Abu Dhabi National Energy : Investor Presentation

Abu Dhabi National Energy Company (TAQA) Investor Presentation

POWERING A THRIVING FUTURE

Disclaimer

These materials have been prepared by Abu Dhabi National Energy Company PJSC ("TAQA" or the "Company"). The information contained in this presentation may not have been reviewed or reported on by the Company's auditors. The Company relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness.

These materials have been prepared for information purposes only and do not form part of any prospectus, offering memorandum or offering circular or an offer to sell any securities and are not intended to provide the basis for any credit or any third party evaluation of any securities or any offering of them and should not be considered as a recommendation that any investor should subscribe for or purchase any securities. The information contained herein supersedes any previous such information delivered to you and will be superseded by any such information subsequently delivered. The information contained herein is subject to change without notice and past performance is not indicative of future results. The Company is under no obligation to update or keep current the information contained herein. No person shall have any right of action (except in case of fraud) against the Company or any other person in relation to the accuracy or completeness of the information contained herein.

This presentation may contain, or may be deemed to contain, "forward-looking statements" regarding future events or the future financial performance of the Company. These forward-looking statements include all matters that are not historical facts. The inclusion of such forward-looking information shall not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved. The Company undertakes no obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise.

TAQA publishes its financial statements in AED rounded to the nearest million. This presentation contains conversions of certain AED amounts into U.S. dollars solely for the convenience of the reader. These conversions should not be construed as representations that the AED amounts actually represent such U.S. dollar amounts or could actually be converted into U.S. dollars at the rate indicated. The UAE dirham has been pegged to the U.S. dollar at a fixed exchange rate of AED 3.6725 = U.S.$1.00 since 22 November 1980 and, unless otherwise indicated, U.S. dollar amounts in this presentation have been converted from AED at this exchange rate.

Please note that rounding differences may appear throughout the presentation.

22

Table of contents

1. A leading integrated utility, underpinned by strong, recurring cash flows
2. Recent strategic developments
3. Integrating ESG into how we do business
4. Maintaining strong financial performance
5. Investment thesis
6. Appendix

4

11

14

19

23

25

3

A leading integrated utility, underpinned by strong, recurring cash flows

POWERING A THRIVING FUTURE

A leading integrated utility at the heart of UAE's energy ambitions

1	Building a global business upon
solid foundations in the UAE

Exclusive	Right of	23
	1st refusal	Countries
Transmission in	For a minimum of	Global footprint
Abu Dhabi and	40% stake in	through power
Northern Emirates	EWEC generation	generation and
Distribution in Abu	projects in the	O&G assets.
UAE
Dhabi

2	Operations spread across three	3	Strong financial performance &
business lines			predictable cash flow generation
	Q1 2024 REVENUE SHARE		$14.1bn	$5.3bn
	~110,000 km		5%		1,250 MIGD
				3.3% YoY	-5.5% YoY
	water &	14%		gross water
					FY 2023 Revenue	FY 2023 EBITDA
	electricity		T&D		desalination
	networks		Generation	capacity
	21%	O&G	60%
		SWS			41%	70%
	gross power
	45.0 GW1				107
	generation		~ $4.4bn		mboe/d		Average Adj.	FCF-to-EBITDA ratio
			production
	capacity				EBITDA margin	FY 2023
	added to RAB
				2021-2023
			via SWS

4	Robust borrowing profile with good
liquidity levels

5	Transparent dividend policy

6	Continuous improvement in ESG
performance

Aa3

AA

11%	2.5x
Liquidity as a % of	Net debt / LTM

Defined dividends from

T&D and Generation

(fils/share)

2023A	2024F2	2025F
3.25	3.50	3.75

Variable payout

from O&G

business for

2023-2025

Discretionary

percentage of net

income

Q1 2024 highlights

11%	9	27%
YoY reduction in	Metrics obtained	Female board

total assets (Mar - 24)

EBITDA (Mar - 24)

Maintaining standalone investment grade rating

• Fixed dividends to be paid quarterly
• Variable dividend at year-end

Scope 1 & 2 GHG	third party	members and 82%
and 19% compared	assurance	independent
to base year 2019		members

5

1. Based on operational and under construction capacities. Includes Masdar generation capacity. Excludes 1GW captive capacity in Oman. 2. Board approved 0.7 fils per share for Q1 2024

TAQA a key driver of the energy transition in Abu Dhabi System

A deliberate shift towards cleaner energy sources

Planned power generation

structure in Abu Dhabi system

Installed generation capacity by	Energy mix across EWEC
type across EWEC network	network

Nuclear

• Base load for Abu
  Dhabi's power generation
• TAQA provides Transmission & Distribution connectivity
• TAQA does not own the Barakah Nuclear Energy plant

Solar

• Intermittent power supply source
• TAQA has a key stake in all solar plants

Gas

• TAQA has a key stake in all Gas plants

100%		94%		100%
90%				90%
80%				80%
70%			68%	70%
		64%
60%				60%
50%				50%
40%				40%
30%	19%	21%		30%
20%		20%
15%	13%
10%	6%			10%
0%	0%			0%
	Nuclear	Solar	Gas
	2019	2023	2030F

			100%
			62%
			51%
32%	32%
		17%
		6%
0%		0%
Nuclear	Solar	Gas
2019	2023	2030F

Source: EWEC

6

Well-articulated strategy to become a low carbon power and water champion focused on optimization and growth

MISSION

To be a low carbon power and water champion

VISION

PURPOSE

STRATEGIC PILLARS

To provide the clean power and water that governments, businesses and consumers need for a sustainable and successful life

Powering a thriving future by efficiently providing sustainable and reliable energy and water to unleash the unlimited potential of people and places

Optimization

Growth

KEY THEMES

Create an integrated and efficient utility company

Partner with the government to establish optimal regulatory system

Enhance security of supply to maintain demand growth in UAE and internationally

Expand product portfolio

Become a sustainable leader and decarbonization partner in the UAE

ENABLERS

Capability Building

Develop people capabilities for

sustainable growth

Financial discipline

Ensure financial stewardship

ESG

Become the UAE's ESG champion

sustainably delivering on our corporate

strategy and objectives

Innovation & Digitization

Enable optimization of existing business and ability to innovate for growth in new business models

7

Breakdown of TAQA's power generation capacity

Share of clean energy increasing in portfolio

Gross capacity (GW)

45.0

16.0

24.122.4

3.4

	12.6				29.0
20.8
9.8	1.6
TAQA	Masdar	Elimination	TAQA +
		(joint project)	Masdar

Current Portfolio (Operating + U/C)

Operational Under construction

Net capacity (GW)

				18.7
14.3				4.3
1.3
13.0	4.4		14.4
		3.0
	1.4
TAQA		Masdar	TAQA + Masdar
	(TAQA Share)

Current Portfolio (Operating + U/C)

Operational Under construction

Technology mix (gross capacity)

Geothermal Other

Coal 4.2% 2.0% 5.1%

Wind

13.5%

Clean

energy at

Thermal

~52% of42.5% portfolio

Solar

32.7%

Technology mix

(net capacity)

Geothermal Other

Wind 0.6% 1.1%

6.9%

Coal

11.0%

	Clean
	energy at
	~31% of
Solar	portfolio
Thermal
21.9%
58.5%

8

Refreshed 2030 Power & Water Capacity Growth Targets

Significant upward revision reflecting stronger ambitions

	Gross generation		Increasing share of
	capacity (GW)*		Renewable Energy
								Conventional
								Renewable
		3X
						70%	30%	33%	67%
	50			150
Previous 2030 target	Refreshed 2030	Previous 2030			Refreshed 2030
				target	target mix			target mix
*7.4GW gross thermal capacity assumed to be
	retired by 2030

Revised targets follow the successful integration of Masdar's renewable business

• Original targets set as part of 2021 growth strategy
• TAQA became Masdar's largest shareholder in December
  2022 with a 43% stake

Capex/investment plans: AED75 billion to be spent until 2030 to deliver the announced targets

• Includes power and water capacity expansion as well as previously committed capex of AED40 billion between 2021- 2023 on T&D regulated assets
• Over 80% of the total spend aimed at energy transition activities; AED 50 billion eligible for sustainable finance (as per EU taxonomy)

Water generation capacity (MIGD)

Conventional

Reverse Osmosis

1,250	1,300
	34%
61%
39%35%	66%
Existing Capacity	2030 target
(as of Q1 '24)

Net generation capacity (GW)∗

Conventional
Renewable	50
				50%
18.7
	50%
	69%
31%
Existing Capacity	2030 target
(as of Q1 '24)

*4.6GW net thermal capacity assumed to be

retired by 2030

Breakdown of AED 35bn

Generation CAPEX

4%

55%41%

Investment in Masdar

Water (TAQA)

Power (TAQA)

Also considering expansion of Transmission & Distribution business outside of the UAE through inorganic and organic opportunities

Establishing growth targets for water generation capacity

• By 2030, two-thirds of water generation capacity will be based on highly efficient reverse osmosis (RO) technology
• Sustaining O&G production capacity across Canada, while decommissioning certain assets in the North Sea
• Commitment to maintain standalone investment grade rating

9

Cash flow stability entrenched in TAQA's business model

T&D

GENERATION

Building blocks of Maximum Allowed Revenue (MAR):

RoI on Regulated		Incentive
Asset Base (RAB)	BST + Opex
structure
+ Depreciation

• Regulatory Control 2 (RC2) increases real WACC from 4.6% to 4.9% for

• Entire domestic and international generation fleet operates under long-term take or pay contracts with highly credible off-takers
• Compensation composed of Capacity Payment and Variable
  Payment

• Capacity Payment is dependent on availability (rather than off-take) and includes recovery of capital and return on capital
• In addition to compensation for variable operating costs, Variable Payment includes recovery of fuel

2023-2026

• Annual nominal RoI on RAB: WACC + previous year's CPI

cost on a pass-through basis in select markets.

Q1 2024 Revenue breakdown	Q1 2024 EBITDA breakdown
15%	16%
21%	51%
65%	33%

Contracted + regulated:		Contracted + regulated:
c.86% of Revenue	Regulated Contracted Other	c.84% of Adj. EBITDA

• Contracted: Local and international power generation assets
• Regulated: Transmission & Distribution companies (licensed activities), Sustainable Water Solutions
• Other: Oil & Gas, unregulated transmission activities

10