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Power transactions and trends Q2 2019

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Is your energy investment strategy built on the best evidence?
As the energy sector transforms, capital and investment plans must adapt too. Is it time to review your strategies in light of global utilities investment trends?  Our latest Power transactions and trends report offers insight and evidence into the major themes and emerging trends driving global power and utilities M&A. Updated quarterly, the report delivers deep insights into each major region.

Published in: Engineering
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Power transactions and trends Q2 2019

  1. 1. Power transactions and trends Q2 2019
  2. 2. Contents Overview Technology investment trends Americas Europe Asia-Pacific Africa and the Middle East Appendix
  3. 3. Power transactions and trends Q2 2019 Overview US$26.8 US$9.6b Integrated US$13.1b Americas Global deal value Largest segment Largest region 135Total deals Q2 Page 3 Note: All transaction information is EY analysis with data sourced from Mergermarket and S&P Global Market Intelligence. 0 20 40 60 80 100 120 140 0 20 40 60 80 100 120 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Dealvolume(numberofdeals) Dealvalue(US$b) Generation Energy services Integrated utility Renewables Gas utility Water and wastewater Volume 0 20 40 60 80 100 120 140 0 20 40 60 80 100 120 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Dealvolume(numberofdeals) Dealvalue(US$b) Americas Asia-Pacific Europe Africa and Middle East Volume Chart 2: Global P&U deal value and volume by region (announced asset and corporate-level deals, Q2 2017–Q2 2019) Chart 1: Global P&U deal value by segment (announced asset and corporate-level deals, Q2 2017–Q2 2019) YTD US$47.4b US$19.6b Renewables US$22.2b Americas 262
  4. 4. Investors seek stability of integrated assets Overview Financial investors drive Q2 investment Deal value in the integrated segment totaled US$9.6b, representing a 3.5x increase compared with Q1 2019. The Americas led the deal activity with US$5.8b or 60% of total deal value in the integrated segment, much of this contributed by the El Paso Electric deal. Investors are trying to balance portfolios by investing in regulated assets, which have less volatility, predictable earnings and a stable cash flow stream. Regulatory uncertainty unsettles investors Shifting regulations create a tense environment for investors and push back investments. In the UK, the Labour Party has raised the possibility of renationalizing the UK’s electric and gas networks, which could force current operators to transfer assets at below-market prices. Meanwhile, Australia’s lack of energy coherence at a federal level is limiting investment by financial investors. In Africa and the Middle East, regulatory uncertainty is also disrupting sector investment. Lebanon’s plans to cut state electricity subsidies to reduce debt is being challenged in court. South Africa’s reforms to the capitalization structure of Eskom, the largest African utility, are moving slowly. And, in India, the state of Andhra Pradesh has announced that it will renegotiate renewable power purchase agreements (PPAs) signed by the previous government in a move that has upset investors. Rise in renewables drives interest in battery storage Battery storage is an increasingly important tool to support the intermittency of renewables and improve grid reliability. In the UK, Statkraft and Statera Energy have announced plans to set up 1 GW of storage with a backup gas generator to provide balancing services in the energy market. New York State Department of Public Service has identified 275 MW of peaking units as potential targets for replacement with six‐hour energy storage in a bid to achieve the state’s clean energy targets and boost grid resiliency. Utilities are continuing investment in new technologies Dubai Electricity and Water Authority will partner with Canadian smart grid solutions company Enbala to build the region’s first virtual power plant to manage frequency regulation and create a smarter grid. In Japan, Toyota Motor Corporation, along with the University of Tokyo and renewable energy supplier TRENDE, will test peer-to-peer electricity trading using blockchain technology. Page 4 Financial investors dominate deal value in every region Financial investors conducted US$13.9b of deals globally, with US$7.8b of activity in the Americas alone. Financial investors were responsible for the largest transactions in each region: • Americas — infrastructure Investments Fund’s acquisition of El Paso Electric Co. • Europe — a consortium managed by Macquarie Infrastructure and Real Assets acquired the remainder of Innogy Grid Holding • Asia-Pacific — IndiGrid’s acquisition of India transmission assets from Sterlite Power
  5. 5. Quarterly investment profile Americas Europe Asia-Pacific Africa and the Middle East US$13.1b deal value, 44% increase from US$9.1b in Q1 2019. US$5.8b deal value in the integrated segment. US$8.5b deal value, 25% increase from US$6.8b in Q1 2019. US$3.0b deal value in the integrated segment. US$5.2b deal value, 27% increase from US$4.1b in Q1 2019. US$1.9b deal value in renewable assets. Investments in Africa target off-grid solutions to enhance low electrification rates. Interest in grid modernization rises as solar and wind projects receive increased funding. Q2 2019 at a glance Financial sponsors invest heavily in integrated assets. Transactions in integrated assets lift deal value. Renewables continue to be the focus. Overview Page 5
  6. 6. Q2 2019 at a glance (continued) Overview Page 6 Capital outlook Americas Europe Asia-Pacific Africa and the Middle East New tenders in South America will attract increased investment in renewables. It is expected that there will be more interest in offshore wind as the US market continues to pick up. Decarbonization plans will drive investment in renewables across Italy, Norway and Spain. Utilities will ramp up investments in energy storage with plans from Statkraft and Statera Energy to build 1 GW of storage in the UK. Investment in offshore wind will pick up in India, Japan and China. Investments in renewables will boost uptake of energy storage across China, India and Australia. Improving economics will drive microgrid deployment, with Nigeria leading the region. Renewables will continue to gain traction on the back of investments from utilities and governments. Battery storage will expand in the US energy system as state regulators turn to batteries to help meet ambitious clean energy targets. Investment in EVs will increase, driven by tighter CO2 emission caps and planned investments by utilities. More smart meter rollouts are planned across the region.
  7. 7. Global capital flows – Q2 2019 Investment activity globally by country, Q2 2019 (US$b) Targetcountry • The US was the top global investment destination in Q2 led by the US$4.3b El Paso Electric transaction. • China continues to be the leading investment destination in Asia- Pacific, but Q2 saw increase in investment in India. • In Europe, investment continues to be spread across the region. Global capital flows – Q2 2019 Overview 0–5 5–10 10–20 20–30 Page 7 Note: Numbers may not add to total due to rounding. Investor country US Canada Greater China Czech Republic Switzerland India France Brazil Rest of the world Total receipts US 7.0 1.3 0.6 8.9 Canada 0.8 2.2 3.0 Greater China 2.2 0.5 2.7 Czech Republic 2.5 2.5 Switzerland 1.6 1.6 India 0.1 1.0 0.4 1.5 France 0.9 0.9 Brazil 0.8 0.8 Rest of the world 0.3 0.5 0.1 0.5 3.5 4.9 Total investments 9.0 4.1 2.2 0.0 1.6 1.1 0.5 0.8 7.5 26.8
  8. 8. Quarter-to-date TSR Year-to-date TSR TSR in % (from 1 April 2019 to 30 June 2019) TSR in % (from 1 January 2019 to 30 June 2019) S&P Global 1200 3.6% 16.3% EY Global Utilities Index 2.9% 13.4% Global returns 1The EY Global Utilities Index benchmarks the returns of 229 utilities globally using data sourced from S&P Capital IQ and other publicly available information. For a comprehensive list of utilities contained within the analysis, please refer to the appendix. • The global market rally in Q2 continued, in line with Q1 returns. The S&P Global 1200 gained 3.6% this quarter, with 16.3% year-to-date returns. • The EY Global Utilities Index1 underperformed the market, returning 2.9%. This was due mostly to the below-market performance of utilities in Asia-Pacific. Utilities gain value but slightly underperform the market Overview Page 8 Total shareholder return – global comparison 90% 95% 100% 105% 110% 115% 120% 1/1/2019 1/31/2019 3/2/2019 4/1/2019 5/1/2019 5/31/2019 6/30/2019 Chart 3: Total shareholder return – global comparison S&P Global 1200 TSR (%) EY Global Utilities Index TSR (%)
  9. 9. Regional TSR Quarter-to-date TSR Year-to-date TSR TSR in % (from 1 April 2019 to 30 June 2019) TSR in % (from 1 January 2019 to 30 June 2019) Americas S&P 500 3.7% 17.7% EY Americas Utilities Index 7.8% 21.5% Europe STOXX Europe 600 3.3% 14.4% EY Europe Utilities Index 5.8% 15.3% Asia-Pacific Nikkei 225 0.8% 2.0% EY Asia-Pacific Utilities Index -3.7% 13.4% Americas The quarter-to-date (QTD) return of the EY Americas Utilities Index2 was 7.8%, which is higher than the regional market (as benchmarked by the S&P 500 index), which returned a quarterly total shareholder return (TSR) of 3.7%. The EY Americas Utilities Index outperformed Europe and Asia-Pacific (QTD TSR of 5.8% and -3.7%, respectively). Valuations The QTD TSR of the EY Europe Utilities Index3 was 5.8%, which is higher than the QTD TSR for the European benchmark index STOXX Europe 600, which returned 3.3% for the quarter. The EY Asia-Pacific Utilities Index4 performed lower than the Nikkei 225, the Asia-Pacific regional benchmark index. Asia-Pacific utilities returned -3.7% QTD compared with the market at 0.8%. The QTD returns of the EY Asia-Pacific Utilities Index were the lowest of all regional EY utilities indices. 2EY analysis is based on data sourced from S&P Capital IQ and other publicly available data. The EY Americas Utilities Index benchmarks the returns of 124 utilities headquartered in the Americas, the EY Europe Utilities Index benchmarks the returns of 73 utilities headquartered in Europe, and the EY Asia-Pacific Utilities Index benchmarks the returns of 122 utilities headquartered in Asia-Pacific. For a comprehensive list of utilities contained within the analysis, please refer to the appendix. 3Ibid. 4Ibid. American utilities performed much better than global peers Europe Asia-Pacific Page 9 Overview 80% 85% 90% 95% 100% 105% 110% 115% 120% 125% 1/1/2019 1/31/2019 3/2/2019 4/1/2019 5/1/2019 5/31/2019 6/30/2019 Chart 4: Total shareholder return – regional comparison S&P 500 TR (total return) % EY Americas Utilities Index TSR (%) Stoxx Europe 600 TR (total return) % EY Europe Utilities Index TSR (%) Nikkei 225 TR (total return) % EY Asia-Pacific Utilities Index TSR (%) STOXX Europe 600 TR (total return) %
  10. 10. 3.1% 3.9% 3.1% 14.0% 9.9% 6.4% 5.8% -3.4% 9.8% 13.0% 19.8% 23.8% 12.4% 13.4% -4.6% -2.8% -6.2% -3.0% -0.8% -6.1% -3.7% 13.2% 11.0% 15.9% 20.3% 27.9% 13.6% 15.3% 5.3% 7.5% 5.7% -0.2% 14.1% 15.0% 7.8% 15.0% 19.6% 22.1% 15.3% 36.3% 25.7% 21.5% TSR and valuations segment dashboard Americas • Water and wastewater’s TSR was the highest-performing in the region, and this segment outperformed the broader market. Generation assets TSR performed the worst, dropping from 10.1% returns in Q1. • The Americas utilities EV/FY2 EBITDA sector traded at 10.5x. Water and wastewater assets were valued at the highest multiple at 12.9x for Q2, while generation assets were the lowest at 8.2x. Europe • The generation QTD TSR was the highest-performing segment in the region (14% TSR QTD), and the only region where this segment delivered positive returns. • The large market capitalization integrated and gas utility segment TSR performed the worst (3.1% TSR QTD). • The European utilities sector was valued at the lowest EV/FY2 EBITDA multiple during Q2 across all regions. Gas utility assets were valued at the highest multiple at 9.4x for Q2, while generation assets were the lowest at the lowest at 5.2x. Asia-Pacific • The overall sector performed poorly with negative returns. This is in stark contrast to positive performance in Q1 (15.7% QTD TSR). • The gas utility segment performed the worst with QTD TSR of -6.2% across the sector and all the regions. • The Asia-Pacific utilities sector EV/FY2 EBITDA traded at 10.9x. Generation assets traded at 15.0x EV/FY2 EBITDA, the highest across all regional segments. Note: EY analysis is based on data sourced from S&P Capital IQ. Please see the appendix for the detailed definitions, the company segment definitions and the company tagging for the valuations analysis. Large market capitalization integrated Medium and small market capitalization integrated Gas utility Generation Renewables Water and wastewater EY Americas Utilities Index Large market capitalization integrated Medium and small market capitalization integrated Gas utility Generation Renewables Water and wastewater EY Europe Utilities Index Large market capitalization integrated Medium and small market capitalization integrated Gas utility Generation Renewables Water and wastewater EY Asia-Pacific Utilities Index Year-to-date TSR (from 1 January 2019 to 30 June 2019) Overview Page 10 TSR performance >20% lower than the regional sector average; EV/FY2 EBITDA >20% premium compared with the regional sector average TSR 0% to 20% lower than the regional sector average; EV/FY2 EBITDA between a 0% to 20% premium compared with the regional sector average TSR 0% to 20% higher than the regional sector average; EV/FY2 EBITDA between a 0% to 20% discount compared with the regional sector average TSR >20% higher than the regional sector average; EV/FY2 EBITDA >20% discount compared with the regional sector average Q2 Quarter-to-date TSR (from 1 April 2019 to 30 June 2019) 10.5x 12.9x 10.8x 8.2x 11.3x 9.5x 11.0x 7.0x 8.4x 8.0x 5.2x 9.4x 5.7x 7.9x 10.9x 8.8x 12.8x 15.0x 9.0x 10.0x 8.6x EV/FY2 EBITDA (at 30 June 2019)* *The market capitalization weighted average of the current enterprise value (EV) (at June 30 2019)/two-year forward (at 30 June 2019) adjusted earnings before interest, tax, depreciation and amortization (EBITDA)
  11. 11. 0 5 10 15 20 25 30 35 40 - 200 400 600 800 1,000 1,200 1,400 1,600 Asia-Pacific Americas Europe #oftransactions Dealvalue(US$m) Deal value Number of deals Transportation electrification leads the way in venture capital (VC) funding Asia-Pacific attracted most investment 5Transport = transportation, digital = digital and analytics, EFF/man = efficiency and manufacturing, BTM = Behind the meter, WTE = waste to energy and biofuels. Miles Huq, EY Global P&U TAS Leader As traditional power and utilities companies come to the realization that new technology adoption is not only important for their growth but also for their survival, we expect to see an influx of investors in the venture capital space trying to get an edge on the competition. “ Page 11 Chart 5: Global deal value in new technology5 (announced deals, Q2 2019) Chart 6: Global deal value in new technology, by region (announced deals, Q2 2019) US$2.1b early-to-late stage venture capital investment in P&U in Q2 0 2 4 6 8 10 12 14 16 18 - 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Transport Digital Eff/man BTM WTE Other #oftransactions Dealvalue(US$m) Deal value Number of deals As the power and utilities sector reaches an inflection point, emerging technology is playing a significant role in shaping industry strategy. This quarter, we are initiating coverage on venture capital investment in the sector to identify trends and themes relevant to market participants. Technology investment trends
  12. 12. Q2 2019 at glance Americas Asia-Pacific Europe The Americas led all regions in the total number of technology-focused deals — 36.9% of these transactions (US$568m) took place in the US. Transportation was the focus of Americas deals, totaling US$187m this quarter. Most of this was contributed by the US$170m funding announced by Sila Nanotechnologies, a battery manufacturer technology company, with much of this investment from German automaker Daimler. Asia-Pacific was the region that attracted the most technology-focused investment in Q2 at US$1.4b. Most deals (83%) focused on China. Electric vehicle (EV) investment is an investment hotspot in the region and accounted for the three largest capital raises across the globe in Q2: • CHJ Automotive — US$500m • Hozon — US$438m • Bordrin — US$365m Investment in EVs is down compared with 2018 (where US$7.7b was raised in the segment over the year) due, in part, to Chinese Government plans to reduce EV subsidies. Activity in Europe was led by investment in digital and analytics (five deals worth US$67m) and behind the meter (five deals worth US$47m). The UK was the region’s most attractive investment destination, accounting for seven deals and US$60m. This was led by a US$26m capital raise by off-grid solar system company, Azuri Technologies, with most funding contributed by Japanese conglomerate Marubeni Corporation. Q2 also saw the return of fusion technology. Startup company Commonwealth Fusion Systems announced a US$115m Series A financing round. eSmart Systems, a provider of AI-based analytics for infrastructure inspection and asset health monitoring, raised US$34m this quarter. The company attracted investment from Energy Impact Partners, innogy Ventures, Equinor Energy Ventures, Nysnø Climate Investments and Kongsberg Digital. Quarterly investment profile by region Technology investment trends Page 12
  13. 13. EY Global P&U TAS Leader EY Global P&U TAS Sector Resident EY Global P&U TAS Sector Resident EY Global P&U Analyst EY Global Transaction Advisory Services P&U contacts Miles Huq Sara Richardson Mike C Morse Anjushi Joshi +1 410 783 3735 miles.huq@ey.com @MilesHuq +61 7 3243 3758 sara.richardson@au.ey.com @sararichardson2 +1 410 234 4330 michael.c.morse@ey.com +91 124 619 2734 anjushi.joshi@gds.ey.com @anjushi_joshi Overview Page 13
  14. 14. Americas Financial sponsors drive M&A activity
  15. 15. Power transactions and trends Q2 2019 Americas El Paso Electric will become the fund’s ‘flagship investment’ in the US. The deal speaks to the core of the fund’s strategy, providing essential services.6 Landy Gilbert, Managing Director, J.P. Morgan Asset Management deal value, 44% increase from Q1 US$13.1b US$5.8b value of integrated asset deals, led by two multimillion-dollar transactions Transaction highlights Financial sponsors deploy dry powder • Infrastructure Investment Fund, an investment vehicle advised by J.P. Morgan, agreed to acquire US-based El Paso Electric (EPE) for US$4.3b, which represents a premium of 17% to EPE’s closing share price on its last trading day. Overall this quarter, financial investors conducted US$5.6b of deals in integrated assets, compared with US$0.2b by corporate investors. Swiss and Canadian infrastructure funds acquire Canada’s longest transmission lines • In a US$1.3b deal, a consortium including Greystone Asset Management and IST3 Infrastruktur Global (IST3 IG) entered into a definitive agreement to jointly acquire up to 100% of Alberta PowerLine. Utilities divest renewable assets to raise cash • Driven by an aim to increase future growth capital plans while reducing future debt issuance needs, Duke Energy sold a minority stake in its commercial renewable portfolio to John Hancock Infrastructure Fund and John Hancock Life Insurance Company. The US$1.3b deal saw the organizations acquire 49% of 37 operating wind, solar and battery storage assets and 33% of 11 operating solar assets. Chart 7: Americas deal value and volume by segment (announced asset and corporate-level deals, Q2 2017–Q2 2019) “ Page 15 0 10 20 30 40 0 10 20 30 40 50 60 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Dealvolume(numberofdeals) Dealvalue(US$b) Generation Energy services Integrated Renewables Gas utility Water and wastewater Volume 6Bloomberg, 3 June 2019.
  16. 16. Americas Renewables and new technology attract investments; conventional generation lags • The third round of Argentina’s RenovAr auction program attracted bids for 56 energy projects with a total investment of US$520m. Meanwhile, Brazil’s Agencia Nacional de Energía Eléctrica A4 tender contracted 401.6 MW of renewable capacity, including 211 MW of solar at record low prices (US$0.0175 kWh). Tenders launched for new renewables in South America Page 16 • Q2 saw Washington state pass legislation requiring a completely carbon-free grid by 2045. New York, New Jersey and Colorado are also on the path in joining California, Nevada, Hawaii, New Mexico, Washington, DC and Puerto Rico in a commitment to 100% clean energy. US state policy boosts clean energy • Tendril, a venture capital-backed startup aiming to offer utilities an end-to-end suite of products to modernize the customer experience, has acquired EEme, an energy analytics provider; EnergySavvy, a developer of customer engagement solutions; and FirstFuel, a developer of business customer solutions so far in 2019, highlighting the race to gain market share in the new energy marketplace. Emerging technologies expand No longer are power plants, poles and wires a utility’s greatest asset. It’s the customer.7 Adrian Tuck, CEO, Tendril “ • General Electric has announced plans to retire the natural gas-fired Inland Empire Energy Center and sell the site for conversion into a battery storage facility. Rhode Island regulators rejected a permit for Invenergy’s new 900 MW gas plant, determining it was not necessary. State subsidies have also come under fire as the Ohio Supreme Court rejected a grid modernization charge that FirstEnergy has been collecting from customers since 2017. Merchant generators continue to seek electric retail businesses to hedge their generation portfolio (such as NRG’s US$300m deal for Stream Energy in May). Fossil fuel generation continues to struggle 7Utility Dive, 21 June 2019.
  17. 17. We are seeing increased activity by financial investors in the region. Investment funds are keen to increase their exposure to renewable assets with long-term stable returns. Miles Huq, EY Global P&U TAS Leader 68% of total Americas investment was in the US. Financial investors conducted 60% (US$7.8b) of deals, mostly in the US and Canada. Domestic deals see US remain the top investment target Americas “ Page 17 0.8 Brazil 0.8 2.2 0.8 Canada 3.0 0.2 Mexico 0.2 1.3 7 0.1 0.4 0.1 US 8.9 Top investor countries/regions Note: Percentages may not add to 100% due to rounding. US Canada UKBrazil Greece Rest of the world Americas regional capital flows — Q2 2019 (US$b)
  18. 18. Announcement date Target Target country/ bidder country Bidder Deal value (US$b) Bidder rationale Segment 3 June El Paso Electric Co. US J.P. Morgan Investment Management Inc. 4.3 Aligns with J.P. Morgan’s strategy to invest in utilities with high-growth potential to increase the value of their investor funds Integrated 24 June Alberta PowerLine Limited Canada Greystone Managed Investments, Inc.; IST Investmentstiftung 1.3 Helps bidders secure long-term stable cash flows Integrated 24 April Duke Energy Renewables, LLC US John Hancock Life Insurance Company, Inc.; John Hancock Infrastructure Fund, GP 1.3 Supports bidders’ strategy to invest in renewable energy assets Renewables 14 May Mesquite Disposals Unlimited, LLC US NGL Energy Partners LP 0.9 Makes NGL the largest water transportation and disposal company in the Delaware Basin Water and wastewater 29 April Goreway Power Station Canada Capital Power Corporation 0.8 Furthers Capital Power’s growth strategy; Goreway’s location in the Greater Toronto Area load center also provides transportation flexibility Generation Top five Americas deals – Q2 2019 Note: All deals are announced deals, and the values indicated are disclosed enterprise values comprised of equity and debt components. Jeff Mouland, Managing Director and Head of Infrastructure, Infrastructure Investments, TD Greystone Asset Management The acquisition of Alberta PowerLine (APL) is a landmark investment for the Greystone Infrastructure Fund. APL is a core operating asset that will provide stable, contracted, long-term income that strongly aligns with our client needs. This is an exciting opportunity to acquire an essential infrastructure asset in Canada, in collaboration with local indigenous communities and IST3 IG.8 Americas “ Page 18 8ISTfunds, 24 June 2019.
  19. 19. Valuations snapshot – Q2 2019 Return over time – from base date Note: EY analysis is based on data sourced from S&P Capital IQ. Please see the appendix for the detailed definitions, the company segment definitions and the company tagging for the valuations analysis. Americas Page 19 Chart 8: Total shareholder return by segment (1 January 2019 to 30 June 2019) The EY Americas Utilities Index recorded a total shareholder return (TSR) of 7.8% for the quarter, overperforming the S&P 500, which returned 3.7% during the same period. The comparatively higher returns of the EY Americas Utilities Index were driven by positive returns of AltaGas Canada Inc. (34.8%), Eletropaulo Metropolitana Eletricidade de São Paulo S.A. (32.5%) and Pampa Energía S.A. (29.5%). 1 The generation segment underperformed the regional index with TSR of -0.2%, the lowest in the Americas but still up 15.3% YTD.2 The EV/FY2 EBITDA of the sector was 10.5x, when compared with the 9.3x two-year historic average multiple.3 The water and wastewater segment continues to be the highest valued segment in the region at 12.9x — 25% higher than the 10.4x two-year historic average multiple. 4 80% 90% 100% 110% 120% 130% 140% 1/1/2019 1/31/2019 3/2/2019 4/1/2019 5/1/2019 5/31/2019 6/30/2019 S&P 500 TR (total return) % Large market capitalization integrated utility Medium and small capitalization integrated utility Gas utility Generation Renewables Water and wastewater
  20. 20. Valuations and TSR snapshot – Q2 2019 Note: EY analysis is based on data sourced from S&P Capital IQ. Please see the appendix for the detailed definitions, the company segment definitions and the company tagging for the valuations analysis. TSR >20% higher than the regional sector average; EV/FY2 EBITDA >20% discount compared with the regional sector average TSR 0% to 20% higher than the regional sector average; EV/FY2 EBITDA between a 0% to 20% discount compared with the regional sector average TSR 0% to 20% lower than the regional sector average; EV/FY2 EBITDA between a 0% to 20% premium compared with the regional sector average TSR performance >20% lower than the regional sector average; EV/FY2 EBITDA >20% premium compared with the regional sector average Americas Page 20 • The generation segment returned a quarterly TSR of -0.2%, the lowest of all segments in the Americas. • The two-year forward EV/EBITDA multiple for generation traded at 8.2x at Q2, which is the lowest of all segments in the Americas. Generation • The gas utility segment returned a quarterly TSR of 5.7%, below the regional index average of 7.8% for the quarter. • The two-year forward EV/EBITDA multiple for gas utility traded at 11.3x, the highest of all gas utility segments across the globe. Gas utility • The renewables segment returned a quarterly TSR of 14.1%. The segment is the best performer YTD with TSR of 36.3%. • The two-year forward EV/EBITDA multiple for renewables traded at 10.8x at Q2, which is 14% more than the two-year historic average multiple of 9.5x. Renewables • The water and wastewater segment returned a quarterly TSR of 15.0%, the best-performing segment across the globe. • The two-year forward EV/EBITDA multiple for water and wastewater traded at 12.9x at Q2, which is the highest across segments in the Americas. Water and wastewater • The medium and small market capitalization integrated segment returned a quarterly TSR of 7.5%, marginally less than the regional index average of 7.8%. • The two-year forward EV/EBITDA multiple for medium and small market capitalization integrated traded at 9.5x at Q2, which is 12% more than the two-year historic average multiple of 8.5x. Medium and small market capitalization integrated • The large market capitalization integrated segment returned a quarterly TSR of 5.3%, below the regional index average of 7.8% for the quarter. • The two-year forward EV/EBITDA multiple for large market capitalization integrated traded at 11.0x, the highest of all large market capitalization segments across the globe. Large market capitalization integrated 5.3% 7.5% 5.7% -0.2% 14.1% 15.0% 7.8% 15.0% 19.6% 22.1% 15.3% 36.3% 25.7% 21.5% Year-to-date TSR (from 1 January 2019 to 30 June 2019) Q2 Quarter-to-date TSR (from 1 April 2019 to 30 June 2019) 10.5x 12.9x 10.8x 8.2x 11.3x 9.5x 11.0x EV/FY2 EBITDA (at 30 June 2019)* *The market capitalization weighted average of the current enterprise value (EV) (at June 30 2019)/two-year forward (at 30 June 2019) adjusted earnings before interest, tax, depreciation and amortization (EBITDA) Large market capitalization integrated Medium and small market capitalization integrated Gas utility Generation Renewables Water and wastewater EY Americas Utilities Index
  21. 21. M&A outlook and investment hotspots Battery storage to expand in US energy system • The Public Service Commission of Utah has approved three demand-side management projects designed to boost the state’s storage, electrified transportation and grid management. New York State Department of Public Service has identified 275 MW of peaking units as potential targets for replacement with six‐hour energy storage to help the state achieve clean energy targets. The Public Service Company of New Mexico is retiring its coal power plant in 2022, replacing it with 280 MW of natural gas peaking units, 350 MW of solar capacity and 130 MW of battery storage. 9 GW new New York offshore wind target by 2035 New renewable capacity to come online in South America • Guatemala launched a tender for a 110 MW solar photovoltaic (PV) project, estimated to cost US$120m. Mexico’s Bravos Energia plans to launch a private renewable energy auction that will enable buyers to obtain a diversified portfolio by pooling resources to participate in larger projects than they could anchor on their own. Investments in clean energy technologies are advancing our aggressive clean energy goals and resulting in economic growth across the state.9 Kathy Hochul, New York Lieutenant Governor US offshore market picks up steam • In June, New Jersey selected Ørsted to construct a 1.1 GW offshore wind project in support of the state’s 2030 offshore wind target of 3.5 GW. Additional offshore wind tenders are expected to be held in the Northeast as states continue to revaluate their offshore wind targets. German power company RWE AG is seeking partnerships to develop US offshore wind farms. Americas “ Page 21 9Utility Dive, 3 April 2019.
  22. 22. EY Americas Transaction Advisory Services P&U contacts Miles Huq Stephanie Chesnick Robert A Jozwiak Global P&U TAS Leader US East P&U TAS Leader +1 410 783 3735 miles.huq@ey.com US P&U TAS Leader US West P&U TAS Leader +1 713 750 8192 stephanie.chesnick@ey.com US Central P&U TAS Leader +1 312 879 3461 robert.jozwiak@ey.com Lucio Teixeira Rafael Aguirre Sosa Latin America South P&U TAS Leader Latin America North P&U TAS Leader +52 55 5283 8650 rafael.aguirre@mx.ey.com +55 11 2573 3008 lucio.teixeira@br.ey.com Bill Armitage Canada P&U TAS Leader +1 416 943 2373 william.armitage@ca.ey.com Americas Page 22
  23. 23. Europe Transactions in integrated assets lift deal value
  24. 24. Power transactions and trends Q2 2019 Europe GasNet provides an essential service within the Czech Republic’s energy sector. This investment represents an exciting opportunity for us to continue to support GasNet’s growth with long- term institutional capital.10 Leigh Harrison, Head of MIRA Europe, Middle East and Africa deal value, 25% increase from Q1 US$8.5b integrated segment deal value, driven by one megadeal US$3.0b Chart 9: Europe deal value and volume by segment (announced asset and corporate-level deals, Q2 2017–Q2 2019) Source: EY analysis on publicly disclosed data “ Page 24 0 10 20 30 40 50 60 70 0 10 20 30 40 50 60 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Dealvolume(numberofdeals) Dealvalue(US$b) Generation Integrated Energy services Renewables Gas utility Water and wastewater Volume Transaction highlights Largest deal in gas distribution • A consortium managed by Macquarie Infrastructure and Real Assets (MIRA) purchased the remaining 50.05% interest in Innogy Grid Holding (iGH) for US$2.1b to give the consortium 100% ownership of the asset. iGH is the owner of GasNet, a regulated gas distribution network in the Czech Republic with 2.3 million connections and a network of approximately 65,000km. The deal highlights a continuing trend of financial sponsors’ investment in the sector. Financial investors lead acquisitions • Financial investors bought assets totaling US$4.6b, while corporate investors conducted acquisitions worth US$3.9b. In addition to the MIRA-led deal, a group of institutional investors led by J.P. Morgan announced the purchase of a US$900m stake in a 998 MW European wind energy portfolio. Established players continue to transform • This quarter, ENGIE acquired ChargePoint Services, a UK- based company that provides charging equipment for electric vehicles (EVs), while also divesting over 2,300 MW of coal generation to private equity firm Riverstone Holdings. 10MIRA, 29 April 2019.
  25. 25. Renewables top investment agenda EU’s Clean Energy Package gets a formal go-ahead Investment in renewables continues • In May, a total of 1 GW of wind capacity was tendered to Turkish company Enerjisa and German firm ENERCON in Turkey’s second Renewable Energy Resource Zone (YEKA) auction. • The Croatian arm of Germany’s wpd — wpd Adria — announced plans to invest US$1.7b in setting up 900 MW of wind projects in Bosnia and 300 MW wind capacity in Croatia. • Portuguese utility EDP and French energy group ENGIE have announced plans to form a joint venture that will combine their offshore wind businesses. The companies plan to have 5 GW to 7 GW in operation and construction by 2025. • Iberdrola announced plans to invest €300b (approximately US$335b) in building Europe’s largest solar photovoltaic (PV) farm totaling 590 MW. • The EU Clean Energy Package — under discussion for two years — was finally adopted in May, paving the way for a new market design that will incorporate five elements: energy efficiency, renewables, better governance of targets, more consumer rights and an efficient electricity market. Regulatory uncertainty in the UK • The UK Labour Party has raised the possibility of renationalizing the UK’s electric and gas networks, prompting concern that current operators would be forced to transfer their assets at below-market prices. The policy calls for the creation of a National Energy Agency to own and run the high-voltage transmission network, set regional decarbonization targets and plan national skills and workforce training. Some 14 regional energy agencies would own power and gas distribution networks and be responsible for decarbonizing heat and power and setting regional industrial strategy. Europe Page 25 This is the most ambitious set of energy proposals ever presented by the European Commission. It has been adopted in record time with impressive support from the European Parliament and Council. With its completion, we have made the EU’s Energy Union – one of the 10 political priorities of the Juncker Commission – a reality. I truly believe it will accelerate the clean energy transition and give all Europeans access to secure, competitive and sustainable energy.11 Miguel Arias Cañete, European Commissioner, Climate Action and Energy “ 11European Commission, 22 May 2019.
  26. 26. 0.2 0.2 0.1 Italy 0.5 0.9 France 0.9 Europe 59% of deal value was concentrated in three countries — Czech Republic, Switzerland and France. 63% of deals were cross-border transactions, with the most conducted by financial investors. Europe regional capital flows — Q2 2019 (US$b) Investment spread across Europe Page 26 Financial investors took the lead in driving activity in Q2. With significant amounts of capital to deploy, we expect financial sponsors to continue looking for regulated and renewable investments. Miles Huq, EY Global P&U TAS Leader “ 0.4 0.1 0.5 UK 1.0 Top investor countries Note: Numbers may not add to total due to rounding. Note: Percentages may not add to total 100% due to rounding. UKSwitzerlandAustralia US Canada Rest of the world 2.1 0.4 Czech Republic 2.5 1.6 Switzerland 1.6
  27. 27. Announcement date Target Target country/bidder country Bidder Deal value (US$b) Bidder rationale Segment 29 April innogy Grid Holding (50.04% stake) Czech Republic/Australia Consortium led by Macquarie Infrastructure and Real Assets 2.1 Gives bidders 100% ownership of the asset Gas distribution 5 April Alpiq Holding Ltd. (37.12% stake) Switzerland/Switzerland Consortium led by CSA Energy Infrastructure Switzerland 1.6 Aligns with bidder’s strategy of growth while ensuring stable and diversified power supply to its customers Integrated 23 April EDP Renovaveis, S.A. (23 onshore wind farms in France, Spain, Belgium and Portugal) (51% stake) France/US J.P. Morgan Asset Management 0.9 Enables J.P. Morgan to deliver stable risk- adjusted returns to investors while continuing to grow its renewable energy portfolio Renewables 3 June Ascendant Group Limited Bermuda (UK) Algonquin Power & Utilities Corp. 0.5 Supports Algonquin’s international expansion strategy to grow via investing in regulated businesses Integrated 20 June CEZ Bulgaria EAD Bulgaria/Bulgaria Eurohold Bulgaria AD 0.4 Part of Eurohold’s long-term strategy to penetrate new regulated business segments that provide large opportunities for growth Integrated Note: All deals are announced deals, and the values indicated are disclosed enterprise values comprised of equity and debt components. Europe Top five Europe deals – Q2 2019 Page 27 Q2 highlighted investor interest in integrated power and utility assets. This signals investor confidence that the utility has a role to play in the grid of the future. Miles Huq, EY Global P&U TAS Leader “
  28. 28. Europe Valuations snapshot – Q2 2019 Return over time — from base date Note: EY analysis is based on data sourced from S&P Capital IQ. Please see the appendix for the detailed definitions, the company segment definitions and the company tagging for the valuations analysis. The EY Europe Utilities Index recorded a total shareholder return (TSR) of 5.8% for the quarter, overperforming the STOXX Europe 600, which returned 3.3% during the same period. The comparatively higher returns of the EY Europe P&U Utilities Index were driven by positive returns of Rosseti, Public Joint Stock Company (42%), Public Joint Stock Company Territorial Generating Company No. 1 (29%) and Public Joint Stock Company Inter RAO UES (26%). 1 The generation segment was the leading segment in the region with TSR of 14.0%, the best of all generation segments globally. 2 The EV/FY2 EBITDA of the region was 7.0x, the lowest of all regions.3 The gas utility segment traded at the highest valuation in the region, 9.4x EV/FY2 EBITDA.4 Page 28 Chart 10: Total shareholder return by segment (1 January 2019 to 30 June 2019) 75% 85% 95% 105% 115% 125% 135% 1/1/2019 1/31/2019 3/2/2019 4/1/2019 5/1/2019 5/31/2019 6/30/2019 STOXX Europe 600 TR (total return) % Large market capitalization integrated utility Medium and small capitalization integrated utility Gas utility Generation Renewables Water and wastewater
  29. 29. 13.2% 11.0% 15.9% 20.3% 27.9% 13.6% 15.3% 3.1% 3.9% 3.1% 14.0% 9.9% 6.4% 5.8% 7.0x 8.4x 8.0x 5.2x 9.4x 5.7x 7.9x Valuations and TSR snapshot – Q2 2019 Note: EY analysis is based on data sourced from S&P Capital IQ. Please see the appendix for the detailed definitions, the company segment definitions and the company tagging for the valuations analysis. Europe Page 29 • The medium and small market capitalization integrated segment returned a quarterly TSR of 3.9%, below the regional index average of 5.8% for the quarter. • The two-year forward EV/EBITDA multiple for medium and small market capitalization integrated traded at 5.7x at Q2, significantly lower than around the globe (10.0x in Asia- Pacific and 9.5x in the Americas). Medium and small market capitalization integrated • The large market capitalization integrated segment returned a quarterly TSR of 3.1%, below the regional index average of 5.8% for the quarter. • The two-year forward EV/EBITDA multiple for large market capitalization integrated traded at 7.9x at Q2, which is 7% more than the two-year historic average multiple of 7.4x. Large market capitalization integrated • The generation segment returned a quarterly TSR of 14.0%, above the regional index average of 5.8% for the quarter. • The two-year forward EV/EBITDA multiple for generation traded at 5.2x at Q2, the lowest of all segments across the globe. Generation • The gas utility segment returned a quarterly TSR of 3.1%, underperforming the regional index average of 5.8% for the quarter. • The two-year forward EV/EBITDA multiple for gas utility traded at 9.4x at Q2, 4% more than the two-year historic average multiple of 9.0x. Gas utility • The renewables segment returned a quarterly TSR of 9.9%, above the regional index average of 5.8% for the quarter. • The two-year forward EV/EBITDA multiple for renewables traded at 8.0x at Q2, which is 9% more than the two-year historic average multiple of 7.3x. Renewables • The water and wastewater segment returned a quarterly TSR of 6.4%, which was above the regional index average of 5.8% for the quarter. • The two-year forward EV/EBITDA multiple for water and wastewater traded at 8.4x at Q2, which is 5% more than the two-year historic average multiple of 8.0x. Water and wastewater Large market capitalization integrated Medium and small market capitalization integrated Gas utility Generation Renewables Water and wastewater EY Europe Utilities Index TSR >20% higher than the regional sector average; EV/FY2 EBITDA >20% discount compared with the regional sector average TSR 0% to 20% higher than the regional sector average; EV/FY2 EBITDA between a 0% to 20% discount compared with the regional sector average TSR 0% to 20% lower than the regional sector average; EV/FY2 EBITDA between a 0% to 20% premium compared with the regional sector average TSR performance >20% lower than the regional sector average; EV/FY2 EBITDA >20% premium compared with the regional sector average *The market capitalization weighted average of the current enterprise value (EV) (at June 30 2019)/two-year forward (at 30 June 2019) adjusted earnings before interest, tax, depreciation and amortization (EBITDA) Year-to-date TSR (from 1 January 2019 to 30 June 2019) Q2 Quarter-to-date TSR (from 1 April 2019 to 30 June 2019) EV/FY2 EBITDA (at 30 June 2019)*
  30. 30. Wind and solar projects remain attractive • The EU approved Italy’s €5.4b (approximately US$6.05b) renewables auction program, which will see the awarding of 5,500 MW of wind and solar PV projects. Italy aims to achieve 30% renewable energy by 2030. • By the end of 2019, the Norwegian Government plans to open two areas in the North Sea for offshore wind development with a combined capacity of up to 3.5 GW. • Spain plans to launch auctions for 3 GW of annual wind and solar capacity through 2030. • Svenska Cellulosa Aktiebolaget (SCA), Europe’s largest forest owner, and renewables firm OX2 have entered into an agreement to develop nearly 1 GW of wind capacity in Sweden by 2024. More investment in energy storage • ScottishPower plans to build a 50 MW battery by 2020 to store Scotland’s excess wind power. • In the UK, Statkraft and Statera Energy will build 1 GW of storage, with a backup gas generator to provide balancing services in the energy market. Utilities to continue investment in e-mobility value chain • ENGIE and Enel X have signed a deal with Fiat Chrysler Automobiles to set up public and private EV chargers in Italy. • Iberdrola has announced plans to acquire a stake in EV charging company Wallbox as part of its Sustainable Mobility Plan and innovation strategy. M&A outlook and investment hotspots 800 MW renewable energy capacity to be built by Repsol in Spain12 We know that renewable energy generation needs to quadruple and we know that onshore wind is the cheapest form of green energy. By integrating storage technologies with onshore wind, we are blowing away one of the myths about renewable generation not being available when you need it.13 Keith Anderson, Chief Executive Officer, ScottishPower Europe “ Page 30 12Bloomberg New Energy Finance. 13ScottishPower, 11 June 2019.
  31. 31. Europe EY Europe Transaction Advisory Services P&U contacts Miles Huq Arnaud De Giovanni John Curtin Grigory Arutunyan Global P&U TAS Leader +1 410 783 3735 miles.huq@ey.com EMEIA P&U TAS Leader UK & Ireland (UKI) P&U TAS Leader Central, Eastern and Southeastern Europe and Central Asia (CESA) Region P&U TAS Leader +33 1 55 61 04 18 arnaud.de.giovanni@fr.ey.com +44 20 7951 6257 jcurtin@uk.ey.com +7 495 641 2941 grigory.s.arutunyan@ru.ey.com Giacomo Chiavari Andreas Siebel Bruno Swildens Michael Bruhn Mediterranean P&U TAS Leader Germany, Switzerland and Austria (GSA) P&U TAS Leader Western Europe and Maghreb (WEM) P&U TAS Leader Nordics P&U TAS Leader +39 027 2212 3090 giacomo.chiavari@it.ey.com +49 211 9352 18523 andreas.siebel@de.ey.com +31 88 40 78776 bruno.jelgerhuis.swildens@nl.ey.com +45 2529 3135 michael.bruhn@dk.ey.com Page 31
  32. 32. Asia-Pacific Renewables push deal value
  33. 33. Power transactions and trends Q2 2019 Asia-Pacific China continues to be the engine driving M&A activity in Asia- Pacific; however, Q2 saw significant interest in Indian power and utility assets. Mile Huq, EY Global P&U TAS Leader US$5.2b total deal value, a 27% increase from Q1 2019 US$1.9b renewables deal value Chart 11: Asia-Pacific deal value and volume by segment (announced asset and corporate-level deals, Q2 2017–Q2 2019) “ Page 33 Transaction highlights Largest deal in integrated segment • Q2’s biggest transaction was led by IndiGrid, a portfolio company of US-based private equity firms GIC Private Limited and Kohlberg Kravis Roberts & Co. L.P, in a deal that acquired US$0.8b of transmission assets from Sterlite Power. Sector convergence continues • In a US$0.4b deal, Malaysian oil and gas company Petroliam Nasional Berhad (PETRONAS) acquired India’s Amplus Energy Solutions Private Limited, which owns and operates distributed rooftop solar power projects. Transactions in generation continue • Seven deals in generation (gas and coal) contributed a disclosed deal value of US$0.8b. All but one of these deals were done by utilities in China, India, Australia and Kazakhstan. 0 10 20 30 40 50 60 0 5 10 15 20 25 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Dealvolume(numberofdeals) Dealvalue(US$b) Generation Integrated utility Energy services Renewables Gas utility Water and wastewater Volume
  34. 34. Asia-Pacific Investment in new technology drives the capital agenda • The Government of South Australia plans to build a 500 MW solar farm with a 250 MW battery, requiring investment of US$1.2b. • Europe’s Scatec Solar partnered with Vietnamese company MT Energy to develop three power plants totaling 485 MW in Vietnam. • Indian solar energy developer Avaada Energy raised US$144m from the Asian Development Bank, the German Development Finance Institution (DEG) and Dutch development finance company FMO to finance its 2.4 GW solar energy portfolio. More solar investment Innovation in charging solutions boost EV progress • The Bureau of Indian Standards (BIS) and the Department of Science & Technology (DST) have agreed to develop an indigenous EV charging standard that will reduce the cost of establishing charging stations in India. • Japanese utility TEPCO will use its poles to install EV charging stations in Tokyo, an innovation that will cut the costs and space needed for next-generation infrastructure. • Evie Networks, an Australia-based developer of EV charging stations, and EV Connect, a US-based provider of EV charging solutions, are collaborating to build an ultrafast highway charging network in Australia, with more than 80 charging stations across 42 sites. • Japan, in partnership with California’s AutoGrid, plans to develop the world’s largest virtual power plant by aggregating 10,000 distributed energy assets. • Toyota Motor Corporation is working with the University of Tokyo and Japanese renewable energy supplier TRENDE to test peer-to-peer electricity trading using blockchain. Toshiba Energy Systems & Solutions, in collaboration with Tohoku Electric Power, is also exploring use of the technology in peer-to-peer energy trading. Japan trials new technology We take a global view, and in Australia we haven’t had investments in large-scale renewables for some time. We like the energy sector and we are very experienced in it, but we do not see opportunities here that offer adequate risk-adjusted returns.14 Michael Cummings, Head of Australian and New Zealand Infrastructure Equity Funds, AMP Capital “ Page 34 14Infrastructure Investor, 1 July 2019. Energy policy paralysis in Australia post elections • Australia’s federal energy incoherence continues to deter financial investors. The recent re-election of the coalition government may indicate the continuation of the country’s business-as-usual scenario, even as Australia is challenged by the “trilemma” of balancing the affordability, reliability and sustainability of its energy supply. UDAY 2.0 aims to improve health of India’s discoms • The second version of India’s Ujjwal DISCOM Assurance Yojana (UDAY) aims to improve the financial health of the state electricity distribution companies (discoms). Its focus will be on improving grid efficiency and deploying new technologies. UDAY 2.0’s introduction comes as the state of Andhra Pradesh announces that it will negotiate tariff reductions with solar and wind developers that had won contracts through capacity auctions due to discoms’ poor financial health.
  35. 35. China was the region’s top investment destination, with 19 deals totaling US$2.7b. 80% — US$4.3b — of deals were domestic, and 83% of these involved corporate investors. Domestic deals dominate in a China-led quarter Miles Huq, EY Global P&U TAS Leader Renewables continue to drive Asia-Pacific deal activity, with China leading the way. Cross-border investments were slow to pick up this quarter, but we expect transaction activity within China to continue. Asia-Pacific regional capital flows – Q2 2019 (US$b) “ Page 35 Asia-Pacific 0.2 Japan 0.2 2.7 China 2.7 1.0 0.5 India 1.5 Note: Numbers may not add to total due to rounding. China Japan Top investor countries India Rest of the world 0.10.1 Australia 0.2 0.3 Thailand 0.3
  36. 36. Asia-Pacific Top five Asia-Pacific deals – Q2 2019 Announcement date Target Target country/ bidder country Bidder Deal value (US$b) Bidder rationale Segment 28 March China Power Clean Energy Development Co. Ltd. (73.58% stake) Greater China/ Greater China China Power International Holding Limited 2.9 Aligns with bidder’s strategy to expand its renewables portfolio and delist the target company from the Hong Kong Stock Exchange Renewable s 1 March Ayana Renewable Power Private Limited India/UK CDC Group plc; National Investment and Infrastructure Fund (NIIF); EverSource Capital Group 0.3 Furthers bidders’ strategy to expand into India’s renewable energy market Renewable s 22 February Youngduk Wind Power Co., Ltd.; Yeong Yang Wind Power Corporation South Korea/South Korea SAMTAN Co., Ltd.; Shinhan Alternative Investment Management Inc. 0.2 Supports investors’ plans to expand into wind energy Renewable s 7 March Qinhuangdao Qinre Electric Power Co., Ltd. (40% stake); Hebei Zhanghewan Storage Power Generation Co., Ltd. (45% stake) Greater China/ Greater China Jointo Energy Investment Co., Ltd. Hebei 0.2 Enables bidder to consolidate market share and enhance power generation capacity Generation 20 March TBEA Xinjiang New Energy Co., Ltd. (15.02% stake) Greater China/ Greater China Bank of Communications Financial Asset Investment Co., Ltd. 0.1 Improves the financing capacities of Xinjiang and supports the development and operation of wind and solar projects Renewable s Note: All deals are announced deals, and the values indicated are disclosed enterprise values comprised of equity and debt components. Page 36 Harsh Shah, CEO, IndiGrid With these acquisitions, IndiGrid’s assets under management (AUM) have increased close to three times, from approximately INR 3,800 crores to approximately INR 10,660 crores, in a span of two years since listing. With the recent capital raise anchored by KKR and GIC and the framework agreement with Sterlite Power, we will be able to reach INR 17,000 crores of AUM and remain well on our way to achieving INR 30,000 crores of AUM by 2022, while providing predictable and growing distributions to our investors.15 “ 15Business Wire, 9 May 2019.
  37. 37. Asia-Pacific Valuations snapshot – Q2 2019 Note: Please see the appendix for information on the company assignment to each sub-segment. The EY Asia-Pacific Utilities Index recorded a total shareholder return (TSR) of -3.7% for the quarter, underperforming the Nikkei 225, which slowed to 0.8% during the same period. 1 Renewables was the best-performing segment in the region, down just -0.8% and up significantly (23.8%) on a year-to date (YTD) basis. 2 Gas utility was the worst-performing segment of the quarter, with TSR of -6.2%. This was the lowest-performing segment across all regions. 3 The EV/FY2 EBITDA of the sector was 10.9x, when compared with the 10.8x two-year historic EV/FY2 EBITDA multiple. On an EY/FY2 EBITDA basis, Asia-Pacific stocks were the highest valued across all regions. 4 Page 37 Return over time — from base date Chart 12: Total shareholder return by sub-segment (1 January 2019 to 30 June 2019) Generation and renewable assets traded at a premium compared with the other segments in the region (15.0x and 12.8x EV/FY2 EBITDA, respectively). 5 70% 80% 90% 100% 110% 120% 130% 140% 150% 1/1/2019 1/31/2019 3/2/2019 4/1/2019 5/1/2019 5/31/2019 6/30/2019 Nikkei 225 TR (total return) % Large market capitalization integrated utility Medium and small capitalization integrated utility Gas utility Generation Renewables Water and wastewater
  38. 38. Asia-Pacific Valuations and TSR snapshot – Q2 2019 Note: EY analysis is based on data sourced from S&P Capital IQ. Please see the appendix for the detailed definitions, the company segment definitions and the company tagging for the valuations analysis. Page 38 • The medium and small market capitalization integrated segment returned a quarterly TSR of -2.8%, outperforming the regional index average. • The two-year forward EV/EBITDA multiple for medium and small market capitalization integrated traded at 10.0x, 5% more than the two-year historic average multiple of 9.5x. Medium and small market capitalization integrated • The large market capitalization integrated segment returned a quarterly TSR of -4.6%, marginally underperforming the regional index average of -3.7%. • The two-year forward EV/EBITDA multiple for large market capitalization integrated traded at 8.6x, 9% more than the two-year historic average multiple of 7.9x. Large market capitalization integrated *The market capitalization weighted average of the current enterprise value (EV) (at June 30 2019)/two-year forward (at 30 June 2019) adjusted earnings before interest, tax, depreciation and amortization (EBITDA) TSR >20% higher than the regional sector average; EV/FY2 EBITDA >20% discount compared with the regional sector average TSR 0% to 20% higher than the regional sector average; EV/FY2 EBITDA between a 0% to 20% discount compared with the regional sector average TSR 0% to 20% lower than the regional sector average; EV/FY2 EBITDA between a 0% to 20% premium compared with the regional sector average TSR performance >20% lower than the regional sector average; EV/FY2 EBITDA >20% premium compared with the regional sector average Large market capitalization integrated Medium and small market capitalization integrated Gas utility Generation Renewables Water and wastewater EY Europe Utilities Index -4.6% -2.8% -6.2% -3.0% -0.8% -6.1% -3.7% -3.4% 9.8% 13.0% 19.8% 23.8% 12.4% 13.4% 10.9x 8.8x 12.8x 15.0x 9.0x 10.0x 8.6x • The generation segment returned a quarterly TSR of -3.0%, marginally outperforming the regional index. • The two-year forward EV/EBITDA multiple for generation traded at 15.0x, which is the highest across all generation segments globally. Generation • The gas utility segment returned a quarterly TSR of -6.2%, the lowest across all segments globally. • The two-year forward EV/EBITDA multiple for gas utility traded at 9.0x, which is 7% less than the two-year historic average multiple of 9.6x. Gas utility • The renewables segment returned a quarterly TSR of - 0.8%, the best of all Asia-Pacific segments. • The two-year forward EV/EBITDA multiple for renewables traded at 12.8x, the highest among all renewable segments globally. Renewables • The water and wastewater segment returned a quarterly TSR of -6.1%, below the regional index average. • The two-year forward EV/EBITDA multiple for water and wastewater traded at 8.8x at Q2, which is 1% more than the two-year historic average multiple of 8.7x. Water and wastewater Year-to-date TSR (from 1 January 2019 to 30 June 2019) Q2 Quarter-to-date TSR (from 1 April 2019 to 30 June 2019) EV/FY2 EBITDA (at 30 June 2019)*
  39. 39. M&A outlook and investment hotspots Asia-Pacific Rise in offshore wind partnerships • The Government of Jiangsu and electricity generation company China Huaneng Group are partnering to develop an offshore wind farm with a planned installed capacity of over 10,000 MW, requiring an investment of more than US$23.5b. • The Indian Government and Danish Government have established an Indo-Danish center of excellence for renewable energy in India, focusing on offshore wind. • In Japan, Hitachi Zosen Corporation and Eco Power have formed a fifty-fifty joint venture (JV) to build and operate a 500 MW offshore wind farm. Renewable integration boosts energy storage • The Indian Government will invite bids for 40 GW battery plants with an investment of US$40b from 2019 to 2022. • China also plans to deploy battery storage systems to increase the integration and utilization of renewable energy. The China renewable energy and battery storage promotion project recently received US$300m from the World Bank. • Australian energy company AGL announced that it will develop, own and operate a 250 MW pumped hydro energy storage project in South Australia. Smart meters roll out across the region • The Indian Government is considering a plan to roll out 300 smart meters over three years, with potential subsidies to cover costs. • Australia’s Western Power plans to install approximately 238,000 smart meters as part of its meter replacement and installation program. • Japanese conglomerate Marubeni, together with Kansai Electric Power and Chubu Electric Power, are forming a JV with Manila Electric Company to construct a smart grid comprised of 45 km of power lines and 30,000 electricity meters in a new city in the Philippines. We are very pleased to be a member of the partnership involved in realizing the first floating offshore wind farm in Asia. If we succeed in realizing the project, the Donghae floating offshore wind project will be the world’s biggest floating wind farm.17 Stephen Bull Senior Vice President, Equinor US$6b Asia-Pacific’s investment in battery energy storage by 2023 — making it the largest market in the world16 “ Page 39 16 Smart Energy International, 2 May 2019. 17Equinor, 11 July 2019.
  40. 40. Asia-Pacific EY Asia-Pacific Transaction Advisory Services P&U contacts Global P&U TAS Leader Oceania P&U TAS Leader ASEAN P&U TAS Leader Greater China P&U TAS Leader Miles Huq Nick Cardno Gilles Pascual Alex Zhu +1 410 783 3735 miles.huq@ey.com +61 2 9248 4817 nick.cardno@au.ey.com +65 6309 6208 gilles.pascual@sg.ey.com +86 10 5815 3891 alex.zhu@cn.ey.com India P&U TAS Leader Japan P&U TAS Leader Korea P&U TAS Leader Somesh Kumar Yo Takehana Bum Choong Kim +91 11 4731 8270 somesh.kumar@in.ey.com +81 3 4582 6623 yo.takehana@jp.ey.com +82 2 3787 4107 bum-choong.kim@kr.ey.com Page 40
  41. 41. Africa and the Middle East Investments in grid modernization and off-grid systems
  42. 42. Power transactions and trends Q2 2019 Africa and the Middle East additional wind capacity to be installed in the Kingdom of Saudi Arabia (KSA) by 2028 tender launched by Dubai Electricity and Water Authority (DEWA) for the fifth phase of Dubai’s solar project 6.2 GW 900 MW Chart 13: Africa and the Middle East cumulative installed capacity of small- scale PV (GW) Source: Bloomberg New Energy Finance Source: EY analysis based on publicly disclosed data Chart 14: Africa and the Middle East deal value (announced asset and corporate level deals, 2010–1H2019) Page 42 Transaction highlights Financial investors signal confidence in African renewables • Chinese state-owned investment fund Silk Road Fund acquired a 49% stake in ACWA Power Renewable Energy Holding Ltd., which will own concentrated solar power (CSP), solar photovoltaic (PV) and wind assets across the United Arab Emirates (UAE), South Africa, Jordan, Egypt and Morocco, with a total capacity of 1,668 MW. • US-based off-grid investor Persistent Energy Capital and Nigerian private equity firm Verod Capital Management invested US$10m in Africa’s Daystar Power, an off-grid solar energy developer, to accelerate its expansion for commercial and industrial customers. More investment in Middle Eastern solar • DEWA launched a tender for the fifth phase of the 900 MW Mohammed bin Rashid Al Maktoum solar project, which will be commissioned in the first half of 2020. • Egypt’s Intro Energy plans to invest US$100m in building approximately 35 MW of solar PV plants across the country over the next three years. Setbacks in move toward cost-reflective pricing • Lebanon’s electricity reform package to reduce electricity subsidies to cut public debt has been stalled by a legal appeal against the changes. • South Africa’s Eskom continues to face huge debt and operational issues, despite regulatory efforts to increase tariffs. A recent US$4.8b government bailout to the utility, which supplies 90% of South Africa’s power, may need to be topped up with more support or additional tariff increases. 0.8 1.1 1.5 2.5 3.6 12.6 36.3 2016 2017 2018 2019F 2020F 2025F 2030F 0.1 0.2 0.7 0.3 0.5 2.6 5.8 1.3 1.2 0.6 2010 2011 2012 2013 2014 2015 2016 2017 2018 1H2019 US$b Year
  43. 43. Grid infrastructure upgrades remain a priority Distributed generation projects aim to increase electrification • The World Bank and French development agency AFD have provided US$106m for the rehabilitation and extension of Guinea’s Conakry power grid. • The New Development Bank announced a US$180m financing facility to Eskom Holdings to support the development of grid connection infrastructure for renewable energy projects in South Africa. • Egyptian Electricity Transmission Company (EETC) is planning to invest US$1.2b in grid modernization in the 2020 financial year. Africa and the Middle East Focus on distributed generation solutions, renewables and grid modernization The potential for electrification is huge, not only in the context of rural electrification but also for companies wishing to have their own reliable electricity network, such as banks and their networks of agencies, distributors, electricity suppliers, etc. We need to help them support their current supply with mini-grid systems.18 Paul-Francois Cattier, Director of Economic Development for Africa and Middle-East Region, Schneider Electric • Ignite Power, a solar energy provider and financier, has announced plans to install a pay-as-you-go off-grid energy solution that offers a combined 10 to 15 watt solar panel and battery to 3.8 million people in Mozambique and Sierra Leone. • African Enterprise Challenge Fund (AECF), set up by the UK Government, has invested US$20.8m to support the provision of off- grid solar energy in five African countries. • Japan’s Marubeni Corporation has invested US$26m in Azure Technologies, a UK-based company providing solar home systems in Africa. • The African Development Bank (AfDB) will provide a US$400m debt facility to support the development of small-scale renewable power and mini-grid projects across Africa. AfDB has also offered a US$20m loan to support green mini-grid solutions of approximately 10 MW capacity for off-grid cities in northern Democratic Republic of Congo. • The Portuguese utility EDP is investing US$13.4m through its Access to Energy (A2E) fund to support the development of mini-grids in Africa. • French utility ENGIE plans to develop 2,000 mini-grids by 2025, which will supply electricity to 2.5 million people across Africa. “ Page 43 Increased interest in African geothermal resources • Between 2021 and 2025, the Tanzanian Government will develop seven geothermal plants with a total capacity of 200 MW and for a total investment of US$182m. • Reykjavik Geothermal, a power developer backed by Paris-based investor Paul Tudor Jones II, has launched a US$4.4b geothermal exploration project in Ethiopia as part of a long-tem plan to develop 1 GW of geothermal energy. • The Ethiopian Council of Ministers is considering a legislative proposal to encourage independent power producers (IPPs) to invest in geothermal energy production by easing the registration and licensing process and providing incentives for participation. 40 GW of solar energy capacity in Saudi Arabia by 2030 18Africa Oil and Power, 19 June 2019.
  44. 44. Fundamental change is coming to the Middle East’s energy sector. The region is fast adopting new technologies — smart meters, EVs and renewables. The question is — can the region’s state-owned, vertically integrated utilities adapt in time? Utilities not only need to build the right operating and business models but also need to develop new skills and capabilities. Serge Colle, EY Global Power & Utilities Advisory Leader 2,400 MW renewable energy capacity to be installed in Jordan by 2021 Solar projects continue and wind investment is on the rise • Petrochemical manufacturer SABIC plans to construct a 300 MW solar photovoltaic project in Yanbu, KSA. • UAE-based Amea Power has announced that it will develop a 50 MW solar power plant in Jordan, backed by US$59.2m of funding from Dutch development bank FMO and DEG, a unit of German development bank KfW. • Oman Power and Water Procurement Company (OPWP) will invest US$1b to build a 300 MW wind-based IPP in Duqm, Oman. • The Renewable Energy Project Development Office (REPDO) of KSA plans to install 850 MW of wind capacity in 2019, which is expected to be commissioned in 2021 through 2022. Renewables expansion drives grid and network investment in the Middle East Ongoing investments to upgrade networks • The Iraq Government is moving ahead with a four-year US$14b road map to increase installed generation capacity and upgrade network infrastructure. While negotiations continue over specific projects, Siemens has secured US$785m of contracts in a landmark deal. • DEWA will partner with Canadian smart grid solutions company Enbala to build the first virtual power plant in the region. The project aims to integrate distributed energy resources (DERs) and provide energy balancing, frequency regulation and peak shaving services. • Turkey aims to invest US$11b in energy efficiency over the next five years, with a focus on reducing demand to decrease pressure on the grid. The Government also plans significant investment in increasing the resilience of grid infrastructure. • German solar equipment manufacturer Schmid Group, along with Saudi-based companies Nusaned Investment and RIWAQ, signed a Memorandum of Understanding (MoU) to build a utility-scale energy storage manufacturing facility in KSA. These storage systems will be critical to maintain the KSA’s grid reliability as increasing amounts of renewable energy capacity are connected to the network. Africa and the Middle East Page 44 “
  45. 45. Bidder company/country Target country Project description Segment Silk Road Fund/China KSA Silk Road Fund has bought a 49% stake in ACWA Power RenewCo, strengthening strategic ties between KSA and China, particularly in renewable investment Renewables Ministry of Energy, Industry and Mineral Resources/KSA KSA Bidder will develop seven greenfield solar PV projects with a combined capacity of around 1.5 GW Renewables Dubai Electricity and Water Authority (DEWA)/UAE Dubai DEWA will develop a 900 MW solar PV project as the fifth phase of the Mohammed bin Rashid Al Maktoum Solar Park Renewables Labacorp Power Company/US Zimbabwe Bidder proposes to develop a 900 MW solar plant to feed electricity into the grid Renewables The Ministry of Electricity/Iraq Iraq The Ministry plans to develop 755 MW of solar PV capacity to become operational by 2020 Renewables Top five Africa and the Middle East greenfield investments – Q2 2019 Africa and the Middle East Page 45
  46. 46. Africa and the Middle East M&A outlook and investment hotspots Improving economics will drive microgrid deployment • Across Africa, microgrid deployment will expand as a cheap solution to providing power to customers. Falling costs, new technologies and a favorable operating environment have already enabled connection of 490 million people to these mini-grids. The cost of microgrid technology fell 9.7% from 2010 until 2018 and is expected to fall by a further 2.4% by 2030. • Nigerian firm Arnergy Solar recently raised US$9m to deploy solar and storage microgrid systems across Africa. • Also in Nigeria, local engineering company EM-ONE Energy Solutions will collaborate with Schneider Electric to jointly produce microgrids in the country. Renewables will continue to gain traction • Over the next five years, the Madagascar Government and French company Tryba Energy will develop solar power plants with a total capacity of 150 MW to improve the country’s electrification rates. • MCX Environmental Energy Corporation, a US company specializing in renewable energy production, will build a 30 MW solar PV park in western Kenya in late 2019. • Saudi construction company alfanar aims to set up a 250 MW wind farm in Egypt by 2021, with a required investment of US$250m. • Zimbabwe’s Guarantee Risk Solar Energy and South Africa’s Bushveld Energy will develop three solar PV power projects with a combined capacity of 250 MW. • The Government of Lebanon announced plans to increase electricity production from 2 GW to 5.6 GW by 2030 with 30% coming from renewable energy sources. The plan also envisages 170 MW of solar power and 200 MW of wind power being added to the grid by 2020. 4,000 microgrids planned for Africa — more than half the total 7,507 mini-grids in development globally Page 46 Beyond the fact that there’s a moral duty to provide all these people with electricity, this may be considered also as a huge business, as the sort of famous billionth client that we are waiting for. It’s a huge market, but this market has still to be reached.19 Lamberto Dai Prà, Head of Africa, Asia and the Pacific, Enel Green Power “ 19Climate Change News, 13 March 2019.
  47. 47. Africa and the Middle East EY Africa and the Middle East Transaction Advisory Services P&U contacts Page 47 Global P&U TAS Leader Middle East P&U TAS Leader Africa P&U TAS Leader Miles Huq Taher Majidi Johan Greyling +1 410 783 3735 miles.huq@ey.com +971 4701 0773 taher.majidi@ae.ey.com +27 11 772 4219 johan.greyling@za.ey.com
  48. 48. Appendix
  49. 49. Appendix: Definitions Company segment definitions Segment EY definition Large market capitalization Utilities with market capitalization more than US$10b and engaged in multiple segments of the power value chain — generation, T&D, and retail, or T&D and retail — and utilities that have T&D business and substantial presence in other segments, as well as from the perspective of revenues Medium and small market capitalization Utilities with market capitalization less than US$10b and engaged in multiple segments of the power value chain — generation, T&D, and retail, or T&D and retail — and utilities that have T&D business and substantial presence in other segments, as well as from the perspective of revenues Gas Utilities that generate the majority of their revenues from downstream gas, including transmission, distribution and the sale of gas as an energy source Generation Utilities that generate the majority of their revenues from power production through large centralized (nonrenewable) sources, including coal, gas, oil, large hydro and nuclear, and are also involved in selling power to customers Renewables Utilities that are engaged in generating power from centralized or distributed renewable energy sources, including solar, wind and small hydro Water and wastewater Utilities that manage water and wastewater networks and engage in the distribution, supply or treatment of water and wastewater Page 49
  50. 50. Americas company segment tagging for valuations analysis Large market capitalization integrated Alliant Energy Corporation Ameren Corporation American Electric Power Company, Inc. An integrated utility based in Pennsylvania Avangrid, Inc. CenterPoint Energy, Inc. CMS Energy Corporation Consolidated Edison, Inc. Dominion Energy, Inc. Duke Energy Corporation Edison International Entergy Corporation Evergy, Inc. Eversource Energy Exelon Corporation FirstEnergy Corp. Fortis Inc. NextEra Energy, Inc. PG&E Corporation Pinnacle West Capital Corporation Public Service Enterprise Group Incorporated Sempra Energy Southern Company WEC Energy Group, Inc. Xcel Energy Inc. Appendix: Americas Medium and small market capitalization integrated (cont.) Black Hills Corporation Canadian Utilities Limited CELSIA S.A. E.S.P. Companhia Energética de Minas Gerais Companhia Energética do Ceará – Coelce Companhia Energética do Maranhão – CEMAR Companhia Energética do Rio Grande do Norte – COSERN Companhia Paranaense de Energia – COPEL Companhia de Eletricidade do Estado da Bahia – COELBA Compañía General de Electricidad S.A. CPFL Energia S.A. DTE Energy Company EDP - Energias do Brasil S.A. El Paso Electric Company Elektro Redes S.A. Eletropaulo Metropolitana Eletricidade de São Paulo S.A. Emera Incorporated Empresa de Energia del Pacifico S.A. E.S.P. Empresa Distribuidora y Comercializadora Norte Sociedad Anónima Enel Chile S.A. Enel Distribucion Chile S.A. Energisa S.A. Equatorial Energia S.A. Hawaiian Electric Industries, Inc. Hydro One Limited IDACORP, Inc. Interconexión Eléctrica S.A. E.S.P. MDU Resources Group, Inc. MGE Energy, Inc. NextEra Energy Partners, LP NorthWestern Corporation Otter Tail Corporation Pampa Energía S.A. PNM Resources, Inc. Gas AltaGas Canada Inc. AltaGas Ltd. Atmos Energy Corporation Chesapeake Utilities Corporation National Fuel Gas Company New Jersey Resources Corporation NiSource Inc. Northwest Natural Holding Company ONE Gas, Inc. South Jersey Industries, Inc. Southwest Gas Holdings, Inc. TC Energy Corporation UGI Corporation Valener Inc. Generation Capital Power Corporation Centrais Elétricas de Santa Catarina S.A. Centrais Elétricas do Pará S.A. CESP - Companhia Energética de São Paulo Enel Generación Peru S.A.A. Engie Energia Chile S.A. Just Energy Group Inc. NRG Energy, Inc. OGE Energy Corp. The AES Corporation TransAlta Corporation Vistra Energy Corp. Renewables AES Tietê Energia S.A. Boralex Inc. Brookfield Renewable Partners L.P. Canadian Solar Inc. Clearway Energy, Inc. CPFL Energias Renováveis S.A. ENGIE Brasil Energia S.A. Innergex Renewable Energy Inc. Northland Power Inc. Omega Geração S.A. Ormat Technologies, Inc. Pattern Energy Group Inc. SunPower Corporation Sunrun Inc. TerraForm Power, Inc. TransAlta Renewables Inc. Vivint Solar, Inc. Water and wastewater Aguas Andinas S.A. American States Water Company American Water Works Company, Inc. Aqua America, Inc. California Water Service Group Companhia Catarinense de Águas e Saneamento – CASAN Companhia de Saneamento de Minas Gerais Companhia de Saneamento do Paraná – SANEPAR Connecticut Water Service, Inc. Covanta Holding Corporation Inversiones Aguas Metropolitanas S.A. Middlesex Water Company Republic Services, Inc. SJW Group Page 50 Medium and small market capitalization integrated Algonquin Power & Utilities Corp. ALLETE, Inc. Alupar Investimento S.A. ATCO Ltd. Avista Corporation Medium and small market capitalization integrated (cont.) Portland General Electric Company Transmissora Aliança de Energia Elétrica S.A. Unitil Corporation
  51. 51. Europe company segment tagging for valuations analysis Large market capitalization integrated CEZ, a. s. E.ON SE EDP - Energias de Portugal, S.A. Electricité de France S.A. Endesa, S.A. Enel SpA ENGIE SA Fortum Oyj Iberdrola, S.A. innogy SE National Grid plc Ørsted A/S Red Eléctrica Corporación, S.A. RWE Aktiengesellschaft SSE plc Terna - Rete Elettrica Nazionale Società per Azioni VERBUND AG Medium and small market capitalization integrated Acciona, S.A. Acea S.p.A. Alpiq Holding AG BKW AG Budapesti Elektromos Muvek Nyrt. Caribbean Utilities Company, Ltd. Centrica plc Drax Group plc Elia System Operator SA Enagás, S.A. EnBW Energie Baden-Württemberg AG ENEA S.A. Energa SA Energiedienst Holding AG Energijos Skirstymo Operatorius AB Enerjisa Enerji A.S. Hera S.p.A. Mainova AG MVV Energie AG PGE Polska Grupa Energetyczna S.A. Public Joint Stock Company Inter RAO UES Public Joint Stock Company Mosenergo Public Joint-Stock Company Federal Grid Company of Unified Energy System Public Joint-Stock Company Lenenergo Public Joint-Stock Company Moscow United Electric Grid Company REN - Redes Energéticas Nacionais, SGPS, S.A. Rosseti, Public Joint Stock Company Signify N.V. TAURON Polska Energia S.A. Gas Italgas S.p.A. Naturgy Energy Group, S.A. Rubis Snam S.p.A. Generation A2A S.p.A. ContourGlobal plc Irkutsk Public Joint Stock Company of Energetics and Electrification Public Joint Stock Company Territorial Generating Company No. 1 Public Joint-Stock Company Enel Russia Public Joint-Stock Company Federal Hydro-Generating Company - RusHydro Public Joint-Stock Company Unipro S.N. Nuclearelectrica S.A. Uniper SE Renewables Albioma Atlantica Yield plc EDP Renováveis, S.A. Encavis AG Falck Renewables S.p.A. Scatec Solar ASA Terna Energy Societe Anonyme Commercial Technical Company Voltalia SA Water and wastewater AquaVenture Holdings Limited Pennon Group Plc Severn Trent Plc Suez SA United Utilities Group PLC Veolia Environnement S.A. Appendix: Europe Page 51
  52. 52. Asia-Pacific company segment tagging for valuations analysis Large market capitalization integrated Chubu Electric Power Company, Incorporated CLP Holdings Limited Huaneng Power International, Inc. Korea Electric Power Corporation NTPC Limited Power Grid Corporation of India Limited Tenaga Nasional Berhad The Kansai Electric Power Company, Incorporated Medium and small market capitalization integrated (cont.) The Okinawa Electric Power Company, Incorporated The Tata Power Company Limited Tohoku Electric Power Company, Incorporated Tokyo Electric Power Company Holdings, Incorporated Trustpower Limited Vector Limited Xinjiang Tianfu Energy Co., Ltd. Gas APA Group China Gas Holdings Limited ENN Energy Holdings Limited Indraprastha Gas Limited Korea Gas Corporation Osaka Gas Co., Ltd. PT Perusahaan Gas Negara Tbk Shaanxi Provincial Natural Gas Co., Ltd Shanghai Dazhong Public Utilities(Group) Co., Ltd. Shenzhen Gas Corporation Ltd. Shizuoka Gas Co., Ltd. Toho Gas Co., Ltd. Tokyo Gas Co., Ltd. Towngas China Company Limited Xinjiang Xintai Natural Gas Co., Ltd. Zhongyu Gas Holdings Limited Generation (cont.) Guangdong Electric Power Development Co., Ltd. Guangxi Guiguan Electric PowerCo., Ltd. Guodian Changyuan Electric Power Co., Ltd. Henan Yuneng Holdings Co., Ltd. Huadian Fuxin Energy Corporation Limited Hubei Energy Group Co., Ltd. Jiangsu Guoxin Corp. Ltd. Jiangxi Ganneng Co., Ltd. Jointo Energy Investment Co., ltd. Hebei. Malakoff Corporation Berhad Ratch Group Public Company Limited Shanghai Electric Power Company Limited Shenergy Company Limited Shenzhen Nanshan Power Co., Ltd. Sichuan Minjiang Hydropower Co., Ltd. SJVN Limited Taiwan Cogeneration Corporation The Hong Kong and China Gas Company Limited Zhejiang Zheneng Electric Power Co., Ltd. Renewables (cont.) NHPC Limited Ning Xia Yin Xing Energy Co., Ltd. Ningxia Jiaze Renewables Corporation Limited Tunghsu Azure Renewable Energy Co., Ltd. Zhongmin Energy Co., Ltd. Water and wastewater Anhui Guozhen Environment Protection Technology Joint Stock Co., Limited Beijing Enterprises Water Group Limited Beijing Originwater Technology Co., Ltd. Beijing Water Business Doctor Co., Ltd. Chengdu Xingrong Environment Co., Ltd. China Everbright Water Limited China Water Affairs Group Limited Chongqing Water Group Co., Ltd. Daiseki Co., Ltd. Eastern Water Resources Development and Management Public Company Limited Guangdong Investment Limited Guangxi Nanning Waterworks Co., Ltd. Heilongjiang Interchina Water Treatment Co., Ltd. Jiangsu Jiangnan Water Co., Ltd. Jiangxi Hongcheng Waterworks Co., Ltd. Luenmei Quantum Co., Ltd Manila Water Company, Inc. Qian Jiang Water Resources Development Co., Ltd. SafBon Water Service (Holding) Inc., Shanghai SIIC Environment Holdings Ltd. TTW Public Company Limited Tus Environmental Science and Technology Development Co., Ltd. Wuhan Sanzhen Industry Holding Co., Ltd Zhongshan Public Utilities Group Co., Ltd. Appendix: Asia-Pacific Page 52 Medium and small market capitalization integrated AGL Energy Limited AusNet Services Ltd. CESC Limited Chongqing Fuling Electric Power Industrial Co., Ltd. Contact Energy Limited Electric Power Development Co., Ltd. First Philippine Holdings Corporation Fujian Mindong Electric Power Limited Company Genesis Energy Limited HK Electric Investments and HK Electric Investments Limited Hokkaido Electric Power Company, Incorporated Hokuriku Electric Power Company Huadian Power International Corporation Limited Huaneng Renewables Corporation Limited India Grid Trust Infratil Limited JSW Energy Limited Kyushu Electric Power Company, Incorporated Origin Energy Limited Shikoku Electric Power Company, Incorporated The Chugoku Electric Power Co., Inc. Generation An Hui Wenergy Company Limited Beijing Jingneng Clean Energy Co., Limited Beijing Jingneng Power Co., Ltd. CGN New Energy Holdings Co., Ltd. China Power International Development Limited Datang International Power Generation Co., Ltd. Global Power Synergy Public Company Limited Renewables BCPG Public Company Limited Beijing Enterprises Clean Energy Group Limited Canvest Environmental Protection Group Company Limited CECEP Wind-power Corporation Co., Ltd. China Datang Corporation Renewable Power Co., Limited China Everbright Greentech Limited CK Power Public Company Limited eREX Co., Ltd. First Gen Corporation GEPIC Energy Development Co., Ltd. GuiZhou QianYuan Power Co., Ltd. Kaidi Ecological and Environmental Technology Co., Ltd. Mercury NZ Limited Meridian Energy Limited
  53. 53. EY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. For more information about our organization, please visit ey.com. The views of third parties set out in this publication are not necessarily the views of the global EY organization or its member firms. Moreover, they should be seen in the context of the time they were made. © 2019 EYGM Limited. All Rights Reserved. EYG no. 003700-19Gbl GA 1012204 ED None This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice. The views of third parties set out in this publication are not necessarily the views of the global EY organization or its member firms. Moreover, they should be seen in the context of the time they were made. ey.com

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