1 Navigating the region s turbulent waters for electric power & the role for innovation and technology XVIII Annual Latin American Energy Conference Planning the Hemisphere's Energy Future During Economic Crisis May 11-13, 2009 La Jolla, California Darío M. Febré Sr. Strategy Manager GDF SUEZ Energy Latin America
Disclaimer 2
GDF SUEZ, the new merged group 2007 revenues: 74,3 billion* (2008 revenues: 83,1 billion*) Global workforce: 198,200 employees** E u r o p e 64.2 bn* 181,600 emp. A s i a & P a c i f i c 2.5 bn* 6,000 emp. N o r t h A m e r i c a 4.2 bn* 4,400 emp. A f r i c a 0.7 bn* 3,500 emp. S o u t h A m e r i c a 2.7 bn* 2,700 emp. 3 *Unless indicated otherwise, all financial data are derived from the 2007 and 2008 pro forma financial statements reviewed by the Board of Directors March 4, 2009. Regional figures correspond to 2007 revenues ** at June 30, 2008..
4 GDF SUEZ Energy Latin America 7,853 MW consolidated 2,451 MW more in operation 10,304 MW subtotal 5,361 MW in construction 15,665 MW total Transport Distribution Commercialization LNG Regasification (in construction) Brazil Chile Panama 13 sites in construction 1.Estreito 2. Biomass 3.Areia Branca 4.Pedra do Sal Wind 5.Jirau 6.Motors 7.Coal 8.LNG Regas Mejillones 9.Wind Mills SIC 10. Coal Conversion 11. 2 Mares Hydro 1,086 MW 33 MW 19.8 MW 18 MW 3300MW 100 MW 300 MW 5.5 MMcmd 38 MW (109 MW) 115 MW Rep office in Colombia Peru 12. Gas Turbine 3 193 MW Costa Rica 13. Wind Mills 49.5 MW
5 Content Latin America s turbulence Impact on Energy Markets Technologies and Innovation Final Comments
Latam has been going through a period of prosperity. Currently, forecasts are being revised downward. However, volatility is part of our history LATAM GDP Growth (including Mexico) Zoom on last decade (excluding Mexico) Average 1980-2009(p): 2.8 Forecast of World GDP growth (FMI) 6 6 Source: Felipe Larrain, March 2008 2009 2010 8-Apr 8-Oct 8-Nov 9-Jan 09-Mar * 09-Apr 9-Jan 09-Mar * 09-Apr World output 3.8 3.0 2.2 0.5-1 to -0.5-1.3 3.0 1.5 to 2.5 1.9 United States 0.6 0.1-0.7-1.6-2.6-2.8 1.6 0.2 0.0 Europe 1.1 0.2-0.5-2.0-3.2-4.2 0.2 0.1-0.4 Japan 1.5 0.5-0.2-2.6-5.8-6.2 0.6-0.2 0.5 United Kingdom 1.6-0.1-1.3-2.8-4.1 0.2-0.4 Emerging Countries 6.4 6.1 5.1 3.3 1.5 to 2.5 1.6 5.0 3.5 to 4.5 4 China 9.2 9.3 8.5 6.7 6.5 8.0 7.5 India 8.0 6.9 6.3 5.1 4.5 6.5 5.6 Russia 6.3 5.5 3.5-0.7-6 1.3 0.5 Brazil 3.7 3.5 3.0 1.8-1.3 3.5 2.2 Argentina 4.5 3.5 3.5 0.0 1.5 Source IMF, World Economic Outlook Report - April 2009 * Preliminary figures April 2009
Unemployment may increase in next years another challenge for governments 16,0 2006 2008 14,0 2010 F 12,0 10,0 8,0 6,0 4,0 2,0 0,0 Unemployment Rate Source: EIU March 2009 7
8 Content Latin America s turbulence but turbulence is not exclusive of today Impact on Energy Markets Technologies and Innovation Final Comments
MW average MW Average MW Average MW average MW Average MW average MW average GWh MW average GDP% QoQ OYA The impact of crisis in electricity demand is still difficult to be defined. (summer season, elasticity to prices, unavailability's, vacations) 14000 12000 10000 8000 6000 4000 % Quarter over Quarter - OYA GDP (1993 based) evolution ARGENTINA 20% 15% 10% 5% 0% -5% -10% Demand (Argentina + Brazil + Chile + Peru + Bolivia + Uruguay + Colombia) 65.000 2000 0 Source: CAMMESA - BCRA -15% -20% 5.000 4.000 SIC SING CHILE 60.000 55.000 50.000 45.000 2007 2008 2006 2005 2004 2003 2002 55.000 50.000 45.000 BRAZIL 3.000 2.000 1.000 4.000 3.500 3.000 2.500 2.000 4.000 Source: COES - SINAC 1.500 Year over Year/Month compared to same month previous year. Energy (MW-average). Red dots Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 indicates March. 1.300 650 800 700 600 500 400 Source: CNE 0 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 PERÚ PANAMÁ Source: CND 300 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 40.000 35.000 30.000 Sources: CAMMESA, ONS, CNE, COES, CNDC, DNETN, XM Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2006 /'05 2007 /'06 2008 /'07 Dic '08/'07 URUGUAY Jan '09/'08 Feb '09/'08 Mar '09/'08 1Q '09/'08 Argentina 10.3% 6.3% 2.9% 1.5% -1.0% -2.2% 4.2% 0.7% Bolivia 7.8% 8.8% 7.1% -4.4% 4.2% 5.2% 5.0% 4.8% Brazil 3.9% 4.8% 5.1% -2.0% -2.6% 0.4% 2.2% 0.0% Chile - SIC 5.9% 4.3% -0.4% -0.2% -3.4% -3.5% 1.8% -1.7% Chile - SING 1.8% 5.4% 4.0% 9.6% 8.8% 7.9% 7.1% 8.0% Colombia 4.1% 4.0% 1.9% 0.8% 1.0% 0.3% 4.5% 1.9% Panamá 4.2% 6.1% 3.3% 3.7% 2.7% 3.2% 4.6% 3.5% Perú 7.6% 10.1% 8.1% 2.9% 3.3% 1.8% 1.7% 2.3% Uruguay -0.2% 9.6% -2.6% 5.0% -3.1% 11.4% 17.4% 8.2% 1.200 2005/2006 2006/2007 2007/2008 Ene '08/09 600 Feb '08/09 Mar '08/09 Argentina 10,3% 6,3% 2,9% -1,0% -2,2% 4,2% 1.100 550 Brazil 3,9% 4,8% 5,1% -2,6% 0,4% 2,2% Chile - SIC 5,9% 4,3% -0,4% -3,4% -3,5% 1.000 500 1,8% Chile - SING 1,8% 5,4% 4,0% 8,8% 7,9% 7,1% Perú 900 7,6% 10,1% 8,1% 3,3% 1,8% 450 1,7% Bolivia 7,8% 8,8% 7,1% 4,2% 5,2% 5,0% Uruguay 800-0,2% 9,6% -2,6% -3,1% 11,4% 400 17,4% Colombia 4,1% 4,0% 1,9% 1,0% 0,3% 4,5% Panamá 700 4,2% 6,1% 3,3% 2,7% 350 3,2% 4,6% Source: DNETN Source: CNDC Guatemala 6,9% 6,0% 3,5% -2,1% 11,0% -4,9% 300 Rep. 600 Dominicana 9,0% 4,4% 4,2% 0,5% -7,4% -6,2% Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-00 Jan-01 Jan-02 Jan-039Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 40.000 35.000 30.000 6.500 6.000 5.500 5.000 4.500 Source: XM COLOMBIA BOLIVIA Source: ONS
Average USD/MWh Average USD/MWh Average USD/MWh USD/MWh 300 250 200 150 100 Behavior of prices is determined by nature, fleet, fuel availability, prices, reserve margin May low fuel prices release pressure towards substitution of liquid fuels? BRAZIL Rationing Program June 01 - February 02 N NE S SE/CO Source: CCEE 500 450 400 350 300 250 200 150 Monthly Avg. Half year Avg. Annual Avg. PANAMA 50 250 200 150 100 0 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 50 Monthly Avg. Half year Avg. Annual Avg. Regulated Price PERU Source: OSINERG 0 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 USD/MWh & USD/Barrel Average 2008 Jan '08 Jan '09 Feb '08 Feb '09 Mar '08 Mar '09 Brazil 73 270 36 110 18 75 32 Chile - SIC 204 247 115 271 142 325 134 Chile - SING 202 205 110 174 88 164 90 Panama 229 147 122 192 112 213 102 Peru 92 16 27 17 52 19 26 WTI 100 93 42 95 39 105 48 USD/MWh & USD/Barrel Avg 08 Mar 08 Mar 09 Chile - SIC 204 325 134 Chile - SING 202 164 90 Brazil 73 75 32 Panama 229 213 102 Peru 92 19 26 WTI 100 105 10 48 350 300 250 200 150 100 50 100 50 Source: CND 0 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Source: CDEC-SIC; CDEC-SING SIC monthly Avg. SING Monthly Avg. SIC. Regulated Energy Price SING. Regulated Energy Price CHILE 0 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
USD/MWh Volume (MWaverage) 11 Price (BRL/MWh) Pass-through prices remain a challenge for governments (short term cost of energy, long term signal, consumer ability to pay, political constrains) 160 140 120 SING Power SING Capacity SIC Power SIC Capacity 18.000 16.000 14.000 12.000 17.008 109,81 139,15 116,43 144,67 141,35 146,65 138,94 130,79 144,39 160 140 120 100 98,10 100 80 60 94,1 96,7 85,3 133,2 10.000 8.000 73,95 72,83 84,55 74,40 80 60 40 20 0 21,1 22,2 27,2 50,2 28,6 33,5 35,6 37,3 14,4 9,1 11,5 14,7 11,5 11,9 12,8 12,5 13,5 12,8 15,6 14,7 14,7 15,3 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Source: CNE, February 2009 54,6 49,8 6.000 4.000 2.000 0 1.325 102 1.166 204 3.016 1.682 1.104 1.304 2.312 1.076 3.125 1.553 1.383 40 20 0 Old Energy Source: CCEE data New Energy (Thermo Hydro) Up to ~ 1000 MW Prices: January, 2009 Structural Projects
12 Content Latin America s turbulence but turbulence is not exclusive of today Impact on Energy Markets turbulence has somewhat an effect but inherent volatility continues to be main issue Technologies & Innovation Final Comments
USD/MWh 13 Volatility in spot prices is mainly driven by supply side s dynamics other than demand (if systems well balanced under normal conditions) 350 Illustration of Triple Contingency Water, Fuels Availability and Prices 300 250 Extra cost in case of low hidrology / lack of fuels and high fuel prices (triple contingency) 200 150 Extra cost in case of low hidrology / lack of fuels 100 50 0-50 What the demand pays in normal conditions 0 2000 4000 6000 8000 10000 MW
14 Latam technology mix mostly driven by local primary energy availability. ref: IEA 2006, except Puerto Rico; PREPA 2007, Chile: CNE 2007, Belize & small Islands, EIA 2005, Rest of South America EIA 2005.
15 Latam has an important potential in non conventional renewable primary energy sources (1/3) Geothermal: 25% of world s potential Geothermal potential world-wide (IGA, 2001). High-temperature resources suitable for electricity generation Conventional technology in TWh/yr of electricity Conventional and binary technology in TWh/yr of electricity Low-temperature resources suitable for direct use in million TJ/yr of heat (lower limit) Europe 1830 16.3% 3700 16.5% 370 26.4% Asia 2970 26.5% 5900 26.3% 320 22.9% Africa 1220 10.9% 2400 10.7% 240 17.1% North America 1330 11.9% 2700 12.1% 120 8.6% Latin America 2800 25.0% 5600 25.0% 240 17.1% Oceania 1050 9.4% 2100 9.4% 110 7.9% World potential 11 200 100% 22 400 100% 1400 100%
16 Latam has an important potential in non conventional renewable primary energy sources (2/3) Wind Energy: important potential, local dynamics to be analyzed World Wind Atlas Oceans Annual Wind Speed at 50 m Source: Example of Wind Turbine Generators Evolution
17 Latam has an important potential in non conventional renewable primary energy sources (1/3) Solar Power: located in altiplano area Solar Power Potential
In addition, Latin America has important untapped hydro resources... Practicable Hidropower Geographic Total Developed 1990 Remaining 1990 Region TWh/a TWh/a % TWh/a % Europe 1,670 745 33 925 11 Asia 3,050 390 17 2,660 32 Africa 2,000 57 3 1,943 24 North American 775 587 36 188 2 Latin American 2,825 418 19 2,400 29 Oceania 160 43 2 117 1 World Total 10,480 2,240 100 8,240 100 Source: World Energy Council 2000 World practicable hydropower < 20% of world gross hydropower 18 18
19 Content Latin America s turbulence but turbulence is not exclusive of today Impact on Energy Markets turbulence has somewhat an effect but inherent volatility continues to be main issue Technologies & Innovation important untapped renewable energy resources. Final Comments
20 Final Comments Latin America has passed over several crisis during past decades. Is this time different? A question for the economists Latam has important hydro resources still to be developed. Innovation is still an important issue for the Long term. Expansion with non conventional renewable energy sources in Latam: Current conditions may not be favorable to develop new projects, but also demand for these technologies is being eased Financial markets stressed Market electricity prices and cost of technology may not be completely in line. Stagnated demand? Capacity Payments? Our region shows important primary energy resources (solar, geothermal, wind, small hydros) So, expansion with non conventional renewables as well as conventional renewables seems appropriate in the long term.
21 Thank you Darío M. Febré Sr. Strategy Manager GDF SUEZ Energy Latin America dario.febre@gdfsuezla.com +54-11-5789-9531