Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — 9M 2023 Earnings Presentation
62 slides from Engie Energia Chile's earnings presentation, November 2023
Slide 1: Investor Presentation 9M 2023 ENGIE Energía Chile
INVESTOR PRESENTATION 9M 2023 ENGIE ENERGÍA CHILE
Slide 2: Summary
Summary 3Q23 Results and view for the full year 3Q2023 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 EE
Slide 3: 9M23 Results & View for the Full Year
1.0 9M23 RESULTS & VIEW FOR THE FULL YEAR ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2023- 3
Slide 4: Following a challenging 2022, clear recovery in 2023
Following a challenging 2022 Clear recovery in 2023 9M23 Highlights What can we expect for 4Q23 Fuel prices falling from 2022 record highs Better hydrology Generation based on high coal and gas prices => high generation costs and => lower spot prices in IIH23 spot energy prices Lower regulated tarif
Slide 5: Stable physical sales in 9M23
Stable physical sales in 9M23 5% drop in free customer sales; 6% growth in regulated customers GWh Unregulated customers Unregulated customers 600 5% decrease (9M23 vs 9M22) 450 Decrease explained by 300 maintenance at Chuquicamata mining 150 operation - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov D
Slide 6: Spot prices back to ~50 USD/MWh due to improved hydrology
Spot prices back to ~50 USD/MWh due to improved hydrology High spot prices (2021-1H23) due to drought, high fuel prices and transmission congestion US$/MWh Average marginal cost 2022 average: US$127/MWh @ 220 kV nodes SIC-SING Interconnection 280 2023 average: 260 US$102/MWh North 240 Center 220 202
Slide 7: April 23 – March 24: year influenced by the El Niño phenomenon
April 23 – March 24: year influenced by the El Niño phenomenon Hydro generation began to recover towards the end of 2Q; improved predictions for 1Q24 Hydro generation in Chile 2.700 2.400 2.100 1.800 GWh 1.500 1.200 900 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2023 2019 2020 2021 2022 • I
Slide 8: Significant coal price decline in spot and forward prices for 2023
Significant coal price decline in spot and forward prices for 2023 Coal prices hit all-time highs in 2022 US$/Ton Coal price indices 2022 avg: US$314/Ton 460 420 API 2 (cif ARA) 380 340 4Q21 avg: US$178/Ton 300 API 6 (fob Newcastle) 9M23 avg: 260 4Q23/1Q24 US$144/Ton 220 Jan-Sep 21 avg: Fwd. avg: US
Slide 9: Declining coal plant availability in the system
Declining coal plant availability in the system Plant closures, limitations, planned and forced outages Coal plant availability in the system ( 3,544 MW avg, in 9M2023) 4,324 MW avg.2020 3,875 MW avg.2021 3,544 MW avg.2023 3,497 MW avg.2022 Jan-22 Jun-22 Jan-20 Mar-20 Jun-20 Jan-21 Mar-21 Jun-21 Mar
Slide 10: Natural gas availability in the Chilean system
Natural gas availability in the Chilean system High volatility due to the Russia-Ukraine conflict LNG prices LNG international markets 60 HH ▪ In 2022 the supply-demand imbalance, aggravated by the 50 Russia-Ukraine war, led countries to struggle to re-build stocks JKM 40 and secure energy supply. G
Slide 11: Closing the gap through back-up PPAs
Closing the gap through back-up PPAs Contracted energy purchases climbing to 3.3 TWh in 2023 (28% of contracted demand) TWh Supply sources to meet demand under Engie’s contracted portfolio [TWh] 13 12 11 10 9 8 7 6 5 4 3 0,4 0,5 0,4 0,3 0,3 0,1 2 0,3 2,9 3,1 3,1 3,1 3,1 1 1,9 2,4 2,4 2,4 0,9 0,1 1,1
Slide 12: Portfolio balancing strategy
Portfolio balancing strategy seeks to increase renewables, storage + back-up PPAs while phasing out coal, mitigating intermittence & curtailment and reducing spot exposure Energy sources and average supply cost GWh 150 3.000 100 2.000 50 1.000 0 0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q
Slide 13: 9M23 supply: increased back-up PPA & LNG supply volumes
9M23 supply: increased back-up PPA & LNG supply volumes, high coal prices, lEM outage Investment in renewables and portfolio balancing to lower future supply cost US$/MWh 300 250 200 9M23 Average monomic Price 171 USD/MWh 150 9M22: 139 USD/MWh 9M23 Average fuel & electricity purchase cost 124 USD/MW
Slide 14: EECL's performance during the energy transition: 2023 results
EECL’s performance during the energy transition A closer look at 2023 results 1Q22 2Q22 3Q22 9M22 1Q23 2Q23 3Q23 9M23 Var % Operating revenues (MUSD) 417.9 481.4 499.7 1,398.9 587.8 616.2 512.0 1,715.9 23% EBITDA (MUSD) 68.5 (8.0) 57.3 117.8 102.0 87.1 123.0 312.0 165% EBITDA margin (%) 16.4% -1.7%
Slide 15: EBITDA recovery despite market and operational challenges
EBITDA recovery despite market and operational challenges Higher energy prices, higher exposure to spot market and falling fuel prices By main effect In US$ Million 1 11 29 129 Lower fuel Physical 20 costs sales Net 2 25 Reg. +35 capacity Margin on Margin on 312 Free -24 purchases gas transmission O
Slide 16: Net income evolution
Net income evolution Stronger operating results, w/ increased interest expenses. Main variations In US$ Millions Recurring Results 3 4 -32 161 Depreciation, Insurance recoveries FX diff. 89 -9 Interest -10 expense 70 PEC 1 (*) financial Impairment Net income expenses intangibles before Net one-offs
Slide 17: Net debt evolution
Net debt evolution CAPEX and PEC receivables build-up financed with cash from operations and PEC sales Main cash flows + net debt variations In US$ Million 37 449 45 87 Insurance 210 Income + premiums CO2 taxes Accrued interest / 375 MTM / FX PEC 246 receivables Cash from build-up operations – befor
Slide 18: Financial structure
Financial structure Making progress in reducing ND/EBITDA and extending debt maturity profile Investment-grade ratings: BBB/BBB Net Debt / LTM EBITDA excluding IFRS-16 leases International: 8,7 Fitch (Aug 2023): BBB Stable S&P (Sep 2023): BBB Stable 4,4 National scale: 2,7 Fitch (Aug 2023): AA- Stab
Slide 19: Recent events and action plans – portfolio balancing
EECL’s performance during the energy transition Recent Events and Action Plans – Portfolio balancing to mark the road ahead Increased gas generation: ~24 TBtu LNG supply secured + tolling w/3rd party CCGTs Accelerated IEM plant repair 3.3 TWh/y back-up PPAs in 2023, up from 2.2 TWh/y in 2022 ~0.9 TW
Slide 20: Accelerating investment in renewables to match new portfolio indexation
Accelerating investment in renewables to match new portfolio indexation 2.1 GW renewable investment pipeline, 0.8 GW already done 0.8 GW 0.6 GW 0.7 GW* Already in portfolio Under Construction Under Development 2019 2020 2021 2022 2023-2024 2025-2027 MW in operation 46 82 265 369 549 790 48 Monte Red
Slide 21: Accelerating investment in renewables
Accelerating investment in renewables US$1.5 bn investment in renewables / US$0.2 bn investment in transmission through 2024 700 MUSD 11,0 10,0 600 9,0 500 TEN 30 8,0 7,0 400 Renewables 387 6,0 Renewables 300 IEM & Port 360 5,0 436 Renewables 200 325 4,0 IEM & Port Renewables 64 Renewables Transmiss
Slide 22: Strong 9M23 results and guidance upgraded
EECL’s performance during the energy transition Strong 9M 2023 results and guidance upgraded Variables affecting EBITDA US$ millions + Coal & gas price decreases + Improved hydrologic conditions 600 9,0 + Argentine gas availability 8,0 500 - LNG contract supply 7,0 + Spot LNG availability 400 6,0 -
Slide 23: Financing plan focused on reducing ND/EBITDA
Financing plan focused on reducing ND/EBITDA and extending debt maturity profile While providing funds for CAPEX program EBITDA recovery MPC law (“PEC-2”) • Decrease in fuel prices • Increased renewable production • True sale of certificates of payment issued by Chilean Treasury for ~US$400 million
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: Additional Information
2.0 Additional Information ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2023- 25
Slide 26: Energy transition
2.1 Energy transition ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2023- 26
Slide 27: EECL is embarked on a profound generation portfolio transformation
Energy transition EECL is embarked on a profound generation portfolio transformation 2018 2026 + 2.1 GW Renewables 1% 10% 8% Installed Installed 58% 59% 29% 33% capacity 1.9 GW - 0.8 GW Coal disconnection capacity 3.4 GW 2% Coal Gas Diesel Renewables Biomass Gas Diesel Renewables 0.7 GW Conversion E
Slide 28: Generation portfolio transformation: addition of 2.1 GW renewables
Generation portfolio transformation Addition of 2.1 GW renewables 0.8 GW / US$0.8 bn already done LOS LOROS MONTE REDONDO CALAMA TAMAYA CAPRICORNIO SAN PEDRO (*) COYA 46 MWac – 2H19 82 MW – 2H20 151 MW – 4Q21 114 MWac – 1H22 88 MWac – 4Q22 101 MW – 4Q22 180 MWac – 1H23 ACQUISITIONS + 4 GREENFIELD PR
Slide 29: 0.8 GW of coal capacity to be closed by YE-2024
Generation portfolio transformation 0.8 GW of coal capacity to be closed by YE-2024 U12 U13 U14 U15 CTM1 CTM2 IEM CTA CTH -171 MW – 2019 -268 MW – 2022 -334 MW – 2025 =733 MW – 2026 IMPAIRMENTS (After-tax effect) RECONVERSION 2018: US$ 53 million 2019: US$ 134 million Coal to LNG and biomass Impairm
Slide 30: 0.7 GW of newer coal capacity to be converted
Generation portfolio transformation 0.7 GW of newer coal capacity to be converted 2021 2022 2023 2024 2025 2026 1H 2Q 3Q 4Q 1H 2Q 3Q 4Q 1H 2Q 3Q 4Q 1H 2Q 3Q 4Q 1H 2Q 3Q 4Q 2026 permits(*), engineering, procurement, off-site preparation outage IEM overhaul 375 MW coal generation +boiler burners gas a
Slide 31: 463 MW renewable projects added since 4Q21
463 MW Renewable projects added since 4Q21 1,138 GWh(*) generated in 9M23 (723 GWh in FY 2022) 151MW Calama 114MWac 88MWac 101MW San 180MWac wind farm Tamaya PV Capricornio PV Pedro wind farms Coya PV US$160 million US$84 million US$100 million ~US$180 million US$160 million investment investment in
Slide 32: Wind and battery projects under construction
180 MWac Coya PV full year of operations in 2023 549 MW wind and battery projects under construction 139MW / 638MWh 342MW Lomas 68MW / 418MWh BESS BESS Coya (storage) de Taltal Wind Tamaya (storage) US$191 million investment US$433 million investment US$125 million investment COD: 1H24 COD: 4Q24 COD
Slide 33: 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 • Wind: Up to 560 MW • Solar PV: Up to 636 MWac • BESS: Up to 255 MW (6-hr. storage) Pampa Fidelia Land-use concession in Taltal awarded in 2021 public auction Note: Regarding
Slide 34: 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 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): 33
Slide 35: Network projects environmental permit requests
Network projects Environmental permit requests Approved RCA: ▪ Dolores substation (Approved Sep-22) ▪ Roncacho substation (Approved May-22) ▪ Desalant substation (Approved May-22) ▪ La Negra substation (Approved April-22) ▪ Algarrobal substation (Pertinence letter approved Feb-22) ▪ Pozo Almonte sub
Slide 36: ESG
2.2 ESG ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2023- 36
Slide 37: 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 In 2022 we… towards a carbon-neutral economy, through reduced energy consumption and more environmentally friendly PLANET PEOPLE solutio
Slide 38: 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 39: 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 TAR
Slide 40: ESG rankings, certifications and initiatives
ESG rankings, certifications and initiatives To track our performance Corporate Commitments EECL Certifications Securing high standards regarding social, The Certification for Workplace Diversity, nature and climate management in Equity, and Inclusion. renewable energy development. ESG rankings & in
Slide 41: Just Transition
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 skills 1. Early citizen participation 1. Associativity Policy 2. Territorial devel
Slide 42: Transmission
2.3 Transmission ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2023- 42
Slide 43: EECL: A relevant player in transmission
EECL: A relevant player in transmission 2,409 Kms. transmission lines, 32 substations and 50% share in TEN Substations ENGIE’S transmission lines Transmission 12 substations 1,032 Generation 20 substations MVA 11% 2,409 946 Kms 89% AVI + COMA for National & Zonal systems Owned & Operated Operated In
Slide 44: National / zonal transmission projects awarded
National / zonal transmission projects awarded US$171 million CAPEX New Works CAPEX (MUSD) COD Liqcau substation (ex La Negra) 36 1H24 Arica y Parinacota Roncacho substation 19 1H24 Nueva Chuquicamata La Ligua substation 24 2Q25 Antofagasta Albemarle SS Totihue new sectioning + new Totihue 2x66 kV t
Slide 45: 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) 50% - Cumbre (500 kV) TEN (COD
Slide 46: TEN: new tariff decree for the 2020-23 period
Transmisora Eléctrica del Norte S.A. (“TEN”) A new tariff decree for the 2020-23 period published with delay in February 2023 TEN revenue scheme Regulated revenues on “national assets” (AVI) Contractual toll with EECL on “dedicated assets” Project Finance status as of 30-Sep-23 TEN: Annual estimated
Slide 47: EECL and Market Information
2.4 EECL and Market Information ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2023- 47
Slide 48: ENGIE Energía Chile S.A. diversified asset base
ENGIE Energía Chile S.A. A diversified asset base concentrated in Chile’s mining region 110/220kV Arica y Parinacota (2,409 km) Gasoducto Our operations Our sites Norandino (1,066 km) Our largest clients Antofagasta 4th largest GenCo in Chile TOCOPILLA Mining 2.5 GW gross capacity Gas (394MW) (500 k
Slide 49: Industry and company highlights – 1H2023
Industry and company highlights – 1H2023 EECL has 7% market share in terms of installed capacity and 15% in terms of electricity sales Gross capacity Generation Demand Market share Other Hydro Engie 7% Solar 4% 22% Renewables AES SISTEMA 27% Hydro 31% Regulated Enel Andes 25% 40% 27% 11% ELÉCTRICO N
Slide 50: PPA portfolio with 9-year remaining average life
PPA portfolio with 9-year remaining average life Free clients: 10 yrs. Regulated clients: 7 yrs. 450 Clients’ credit ratings 400 350 Distribution (S&P/Moody’s/Fitch): Companies (South, SEN) - Codelco: A/A3/A- Average Demand (MW) 300 Codelco - Freeport-MM (El Abra ): BB+/Baa3/BBB- 250 Others - Antofa
Slide 51: 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 begun to reverse Energy sales Energy sales and prices Prices GWh 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 4Q17 1
Slide 52: Demand supplied with own generation and energy purchases
Demand supplied with own generation and energy purchases Our installed capacity and contracted energy purchases provide a physical hedge Renewables 31% Coal 42% Average supply cost depends on fuel prices, power demand, gas supply, Installed transmission congestions, renewable output, plant performan
Slide 53: High and volatile marginal costs affected by renewable intermittency
High and volatile marginal costs affected by renewable intermittency and diesel dispatch A 10-day real example in the SEN grid (Sep. 1 to 10, 2023) MW USD/MWh 12.000 300 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 4 9 14 19 24 5 10 15 20 1 6 11 16 21 2 7 12 17 22 3 8
Slide 54: Portfolio balancing measures
EECL’s performance during the energy transition Portfolio balancing measures Short position during transition Portfolio balancing strategy Current contracted sales for ~12 TWh/y, falling to 1.4 GW of renewable newbuild to be delivered by 2027 (0.9 GW ~10 TWh/y starting 2027 wind, 0.3 GW BESS, 0.1 GW
Slide 55: Regulatory initiatives
Regulatory initiatives GENERATION DISTRIBUTION • Bill Energy Transition (several topics: Low GHG new • Tariff fixing (VAD 2020-2024) coordination principle, Massive BESS, ITs • Technical standard for Service Quality in reallocation, Max demand redefinition, Suspended distribution System under review
Slide 56: Price stabilization mechanism (PEC-1)
Price stabilization mechanism (“PEC-1”) Last sale of US$51 million PEC-1 receivables (US$38 million cash proceeds on 12-May-23) Law #21,185 (Nov-19): Electricity price PEC = Adjusted upwards PEC = Adjusted upwards Dec 2020 PEC = Fixed price to PEC = Fixed price to Dec 2025 Jul 2023 stabilization mec
Slide 57: Mechanism for the protection of end users (PEC-2)
Mechanism for the protection of end users (MPC law or “PEC-2”) to stabilize consumer prices beyond PEC-1 (~US$200 million monetized in 3Q23) The MPC Law (Aug-22) seeks to stabilize electricity tariffs to 1.- True sale by Generation Companies of Certificates of Payment issued by Chilean Treasury (CPs
Slide 58: Financing activity
Financing activity Securing liquidity and funding for our transformation 2021/23 Monetization of PEC-1 Dec-2020 – IDB green loan Jul-2022 – Scotiabank green loan Dec-2022 – Santander green loan receivables (“ARs”) US$125 million financing US$250 million 5-year loan US$170 million 5-year syndicated l
Slide 59: EECL stock price recovered, outpacing the market
EECL & utilities’ stock price recovered, outpacing the market average in the last 12 months No dividends paid on account of 2022 results Dividends paid In US$ Millions 120 100% 112 100% 90% 100 22 81% 72% 93 80% Share price evolution 80 79 70% 30-Sep-22 30-Sep-23 7 67 60% EECL: CLP 455 EECL: CLP 817
Slide 60: Ownership structure
Ownership structure Pension Local Foreign 59.99% 13.43% 18.39% 7.80% Individuals 0.39% 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 9M2023 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