investor presentation · 2019. 5. 3. · q1 17 q1 18. q1 19. 1,168. proportionate financials - last...
TRANSCRIPT
Investor presentation
May 2019
Disclaimer
2
The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’). Any person who is not a relevant person should not rely, act or make assessment on the basis of this presentation or anything included therein.
The following presentation may include information related to investments made and key commercial terms thereof, including future returns. Such information cannot be relied upon as a guide to the future performance of such investments. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Scatec Solar ASA or any company within the Scatec Solar Group. This presentation contains statements regarding the future in connection with the Scatec Solar Group’s growth initiatives, profit figures, outlook, strategies and objectives as well as forward looking statements and any such information or forward-looking statements regarding the future and/or the Scatec Solar Group’s expectations are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements.
Contents
3
• Introduction
• The solar market
• Business model
• Financials
• Outlook and guidance
Scatec Solar – a frontrunner in renewable energy
We develop, build, own and operate utility-scale solar power plants
4
IN OPERATION & UNDER
CONSTRUCTIONPROJECT BACKLOG
& PIPELINE
4.6 GW1.7 GW
CAPACITY BY END 2021
3.5 GWEMPLOYEES
263
A portfolio of 649 MW in operation – track record of 1 GW+
5
Honduras, 95 MW Malaysia,65 MWSouth Africa, 190 MW
Rwanda, 9 MW
Brazil, 162 MW
Czech, 20 MWJordan, 43 MWEqypt, 65 MW
Scatec Solar’s average economic interest: 55%
1,006 MW under construction in six countries
6
Jasin & Merchang, Malaysia, 130 MW Argentina, 117 MWEgypt, 335 MW
Mozambique, 40 MW
South Africa, 258 MW
Redsol, Malaysia, 47 MWUkraine, 77 MW
Scatec Solar’s average economic interest: 60%
First 65 of 400 MW in Egypt reached commercial operation
Scatec Solar’s Egypt solar power plants:• Bi-facial solar panels: 1 million • Peak manning: 4,500• Lost Time Incidents: 1 on 4 million hours• Households powered: 420,000 • Annual production: 870 GWh• Avoided CO2 annually: 350,000 tonnes
January2019
Expected commercial operation dates
December20191 2 3 4 5 6
Project pipeline and backlog of 4.6 GW across our target markets
8
Latin America
833 MW
Africa
2,106 MW
Southeast Asia
824 MW
Europe and Central Asia
410 MWBacklog
377 MW
Pipeline4,173 MW
All figures are as per reporting date for first quarter 2019.
Bi-lateral28 %
FiT28 %
Project tender32 %
Price tender12 %
Partnering with UN to reduce carbon emissions and the cost of power
9
• 0.7 MW project for United Nations entity secured in South Sudan• Combined battery and solar project for IOM – covering about
90% of off-takers energy demand 24/7
• The solar systems can easily be increased to supply power to local communities or to other off-takers at a later stage
• UN spends about USD 600* million annually on fuel for power
• A large potential to reduce cost and carbon emissions for the UN entities
• In addition, two hybrid plants with total capacity of 2.25 MW for an international agency in South Sudan
*Source: The Moving Energy Initiative (MEI), December 2018.IOM: International Organisation for Migration.
We have advanced into a top 10 global independent solar PV developer
10
0 2,000 12,0006,000 10,000 14,0004,000 8,000
Enel Green Power
SunEdison
First Solar
GCL New Energy
Engie
EDF
Scatec Solar
Enerparc
Total (SunPower and Eren)
Canadian Solar
Adani
Marubeni
Equis
Neoen
Lightsource
Asia Pacific
North America
Europe
Latin America
Middle East and North Africa
Sub-Saharan Africa
MW, operational and under development
Upstream
Direct peers
• Top 10 global utility-scale solar developer • A broad portfolio across emerging markets
Source: GTM Research
Our success is based on our integrated business model combined with a strong entrepreneurial culture
11
• Agile and lean• Entrepreneurial culture• Passionate and empowered people• Strong talent bench
• Fully integrated• Structuring and financing• Financial discipline• Partnerships
Business model People
Predictable Working together Driving results Changemakers
The Solar Market
Multiple governmental drivers for solar PV demand
Demand for solar is growing significantly across emerging markets
13
Main drivers
Time-to-market
Cost of energy
Energy security
More foreign
investments
Employment and economic
growth
Climate treaty
& national actionplans
Annual global solar PV demand forecast - GW
20202014
45
130
2016 2018 2019 2021
75
105
117127
Rest of AsiaUSAMENA
Rest of WorldSub-Saharan Africa
Latin America
China
IndiaEurope
Source: BloombergNEF Q1 2019 conservative forecast
Solar is one of the world’s most competitive sources of energy
• The levelized cost of solar has come down 83% since 2010 – industry scale and technology
• Solar is now the lowest cost source of energy across the sun-rich regions globally
• Storage and hybrid solutions are expected to become increasingly important for demand
• New business propositions are emerging when solar is cost competitive with base load
Cost of alternative energy sources (LCOE, USD/MWh)
14
0
50
100
150
200
250
Solar PV CoalWind Gas base load
Gas peakload
Nuclear
Source: Lazard Capital, LCOE v12, Scatec Solar
Diesel
A solid business case for corporates sourcing solar across emerging markets
15
Cost of electricity for corporates in emerging markets
0
50
100
150
200
250
Solar on 20 yr contracts
On-grid Power –unreliable and blackouts
Off-grid Diesel –high opex and logistics
Source: Lazard Capital, Scatec Solar
LCOE, USD/MWh
A large potential to replace diesel and oil based power generation globally
16
• Total installed capacity of more than 500 GW of diesel and heavy fuel oil gen sets globally
• Annual installations of more than 35 GW in emerging markets
• Installed base of more than 250 GW in Africa • More than 10 GW new capacity installed annually
• Significant potential in Africa, Southeast Asia, Middle-East and Latin America
Source: Bloomberg New Energy Finance, Scatec Solar analysis.
Corporates active on renewables in OECD, but slower adaption in emerging markets
17
6256
3225
20
93
Europe US - NA India China Latin-America Other- Asia Africa
• RE100 is a global initiative with 100 influential businesses
• Committed to sourcing 100% renewable electricity
• The companies consume 188TWh annually
Percentage of electricity sourced from renewables per region
RE100 members
• Sourcing of renewables is high in Europe and US due to de-regulated markets and available wheeling regimes and good tracking of origination
Source: RE100.org
Business model
Scatec Solar’s value chain
• Site development & permitting
• System design
• Business case development
• PPA negotiation
19
Project development Financing Operations Ownership (IPP)Construction
• Debt/Equity structuring
• Due diligence
• Engineering and procurement
• Construction management
• Maximize performance and availability
• Maintenance and repair
• Asset management
• Financial optimization
We develop, build, own & operate solar plants for 20 years
Scatec Solar is partnering with Governments and Development banks
20
• As cost of solar continues to decline - governments are looking to solar to cover their power needs and grow the economy
• Governments in emerging economies finds private/public partnerships very attractive implementation model (IPPs)
• Multilateral development banks typically with a long standing presence and experience in the county
• Project structures and contracts designed to mitigate risk (political financial, compliance etc)
Creates business opportunities and Reduces risks of Scatec Solar’s investments
Our business model and typical project structure
21
Simplified illustration of company structure and main contracts in place
Scatec Solar O&M / EPC
Single Purpose Vehicle
State owned utility
Project financing
Scatec Solar Equity co-investors
State government
• EPC contract • O&M contract• Asset Management
contract
Loan agreements
• Sovereign guarantee• Concession
agreement
PPA agreement
Land lease agreements
Land owners
Shareholders agreement
World Bank/others
• Political risk insurance (when relevant)
100% 39%-100%
Component Suppliers
Sub-Contractors
A business model enabling «self funded» growth
22
D&C margin
13(12.5%)
100(100%)
Partner’s equity share
Total capex Debt Financing
75(75%)
13(12.5%)
SSO equity
13(12.5%)
USDm
• All projects enters 20-25 year PPAs with fixed tariffs with state owned utilities
• The power plants are financed with non-recourse debt, and the PPAs allows Scatec Solar to operate with high financial leverage at project level
• The D&C gross margin covers a large part of the Scatec Solar’s equity contribution in the project
100 MW project expample
Stable project cash flows based on PPAs - allowing for a non-recourse debt structure
• Tariffs fixed for 20-25 years
• Take or pay all volume produced
• Structuring of project debt in same currency as power sales revenues
• Inflation adjusted tariffs in PPA
• Project finance debt with fixed interest of 10 years or more from grid connection
• PPAs with state owned utilities with government guarantees
• Financing partners with strong government relations
• Political risk insurance or equivalent in selected markets
Power price & volume CurrencyInterest rateCounterparty
23
Managing financial risk
PPA: Power purchase agreement
Scatec Solar utilises new technology to improve power plant performance
• The world’s largest solar park with bi-facial modules
• 400 MW / 870 GWh annual production
• Test station established on site
• Real-time data from all plants globally 24/7
• Improving operational quality and efficiency
• Increasing uptime and production yield
Bi-facial solar modules, Egypt Global control & monitoring centre, Cape Town
24
There is a significant value of solar power plants post Power Purchase Agreements
25
Post PPA value:
• Power Purchase Agreements of 20-25 years
• Technical life of solar plants of 35+ years
• Scatec Solar have secured land rights for 35+ years
• Market power prices are expected continue to increase – especially across emerging markets
• After 20 years the marginal cost of solar power production is very limited
• Fully depreciated and debt free plants• No fuel cost• Limited cost of operation & maintenance
The 40 MW Linde plant in South Africa.
Sustainability is an integrated part of our business
26
Sustainability is;
• Project risk mitigation and value creation
• Local engagement and strong community relations
• Facilitating strong partnerships (project and group level)
• A competitive advantage if done well
SustainabilityLocal development programmes - focus on education
27
Contributing to local value creation
• Education - key focus for local development programmes – one of our four selected UN Sustainability Development Goals
• Target at least one long-term education programme related to all our solar projects
Examples: • Jordan: English language lab set up to offer free
training courses and workshops• Honduras: 80 women from the local community
received HSSE training in the Los Prados project• South Africa: 60 Entrepreneurs received business
administration training Read more: Sustainability Report 2018
Financials
Q1’19: Continued strong growth and solid financial results
29
388
815
Q1 17 Q1 18 Q1 19
1,168
Proportionate financials - last 12 months (NOK million)
943
Q1 19Q1 18Q1 17
2,108
5,682
90279
639
Q1 17 Q1 18 Q1 19
Revenues EBITDA Cash flow to Equity*Key drivers:
• Consistent conversion of an attractive project pipeline in emerging markets
• Solid delivery on construction across four continents
• A broad asset portfolio with long term cash flows secured • 17 years of remaining tenor of current
power purchase agreements
• Strong focus on operations & asset management
(*) Cash flow to equity is defined as EBITDA less normalised (i.e. average o over each calendar year) loan and net interest repayments less normalised income tax payments. The definition implies changes in net working capital and investing activities are excluded from the figure.
Proportionate revenues by segment (NOK million)
Q1’19: Revenues and EBITDA are up three fold from the same quarter last year
Proportionate EBITDA by segment (NOK million)
30
417
137
150 155
180208
Q1 18
1,0771,045
Q2 18 Q3 18 Q4 18
1,4661,297
Q1 19
1,229
572
1,259
1,6661,528
Development & ConstructionCorporate Power Production
Operations & Maintenance
140 130202
159106
121 127
139168
266
Q4 1815
Q1 18 Q2 18 Q1 19Q3 18
109
257
329 315
A solid financial position
31
• Group free cash of NOK 785 million • Revolving Credit Facility increased by NOK 275 million to
NOK 775 million – undrawn at the end of Q1’19• Group* book equity strengthened to NOK 3,318 million –
equity ratio of 82%
Consolidated financial position (NOK million)
NOK million ConsolidatedSSO prop.
Share Group level*
Cash 2,806 2,082 785
Interest bearing liabilities* -10,441 -7,124 -744
Net debt -7,635 -5,042 41
As of 31.12.2018 As of 31.03.2019
* Defined as ‘recourse group’ in the corporate bond and loan agreements
10,647 10,647
15,876 15,876
10 583 11 412
1 8002 100
2 4752 364
10 41511 686
4 4424 190
Assets Equity & Liabilities Assets Equity & Liabilities
Current assets Non-current assets Equity Current liabilities Non-current liabilities
14,85714,857
Q1’19 movement of free cash at group level
32
73 128
2
Cash flow to equity O&M
1,039
End Q4 Working Capital/other
Cash flow to equity Corporate
Distributions from operating power plants
Cash flow to equity D&C
-312
-20
-114
Project equity End Q1
-12
Project Development
capex
785
NOK million
Development of project backlog
and pipeline
Malaysia & Ukraine Net working capital
construction projects
Movement of cash in ‘recourse group’ as defined in the corporate bond and loan agreements
Our principles for investments and financing
33
Transactional and operational control- SSO the lead developer and investor
D&C margins - key contribution to equity positions
Working capital - managed through project structuring
Moderate debt at group level - reflecting debt capacity of long term cash flows
Dividends- 50% of free cash flow from operating power plants
Outlook and guidance
Short term guidance
35
• 2019 O&M revenues of NOK 110-120 million with an EBITDA margin of around 30%
• D&C value for 1 GW under construction: NOK 7 billion• Remaining NOK 3.3 billion value to be recognised
• Power production from plants in operation end Q1:
GWh Q1’19 Q2’19e 2019e
Proportionate 133 150-170 620-660
100% basis 254 290-310 1,100-1,300
The 65 MW Gurun solar plant in Malaysia.
New investments generate significant value from D&C and Power Production
36
Key figures – NOK million 1.7 GW in operation & under construction
1.8 GW new capacity towards 2021
Total 3.5 GW towards 2021
SSO’s economic interest 58% 50% – 70% 50% – 70%
Capex , 100% 20,700 13,000 – 15,000 34,000 – 36,000
SSO’s equity investments 3,500* 1,800 – 2,300 5,200 – 5,800
Development & Construction – after tax margin 950 – 1,050 1,000 – 1,500 2,000 – 2,500
Annual cash flow to equity - Power Production & O&M 500 – 550 250 – 300 750 – 850
(*) About NOK 500 million remains to be invested at year end 2018. Based on equity financing of the Los Prados project. Figures in the table above are estimates.
A well-proven business model with an execution capacity of 800-1,200 MW per year
37
1,700
3,500
MW
2019In operation & under
construction
End 2021In operation & under
construction (2018 CMU target)
Growth beyond 2021
• Effective execution of current project portfolio 1 GW under construction plus additional volumes to be secured in 2019
• Secure growth in priority regionsPipeline and backlog of 4.6 GW
• Broaden commercial and technology scope 2019 expected to be a break-through yearfor corporate PPAs
• Optimize financing and asset portfolio to enhance value Selective asset rotation as portfolio grows over time
Our asset portfolio – May 2019
39
CAPACITY ECONOMICMW INTEREST
South Africa: R1 & R2 190 45%Brazil: Apodi Solar 162 44%Honduras: Agua F, LP I 95 51%Malaysia: Gurun 65 100%Egypt: Benban 65 51%Jordan: EJRE/GLAE, Oryx 43 59%Czech Republic 20 100%Rwanda: Asyv 9 54%Total 649 55%
CAPACITY ECONOMICMW INTEREST
Egypt: Benban 335 51%South Africa: Upington 258 46%Malaysia: Jasin, Redsol 179 100%Argentina: Guañizuil 117 50%Ukraine: Rengy, Kaminaka 77 70%Mozambique: Mocuba 40 52%Total 1,006 60%
CAPACITY ECONOMICMW INTEREST
Ukraine 326 65%Mali 33 51%Honduras 18 70%Total 377 64%
In Operation: Under Construction: Project backlog: