C OMPANY P RESENTATION 3Q 2013
Agenda Chilean Electricity Sector Overview Company Overview Competitive Advantages Conclusion 2
Chilean Electricity Sector Overview Chilean Electricity Sector Sector Segmentation Centralized Dispatch Scheme 3 SUB-SECTORS 4 SEPARATE GRIDS SING Arica Demand Curve Variable Cost of the Plants (USD/MWh) G ENERATION 4,146 MW - 24% 16,751 GWh - 25% Thermo-Diesel Antofagasta Tal-Tal OC-Diesel SIC 13,332 MW - 76% CC-Diesel T RANSMISSION 48,796 GWh - 74% SPOT PRICE Regulated CC-LNG Santiago Marginal Cost of sectors the System (concessions) Coal D ISTRIBUTION Hydro Castro Output from available plants (MWh) Chaitén SEA R ELEVANT Back Up Plants Dispatched Plants 52 MW - 0% I NSTITUTIONS 166 GWh - 0% Cochrane Ministry of Energy Plants receive revenues from Capacity charge Regulator: CNE Pto. Natales SAM 103 MW - 0% Plants earn a Margin* Supervisor: SEC 287 GWh - 0% Coordinator: CDEC *Margin = [Spot Price - Var. Cost] Pto. Williams Source: CNE, December 2012 3
Chilean Electricity Sector Overview Evolution of Power Generation and Demand in the SIC Annual Power Generation – SIC (TWh) Annual Electricity Demand – SIC (TWh) 50 Others 50 Unregulated Demand Regulated Demand Diesel-Fuel LNG 45 45 Diesel 7% Coal /Petcoke Gas 40 40 Hydro LNG 21% Unregulated: ~ 30 % 35 35 30 30 Coal 27% 25 25 Gas 0% 20 20 Regulated: ~ 70 % Jan-Sep 2013 2013 YoY monthly growth 15 15 6% 10% Hydro 40% 4% 10 35% 10 20% 5% 5 35% 5 0% J F M A M J J A S O N D 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: “ Producción Real por Sistema ”, CNE/Colbún, 2013. Source: “ Generación Bruta en el SIC”, CNE 2012. Anuarios CDEC-SIC 4
Chilean Electricity Sector Overview Volatile Growing Prices Due to Lack of Efficient Supply Electricity Prices-SIC (USD/MWh) 350 1) Energy Node Price Alto Jahuel (USD/MWh) 300 2) Average Auction price (USD/MWh) 3) Average Market price (USD/MWh)* 250 4) Energy Spot Market Price Alto Jahuel (USD/MWh) 200 150 100 50 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: “ Costos reales marginales mensuales Alto Jahuel ”, CDEC/ Colbún; “ Historia precios nudos ”, CNE; “ Informes Mensuales Systep ”, www.systep.cl Note (*): The market Price is calculated by the Regulator upon information provided by all generation companies. This average price does not includes the capacity charge component. 5
Chilean Electricity Sector Overview Strong and Stable Regulation in a A+ Rating Country Regulatory Aspects Country Risk A+ Chile G ENERAL E LECTRIC P OWER S ERVICES L AW AA- BBB Set: 1982 Perú BBB+ 3 Main Amendments: “Short Law 1” - 2004 BBB Brazil “Short Law 2” - 2005 BBB NCRE - 2008 BBB- Colombia BBB CC Argentina E NVIRONMENTAL L AW CCC+ Major Modification: 2009 Fitch S&P - 50 100 Main Amendments: Environmental Ministry, Superintendence, Courts and the Biodiversity and Wild Electricity Market Structure Protected Area Service - 2009 G ENERATORS W ATER C ODE R EGULATED S POT U NREGULATED Set: 1951 C USTOMERS C USTOMERS M ARKET Main Amendment: Unused water right patents - 2005 D ISTRIBUTION “F REE ” CDEC C OMPANIES C USTOMERS A CCOUNTING S TANDARDS Regulated Spot Price Unregulated Tender Tariffs /Marginal Cost IFRS standards - 2009 Market Tariffs Auctioned under The variable cost of settled by both Functional currency: US dollar the supervision of the most expensive parties, generator the National Energy dispatched plant at and free customer. Commission. each moment. 6
Chilean Electricity Sector Overview Chile Has Growing Energy Requirements Electricity Demand Outlook - SIC (TWh) Electricity per capita Consumption MWh/ TWh person 70 14 60 12 50 10 8.3 40 8 30 6 20 3.3 4 10 2 0 0 2013 2014 2015 2016 2017 2018 Source: “ Informe Técnico Definitivo Fijación Precio Nudo SIC” , CNE/Colbún, October 2013 7
Agenda Chilean Electricity Sector Overview Company Overview Competitive Advantages Conclusion 8
Company Overview Colbún at a glance Generation (GWh) and Installed Capacity (MW) L eading Chilean generation company of reliable, competitive and sustainable energy. Generation D evelop projects and manage power infrastructure to generate long Capacity Hydro term value. 45% 43 57 Thermal % C ommit our power through long-term power purchase agreements % 55% with distribution, industrial and mining companies . Some relevant figures Source: Colbún, December 2012 • Revenues of US$ 1.4 billion in 2012. Main Players in the Generation Sector-SIC • EBITDA of US$ 284 million in 2012. • 39% EBITDA of US$ 462 million LTM Sep 2013. >15 • Employees: 983 as of Sep 2013. players Market Cap (MMUSD) Capacity (MW) 21% 20% 17% 4,830 2,962 MW 5.000 3.000 4.000 2.000 3.000 CAGR: 23% 2.000 618 CAGR: 9% 2% 1% 1.000 1.000 1,260 MW 0 0 Endesa Colbún Gener Arauco CGE Others 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Colbún, December 2012 9
Company Overview Solid committed controlling group with a strategic and long term vision Ownership Structure C ONTROL Matte Group (49%) since 2005, a leading economic Angelini Group group in Chile, with stakes in various sectors (forestry, 10% Pension financial, telecommunications, among others). Matte Funds 18% Group L ARGE S TAKEHOLDER 49% Others 23% Angelini Group (9.6%) since 2006, also a leading Chilean economic group. Source: Colbún, September 2013 F LOAT 41% free float , with relevant local institutional investor Credit Rating presence. 100 AA- A+ G OVERNANCE 80 BBB BBB-* 60 4 out of 9 are independent directors . 40 20 - Local International Fitch Humphreys S&P * Negative Outlook 10
Agenda Chilean Electricity Sector Overview Company Overview Competitive Advantages • Attractive Market • Diversity of Asset Base • High Quality Customers, Risk Sharing PPAs • Strong Financial Discipline • Committed to Sustainability • Valuable Portafolio of New Projects Conclusion 11
Competitive Advantages Diversity of Asset Base for Flexibility, Lower Generation Risk Estimated Capacity Type Generation (1) Hydro Under Construction (as of Sep-13) (MW) (TWh/year) Thermal Hydro Hydro (operational) 1,273 6.5 N Hydro (under construction) 316 1.5 70 mi 874 213 Coal 342 2.5 CCGT (gas/diesel) (2) 766 5.0 Santiago 9 Peaking (gas/diesel) 581 4.0 60 mi 270 Total 2,962 18 Total with hydro under construction 3,278 19.5 160 mi 630 316 320 mi 442 249 520 mi 103 172 0 500 1.000 S Installed capacity (MW) (1) For hydro, this estimation considers medium-to-dry hydrological conditions. For CCGT and peaking, they are estimated yearly productions (85% plant factor). 12 (2) Gas generation will depend upon gas availability (3) Total figures reflect the commissioning of the Angostura hydro project, which is expected to start operations at the end of 2013.
Competitive Advantages Increasingly Efficient Generation Matrix • Increasingly diversified generating matrix lowers volatility. • Santa María I has become a key component of our thermal production. • Since the entry into operations of the Quintero terminal Colbún has been able to secure LNG supply. Colbún Production (GWh) Colbún Thermal Production Breakdown (%) More 11% Expensive 35% 42% 43% 6.335 2.980 4.415 67% 3.836 40% 4.493 94% 5.017 35% 33% 55% 6.580 5.567 5.462 5.233 37% 4.066 33% 29% 3.411 25% Less 6% Expensive 2% 2009 2010 2011 2012 Sep12 Sep13 2009 2010 2011 2012 Sep12 Sep13 Hydro Thermal Coal LNG/Gas Diesel Source: Colbún 13
Competitive Advantages Diversified And Creditworthy Customer Portfolio • Long term contracts with a diversified and creditworthy customer base • Long-term average PPA price ~100 US$/MWh Sales by Type of Customer (1) Sales Volume by Customer (%) (1) Chilectra Un-regulated (BBB+/BBB+)* (mining and AngloAmerican 26% industrial (BBB/BBB+) companies) 10% 37% CGED (Local A+) 20% Codelco (A/A+) Regulated 16% (distribution companies) 63% Saesa (Local AA) Others 17% 11% *Enersis (Baa2/BBB+/BBB+) owns 99.1% of Chilectra Historic Sales by Type of Customer (GWh) Selected historical average monomic prices (2) 12.000 140 10.000 120 100 USD/MWh 8.000 80 6.000 60 4.000 40 2.000 20 0 0 2010 2011 2012 Sep13 2010 2011 2012 Sep12 Sep13 Regulated customers Unregulated customers Regulated customers Nonregulated customers (1) As of September 2013 LTM 14 (2) Average monomic prices are calculated by dividing the total amount of sales in US$, by physical energy sales in MWh
Competitive Advantages The key driver in our results is our commercial policy C OMMERCIAL G OALS Supply secure and competitive energy to our customers Maximize returns from our current and future assets Manage volatility given relevant hydro component 2. Incorporate indexation 1. Define optimal formulas in sale prices, 3. Business, operational contract level which reflect our and financial management cost structure Hydro capacity CPI Natural gas supply for Corporate Risk certain Management periods Efficient thermal capacity Fossil Fuels prices Financial Flexible prices for transitional hedges periods 15
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