Endesa S.a. · BME:ELE
Endesa — SCH Conference, London, 2005
26 slides from Endesa's conference presentation, Jan 26, 2005
Slide 1: Endesa's Renewables Strategy
Endesa’s Renewables Strategy Manuel Morán Senior VP Electricity Generation SCH Conference London, January 26th, 2005
Slide 2: Endesa's Renewables Strategy
Endesa’s Renewables Strategy 1. Endesa’s current position in renewables 2. Opportunities and risks 3. Strategy and plans for the future 4. Conclusions 2
Slide 3: Endesa: a global energy operator
Endesa: a global energy operator Spain & Portugal Europe Latam Capacity (b) (MW) 22,204 8,814 (a) 13,903 95,211 90,855 GWh (c) 46,480 49,526 26,946 (a) 10,697 (a) Production Customer Sales Production Customer Sales Production Customer Sales Assets (b) (€ M) 23,471 6,168 15,149 Average weight 50-55%
Slide 4: Historical renewable output by technology
Historical renewable output by technology1 (GWh) 1,772 % 92 GR=13 CA 1,541 199 1,411 82 1,284 64 35 Other 2 1,085 321 528 2 417 573 CHP 495 443 Mini-hydro 545 Wind 953 422 822 611 319 165 2000 2001 2002 2003 2004 4 (1) 100% of installations where Endesa has >50%
Slide 5: Achievements in 2004: Spain and Portugal
Achievements in 2004: Spain and Portugal Installed capacity (net MW) ECYR Main Financial Data 1,213 1,048 46 49 229 Other €M 9M 03 9M 04 %Chg 240 158 CHP 157 Mini-hydro EBITDA 39 43 +11% 780 602 Wind EBIT 19 21 +11% Net income 14 16 +14% 2003 2004 5
Slide 6: Achievements in 2004: Italy
Achievements in 2004: Italy Acquisition 90% of 20MW Florinas wind farm in Sardinia, for €21.5M • Close to the Fiume Santo power plant, owned by Endesa Italia • Started commercial operations in 2004 • Installed capacity of 20 MW, potential increase to 40 MW • Estimated net output of 42 GWh Agreement
Slide 7: Endesa's Renewables Strategy
Endesa’s Renewables Strategy 1. Endesa’s current position in renewables 2. Opportunities and risks 3. Strategy and plans for the future 4. Conclusions 7
Slide 8: Europe is actively promoting renewable energies
Europe is actively promoting renewable energies Opportunities Installed wind capacity as of 2003 (MW) EU Legal Framework in renewables: 1. Renewable Development Directive Sept, 01: Ø Guaranteed TPA and reduced regulatory barriers 13,875 13.875 Ø EU support framework Ø EU recommendation and monitorin
Slide 9: Spain sets more ambitious objectives in renewable energies than the average EU
Spain sets more ambitious objectives in renewable energies than the average EU Opportunities Directive on the development of electricity Spain: Electricity infrastructure plan (2002) generated with renewables (2001) Share of renewable energies in electricity Installed capacity under Special Regime o
Slide 10: Renewable energy regulations in Spain
Renewable energy regulations in Spain Opportunities • Current legislation in Spain provides annually a fixed range of revenues but in the long run the system may be harmonised throughout the European Union • Remuneration in Spain is attractive for wind and mini-hydro power but less so for co- genera
Slide 11: Favourable regulation provides high return for wind and mini-hydro
Favourable regulation provides high return for wind and mini-hydro Opportunities Historical trends in prices paid for wind power Current pool price + premium 2818 + reactive 75 Expected pool price + premium 436 65 Fixed price 55 €/MWh 45 Pool price 35 25 1999 2000 2001 2002 2003 2004 2005 11
Slide 12: Potential saturation owing to strong growth in wind power
Potential saturation owing to strong growth in wind power Potential risks Installed wind capacity in Spain (MW) 7,953 % 6,230 GR=46 CA 4,886 3,271 2,286 1,471 829 1998 1999 2000 2001 2002 2003 2004 Annual TOTAL investment 368 601 747 936 1,567 1,344 1,657 7,219 (M€) Source: Plataforma Eólica Empresa
Slide 13: Recent wind farms acquisitions have led to lower returns
Recent wind farms acquistions have led to lower returns Potential risks Price range of Price range of farms in farms under operation development IRR of project (%) 14 12 10 8 IRR project=7% 6 2,600 h- wind 4 2 0 0 5 10 15 20 25 30 35 Premium paid (%) 0.9 0.94 0.99 1.03 1.08 1.13 1.17 1.21 Total inve
Slide 14: The weight of renewable energy in the electricity tariff has doubled in eight years
The weight of renewable energy in the electricity tariff has doubled in eight years Potential risks % of total electricity tariff Spain 19.8% 17.0% 15.8% 14.9% Where is 14.0% the limit? 12.8% 11.3% 9.0% 1998 1999 2000 2001 2002 2003 2004 2005 Total revenues Renewables (€M) CAGR 1,043.4 1,336.8 1,566
Slide 15: Endesa's Renewable Strategy
Endesa’s Renewable Strategy 1. Endesa’s current position in renewables 2. Opportunities and risks 3. Strategy and plans for the future 4. Conclusions 15
Slide 16: Renewable energy is a key element of Endesa's strategy
Renewable energy is a key element of Endesa’s strategy in the electricity business Acts as hedge against Renewables are part of An attractive business decline in Ordinary Endesa’s core business + in itself + Generation revenues • It is part of the • High return • An increase in industry’s regulated
Slide 17: Maximising synergies within Endesa
Maximising synergies within Endesa Use of operating rights of mini -hydro plants Conventional Generation Optimisation of generation portfolio, operating conditions, O&M Distribution Development of distribution infrastructure Endesa Renewables Supply Availability of green energy Energy Advanced knowl
Slide 18: Lines of action
Lines of action To increase installed capacity in Spain and + Adaptation of existing plants in + Europe as much as Spain to the new regulations LatAm possible • “Endesa Renewables” licensed • Leveraging our experience • Development of new sites, sales agent in the pool and know-how to: via 100% or m
Slide 19: Expansion plan in renewables for Spain
Expansion plan in renewables for Spain Gross* Renewable/CHP Capacity (MW) Maturity of the portfolio of new wind projects (net MW) 258 457 497 478 441 100% 8 82 CHP 4,100 90% 156 80% Wind 500 Mini Hydro 70% 274 Other renewable 60% 364 1,858 50% 3100 250 581 40% 375 341 922 30% 207 300 204 148 200 20%
Slide 20: 29% of Endesa's 5-year growth investment will be in renewables
29% of Endesa’s 5-year growth investment will be in renewables € bn Includes 1.4 bn 2004 2005 2005-09 for additional Spain and Portugal 1.6 2.4 10.3 2,100 MW mainly wind New capacity 0.5 1.0 4.6 Includes € 0.5 bn Maintenance capex (1) 1.2 1.4 5.7 for 400 MW additional mainly European Business 0.5 0.
Slide 21: Renewable energy contributes to Endesa generation strategy
Renewable energy contributes to Endesa generation strategy Evolution of mainland production mix Spain Mainland capacity mix (MW) 1 Market Share in Mibel GWh 2003 Energy sales as % of generation 103% 18,347 22,229 Others (2) 2% 7% 95% 7% 0 Renew/CHP 6% 12% 18,2% 6% 18% 9% CCGT 20% 34,4% 43% Fuel-oil
Slide 22: Portugal: a key market for the renewables expansion plan
Portugal: a key market for the renewables expansion plan Renewable market in So far, better returns in Portugal fulfils Endesa’s + wind compared to Spain, + Current position and strategic requirements but convergence in the outlook long term is expected • Moving towards the single • Wind remuneratio
Slide 23: Italy: renewable as an investment opportunity with synergies
Italy: renewable as an investment opportunity with synergies in the current generation portfolio Endesa Italia generation plan 2003-09 Endesa Italia 32.8 0.7 CAGR 1.8 (TWh) 11.7% 3.1 • Acquired in Sept 2001 WIND 17.7 • 85% ownership. Partnership with ASM 1.7 19.8 HYDROELECTRIC Brescia OIL-GAS 11.1 •
Slide 24: Endesa's Renewable Strategy
Endesa’s Renewable Strategy 1. Endesa’s current position in renewables 2. Opportunities and risks 3. Strategy and plans for the future 4. Conclusions 24
Slide 25: Conclusions
Conclusions Maintenance of a balanced mix, vertical integration and leadership, while complying with environmental requirements Strong commitment to renewable energies in Spain and Portugal. Selective focus in France and Italy Balanced growth of generation portfolio Opportunity to benefit from syner
Slide 26: Endesa's Renewables Strategy
Endesa’s Renewables Strategy Manuel Morán Senior VP Electricity Generation SCH Conference London, January 26th, 2005