EnBW Energie Baden-Württemberg AG Investor Presentation Unicredit European Energy & Utilities Credit Conference 26 November 2013 Energy needs new impetus
EnBW - A strong player in the German utilities sector Based on strong roots in Baden-Württemberg Our electricity segment is the performance driver Active in selected foreign markets Number 3 in Germany with approx. 5.5 million customers With a generation capacity of 13,400 MW one of the most important utilities in Germany and Europe Reliable shareholder structure (OEW, federal state of BW, municipal associations) Electricity segment (generation, trading, grid and sales) contributed 86% to Adjusted EBITDA in 2012 Generation portfolio with the lowest CO 2 emissions in Germany: 369 g CO 2 /kwh 1 Currently 11% of revenue outside of Germany Profitable shareholdings in core markets abroad e.g. Turkey: generation gap, CZ: Strong regional growth in capital Business activities in three different markets 2 2 Wholesale markets (Procurement, generation, trading) Procurement: fuels (gas, coal, oil), emissions allowances Generation portfolio: 13,400 MW3 Trading: energy (electricity): 57.5 TWh Regulated markets Electricity grids: 154,800 km Transmission: 3,700 km Distribution: 151,000 km Gas grids: 16,300 km Renewable energies according to EEG (German Renewable Energies Act) End-customer markets (Business and retail) Electricity: 58.2 TWh Gas: 73.1 TWh Further energy and environmental services 1 In comparison to the biggest competitors; 2 Annual Report 2012 all figures stated as of 31 December 2012 ; 3 Installed capacity without cold reserve
Our value chain EnBW remains the only fully integrated utility in Germany Electricity Generation Trading & procurement Transport & distribution Sales Sales Gas Import contracts and infrastructure Storage Trading portfolio controlling Transport & distribution Sales Energy and environmental services 3
Segments 4 Generation & Trading Adjusted EBITDA 2012: 1.125m Employees 5,447 Tasks/products: Along with the production and trading of electricity, the Electricity Generation and Trading Segment also comprises the gas midstream business (long-distance gas distribution) as well as recycling. Grids Adjusted EBITDA 2012: 774m Employees: 7,372 Task/products: The Grids Segment encompasses the following stages in the value chain: the transport and distribution of electricity and gas, the providing of grid-related services, operating grids for third parties and water supply services, for instance. Renewable Energies Adjusted EBITDA 2012: 239m Employees: 474 Tasks/products: The Renewable Energies Segment comprises the activities concerned with the expansion and operation of renewable generation capacities from hydropower, onshore and offshore wind energy, photovoltaics and bioenergy. Sales Adjusted EBITDA 2012: 241m Employees: 3,510 Task/products: The distribution of electricity and gas and providing energy-related services, such as invoicing services or energy supply and energy saving contracting, are comprised under the Distribution Segment. 1 Incl. plants and savings contracting for decentralised energy systems
EnBW s generation portfolio Breakdown of the generation portfolio of the EnBW group 1), 2) Installed capacity in MW 3) 2012 2011 2010 Nuclear power plants 3,333 3,333 4,856 Conventional power stations 6,995 7,010 6,940 Of which brown coal 1,034 1,034 1,034 Of which hard coal 3,987 3,953 3,946 Of which gas 1,154 1,210 1,200 Of which other (oil, waste, etc.) 820 813 760 Pumped storage power stations that do not use the natural flow of water 3) 545 545 545 Renewable energies 2,527 2,461 2,365 Of which storage power stations/pumped storage power stations using the natural flow of water 3) 1,311 1,299 1,297 Of which run-of-the-river power stations 882 860 862 Of which wind 218 194 109 Of which other renewables 116 109 97 Total installed output (without standby reserve) 13,400 13,350 14,706 Of which renewable energies 18,9% 18,4% 16,1% 1 The generation portfolio includes long-term supply contracts and part-owned power plants 5 2 Previous-year figures adjusted 3 Power level independent of marketing approach, with storage: output Source: EnBW Report 2012
EnBW s market presence in Europe Generation capacity (in MW) 1 EnBW s foreign market presence EDF GDF Suez 128,500 116,000 ENEL 79,700 E.ON 67,700 6 RWE Iberdrola Vattenfall CEZ Fortum EnBW 52,000 46,000 37,400 15,800 14,700 13,400 CZECH REPUBLIC Pražská energetika a.s. (PRE) 69.61% TURKEY Borusan EnBW Enerji yatirimlari ve Üretim A.S. 50.00% SWITZERLAND Energiedienst Holding AG (ED) 66.67% Kraftwerk Ryburg-Schwörstadt AG 38.00% AUSTRIA EVN AG 32.47% HUNGARY Mátrai Erömü ZRt.(MATRA) 21.71% Budapesti Elektromos Müvek Nyrt. (ELMÜ) 27.25% 1 Source: The companies Annual Reports and Annual Presentations 2012, generation capacity group-wide
Fundamental changes in the energy industry (German Energiewende) trigger need for strategic review Generation / Trading Grids Customers Nuclear exit Sustained trend towards renewable energies Operating time of conventional power plants in steady decline, accompanied by partly unsatisfactory margins Increasing volatility of prices and volumes Volatile electricity generation detrimental to grid stability Investments of around 50 billion in expanding the grid through to 2030 Conventional power stations increasingly in back-up role Accelerating expansion of smart grids Downturn in demand for electricity and gas - Renewables for the most part in the hands of non-pscs (power supply companies) Increasingly active role of customers with changing needs customers becoming producers and "energy entrepreneurs" Technological developments: more diversity, modularity and granularity in the energy system New market participants: more competition and fragmentation of the value chain Regulatory framework conditions: undergoing constant change 7 In summary: Traditional business models of large utilities no longer an option
The core components of EnBW 2020 Strategy are two interconnecting operating models The two heartbeats of EnBW: Customer proximity Engine room of the Energiewende Two strategic "heartbeats", linked by system competence and market orientation, are each given scope through a distinctive operating model: Customer proximity: Innovative strength and product development 100% customer and solution orientation Engine room of the Energiewende : Expansion, efficient and safe operation of the system-critical energy infrastructure "Secure supply" as product for commercial and industrial customers Partnership models and dialogue as a strategic differentiation Portfolio streamlining through a stringent divestment and investment programme Thorough modernisation of EnBW's corporate structure and processes 8 Reattaining financial strength and returning to profitability through a business model adjusted to accommodate changes in the market
Both orientations represent equal pillars at EnBW Engine room of the Energiewende Offshore wind farms Baltic 1: Successful in operation Baltic 2: Construction started Customer proximity Customer Insight based orientation Substantial onshore wind farm portfolio Concept of sustainable town in Leutkirch and Ehingen Intelligent expansion of transport and distribution infrastructure to implement the Energiewende Establishing centre of innovation Potential wind and hydro-electric projects in Turkey (target 2015: ~ 1000MW) Back office services for utilities 9 1 EnBW Energy Solutions GmbH Source: EnBW Annual Report 2011, Quarterly Financial Reports 2012
Engine room of the Energiewende - Secure supply through high grid quality and conventional power generation Significant expansion of our transmission grids Better integration into the European grid EnBW plans, builds and operates electricity and gas grids System services for third parties Efficient, safe supply of power from conventional power stations EnBW share in conventional power generation in Baden- Württemberg around 70% "Smart expansion of distribution grids for the purpose of integrating renewable energies and securing high standards of supply 10
ONE EnBW Stringent performance management and reduced complexity 11
Financial evidence of Energiewende requires strict discipline and smart solutions Energiewende 12
Implementation of the EnBW 2020 Strategy secures financial success and improves the business risk profile Generation and Trading Renewable Energies Grids Sales/DSP 1-80% +300% +10% +150% 1.2 0.8 0.8 0.9 0.3 0.2 0.2 0.5 2012 2020 2012 2020 2012 2020 2012 2020 Adjusted EBITDA 2020 at 2.5 billion; of which ~40% from strategic realignment 13 1 Decentralised services provider
Planned net investments of approximately 9bn to 2020 supported by disciplined capex and dividend policy Ample liquidity available through unused financial facilities Well-balanced bond maturity profile We will continue to manage our future investments depending on the positive free/ retained cash flow assumed for next several years Ongoing progress of our divestiture programme in order to safeguard EnBW s credit standing and financial stability Maintentance 2016-20 Approved PR 1315 14,1 2,7 4,3 5,1 2,4 2,7 Participation models and others Disposals 9,0 4,0 Maintenance EnBW 2020 7,1 5,0 Growth 14 Gross investments Divestments Net investments
Lower prices and spreads lead to lower earnings or even unprofitable operations of coal and gas-fired power stations Energiewende 15
Financial framework designed to maintain existing debt ratio Objective of being cash flow positive in each period Well-balanced debt maturities to be only partially refinanced through to 2020 EnBW is owned by long-term public shareholders Participation models to share financial burden Disciplined capex hinging on divestments Target of a dynamic debt ration of 3.3 16
This makes EnBW a unique utility EnBW 2020 finalised (consistent implementation of all measures) First milestones of One EnBW accomplished / streamlining of executive board Highest share of regulated earnings (~ 1/3 of 2012 EBITDA, increasing to ~ 40% YE 2013 and > 50% in the mid-term) Objective of being cash flow positive in each period Highest flexibility in terms of investment expenditures (Capex as a function of progress in planned divestitures) Lowest CO 2 footprint Long-term government-related shareholder structure (99.6% in public ownership) 17 Core market Baden-Württemberg, the most prosperous region of Europe
Back-up 18
Specific measures in the transmission grid to support the security of supply in BaWü through to 2020 Expansion of the EnBW transmission grid through to 2020 1 AC grid reinforcement along Baden-Baden Rhine River Grid section: 121 km Scheduled completion: 2017 2 AC grid reinforcement in southern Baden-Württemberg Grid section: 265 km Scheduled completion: 2020 4 3 AC grid reinf. north east of Baden-Württemberg Grid section: 160 km Scheduled completion: 2019 5 1 3 Amprion Tennet 4 DC expansion corridor C In partnership with TenneT Grid section: 770 km Scheduled completion: 2022 2 2 TransnetBW 50 Hz 5 DC expansion corridor A In partnership with Scheduled completion: 2019 Amprion 19 New DC 1 constr. New AC 2 constr. AC grid reinforcement Portfolio Investments through to 2020: ca 2 billion Supraregional DC projects together with partners, if appropriate 1 Direct current; 2 Alternating current Source: German Federal Ministry of Economic and Technology, EnBW, network development plan
EnBW is investing in the distribution grid in order to integrate renewables into the energy system and to secure high quality supply Challenges and activities EnBW distribution grid 20 Challenges of the distribution grid in Baden-Württemberg Wide use of PV in the grid area (ca 4,400 MWp) High expansion targets for wind power (ca 1,200 wind farms through to 2020) In some parts of the grid, already large volumes of power fed back into the upstream grid... necessitate grid expansion using intelligent technologies (e.g. controllable local grid station, current peaks storage etc.) In addition to expansion of the distribution grids together with partners, EnBW is investigating smart distribution grids in several "grid laboratories" in order to... limit cost-intensive grid expansion in future by using ICT. enhance the transparency of the grid status in order to be able to analyse and rectify failures more swiftly and effectively. be flexible in respect of user requirements and changes anticipated Through to 2020, additional investments of around 1 billion in expanding the distribution grid infrastructure in Baden-Württemberg Smart local power supply transformer EnBW grid laboratory Smart local grid station Source: EnBW
Important note Unless indicated otherwise, all data contained hereinafter refers to the EnBW group and is calculated according to IFRS. No offer or investment recommendation This presentation has been prepared for information purposes only. It does not constitute an offer, an invitation or a recommendation to purchase or sell securities issued by EnBW Energie Baden-Württemberg AG (EnBW), a company of the EnBW group or any other company. This presentation does not constitute a request, instruction or recommendation to vote or give consent. All descriptions, examples and calculations are included in this presentation for illustration purposes only. Future-oriented statements This presentation contains future-oriented statements that are based on current assumptions, plans, estimates and forecasts of the management of EnBW. Such future-oriented statements are therefore only valid at the time at which they are published for the first time. Future-oriented statements are indicated by the context, but may also be identified by the use of the words may, will, should, plans, intends, expects, believes, assumes, forecasts, potentially or continued and similar expressions. By nature, future-oriented statements are subject to risks and uncertainties that cannot be controlled or accurately predicted by EnBW. Actual events, future results, the financial position, development or performance of EnBW and the companies of the EnBW group may therefore diverge considerably from the future-oriented statements made in this presentation. Therefore it cannot be guaranteed nor can any liability be assumed otherwise that these future-oriented statements will prove complete, correct or precise or that expected and forecast results will actually occur in the future. No obligation to update the information EnBW assumes no obligation of any kind to update the information contained in this presentation or to adjust or update futureoriented statements to future events or developments. 21