Investments in Power Generation and Natural Gas Imports. Pier Francesco Pinelli

Transcription

1 in Power Generation and Natural Gas Imports Pier Francesco Pinelli 1

2 Table of contents Strategy 2

3 Strategy ELECTRICITY New Projects Electricity operator focused on generation Target Electricity generator and Gas seller On-going Projects Priolo Supersite Reinforcement Today Purchase by third parties GAS Gas Operator also positioned in the electricity market Direct Supply Build a long term sustainable position in the electricity and gas markets 3

4 ERG Power & Gas Project evolution Consolidation and growth Organisation Commence construction of NuCe nord Consolidation and operational excellence on site Start up ISAB Energy Start up Acquisition NuCe nord power plant Organisation ERG P&G Start up ERG Cesa Eolica Transfer asset NuCe JV Ionio Gas ERG Cesa Eolica first investment Management of NuCe power plants Growth in power generation (thermo e renewable) The premise to enter into gas logistics

5 Electricity scenario Market growth over 2% per year New generation gas plant: MW (50% new CCGT 50% repowering) Wholesale Energy Price Forecast* In the medium term, stable price level due to the generation structure, environmental costs and high fuel prices Few good development opportunities Euro/MWh Some years of overcapacity in the short-medium term *Source: Business Insight New Investment opportunities are carefully evaluated Strong belief in the internal growth plan 5

6 Repowering NuCe nord Key data Investment Euro 316 million Highlights Capacity 480MW Electricity production 3.6 TWh Steam production 3 million tons IRR > 11% Completion of permitting process 12th October 2005 Start of construction November 2005 Start of commercial operation 4Q 2007 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q

7 Repowering NuCe nord Technology Procurement: main items Photo omitted Turbogas General Electric: 4 x PG6111FAe+ (70 MW) order placed August 2005 Steam Turbine: Ansaldo (92MW) order placed September 2005 Snam Progetti Engineering order placed October

8 Repowering NuCe nord Highlights Cogenerativity Green certificates Despatching priority Site supply The plant will be supplying steam to the site customers (Isab nord refinery and ENI petrochemical plant) and is defined as cogenerative Being cogenerative, the plant will not have to acquire Green Certificates Being cogenerative, the plant will have priority on despatch if the grid becomes congested A large part of production (all the steam and a part of electricity) will be supplied to the onsite customers ensuring a stable cash flow NuCe Nord is one of the most competitive new production plants among those under construction in Italy 8

9 Repowering NuCe sud Key data Investment Euro 60 million Highlights Capacity 99 MW Electricity production 780 GWh/year Steam production 2.2 million tons/year IRR 10% Start of commercial operation by October 2006 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q

10 Repowering NuCe sud Technology Main technical items Photo omitted Turbine building Photo omitted Located within the Isab sud refinery in Priolo Gargallo Two existing backpressure plants connected to a new turbogas (General Electric technology Frame 6A) Boiler 10

11 Wind Market and opportunities MW 7.000, ,0 ~ 4700 ~ , ,0 ~ , , ,0 ~ 1500 ~ ,0 In operation 30/06/2005 In development Mortality Further Plant operational by 2010 Many opportunities available 11

12 and wind power market overview Wind opportunities and competition Wind economics Regulated market driven by green certificate demand Annual increase of green certificate quota obligation for nonrenewable electricity producers equal to 0.25% per year Green certificate demand exceeds current production Several small players, with insufficient development experience / capabilities, willing to sell Few aggressive large players Green certificates (2005 estimate): Euro 109 / MWh Electricity average market price (2005 estimate): Euro 61 / MWh Expected project IRR ranging between 11% and 13% Financed with non-recourse project financing (>70% debt) Several opportunities to develop a strong presence in a growing market, with low risk profile and not controlled by electricity sector incumbents 12

13 Erg Cesa Eolica Projects Liguria, 2 MW Abruzzo: Under evaluation 35 MW In operation 31 MW Molise, 60 MW Under evaluation: Authorised: In Operation: 940 MW 120 MW 31 MW Campania, 30 MW Sicilia, 450 MW Basilicata, 80 MW Calabria: Under evaluation 280 MW Authorised 120 MW. ERG CESA Eolica has more than 1,000 MW of wind farms under development / evaluation. Objective is 300 MW by

14 ERG Cesa Eolica Cucullo Wind Farm Highlights Capacity 31 MW Electricity production 60 GWh/year IRR > 11% Photo omitted Start of commercial operation June 2005 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q

15 ERG Cesa Eolica Evaluation process - Case Study Permitting Construction Project overview Completed First phase 2005 Second phase wind power generators 20 MW IRR 12% 15

16 Europe Gas Supply & Demand Balance Internal production Import contract Additional Gas demand import Gas demand bcm/year Strong demand growth and lack of gas in Europe Rapid development of market worldwide: US, Japan Europe Italy can be positioned as southern-european hub 16

17 Italy Gas Supply & Demand Balance Italy gas logistics development 17

18 Italy Gas Supply & Demand Balance Italian gas supply & demand balance billion m 3 /year National gas demand Import requirement Infrastructure available % system security 22% 18% 22% 11% Italian logistics availability could become a new gas source to North Europe Key to development success: acquisition of introduction capacity 18

19 Project overview Location Schedule Within the ERGMED Isab nord refinery at Priolo Construction start planned for 2007 Terminal operations planned for end 2010 Technical features Layout Throughput Other Onshore area: m 2 Seaworks: jetty inside Augusta harbour Phase 1: 8 bcm/y (approx 6 million tonnes per annum) Phase 2: 12 bcm/y. Financed with non-recourse project financing Phase 1: 2 x 150,000 m 3 full containment tanks Designed to accommodate 70, ,000 m 3 carriers Cold will be shared with the ERG P&G power plants and others 23 November 2005 : first Conferenza dei servizi 19

20 Strategy Project overview 20

21 Project structure ERG SHELL Logistic 50% 50% To develop, build, own and operate the terminal Lease the regasification capacity Capacity utilization (TPA exemption in progress) ERG SHELL Third Party Access 40% 40% 20% 21

22 Capex of highly probable projects Euro millions Total NuCe nord NuCe sud (project financing) ERG equity share ERG plans to invest Euro 388 million in the years

23 Forecast Electricity Production 8,000 ~7.600 GWh 6,000 ~ ,080 ISAB Energy 4,000 ~ NuCe Sud 2, NuCe Nord Other Thermo Inst. Capacity (MW) Equity ERG ,000 Target market share in 2010 ~ 3,5 % 23