a 20 year entrepreunarial journey in renewables · 2012 2020 2030 2040 total capacity(gw) 5,440...

A 20 YEAR ENTREPREUNARIALJOURNEY IN RENEWABLES2nd October 2017

- Confidential -

AGENDA

1 Introduction

3 EREN RE Organization

4 Intensity!

5

2 Business environment

2

Wrap up

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A PARTNERSHIP BUILT OVER FIFTEEN YEARS

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

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

EREN FOUNDERS

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EDF ENERGIES NOUVELLES: A SUCCESSFUL ALLIANCE BETWEEN A LARGE GROUP AND AN ENTREPRENEUR

4

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

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EDF EN IN 2011

5

85% of the installed capacityof the Group EDF EN

Main Growth Businesses

Potential for future growth

1

Goal: 500 MWc nets in service by the end of 2012

Wind

Solar PV

Selective developments to prepare the future

Biomass / biogas

Marine energy

CSPOffshore

2

Distributed solar

energy*

A pure player diversified across segments: wind, solar and potential growth

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FranceWind - Solar

HydroCogen. / Biogas

493 MW

USAWindSolar

Biogas

987 MW

UKWind

167 MW

PortugalWind

303 MW GreeceWindSolar

240 MW

BelgiumOffshore

6 MW

GermanyWind

8 MW

BulgariaHydro

58 MW

SpainSolar

Biomasse

41 MW

EUROPE1 601 MW

North America1,114 MW

TurkeyWind

52 MW

MexicoWind

68 MW

CanadaWindSolar

59 MW

Wind

Wind and Solar

Hydro

ItalyWindSolar

272 MW

An international footprint: 2,715 MW net* installed in 13 countries and 986 MW in construction

EDF EN, PLATFORM OF THE RENEWABLE ENERGY AMBITIONS OF THE GROUP: AN INTERNATIONAL SCOPE

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FranceWind: 1,292Solar: 2,056

USA Wind: 8,224 Solar: 814

UKWind: 1,105

PortugalWind: 177

GreeceWind: 1,293Solar: 206

BelgiumOffshore: 295

PolandWind: 184

BulgariaSolar: 54

SpainSolar: 34 Turkey

Wind: 226

MexicoWind: 324

CanadaWind: 1,153

Solar: 54

ItalyWind: 547Solar: 240

A massive development effort: more than 18 GW in the pipeline

EDF EN, PLATFORM OF THE RENEWABLE ENERGY AMBITIONS OF THE GROUP: A DIVERSIFIED AND SOLID PIPELINE

IsraelSolar: 104

• 14.7 GW of Wind pipeline• 3.6 GW of Solar pipeline

of which 1 GW in construction (Wind and PV)

GermanyWind: 85

7

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KEY PERFORMANCE INDICATORS

8

CAGR since 2006

+ 47 %Turnover 1 573

In m€

EBITDA 455 + 49 %

Net Income – Group Share

106 + 48 %

Capex 1 217 + 38 %

As of 12/31/2010

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86410

3 043

2001 2005 2010

1462

455

2001 2005 2010

ANOTHER WAY TO LOOK AT IT

84

6482 430

233

2001 2005 2010

Solar PV

Wind & others

2001 2005 2010

EBITDA (m€)

Net income – Group share (m€)

Net installed capacity (MW)

Employees

X 32

2 663

X 32

0,917

106

2001 2005 2010

X117

X 35

9

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EDF EN: A SUCCESS STORY 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

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EREN GROUPE AT A GLANCE 5 YEARS LATER

11

• Started in 2012

• 650 MW in operations or under construction

• >1,500 MW in development

• Worldwide presence:

• Europe

• Central Asia

• Africa

• South East Asia

• Latin America

• Canada

• Monitoring of Infrastructure & industrial equipment

• Water treatment

• Energy

• Private Equity

• Minority stakes in non core activities

• Real estateinvestment

Tennis Academy

� Paris

� Sophia Country Club

Website dedicated to classical music

Sport & Culture

Fitness

• Group strategy & control

• Short term assets & Cash management

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AGENDA

1 Introduction


4 Intensity!

5


12

Wrap up

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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

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4773

112

154182 179

239

279257

234

273286

0

50

100

150

200

250

300

350

400

450

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Asset Finance Small Distributed Capacity

Public Markets VC/PE

Government R&D Corporate R&D

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.

14

Source: MarketlineSource: Bloomberg New Energy Finance

GLOBAL NEW INVESTMENT IN RENEWABLE ENERGYBY ASSET CLASS, 2004 – 2015, $BN

NET CAPACITY ADDITION BY TECHNOLOGY IN RENEWABLE ENERGY2010 - 2015

Investments in renewable energies back to growth, reaching 2011 level in 2015

Solar and wind share is growing from 17% in 2010 to 32% in 2015

77% 73% 70% 68% 65% 61%

14% 15% 17% 18% 19% 21%

3% 5% 7% 8% 10% 11%

5% 5% 5% 5% 5% 5%

1% 1% 1% 1% 1% 1%

2010A 2011A 2012A 2013A 2014A 2015A

Hydropow er Marine Wind Solar Bioenergy Geothermal

17%32%

MACRO TRENDS (2/3)

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17%

10%

6%1%

3%

63%

15

Wind and solar are expected to account for 13% of gl obal capacity by 2020E and 18% by 2040E

TOTAL INSTALLED CAPACITY BY TECHNOLOGY

2012A 2020E 2030E 2040E

2012 2020 2030 2040

Total capacity (GW) 5,440 6,577 7,422 8,455

o/w Wind capacity

(GW)269 569 750 961

o/w PV capacity (GW) 95 293 491 551

18%

5%2%

0%2%

73%

18%

9%

4%0%

3%66%

17%

11%

7%1%

3%

61%

Hydro Wind Solar Geothermal Other renew able Non renew able

Source: US Energy Information Administration

MACRO TRENDS (3/3)

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20002005 2008

2012 2016

0.1

1

10

1,000 10,000 100,000 1,000,000

DRAMATIC EVOLUTION OF EQUIPMENT COSTS

16

SOLAR PV MODULE COST ($/W)NORTHERN EUROPE ONSHORE WIND LEVELIZED COST

(NORTHERN EUROPE - $/MWH)

CUMULATIVE CAPACITY (MW)

Solar costs have fallen by 90% since 2009

CUMULATIVE CAPACITY (MW)

Wind costs have fallen by 50% since 2009

Source: Bloomberg New Energy Finance

20002005 2008

20152016

32

64

128

256

10,000 100,000 1,000,000

2017 ?

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AGENDA

1 Introduction


4 Intensity!

5


17

Wrap up

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EREN RENEWABLE ENERGY ORIGINS

18

BUILD ON PAST SUCCESSES… …TO ADDRESS CURRENT TRENDS

� Positioning as a long-term Independent PowerProducer: own projects in the long-run (no exitplan) and long intended presence in selectedcountries

� Early involvement in project development

� Partnerships with local developers with deepunderstanding of local energy markets and keystakeholders

� Use of mature and reliable technologies: onshorewind and solar PV

� Leverage non-recourse project financing from leading institutions

� Diversified geographic footprint with focus oncountries 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

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YONATAN SHEK

VP, CORPORATE & BUSINESS DEVELOPMENT

� Graduate of the Hebrew University &

Harvard Business School

� Served as 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

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 Matra Horlogerie, 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

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

THIERRY CLEMENTZ

GENERAL SECRETARY, HEAD OF LEGAL

� Started his career within the Lagardère

Group, with Matra Transport (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

EREN’S MANAGEMENT TEAM

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EREN’S ORGANISATION

20

Pâris MOURATOGLOU David CORCHIAChairman of Board Chief Executive Officer

FINANCE & ASSET MANAGEMENT

Laurence JUIN CFO

TECHNICAL TEAM

LEGAL TEAM

Thierry CLEMENTZHead of LegalDEVELOPMENT TEAM

Fabienne DEMOLEVP/Global Head of Business Development

Yonatan SHEKVP - Corporate and Business Development

20

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Shareholder loans to fund development

budget

Shareholder loans to fund a small portion of the development

budget

Project 2

JV Development Platform

Minority stakeLOCAL

PARTNER

Project 3Project 1

Majority stake

Call option to take X% of the equity of

the SPVs

� Call option to take 1-X% of the equity of the SPVs at FC

� Put to reinvest a portion of their SF

At FC, SPV repays the

development

expenses +

Development Fee Success Fee to be paid

at FC

Indicative scheme

- 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

OUR APPROACH TO PARTNERSHIPS

21

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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

UNMATCHED TRACK RECORD OF MANAGEMENT AND INVESTMENT TEAM IN THE RENEWABLE SPACE

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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)

CLEAR RISK MITIGATION POLICY

� Excellent renewable resources (wind, irradiation) making renewable energy competitive

� 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 policybased on low risk profile projects and strict investment return thresholds

A DISCIPLINED FINANCIAL APPROACH

23

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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

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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

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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

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LEGAL – MISSION

General: legal support & advice in order to ensure “group legal security”

Commercial law

Corporate

Insurance

Law suit management

27

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PROJECT DEVELOPMENT PROCESS

28

Project Feasibility

• Initial assessment of resource

• Desktop technical feasibility study

• PPA and grid connection options confirmation

• Land availability assessment

• Initial development budget

Early Stage Development

• 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

Late Stage Development

• 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

• Constructionprogress monitoring and reporting

• Claims and variations monitoring and reporting

• Management of financial drawdowns

Asset Management

• Hand-over to asset management team

• Project monitoring and ongoingfinancial control

• Supervision of operation and maintenance

• Energy yield monitoring

• Final accounts preparation

• Loan management

Stage 1 Stage 2

Stage 3Financial

Close

New opportunity

Stage 4Commissioning

completed

When considering a new greenfield Project

No external expenses engaged Budget validated Investment processed

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AGENDA

1 Introduction


4 Intensity!

5


29

Wrap up

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OVERVIEW OF GEOGRAPHIC FOOTPRINT 2012

30

OriginationOperating DevelopmentUnder construction / Late stage development

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3 31

4

4

529

3

5

27 1010

6

1 15

1

15

1

Operating Development Origination EREN’s teams EREN’s local partner/JVUnder construction / Late stage development

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WindSolar

CAPACITY & INVESTMENT

37

NET INSTALLED CAPACITY (MW)

NET INSTALLED CAPACITY BY REGION

• Reach 5/600 MW installed every year

• Diversify geographies

• 50/50 wind and solar is a good balance

• Get ready to invest 100/150 m€ in equity every year

Target: 3GW in 2022

Solar To be defined

2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2030E 2040E

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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 PV solar system with battery backup, delivering reliable power supply via a mini-grid to rural areas

� Modular system allows to quickly meet growing demand

� Scalable with 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

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AGENDA

1 Introduction


4 Intensity!

5


39

Wrap up

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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

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WHERE DO WE STAND OVERALL

Most of the targeted markets are penetrated (some still early stage)

Most global 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 H1 2016 because we refused to significantly lower return expectations… and success came back in H2 and in 2017 while keeping the same discipline

41

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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

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A MAJOR TRANSACTION ANNOUNCED

43

EREN and Total announced on Sep 22nd 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, priority in all of EREN’s zones of focus - Africa,

Latin America, most of Asia Pacific

“We welcome Total Eren into the Total Group!” said Patrick Pouyanné, Chairman and CEO of Total

a 20 year entrepreunarial journey in renewables · 2012 2020 2030 2040 total capacity(gw) 5,440...

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