Scatec Asa · OSL:SCATC
Scatec Asa — Scatec Solar — Investor Presentation (July 2020)
44 slides from Scatec Asa's investor presentation, July 2020
Slide 1: Investor presentation July 2020
Investor presentation July 2020 1
Slide 2: Disclaimer
Disclaimer 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 inc
Slide 3: Contents
Contents • Introduction • The solar market • Our backlog & pipeline • Our business model • Financials • Outlook and guidance The 54 MW Boguslav solar plant in Ukraine. 3
Slide 4: Scatec Solar in brief
Scatec Solar in brief Key facts • We develop, build, own and operate solar plants across emerging markets 1.9 GW 6.1 GW 373 • Founded in 2007 – headquarter in Oslo, Norway • Present in 18 countries globally In operation & Backlog & Employees under construction pipeline Our locations Scatec Solar off
Slide 5: Power production doubled – progressing large project opportunities
Q2’20: Power production doubled – progressing large project opportunities Power production (GWh) • Power production reached 406 GWh, doubling 105% production from same quarter last year 406 • EBITDA* of NOK 417 million, up from NOK 346 million in previous quarter Malaysia • Completed 140 MW in South
Slide 6: A portfolio of 1.9 GW in operation and under construction
A portfolio of 1.9 GW in operation and under construction 1,505 MW in operation (140 MW added in Q2): 399 MW under construction: South Africa, 448 MW Egypt, 390 MW Malaysia, 197 MW Brazil, 162 MW Ukraine, 235 MW Ukraine, 101 MW Honduras, 95 MW Jordan, 43 MW Mozambique, 40 MW Argentina, 117 MW Czech,
Slide 7: Our success is based on our business model and a strong entrepreneurial culture
Our success is based on our business model and a strong entrepreneurial culture Business model People • Integrated – capturing full project value • Agile and lean • Structuring and financing • Entrepreneurial culture • Financial discipline • Passionate and empowered people • Partnerships • Strong an
Slide 8: The Solar market
The Solar market 8 Scatec Solar Improving our fut:
Slide 9: Solar & wind expected to provide 50% of all power globally by 2050
Solar & wind expected to provide 50% of all power globally by 2050 The global power 62% sector towards 2050: 77% Increase in global Of new demand to be electricity demand covered by renewables 12,000 GW 98% New power Demand growth in generation capacity non-OECD-countries Solar from to 2% 22% 64% 20
Slide 10: Solar is one of the world’s most competitive sources of energy
Solar is one of the world’s most competitive sources of energy Cost of alternative energy sources (LCOE, USD/MWh) • Solar is now the lowest cost source of energy across the sun-rich regions globally • The levelised cost of solar has come down 85% 250 since 2010 – industry scale and technology 200 •
Slide 11: Solar market expected to reach 170 GW of annual installations in 2022
Solar market expected to reach 170 GW of annual installations in 2022 Multiple governmental drivers for solar demand Annual global solar demand forecast - GW Europe Other Asia MENA Time-to- Mainland China North America & Caribbean Sub-Saharan Africa market India Central & South America Rest of the w
Slide 12: Battery costs expected to be reduced by almost 60% by 2030
Battery costs expected to be reduced by almost 60% by 2030 Expected battery cost development 600 GW of large scale diesel/HFO installed globally 325 Installed large scale diesel/HFO (GW) 250 255 USD/kWh 219 183 161 130 130 149 137 100 2018 2020 2022 2024 2026 2028 2030 Americas Africa Europe Asia So
Slide 13: Our backlog & pipeline
Our backlog & pipeline 8 Scatec Solar Improving our fut:
Slide 14: Growing pipeline with several additional opportunities under development
Growing pipeline with several additional opportunities under development Europe & Central Asia 430 MW Backlog & Africa Southeast Asia pipeline 2,615 MW 1,575 MW 6,140 MW Latin America 1,000 MW 2021 target 4,500 MW All figures are as of Q2 2020 reporting date. 14
Slide 15: Key project backlog & pipeline updates
Key project backlog & pipeline updates Tunisia – 360 MW Industrial partnership projects (1,000 MW in pipeline) • Three solar projects awarded in international tender, Dec 2019 • Several large projects of 500 MW+ developed in Brazil and South Africa • Project agreements in process of finalisation wit
Slide 16: We are further expanding our market segments & product offerings
We are further expanding our market segments & product offerings Utility scale solar Corporate & Industrial Release – Redeployable solar • PPAs with state owned utilities • Large industrial customers • Hybrids with storage and gensets • Non-recourse project finance • Long-term PPAs with fixed prices
Slide 17: Release – a new growth platform for Scatec Solar
Release – a new growth platform for Scatec Solar • Release offers affordable, clean, reliable and flexible solar power for rent • Targeting industrial customers in emerging markets with pre- assembled and re-deployable solar parks • Large addressable market, including 600 GW in large scale diesel po
Slide 18: Release – offering reliable, flexible and low-cost solar power
- offering reliable, flexible and low-cost solar power Pre-assembled and containerised solar Quickly installed – Limited upfront investment and battery equipment modular, scalable and redeployable flexible contract duration by Scatec Solar Photo: Cambridge Energy Partners 18
Slide 19: Our business model
Our business model 8 Scatec Solar Improving our fut:
Slide 20: Scatec Solar’s value chain
Scatec Solar’s value chain We develop, build, own & operate solar plants for 20 years Project development Financing Construction Operations Ownership (IPP) • Site development & • Debt/Equity structuring • Engineering and • Maximise performance and • Asset management permitting procurement availabili
Slide 21: Partnering with Development Banks for project finance and risk mitigation
Partnering with Development Banks for project finance and risk mitigation • Multilateral development banks (DFIs) are providing project debt to infrastructure in emerging markets • DFIs are often advising governments on design of renewable programmes to promote private / public partnerships • Projec
Slide 22: Our business model and typical project structure
Our business model and typical project structure Simplified illustration of company structure and main contracts in place Equity co- Scatec Solar investors 100% 39%-100% Shareholders agreement Component Land lease Land owners Suppliers agreements Scatec Solar Single Purpose O&M / EPC • EPC contract
Slide 23: Scatec Solar’s growth capacity continues to increase
Scatec Solar’s growth capacity continues to increase Our business model and typical project capital structure: Scatec Solar’s growth capacity • As the asset portfolio grows, more dividends/operating cash flow is available for investments 75 • In addition the integrated business model adds to (75%) o
Slide 24: Utilising new technology to reduce costs and improve power plant performance
Utilising new technology to reduce costs and improve power plant performance Operation & Maintenance (O&M) Global control & monitoring centre, Cape Town • Improved workflows through automation of processes • Leveraging economies of scale - MW/FTE doubled from 2018 • Actionable analysis sent directly
Slide 25: Improving cost, design and performance for future solar plants
Improving cost, design and performance for future solar plants Bi-facial solar panels Larger PV modules Self-powered trackers Joint initiatives • 390 MW Benban project, • 500Wp+ modules available • Incudes wireless • Improve operations’ Egypt - world’s largest solar • Working with leading communicat
Slide 26: ESG is integrated in our operating model
Environmental, Social & Governance (ESG) is integrated in our operating model Project Power Opportunity Financing Delivery Development Production Continuous compliance risk assessment, integrity due diligence and monitoring Conduct E&S due diligence CO2 emissions Identify, mitigate and monitor envir
Slide 27: 22 sustainability targets for 2020
Sustainability Key ambitions 2020: 22 sustainability targets for 2020 Responsible Climate procurement action Engaging key suppliers Setting and pursuing an to capture more of our emission reduction value chain’s total target for our company environmental impact
Slide 28: Climate reporting: Strategic priority and key stakeholder focus
Climate reporting: Strategic priority and key stakeholder focus Scope 1 Scope 2 Scope 3 Vehicles & CO2 emissions from Equipment our business 2019: 10,972 tons 2019 Diesel generators Purchased Electricity Business Air Travel CO2 emissions avoided from our solar plants in Transformer stations operatio
Slide 29: Financials
Financials eS Scatec Solar Improving cur future
Slide 30: Our priorities when investing in solar stay firm
Our priorities when investing in solar stay firm Continue to stay selective - Focus on value and risk adjusted returns - Secure D&C margin – key for equity funding Transactional and operational control - Scatec Solar – the lead developer and investor Debt & Equity partnerships - Maximise return on e
Slide 31: Continued growth in power production – steady operations
Continued growth in power production – steady operations Proportionate financials Quarterly (NOK million) Last 12 months (NOK million) Second quarter 2020 6,101 EBITDA Revenues • Increased Power Production revenues and EBITDA 4,956 as asset portfolio grows • Change in segment mix resulting in EBITDA
Slide 32: Power production doubled – plant availability above 99%
Power Production Power production doubled – plant availability above 99% Quarterly (NOK million) Last 12 months (NOK million) 1,557 EBITDA Revenues 1,301 771 639 458 374 258 216 Q2 19 Q2 20 Q2 19 Q2 20 EBITDA 84% 82% 83% 84% The 258 MW Upington project in South Africa. • 140 MW in South Africa and U
Slide 33: EBITDA increased with a larger asset portfolio and revenues catch up
Services EBITDA increased with a larger asset portfolio and revenues catch up Quarterly (NOK million) Last 12 months (NOK million) EBITDA Revenues 222 128 89 73 42 45 34 19 Q2 19 Q2 20 Q2 19 Q2 20 EBITDA 45% 47% 35% 40% • Includes revenues catch up of NOK 14 million 33
Slide 34: Lower construction activity before starting a new wave of projects
Development & Construction Lower construction activity before starting a new wave of projects Quarterly (NOK million) Last 12 months (NOK million) 5,179 EBITDA Revenues 3,141 1,339 657 383 302 165 22 Q2 19 Q2 20 Q2 19 Q2 20 Gross margin 14% 14% 15% 14% EBITDA 12% 6% 13% 10% The 47 MW Redsol project
Slide 35: Ready for further investments – NOK 3.6 billion of available liquidity
Ready for further investments – NOK 3.6 billion of available liquidity Consolidated financial position (NOK million) • Group free cash of NOK 1,933 million As of 31.12.2019 As of 30.06.2020 • Undrawn credit facilities of NOK 1,646 million 24,302 24,302 • Group* book equity of NOK 7,361 million – equ
Slide 36: Q2’20 movement of free cash
Q2’20 movement of free cash 1,933 NOK million Ukraine, Malaysia & South Africa 1,927 20 19 27 -23 717 -216 -53 -169 -315 End Q1 Distributions Cash flow to Cash flow to Cash flow Project equity Project Working Drawn credit Net share End Q2 from operating equity D&C equity Services to equity Developme
Slide 37: Stable cash flows based on PPAs with public utilities and corporates
Stable cash flows based on PPAs with public utilities and corporates Power price Counterparty Interest rate Currency & volume • Tariffs fixed in long • PPAs with state owned • Project finance debt • Structuring of project debt term contracts utilities with fixed interest of 10 in same currency as po
Slide 38: A well diversified portfolio with PPA contract values of more than NOK 60 billion
A well diversified portfolio with PPA contract values of more than NOK 60 billion Portfolio currency split*: 1.9 GW 19 years average remaining PPA tenor: Egypt - 390 MW 24 in operation & under MYR ZAR construction Mozambique - 47 MW 24 10% 25% Malaysia - 244 MW 20 25% EUR Portfolio country split*: A
Slide 39: A significant Post PPA value based on a plant life of 35+ years
A significant Post PPA value based on a plant life of 35+ years Post PPA value: 15 years of post PPA Equity Value for 1.9 GW* NOK billion • Power Purchase Agreements of 20-25 years 4 CoE 10% CoE 8% • Technical life of solar plants of 35+ years CoE 6% • After 20 years the marginal cost of solar power
Slide 40: Outlook and guidance
Outlook and guidance 8 Scatec Solar Improving our fut:
Slide 41: Short term guidance
Short term guidance • D&C value of portfolio under construction: NOK 1.1 billion • Remaining NOK 45 million value to be recognised • Lower D&C revenues in second half of 2020 • Power production from plants in operation end of Q2 2020: GWh Q2’20 Q3’20e 2020e Proportionate 406 420-435 1,580-1,630 100%
Slide 42: Power production doubled – progressing large project opportunities
Power production doubled – progressing large project opportunities • COVID-19: Short-term impact on project development • Pipeline of 5.6 GW – several large additional opportunities • Completing 399 MW in second half of 2020 • Assessing M&A opportunities • Robust financial position - available liqui
Slide 43: Scatec Solar
Scatec Solar Improving our future™
Slide 44: Our asset portfolio – July 2020
Our asset portfolio – July 2020 In operation: Under construction: Project backlog: CAPACITY ECONOMIC CAPACITY ECONOMIC CAPACITY ECONOMIC MW INTEREST MW INTEREST MW INTEREST Egypt: Benban 390 51% Ukraine: Kamianka, Tunisia 360 65% South Africa: Upington 258 46% Progressovka, Chigirin 289 96% Ukraine