Entering in Mexico’s electricity generation business with 2,000 MW
October 23, 2015
Strategic compliance
Sector overview
Project description
Final remarks
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Compliance with Mota-Engil strategy
Mexico is a core region
Long-term growth
Construction synergies
Resilient cashflow
Low upfront requirements
Diversification
Principles aligned with the Company’s strategy
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Strategic compliance
Sector overview
Project description
Final remarks
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Electric sector highly correlated with GDP Mexico’s GDP and electric sector evolution 20% 15% 10% 5%
0% 2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-5%
-10% GDP
Source: Mexico’s Secretaria de Energía.
Electric sector
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83% of the capacity owned by the Government Installed capacity in 2014 7% 7%
11%
48%
65 GW Conventional 49 GW
27%
26%
Combined cycle
Thermal
74%
Coal
Turbogas
Other
6% 8%
Renewables 17 GW 12%
Conventional
Renewables 73%
Hydro
Source: Mexico’s Secretaria de Energía.
Wind
Nuclear
Other
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Electricity prices with a CAGR of 7% since 2000 Installed capacity (GW)
Electricity prices (MXN cent/kWh current prices)
65 GW 350
300
37 GW 250
200
158
150
100
50
0 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Residential
Commercial
Services
Industrial-mid size
Industrial-large size
Average
2010
2011
2012
2013
2014
Agriculture
Average electricity prices rising, despite increase in capacity and subsidies usually granted to the agriculture and residential segments Source: Mexico’s Secretaria de EnergĂa.
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An opportunity for private players Electric sector challenges
Positive GDP growth outlook and electricity demand, mainly fuelled by the manufacturing sector
Mexico’s oil production declining
Low installed electricity generation capacity
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
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
1Source:
Mexico’s Secretaria de Energía.
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GDP expected to grow 3% on average until 2020 Expected electricity demand1
Expected GDP growth2
CAGR 2014-2029E 3.6%
5.0%
3.4%
4.6%
4.5%
3.2%
4.0%
3.0%
3.5%
3.5%
2.8% 2.6%
3.0%
2.8%
2.4%
2.5%
2.2%
2.0%
2.0% 2015
2016
2017
2018
2019
2020 High case
1Source:
Mexico’s Secretaria de Energía.
2Source:
IMF, October 2015.
2021
2022 Base case
2023
2024
2025
2026
2027
2028
2029
2014
2015
2016
2017
2018
2019
2020
Low case
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60 GW of additional capacity requirements until 2029 Generation mix of incremental capacity 0.5%
1.2%
1.5%
0.5%
Conventional 27 GW
60 GW
96.4%
Combined cycle
Thermal
46%
Turbogas
Other
17%
Renewables 33 GW
54%
Coal
23%
11% 37% 12%
Conventional
Renewables
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
Source: Mexico’s Secretaria de Energía.
Hydro
Wind
Nuclear
Other
Cogeneration
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Generation with the bulk of expected investment Expected investment by activity
12%
10%
77%
Generation
Transmission
Distribution
US$ 127 Bn1 expected to be invested in the period 2015 to 2029, of which US$98 Bn in the generation activity 1
US$/MXN=16.6.
Source: Mexico’s Secretaria de EnergĂa.
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A transparent and stable legal framework New Electric Industry Law main goals
Development of the electric sector on a sustainable basis, guaranteeing continued, efficient and secure operations
Improvement of Mexico’s competitiveness
Compliance with public service, clean energy and decreased emissions obligations
Opening of the electricity sector to private companies
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 private companies 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 11
A transparent and stable legal framework Before new Electric Industry Law
Generation
CFE’s1 Power Plants
Independent Producers
Small scale production
After new Electric Industry Law Self-supply & cogeneration
National Electrical System
Consumers
1Comisión 2Eligible
Commercial
Private
Short Term Contracts
Long Term Contracts
Spot
Auctions
Wholesale
Public Service
Suppliers
CFE1
Residential
Industrial
Federal de Electricidad, Government owned.
consumers: consumption above 3 MW, being reduced to 1 MW by 2017.
Qualified Service Suppliers
Services
Qualified consumers2
Last Resort Supplier
Basic Service Suppliers
Regulated consumers
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Strategic compliance
Sector overview
Project description
Final remarks
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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 successfully manage 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 SME1
Mota-Engil México 51%
Generadora Fénix
49%
Activity: build, explore, operate and mantain during a period of 30 years Hydro plants Plant
Capacity (MW)
State
Necaxa
114
Puebla
Tepexic
45
Puebla
Patla
45
Puebla
Tezcapa
5
Puebla
Lerma
74
Michoacán
1Sindicato
Mini-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
Mexicano de Electricistas, Mexico’s main electricity Union.
Plant
Capacity (MW)
State
Alameda
5.6
Morelos
Juando
6.6
Hidalgo
Cañada
1.1
Hidalgo
Tlilan
0.7
México
Fernández Leal
1.3
México
Villada
1.3
México
Temascaltepec
2.4
México
S. Simón
2.1
México
Zepayautla
0.8
México
Zictepec
0.5
México
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
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Inroads in the electricity generation activity SME1
Mota-Engil México 51%
Generadora Fénix
49%
Activity: build, explore, operate and mantain during a period of 30 years CCGT plant 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 16
Strategic compliance
Sector overview
Project description
Final remarks
Page 2
Page 4
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Final remarks Mota-Engil México to become an important player in Mexico’s liberalised electricity market with a total potential generation capacity of up to 2,000 MW (11% of Portugal’s installed capacity) Existing plants already in operation with c.300 MW and option to add 1,700 MW through a CCGT (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
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Disclaimer This presentation used sources deemed credible and reliable but is not guaranteed as to accuracy or completeness. It also contains forward looking information that expresses management’s best assessments but might prove inaccurate. The information contained in this presentation is subject to many factors and uncertainties and therefore subject to change without notice. The company declines any responsibility to update, revise or correct any of the information hereby contained. This presentation does not constitute an offer or invitation to purchase securities of Mota-Engil nor any of its subsidiaries.
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João Vermelho Director, Head of Investor Relations Email: jvermelho@mota-engil.pt Maria Anunciação Borrega Investor Relations Officer Email: maria.borrega@mota-engil.pt
investor.relations@mota-engil.pt Rua de Mário Dionísio, 2 2796-957 Linda-A-Velha Portugal Tel. +351-21-415-8671