Engie Energia Chile S.a. · BCS:ECL
Engie Energia Chile — Q1 2024 Earnings Presentation
55 slides from Engie Energia Chile's earnings presentation, May 14, 2024
Slide 1: 1Q 2024 Investor Presentation
1Q 2024 INVESTOR PRESENTATION ENGIE ENERGÍA CHILE 14 May 2024
Slide 2: Summary
SUMMARY 1Q24 RESULTS AND VIEW FOR THE FULL YEAR 1Q24 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 EECL
Slide 3: 1Q24 Highlights
1Q24 HIGHLIGHTS Fuel prices falling from 2022 record highs Increased renewable generation + back-up PPA volumes Tariffs reflecting lower fuel prices Lower dispatch of coal plants PEC & MPC law Pivotal expansion move in battery storage Total exit of coal-fired generation announced Successful liabilit
Slide 4: 7% Growth in Regulated and Unregulated Customer Sales
7% GROWTH IN REGULATED AND UNREGULATED CUSTOMER SALES GWh Unregulated customers 600 Unregulated customers 450 5% increase 300 Strong demand from mining clients 150 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2021 2022 2023 2024 GWh Regulated customers 600 Regulated customers 450 10% increase 3
Slide 5: Average Spot Prices ~58 USD/MWh in 1Q24
AVERAGE SPOT PRICES ~58 USD/MWH IN 1Q24 Improved hydrology and lower fuel prices US$/MWh Average marginal cost 280 260 @ 220 kV nodes 2022 average: 240 US$127/MWh 220 2021 average: 200 US$95/MWh 180 2023 average: 160 2017-2020 average: US$87/MWh US$52/MWh 140 120 2024 average: 100 US$58/MWh 80 60 40
Slide 6: El Niño Improved Hydro Generation Outlook
APR 23/MAR 24: “EL NIÑO” IMPROVED HYDRO GENERATION OUTLOOK Conditions are expected to evolve to a neutral “La Niña” in 2H24 3.000 Hydro generation in Chile 2.700 2.400 2.100 GWh 1.800 1.500 1.200 900 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2024 2019 2020 2021 2022 2023 • In terms of hydr
Slide 7: Significant Coal Price Decline
SIGNIFICANT COAL PRICE DECLINE Coal prices hit all-time highs in 2022 and stabilized at around US$ 108/Ton in 1Q24 US$/Ton Coal price indices 2022 avg: US$314/Ton 460 API 2 (cif ARA) 420 380 API 6 (fob Newcastle) 2023 avg: 340 US$138/Ton 2024 2021 avg: Fwd. avg: 300 US$123/Ton US$120/Ton 260 220 201
Slide 8: Coal Plant Availability Stable at 3.5GW
COAL PLANT AVAILABILITY REMAINED STABLE AT 3.5GW IN LAST 2 YEARS Plant closures, limitations, planned and forced outages Coal plant availability in the system (3,497 MW avg. in 1Q24) 4,324 MW avg.2020 3,875 MW avg.2021 3,497 MW avg.2022 3,476 MW avg.2023 3,497 MW avg.1Q24 Mar-23 Mar-20 Mar-21 Mar-22
Slide 9: Natural Gas Availability in the Chilean System
NATURAL GAS AVAILABILITY IN THE CHILEAN SYSTEM Argentine gas available for EECL since October 2023 LNG prices LNG international markets 60 HH ▪ In 2022 the supply-demand imbalance, aggravated by the 50 Russia-Ukraine war, led countries to struggle to re -build stocks JKM 40 and secure energy supply.
Slide 10: Closing the Gap Through Back-up PPAs
CLOSING THE GAP THROUGH BACK-UP PPAS Contracted energy purchases climbing to 3.6 TWh in 2024, reducing exposure to spot risk Supply sources to meet demand under Engie’s contracted portfolio [twh] 13 12 11 10 9 8 7 6 5 4 0,4 0,5 0,4 0,3 0,3 3 0,2 2 0,3 2,9 3,1 3,1 3,1 3,2 2,6 2,6 2,6 1 1,9 0,9 0,1 1,
Slide 11: Demand Supplied with Own Generation and Energy Purchases
DEMAND SUPPLIED WITH OWN GENERATION AND ENERGY PURCHASES Portfolio balancing: More renewables, storage & back-up PPAs. Less coal and spot exposure Renewables 35% In 1Q24, the average cost of energy supplied decreased by 40% compared to Coal 40% Installed 1Q23 due to increased renewable production, l
Slide 12: 1Q24 Energy Supply: Seeking Portfolio Balancing
1Q24 ENERGY SUPPLY: SEEKING PORTFOLIO BALANCING Decreased energy supply cost: Increased renewable production, greater back-up PPA and LNG volumes US$/MWh 200 1Q23 Av. Monomic price: 165 USD/MWh 150 1Q24 Average monomic price 123 USD/MWh 1Q23 Av. cost: 118 USD/MWh 100 1Q24 Average fuel & electricity
Slide 13: EECL's Performance During the Energy Transition
EECL’S PERFORMANCE DURING THE ENERGY TRANSITION A closer look at 1Q24 results 1Q23 2Q23 3Q23 4Q23 FY23 1Q24 QoQ Var % Operating revenues (MUSD) 587.8 616.2 512.0 476.8 2,192.7 442.7 -25% EBITDA (MUSD) 102.0 87.1 123.0 90.9 402.9 138.1 35% EBITDA margin (%) 17.3% 14.1% 24.0% 19.1% 18.4% 31.2% 13.9 pp
Slide 14: 1Q EBITDA in Line with High End of Guidance
1Q EBITDA IN LINE WITH HIGH END OF GUIDANCE FOR THE YEAR More balanced spot exposure, stable fuel prices and improved hydrologic conditions EBITDA +6 -120 (US$m) +8 +7 +27 Insurance Net Margin +50 capacity transmission Physical purchases business sales +96 Lower -32 average Average price realized -4
Slide 15: US$46M Net Income
US$46M NET INCOME Driven by stronger operating results NET RESULTS (US$m) +6 -2 -3 +7 -7 Interest +26 Other expense Insurance provisions net recovery D&A FX 46 difference 20 EBITDA 1Q23 1Q24 up US$26m to US$46m -491 15 ENGIE ENERGIA CHILE – INVESTOR PRESENTATION 1Q24
Slide 16: Healthier Cash Generation & PEC Sales
HEALTHIER CASH GENERATION & PEC SALES Cash needs primarily financed with cash from operations NET DEBT & FUND FLOWS 48 2 123 (US$m) 44 90 Income Accrued taxes 10 PEC interest / MTM Cash from Proceeds Receivables / FX 1,894 CAPEX operations from sales 1,844 build-up + M&A of PEC-2 receivables 31-Dec-
Slide 17: Price Stabilization Laws (PEC-1 + MPC)
PRICE STABILIZATION LAWS (PEC-1 + MPC) Effects on liquidity and financial cost. US$333m pending to be monetized • PEC laws have affected our liquidity and finance costs, with 333 MUSD ARs pending to be monetized as of 31-Mar-24. • The heaviest impact took place in 2022 (255 MUSD cash impact; 15 MUSD
Slide 18: Financial Structure
FINANCIAL STRUCTURE Making progress in reducing ND/EBITDA and extending maturity profile Investment-grade ratings Net Debt / EBITDA Excluding IFRS-16 leases International: 8,7 Fitch (Mar 2024): BBB Stable S&P (Sep 2023): BBB Stable 4,6 4,3 National scale: 2,7 Fitch (Mar 2024): AA- Stable 1.1 Feller
Slide 19: Recent Events and Action Plans
EECL’S PERFORMANCE DURING THE ENERGY TRANSITION Recent Events and Action Plans – Portfolio balancing to mark the road ahead 3.6 TWh/y back-up PPAs in 2024, up from 2.3 TWh/y in 2023 ~1 TWh additional renewable generation since 2023, with wind production in southern node BESS Coya operating in 4Q23.
Slide 20: Accelerating Investment in Renewables and BESS
ACCELERATING INVESTMENT IN RENEWABLES AND BESS 2.1 GW renewable + BESS investment pipeline, 0.9 GW already done 0.9 GW 0.6 GW 0.6 GW* Already in portfolio Under Construction Under Development 2019 2020 2021 2022 2023 2024 (e) 2025-2027 (e) MW 46 82 265 369 139 574** 584 48 Monte Redondo 151 Calama 1
Slide 21: Accelerating Investment in Renewables and BESS
ACCELERATING INVESTMENT IN RENEWABLES AND BESS US$1.6 bn investment in renewables+BESS & US$0.2 bn in transmission through 2024 MUSD 600 555 535 500 Renewables 394 235 400 Renewables 385 276 Renewables 300 105 237 Renewables BESS 170 190 209 325 200 BESS 155 BESS 146 Renewables 64 Renewables Renewab
Slide 22: What Can We Expect for 2024
WHAT CAN WE EXPECT FOR 2024 • Lower fuel costs EBITDAE CAPEXE • LNG + Argentine gas sourcing • Lower average spot prices US$450-500 US$555 • Renewable generation increase million million • New storage projects • PEC receivables monetization ND/EBITDAE • Improving debt maturity profile 3.8 times 2024
Slide 23: Our Guidance for 2024
EECL’S PERFORMANCE DURING THE ENERGY TRANSITION Our guidance for 2024 US$ millions 600 9,0 8,0 500 7,0 400 6,0 5,0 300 4,0 200 3,0 2,0 100 1,0 0 0,0 2018 2019 2020 2021 2022 2023 2024 (e) 2025 (e) EBITDA CAPEX ND/EBITDA 23 ENGIE ENERGIA CHILE – INVESTOR PRESENTATION 1Q24
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: 2.0 Additional Material
2.0 ADDITIONAL MATERIAL
Slide 26: 2.1 Energy Transition
2.1 ENERGY TRANSITION ENGIE ENERGÍA CHILE S.A. – INVESTOR PRESENTATION 9M 2023
Slide 27: Energy Transition
ENERGY TRANSITION EECL is embarked on a profound generation portfolio transformation 2018 2026 + 2.1 GW Renewables 1% 8% 34% Installed Installed - 58% 33% capacity capacity 1.2 GW Coal disconnection 66% 1.9 GW 3.1 GW Coal Gas Diesel Renewables Gas Renewables/ BESS 0.4 GW Conversion 27 ENGIE ENERGIA
Slide 28: Generation Portfolio Transformation
GENERATION PORTFOLIO TRANSFORMATION Addition of 2.1 GW renewables 0.9 GW / US$1.0 bn already done LOS LOROS MONTE REDONDO CALAMA TAMAYA CAPRICORNIO SAN PEDRO (*) COYA BESS COYA 46 MWac – 2H19 82 MW – 2H20 151 MW – 4Q21 114 MWac – 1H22 88 MWac – 4Q22 101 MW – 4Q22 180 MWac – 1H23 139 MW/638 MWh – 4Q2
Slide 29: 1.2 GW of Coal Capacity to Be Closed by YE-2025
GENERATION PORTFOLIO TRANSFORMATION 1.2 GW of coal capacity to be closed by YE-2025 U12 U13 U14 U15 CTM1 CTM2 CTA CTH IEM -171 MW – 2019 -268 MW – 2022 -334 MW – 2025 =356 MW – 2025 =377MW – 2026 2018: US$ 53 million 2019: US$ 134 million 2023: US$491 Million Coal to gas US$ 491 million after-tax no
Slide 30: 773 MW Renewable Projects Added Since 4Q21
773 MW RENEWABLE PROJECTS ADDED SINCE 4Q21 394 GWh generated in 1Q24 (1,670 GWh in 2023). BESS Coya in operation 151MW Calama 114MWac 88MWac wind farm Tamaya PV Capricornio PV US$160 million US$84 million US$100 million investment investment investment COD: 29-Oct-21 COD: 14-Jan-22 COD: 21-Nov-22 10
Slide 31: 574 MW Wind and Battery Projects Under Construction
574 MW WIND AND BATTERY PROJECTS UNDER CONSTRUCTION Lomas de Taltal. 61% advance rate as of 31-Mar-24 342MW 68MW / 418 MWh 48MW / 254 MWh 116MW / 660 MWh Lomas de BESS Tamaya BESS Capricornio BESS Tocopilla Taltal Wind (storage) (storage) (storage) US$468 million US$128 million US$76 million US$180
Slide 32: Renewable Projects
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):
Slide 33: Network Projects
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 s
Slide 34: 2.2 ESG
2.2 ESG
Slide 35: 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 2023 we… towards a carbon-neutral economy, through reduced energy consumption and more environmentally friendly PLANET PEOPLE solutio
Slide 36: 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 pro
Slide 37: ESG Rankings, Certifications and Initiatives
ESG RANKINGS, CERTIFICATIONS AND INITIATIVES To track our performance Corporate Commitments EECL Certifications Securing high standards The Certification for Global assessment regarding social, nature Workplace Diversity, platform for and climate. Equity, and Inclusion. businesses' sustainability ra
Slide 38: Corporate Social Responsibility
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 1. Early citizen 1. Associativity Policy skills participation 2. Social investment
Slide 39: 2.3 Transmission
2.3 TRANSMISSION
Slide 40: EECL: A Relevant Player in Transmission
EECL: A RELEVANT PLAYER IN TRANSMISSION 2,128 Kms. transmission lines, 37 substations and 50% share in TEN Substations ENGIE’S transmission lines Transmission 12 substations 1,032 Generation MVA substations 13% 25 2,128 946 Kms AVI + COMA for National & Zonal systems 87% Owned & Operated Operated In
Slide 41: National / Zonal Transmission Projects Awarded
NATIONAL / ZONAL TRANSMISSION PROJECTS AWARDED Arica y Parinacota New Works CAPEX (MUSD) COD Nueva Chuquicamata Liqcau substation (ex La Negra) 36 TBD Antofagasta Albemarle SS Roncacho substation 19 1H24 Capricornio SS La Ligua substation 24 2Q25 Atacama Totihue new sectioning + new Totihue 2x66 kV
Slide 42: 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) TEN 50% - Cumbre (500 kV) (COD
Slide 43: Transmisora Eléctrica del Norte S.A. (TEN)
TRANSMISORA ELÉCTRICA DEL NORTE S.A. (“TEN”) Tariff decree for the 2020-23 period published with delay in Feb-23 TEN revenue scheme Project finance as of 31-Mar-24 Regulated revenues on “national assets” (AVI) Senior 18-yr USD Loan Contractual toll with EECL on “dedicated assets” 26-yr USD Fixed-rat
Slide 44: 2.4 EECL and Market Information
2.4 EECL AND MARKET INFORMATION
Slide 45: Engie Energía Chile S.A.
ENGIE ENERGÍA CHILE S.A. A diversified asset base concentrated in Chile’s mining region 110/220kV Gasoducto Our operations Our sites Arica y (2,128 km) Norandino (1,066 km) Our largest clients Parinacota 4th largest GenCo in Chile TOCOPILLA Mining Gas (434MW) Antofagasta 2.7 GW gross capacity (500 k
Slide 46: Industry and Company Highlights
INDUSTRY AND COMPANY HIGHLIGHTS 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% 21% Hydro AES Renewables SISTEMA 28% 28% 36% Regulated 39% Enel Andes 27% ELÉCTRICO 11% NACIONAL 3
Slide 47: PPA Portfolio with 8-Year Remaining Average Life
PPA PORTFOLIO WITH 8-YEAR REMAINING AVERAGE LIFE Free clients: 10 yrs. Regulated clients: 6 yrs. 450 Clients’ credit ratings 400 (S&P/Moody’s/Fitch): 350 Distribution Companies - Codelco: BBB+/Baa1/BBB+ Average Demand (MW) 300 Codelco - Freeport-MM (El Abra ): BB+/Baa2/BBB- 250 Others - Antofagasta
Slide 48: 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 reversed since 2H23 Prices Energy sales GWh Energy sales and prices 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 4Q1
Slide 49: Volatile Marginal Costs Affected by Renewable Intermittency
VOLATILE MARGINAL COSTS AFFECTED BY RENEWABLE INTERMITTENCY A 10-day real example in the SEN grid (March 1 to 10, 2024) MW USD/MWh 10.000 300 9.000 250 8.000 7.000 200 6.000 5.000 150 4.000 100 3.000 2.000 50 1.000 0 0 1 6 11 16 21 2 7 12 17 22 3 8 13 18 23 4 9 14 19 24 5 10 15 20 1 6 11 16 21 2 7 1
Slide 50: Regulatory Initiatives
REGULATORY INITIATIVES GENERATION DISTRIBUTION • Tariff Normalization Law (“PEC3”). • Bill Energy Transition & amendments • Tariff fixing (VAD 2020-2024). (massive BESS, ITs reallocation, vertical integration limits). • NT Distribution update (REx CNE N° 210/2024). • Update DS MEN 125/2019. • Consul
Slide 51: Financing Activity
FINANCING ACTIVITY Securing funding and liquidity for the energy transition 144A / Reg S Bonds PEC Accounts Receivable (ARs) Bank loans as of 30-Apr-24 as of 30-Apr-24 monetization programs US$1,195 million US$1,136 million US$435 million (o.w. US$192 mln < 1 yr.) (o.w. US$136 mln < 1 yr.) Cashed-in
Slide 52: Stock Price Recovery
STOCK PRICE RECOVERY No dividends paid on account of 2022 and 2023 results 31-Mar-23 31-Mar-24 EECL: CLP 584 EECL: CLP 780 (+34%) 180 IPSA: 5,325 IPSA: 6,644 (+25%) Genco’s: 100 Genco’s: 130 (+30%) up 34% to CLP 780 160 140 120 100 Colbun Enel ECL IPSA Genco's 80 Mar-23 Apr-23 May-23 Jun-23 Jul-23 A
Slide 53: Ownership Structure
OWNERSHIP STRUCTURE 50% Pension Local Foreign 59.99% 15.02% 17.59% 7.04% Individuals 0.36% 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 del Andina SpA
Slide 54: 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 1Q2024 results in our web page Presentation Addenda Press Release Recorded Financial Analyst pack conference Report audiocast 54 ENGIE ENERGIA CHILE – I
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