Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — H1 2021 Earnings Presentation
55 slides from Engie Energia Chile's earnings presentation, August 2021
Slide 1: Investor Presentation 1H 2021
Investor Presentation 1H 2021
Slide 2: Results & Guidance
f . Results & Guidance
Slide 3: Key messages
3 Key messages Challenging 2021 due extreme drought and continued high marginal costs After resilient 2020 results, our efforts are focused on approaching revised 2021 guidance Advancing in of our transformation: 151MW Calama wind farm energized and injecting to the grid 0.6 GW renewables under cons
Slide 4: 2021: Working on our reconversion
4 2021: Working on our reconversion To become greener and reduce our supply cost Reshaping our PPA portfolio with green corporate PPAs OUR PERFORMANCE - Contracted portfolio of more than 12 TWh/y – 11-year average life - Balanced regulated vs. unregulated portfolio 2019 2020 LTM 06-21 TOTAL ENERGY S
Slide 5: Contracted demand: our vision through 2030
Contracted demand: our vision through 5 2030 Renegotiated PPAs (extended lives and decarbonized tariffs) and new green corporate PPAs GWh 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Regulated SING Regulated SIC Free clients-ren
Slide 6: Our transformation: Phase 1
6 Our transformation: Phase 1 1 GW COMMITTED PIPELINE, of which 0.7 GW UNDER WAY LOS LOROS MONTE REDONDO CALAMA TAMAYA COYA CAPRICORNIO ADVANCED STAGE 55 MWac 82 M W 151 M W 114 MWac 180 MWac 88 MWac 360 M W COD(*) 2019 2020 2021 2022 2023-2024 UNDER DEVELOPMENT ACQUISITIONS +FIRST 4 PROJECTS READY
Slide 7: Improved 2Q despite continued high marginal costs
Improved 2Q despite continued high 7 marginal costs 1Q20 2Q20 1H20 1Q21 2Q21 1H21 Var. Operating revenues (MUSD) 335.3 322.0 657.3 332.3 388.5 720.8 10% EBITDA (MUSD) 99.1 103.0 202.1 66.0 121.7 187.7 -7% EBITDA margin (%) 29.6% 32.0% 30.7% 19.8% 31.3% 26.0% 4.7 p.p. Net income (MUSD) 25.6 40.6 66.2
Slide 8: 1H21: A challenging period
1H21: A challenging period 8 Dry season, unavailability of efficient thermal plants, gas interruptions => high spot prices Average marginal cost 1H21: Unfortunate events for the power industry Crucero & Polpaico nodes 80 Record low hydrology => decrease of low-cost power supply in the grid. US$/MWh
Slide 9: 1H21: High and volatile marginal cost
9 1H21: High and volatile marginal cost A 10-day real example in the north segment of the SEN grid (June 1 to 10, 2021) MW USD/MWh 4,000 200 3,500 180 160 3,000 140 2,500 120 2,000 100 1,500 80 60 1,000 40 500 20 0 0 1 4 7 10 13 16 19 22 1 4 7 10 13 16 19 22 1 4 7 10 13 16 19 22 1 4 7 10 13 16 19 22
Slide 10: Physical sales evolution
10 Physical sales evolution Strong demand from unregulated clients; regulated demand showing signs of recovery Unregulated customers GWh 600 500 400 300 200 100 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2018 2019 2020 2021 GWh Regulated customers 600 500 400 300 200 100 - Jan Feb Mar Apr May
Slide 11: Demand met with generation and energy purchases
Demand met with generation and energy 11 US$/MWh 160 purchases Coal plant decommissioning schedule Unit MW Date %1H21 supply 140 U14-U15 268 Dec-21 6.0% 120 Average monomic price CTM1-CTM2 334 Dec-24 7.2% 108 USD/MWh 100 1H20: 100 USD/MWh 80 Average fuel & electricity purchase cost 66 USD/MWh 60 1H2
Slide 12: Our guidance
12 Our guidance Revised range in the current challenging industry environment Demand & prices 244 150 - 170 New PPAs 181 75 LDs (**) COVID-19 pandemic 156 440 – 460 (*) Client migration & lower demand 460 455 Marginal cost risks 87 375 Coal & gas price increases Dry hydrologic conditions 276 1,301 1
Slide 13: Room to finance projects on balance sheet
Room to finance projects on 13 balance sheet 600 MUSD 4.5 4.0 500 TEN 30 3.5 400 3.0 TEN 35 Net debt capacity: ~US$1.2bn @ 2.5x Net Debt/EBITDA 2.5 300 Conversion 11 IEM & Port 436 2.0 Renewables 200 248 1.5 IEM & Port Renewables 314 230 Renewables 64 IEM & Port 1.0 183 Transmission 13 Renewables 10
Slide 14: Regulatory initiatives under way
14 Regulatory initiatives under way GENERATION DISTRIBUTION Energy transition Electric portability: Flexibility strategy - Energy dealer Accelerated retirement of coal-fired units - New types of energy auctions - Information manager Emission compensation mechanism in green taxes Basic services (cont
Slide 15: Our transformation
y Our transformation
Slide 16: Our transformation: a four-track road
16 Our transformation A four-track road Greening existing corporate PPAs Closing Old Coal Units Restructuring 800 MW/y of long-term Closing 0.8 GW of coal power plants corporate PPAs with mining customers between 2019 and 2024 Converting Newer Coal Units Developing more Wind and Solar Remaining 3 co
Slide 17: Greening existing corporate PPAs
Greening existing corporate PPAs 17 75% of mining PPAs transformed: strong long-term relationships for more sustainable mining Corporate Clients [6.5 TWh] Regulated Clients [5.5 TWh] PPAs EL ABRA 12 TWh CODELCO AMSA GLENCORE FREEPORT OTHER DISCO NORTH DISCO CENTER [2021] Sound portfolio with average
Slide 18: Greening our PPA portfolio
Greening our PPA portfolio 18 Shifting away from coal-price indexation Indexation applicable to contracted electricity and capacity sales (*) 2020 2022 2025 U.S. CPI Gas U.S. CPI U.S. CPI 78% 10% 60% 79% Coal 2,026 MW Gas 1,815 MW Gas 1,737 MW 10% 11% 29% Coal Coal 11% 11% Free clients’ PPAs: Tariff
Slide 19: Generation portfolio transformation
Generation portfolio transformation 19 2018 2025 2.0 GW Renewables 8% 1% 58% + 59% 10% Installed Installed 33% capacity 58% 0.8 GW Coal disconnection 58% capacity 29% 1.9 GW 3.4 GW - 2% Coal Gas Biomass Gas Diesel Renewables Diesel Renewables 0.7 GW Conversion Note: IEM (375MW) started operations in
Slide 20: Renewables acceleration
Renewables acceleration 20 Achievements so far, paving the way to reach our goals 0.7 GW approved and committed plus 1.3 GW projects under development 1.3 GW 0.7 GW Under development not yet approved 2019 2020 2021 2022 2023-2025 COD/YEAR (MW) 55 82 265 268 1.3 GW 48 Monte Redondo 151 Calama 1.1 Vie
Slide 21: Unit conversion
Unit conversion 21 Permits full exit from coal, while providing back-up for renewables expansion 2021 2022 2023 2024 2025 2026 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q permits(*), engineering, procurement, off-site preparation outage IEM overhaul 375 MW coal generation +boiler bur
Slide 22: 151 MWac Calama wind farm
22 151 MWac Calama wind farm US$160 million investment / Energization: 3Q21, COD: 4Q21 Global advance: 97% - Main milestones: - 34 WTGs connected and generating - 35 WTGs installed - Main contractors: Siemens Gamesa & GES
Slide 23: 88 MWac Capricornio solar PV plant
88 MWac Capricornio solar PV plant 23 US$ 74 million investment / COD: 1Q22 Global advance: 85% - Main milestones: - Main transformer installed - Civil Works control building finished - Tracker reinforcement solution in progress - Main contractors: Trina Pro, Sungrow, BOP being replaced, EMEC
Slide 24: 114 MWac Tamaya solar PV plant
24 114 MWac Tamaya solar PV plant US$ 79 million investment / Energization: 3Q21, COD: 4Q21 Global advance: 90% - Main milestones: - Substation test and commissioning started - Poles 100% installed, 5 circuits 100% completed - Main contractors: Trina Pro, Sungrow, Inneria (BOP construction staff)
Slide 25: 181 MWac Coya solar PV plant
25 181 MWac Coya solar PV plant US$ 125 million investment / Energization: 2Q22, COD: 3Q22 Global advance: 21% - Main milestones: - Pole installation works initiated - Power transformer acceptance test in process - Main contractors: Siemens-Ingecoz (HV connection), OHL (BOP), Sungrow (inverters), So
Slide 26: Securing land concessions for the development of renewable projects
Securing land concessions for the 26 development of renewable projects Recently awarded slots with excellent potential for hybrid projects Pampa Fidelia and Pampa Yolanda - Two land-use concessions in Taltal (Antofagasta) awarded in public auction - Potential to develop hybrid projects, with up to 1
Slide 27: National / zonal transmission projects in execution
National / zonal transmission projects in 27 execution US$ 53 million Total Investment Value Arica y Parinacota Nueva Chiquicamata Antofagasta Capricornio SS expansion Atacama Algarrobal Nueva Chuquicamata (National) Algarrobal (National) Substation +2 x 220 kV transmission line 220 kV sectioning su
Slide 28: National / zonal transmission projects awarded
National / zonal transmission projects 28 awarded Arica-Pozo Roncacho US$ 43 million Total Investment Value Sectioning SS Pozo Almonte SS Tamarugal SS Antofagasta La Negra Pozo Almonte SS Antofagasta By-Pass By-Pass Expansion Albemarle SS Zonal Zonal Zonal Multi-circuit transmission line 2x110 kV, S
Slide 29: Financial update
Financial update
Slide 30: EBITDA evolution
EBITDA evolution 30 Margin compression explained by higher marginal costs and higher fuel prices By main effect In US$ Million 5 36 50 3 Lower Insurance energy (BI) purchase 27 volume Marginal 202 cost increase 3 7 Average Fuel costs Transmission 188 realized EBITDA 1Q21 & Gas OPEX, prices SG&A + Ot
Slide 31: Net income evolution
Net income evolution 31 Narrower first quarter operating margin and one-time financial expenses from sale of PEC receivables By main effect In US$ Million Recurring Results 10 76 3 10 66 Other 3 66 36 Depreciation, FX, Make-whole write-offs on early EBITDA Financial bond expenses redemption 30 Net I
Slide 32: Net Debt evolution
Net Debt evolution 32 Net debt increase due to CAPEX, dividends and leases, offset by proceeds from sale of long-term receivables Main cash flows In US$ Million 23 8 118 87 Cash Accrued payment interest / 19 from TEN 50 deferred 23 Income Leases financial Proceeds 912 83 (IFRS 16) taxes cost from sa
Slide 33: Robust financial structure
33 Robust financial structure Investment-grade ratings: BBB+/BBB NET DEBT/EBITDA @ 2.1 X International: 2.8 Fitch (Jun 2021): BBB+ Stable 2.2 2.1 1.8 S&P (Jan 2021): BBB Stable 1.3 National scale: Fitch (Jun 2021) AA Stable Feller Rate (Jan 2021): AA- Positive Dec 17 Dec 18 Dec 19 Dec 20 LTM Jun 21
Slide 34: US$41.5 million provisional dividend to be paid in August 2021
34 US$41.5 million provisional dividend to DIVIDENDS PAID be paid in August 2021 In US$ Millions 120 100% 112 100% 90% 100 22 81% 72% 93 80% 80 79 70% 7 67 60% 60 56 47% 56 51 50% SHARE PRICE EVOLUTION 17 47 40% 40 12 30%34 30% 30% 30 90 67 30% June 30, 2021 20 72 20% EECL: CLP 555 (-50%) 20 39 35 1
Slide 35: Key take aways
Key take aways 35 Improved 2 nd quarter, with challenges ahead due to extreme drought Best efforts to reach our revised 2021 EBITDA guidance 151 MW Calama wind farm in commissioning phase Advancing in the construction of renewables to support our decarbonization strategy and strong PPA portfolio wit
Slide 36: Addenda
Addenda
Slide 37: The ENGIE Group
The ENGIE Group 37 A global reference in low carbon energy services FOCUSED ON FOUR GLOBAL BUSINESS LINES AND 20 COUNTRIES - 170,000 EMPLOYEES WORLDWIDE CLIENT SOLUTIONS INFRASTRUCTURE REVENUE BREAKDOWN EBITDA 2020 Supporting the carbon-neutral transition Strengthen our presence across the gas and o
Slide 38: Industry and company highlights
Industry and company highlights 38 As of June 30, 2021, or for the first half of 2021 Gross capacity Generation Demand Market share Solar Hydro Wind 7% Engie 8% Hydro 18% 20% SISTEMA 24% Solar Regulated Enel AES Gener 11% 38% 25% 13% ELÉCTRICO Wind NACIONAL 10% 28.1 GW 40.1 TWh 37.1 TWh 28.1 GW (SEN
Slide 39: Sistema Eléctrico Nacional (SEN)
Sistema Eléctrico Nacional - SEN 39 ‘SEN’ Sistema Eléctrico Nacional 11,923 MW SEN – June 2021 28,087 M W SING 7,160 MW 7,435 1,100 3,600 SIC 3,512 MW 3,310 MW 212 45 1,370 267 2,182 MW 58 127 1,611 105 44 91 610 2,586 2,033 2,901 1,304 (*) 532 MW 1,332 300 350 532 Enel Generación AES Andes Colbún E
Slide 40: ENGIE Energía Chile
ENGIE Energía Chile 40 A diversified asset base in Chile’s mining region Our operations Our sites Our largest clients TOCOPILLA Coal (269MW) MINING Gas (399MW) 4th largest GenCo in Chile Port 2.2 GW gross capacity 0.6 GW renewables in construction MEJILLONES Coal (711MW) 11.4 TWh sold under PPAs in
Slide 41: Sound contract portfolio
41 Sound contract portfolio 11-year remaining average life 500 ● Regulated contracts Clients’ credit ratings 450 ● Unregulated contracts 400 Renegotiated contracts Distribution (S&P/Moody’s/Fitch): Companies Average demand (MW) (South SEN) 350 Other - Codelco: A/A3/A- 300 Codelco Codelco - Freeport-
Slide 42: AMSA (Centinela) PPA
AMSA (Centinela) PPA 42 Renegotiation of existing agreement +new green PPA signed on March 31, 2020 Existing PPA New PPA Esperanza Amendment of existing PPA New 11-year 186MW PPA Centinela 150MW between Inversiones Hornitos 186MW between EECL and Minera El Tesoro 36MW (CTH) and Centinela for its Cen
Slide 43: Long-term contracts
43 Long-term contracts The basis for stable sales and prices Energy sales and prices Energy sales Prices GWh US$/MWh 3,000 150 2,500 2,000 100 1,500 1,000 50 500 0 0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 Unre
Slide 44: Demand supplied with own generation and energy purchases
Demand supplied with own generation and energy 44 purchases hedged by our installed capacity Renewables 7% Diesel 4% Energy purchases remain high due to (i) efficient capacity additions in the grid and (ii) PPA with distribution companies in central Chile. Installed Coal 61% Gas 28% capacity 2,182 M
Slide 45: Eólica Monte Redondo SpA
Eólica Monte Redondo SpA 45 82MW of renewable capacity acquired on July 1, 2020 MONTE REDONDO WIND FARM - Acquired from ENGIE Latam: US$53 million+cash, on debt-free basis. Approved by independent board members (“Comité de Directores”) 48 MW (24 Vestas V90 WTGs(*), 80m hub height, 90m rotor diameter
Slide 46: Price stabilization mechanism
46 Price stabilization mechanism: US$48 million financial cost 1H21 Law #21,185 (Nov-19): Electricity price stabilization mechanism for regulated customers PEC = Adjusted upwards PEC = Adjusted upwards Dec 2020 Dec 2025 Jul 2023 PEC = Fixed price to PEC = Fixed price to if necessary to avoid if nece
Slide 47: Financing activity
Financing activity 47 Securing liquidity and funding for our transformation strategy 2021 – Monetization of PEC receivables (“AR”) New 10-yr, 3.4%, US$500 million US$118 million received on 144A/RegS bond US$167 million of monetized ARs - Early redemption of US$400mln - True sale to SPV of ARs relat
Slide 48: EECL, a relevant player in transmission
EECL, a relevant player in 48 transmission Substations 2,330 KMS 24 SUBSTATIONS - 977 MVA 5 Transmission US$ 19.9 MILLION REGULATED REVENUE P.A. substations Generation substations Transmission lines 977 MVA 9% 18 892 2,330 Kms AVI + COMA for National & Zonal systems 91% (in millions of US$) Owned &
Slide 49: Transmisora Eléctrica del Norte (TEN)
Transmisora Eléctrica del Norte 3 49 («TEN») Double circuit, 500 kV, alternate current (HVAC), TEN annual revenue per 1,500 MW, 600-km long transmission line old decree: National transmission system interconnecting SIC in USD millions and SING grids since Nov. 24, 2017 at June 30, 2021 FX rates) Reg
Slide 50: Copper industry
50 Copper industry US¢/lb Copper production in Chile ('000 tons) GWh 500 8,000 Copper price LME (US¢/lb) SEN monthly electricity demand 450 7,000 400 6,000 350 5,000 300 250 4,000 5,776 5,761 5,772 5,832 5,787 5,732 5,413 5,557 5,394 5,419 5,434 5,553 5,504 5,321 5,361 5,328 5,263 200 4,904 4,602 4,
Slide 51: Covid-19 pandemic: Safety first
51 Covid-19 pandemic Focus on safety, operational continuity and reconversion strategy Operational continuity Projects in progress Caring for others • +70% home office Safety first • Daily internal communications • Crisis committee US$700k donation CLP179M 1+1 fund • Strict protocols Emergency camps
Slide 52: Ownership structure
52 Ownership structure Pension Local Foreign 59.99% Funds 14.12% institutions 16.29% institutions 9.00% Individuals 0.60% ENGIE Energía Chile S.A. (EECL) Red Eléctrica Chile S.A. 50% Central Termoeléctrica Central Termoeléctrica Gasoducto Edelnor Transmisora Eléctrica Norandino SpA Transmisión S.A.
Slide 53: EECL organizational structure
EECL organizational structure 53 Shareholders’ Functional assembly committees - Management - Commercial origination Committee of Board of - Development directors directors - Stakeholders & Regulation - Change management - Construction CEO - Portfolio & risk management - COVID 19 crisis committee Int
Slide 54: For more information about ENGIE Energía Chile
For more information about ENGIE 54 Energía Chile +562 2783 3307 inversionistas@engie.com http://www.engie-energia.cl More information on 1H 2021 results in our web page Presentation Addenda Press Release Recorded Financial Report Analyst pack conference audiocast
Slide 55: 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