A 20 YEAR ENTREPREUNARIAL JOURNEY IN RENEWABLES. 2 nd October 2017

Transcription

1 A 20 YEAR ENTREPREUNARIAL JOURNEY IN RENEWABLES 2 nd October 2017

2 AGENDA 1 Introduction 2 Business environment 3 EREN RE Organization 4 Intensity! 5 Wrap up 2

3 A PARTNERSHIP BUILT OVER FIFTEEN YEARS EREN FOUNDERS PÂRIS MOURATOGLOU, CHAIRMAN Serial entrepreneur with over 40 years of achievements in the energy sector Founder of SIIF Energies, a renewable energy company which became EDF EN in 2004 Chairman of EDF EN until 2011 and CEO until 2006 Co-founder of Sithe, a Combined Heat and Power company listed on NYSE in 1992 DAVID CORCHIA, CEO Top executive with 27 years of experience in the energy and finance industries CEO of EDF EN from 2006 to 2012;led the company through the IPO Started his career in Project Finance at BNP Paribas before spending 9 years at JP Morgan Chase 3

4 EDF ENERGIES NOUVELLES: A SUCCESSFUL ALLIANCE BETWEEN A LARGE GROUP AND AN ENTREPRENEUR 1990 Creation of SIIF Energies by Pâris Mouratoglou 1999 First investment in Wind energy 2000 EDF acquires a 35% stake in SIIF Energies 2002 Acquisition of enxco in the USA EDF increases its participation in SIIF Energies to 50% 2004 SIIF Energies changes its names and becomes EDF Energies Nouvelles 2006 IPO through a capital increase of 530 m to finance the Wind development plan 2008 Creation of EDF ENR, Joint Venture with EDF in distributed energy activities New capital increase of 500 m to finance the development plan in Solar 2011 EDF launches a friendly takeover to acquire 100% of EDF EN 4

5 EDF EN IN 2011 A pure player diversified across segments: wind, solar and potential growth 1 Main Growth Businesses Wind Solar PV 85% of the installed capacity of the Group EDF EN Goal: 500 MWc nets in service by the end of Potential for future growth Distributed solar energy* Offshore Biomass / biogas CSP Marine energy Selective developments to prepare the future 5

6 EDF EN, PLATFORM OF THE RENEWABLE ENERGY AMBITIONS OF THE GROUP: AN INTERNATIONAL SCOPE An international footprint: 2,715 MW net* installed in 13 countries and 986 MW in construction EUROPE MW USA Wind Solar Biogas 987 MW Canada Wind Solar 59 MW UK Wind 167 MW France Wind -Solar Hydro Cogen. / Biogas 493 MW Belgium Offshore 6 MW Germany Wind 8 MW Bulgaria Hydro 58 MW Mexico Wind 68 MW North America 1,114 MW Wind Portugal Wind 303 MW Wind and Solar Spain Solar Biomasse 41 MW Italy Wind Solar 272 MW Greece Wind Solar 240 MW Turkey Wind 52 MW Hydro 6

7 EDF EN, PLATFORM OF THE RENEWABLE ENERGY AMBITIONS OF THE GROUP: A DIVERSIFIED AND SOLID PIPELINE A massive development effort: more than 18 GW in the pipeline USA Wind: 8,224 Solar: 814 Canada Wind: 1,153 Solar: 54 UK Wind: 1,105 France Wind: 1,292 Solar: 2,056 Germany Wind: 85 Belgium Offshore: 295 Poland Wind: 184 Bulgaria Solar: 54 Mexico Wind: 324 Portugal Wind: 177 Spain Solar: 34 Italy Wind: 547 Solar: GW of Wind pipeline 3.6 GW of Solar pipeline of which 1 GW in construction (Wind and PV) Greece Wind: 1,293 Solar: 206 Turkey Wind: 226 Israel Solar: 104 7

8 KEY PERFORMANCE INDICATORS In m As of 12/31/2010 Turnover CAGR since % EBITDA % Net Income Group Share % Capex % 8

9 ANOTHER WAY TO LOOK AT IT Solar PV Net installed capacity (MW) Wind & others X EBITDA (m ) X Net income Group share (m ) 0, X Employees X

10 EDF EN: A SUCCESSSTORY BUT in 2011, EDF decides to launch a takeover on 100% of the company What s next? Assist on the transition (for more than one year) and You always have an extra ball! 10

11 EREN GROUPE AT A GLANCE 5 YEARSLATER Group strategy & control Short term assets & Cash management Sport & Culture Started in MW in operations or under construction >1,500 MW in development Worldwide presence: Europe Central Asia Africa South East Asia Latin America Canada Water treatment Monitoring of Infrastructure & industrial equipment Energy Tennis Academy Paris Sophia Country Club Fitness Website dedicated to classical music Real estate investment Private Equity Minority stakes in non core activities 11 11

12 AGENDA 1 Introduction 2 Business environment 3 EREN RE Organization 4 Intensity! 5 Wrap up 12

13 MACRO TRENDS (1/3) Renewable energy is more competitive (improvement in efficiency and reduction of equipment prices) Abundance of funding available to renewable energy mature asset class; yieldco bubble somewhat deflated, but still an image of bond like investment within the finance investor community Significant shift from developed to developing world Global environment of extremely low interest rates Shift towards tenders (vs. FiT) Increasing competition leading to less attractive risk/return profiles 13

14 MACRO TRENDS (2/3) Solid sector growth and mass penetration In 2015, renewable energy (excl. large hydro) investment doubled that in thermal generation and surpassed it in capacity addition for the first time. GLOBAL NEW INVESTMENT IN RENEWABLE ENERGY BY ASSET CLASS, , $BN NET CAPACITY ADDITION BY TECHNOLOGY IN RENEWABLE ENERGY % 1% 1% 1% 1% 1% 1% 5% 5% 5% 5% 5% 5% 3% 5% 7% 8% 10% 11% 14% 15% 17% 18% 19% 21% 32% % 73% 70% 68% 65% 61% Asset Finance Public Markets Government R&D Source: Bloomberg New Energy Finance Small Distributed Capacity VC/PE Corporate R&D Investments in renewable energies back to growth, reaching 2011 level in A 2011A 2012A 2013A 2014A 2015A Hydropow er Marine Wind Solar Bioenergy Geothermal Solar and wind share is growing from 17% in 2010 to 32% in 2015 Source: Marketline 14

15 MACRO TRENDS (3/3) TOTAL INSTALLED CAPACITY BY TECHNOLOGY 2012A 2020E 2030E 2040E 18% 18% 17% 17% 73% 5% 2% 0% 2% 66% 9% 4% 0% 3% 63% 10% 6% 1% 3% 61% 11% 7% 1% 3% Hydro Wind Solar Geothermal Other renew able Non renew able Total capacity(gw) 5,440 6,577 7,422 8,455 o/w Wind capacity (GW) o/w PV capacity (GW) Wind and solar are expected to account for 13% of global capacity by 2020E and 18% by 2040E Source: US Energy Information Administration 15

16 DRAMATIC EVOLUTION OF EQUIPMENT COSTS SOLAR PV MODULE COST ($/W) NORTHERN EUROPE ONSHORE WIND LEVELIZEDCOST (NORTHERN EUROPE - $/MWH) ? 0.1 1,000 10, ,000 1,000,000 CUMULATIVE CAPACITY (MW) 32 10, ,000 1,000,000 CUMULATIVE CAPACITY (MW) Solar costs have fallen by 90% since 2009 Wind costs have fallen by 50% since 2009 Source: Bloomberg New Energy Finance 16

17 AGENDA 1 Introduction 2 Business environment 3 EREN RE Organization 4 Intensity! 5 Wrap up 17

18 EREN RENEWABLE ENERGY ORIGINS BUILD ON PAST SUCCESSES Positioning as a long-term Independent Power Producer: own projects in the long-run (no exit plan) and long intended presence in selected countries Early involvement in project development Partnerships with local developers with deep understanding of local energy markets and key stakeholders Use of mature and reliable technologies: onshore windand solarpv Leverage non-recourse project financing from leading institutions TO ADDRESS CURRENT TRENDS Diversified geographic footprint with focus on countries that present: Good natural resources (radiation level, wind speed) Need to build a more independent energy mix and grow the generation capacity Political support and will to develop renewable capacity Potential to reach critical size Expanded applications to address a broader market: on-grid / offgrid, hybrid (battery, diesel) Close collaboration with development agencies and multilateral lending institutions EREN to date -Key Figures 450 m Equity invested (pre-transaction announced with Total) 650 MW Gross capacity in operation or under construction 41 m 2016 consolidated EBITDA 170 people Staff working on project development and operations on behalf of EREN RE (subsidiaries and partners), of which 31 with EREN RE in Paris 18

19 EREN S MANAGEMENT TEAM FABIENNE DEMOL EVP, GLOBAL HEAD OF BUSINESS DEVELOPMENT Extensive career in the energy sector, having previously worked at Alstom Gas Turbines and Wärtislä Served as Head of Business Development at EDF EN for 13 years Has successfully led the development of 3 GW of wind and PV projects in over 12 countries LAURENCE JUIN EVP, CHIEF FINANCIAL OFFICER Graduate of ESCP Europe Led an extensive career in managerial financial roles including as Deputy Treasurer at Air Liquide, Head of Treasury & Financing at MatraHorlogerie, and CFO and Deputy CEO at OTV (Veolia Water) Spent 18 years with EDF EN in a variety of positions, lastly as Deputy CEO Europe THIERRY CLEMENTZ GENERAL SECRETARY, HEAD OF LEGAL Started his career within the Lagardère Group, with MatraTransport (later Siemens Transportation Systems), and later joined Cogetherm(EDF) Served as Head of Legal and General Secretary of EDF EN for over 10 years Led all legal affairs through EDF EN s IPO and extensive international development, covering corporate & project DD, structuring and negotiations, insurance, litigation and other corporate matters YONATAN SHEK VP, CORPORATE& BUSINESS DEVELOPMENT Graduate of thehebrew University & Harvard Business School Servedas Intelligence Team Leader in the Israeli Defense Forces Started his professional career in strategic & financial advisory in the energy sector with TASC (the Israeli affiliate of Bain & Co.) Joined EREN to pursue business development activities and coordinate corporate fundraising efforts 19

20 EREN S ORGANISATION Pâris MOURATOGLOU Chairman of Board David CORCHIA Chief Executive Officer LEGAL TEAM DEVELOPMENT TEAM Thierry CLEMENTZ Head of Legal Fabienne DEMOL EVP/Global Head of Business Development Yonatan SHEK VP - Corporate and Business Development FINANCE & ASSET MANAGEMENT Laurence JUIN CFO TECHNICAL TEAM 20 20

21 OUR APPROACH TO PARTNERSHIPS Indicative scheme Majority stake Minority stake LOCAL PARTNER Shareholder loans to fund development budget JV Development Platform Shareholder loans to fund a small portion of the development budget Call option to take X% of the equity of the SPVs At FC, SPV repays the development expenses + Development Fee Success Fee to be paid at FC Call option to take 1-X% of the equity of the SPVs at FC Put to reinvest a portion of their SF Project 1 Project 2 Project 3 - Seeks partners with local development experience and expertise - Transactions structured to keep developers involved in the equity of projects EREN has a call option on all projects developed by JVs. Each SPV pays a pre-agreed success fee to the JV success fee reimburses first the development expenses (shareholder loan) EREN also retains a put option, which can force the developers to deploy all or part of the net success fees in the SPV s equity 21

22 UNMATCHED TRACK RECORD OF MANAGEMENT AND INVESTMENT TEAM IN THE RENEWABLE SPACE ABILITY TO STRUCTURE PARTNERSHIPS WITH DEVELOPERS GLOBALLY EREN s management combine distinct knowledge and understanding of developers' drivers, based on a proven and successful track record, enabling them to structure partnerships effectively They have access to a proprietary network of developers ensuring constant inflow of opportunities STRONG AND TRUST BASED RELATIONSHIPS WITH INDUSTRIAL PLAYERS AND OTHER STAKEHOLDERS EREN is used to developing trust-based relationships with industrial players such as EPC contractors and O&M providers Able to intervene and negotiate favourable terms thanks to direct dialogue at top management level rather than through mid-management sales / procurement departments Highly valuable source for exchanges on technical issues Access to constant pipeline of attractive projects provided by EPC contractors CAPACITY TO NEGOTIATE ATTRACTIVE FINANCING SCHEMES Management have accumulated expertise in financing throughout their careers Have been able to raise multi billion dollars of non / limited recourse project financing debt throughout their career Understanding of financing banks drivers and knowledge of financing products allows to push the right levers Ability to raise financing in countries where conditions are more challenging Trusted partners to financing banks: management have never defaulted on financing throughout their careers Experience in fundraising including corporate debt and IPO process STRONG TECHNICAL EXPERTISE Their technical expertise allows them to rapidly assess projects feasibility / attractiveness and identify risks: In-house project assessment expertise to accelerate due diligence processes and investment decisions Choice of right technology for each project to mitigate technology risk Experience with actual performance of technologies Ability to add value to local development companies from day one Outstanding track record of management and investment team in creating value across the value chain 22

23 A DISCIPLINED FINANCIAL APPROACH INVESTMENT APPROACH BASED ON STRICT CRITERIA EREN s key financial decision criterion is unlevered project return Minimum thresholds, primarily depending on country risk and PPA off-takers, structures & tenors, are applied to every investment opportunity RIGOROUS FINANCIAL DISCIPLINE EREN finances all projects with competitive non / limited-recourse project financing and structures them to be bankable from inception Management have demonstrated their expertise in structuring sophisticated financing Management have never defaulted on financing throughout their careers EREN s policy is to fund all projects with debt denominated in the currency of the revenues EREN avoids any refinancing risk (mini perm financing) Excellent renewable resources (wind, irradiation) making renewable energy competitive CLEAR RISK MITIGATION POLICY Reliance on long-term PPA where prices are or are expected to be competitive with conventional power technologies Focus on mature technologies and proven key equipments with no technology risk Procurement from leading suppliers and contractors, capable of providing long-term performance warranties EREN s management pursue a disciplined investment policy based on low risk profile projects and strict investment return thresholds 23

24 ORGANIZATIONAL KEY SUCCESS FACTORS EREN s strategy is to build a global, partnership-based operation Lean corporate team in Paris Local teams for development, construction supervision and asset management Partner companies that will often be integrated, over time, into EREN The key principles for our organizations are We are in the business of continuous risk assessment We depend on a high level of accountability in the organization We must remain agile to capture the most attractive opportunities Our success relies on four key pillars: development, finance & asset management, technical and legal But our one single most important asset is our reputation 24

25 BUSINESS DEVELOPMENT MISSION Our mission: identify investment opportunities for EREN Definition of strategic priorities (country/area of focus, assessment of off-taker, technology ) Identification of potential local development platforms and partners Partnership structuration Coordinate the efforts of all support teams: technical, legal, project finance Bring a project to the ready to build status and investment decision after evaluating all risks related to the project and mitigating all those risks, through, notably: Technical (energy production assessment and optimization) & economic feasibility analysis Permitting & land rights Contracts negotiations & optimization to mitigate / remove all risks Project financing conditions and level of commitment before and after COD Applicable tax regime & strategies and analysis of currency issues (convertibility, transferability, etc.) 25

26 TECHNICAL MISSION Technical assessment across all phases to reduce the risks and improve the value of the projects Engineering & production assessment Contract negotiation and construction management Asset Management support 26

27 LEGAL MISSION General: legal support & advice in order to ensure group legal security Commercial law Corporate Insurance Law suit management 27

28 PROJECT DEVELOPMENT PROCESS New opportunity When considering a new greenfield Project Stage 1 Stage 2 Stage 3 Financial Close Stage 4 Commissioning completed Project Feasibility Early Stage Development Late Stage Development Construction Asset Management Initial assessment of resource Desktop technical feasibility study PPA and grid connection options confirmation Land availability assessment Initial development budget Letter of intent for PPA & grid connection Identification of suited equipment and negotiation process with suppliers Environmental impact assessment procedures Land acquisition process Preliminary site layout and engineering designs Financial modeling Execution of all relevant contracts (PPA, grid connection, EPC, O&M, equipment suppliers, land lease etc.) Execution of all permitting requirements (EIA, building permits etc.) Project financing secured Initial involvement of Owner s Rep and asset management team Construction progress monitoring and reporting Claims and variations monitoring and reporting Management of financial drawdowns Hand-over to asset management team Project monitoring and ongoing financial control Supervision of operation and maintenance Energy yield monitoring Final accounts preparation Loan management No external expenses engaged Budget validated Investment processed 28

29 AGENDA 1 Introduction 2 Business environment 3 EREN RE Organization 4 Intensity! 5 Wrap up 29

30 OVERVIEW OF GEOGRAPHIC FOOTPRINT 2012 Operating Under construction / Late stage development Development Origination 30

31 OVERVIEW OF GEOGRAPHIC FOOTPRINT 2013 Operating Under construction / Late stage development Development Origination 31

32 OVERVIEW OF GEOGRAPHIC FOOTPRINT 2014 Operating Under construction / Late stage development 32 Development Origination

33 OVERVIEW OF GEOGRAPHIC FOOTPRINT 2015 Operating Under construction / Late stage development 33 Development Origination

34 OVERVIEW OF GEOGRAPHIC FOOTPRINT 2016 Operating Under construction / Late stage development Development Origination 34

35 OVERVIEW OF GEOGRAPHIC FOOTPRINT 2017 Operating Under construction / Late stage development Development Origination 35

36 OVERVIEW OF GEOGRAPHIC FOOTPRINT Operating Development Origination EREN s teams EREN s local partner/jv Under construction / Late stage development 36

37 CAPACITY & INVESTMENT NET INSTALLED CAPACITY (MW) Reach 5/600 MW installed every year Diversify geographies 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2030E 2040E S Solar Wind To be defined NET INSTALLED CAPACITY BY REGION 50/50 wind and solar is a good balance Get ready to invest 100/150 m in equity every year Target: 3GW in

38 CASE STUDY FOR DIFFERENTIATION: WINCH ENERGY In early 2016, EREN RE invested in Winch Energy, an off-grid renewable energy developer and technology integrator focused on rural electrification in Africa Winch has developed the Rural Power Unit (RPU): an innovative, containerized PVsolar system with battery backup, delivering reliable power supply via a mini-grid to rural areas Modular system allows to quickly meet growing demand Scalablewith three different models available: 7 kw, 17 kw, 30 kw, 100 kw Assembled in 2-3 days and can be installed using local labor Remote monitoring and fault detection allow remote management and data analysis The system integrates powerful communication tools 1st project installed in Mauritania in Aug 16, as first step towards a large program with the local government 38

39 AGENDA 1 Introduction 2 Business environment 3 EREN RE Organization 4 Intensity! 5 Wrap up 39

40 WHAT THE INDUSTRY THINKS ABOUT EREN RE One of the best teams overall Highly disciplined investor Very agile, high-speed decision making Preferred partner of: Local developers, except those who want to take the money and run Lenders Key suppliers and contractors 40

41 WHERE DO WE STAND OVERALL Most of the targeted markets are penetrated(some still early stage) Mostglobal or local partners are in hands All HQ teams are adequately staffed but growth always requires new talents We dropped a number of investment opportunities / lost tenders in H because we refused to significantly lower return expectations and success came back in H2 and in 2017 while keeping the same discipline 41

42 THE TWO RULES TO STICK TO We will continue looking at too many projects A priori selection is very difficult and often wrong Internal effort is significant but external costs are limited Best projects come from unsuccessful attempts Geographical diversification remains fundamental We will not invest in low profitability projects Interest rates may increase again in the medium term Economics are locked for 20 years in our industry Low profitability / highly leveraged projects lead to financing defaults and restructurings There are no strategic countries for EREN that justify poor profitability Players with large exposure to low profitability projects will disappear Opportunities will come, even for M&A 42

43 A MAJOR TRANSACTION ANNOUNCED EREN and Total announced on Sep 22 nd the signature of a strategic agreement to accelerate the development of EREN Renewable Energy (EREN RE) worldwide. In particular, the agreement allows to: Secure medium-term equity needs to deliver EREN RE s growth plan EREN Groupe to maintain control Management to preserve its operational flexibility Strategic benefits to partner with a dominant player in the global energy industry ; the company will change its name post-closing Global priority in wind development ; in PV,priorityinallofEREN szonesoffocus - Africa, Latin America, most of Asia Pacific We welcome Total Eren into the Total Group! said Patrick Pouyanné, Chairman and CEO of Total 43