Infratil Limited · NZX:IFT
Infratil — Longroad Energy — Investor Day (September 2023)
52 slides from Infratil's investor day presentation, Sep 12, 2023
Slide 1: Longroad Energy: Infratil Investor Presentation
Longroad Energy: Infratil Investor Presentation Phoenix, Arizona 12 September 2023
Slide 2: Safety
Longroad Energy: Infratil Investor Day Safety Hotel Emergencies • Dial 9-1-1 for any emergency • Primary muster point is on Southwest corner of East 7th St. and S. Mills Ave. • Secondary muster point is on the south lawn of Tempe City Hall • Nearest Medical Facility is 2 blocks south Weaver • Univer
Slide 3: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alvarez 9:15 – 9:30 Devel
Slide 4: Market Commentary
Market Overview Market Commentary • Policy on target: increasing domestic manufacturing, decreasing reliance on China • Treasury guidance imperfect and delayed • Start-up time to establish domestic manufacturing • Transmission build out required • Permitting reform • Workforce training Once in a Gen
Slide 5: Game Changing Legislation – IRA 2022
Market Overview Game Changing Legislation – IRA 2022 GW Multiple of 2022 Capacity Solar 364 (3x) 2023-2030 Projected Wind 137 (2x) Additions Storage 111 (9x) Total 606 or about ~75 GW p.a. Source: BNEF 1H 2023 US Clean Energy Market Outlook Need ~100 GW p.a. to hit 80% clean power by 2030 COPYRIGHT
Slide 6: Five-Year Goal: MW Deployment
Five-Year Goal Reformat ~10 GW by 2027 $500m EBITD??A Annual MW Deployed by FNTP Year 10.0 9.5 8.0 2-3% market share MW Deployment 8.0 6.5 6.0 5.1 4.0 3.6 2.5 2.0 1.4 1.5 1.5 1.5 1.5 1.1 1.1 - (1) 2021 2022 2023 2024 2025 2026 2027 Annual MW Deployed Cumulative MW Deployed (Incl. Sale Projects) Net
Slide 7: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alvarez 9:15 – 9:30 Devel
Slide 8: 2.4 GW / 30 Projects
Operating Assets 2.4 GW / 30 Projects GW Longroad Sold, Owned (Operating + In-Construction), and LES-Managed Assets 3.8 Developed (4) 0.5 Acquired 4.3 Total (1.9) Sold 2.4 Net Owned (30) 1.9 Services 401+ MW Solar Assets Sold Wind Assets Sold Storage Assets Sold 201 – 400 MW Solar Operating/In-Const
Slide 9: 2023 Performance update
Operating Assets 2023 Performance update Key 2023 Performance Drivers • Prospero Solar 1 and 2 hail repairs completed ahead of schedule • Milford Wind repower nearing completion (September COD) • Maine DG Solar overperforming investment case so far primarily due to strong power pricing and favorable
Slide 10: 2023+ Opco Execution Plan
Operating Assets 2023+ Opco Execution Plan 2023 2023 & beyond • Safe execution is the Highest Priority Key Issues to Address for Growth to Opco run rate EBITDA of US$500 million • 2023 Opco EBITDA is forecast to be ~US$147 million across 30 projects • Congestion/basis and Energy/REC Management • Pri
Slide 11: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alvarez 9:15 – 9:30 Devel
Slide 12: Features of the IRA
Understanding The Inflation Reduction Act Features of the IRA The IRA directs nearly US$400 billion in federal funding to clean energy, with the goal of substantially lowering the nation’s carbon emissions by the end of this decade Key Features: • 10-year Production Tax Credit (PTC) (including new s
Slide 13: Economic Impact
Understanding The Inflation Reduction Act Economic Impact Potential Value +Unlev PPA Price 1 IRR% Discount • 110% multiplier for PTC $/MWh Domestic • +10 percentage points adder to ITC • FSLR procurement of US-made modules for under-construction Content solar-only projects +4% $(10) Adder • Addition
Slide 14: Prevailing Wage and Apprenticeship
Understanding The Inflation Reduction Act Prevailing Wage and Apprenticeship Specific Guidance Longroad Implications • Projects must pay prevailing wage and • Longroad’s 2022 NTP projects exempt 10-15% apprenticeship labor hours for construction and alterations/repairs during • Incorporated complian
Slide 15: Energy Community
Understanding The Inflation Reduction Act Energy Community Specific Guidance Longroad Implications • Qualify one of three ways: • Opportunity to secure qualification status 1. Brownfield site under method #2 at start of construction 2. O&G employment + general unemployment, or • Qualification under
Slide 16: Energy Community Map
Understanding The Inflation Reduction Act Energy Community Map Weaver USA Coal Closure Energy Communities – DOE USA MSA/Non-MSAs that are Energy • Census tract directly adjoining a census tract with a coal Communities - DOE closure • Is an energy community, as it meets both the Fossil • Census tract
Slide 17: Made in America
Understanding The Inflation Reduction Act Made in America Specific Guidance Longroad Implications • Issued proposed guidance (can be utilized • Direct cost methodology not anticipated or interim), formal guidance expected 1H ‘24 based on Made in America precedent. Industry lobbying for changes, main
Slide 18: Made in America Examples
Understanding The Inflation Reduction Act Made in America Examples Potential Value +Unlev PPA Price IRR% Discount 1 $/MWh • 110% multiplier for PTC +0.2% $(0.50) Solar • +10 percentage points for ITC +4% $(10) 2 • PTC less accretive in general. Most wind • 110% multiplier for PTC, or TBD TBD Wind pr
Slide 19: Transferability
Understanding The Inflation Reduction Act Transferability Specific Guidance Longroad Implications • Tax credit sale proceeds are tax exempt • Credit unable to be transferred using lease-passthrough structure due to • Seller (i.e., project) unable to sell only “double sale” restriction. May limit use
Slide 20: IRA: Transferability vs. Tax Equity
Understanding The Inflation Reduction Act IRA: Transferability vs. Tax Equity Weaver Source: CohnReznick Capital August 2022 presentation, “Inflation Reduction Act: Tax Credit Monetization Analysis” COPYRIGHT © LONGROAD ENERGY HOLDINGS, LLC. STRICTLY CONFIDENTIAL. 20
Slide 21: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alvarez 9:15 – 9:30 Devel
Slide 22: Construction: 8 projects/2.4 GW/$3.1 B
Execution: Supply Chain and EPC Construction: 8 projects/2.4 GW/$3.1 B Key: Project Name (COD Year), MW 3 Corners (2024), 150 MW Maine DG (2023), 7 MW Milford Wind (2023), 306 MW Foxhound (2024), 108 MW Sun Streams 4 (2025), 677 MW Pre-Construction Sun Streams 3 (2024), 500 MW Serrano (2025), 444 MW
Slide 23: Construction: 3 Corners (Maine)
Execution: Supply Chain and EPC Construction: 3 Corners (Maine) March 2023 August 2023 COPYRIGHT © LONGROAD ENERGY HOLDINGS, LLC. STRICTLY CONFIDENTIAL. 23
Slide 24: Construction: Umbriel (Texas)
Execution: Supply Chain and EPC Construction: Umbriel (Texas) March 2023 August 2023 COPYRIGHT © LONGROAD ENERGY HOLDINGS, LLC. STRICTLY CONFIDENTIAL. 24
Slide 25: EPC Suppliers
Execution: Supply Chain and EPC EPC Suppliers • Longroad partners with six EPC contractors, principally using a Guaranteed Maximum Price (GMP) contract structure • Tier 1 EPC firms are in high demand given IRA tailwinds, with most being awarded a portfolio of deals or have pivoted to unilateral nego
Slide 26: Equipment – PV Modules
Execution: Supply Chain and EPC Equipment – PV Modules • Longroad continues to leverage the strategic partnership with First Solar via a frame agreement • Frame capacity plus previous procurement totals multi-GW • Current frame agreement: • Successfully contracted and/or supplied Three Corners, Foxh
Slide 27: Equipment – Inverters
Execution: Supply Chain and EPC Equipment – Inverters • Longroad’s current prequalified inverter manufacturers include Power Electronics, SMA, TMEIC, and Sungrow • Will not look to procure inverters direct given consequences of essentially taking on all commissioning/performance risk • Commissioning
Slide 28: Equipment – Trackers
Execution: Supply Chain and EPC Equipment – Trackers • Longroad sources field-proven single axis tracker system from financially stable vendors • Longroad has successfully contracted multi-GW of single-axis trackers between 2016 – 2023, primarily with NEXTracker • Longroad is currently reviewing tec
Slide 29: Equipment – Storage
Execution: Supply Chain and EPC Equipment – Storage • Powin is supplying BESS integrations services for Sun Streams 3 & 4 and Serrano • Longroad Energy storage team evaluating alternative BESS suppliers ― Current short list includes two other suppliers • IRA domestic content guidelines for BESS uncl
Slide 30: Equipment – Wind Turbines
Execution: Supply Chain and EPC Equipment – Wind Turbines • All major original equipment manufacturers (OEMs) are struggling through a combination of higher-than-expected supply chain costs and unexpected warranty costs on turbines that were rushed to market over the past few years; resulting in maj
Slide 31: Equipment – Main Power Transformers
Execution: Supply Chain and EPC Equipment – Main Power Transformers Example of Market • Historically Main Power Transformers (MPT) were wrapped within EPC agreements, except when pursuing a safe harbor play, which kept any delays on the EPC to manage • With lead times and costs doubling/tripling, wo
Slide 32: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alvarez 9:15 – 9:30 Devel
Slide 33: Near Term Plan Candidate Projects
Development Plan Near Term Plan Candidate Projects Key: Project Name (FNTP Year), MW Mountain 4 (2025), 360 CA 1 (2024), 367 Mountain 3 (2025), 540 GW 1.1 DSW 3 (2025), 1,035 Mountain 1 (2024), 180 2023 (2) Mountain 2 (2024), 180 CA 2 (2024), 176 2.3 DSW 1 (2024), 195 Mid-Atlantic 1 (2025), 105 2024
Slide 34: Near Term Plan Projects (2023)
Development Plan Near Term Plan Projects (2023) Project Market Technology Wind/Solar BESS Total Land Interconnect MW MW MW Initiated Sun Streams 4 AZ/CAISO PV + BESS 377 300 677 Yes Yes Serrano AZ PV + BESS 230 214 444 Yes Yes Total 607 514 1,121 • Both projects are in Arizona and share Sun Streams
Slide 35: Near Term Plan Candidate Projects (2024)
Development Plan Near Term Plan Candidate Projects (2024) Project Market Technology Wind/Solar BESS Total Land Interconnect MW MW MW Initiated TX 1 SPP PV 388 - 388 Yes Yes DSW 1 AZ/CAISO PV + BESS 110 85 195 No Yes CA 1 SCPPA PV + BESS 267 100 367 Yes Yes Mountain 1 PAC PV + BESS 130 50 180 Yes Yes
Slide 36: Near Term Plan Candidate Projects (2025)
Development Plan Near Term Plan Candidate Projects (2025) Project Market Technology Wind/Solar BESS Total Land Interconnect MW MW MW Initiated CA 3 SCPPA PV + BESS 268 100 368 Yes Yes HI 1 HI PV + BESS 160 120 280 No Yes HI 2 HI PV + BESS 26 20 46 Yes Yes HI 3 HI PV + BESS 38 30 68 Yes Yes DSW 3 AZ
Slide 37: Total Pipeline Growth
Development Plan Total Pipeline Growth January 2022 to June 2023, Pipeline Change 35,000 +60% 28.5 GW 30,000 25,000 +38% 17.8 GW 20,000 15,000 12.9 GW 10,000 5,000 - Jan. 2022 Jan. 2023 Jun. 2023 CAISO AZ PAC SCPPA/LA NVE MTN West HI ISONE SPP MISO PJM ERCOT Other COPYRIGHT © LONGROAD ENERGY HOLDING
Slide 38: Pipeline Breakdown by Year (GW)
Development Plan Pipeline Breakdown by Year (GW) Pipeline Breakdown by Project Total MW and FNTP Year 35,000 9.2 GW 30,000 72 Active Projects 15 Projects Out to 2028+ 25,000 5.4 GW 14 Projects 20,000 7.3 GW 16 Projects 15,000 Weaver 10,000 3.3 GW 15 Projects 2.3 GW 5,000 10 Projects 1.1 GW 2 Project
Slide 39: Origination Big Picture
Development Plan Origination Big Picture There continues to be a sustained demand for renewables; Longroad has increased its opportunity set via an expanded development footprint Longroad RFP Participation by Year 2023 Longroad RFP Participation by Offtaker Type 39 33 29 18 21 Corporate Utility 2021
Slide 40: Agreement with Black Stone Minerals
Development Plan Agreement with Black Stone Minerals The agreement provides Longroad with exclusive rights to several thousand acres of Black Stone Minerals (BSM) assets • BSM is one of the largest owners of mineral rights with 20+ million acres under management • Relationship established via succes
Slide 41: M&A Environment
Development Plan M&A Environment • 12 large platform transactions since Q4 2021 • Significant number of asset level opportunities in market of varying quality, constraining investors’ bandwidth • Longroad M&A focus in line with portfolio rebalancing strategy and/or opportunistic • ~33% of deals comp
Slide 42: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alvarez 9:15 – 9:30 Devel
Slide 43: Longroad Today (pro forma December 23)
Capital Requirements Longroad Today (pro forma December 23) • 3.5 GW operating and in-construction on December 31, 2023 ̶ 2.4 GW operating and in-construction today ̶ 1.1 GW (Sun Streams 4 and Serrano) achieving FNTP in the balance of the year • Equity in 3.5 GW fleet fully funded with existing Long
Slide 44: Capital to Fund 2024-27 Plan (~6 GW)
Capital Requirements Capital to Fund 2024-27 Plan (~6 GW) Equity Funding Requirement 2027 NTP $1.0 B Projects 2024-27 Plan ~6 GW $2.0 B • ~US$8 billion capex Project Debt plan Financing $3.1 B 2026 NTP • 85% to 90% via tax Projects equity and debt $2.0 B financing • 10 – 15% funded via 2025 NTP equi
Slide 45: Raising Capital in New World of IRA
Capital Requirements Raising Capital in New World of IRA • Longroad has raised US$10 billion since inception • Development plan through 2027 will require ~US$8 billion of incremental capex investment • Expect 85-90%, or US$7.0 billion, of capex to be funded via non-recourse project financings (i.e.,
Slide 46: Longroad Today vs. ~10 GW (2027)
Capital Requirements Longroad Today vs. ~10 GW (2027) • Operating fleet growing from 3.5 GW today to 10 GW in 2027 • EBITDA increases from US$200 million to US$600 million on a run-rate basis • ~6 GW of new projects requires ~US$8 billion of new capital ̶ US$7 billion funded by project level term de
Slide 47: Agenda
Longroad Energy: Infratil Investor Day Agenda Topic Speaker Time Market Overview and Five-Year Goals Paul Gaynor 8:15 – 8:30 Operating Assets Michael Alvarez 8:30 – 8:45 Understanding The Inflation Reduction Act Ben Miller 8:45 – 9:15 Execution: Supply Chain and EPC Michael Alvarez 9:15 – 9:30 Devel
Slide 48: Sun Streams Overview
Sun Streams Overview Sun Streams Overview • Sun Streams are located at a major transmission hub associated with Palo Verde, the largest nuclear plant in the U.S. • Longroad has 20-year contracts with Phoenix-based utility Arizona Public Service for offtake of energy and capacity from 515 MW solar an
Slide 49: Operational Highlights
Sun Streams Overview Operational Highlights Annual BESS MWh BESS MWh # BESS PV MW # panels generation # piles BESS MW Acres (nameplate) (installed) Cells (MWh) SS2 199 452,790 465,359 70,024 - - - - 1,388 SS3 285 606,492 656,259 87,520 215 860 1,308 1,340,640 2,172 SS4 377 793,404 887,238 114,915 30
Slide 50: Tour Overview: 4 Stops
Sun Streams Overview Tour Overview: 4 Stops • SS2: solar arrays at operational project • SS3 north: solar arrays under construction adjacent to Palo Verde nuclear plant • SS3 BESS yard and Chukar substation: battery storage area next to 500 kV step-up substation Weaver shared by Sun Streams projects
Slide 51: BESS 101
Sun Streams Overview BESS 101 Cell Module Container (DC Rack Package) Inverter Weaver Transformer Control Full BESS System COPYRIGHT © LONGROAD ENERGY HOLDINGS, LLC. STRICTLY CONFIDENTIAL. 51
Slide 52: Longroad Energy: Infratil Investor Presentation
Longroad Energy: Infratil Investor Presentation Phoenix, Arizona 12 September 2023