Enel Spa · MIL:ENEL
Enel Spa — Investor Day (July 2010)
70 slides from Enel Spa's investor day presentation, Jul 6, 2010
Slide 1: Investor Day on Russia
Enel SpA Investor Relations Investor Day on Russia Moscow - July 6th, 2010
Slide 2: Agenda
Enel SpA Investor Relations Agenda • Opening remarks F. Conti • Power market and regulation C. Tamburi • Upstream: SeverEnergia M. Arcelli • Generation: OGK-5 E. Viale – Presentation of Reftinskaya plant A. Zhugrin • Supply: RusEnergoSbyt M. Andronov • Closing remarks F. Conti • Q&A session 1
Slide 3: Opening remarks - Fulvio Conti
Enel SpA Opening remarks Investor Relations Fulvio Conti Chief Executive Officer 2
Slide 4: Group strategy: key priorities
Enel SpA Opening remarks Investor Relations Group strategy Key priorities Leadership Leadershipin instrategic strategicmarkets markets Consolidation Consolidation&&integration integration Operational Operationalexcellence excellence Renewables Renewables&&innovation innovation Financial Financialsta
Slide 5: Key priorities: Leadership in strategic markets
Enel SpA Opening remarks Investor Relations Key priorities Leadership in strategic markets RUSSIA Capturing growth and value NORTH AMERICA of our integrated position • Focus on renewables FRANCE • Focus on renewables and nuclear SLOVAKIA - ROMANIA • Leading position in Slovakian generation and Roman
Slide 6: Key priorities: Consolidation and integration
Enel SpA Opening remarks Investor Relations Key priorities Consolidation and integration 2004 2009 • Enel and Russian private company ESN-Energo: joint contract for the management of the North West Thermal Power Plant (NWTPP) in St. Petersburg Moscow • Plant consisted of: 450MW with project financin
Slide 7: Key priorities: The value chain
Enel SpA Opening remarks Investor Relations Key priorities The value chain Upstream gas Power generation Supply 19.6% of SeverEnergia 56.4% of Enel OGK-5 49.5% of RusEnergoSbyt (51.0% Gazprom; 29.4% ENI) • Gas fields in the North of Western Siberia • 2009 net installed capacity: c. 8.2GW • 2009 sale
Slide 8: Key priorities: Operational excellence
Enel SpA Opening remarks Investor Relations Key priorities Operational excellence Working capital optimisation Group cash flow optimisation1 (2009-11) •• Credit Creditmanagement management ~2,700 €mn •• Inventory Inventorymanagement management •• Sourcing Sourcing 11% EBITDA improvement 89% •• Share
Slide 9: Key priorities: Renewables and innovation
Enel SpA Opening remarks Investor Relations Key priorities Renewables and innovation Hydro and other renewable sources Nuclear development Higher efficiency in gas and coal generation Digital meters Opportunities for further growth 8
Slide 10: Summary
Enel SpA Opening remarks Investor Relations Summary • One of the most attractive power markets worldwide • Liberalisation process as a key driver for growth • Optimal mix of assets to benefit from market opening and new regulatory framework • Fully integrated position to enhance value Russia: a stra
Slide 11: Agenda
Enel SpA Investor Relations Agenda • Opening remarks F. Conti • Power market and regulation C. Tamburi • Upstream: SeverEnergia M. Arcelli • Generation: OGK-5 E. Viale – Presentation of Reftinskaya plant A. Zhugrin • Supply: RusEnergoSbyt M. Andronov • Closing remarks F. Conti • Q&A session 10
Slide 12: Power market and regulation - Carlo Tamburi
Enel SpA Power market and regulation Investor Relations Carlo Tamburi Head of the International Division 11
Slide 13: Russia: Historic overview and outlook
Enel SpA Power market and regulation Investor Relations Russia Historic overview and outlook General overview CPI trend (%) 20 15 Surface Surface(mn (mnKm Km): 2 17 2 ): 17 Population Population(mn): 139 (mn): 139 10 Urban Urbanpopulation population(%): 73 (%): 73 Nominal 5 NominalGDP GDP0909($bn):
Slide 14: Focus on Russian power market: Overview
Enel SpA Power market and regulation Investor Relations Focus on Russian power market Overview Generation capacity worldwide1 (GW) Estimated energy demand growth2 (TWh) 1,021 1,100 1,050 508 1,000 950 253 212 177 115 112 81 USA China Japan Russia India Germany France Italy 2004 2005 2006 2007 2008 2
Slide 15: Energy demand and capacity evolution in Enel's regions
Enel SpA Power market and regulation Investor Relations Focus on Russian power market Energy demand and capacity evolution in Enel’s regions Reftinskaya 3.6GW Sredneuralskaya 1.1GW 57% of group installed capacity Konakovskaya 2.3GW 20% of the Urals region market1 28% of group installed capacity 7% o
Slide 16: Focus on Russian power market: Technology mix
Enel SpA Power market and regulation Investor Relations Focus on Russian power market Technology mix Capacity breakdown 18% 4% 16% 27% 66% 69% Nuclear Gas Hydro Coal Thermal Other Marginal price set by open-cycle gas plants 15
Slide 17: Focus on power market: Electricity price
Enel SpA Power market and regulation Investor Relations Focus on power market Electricity price Revenue sources1 Electricity price (€/MWh) 2011 Capacity payment (€/MW per month) Existing Existingcapacity 2,950 €/MW per month2 2 capacity 2,950 €/MW per month New Newcapacity capacity 12,300-13,900 €/M
Slide 18: Focus on regulation: current regulatory framework
Enel SpA Power market and regulation Investor Relations Focus on regulation Fundamentals: current regulatory framework 3 OGKs, 4TGKs Hydro (RusHydro) 3 OGKs Nuclear (Rosatom) 10 TGKs Generation Import/Export (InterRAO) FSK (Transmission operator) Transmission SO (System operator) Dispatching Distrib
Slide 19: The Russian power market reform
Enel SpA Power market and regulation Investor Relations Focus on regulation The Russian power market reform Liberalization path1 % 5 - 10% of t 10 - 15% he 15 - 20% m ark 15 - 20% et at 30 - 35% m arg Regulated market i nal pr ice (tariff) 50 - 55% 60 - 65% 80 - 85% 100% Jan 2007 Jul 2007 Jan 2008 J
Slide 20: Russian electricity market structure
Enel SpA Power market and regulation Investor Relations Focus on regulation Russian electricity market structure Bilateral contracts Day Ahead Market FREE FREEMARKET MARKET OGKs SUPPLIERS OGKs SUPPLIERS CUSTOMERS CUSTOMERS OTC Market TGKs TGKs REGULATED REGULATED MARKET MARKET CUSTOMERS CUSTOMERS Re
Slide 21: Capacity market
Enel SpA Power market and regulation Investor Relations Focus on regulation Capacity market Europe & Urals region 2,950 €/MW per month Enel’s presence: Price zone I Existing Price zone II Existing Non-free price zones capacity capacity Siberia region 3,159 €/MW per month Europe & Urals region 12,300
Slide 22: Summary
Enel SpA Power market and regulation Investor Relations Summary • Growth market with high improvement potential • Market liberalisation path respected • Favourable regulatory framework Enel prepared to seize opportunities in Russia 21
Slide 23: Agenda
Enel SpA Investor Relations Agenda • Opening remarks F. Conti • Power market and regulation C. Tamburi • Upstream: SeverEnergia M. Arcelli • Generation: OGK-5 E. Viale – Presentation of Reftinskaya plant A. Zhugrin • Supply: RusEnergoSbyt M. Andronov • Closing remarks F. Conti • Q&A session 22
Slide 24: Upstream: SeverEnergia - Marco Arcelli
Enel SpA Upstream: SeverEnergia Investor Relations Marco Arcelli Head of Upstream Gas 23
Slide 25: Ownership Structure
Enel SpA Upstream: SeverEnergia Investor Relations Ownership Structure 60% 40% Joint Joint Venture Venture 49% 51% NefteGas Arcticgas Urengoil NefteGas Arcticgas Urengoil Technologia Technologia Samburgsky Yaro-Yakhinsky Severo-Chaselsky Yevo-Yakhinsky A strong, unique partnership 24
Slide 26: Investment to date (€mn)
Enel SpA Upstream: SeverEnergia Investor Relations Investment to date (€mn) 83 722 464 639 258 Initial Additional Total Disposal to Total Investment1 Investment Investment Gazprom net (2007) (2007-09) (2007-09) investment Very competitive acquisition cost in one of the best gas basins in the world 1
Slide 27: Assets overview
Enel SpA Upstream: SeverEnergia Investor Relations Assets overview SeverEnergia Gas Fields Russia’s gas supply forecast S. Tambey bcm 1,000 Bovanenkovo 750 Urengoy Konakovskaya GRES West Siberia independents 2,400 MW; 3770 km 500 Sredneuralskaya GRES 1,242 MW; 1740 km SeverEnergia 250 West Siberia G
Slide 28: Reserves acquired
Enel SpA Upstream: SeverEnergia Investor Relations Reserves acquired Total 2P(1) reserves (mn BOE) ~ 5,000 851 949 Samburgsky V. Yaro-Yakhinsky Samburgsky A. 2,222 Gas 84% 16% Liquids Yevo-Yakhinsky Severo-Chalesky 255 743 Enel reserves amount to c. 987 mn BOE Secured up to 50% of Enel gas needs on
Slide 29: License commitments
Enel SpA Upstream: SeverEnergia Investor Relations License commitments 2012 2013 2014 2015 2016 2017 2018 Zapolyarny Samburgsky V. Samburgsky A. Severo- Purovsky Yaro-Yakhinsky Urengoy Esetinkoye Yevo-Yakhinsky Severo-Chaselsky Finalizing long-term development plan 28
Slide 30: Focus on Samburgsky Valanginian: Overview
Enel SpA Upstream: SeverEnergia Investor Relations Focus on Samburgsky Valanginian Overview Drilling Facilities 100% Capex: 1.7€bn1 Reserves (100%) • 146 wells: 35 for first gas • 851 mBOE • 3x6 mcm/d treatment plants • 2011 start-up date First gas available in 2H2011 ahead of license requirements 1
Slide 31: Focus on Samburgsky Valanginian: Progress to date
Enel SpA Upstream: SeverEnergia Investor Relations Focus on Samburgsky Valanginian Progress to date • Management system implemented: no significant accident in 2009 HSE HSE and 2010 year-to-date • 1 rig at site plus 2 under mobilization • 13 new wells drilled with strong improvement from introductio
Slide 32: Summary
Enel SpA Upstream: SeverEnergia Investor Relations Summary • Very promising gas fields to be developed • First gas in 2011 after solid operational achievements to date • Integration with OGK-5 Upstream integration as a value creation driver for our presence in Russia 31
Slide 33: Agenda
Enel SpA Investor Relations Agenda • Opening remarks F. Conti • Power market and regulation C. Tamburi • Upstream: SeverEnergia M. Arcelli • Generation: OGK-5 E. Viale – Presentation of Reftinskaya plant A. Zhugrin • Supply: RusEnergoSbyt M. Andronov • Closing remarks F. Conti • Q&A session 32
Slide 34: Generation: OGK-5 - Enrico Viale
Enel SpA Generation: OGK-5 Investor Relations Enrico Viale Chief Operating Officer - Russia 33
Slide 35: Ownership Structure
Enel SpA Generation: OGK-5 Investor Relations Ownership Structure Russian Russian Other Other Enel Gazprombank EBRD Enel Federation Gazprombank EBRD minorities Federation minorities 56.4% 26.4% 5.3% 5.1% 6.8% Enel OGK-5 34
Slide 36: Enel OGK-5 and its Peers
Enel SpA Generation: OGK-5 Investor Relations Enel OGK-5 and its Peers Installed EBITDA, Utilization EBITDA Headcount Capacity Controlled by Positioning ratio2 Fuel Mix Mn EUR3 margin per MW (IC), (2009) (2009) (2009) (2009) MW1 Coal 13% 9,531 51% 108 9.6% 0.47 InterRAO Gas OGK-1 87% Coal 26% Gazpro
Slide 37: Assets Overview
Enel SpA Generation: OGK-5 Investor Relations Assets Overview1,2 Price Zone I (Free market) Price Zone II (Free market) Non-Price Zones (Regulated market) Coal-fired Gas-fired Plant load and output in 2009 Net output Load factor Plant (GWh) (%) Konakovskaya GRES Konakovskaya 7,157 79.7 2.3GW Reftins
Slide 38: Key Levers and Target Areas of Value Creation
Enel SpA Generation: OGK-5 Investor Relations Key Levers and Target Areas of Value Creation • Improving maintenance activities and processes O&M O&Mand andEnergy Energy • Improving heat rate Management Management • Diversifying fuel sources and logistics • Commissioning two new CCGT units at SGRES a
Slide 39: Operational KPIs
Enel SpA Generation: OGK-5 Investor Relations Operational KPIs Net installed capacity (GW) Net power output (TWh) 8.1 8.2 8.8 8.8 8.1 47 52 41 39 36 2007 2008 2009 2011 2014 2007 2008 2009 2011 2014 Before Enel acquisition Availability ratio1 (%) After Enel acquisition 82 82 86 2010-2014 Business Pl
Slide 40: Key financials
Enel SpA Generation: OGK-5 Investor Relations Key financials EBITDA (€mn)1 and EBITDA margin (%) Total 2010-2014 capex: c.1€bn 40 1,077 30 27% 25% 20 471 26% 22% 184 10 138 93 2007 2008 2009 2011 2014 CCGTs Before Enel acquisition Modernisation & repowering After Enel acquisition Operational improve
Slide 41: Focus on Investments: New Capacity
Enel SpA Generation: OGK-5 Investor Relations Focus on Investments: New Capacity CCGT unit at CCGT unit at Sredneuralskaya GRES Nevinnomysskaya GRES • Gross installed capacity: 410MW • Gross installed capacity: 410MW • Fuel: gas • Fuel: gas • Commissioning: end of 2010 • Commissioning: end of 2010 •
Slide 42: Focus on Investments: Existing Capacity
Enel SpA Generation: OGK-5 Investor Relations Focus on Investments: Existing Capacity Reftinskaya GRES revamping programme • Long-term revamping 6x300MW units • Units 4 & 5 to be revamped by 2014: +25MW each • Significant improvement in plant’s availability and efficiency Operational improvements •
Slide 43: Summary
Enel SpA Generation: OGK-5 Investor Relations Summary • Among the best positioned to leverage on the new market framework • Solid track record of delivering good results in a challenging environment • Significant hike in future earnings from investments, operational improvements, and market liberali
Slide 44: Agenda
Enel SpA Investor Relations Agenda • Opening remarks F. Conti • Power market and regulation C. Tamburi • Upstream: SeverEnergia M. Arcelli • Generation: OGK-5 E. Viale – Presentation of Reftinskaya plant A. Zhugrin • Supply: RusEnergoSbyt M. Andronov • Closing remarks F. Conti • Q&A session 43
Slide 45: Focus on generation: Reftinskaya plant - Alexander Zhugrin
Enel SpA Focus on generation: Reftinskaya plant Investor Relations Alexander Zhugrin Plant Director 44
Slide 46: Key facts
Enel SpA Focus on generation: Reftinskaya plant Investor Relations Key facts • Installed power capacity: 3,800 MW1 (6X300MW units and 4X500MW units) • Available heat capacity: 350 Gcal/h • Average annual gross power output2: 19.5TWh • Average annual consumption of coal2: 11 million tons • Average lo
Slide 47: Position in Sverdlovsk Region
Enel SpA Focus on generation: Reftinskaya plant Investor Relations Position in Sverdlovsk Region Integrated Energy System of Urals Sverdlovsk Sverdlovskregion region • Surface: 195 th km2 (~1% of Russia and ~2/3 of Italy) • Surface: 195 th km2 (~1% of Russia and ~2/3 of Italy) • Population: 4.4 mln
Slide 48: Enel SpA Investor Relations
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Slide 56: Enel SpA Investor Relations
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Slide 57: Focus on Operating Performance
Enel SpA Focus on generation: Reftinskaya plant Investor Relations Focus on Operating Performance Net Power Output (TWh) Availability ratio2 (%) Utilization ratio1 (%) 25.6 82 81 23.3 76 77 74 70 19.9 20.0 63 64 55 15.5 49 2007 2008 2009 2011 2014 2007 2008 2009 2011 2014 2007 2008 2009 2011 2014 1Q
Slide 58: Agenda
Enel SpA Investor Relations Agenda • Opening remarks F. Conti • Power market and regulation C. Tamburi • Upstream: SeverEnergia M. Arcelli • Generation: OGK-5 E. Viale – Presentation of Reftinskaya plant A. Zhugrin • Supply: RusEnergoSbyt M. Andronov • Closing remarks F. Conti • Q&A session 57
Slide 59: Supply: RusEnergoSbyt - Mikhail Andronov
Enel SpA Supply: RusEnergoSbyt Investor Relations Mikhail Andronov Chairman of RusEnergoSbyt 58
Slide 60: Ownership Structure
Enel SpA Supply: RusEnergoSbyt Investor Relations Ownership Structure 50.5% 49.5% Joint Joint Venture Venture 100% RusEnergoSbyt 59
Slide 61: Market position
Enel SpA Supply: RusEnergoSbyt Investor Relations Market position1 • Significant growth since Enel entry: from 19TWh • Significant growth since Enel entry: from 19TWh (2006) to c. 40TWh (2009) (2006) to c. 40TWh (2009) • 33 regions served in 2007, grown to 47 in 2009 • 33 regions served in 2007, gro
Slide 62: Business Model
Enel SpA Supply: RusEnergoSbyt Investor Relations Business Model Regulated Regulated 60% of total Bilateral market volume Agreement Final Final customers customerscancan Free Bilateral Agreement1 be households, be households, companies companies within withinRussian Russian Day Ahead RES RES railway
Slide 63: Market share
Enel SpA Supply: RusEnergoSbyt Investor Relations Market share1 Suppliers Independent suppliers 12.1% 1st 5.9% 5.8% 70.6% 29.4% 76.2% Independent RES Regional Rusal Sibirenergo Other independents The largest independent supplier 1. 2009 data and on a standalone basis 62
Slide 64: KPIs
Enel SpA Supply: RusEnergoSbyt Investor Relations KPIs1 Volumes to final customers (TWh) EBITDA (€mn) 81 46 40 54 31 33 30 40 35 35 20 19 2006 2007 2008 2009 2011 2014 2006 2007 2008 2009 2011 2014 +15 +8 2009-14 CAGR (%) 2009-14 CAGR (%) Before Enel acquisition After Enel acquisition 2010-2014 Busi
Slide 65: Summary
Enel SpA Supply: RusEnergoSbyt Investor Relations Summary • Further strengthen supply position in a context of market liberalization and economic growth • Cost optimization process integration and best practices implementation 64
Slide 66: Agenda
Enel SpA Investor Relations Agenda • Opening remarks F. Conti • Power market and regulation C. Tamburi • Upstream: SeverEnergia M. Arcelli • Generation: OGK-5 E. Viale – Presentation of Reftinskaya plant A. Zhugrin • Supply: RusEnergoSbyt M. Andronov • Closing remarks F. Conti • Q&A session 65
Slide 67: Russian operations overall financial targets (€mn)
Enel SpA Closing remarks Investor Relations Russian operations overall financial targets (€mn) EBITDA by business segment1 Cumulated capex1 1,099 22 982 3 487 1,077 979 55% 45% 16 471 2011 2014 2010-2014 RusEnergoSbyt Maintenance Growth OGK-5 CAGR 2011-14 22.5% 1. Excluding contribution from Severen
Slide 68: Russian operations returns
Enel SpA Closing remarks Investor Relations Russian operations returns New 2014 €mn Equity1 Capex1 investments2 ROI (%) OGK-5 2,466 523 979 RusEnergoSbyt 83 2 3 Total 2,549 525 982 25.4 New 2014 €mn Equity & Capex1 Investments2,3 IRR (%) Severenergia 258 400-500 >11.5(4) Russia is a key pillar to bo
Slide 69: Disclaimer
Enel SpA Investor Relations Disclaimer This presentation contains certain statements that are neither reported financial results nor other historical information (“forward-looking statements”). These forward-looking statements are based on Enel S.p.A.’s current expectations and projections about fut
Slide 70: Contact us
Enel SpA Investor Relations Contact us Investor Relations Team (investor.relations@enel.com) • Luca Torchia (Head of IR) +39 06 83053437 • Pedro Cañamero (Equity IR) +39 06 83055292 • Donatella Izzo (Fixed income IR) +39 06 83057449 Visit our website at: www.enel.com (Investor Relations) 69