#4 #2 Offshore under 4,811 develop 71 ment MW 418 MW MW - - PowerPoint PPT Presentation
30 MW #4 #2 Offshore under 4,811 develop 71 ment MW 418 MW MW Offshore 388 under develop 200 MW ment #3 MW 521 #1 MW 1,251 144 #3 MW MW 204 2,371 MW MW 2 ( 1) December 2016: Installed capacity includes EDPRs
(1) December 2016: Installed capacity includes EDPR’s Equity consolidated: 177 MW in Spain and 179 MW in the US; Includes 82 MW of Solar PV
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#1 #3 #2 #3 #4
1,251 MW 2,371 MW 71 MW
Offshore under develop ment
418 MW 521 MW 144 MW 30 MW 4,811 MW 204 MW
Offshore under develop ment
388 MW 200 MW
3
6
Quality assets
Ongoing renewable competitiveness improvement…
Renewables are a competitive and cheap technology (wind LCoE -66% since 20091) to cope with the increasing energy demand and the need of a low carbon economy
Quality assets
…supporting increasing growth in main markets…
Solid specific market fundamentals, namely in the US despite new macro landscape, based on clear bipartisan support along with state level targets, coal shut-down plans and C&I2 increasing market
Quality assets
…with EDPR well positioned to benefit from its 2020 strategy
A strong renewable sponsor exposed to attractive markets, with clear competitive advantages supported by unique core competences on project development, PPAs origination & asset management (O&M strategy and low-risk profile)
(1) Source: Lazard´s Levelized Cost of Energy Analysis from Jan-2017; (2) Commercial & Industrial companies
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Quality assets Quality assets 97.7% availability
higher than 97.5% target; benefitting from predictive maintenance and O&M strategy
95% of Revenues fixed1
€61/MWh avg. selling price in line with guidance
30% load factor vs 29% in 2015
but 96% of P50 impacting €29m in EBITDA
Quality assets Selective and profitable growth €1,171m EBITDA (+12% YoY adj.)
higher than +8% CAGR 15-20 growth target
Quality assets Self-funding business €698m (+13% YoY) RCF2
from young assets exposed mostly to PPA/FiT
+820 MW installed in 2016
higher than 700 MW target; with 248 MW already under construction
>65% of 2020 target secured
+3.5 GW of additions in 2016-20
NP €56m -66% YoY due to one-offs
€104m adj. net profit (-4% YoY)
Asset rotation €550m cashed-in
along with €0.4bn from CTG; attractive €1.7m/MW multiple
Lower cost of debt at 4.0%
€2.3bn restructured & prepaid since 2015
€0.6bn Net Debt & TEI reduction
after €1.06bn of total investments
2016 Performance
(1) Based on status at the beginning of 2016; (2) RCF stands for Retained Cash Flow
Spain 23% Portugal 12% Rest of Europe 15% Brazil 2% North America 48%
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Installed Capacity1 (EBITDA MW + Equity Consolidated)
2016 execution above expectations: 820 MW added YTD and 248 MW under construction
(1) Incl. equity consolidated: 177 MW in SP & 179 MW in the US; (2) In EU: PT (4 MW), FR (24 MW), IT (44 MW); does not consider 50 MW deconsolidated in PL; 200 MW in MX to start full consolidation in 2017
Average Installed Capacity increased by 960 MW (+11% YoY)
Under Construction
+100 MW +429 MW +21 MW +72 MW +127 MW +120 MW
2016 Additions2
+248 MW +820 MW
EDPR Load Factor analysis vs. long-term average (P50) (%)
EDPR Availability1
10
2016 33% 26% 35%
97.7%
30%
+1.1pp +4.3pp +0.4pp
D% YoY
Load factor increased to 30% in 2016 on the back of new assets with above average load factors High level of availability (97.7%) reflecting distinctive core competences 2016 vs. Average (P50)
96% 97%
96%
107%
+7%
1Q 2Q 3Q 4Q
2016
Load Factor and Technical Availability
2015
(1) Technical Energy Availability (TEA); (2) Avg NCF sources: REE/AEE (Spain), REN (Portugal), RTE (France), Elia (Belgium), Terna/ANEV (Italy), PSE/URE (Poland) & Transelectrica (Romania)
+2pp
+1pp
(%)
EDPR Mkt
11
Electricity Production (TWh)
In 2016 EDPR generated 24.5 TWh avoiding 20.1 mt of CO2 emissions Electricity Output breakdown: 51% in US, 46% in Europe and 3% in Brazil TWh r% YoY +12%
Output growth across all platforms; impact from 2015 ENEOP consolidation (+1.0 TWh YoY)
+200%
Reflecting mainly 120 MW of capacity added YoY
+13%
Impact from capacity additions with above average load factors
21.4 +3.0 +0.1 24.5 2015 Capacity Growth 2016 +14% D Load Factor
€64.0 €60.5 2015 2016
EDPR Price Evolution (€/MWh)
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Selling price -5% YoY due to different mix and lower pool price mitigated by hedging strategy 2016 r% YoY1 €81.5
exposed to market price
R$216
wind farm in operation
$46.4
hedges; 2015 benefitted from sale
(1) Evolution calculated in local currency
1Q: €60.8 2Q: €58.7 3Q: €61.2 4Q: €61.3
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Higher YoY revenues supported by new additions, offsetting the lower price in the period Lower than average wind resource with €29m negative impact Load factor: 96% of P50 Negative impact of €29m (vs -€6m in 9M16) Higher output: +14% YoY from +960 MW (Avg. EBITDA) YoY EU +12%; NA +13%; BR +200% Lower average selling price: -5% YoY EU -2%; NA -9% (in $); BR -42% (in R$)
Main drivers for Revenues performance
1,547 1,651 2015 2016
Revenues (€ million)
+7%
Includes +€30m
residual interest accretion +9% ex-one-off
566 534 2015 2016 45.1 42.8 2015 2016
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Opex (excludes Other Operating Income) (€ million)
+6% Core Opex/Avg. MW (€k)
(Supplies & Services and Personnel Costs) Core Opex(1) Levies & Non-current
(1) Includes Supplies and Services and Personnel Costs
Core Opex per average MW decreasing 5% YoY boosted by EDPR’s control over costs and higher installed capacity
€1,192m recurring Spain 21% Portugal 18% Rest of Europe 16% Brazil 2% North America 43%
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EBITDA per Region(1) (%)
(1) Includes hedges gains in Spain, Rest of Europe and US
1,142 1,171 2015 2016
EBITDA (€ million)
+3%
+12% ex-one-offs
2016: -€103m one-offs YoY: €125m: ENEOP PPA in 2015 €61m: lower YoY write-offs €39m: other including TEI’s minority interest accretion (FY15)
EBITDA +3% YoY, impacted by 2015 one-offs and benefitting from top-line evolution and cost control
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Load Factor (%, P50) Selling Price (€/MWh)
in Operation (MW) Core Opex per MW (€k) EBITDA (ex-one-offs) (€bn) 2016 Operational Performance YE16 Outlook
(presented in YE15 results, BP 2016-20)
+10-12% YoY
consolidation
c.31%
projects
recovery
c.€60 per MWh
revenues & efficient hedges
(M3 & SP)
Double digit
accretive projects
+11% YoY
competitive projects with contracted revenues
30% in 2016
96% of P50 scenario due to lower 4Q
€61 per MWh
low market prices mitigated by hedging strategy (€40m gain)
control over costs and O&M strategy
EBITDA +12% YoY
ex-non recurring; Reported EBITDA: +3% YoY
2016 Execution
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Reported Net Profit Adjusted Net Profit
2015 2016
166.6 56.3 107.7 103.6
Write-offs & Impairments Forex losses (gains) & Forex derivatives
+2.3 (1.4) +70.2 +14.5
(66%) (4%)
Provisions & other
(137.7) +13.4
(€ million)
On a like-for-like basis and excluding non-recurring, Net Profit was -4% YoY impacted by lower wind resource
Project Finance Renegotiation
+6.2 +20.7
108 104 2015 2016
Adjusted Net Profit (€ million)
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EBITDA
LT receivables & cash-adjustments Current income taxes Interests, TEI, fees & derivatives Dividends and interests to Minorities
Retained Cash Flow (RCF)
Retained Cash Flow metric captures assets’ cash generation capabilities and EDPR ability to grow profitable
as realized revenues by TEI (vs accounting), write-offs, provisions…
excludes tax provision/deferred taxes
partnerships costs and banking fees, forex and energy derivatives
partners; includes net dividends, capital distributions and interests
re-invest, distribute and pay debt principal
1 3 4 2
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LT receivables & Cash Adjustments 1 (€8m)
2016
Current income taxes (€50m)
2016
2 EBITDA (€ million)
€8m 2016 Current income taxes in line with 2015 Tax provisions/deferred taxes not included (“non-cash”)1 Spanish regulatory adjustment on standard GWh
(to be received from 2017 till the end of assets’ regulatory life)
Restricted Green Certificates in Romania
(to be sold after Jan-18)
TEI realized revenues (vs accounting), gains on assets, write-offs, provisions, etc…
(€22m)
(2016)
(€18m)
(2016)
+€32m
(2016) LT Receivables Cash Adjust.
(1) As of Dec-16 EDPR had €2.8bn of tax losses carried forward (mostly US)
€1,171m
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Interests costs, TEI costs, Banking fees and Derivatives 3 (€295m)
2016
Tax Equity
€1,520m Financial Debt Cost of Debt Ongoing reduction in interests costs benefitting from:
cost with maturity scheduled for 2018/19;
Cost of TEI
(€0.8bn)
YoY
4.0%
(-30bps YoY)
7.1%
in 2016
€3,360m
Financial Debt Net Debt €2,755m
Very low interest risk based on long-term fixed rate funding 90% of financial debt @ fixed rates; TEI costs fixed per transaction (trend with low correlation to market rates)
6.7% 2016 2017E Minorities Return (%)
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Dividends and interests to Minorities 4 (€119m)
2016
Capital Gains Dividends & Capital paid …of which €319m booked in equity reserves €0.4bn since 2012
(based on projects Cash Flows and interest stakes)
Original proceeds €2.4bn Equity & Shareholder Loans…
(1) Attributable to Equity Partners; includes external net debt and Tax Equity
Minorities return expected to decrease in 2017 due to cash-flows profile, latest deals at lower yields and higher valuations (latest at €1.7m/MW)
€1.5m
Avg EV/MW Attractive average transaction multiple
(transaction closing date; all since 2012)
2016 Average monthly capital invested: €1.8bn
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698 597
+1,189 (1,050) (44) (198) RCF Net Debt & TEI reduction Asset Rotation & CTG Cash Investments Forex & Other Dividends to EDPR shareholders
Operational and financial performance to enhance EDPR growth, decreasing Net Debt and Tax Equity by €597m in 2016
Includes forex (€119m),
prepayment/restructuring and other
+13%
2016: From EBITDA to Retained Cash Flow (RCF) and Net Debt & TEI reduction (€ million)
EBITDA
LT receivables & cash-adjustments Current income taxes Interests, TEI, fees & derivatives Dividends and interests to Minorities
Retained Cash Flow (RCF) 2016 1,171 1,142 1,171
(8) (110) (93%) (119) (91) +31% (50) (51) (3%)
698 619 1,171
(294) (271) +9%
+13% +3% 2015 D% YoY
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Business case for renewables remains strong Wind energy provided 4.7% of the nation’s electricity during 20153 Industry Fundamentals
.New political landscape Production
Tax Reform
PTC phase-out approved in 2015 by a congress dominated by Republicans; New Treasury secretary supported current scheme in Senate hearings Wind is a competitive and cheap technology presenting an ongoing decrease of its LCoE (c.26% by 20251) Increasing demand drivers at State, Utility and C&I2 ; likely negative impact on CPP rollout but only in the next decade Clear positive impacts on job creation, local economy, industry and infrastructure development A key topic of the new Administration in functions (main consideration is the reduction of the current 35% federal tax rate) Bipartisan Support Technology Competitiveness Increasing Demand Pro-economic growth sector Tax Reform
pending final framework
likely positive
(1) LCoE source: IRENA Power to Change 2016; (2) Stands for Commercial and Industrial companies; (3) Source: AWEA
Main Drivers
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$97 $60 $48 $46 $32 $136 $143 $78 $61 $62 20 40 60 80 100 120 140 160 Nuclear Coal CCGT Solar PV Wind
Levelized Cost of Energy Comparison1 $/MWh
Source: (1) Lazard´s Levelized Cost of Energy Analysis from Jan-2017; (2) Based on University of Texas: The Full Cost of Electricity of December 2016
$32
Expected reduction in wind LCoE of c.26% by 2025
Map of Lowest Cost Electricity Resource2 (unsubsidized; by region)
Wind Solar Utility Gas
$62 $61 $46
98 MW
(CoD 2017)
200 MW
(CoD 2018)
175 MW
(CoD 2017/18)
100 MW
(CoD 2016)
157 MW
(CoD 2016/17)
99 MW
(CoD 2017)
250 MW
(CoD 2016)
EDPR projects (secured 2016-18)
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RPS
Renewable Portfolio Standards Utilities´ Portfolio Demand Commercial & Industrial Entities
until 2030E; 49 GW since 2010
Coal Retirement Utilities C&I
defined at state level RPS policies cover 55% of total US retail electricity sales 5 states increased quotas in 2016 (OR; IL; MI; NY; DC)
23% of coal fleet retired or announced prior 2030 non-utilities companies incl. techs, industrials, cooperatives… fixed-long-term price protected from fuel price fluctuations 80 companies have pledged to move to 100% renewable power
+ DC
signed 2015
Source: (1) AWEA
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Wind industry creates jobs, economic investment and clean energy across the country
Job creation Industry Local Economy Infrastructure
>500 wind manufacturing facilities
in 43 states
>600 manufacturing plants producing
goods for wind & solar across 45 states
Every state benefiting from wind
w/ manufacturing facility, wind farm, or both
Rural areas: land renting income
while enable agricultural and livestock farming
Source: AWEA; Business Insider; RTO Insider
Expected investments in transmission
lines and wind/solar to fuel economic growth Increases US
energy independence >300,000 Jobs
Wind and Solar jobs growing at a rate
12x faster vs the rest of the US
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A tax reform could potentially be overall positive, specially for solid sponsors, but it is still too early to fully assess its impacts
Asset Base New Projects
+$15m-$30m per year (Net Income) One-off positive impact in bottom-line
P&L Tax Provision
Reduction in the annual tax provision
BS Tax Assets & Liabilities
Liabilities (on future tax payments) higher than assets (related to tax losses carry forward) Lower tax rate would reduce 5y-MACRS’ value and lead to a lower tax equity funding along with investors’ lower tax appetite 100% capex expensing given the incremental time value benefit
A
Tax Equity market is attracting new investors every year and enlarging the supply base
C
Lower funding replaced by corporate debt at a lower cost (USD debt is issued in Spain – no impact on changes in interest deductibility)
B Analyzing the impact at EDPR of a potential reduction of Federal Tax Rate from 35% to 20%-25%
However to be potentially offset by…
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0.4 1.8 3.1 +0.7 +0.7 +1.3 Visibility over PTC tax scheme Industry fundamentals driving solid ongoing demand (GW) EDPR is a strong sponsor with solid balance sheet and clear execution capabilities
1.1 GW secured >55% non-utility Option could be executed namely through the new “Build & Transfer” strategy, enhancing pipeline development >5 GW under continuous commercial efforts to secure PPAs Safe Harbor secured To be secured Additions SH1
2020 target additions 2016 2017/18 secured
2016-20 EDPR target additions in the US
(1) Safe Harbor
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Capacity additions +820 MW
€698m RCF €550m proceeds 4.0% Cost of Debt
(Dec-2016)
Efficiency: Core opex/MW Cash generation Asset Rotation Debt optimization
EDPR to keep €0.05 dividend per share distribution
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By technology (MW) Built in 2016 & Secured
+3.5 GW
2016-20 Solar PV >65% 10%
EDPR 2016-20 additions breakdown with visible projects execution
Wind Onshore 25% US Canada Brazil Growth supported by 1.5 GW of secured projects to be built in 2017-2019, of which 248 MW under construction Portugal RoE Spain Name
ML V, ARS, QB, RBP TC; ML VI Nation Rise JAU & Aventura Babilônia Ventinveste & other Auction projects Italian auction France projects
CoD
2017E 2018E 2019E 2017E 2018E 2017-19E <2020E 2017-18E 2017E
MW
376 275 100 127 143 237 93 127 22
Built
Capacity additions 2016 820
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2017 Outlook: Operational and Cash Generation targets
EDPR strategy execution set to deliver solid and profitable growth
Benefitting from 2016 new capacity additions; 820 MW instated in 2016
Load Factor
Positive impact from new projects & wind resource recovery (P50)
Selling price
New competitive projects w/ higher load factor; 95%
+7-9%
YoY
c.32%
+5% YoY
c.€58
per MWh
Opex per MW
Keeping high efficiency levels; vs target -1% CAGR 15-20E
flat YoY
EBITDA (€ million) Retained Cash Flow (€ million) 1,171 2016 2017E 698 2016 2017E ~+10% +10-15%
34
(1) 2015 EBITDA and Net Profit adjusted by non-recurrent events; EBITDA 2015 Adjusted of €1.07bn; (2) Net Profit 2015 Adjusted of €108m
…a positive impact on accounting Net Income from 2017 onwards Update on D&A leading to…
Adjusted Net Income guidance
Higher assets’ useful life based on independent technical assessment EDPR’s portfolio is composed by young assets across 11 countries 30 years
6.5 years
EBITDA
CAGR 2015-20201
+8% €0.9bn
Retained Cash Flow
2020E
EDPR reiterates its key 2020 BP targets +16% CAGR 2015-202 (@ 25 years) D&A impact +€65-70m per year
36
2016-2020 2016-2020 2016-2020
c.700
MW/year
>65%
till 2020
Solar & Offshore
Prioritize quality investments in our core markets High visibility on projects w/ LT contracts awarded Technological mix initiatives
>97.5%
availability
33%
in 2020
CAGR 2015-20
Technical expertise to maximize production Competitive projects leading to a superior load factor Unique O&M strategy to keep lowering Core Opex/MW
€3.9bn
RCF up to €1.1bn €550m signed c.€600m new
€4.8bn
investments
Investing in visible growth opportunities Profitable assets generating robust Retained Cash Flow Asset Rotation strategy to keep enhancing value growth
37
Increasing 2014-17 Business Plan… …into a new with stronger capacity additions and technological mix Capacity Additions (MW; %)
Total of 3.5 GW capacity additions 65% 10% 15%
700 MW/year
2016-2020 North America1 Brazil Europe 10% Solar PV
Drivers
Wind Onshore: fully competitive technology Solar PV: Increasing its competitiveness
Capacity Additions (MW; %)
Total of 2 GW capacity additions
60% 20% 20%
500 MW/year
2014-2017 United States Emerging Markets Europe Projects with long-term visibility & low risk profile
Notes: (1) North America includes: US, Canada and Mexico
100% of PTCs value if installed until 2020
under safe-harbor conditions (5% capex invested in 2016)
38
Capacity additions (GW)
under negotiation/identified secured 2016 2018 2019 2017 2020 Full PTC ($23/MWh1) 80% PTC1 60% PTC1 (until 2022) Start of construction… 40% PTC1 (until 2023) 2021
Hidalgo Texas 2016 250 Timber Road III Ohio 2016 100 Jericho New York 2016 78 Arkwright New York 2017 79 Meadow Lake V Indiana 2017 100 Quilt Block Wisconsin 2017 98 Red Bed Oklahoma 2017 99
Project Name CoD State 1.1 GW already secured >55% secured with non-utilities
Turtle Creek Iowa 2018 200
1.8 GW
2016-2020 60% Secured
Option to grow 3.1 GW
with safe harbor
Meadow Lake VI Indiana 2018 75
Production Tax Credits scheme phase-down EDPR strategy under “safe-harbour conditions” to maximize projects returns
(1) PTC value in 2015 of $23/MWh
MW …end of construction
60%
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MEXICO CANADA
100 MW Nation Rise Wind Farm 200 MW Eólica de Coahuila Completed 200 MW1 wind farm with 25-year PPA In operation 2016 project 100 MW wind farm in Ontario 20-year supply contract Under development 2019 project All projects with PPAs already awarded Platforms for future growth in promising markets
(1) In partnership with Grupo Bal, owner of Industrias Peñoles
40
Europe to represent c.15% of EDPR growth plan
+0.6 GW
Target 2016-2020
Capacity Additions (MW) Portugal Italy France Spain
Portugal
Completion of Ventinveste projects 20-year feed-in tariff
+0.2 GW
Spain
Projects awarded in Jan-16 very high load factor and low capex
<0.1 GW
France
Identified & pipeline projects feed-in tariff1
+0.1 GW
Italy
Auction based system with 0.2 GW
+0.2 GW
(1) Projects which requested tariff in 2016 will be receiving a 15y CfD; projects that will request tariff in 2017 are expected to be granted a 20y CfD
> 45 % load factor
41
BRAZIL
120 MW Baixa do Feijão
project completed in 1Q16 awarded in 2011
267 MW
2017-18 projects awarded in 2013-15
New auctions opportunities 120 MW Baixa do Feijão 127 MW JAU & Aventura 140 MW Babilônia
Projects with PPAs already awarded
Increased profitability due to higher production and increasing auction prices
PPA price inflation linked mid/high double digit IRR
42
EDPR 2016-20 additions breakdown Different markets dynamics
United States The core growth market boosted by ITC extension Europe, Brazil & Mexico Developing options based on projects’ fundamentals
(1) ITC - Investment Tax Credit
By technology (MW) Solar PV to represent about 10%
Wind Onshore
+3.5 GW
2016-2020 Solar PV 10% 10% ITC 2016 2020 2021 … 2022 Full ITC (30% capex) 26% ITC 22% ITC Start of construction… … …end of construction
US: ITC scheme1
ITC scheme in place to benefit Solar technology 2023
43
FRANCE UNITED KINGDOM
Moray Firth Consent granted for offshore wind development; Partnership with CTG (up to 30%)
1.1 GW
Next step: CfD1 allocation round 2 Auction: 2Q-3Q 2017
max.
Le Tréport
500 MW + 500 MW
Iles d’Yeu et de Noirmoutier Partnership with Engie allows de-risking and complementary skills Selected in May-14 for the development, construction and operation Offshore projects to represent less than 10% of total investment needs through 2020 and to be developed through partnerships with expected CoD after 2020
(1) CfD – Contract for Difference
44
Delivering second-to-none metrics based on unique wind assessment know-how… …to maximize asset value
Predictive maintenance and O&M strategy key to reduce downtime Accretive contribution from US, Mexico, Canada and Brazil Technical Availability (%) Load Factor (%) 30% 2015 (P50) 2020E 97.6% > 97.5% 2015 2020E Growth supported by distinctive competences and accretive projects Production (TWh) 21.4 2015 2020E CAGR +3pp +10%
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Cost Control Revenue Maximization
Ongoing implementation of innovative power enhancing products Comprehensive O&M strategy to increase efficiency Keep high levels
Discipline over G&A costs
Maximizing operating wind farms output (+100 GWh already in 2015) Reduction of downtimes by managing warehousing
Comprehensive cost control management Successfully implementation of M3(1) and Self-Perform (higher insourcing of services)
>97.5%
MW
~30%
retrofits IT Consulting Legal Travelling …
(1) Proprietary model (M3 - Modular Maintenance Model).
add vortex cut-out max uprate power
2020E
46
Strong focus on efficiency and cost control benefiting from economies of scale and… …supported by a superior and higher efficient O&M strategy… …leading to improvements in efficiency ratios Core Opex ~80% Levies & Other Core Opex1 per MWh
2015 2020E CAGR
Core Opex1 per MW
2015 2020E CAGR
Operating Costs breakdown (2016-2020)
(1) Core Opex - Supplies & Services and Personnel Costs
47
Portfolio by O&M contract type
~70% ~50%
2015 2020E Higher exposure to M3 and Self perform driven by full scope contracts expiration
Full scope M3 & Self perform
Unique O&M strategy at the end of initial contract warranty
(%; MW) lower costs Full Scope M3 & SP
100% 90%-70%
Insource more activities: preventative, logistics & small correctives Segregate & insource main maintenance activities Self-perform (SP)
EDPR ISP1 OEM2 EDPR
Segregating and keeping in-house high value-added activities, minimizing OEM dependency and increasing efficiency Modular Maintenance Model (M3)
OEM2
(1) ISP - Independent Service Provider; (2) OEM – Original Equipment Manufacturer
EBITDA growth supported by new and accretive capacity additions along with increased efficiency
48
EBITDA growth (vs. 2015 Adjusted; € million) €1.07bn 2015 adj. 2020E CAGR Expected EBITDA growth drivers MW Addition Efficiency Other Items1 +11% CAGR +0.5% CAGR
CAGR New MW in operation MW with higher profitability Ex-MW growth performance Opex efficiency O&M strategy US 10-yr PTCs expiration Tariffs and GC expiration
+8%
(1) Impact from PTCs (Production Tax Credits), GC (Green Certificates) and (FiT) Feed-in Tariffs expiration
49
Quality portfolio generating robust RCF1 Rigorous investment plan to deliver solid returns
Retained Cash Flow (€ billion) 6.8 3.9
EBITDA
Cumulative for 2016-2020
Interest & TEI costs Minorities Distributions Taxes & Other2 RCF
2016-2020
€4.8bn
Capex & Financial Investments
Onshore + Solar PV Offshore > 90% < 10% €120m/year
New Asset Rotation
(based on projects with PPAs)
Cumulative Asset Rotation
(including already signed in 2016)
up to €0.6bn
€1.1 bn
(1) Retained Cash Flow; (2) Other include Associates and Non-cash items
Source
Use
50
1 2
Self-funding Strategy (1) Accelerate value growth
Interests Dividends Operating Cash-Flow Asset Rotation Allowing the execution
with superior returns Crystallise projects’ NPV, capturing value created
IRR double-digit
Re-investing
IRR single-digit
Selling
&
Investment
(1) Illustrative and non-exhaustive
…and to maintain a self-funding strategy
Scope Implied EV/MW 51
Proceeds are re-invested in the development of quality and value accretive projects, enhancing its growth and accelerating value creation
€1.3m
€1.9m1
270 MW
49%
C$3.3m
C$3.3m1
30 MW
49%
$1.5m
$2.3m1
1,101 MW
36%
$3.1m
n/a
30 MW
49%
$1.7m
$2.4m1
1,002 MW
34%
€1.7m n/a 348 MW 49% of total 664 MW 54 MW 191 MW 71 MW
(1) Including all cash-flows generated by the projects since inception; (2) also considers an additional 30 MW under development
In 2017 EDPR executed a minority sale transaction with CTG, related to certain assets in Portugal, at a multiple of €1.7/MW
€2.1m n/a 100 MW2
49%
CTG
52
Dec-2016 Debt and TEI Breakdown (%)
Gross Debt €3.4bn 33% Other & TEI 53% Fixed 93% TEI €1.5bn 60% Loans with EDP 47% Variable 7% Debt and TEI Currency Type Rate Cost of debt at 4.0% and tax equity cost at 7.1%
Financial debt by maturity1 (%)
(1) Considers re-profiling after renegotiation of 2018 debt which occurred in the beginning of 2017
3% 13% 13% 31% 40% 2017 2018 2019 2020 ≥2021
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0% 2% 4% 6% 8% 10% 12% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Tax Equity Yield – EDPR analysis based on discussions with market participants
3M Libor Supply (investors – in number and tax appetite) and demand (renewable growth) has been the main driver Tax Equity Yield
55
(€m/MW) EDPR Market Valuation EV/MW implicit in share price (€m) Equity @ 6.4€/share 5,583 + Net Debt (2016) + 2,755 + Inst. Partnerships (2016) + 1,520 + Non-controlling interests (2016) + 1,448 = Enterprise Value = 11,306 = EV “installed capacity” = 10,950
Assets Under Construction
1.00 1.02 1.05 1.07 1.12 1.14 Share @ 5.80 Share @ 6.00 Share @ 6.40 Share @ 6.65 Share @ 7.15 Share @ 7.40
Wind onshore is today amongst the cheapest and most competitive technologies
56
Levelised Cost of Energy1 (LCoE) (€/MWh, 2016)
Today 2020 2030 Today 2020 2030 (10%) (17%) (37%) Long-lasting technology with decreasing LCoE
Wind Onshore
Set to be a highly competitive technology
Solar PV Indexed LCoE2 (€/MWh)
76-86 92-100 95-117 61-106 50-70 69-98 90 -168
CCGT Coal Nuclear Hydro Wind
Solar PV Wind
(22%)
Wind already competes with all sources of energy… …and Solar PV is set to increase its attractiveness
(1) EDPR Analysis for European Market, NCF: Onshore @ 27%-36% ; Solar PV-one axis tracking @ 23%-27%; Offshore @ 45%-50%; (2) Analysis for an average LCoE
Wind Onshore Solar PV Utility Solar PV C&I Solar PV Residential Wind Offshore 150 104 74 35 16
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2016-20: Renewables Worldwide Additions1 (GW)
Economy electrification Energy independence Regions with EDPR presence account for >65% of Wind and Solar PV (utility) additions
Environmental concerns
+413 GW
Renewables2
Solid growth drivers in addition to its competitiveness
(1) IHS Global Renewable Market Forecast (2016); ex-China; (2) Incl. 34 GW of Solar CSP, Biomass, Geothermal, Small hydro & Ocean, not included in the graph
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Europe short term opportunities to… …escalate medium term, supported by:
Short-term specific growth opportunities Expected additions in EDPR geographies
+24 GW
Solar PV (utility) Wind Onshore Wind Offshore
57% 27% 16%
2016-2020: Wind and Solar additions in Europe
Demand recovery and a common vision in Europe Regulation in Europe for renewables is evolving into ex-ante competition systems with long-term contracts (including: France, Italy, Poland, Portugal, Spain, UK)
EU 2030 targets
Source: IHS Global Renewable Market Forecast (2016)
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EDPR’s strategy…
Good natural resources (load factor) Long-term contracts awarded thru competitive processes Strong renewable electricity demand
BRAZIL MEXICO
…for growth in selective countries with strong fundamentals
Wind the main growth driver Top-notch wind resource Inflation linked with local funding
+10% CAGR 15-20 c.50% Load factor Auctions
Mainly from wind onshore Competitive renewable resources Market recently re-designed
+15% CAGR 15-20 34%-45% Load factor Auction/PPAs
Source: IHS Global Renewable Market Forecast (2016) and BNEF
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Wind competes for PPAs mainly in two different segments
1 RPS demand for new renewable builds 2
Wind vs CCGT: Levelised Cost of Energy
20 30 40 50 60 70 80 90 100 110 2 3 4 5 6 7 8 9 10 Gas price $/MBtu LCoE $/MWh Wind Load factor 23% 29% 34% 40% 46% 51% CCGT load factor @ 40% CCGT load factor @ 70% US shale gas price range
the price of a new CCGT Demand for new energy
EDPR analysis - Wind capex $2.0m/MW; No carbon tax considered; Gas prices are assumed flat in real terms
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Wind vs CCGT: LCoE1
30 40 50 60 70 80 90 100 110 120 30 40 50 60 70 80 90 100 110 120 130 Wind load factor Oil price $/bbl Recent oil prices LCoE €/MWh 23% 29% 34% 25% 21%
Wind Energy competes with the most efficient conventional technology Wind Energy Costs are unrelated to commodities, providing greater visibility
CCGT load factor @ 23% CCGT load factor @ 57% Legend:
(1) Source: EDPR Analysis, LCoE – Levelised Cost of Energy
(1) Attributable to Equity Partners; includes external net debt and Tax Equity
ES PT RoE NA Total Net MW 2016 average life (years) Attributable Net Debt + TEI1 170 414 504 1,105 2.3 GW 7.5 8.5 5.3 6.0 6.3
€163m €473m €721m BR 100 2.9 €74m
Average EV per MW of €1.5m/MW (at transaction closing) considering all minorities sales executed since 2012
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IR Contacts
Rui Antunes, Head of IR, P&C and Sustainability Maria Fontes Pia Domecq Paloma Bastos-Mendes E-mail: ir@edpr.com Phone: +34 914 238 402 Fax: +34 914 238 429 Serrano Galvache 56, Edificio Olmo, 7th Floor 28033, Madrid - Spain
EDP Renováveis online
Site: www.edpr.com Link Results & Presentations: www.edpr.com/investors
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