Scatec Asa · OSL:SCATC
Scatec Asa — Scatec Solar — Investor Day (September 2019)
63 slides from Scatec Asa's investor day presentation, Sep 18, 2019
Slide 1: Capital Markets Update 2019
Capital Markets Update 2019 Oslo, 18 September 2019
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: Expanding our platform for increased growth
Expanding our platform for increased growth Raymond Carlsen, CEO
Slide 4: A clear strategic direction: Expanding our platform for increased growth
A clear strategic direction: Expanding our platform for increased growth • Strong market outlook Installed capacity* Annual growth of • Growth target raised 4.5 GW 1.5+ GW • Introducing Release by end 2021 from 2022 • Continued ESG focus onwards Effective execution of Secure growth in Broaden commer
Slide 5: 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 sector towards 2050: 62% 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 6: Scatec Solar at a glance
Scatec Solar at a glance Key facts • We develop, build, own and operate solar plants across emerging market 1.9 GW 5.6 GW 315 • Founded in 2007 – Headquarter in Oslo, Norway • Present in 13 countries globally In operation & Backlog & Employees under construction pipeline Our locations Scatec Solar o
Slide 7: A portfolio of 1.9 GW in operation and under construction
A portfolio of 1.9 GW in operation and under construction Eqypt, 325 MW Malaysia, 197 MW South Africa, 190 MW Brazil, 162 MW Honduras, 95 MW IN OPERATION Malaysia, 197 MW Ukraine, 47 MW Jordan, 43 MW Mozambique, 40 MW Czech, 20 MW Rwanda, 9 MW Ukraine, 289 MW South Africa, 258 MW Egypt, 65 MW Argent
Slide 8: We continue to deliver strong growth and shareholder value
We continue to deliver strong growth and shareholder value Strong share price development Strong increase in asset portfolio In operation (MW) 350 Scatec Solar OSEBX SSO dividends 5,611 In ops. & under construction (MW) Core peers Other renewable IPPs Backlog & pipeline (MW) 300 4,679 250 200 150 1,
Slide 9: Main achievements since last Capital Markets Update
Main achievements since last Capital Markets Update Global footprint expanded, now Grid connected 759 MW in present in 13 countries – pipeline Egypt, Malaysia, Brazil, Honduras & backlog increased to 5.6 GW and Mozambique Comprehensive sustainability Continued strong focus on HSSE. and compliance pr
Slide 10: 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 11: Building a high performance culture based on company values
Building a high performance culture based on the Scatec Solar company values Developing a global organisation: Our employees: • Culturally diverse 585 Short term • Focusing on international experience Permament • Attracting & developing talent – offering global careers • Maintain organisational flex
Slide 12: Strong focus on Health Safety Security & Environment
Strong focus on Health Safety Security & Environment Key highlights Key performance indicators • 13 mill working hours performed - excellent safety records LTIF* Lost time injury • ISO certification obtained for HSSE systems 0.8 frequency • Specific focus areas: Traffic, electrical work & security S
Slide 13: Scatec Solar utilises new technology to improve power plant performance
Scatec Solar utilises new technology to improve power plant performance Bi-facial solar modules, Egypt Global control & monitoring centre, Cape Town • The world’s largest solar park with bi-facial modules • Real-time data from all plants globally 24/7 • 390 MW / 870 GWh annual production • Improving
Slide 14: Significant market opportunities in both utility & corporate segment
Significant market opportunities in both utility & corporate segment Utility scale solar Corporate & Industrial • PPAs with state owned utilities • Large industrial customers • Non-recourse project finance • Long-term PPAs with fixed prices 15
Slide 15: Introducing Release - reliable, flexible and low cost solar power
Introducing - 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 16
Slide 16: Creating a sustainable business in complex environments
Creating a sustainable business in complex environments Why sustainability is good business • Ensures stable operations and investor return • Enables compliance with international standards and reporting on non-financial results via Global Reporting Initiative • Makes us attractive for solid financi
Slide 17: Community development programmes – key contributor to local value creation
Community development programmes – key contributor to local value creation Programmes roll-out Programme example - Medical brigade, Honduras • 35 programmes ongoing, focusing on four of the UN’s Sustainable Development Goals • Long-term strategic alliance with America Social Group • Benefitting more
Slide 18: Target raised – installed capacity of 4.5 GW by end of 2021
Target raised – installed capacity of 4.5 GW by end of 2021 Target installed capacity Financial and operational targets Targeting • Development & Construction gross 4.5 GW 4.5 GW margin; 12-14% 2.3 GW by end 2021 • Avg. Equity IRR on investments; 12-14% Adding • Grow Release to 300 - 500 MW per year
Slide 19: The solar market and our project pipeline
The solar market and our project pipeline Terje Pilskog, EVP Project Development & Project Finance
Slide 20: Introduction
Introduction • As costs continue to decline, solar power is growing at a high rate across emerging markets • New market segments are evolving and creating new opportunities • Pipeline has increased in size and improved in quality • Backlog and pipeline now exceeding 5.6 GW • Significant pipeline has
Slide 21: 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 22: Solar market expected to reach more than 150 GW of annual installations
Solar market expected to reach more than 150 GW of annual installations Annual global solar demand forecast - GW • Global demand expected to increase by 48 percent Rest of Asia Latin America India to 154 GW towards 2021 (compared to 2018) MENA USA Europe • India, China and USA representing 47 percen
Slide 23: A strong rationale for increased adaption of solar across emerging markets
A strong rationale for increased adaption of solar across emerging markets Multiple governmental drivers for solar demand Annual non-OECD (ex China & India) solar demand - GW Rest of Asia Sub-Saharan Africa Rest of World Time-to- MENA Latin America market 43 Climate treaty Cost of & national energy
Slide 24: Several large markets hold significant potential short to medium term
Several large markets hold significant potential short to medium term Installed and forecasted solar volumes in selected emerging markets GW - 1 2 3 4 5 6 7 Vietnam • Selected emerging markets are expected to Brazil South Africa install large volumes of solar over the next years Ukraine • Focus on l
Slide 25: Increased size and quality in project pipeline since last Capital Markets Update
Increased size and quality in project pipeline since last Capital Markets Update Backlog & pipeline development since 2018 CMU (MW) 5,611 2,737 3,964 490 Adding 1 GW to target: 600 • Larger pipeline • Higher quality of pipeline 2018 CMU Moved into Abandoned New pipeline 2019 CMU construction markets
Slide 26: Further expanding our market segments & product offerings
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 • Off-
Slide 27: Succeeding across procurement approaches in utility scale solar segment
Succeeding across procurement approaches in utility scale solar segment Share of pipeline Characteristics Value creation Bi-lateral negotiations 25% • Lower predictability • Potential for higher • Longer timeline margins and returns • Less competition Feed-in tariffs 28% Project tenders 28% • Higher
Slide 28: Key principles of our approach to project origination and development
Key principles of our approach to project origination and development Develop Prioritise Build deep Originate Manage based on growth market through development integrated markets knowledge partnerships risk approach • Target scalable • Understand • Qualify and partner • Use integrated teams • Mainta
Slide 29: The approach to enter and succeed in the solar market in Ukraine
The approach to enter and succeed in the solar market in Ukraine Portfolio Capex Project Finance 336 MW NOK 4.7 bn of NOK 2.3 bn Rengy, 47 MW Kamianka, 32 MW Chigirin, 55 MW Boguslav, 54 MW Progressovka, 148 MW • In operation since • Financing partners: • Financing partners: • Financing partners: •
Slide 30: Vietnam – a high growth economy with a significant solar market potential
Vietnam – a high growth economy with a significant solar market potential • Strong economic growth – GDP growth of 7% per year • Population of close to 100 million • Strong historic and future power demand • 10% p.a. last decade expected to grow by 60-70 GW next decade • Current power supply from co
Slide 31: Solar has huge potential in Vietnam in the years to come
Solar has huge potential in Vietnam in the years to come Renewables-led plan for power generation in Vietnam • Current plan implies build-out of 30 GW of new coal until 2030 to 60 GW in total Installed capacity, GW 205 • Coal build-out currently delayed Other Hydro Coal Wind • Current master plan “o
Slide 32: Our current Vietnam portfolio
Our current Vietnam portfolio 1 • Hong Phong (48 MW): Ground-based. Backlog, master plan approval and PPA received. Financing and EPC structuring under way 2 • Binh Phuoc (140 MW): Ground-based. Phase 1 (60 MW) in backlog. Master plan approval expected in 2019 4 3 • Dong Nai (650 MW): Large-scale fl
Slide 33: Vietnam is a good fit for Scatec Solar's business model
Vietnam is a good fit for Scatec Solar’s business model • Complex land acquisition • Regulatory approval process The integrated approach, • Template PPA for renewables requires new partnership focus, emerging market financing structures experience and financial structuring capabilities makes us well
Slide 34: A range of projects under development in Bangladesh
A range of projects under development in Bangladesh Long-term development perspective in promising market Nilphamari • Current generation capacity of 16 GW needs to double Netrokona by 2030 to sustain economic growth of ~7% p.a. • Target of 10% renewable energy by 2020 • Secured Nilphamari (62 MW) t
Slide 35: Ability to compete in price tender in Tunisia
Ability to compete in price tender in Tunisia N. Kaiouran Efficient process with opportunity to capture significant volume (100 MW) • Pre-qualification late 2018 W. Gafsa • Bid during summer 2019 (100 MW) • Award and PPA during 2019 (pending) SIDI Bouzid • COD for the projects 2021 - 2022 (50 MW) Sc
Slide 36: Significant pipeline has been secured in several new markets
Significant pipeline has been secured in several new markets Backlog & pipeline in key markets (MW) Key triggers for moving to backlog and construction Vietnam 1,271 • Announcement of FiT II and final project approvals South Africa 768 • Integrated Resource Plan and REIPPP Round 5 Brazil 752 • Negot
Slide 37: A solid backlog & pipeline is supporting our ambition to accelerate growth
A solid backlog & pipeline is supporting our ambition to accelerate growth Europe & Central Asia 378 MW Backlog & pipeline Southeast Asia Africa 1,885 MW 5,611 MW 2,378 MW Latin America 2021 target 970 MW 4,500 MW Backlog 268 MW of total 5,611 MW. All figures are as per 17 September 2019. 38
Slide 38: Introduction to Release
Introduction to Hans Olav Kvalvaag, SVP Release
Slide 39: Introducing Release – a new growth platform for Scatec Solar
Introducing 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 scal
Slide 40: Release offers reliable, flexible and low cost solar power
Release offers reliable, flexible and low cost solar power Pre-assembled and containerised Quickly installed - modular, Limited upfront investment - solar and battery equipment scalable and redeployable flexible contract duration Photo: Cambridge Energy Partners 41
Slide 41: Supporting corporates in making the shift
Supporting corporates in making the shift Key challenges in emerging markets: • Replace or reduce diesel consumption …to low cost and clean • Secure a reliable power source • Get solar with shorter contract duration at competitive prices Moving from expensive and polluting… Photo: Cambridge Energy P
Slide 42: Targeting a diverse customer group with plant capacity of 1-20 MW
Targeting a diverse customer group with plant capacity of 1-20 MW Off-grid mining operations UN and NGOs Small utilities with diesel or On-grid users with high powered by diesel thermal generation cost/unreliable power • 23 GW only in Africa • About 600 MUSD/year • Utilities seeks distributed • Indu
Slide 43: The first redeployable and containerised tracker solution
The first redeployable and containerised tracker solution Movable equipment provides flexibility: • Reduces the customer’s financial liabilities • Provides counter-party risk mitigation • Leads to shorter preparation and installation time • Using the customer’s own site requires less permits and lic
Slide 44: A customer case – substantial long term savings
A customer case – substantial long term savings Customer: • Western listed mining company operating in Africa • Relies on diesel – life of mine 5 - 20 years Customer need: • Power demand: 60 GWh/year - Solar to cover 28% • Cost savings over 15 years: USD 24 million • CO2 emission reduction over 15 y
Slide 45: Storage is an integral part of the Release offering
Storage is an integral part of the Release offering A battery solution can add benefits in combination Illustrative example with solar for diesel integration - today: Hybrid plant with 65 % solarisation and constant base load of 10 MW – average per day • Up to 40% solar penetration, batteries can be
Slide 46: A significant market potential – 600 GW of large scale diesel/HFO installed globally
A significant market potential – 600 GW of large scale diesel/HFO installed globally Fossil fuel generation with capacity above 3 MW HFO, diesel and gas (if available) Europe 130 GW + 7 GW per year Asia 250 GW Americas Africa + 20 GW per year 130 GW 100 GW + 10 GW per year + 10 GW per year Source: I
Slide 47: Starting in Africa - a solid pipeline of projects under development
Starting in Africa - a solid pipeline of projects under development Current pipeline of 300 MW in Africa • Scatec Solar has been marketing the Release concept for the last six months • Mainly targeting solid international companies 15% 10% with a footprint in emerging markets • Signed contracts with
Slide 48: Release Africa – established in partnership with Norfund
Release Africa – established in partnership with Norfund • Release Africa in partnership with Norfund Contemplated legal structure • Initial fleet financed by equity Other • Release Africa expected to be self funded when investors asset fleet passes around 300 - 400 MW • Operating cash flow is used
Slide 49: Release has a significant long term potential
Release has a significant long term potential Targets for Release: • Annual volumes of 300 - 500 MW from 2022 and onwards • Above average returns compared to utility scale PPAs • Starting with a focus on Africa • Pipeline under the development in South East Asia and Latin America 50
Slide 50: Investments & financing
Investments & financing Mikkel Tørud, CFO
Slide 51: 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 52: Substantial value creation over the last few years - EBITDA up 4x
Substantial value creation over the last few years - EBITDA up 4x Proportionate financials - last 12 months (NOK million) Strong growth and solid financial performance Revenues EBITDA 6,102 • Power production up by 57% to 979 GWh last 12 months • Daily production up 2.5x since beginning of 2019 • A
Slide 53: A growing asset base and a solid financial position
A growing asset base and a solid financial position Consolidated financial position (NOK million) End of Q2 2019 As of 31.12.2018 As of 30.06.2019 • Group free cash of NOK 560 million • Undrawn Revolving Credit Facility at NOK 775 million 17,492 17,492 • Group* book equity at NOK 3,318 million – 14,
Slide 54: NOK 1.3 billion of cash from D&C and operating assets while investing NOK 2.7 billion
Last 2 years: NOK 1.3 billion of cash from D&C and operating assets while investing NOK 2.7 billion Movement of free cash flow in Scatec Solar group over the last 2 years* NOK million -156 831 379 49 560 427 -2,495 1,093 -196 817 -189 End Q2 2017 Distributions Cash flow to Cash flow to Cash flow Pro
Slide 55: 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 56: 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 57: A holistic and integrated approach to ESG and sustainability
A holistic and integrated approach to ESG and sustainability Scatec Solar’s Sustainability Framework Delivering competitive and sustainable renewable energy Managing social Being a trusted Contributing to and environmental business local value impacts partner creation • Stakeholder engagement • Comp
Slide 58: A comprehensive governance and compliance programme
A comprehensive governance and compliance programme • In the forefront combating corruption & other sanctionable practices • Risk assessments and full integrity due diligence of all award processes, stakeholders and partners • Follow the Equator Principles and IFC Performance Standards • Zero tolera
Slide 59: 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 60: A well diversified portfolio with a PPA contract value of more than NOK 60 billion
A well diversified portfolio with a PPA contract value of more than NOK 60 billion Portfolio currency split*: 1.9 GW 20 years average remaining PPA tenor: in operation & under MYR Egypt - 390 MW 25 ZAR construction 10% Malaysia - 244 MW 21 25% Mozambique - 47 MW 20 25% EUR Portfolio country split*:
Slide 61: 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 62: Target raised – installed capacity of 4.5 GW by end of 2021
Target raised – installed capacity of 4.5 GW by end of 2021 Target installed capacity Financial and operational targets Targeting • Development & Construction 4.5 GW 4.5 GW gross margin; 12-14% 2.3 GW by end 2021 • Avg. Equity IRR on investments; 12-14% Adding • Grow Release to 300 - 500 MW per year
Slide 63: Scatec Solar
Scatec Solar Improving our future™