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Abengoa Sa — Abengoa Bioenergy — Investor Day (October 2006)
46 slides from Abengoa Sa's investor day presentation, October 2006
Slide 1: Abengoa Bioenergy: Investor Day
ABENGOA BIOENERGY www.abengoabioenergy.com Abengoa Bioenergy : Investor Day Javier Salgado President & CEO October 2006 Science. Solutions. Service. 1
Slide 2: Table of Contents
ABENGOA BIOENERGY Table of Contents 1. Abengoa Bioenergy Overview 2. US Market 3. EU Market 4. World Market 5. R&D Science. Solutions. Service. 2
Slide 3: 1. Abengoa Bioenergy Overview
ABENGOA BIOENERGY 1. Abengoa Bioenergy Overview Science. Solutions. Service. 3
Slide 4: The Evolution of Abengoa Bioenergy
ABENGOA BIOENERGY The Evolution of Abengoa Bioenergy f R&D award by the European f Construction of fourth facility in US Commission (€ 4.5 million) f 40,000 tons award in France f R&D award by the U.S. DOE ($35.5 million) f 22 MG of ethanol exports contracted in Europe f Construction of third facili
Slide 5: YTD Production Capacity
ABENGOA BIOENERGY YTD Production Capacity Production Facilities in EU Production Facilities in U.S. EU (MGPY) 2006 2007 2008 US (MGPY) 2006 2007 2008 EU (MGPY) 2006 2007 2008 US (MGPY) 2006 2007 2008 Production 143 143 209 Production 110 198 198 Production 143 143 209 Production 110 198 198 Construc
Slide 6: 2. US Market
ABENGOA BIOENERGY 2. US Market Science. Solutions. Service. 6
Slide 7: Frequently asked questions … (US)
ABENGOA BIOENERGY U.S. U.S. would seek a cheap barrel or an “American” barrel? Frequently asked questions … f f Will incentives still be necessary? f What does it take to reach the E10 by 2015? f Is Corn the answer to U.S. energy independence ? f Ethanol Imports? f Is Cellulosic ethanol an option? f
Slide 8: Current Market
ABENGOA BIOENERGY Current Market High crude oil and rapid MTBE replacement f 3.1% blended with gasoline f Ytd ethanol production capacity = 5BGPY @ 32% increase over 2005 f 3 BGPY under construction @ 44 new plants and 7 expansions f 8 BGPY, 5,7% gasoline consumption, by the end of 2007 @ 80% increa
Slide 9: Cheap oil or energy independence?
ABENGOA BIOENERGY Cheap oil or energy independence? Legislation Gasoline $/Ba. I) Yield 2.7 gall/Bu. Ethanol’s premium over regular unleaded gasoline 100 Crude oil $/Ba II) NG consumption 0.32 mmbtu at $8 btu III) Tax incentive $0.51 gall. $87 90 $2.36 IV) Energy equivalence 1.48 gall. ethanol / gas
Slide 10: Can ethanol really make a difference?
ABENGOA BIOENERGY Can ethanol really U.S gasoline consumption Bgall. make a difference? 200 1.2 – (7%) 163 Imports 10 175 153 1,5 3.7 9,5 150 140 (23%) 71% 9 125 70% Source:Bear & Stearn, Abengoa 8,5 66% 9,5 100 8 8,8 0,5 0,2 0,1 75 Corn 7,5 11.4 50 7 2005 Corn Ethanol Cellulostic Demand 2015E (70%)
Slide 11: How much gasoline can be displaced using corn?
ABENGOA BIOENERGY How much gasoline can be displaced using corn? f Land availability: Corn planted acreage increase 3% by 2015 f Yield: Corn yields have been improving on average 1.9 Bu. per acre per year from 1973 to 2005. 11% increase by 2015. f Domestic demand: Food and livestock will not decline
Slide 12: DDGS: A Potential Risk?
ABENGOA BIOENERGY DDGS: A Potential Risk? DDGS (Mt) 40 US 2005 DDGS consumption 34.0 Poultry 35 5% 30 CAGR = 10.4% Swine 26.8 13% 25 Beef 20 37% 14.0 15 10 Sources: JP Morgan, 5 0 2006 2010 2015 Dairy Sources: JP Morgan, Abengoa 45% f U.S. livestock and poultry, pig, swine, do have potential to cons
Slide 13: Outlook
ABENGOA BIOENERGY Outlook Ethanol supply / demand outlook 2006 – 08 Expansion 2008 – 10 Consolidation 2010 – Fwd. Maturing market MTBE phase out Higher blends (E85) Tax credit extended New Ethanol Markets New RFS minimum target E85 provides a retail channel to High oil prices Supply
Slide 14: U.S. - Our Vision
ABENGOA BIOENERGY U.S. - Our Vision 18,0 16,3 Cellulosic Billion Gallons 16,0 1,2 Imports CAGR = 15,1% 14,0 3,7 Corn 12,0 10,0 9,0 8,0 6,0 4,6 4,0 11,4 2,0 0,0 2006 2010 2015 Source: Abengoa Energy Policy Act. Mandatory floors 163 billion gallons of gasoline Legislation VEECT Incentives
Slide 15: Scenarios: oil price and legislation
ABENGOA BIOENERGY Oil > $50 Oil < $50 Demand: Beyond mandate target Demand: RFS level 10 BGPY by 2012 Favorable Capacity: > 10 BGPY by 2012 Our Capacity: overcapacity (20%) View Biomass: critical Biomass: no critical Strong market: > $2.0 gall. (E10 – E85) Subsidized market: $1.5 (Am
Slide 16: 3. EU Market
ABENGOA BIOENERGY 3. EU Market Science. Solutions. Service. 16
Slide 17: Frequently asked questions … (EU)
ABENGOA BIOENERGY EU Frequently asked questions … f What is driving EU’s interest in biofuels overall? f Do we need to fill the ETBE capacity to shift to direct blending? f Will ethanol replace methanol in biodiesel production? f Are we facing a constraint in terms of availability of raw material? f
Slide 18: Biofuels Industry is in its Infancy
ABENGOA BIOENERGY Current Market Mandatory targets: driving the growth f Ethanol installed capacity Installed Capacity (Bioethanol - Ml) 2006 Spain 540 Germany 490 France 120 Poland 60 Sweden 50 Source: Abengoa Total 1.260 f The EU target was missed in 2005, but we firmly believe the 2010 target wil
Slide 19: Implementation of legal framework
ABENGOA BIOENERGY Implementation of legal framework Netherlands: Sweden: Mandatory target by 2007 Total tax exemption 0,5 approved by Government is eur/l 2%. Jan. 04 – Dec. 2010 United Kingdom: Mandatory Targets, from Belgium: 2.5% in 2008 to 5% by 2010 Mandatory target for 2010 Partial tax exemptio
Slide 20: Legislation: Necessary for an entrepreneur industry
ABENGOA BIOENERGY Legislation: Necessary for an entrepreneur industry Legislation under development f Different legislations: Germany 100% exemption on all biofuel consumed while France has a quota system. f Inconsistency between the RVP, blending limits and directives on fuel quality. f EU Imports
Slide 21: EU Fuel biofuel production targets (05e – 15e)
ABENGOA BIOENERGY EU Fuel biofuel production targets (05e – 15e) f Achieving the EU targets would require boosting bioethanol capacity an annual 60% (05 – 10) and 31% (05-15), but as the US market has proved this is clearly possible . f We estimate almost an additional 12 Bl and 17 Bl are needed to
Slide 22: EU Ethanol Market Evolution
ABENGOA BIOENERGY EU Ethanol Market Evolution 2015 165,0 5,5 21,0 6,9 156,2 BI 4% 18,4 BI 4% 130,0 24,9 16,0 16% 30,7 11,0 20% 95,0 60,0 6,0 88,0 56% 25,0 1,0 Source: Abengoa Gasoline Consumption Bl Source: Abengoa Ethanol to Gasoline ( 8% )in v/v ( Bl ) Rest of EU 25 Netherlands Germany Swe
Slide 23: EU Raw Materials
ABENGOA BIOENERGY EU Raw Materials Agriculture New Opportunities % EtOH consumption on Cereal Production 350 Cereal: Corn, wheat, barley 8,6% Million Tons 300 6,8% 1,1% EtOH: 250 • 2006 = 1,3 Bl 200 275,1 • 2010 = 9,0 Bl 150 256,9 235,0 • 2015 = 12,4 Bl 100 50 25,8 18,7 Sources: Stratégie Grain,
Slide 24: DDGS
ABENGOA BIOENERGY DDGS f DDGS is still relatively unknown in Europe but is likely to find its way to the compound feed industry. Our experience of introduction has been very succesful. f DDGs is going to displace imported protein at the SBM price (aprox. 70% of SBM price). f There is potential to co
Slide 25: Our Vision
ABENGOA BIOENERGY Our Vision Objetives vs. EU installed capacity & imports Bl 10% Not covered EU 23 targets EU Installed Cap. CAGR = 19% 8% 4.6 Imports EU Capacity 16 5.75% 6.0 13 Source: Abengoa 4.2 3.5% 18.0 8 2% 4.2 12.4 5 3.3 1.0 9.0 1.3 2.8 2005 2007 2010 2015 2020 Voluntary Mandatory
Slide 26: EU Biggest Challenge
ABENGOA BIOENERGY EU Biggest Challenge To be the First Mover Expansion to Italy consolidate Sweden Leadership Benelux France United Germany Kingdom ABT & Ecoagricola Science. Solutions. Service. 26
Slide 27: 4. World
ABENGOA BIOENERGY www.abengoabioenergy.com 4. World Science. Solutions. Service. 27
Slide 28: World Fuel Ethanol Production
ABENGOA BIOENERGY World Fuel Ethanol Production 7.5% 120,0 Others CAGR = 25.8% EU CAGR = 25.3% 9,9 100,0 Brazil CAGR = 11,3% 12,4 US CAGR = 12.2% 80,0 45,0 60,0 2.6% 40,0 1,0 1,3 20,0 15,4 47,7 15,1 0,0 2005 2015 Bl Source: Abengoa US Brazil EU Others Ethanol /Gasoline (%) f Brazil driven by technol
Slide 29: Brazil Current Market
ABENGOA BIOENERGY Brazil Current Market High oil prices and strong Government support f Actual production 15.4 Bl (2005) f 20% Mandate target @ 6.0 Bl f Internal consumption 80% (no exports dependency, preference to distribute locally) f High subsidies; tax reductions, federal, state. f 5.5 MHa to r
Slide 30: Brazil's roll on the World ethanol market
Brazil’s roll on the World ABENGOA BIOENERGY ethanol market Domestic = 25.1 Bl + Exports = 19.9 Bl = Total 45 Bl 45 Japan Others Billion liters Billion liters CAGR = 2.50% 38.2 (E10) 5,0 Total 40 6,0 27,6 Bl 35 29.9 30 16.5 Europe 25 (E10) 23.5 3.3 2,6 20 Source: Abengoa 15 10 5.9 21.8 5 6.4 U.S. (E
Slide 31: 5. R&D
ABENGOA BIOENERGY www.abengoabioenergy.com 5. R&D Science. Solutions. Service. 31
Slide 32: Table of Contents
ABENGOA BIOENERGY Table of Contents 1. Objectives, Strategy and R&D Activities 2. Projects Science. Solutions. Service. 32
Slide 33: 1. Objectives, Strategy and R&D Activities
ABENGOA BIOENERGY 1. Objectives, Strategy and R&D Activities Science. Solutions. Service. 33
Slide 34: R&D Objectives
ABENGOA BIOENERGY R&D Objectives Our strategic vision is part of a sustainable energy system: s s Market evolution t ep Proce Commercial b ys ethanol Step Commercial production Massive ethanol from introduction production lignocellulosic Ethanol ETBE & E5 of higher from hybrid biomass stand Mandate
Slide 35: Abengoa Bioenergy's R&D
ABENGOA BIOENERGY Abengoa Bioenergy’s R&D Bioenergy R&D Plan. Objectives Objectives Production of ethanol at gasoline competitive prices Widen the market Ethanol Production from Demonstration programs for ethanol Improve current Energy crops Work Area Biomass = new technology end-uses and developmen
Slide 36: R&D Strategy
ABENGOA BIOENERGY R&D Strategy Abengoa Bionenergy conducts its R&D through a subsidiary, ABRD, Inc. f More than 30 researchers in Europe and US working on R&D f Use collaborative partnerships,JVs and equity stakes to- identify and develop cost efficient manufacturing technologies and new application
Slide 37: R&D Efforts
ABENGOA BIOENERGY R&D Efforts Main Current Projects • 4 year $35.5 million contract with DOE in 2003 to develop technology for Advanced Biorefining of Distiller Grain and Corn Stover Blends • BCyL Project: construction of a plant combining cereal and lignocellulosic processes (V FP) • Key participat
Slide 38: 2. Projects
ABENGOA BIOENERGY 2. Projects Science. Solutions. Service. 38
Slide 39: Promoting energy crops
ABENGOA BIOENERGY Promoting energy crops Energy crops Sugar content crops • Evaluate Jerusalem Artichoke and Sweet Sorghum as raw material • Develop farming techniques for these crops • Sugar beet evaluation for ethanol. New varieties under revision Cereal crops • Promote seeds with improved charact
Slide 40: Residual starch
ABENGOA BIOENERGY Current technology Residual starch Objectives • Increase ethanol yield over 95% • Improve plant operation • Demonstrate third parties technology • Improve DDGS protein content Current status • Pilot plant constructed • Corn research experimental program finished • Barley and wheat
Slide 41: Enzymatic Hydrolysis
ABENGOA BIOENERGY New technology Enzymatic Hydrolysis Objectives • Develop Enzymatic Hydrolysis technology • Develop C5 fermentation • Construct a flexible pilot plant • Construct the first world demonstration plant Current status • York pilot plant under construction • Salamanca Demonstration Plant
Slide 42: Gasification and synthesis
ABENGOA BIOENERGY New technology Gasification and synthesis Objectives Steam Heat & Power Oxygen Air Recycle ASU Power • Develop Gasification and Ethanol Catalytic Synthesis CO2 Production • Develop a catalyst for ethanol synthesis Gasification Biomass Ethanol • Evaluate the optimum process configur
Slide 43: Hybrid Plant
ABENGOA BIOENERGY New technology Hybrid Plant Objectives • Promote, design, build and operate the first commercial hybrid plant combining starch and enzymatic hydrolysis technologies • Make it profitable • Make it easily replicated • Increase learning curve evolution for enzymatic hydrolysis technol
Slide 44: Coproducts and new materials
ABENGOA BIOENERGY Coproducts and new materials Coproducts and new materials Objectives • Increase DDGs quality •Improve amino acid balance • Increase protein content •Improve palatability and digestibility •Avoid heat damage • Develop new materials derived from ethanol production process(biorefinery
Slide 45: Ethanol end use: End use programs
ABENGOA BIOENERGY End use programs Ethanol end use Objectives • Demonstrate ethanol- diesel blends (e-diesel) • Demonstrate ethanol-biodiesel-diesel blends • Develop additives for e-95 • Promote ethanol high blends •Logistics •New applications Current status • Strategic agreement with O2Diesel to de
Slide 46: Ethanol end use: reforming systems
ABENGOA BIOENERGY End use programs Ethanol end use Objectives • Develop ethanol reforming systems Current status • A catalyst for ethanol reforming developed and patented • A 1 kW pilot plant designed, constructed and tested • A 10 kW pilot plant designed, constructed and tested • A 300 kW demonstra