Entering in Mexico’s electricity generation business …...An opportunity for private players...
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Entering in Mexico’s electricity generation business with 2,000 MW October 23, 2015
Transcript of Entering in Mexico’s electricity generation business …...An opportunity for private players...
Entering in Mexico’s electricity generation business with 2,000 MW
October 23, 2015
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Strategiccompliance
Page 4
Sectoroverview
Project description
Page 2 Page 14
Final remarks
Page 18
Compliance with Mota-Engil strategy
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Mexico is a core region
Long-termgrowth
Constructionsynergies
Resilient cash-flow
Low upfrontrequirements
Diversification
Principles aligned with the Company’s strategy
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Strategiccompliance
Page 4
Sectoroverview
Project description
Page 2 Page. 14
Final remarks
Page 18
Electric sector highly correlated with GDP
-10%
-5%
0%
5%
10%
15%
20%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
GDP Electric sector
Mexico’s GDP and electric sector evolution
Source: Mexico’s Secretaria de Energía. 4
83% of the capacity owned by the Government
74%
26%
Conventional Renewables
48%
27%
11%
7%7%
Combined cycle Thermal Coal Turbogas Other
73%
12%
8%6%
Hydro Wind Nuclear Other
65 GW
Conventional49 GW
Installed capacity in 2014
Source: Mexico’s Secretaria de Energía.
Renewables17 GW
5
0
50
100
150
200
250
300
350
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Residential Commercial Services Agriculture
Industrial-mid size Industrial-large size Average
Electricity prices with a CAGR of 7% since 2000
Source: Mexico’s Secretaria de Energía. 6
Installed capacity (GW) Electricity prices (MXN cent/kWh current prices)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
37 GW
65 GW
Average electricity prices rising, despite increase in capacity and subsidies usually granted to the agriculture and residential segments
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An opportunity for private players
Positive GDP growth outlook and electricity demand, mainly fuelled by the manufacturing sector
Mexico’s oil production declining
Low installed electricity generation capacity
Capacity congestion, limiting electricity transmission and interconnection activities
High relative electricity tariffs for both high consumption residential and industrial segments, with impact in the country’s competitiveness
Private investment opportunities
Stable and well defined new energy legal framework, effective from August 2014
Energy demand will continue to grow at an estimated rate above 3.5%/year in the next ten years1
New projects already planned expected to add 34 GW of new generation capacity until 20241
Required expansion of transmission and distribution infrastructure both in the pipelines and the electricity network
Diversification of generation mix towards hydro and combined cycle gas turbines (CCGT) and other renewables, technologies with lower fuel cost and emissions
Electric sector challenges
71Source: Mexico’s Secretaria de Energía.
GDP expected to grow 3% on average until 2020
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
High case Base case Low case
CAGR 2014-2029E
1Source: Mexico’s Secretaria de Energía.
2Source: IMF, October 2015.
4.6%
3.5%
2.8%
Expected electricity demand1 Expected GDP growth2
2.0%
2.2%
2.4%
2.6%
2.8%
3.0%
3.2%
3.4%
3.6%
2014 2015 2016 2017 2018 2019 2020
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46%
54%
Conventional Renewables
17%
37%
12%
11%
23%
Hydro Wind Nuclear Other Cogeneration
Generation mix of incremental capacity
Conventional27 GW
Renewables33 GW
Source: Mexico’s Secretaria de Energía.
60 GW
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60 GW of additional capacity requirements until 2029
Increased weight of combined cycle and renewables, which are more efficient and have lower fuel costs and emissions
Existing prospects already account for a 34 GW increase
Investments will be mainly promoted by the private sector, with 68% of the total
96.4%
1.2% 0.5% 1.5%0.5%
Combined cycle Thermal Coal Turbogas Other
Generation with the bulk of expected investment
US$ 127 Bn1 expected to be invested in the period 2015 to 2029, of which US$98 Bnin the generation activity
77%
10%
12%
Generation Transmission Distribution
Expected investment by activity
1 US$/MXN=16.6.
Source: Mexico’s Secretaria de Energía.10
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A transparent and stable legal framework
Development of the electric sector on a sustainable basis, guaranteeing continued, efficient and secureoperations
Improvement of Mexico’s competitiveness
Compliance with public service, clean energy and decreased emissions obligations
Opening of the electricity sector to private companies
New Electric Industry Law main goals
Main reforms
Unbundling of the electricity generation, transmission, distribution and marketing activities
Liberalisation of the electricity generation and commercialisation activities, with private investment now allowed
Transmission and distribution will continue under Government ownership with regulated tariffs, but privatecompanies can participate in the construction, operation and maintenance of the facilities
Creation of a liberalised wholesale electricity market open to competition, being the participants generators,marketing companies and large consumers (“qualified consumers”)
Power generators can sell the electricity in the wholesale market or under PPAs (Power Purchase Agreements)
Large electricity consumers are free to chose the supplier and the terms and conditions of the supply
Mechanism to encourage clean energy sources
CFE1Self-supply & cogeneration
Private
National Electrical System
Commercial
Basic Service Suppliers
Regulated consumers
Qualified Service Suppliers
Last Resort Supplier
Spot Auctions
Qualified consumers2
Public Service
IndustrialResidential Services
Independent Producers
CFE’s1 Power Plants
Wholesale
Before new Electric Industry Law After new Electric Industry Law
1Comisión Federal de Electricidad, Government owned.
2Eligible consumers: consumption above 3 MW, being reduced to 1 MW by 2017.
Generation
Suppliers
Consumers
Long Term Contracts
Short Term Contracts
Small scale production
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A transparent and stable legal framework
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Strategiccompliance
Page 4
Sectoroverview
Project description
Page 2 Page 14
Final remarks
Page 18
Mota-Engil well placed to succeed
Established in Mexico since 2008 with a successful performance
Within the top 5 construction players in the country
Local company stance with solid local partnerships
Strong competencies in infrastructures construction
Strengthening the Human Resources and competencies to successfullymanage and maximize returns in the business
Proven track record in entering in new and/or changing businesses
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Inroads in the electricity generation activity
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Generadora Fénix
Mota-Engil México SME1
Activity: build, explore, operate and mantain during a period of 30 years
PlantCapacity
(MW)State
Necaxa 114 Puebla
Tepexic 45 Puebla
Patla 45 Puebla
Tezcapa 5 Puebla
Lerma 74 Michoacán
Plant Capacity (MW) State
Alameda 5.6 Morelos
Juando 6.6 Hidalgo
Cañada 1.1 Hidalgo
Tlilan 0.7 México
FernándezLeal
1.3 México
Villada 1.3 México
Temascaltepec 2.4 México
S. Simón 2.1 México
Zepayautla 0.8 México
Zictepec 0.5 México
Hydro plants
Five plants with a total installed capacity of 288 MW
Average load factors over the last years ranged from 40-45%
Option to increase capacity to 400 MW
Energy to be sold in the spot market from January 2016 onwards, with priority in the merit order
2014 average price of 1.58 MXN/kWh
Ten plants with a total installed capacity of 20 MW with option to increase by 50%
To be rehabilitated and to upgrade capacity with an expected required investment of less than US$10 Mn
Energy to be sold to the spot market
Mini-hydro plants
1Sindicato Mexicano de Electricistas, Mexico’s main electricity Union.
51% 49%
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Plant Capacity (MW) State
CTE JLL - Puebla
Located in Mexico’s highest electricity demand growth area
Thermal plant, currently deactivated, with a revamping option to a combined cycle gas turbine (CCGT) with a planned capacity up to 1,700 MW
Availability of existing land and facilities, including transmission, transport and pipeline to develop the plant
Project already obtained the required technical and environment licenses
Investment is an option, not an obligation
Energy to be sold under a PPA contract
Generadora Fénix
Mota-Engil México SME1
51% 49%
Activity: build, explore, operate and mantain during a period of 30 years
CCGT plant
Inroads in the electricity generation activity
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Strategiccompliance
Page 4
Sectoroverview
Project description
Page 2 Page 14
Final remarks
Page 18
Final remarks
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Mota-Engil México to become an important player in Mexico’s liberalised electricity marketwith a total potential generation capacity of up to 2,000 MW (11% of Portugal’s installedcapacity)
Existing plants already in operation with c.300 MW and option to add 1,700 MW through aCCGT (when PPA signed)
Proven track record in entering in new and/or changing businesses
Strong presence in Mexico, a core country in the Company’s portfolio
Platform for future analysis of other opportunities if and when available
Business to be fully consolidated with main impacts from 2016 onwards
This presentation used sources deemed credible and reliable but is not guaranteed as toaccuracy or completeness. It also contains forward looking information that expressesmanagement’s best assessments but might prove inaccurate. The information contained inthis presentation is subject to many factors and uncertainties and therefore subject tochange without notice. The company declines any responsibility to update, revise or correctany of the information hereby contained. This presentation does not constitute an offer orinvitation to purchase securities of Mota-Engil nor any of its subsidiaries.
Disclaimer
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João Vermelho
Director, Head of Investor Relations
Email: [email protected]
Maria Anunciação BorregaInvestor Relations Officer
Email: [email protected]
Rua de Mário Dionísio, 2
2796-957 Linda-A-Velha Portugal
Tel. +351-21-415-8671
