Presentation by Benoit Ribesse, CEO of Engie Mongolia, on “Future Summit Trends: Environment, Social and Governance (ESG) performance

1. CLIMATE CHANGE AS A BUSINESS
OPPORTUNITY IN ASIA PACIFIC:
LESSONS FROM AUSTRALIA
June 2017
Benoit RIBESSE
CEO
ENGIE Mongolia

2.  Australian electricity sector dominated by
coal, >90% of output
 Australia to reduce emissions by 26-28%
from 2005 levels (to 435Mt p.a.)
 Historically electricity sector = 35% of
total emissions
 Renewable Energy Target (RET) obliging
electricity retailers to procure a proportion
of its load from renewable sources
EMISSIONS TARGETS change the Business as usual
592Mt
BAU in
2030
435M
t target
in 2030
180Mt
140Mt
113Mt
76Mt

3. IMPACTS of emmissions reductions so far
3 April 2017
• Renewable Energy Target helped pushed coal-powered
generation to the margins of the market
• Accelerated closure of 5,500MW of coal stations since
2012. Closure of older thermal generation capacity
• Intermittency of renewable generation increased
reliance on fast-response gas-fired generation
• Steady increase in renewables now ~15% of
generation, forecast to reach 40% by 2030
• Tightened reserve margins and rise in wholesale
electricity prices  300% increase in last 12 months
3
Forward Electricity Price Curve

4. Notes: 1 – Hazelwood power station closed end March 2017
Fuel Name % Capacity MW
Wind Canunda 1% 46
Gas Pelican Point 13% 487
Gas/Distillate Synergen 10% 396
Coal Hazelwood1 45% 1760
Coal Loy Yang B 27% 1060
Gas Kwinana 3% 123
Retail 600,000 customers, Simply Energy
• Generation & retail assets
• Retiring coal-fired power
• Diverse, but now to replace coal
• Align with global low-carbon target
Diverse but rapidly changing Generation Portfolio
Large carbon footprint up to 2016, a generation of 19 TWh with a carbon intensity of 1.3 ton CO2 / MWh.
Projection for end 2017, 0.4 ton / MWh
ENGIE portfolio in Australia

5. Over the past 5-10 years, South Australia has
evolved into a State dominated by renewables:
A. The demand (av. ~1,500MW), has been eroded
by Increasing rooftop PV (800MW installed) –
reduces grid-based demand
B. Increasing wind built due to renewable subsidies
– intermittent in nature
C. 2012-2016: brown coal (740MW) and gas (CCGT
220MW) baseload generation closed due to ‘low
price market conditions’
0
200
400
600
800
1000
1200
1400
MonthlyEnergy(GWh)
South Australia - demand and supply
Wind Brown Coal Natural gas ImportGWh DemandGWh
A
B
C C C
RESULT  the fragility of the state has been evident, as without any baseload
generation, trying to manage demand with the intermittency of wind/solar is a challenge.
When RENEWABLES dominate – case of South Australia

6. 6
State-wide black out: 28 September 2016
• Severe weather, widespread
thunderstorms/lightning, strong and
damaging winds
• Just prior to blackout, generation mix had only
300MW of thermal generation on load, to
meet demand of ~1800MW
• Five transmission faults occurred
• caused entire state to blackout during ~18
hrs with industrial load lost for ~2 weeks (due
to damage to transmission facilities)
0
500
1000
1500
2000
2500
MW
SA: week of 25 Sep 16, supply/demand
Gas Wind Import from VIC NativeDemand
Recent BLACK-OUT: State of South Australia

7. 7
South Australia’s case and the CES in Mongolia
South Australian State
• Installed Capacity: ~ 4,500 MW
(excluding 800MW PV roof top)
• Interconnection capacity:
• With State of Victoria
• ~ 19% of the installed capacity
• Market size: 13 TWh
• 1.6 million inhabitants
• 4k Businesses (65% of market)
• Policy, low emission ambitions
• 50% RE produced by 2025
• Status 2017, 40% of generated
energy
Mongolia, CES
• Installed Capacity: ~ 1,050 MW (CHP >90%)
• Interconnection capacity:
• With Russia: 220 MW
• ~ 18% of installed capacity
• Market size: ~ 4.1 TWh
• 520k households (86% of customers in country)
• 38.5k factories (but 75% of market)
• Policy, low emission ambitions
• 20% / 30% installed capacity by 2023 / 2030
• Status 2017, ~ 5% installed capacity
• Status 2019, ~ 15% of installed capacity

8. 8
Lessons learnt for Mongolian industry
 Stalled Energy Policy over the last decade constrained Australian Energy sector
 Uncertainty on carbon price (introduced in 2011 only to be abolished in 2013)
 Changing Renewable Target (reduction in target in 2016 from 41 to 33TWh p.a)
 Poor planning processes (lack of transition plan)
 Outdated market design (commenced in 1998)
 Lack of central planning
 Resulted in a number of issues, mainly
o Emergence of grid stability issues
o Rapid rise of Wholesale electricity prices
Government review delivered CLEAR recommendations to increase energy security and reduce price
(Finkel Report)

9. 9
Moving forward: Transition to a low emission future
Governments response to challenges with transition to a low emission future;
• Improve Reliability (standards, ancillary services)
• System security (reserve capacity)
• Planning for closure of old generation assets (minimum time, 3 years)
• Reward demand side management (Energy Efficiency)
• Certainty in commitment to reduce its emissions (28% by 2030 for Australia)
• System planning – integrated national grid plan
• Establish new Energy Security Board to oversee the Electricity market

10. 10
Discussion: Connecting the dots in Mongolia
The Business Case for Sustainability
• The Issues
• Good Practices
• Opportunities

11. 2017 оны 1-р сар
Thank You For Your Attention!