build Operate Develop Share Build Operate Develop Build Share Operate No sale “pSale1” bef
Slide 30: Adjusting business models to market context
ADJUSTING TO MARKET CONTEXT Business models Market context INTEREST RATE INCREASING ENVIRONMENT DBSO or DSBO Intensity If the context was Deconso- in competition to drastically change, lidation ENGIE would adjust development pace Exposure to merchant risks ENGIE Green (or shorter PPA duration) WHY K
Slide 31: Normative wind onshore and solar project in Europe
NORMATIVE 10 MW WIND ONSHORE & SOLAR PROJECT IN EUROPE (COMPETITIVE TENDER) Cash Flow to Equity (€k/MW gross) 75 DBSO DBOO 55 Sell-down for DBSO model with 50% sell down 35 15 SOLAR €0.6-0.8M/MW €0.05-0.15M/MW NET CAPEX (5) 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 WIND €
Slide 32: Typical contribution and financial impacts at ENGIE level
TYPICAL CONTRIBUTION & FINANCIAL IMPACTS AT ENGIE LEVEL Average contribution during At commissioning contracted operations DBSO Margin Recurring Net Result of JV €0.05-0.4M/MW gross €5-15k/MW net Net Result capacity capacity Group €0.05-0.15M/MW gross €1-10k/MW net capacity capacity Net Capex DBSO €
Slide 33: France: wind and solar market shares
FRANCE 2500 14% 15% 2000 10% FRENCH 10% 1500 WIND MARKET 2.1 6% 1000 4% GW 3% 2% 2% 2% 5% (1) 2% 2% 15GW500 1% 1% 0 0% Engie France EDF Boralex (incl. RES France EDPR France Total Eren Neoen ERG France Valeco (EnBW) Enertrag Valorem Akuo Energy EnR Renouvelables Kallista) Quadran D.E. (incl. Luxel)
Slide 34: France: market perspective and auction mechanism
FRANCE Market perspective Auction mechanism Energy Transition Law Feed-in premium (CfD) for 20 years guaranteed by the State • Increase the share of renewables to 23% of the gross final Market Price energy consumption by 2020 and to 32% by 2030 Strike price • Reach 40% of renewables in the electrici
Slide 35: France: ENGIE wins in solar auctions
FRANCE CRE 4 solar tender– cumulative MW won 0 50 100 150 200 250 300 500 550 600 ENGIE is a big winner of the latest solar auctions in France Urbasolar Strong competitiveness based on strong capabilities: Total • Origination (partnerships, notably with Suez) Neoen • Financing - Leverage ENGIE’s str
Slide 36: Brazil: NCR boosting growth
6 BRAZIL NCR(1) BOOSTING GROWTH: ~1.2 GW INSTALLED IN THE PAST 5 YEARS AND 1.9 GW UNDER DEVELOPMENT PPAs Commercial Offtaker (corporate Power plants Installed Duration Capacity or captive COD in operation Capacity (MW) (years) (aMW) clients(2)) 1 Umburanas Complex (Wind) 20 360 213 Both 04/24/2019 3
Slide 37: North America: price competitiveness
NORTH AMERICA Estimated Texas LCOEs vs ERCOT(2) Estimated mid-Atlantic LCOEs vs PJM(3) PRICE COMPETITIVENESS power prices power prices • Land availability, with limited constraints (social and environmental) • Excellent wind and solar resources • Federal and State level incentives (“PTC” &“ITC”)(1)
Slide 38: North America: large portfolio and broad solutions
NORTH AMERICA LARGE PORTFOLIO, DEVELOPMENT TEAM, BROAD SOLUTIONS AND COMMERCIAL RELATIONSHIPS Diversified Large portfolio of projects (>10GW) and well Portfolio diversified (technology, markets and delivery date) Experienced Very experienced team from origination to project Team delivery of more tha
Slide 39: North America: energy services offering
NORTH AMERICA Equipment Infrastructure Technology Maintenance upgrades improvement Optimization & Monitoring ENGIE Insight(1) ENERGY • Expense Data Management EFFICIENCY • Energy Supply Management • Energy Star Reporting COMMODITY Demand Usage Invoice Measurement Analysis Analsysis Analysis & Verifi
Slide 40: North America: ENGIE's renewables continuum
NORTH AMERICA ENGIE’S RENEWABLES CONTINUUM CUSTOM CORPORATE PHYSICAL STRUCTURED RECS(1) PPA / VPPA GREEN SUPPLY SOLUTIONS KEY CLIENT PRIORITIES A customer’s desire to demonstrate that their action directly increments ADDITIONALITY renewable generation… A customer’s desire to demonstrate actions that
Slide 41: North America: round-the-clock 24x7 PPA structure
NORTH AMERICA INNOVATIVE STRUCTURE ADDRESSING THE FUTURE OF CORPORATE PPAS SOLAR WIND GEM(1) “ROUND THE CLOCK” “24X7” ~xxMW PPA ~yyMW PPA Balancing Power ~zzMW PPA ENGIE Solar Project ENGIE Wind Project MW • This structure transforms intermittent wind & solar to a firm 24x7 zzMW baseload profile • “
Slide 42: North America: market diversification
NORTH AMERICA Diversity of off-taker types Solar and Wind Wind 2,011MW(1), Solar PV 525MW(1) Utility Market diversification – Data Center ERCOT, SPP, MISO and PJM Weighted average life of 13.1 years Education 82% with Investment Grade customers(2) 81% of the contracts settle “as produced” Services C
Slide 43: North America: typical project P&L
NORTH AMERICA Total investment cost of $100M; 75% sell down Project Co. typical P&L ENGIE typical P&L (equity consolidated within ENGIE) (excl. one-off development fee & DBSO margin) Average Average In $M Year 6 In $M Year 6 year 1-5 year 1-5 Revenues 5 6 O&M margin invoiced to Project Co. 0.1 0.1 E
Slide 44: Offshore Wind
OFFSHORE WIND 4444
Slide 45: Offshore wind growth backed by political commitments
Growth to be roughly half in Europe already backed by political commitments (installed capacities,GW) 154 41 30 22 20 12 11 12 10(1) 8 10 6 5 4 4 4 0 1 1 0 0 0 0 0 World France UK Belgium Netherlands Germany Portugal Poland Japan South Korea China USA End 2018 2030 target (1) French government to se
Slide 46: 50:50 exclusive JV with joint control
50:50 EXCLUSIVE JV WITH JOINT- … SUPPORTING VERY AMBITIOUS GROWTH CONTROL, BALANCED GOVERNANCE TARGETS (GROSS GW(1)) AND SELECTIVE INVESTMENT CRITERIA… Sound market fundamentals Operational/ Stable regulatory frameworks 1.5GW 5-7GW Under construction Contracted NPV (i.e. cash flows visibility) Under
Slide 47: Large market and competitive advantages
LARGE MARKET AND POTENTIAL MARKET EXPECTED FOR THE NEXT DECADE(S) Although we are late comers, the market growth is tremendous and leaves enough opportunities for all who have competences and financial strength. SCALE AND COMPETITIVENESS PROVEN ALREADY WITH OUR CURRENT POSITION Already today both co
Slide 48: Offshore wind project pipeline
Moray-East, 950MW Seamade, 487MW Moray-West, 850MW CFD # 4, 1,000MW Poland, 400MW Ireland, 1,000MW Floating Germany, 700MW WFA, 25MW Floating HKZ III&IV, 760MW North California Coast, 150MW Hollandse Kust Noord 750MW Floating Mayflower Massachusetts, 1,600MW Japan, 500MW Floating Floating
Slide 49: Financial Outlook
FINANCIAL OUTLOOK 4949
Slide 50: 8.5GW commissioned, under construction or secured 2019-21
Capacity commissioned, under construction or secured Capacity commissioned, under construction or secured 2019-21, split by geography 2019-21, split by technology Rest 0.2 Wind onshore of the world Wind offshore Europe 1.6 2.7 2.8 Solar Other LATAM 8.5GW 8.5GW 1.6 5.2 0.5 NORAM 2.5 50
Slide 51: ~€2.5bn growth capex by operating model and technology
By operating model By technology 0.0 0.1 Onshore Wind Offshore Wind 0.2 Solar 43% Hydro DBOO Other 57% 0.4 DBSO + DSBO ~€2.5bn(1) ~€2.5bn(1) 1.7 ~€2.0BN OF CAPEX WILL BE EARNINGS ACCRETIVE OVER 2019-21 (1) Mid-range of €2.3-2.8bn 51
Slide 52: COD and sell-down expectations 2019-2023
COD expectation over 2019-2023 (GW) Sell-down expectations 2019-2023 (GW) 3.5 3.6 3 2.5 2.5 2 1.2 1 1 1 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Based on 11GW already secured Sell-downs in 2022-23 to increase following pipeline development beyond the 11 GW already secured (1) Other: biomass
Slide 53: COI 2018-21 indicative expectations by technology
COI 2018-21 indicative expectations by technology - in €bn(1) In(€bn) CAGR(2) 2018-2021 o/w o/w o/w GROWTH CAGR 8-11% DBOO DBSO ASSOCIATES 1.5 HYDRO 8-11% 0.2-0.3 0.2-0.3 - +0.0 0.5 1.1 Other 0.4 WIND & SOLAR 10-13% 0.1-0.2 ~0.1 ~0.1 +0.0 Wind&Solar 1.0 Hydro 0.7 OTHER 2018 2021 2018-21 DBSO MARGINS
Slide 54: Huge growth potential and strong momentum
HUGE GROWTH ENGIE HAS A UNIQUE STRONG MOMENTUM; POTENTIAL POSITIONNING TO CAPTURE ON TRACK TO REACH THESE GROWTH POTENTIAL CMD TARGET AND DELIVER VALUE 54
Slide 55: Appendices
APPENDICES 5555
Slide 56: DBOO, SDBO, DSBO, DBSO financial statement impact
DEPENDING ON IF & WHEN SPV EQUITY IS PARTIALLY SOLD TO INVESTORS OPERATION DEVELOPMENT CONSTRUCTION & MAINTENANCE 1 2 3 4 DBOO SDBO DSBO DBSO Impact on ENGIE F/S On Balance Sheet Deconsolidated EBITDA/COI 100% Project EBITDA/COI SPV share of net result SPV share of net result SPV share of net result
Slide 57: COI
Energy Margin Opex in EBITDA D&A Power Margin @ market Non-energy COS: Staff costs and captured/regulated price & Intraday Operation & Maintenance costs & Green Margin COI Selling: Depreciation of tangible assets Ancillaries, Balancing & capacity BD costs to develop new concessions (recovery assets
Slide 58: Evolution of the US corporate PPA market
EARLY 2000 FROM 2010 FROM 2015 FROM 2018 TO 2010 TO 2015 TO TODAY ONWARDS 1 2 3 4 • Long-term PPAs procured • Solar PV and wind with • Wind and solar prices achieved • Corporate PPAs continuing by utilities driven by State level continuing decline in prices grid parity (or below) in several to reduc
Slide 59: Floating offshore wind benefits and potential
COMPLIMENTARY WITH FIXED OFFSHORE WIND AND SYNERGIES FOW allows to tap into areas with much higher wind speeds. At farther distances from the shore, the wind blows stronger BENEFITS and its flow is more consistent. By using FOW, we can make use of larger areas avoiding wake effects from nearby wind