Good afternoon, everyone, and welcome to ENGIE Energía Chile's Fourth Quarter 2024 Results Conference Call. If you need a copy of the press release issued on January 29th, it is available on the company's website at www.engie.cl. Before we begin, I would like to remind you that this call is being recorded and that information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risk and uncertainty, and actual results may differ materially.
Please refer to the detailed note in the company's press release regarding forward-looking statements for contact investor relations officer Marcela Muñoz. We would like to advise participants that this call is dedicated to investors and market analysts, not for the press. We ask all journalists to contact ENGIE Energía Chile's PR department for details. I will now turn the call over to Mr. Eduardo Milligan.
Please go ahead, sir.
Thank you. Good afternoon, everyone. Today I'm here with Alison Saffery, Head of Corporate Finance and Investor Relations, and Melanie Wilneder, Head of ESG. And we are pleased to present ENGIE Chile's full-year results for 2024. So let's start with the presentation. As described on page two, we have organized this updated presentation into two sections. In the first part, we will briefly go through 2024 performance and results. And then in part two, we will provide an updated vision of the medium-term outlook for ECL.
So we can start directly on page three, where we share the main highlights for 2024. So first, the company delivered strong results in 2024. Initial guidance was updated by mid-2024 and confirmed, and we reached the high end of the range that we provided during such update.
Second, as we will confirm in section two, we accelerated the development of batteries, which will be key to support our 24/7 downstream PPAs. Third, the successful implementation of the securitization program for PEC and MPC in 2024 improved the liquidity and triggered new investments while keeping ECL's leverage under control. Fourth, we confirmed total exit of coal-fired generation between the end of 2025 and mid-2026. And fifth, we start to see the ramp-up on volumes coming from the new renewables, which together with the upstream or what we call backup PPAs are reducing ECL's share position and exposure to the market volatility. Then on page four, we can see the current progress and the execution plan for renewables. As of today, we have already implemented 0.9 GW, and the Taltal wind farm is also ready. We are just waiting the formal COD.
This means ECL already has between 1.3 and 1.4 GW of renewable capacity in its portfolio. Importantly, these projects were developed on time and on budget. Next, page five presents the 12 renewables that ECL added to its portfolio in the last five years to gradually replace the thermal power plants that were at the end of their economic life. Then on page six, we present the bold move into batteries to boost our flexible generation capacity. We already have 205 MW in operation, and in 2025, we will add an additional 164 MW to reach 369 MW of capacity by the end of this year, with a total investment of approximately $560 million. And this is not all in renewables and batteries. We'll come back to them in a few minutes when we present the medium-term outlook.
On page seven, we highlight three developments linked to the decarbonization plan and the key role of natural gas for the portfolio. First, linked to optimizing existing infrastructure, we successfully won an auction to provide ancillary services to the system through the installation of a synchronous condenser using part of the equipment of the former coal power plant named Unit 15, giving this asset a second economic life. The required economic investment for this conversion is $25 million, and the COD is expected in the first quarter of 2027.
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Okay, good. So let's continue on page number seven, in which we highlight three developments linked to the decarbonization plan and the key role of natural gas to the portfolio. And as I was mentioning before, we are converting power plant Unit 16 to a synchronous condenser. And second, we have implemented two projects for both CCGTs running with natural gas to improve their efficiency and increasing their economic life. So these CCGTs will be crucial in the north of Chile to support the system, mainly during non-solar hours. Third, we'll be converting the IEM coal power plant to natural gas with a $75 million investment. The power plant will be ready to operate with gas by the third quarter of 2026 and will act as a backup for our two CCGTs in the northern region.
On page eight, we show the full path of our coal power plants, and we will have in the year to come basically the exit of two of them by December 2025. IEM will be converted by mid-2026, and CTA and CTH will also be disconnected during May 2026. Another relevant business for ECL is transmission. On page nine, we present the main figures of our power network business. We aim to grow in power networks with a special focus on regulated assets. Total revenues from the transmission business reached $56 million in 2024, of which approximately 50% were regulated revenues. On the other hand, we have a strong pipeline of regulated projects for which we will need to deploy CapEx of approximately $250 million in the next three years. Once these projects are ready by 2030, our regulated revenues are expected to reach around $40 million.
Besides the development of new regulated projects in line with the energy transition, we have the opportunity to reclassify some existing dedicated assets as regulated. Now, please continue on page 10. I have a few things to say here. We reached the high end of the updated guidance while ECL invested $655 million in CapEx, and the structural net debt to EBITDA reached 3.8x during an intense period of capital expenditures that, of course, will bring higher revenues in the future. This is also explained on next page 11, where we show the 28% increase in EBITDA compared to the previous year and the $228 million net result achieved thanks to operational performance and the monetization of PEC receivables. Now, moving forward, page 12 explains in detail the evolution of ECL's energy margin.
This chart shows the total energy sales of 2024 reaching 12.6 terawatt-hours and how these energy sales were supplied with different sources. The energy margin increased from $48 in 2023 to $54 in 2024. This additional margin, together with higher volumes, explains the 28% increase in EBITDA thanks to renewable generation, lower fuel prices, and lower spot prices too, which on average allow ECL to keep its average supply costs under control, and now, I will leave you with Alison, who will present the detailed evolution of ECL financials and capital structure.
Hello, everyone. Thanks, Eduardo. Good afternoon. Let's go to slide 13, which shows the main reasons behind the EBITDA recovery in 2024: lower fuel costs and lower average price of our energy purchases and the increase of physical sales. These positive factors offset the decrease in average realized prices. EBITDA increased by 28% compared to 2023 and reached $515 million. Total revenues dropped 16% to $1.8 billion, mainly as a result of a 13% decrease in average realized PPA prices to $125 per MWh, reflecting the return of fuel prices to more normal levels. This price decrease caused an estimated $230 million EBITDA reduction, which was offset by lower costs as well as by the 3% increase in physical energy sales. Energy sales reached 12.5 terawatt-hour, with growth driven by both free clients and regulated clients.
Demand, but more evidently in the regulated space, as a result of natural growth and the increase in our pro rata share of regulated supply. The increase in physical energy sales had a $64 million positive effect on EBITDA. Our EBITDA margin advanced by 9.8 points to 28% due to a significant cost reduction, mainly explained by the drop in fuel costs and lower spot energy prices resulting from better hydrological conditions, lower fuel prices, and greater availability of natural gas. In 2024, we reported a 9% increase in energy purchases to 7.5 terawatt-hours, although we reduced our exposure to a spot market during non-solar hours. Energy purchases from the spot market climbed 7% to 3.9 terawatt-hours, while purchases under backup PPAs increased by 11% to 3.7 terawatt-hours. These purchases were made at much lower average prices.
Indeed, the average realized price of our energy purchases was 32% lower than the price reported in 2023. In slide 13, there is an orange bar showing a net effect of a minus $50 million, which combines a $33 million positive effect of the lower average price of our energy purchases with an $82 million negative impact of higher purchase volumes. The greater volume of energy purchases was offset by the decrease in our own generation. On the one hand, coal generation increased 37% to 1.77 terawatt-hour because of the failure of IEM plant in the first half of 2023, and on the other hand, gas generation fell by 34% to 1.8 terawatt-hour because in 2023, we had a tolling agreement with Kelar, which was not in effect in 2024.
Our renewable generation, including the output of our new BESS Coya storage plant, increased by 2% to 1.7 terawatt-hour, accounting for approximately one-third of our own generation. The 11% decrease in our thermal generation, combined with lower average fuel prices, explains the $280 million positive impact on EBITDA in 2024. All this explains the $112 million increase in EBITDA to $515 million, which ended up in line with the high end of our EBITDA guidance for 2024. In slide 14, we can see the complete turnaround of our net results, which went from a negative $411 million to a positive $228 million.
In 2023, we reported a $9 million after-tax effect of the last sale of PEC 1 receivables and a $491 million after-tax effect from additional asset impairments related to coal assets, which will stop working under their current conditions beyond 2026, excluding the one-off effects, though 2023 net income would have reached $89 million in 2023. In 2024, net income reached the mentioned $228 million, a significant improvement from 2023's recurring results, mainly due to the strong EBITDA recovery, a reduction in depreciation expenses explained by the impairments made in the last quarter of last year, and an increase in the financial income. The increase in net financial income is in turn explained by interest accrued on delayed collections from regulated customers, as recognized by the January 24 PNP tariff decree, interest earned on the sale of PEC accounts receivables, and an $18 million increase in capitalized interest.
All this offset an increase in interest expense triggered by higher debt balances and higher average interest rates. In slide 15, we see the status of our net debt, which increased by $97 million to $1.9 billion, a modest increase considering that we financed $626 million and $127 million build-up of accounts receivable resulting from price stabilization laws. The modest increase in the net debt compared to the investing activity was possible due to the strong operating cash generation, which reached $459 million, plus $415 million in proceeds from the sale of PEC 2 and PEC 3 Receivables in 2024. In slide 16, we are showing a summary of cash flows resulting from price stabilization laws. Over the four-year period ended December 2024, the company accumulated accounts receivable for a total amount of $793 million on top of the $142 million initial balance reported in year-end 2020.
All this represented sales revenues that could not be collected because of the enactment of the price stabilization for regulated customers. Thanks to the PEC 1 monetization program, the company could collect cash proceeds amounting to $193 million between the first quarter of 2021 and the second quarter of 2023, and it had to bear financing costs of $79 million because these receivables were sold at a discount. PEC 2 notes began to be sold in 2023. Under this program, between 2023 and 2024, we collected $278 million in cash, plus $13 million in interest income, which alleviated liquidity pressures, especially in 2023. In 2024, the account receivable build-up amounted to $127 million, or $200 million including the interest and inflation adjustments. The gap between PPA tariffs and the stabilized prices began to decrease upon the full implementation of the PEC 3 law.
In 2024, we completed the sale of certificates of payment issued under PEC 2 in an aggregate amount of $57 million, and we received $1.5 million in interest income. On October 24, we completed the first sale of certificates of payment under PEC 3 in an aggregate amount of approximately $356 million. A second and last sale of certificates is expected to occur on April 2025, which should amount to approximately $109 million plus interest. As tariffs to regulated customers increase following the publication of the last tariff decrease, PEC receivables will no longer accrue, and the second PEC 3 monetization schedule for April 2025 will mark the end of PEC receivables build-up and related monetization programs. All in all, once the April 2025 sale is completed, ENGIE will have sold accounts receivable in an aggregate amount of approximately $1 billion over the last four years.
The three PEC monetization programs contributed to alleviate the heavy financial pressure in terms of leverage, liquidity, and funding compression to finance investments required for the energy transition. Now, let's move to slide 17. Our triple B stable outlook ratings have been confirmed by both Fitch and Standard & Poor's. Net financial debt reached $1.9 billion at the end of December, with net debt to EBITDA down to 3.8x . We have made progress in our debt profile objectives. First, to reduce net debt to EBITDA through EBITDA recovery. Second, to fund the construction of Lomas de Taltal wind farm and the BESS projects, whose objectives are to reduce the costs of exposure to the spot market and the containment and intermittency associated with renewables. The third, to extend the maturity profile of our debt.
The first sale of PEC 3 receivables in October also allowed us to reduce our net debt to EBITDA ratios. On the bottom left corner of the slide, you can see the maturity schedule of our debt as of the end of December, which shows a reduction in refinancing risk and a 5.5% average coupon rate of our debt. At the end of January 2025, following the full repayment of the remainder of our 144A bond, the average remaining life of our debt was extended to 5.2 years from 3.8 years at the end of December 2023. Now, I'll leave you with Eduardo, who will brief us on the investment plans and guidance for the year.
Thank you, Alison. So now, please, let's go directly to page 19, in which we will start with the second part of this presentation and present the medium-term outlook for ECL. If we move directly to page 20, we can see that we are presenting an updated development plan to be executed between 2025 and 2027. This is no longer a potential plan. These are the concrete projects that have been under construction for a few weeks and will be delivered in the next two years. So these new projects will add around 1.1 GW of additional renewables and BESS capacity to the portfolio and will allow ECL to be fully balanced from both business and risk perspectives. To implement these additional projects, we will need to deploy approximately $1.4 billion in the next three years.
On page 21, we present the seven projects that we have now under construction, which will bring, as I was mentioning before, 1.1GW of additional capacity to our portfolio in Chile. These projects are located in different regions. As we can see in the graph on the right side, five will be located in the north, where we have an important volume of energy sales, one in the center, and one in the south. Let's see them in detail starting from the top left. BESS Arica is a 30 MW BESS project located on an existing site. We are taking advantage of existing synergies. BESS Tocopilla is the only project that was already announced during 2024, and it's located on the same site where we had two coal power plants.
So we are building these batteries in the same square meters where we used to run Unit 12 and Unit 13. Then BESS Lile is a 140MW BESS project located at the Mejillones site, optimizing, again, the project by using an existing site and existing connections. Then Pampa Fidelia is a large wind project located in the north that will require a total CapEx of around $475 million. And this project will also be key to balancing our position in the north, where most of our unregulated clients are. Then we continue with BESS Los Loros, which is a co-located project in an existing PV solar plant. So this means we are adding, again, batteries to an existing PV solar plant. And we are, again, taking advantage of the site and connections.
Then we have PV plus BESS Libélula, which is a total of 354MW project located in the central region of Chile, close to Santiago, and will become our first project in this important region. Then we can continue with Pemuco, which is a 165MW wind farm located in the southern region. And this project will be ECL's first greenfield project to be developed in that region. Both Libélula and Pemuco will be key to reinforce our regional presence with different generation sources all across the country. And this will, of course, improve our competitiveness for future growth. So now we are basically sharing that we will have seven projects under construction. So this is a material progress in our transformation plan.
If we move to page 22, we can see a good number of power networks projects that are new works and also expansions, which, as I mentioned before, will bring additional regulated revenues to the portfolio. These projects will require ECL to invest around $250 million in the next three years, or between 2024 and the next three years. Page 23 shows a consolidated snapshot of the investment plan, mainly concentrated in renewables and BESS, with a total investment of $1.4 billion to be deployed between 2025 and 2027. This investment includes the seven projects that I mentioned a few minutes ago. Now, please, let's continue on page 24.
As a result of the investment plan we just explained, ECL's average supply cost should continue decreasing, and this positive effect should be captured by a positive evolution in ECL's EBITDA while keeping ECL's leverage under control during this intensive CapEx phase, so this is why the net debt to EBITDA ratio is expected to remain at current levels during this period, then moving to page 25, in summary, and also as a consequence of the updated investment plan, we are pleased to confirm that we are right on track to deliver the transformation plan that we announced some years ago. By 2027, we will be fully balanced, developing 2.5GW of renewables and batteries, disconnecting 1.2 gigawatts of coal power plants, converting the IEM coal power plant to natural gas, and this will also add 0.4GW of gas capacity to the portfolio.
The positive impact of these new projects can be seen on next page 26, where we present the yearly average position of the portfolio. By 2027, ECL will reach full balance, considering the new investments and the end of the regulated PPA that we have in the north. This also means that ECL is now ready to resume its commercial activity and sign new PPAs and trigger additional investments in the future. We can now move forward also with the guidance for 2025 and talk about the short term. This is presented in next page 27. So in 2025, we plan to invest approximately $900 million, and we expect an EBITDA in the range of $525-$575 million, keeping the net debt to EBITDA ratio below four times . As usual, there are some upsides and downsides related to the variables described on the left side of this page.
However, the exposure to spot prices is not as relevant as in previous year, so meaning lower upsides and downsides linked to the spot price volatility. Now, I would be pleased to leave you for some minutes and also to invite Melanie, who will brief us on our ESG strategy and accomplishments.
Thank you, Eduardo, and hello, everyone. If we move to slide 29, as shown here, if you have seen our 2023 report or also attended this call last year, you might recognize our approach to sustainability, maintaining the same four pillars: the triple bottom line, Performance, Planet, and People, as well as a supporting governance structure. This is all to support our purpose of being a transition maker, enabling our customers in the decarbonization of their operations. The head of ESG role, in which I am, only exists since the 1st of October last year. So this year, we will be developing our first local sustainability strategy, reflecting and adapting the group strategy for Chile.
We will have a vision for 2030 and 2035, which will cover all elements of the group strategy, which is being updated as we speak, and that will be doing a double-click by region and business unit as required, considering the wide geographic, industrial, and social diversity across a company, across a country as large and extensive as Chile. So with that context, let's focus on some of our key results for 2024. We'll cover Planet and People in more depth on one of the next slides, and you've just heard the financial results in a lot of depth. So focusing on governance on the slide 29, there are three achievements that stand out primarily from improving our processes in procurement, our code of conduct. We implemented a human rights surveillance plan in the value chain.
We also reinforced our due diligence process around ethics for our new supplier contracts, and we updated our ethics code of conduct in our business and crime prevention approaches. With that, moving on to page 30 and sustainable finance. This has been increasingly key for us. The IFC has issued their first sustainability-linked loan in Chile to ENGIE Chile, and with $400 million over a 10-year term, the loan is available to refinance debt and finance other green projects in line with our transformation plan. We're moving away from fossil fuel-based power generation to renewable energy generation and BESS systems. So this loan is linked to our ESG performance, meaning our commitments and targets on the non-financial indicators, such as reducing our residual GHG emissions, installing renewable energy capacity, and supporting gender diversity.
For the IFC, as per the regional director for Latin America, quoted here in Spanish on the slide, this loan sets a precedent, and they consider us as a leader in tackling climate-related challenges efficiently. We're also working with the IDB, and we look forward to expanding on these forms of financing and collaboration as both institutions have become valued partners of ours, as we have seen in our on-site visits with them in the preparation leading up to the visits and the follow-up conversations we've had with them. Moving on to slide 31, this is where we focus on the Planet and People pillars and contrast some of our local and group targets, considering that, as we said in the beginning of the section, they will be reviewed during the next weeks and months as part of our first local strategy.
Two key environmental indicators are the share of renewables as part of our total installed capacity and also how emissions-intensive that generation is, meaning our Scope 1 emissions covering all the non-electric, stationary, and mobile fuel consumption, as well as fugitive gases. These are mainly driven by the remaining operating coal capacity that we have, as well as construction-related emissions for the new projects. Our target for 2024 was to be below 3.9 megatons, which we have achieved with 2.2, even though emissions have increased from 2023. Here, we need to point out that the decrease in 2023 was due to the units' CTM3 and Red Dragon going offline for three or four months. And in reality, last year, our production went back to business as usual, and we still managed to reduce overall emissions compared to 2022. So the relevant comparison here is between 2024 and 2022.
On installed renewable capacity, our target for Chile in 2026 is 1% higher than the group's 2030 target, and with 42% in 2024, and the projected progress of our pipeline development and everything you have heard before from Eduardo and Alison, we are on track to achieve our 2030 targets. For gender diversity, we have met our national target, but the target itself that we set ourselves for last year was still lower than the group's 2030 target, and this, for context, reflects dynamics and availability of talent in the Chilean market specifically. We continue to implement initiatives to attract and retain female talent, and in this context, it is also worth pointing out that we have a new benefit of paternity leave extending the five days stipulated by Chilean law to four weeks.
Last but not least, and absolutely critical in our sector, we maintained our lost time injury frequency rate at 0.1, as we did last year, and below the Chilean target that we have at 1.1, which in turn is lower than the group's 2.3 target for 2.3. This is something that is incredibly important to us. On page 32, we provide an overview of rankings and certification. Nationally and at group level, we participate in a wide range of initiatives and rankings as relevant and as efficiently as possible, avoiding duplication with our headquarters. The group has approved a science-based target for 2045 and is a member of United Nations Global Compact.
We continue to follow the 11 TCFD recommendations, and at a practical level, we are looking at climate risks at GBU level in each country and have adaptation plans in place at site level that we keep improving year on year. We participate in the Ecovadis rankings as a supplier, where we are ranked in the 97th percentile, and we also use it for our own key suppliers globally and in Chile. We are ISO and EDGE certified and will be pursuing our recertification of the internal SET label, which applies to our project development and is aligned with the sustainable energy transition. It is externally audited, and we participated and qualified for the first time last year. In Chile, we participate in the assessment of ACCIÓN Empresas, which is the local chapter of the WBCSD, as well as the SOFOFA and Merco rankings.
And we take our suppliers on this journey with us and have 25 suppliers participating in our sustainable procurement program. A selection of emissions-intensive local key suppliers also participate in the Chilean national program that allows companies to report their carbon footprint for free, and if they choose to be audited, they get a corresponding certificate. And with that, to come to a close on page 33 and to leave space for questions, while we are driving a shift to renewable energy at full speed, we recognize that we need to go beyond just the quantity of our installed capacity. With our legacy coal assets, we need to ensure a just transition for our communities that considers employment opportunities and new skills, territorial development, and a responsible dismantling.
As we accelerate this development of new capacity, especially in the south of Chile, we need to establish constructive relationships with local communities via a permanent presence, and we pride ourselves on our associativity policy that has been in place for years and that we continue to improve and add to during the existing strategy development. Thank you very much, and I will now leave you with Eduardo for the closing remarks of this presentation and any questions.
Thank you, Melanie, for this interesting update on our sustainability strategy and the recent achievements. So to conclude this presentation, it is confirmed that the completion of ECL's transformation plan is on schedule with today's new investments, and these investments will require a $1.4 billion CapEx between 2025 and 2027. Also, the company achieved a 28% increase in EBITDA, reaching $515 million and a net income of $228 million in 2024. And future expectations include continued positive EBITDA growth, accompanied by lower volatility and also improved risk control. So thank you for your attention, and now we are open for any questions and suggestions that you may have for us.
Thank you. The floor is now open for questions. If you have a question, please press star, then one on your touch-tone phone at this time or at any time. If at any point your question is answered, you may remove yourself from the question queue by pressing star, then two. Questions will be taken in the order they are received. We do ask that when you pose your question, that you pick up your handset to provide optimum sound quality. Once again, if you would like to ask a question, please press star, then one. Please hold while we poll for questions. Once again, if you would like to ask a question, please press star, then one. At this time, I would like to turn the floor back to ENGIE Energía Chile for any closing remarks.
Thank you, Operator, and thank you, everyone, for being with us today. Of course, we remain, as always, available for any future questions that you may have in the next weeks. Thank you very much and have a very good day.
The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.