Scatec Solar : Investor presentation October 2020

Investor presentation

October 2020

Disclaimer

The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ('relevant persons'). Any person who is not a relevant person should not rely, act or make assessment on the basis of this presentation or anything included therein.

The following presentation may include information related to investments made and key commercial terms thereof, including future returns. Such information cannot be relied upon as a guide to the future performance of such investments. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in Scatec Solar ASA or any company within the Scatec Solar Group. This presentation contains statements regarding the future in connection with the Scatec Solar Group's growth initiatives, profit figures, outlook, strategies and objectives as well as forward looking statements and any such information or forward- looking statements regarding the future and/or the Scatec Solar Group's expectations are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements.

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Contents

• Introduction
• Acquisition of SN Power
• The solar market
• Project pipeline update
• Our business model
• Financials
• Outlook and guidance

The 47 MW Redsol project in Malaysia just started commercial operations.

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A leading player in emerging markets

Scatec Solar offices Plants in operation Plants under construction

	1. 9 GW	374	7 GW
	operation &	employees	backlog &
•	construction		pipeline
Present in 18 countries globally

Key facts

• Develop, build, own & operate solar plants across emerging markets
• Founded in 2007 - headquarters in Oslo, Norway
• Present in 18 countries globally

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Q3'20:

Increased power production and growth in project pipeline

• Power production of 430 GWh, up 46 % from last year
• EBITDA* of NOK 319 million, down from NOK 433 million last year
• Added 900 MW to project pipeline - several large projects maturing
• COD reached for the 47 MW Redsol plant in Malaysia

Power production (GWh)

+46%

430

295

Q3 2019

Q3 2020

Malaysia Mozambique

Egypt

Ukraine

Brazil South Africa

Czech

Jordan

Honduras Rwanda

*EBITDA and other alternative performance measures (APMs) are defined and	5
reconciled as a part of the APM section of the third quarter report on pages 36-40.

Diversified portfolio of 1.9 GW in operation and under construction

1,552 MW in operation				352 MW
			under construction:
South Africa, 448 MW	Egypt, 390 MW	Malaysia, 244 MW	Brazil, 162 MW	Ukraine, 235 MW

Ukraine, 101 MW

Honduras, 95 MW

Jordan, 43 MW

Mozambique, 40 MW

Argentina, 117 MW

Czech Republic, 20 MW	Rwanda, 9 MW
	COD expected in Q1 2021

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Our success is based on our business model and a strong entrepreneurial culture

Business model		People
Integrated - capturing full project	Predictable	Agile & lean
value	Working together	Entrepreneurial culture
Structuring & financing	Driving results	Passionate & empowered people
Financial discipline	Changemakers	Strong and diversified talent pool
Partnerships

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Our competence and track record will drive Scatec Solar's growth in renewables

Success formula: Agility and cross functional teams

Empowerment of teams to take a holistic

approach to the business case

Discipline and focus

Increased project conversion rate

Key competencies:

•	Energy & regulatory	•	Project structuring,
	frameworks	•	tax and financing
•	Power markets	Legal & compliance
	analysis	•	Environmental &
•	Project design and	•	social assessments
	engineering	Business case
			optimisation

1,505 MW	50 projects	16 Countries	2.5 BUSD of
in operation			project finance

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Acquisition of SN Power

Acquisition of SN Power

• On 16 October, Scatec Solar announced the acquisition of SN Power from Norfund for a total consideration of USD 1,166 million

• The transaction is expected to close in the first half of 2021

• More information and full presentation here

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Scatec Solar acquires SN Power - a leading hydropower developer and IPP

The acquisition of

SN Power AS

• Scatec Solar has signed an agreement to acquire 100% of the shares in SN Power from Norfund for a total consideration of USD 1,166 million (NOK 10,948 million)
• Includes SN Power's hydropower assets in the Philippines, Laos and Uganda1 with a gross capacity of 1.4 GW (production of 6.1 TWh) and a pipeline of gross 2.5 GW
• Hydro asset and pipeline in Sub-SaharanAfrica to be structured as a joint venture with Norfund (51% Scatec Solar / 49% Norfund) - Scatec Solar being the operator

Financing &

transaction timing

• The acquisition is fully funded through cash on hand, vendor finance, term loan and acquisition finance from DNB, Nordea, Swedbank and BNP Paribas
• The transaction is expected to close in the first half of 2021
• The transaction is conditional upon customary regulatory approvals and local competition approval

(1) SN Power assets in Panama and Zambia is excluded from the transaction

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Strategic rationale

1. Building a global leader in renewable energy
2. Adding significant cash flow from operating plants
3. Solid hydro assets in attractive power markets

4 Accelerating growth with new pipeline & market access

5 Cultural fit and strong focus on ESG

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1 The energy transition is accelerating and Scatec Solar broadens its growth strategy

Massive demand growth in renewables

More complex power markets

Further technology integration

Scatec Solar's broadened growth strategy:

• Build an IPP across solar, hydro, wind and storage
• New, high growth markets and broader offering
• Maintain the integrated business model
• Increase focus on early phase project development

The SN Power acquisition is an important step in this direction

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1 Strengthening Scatec Solar's position as a leading renewable developer

	+
Scatec Solar + SN Power - in brief	450 employees globally

3.3 GW1	9.5 GW1
In operation & under	Backlog & pipeline
construction
8,108	2,720
MNOK2	MNOK2
2019 proportionate	2019 proportionate
Revenues	EBITDA

(1) Gross Capacity (2) Proportionate basis

SSO	SNP
2.5 TWh2		HQ
2019 net power
production
1,336
MNOK
2019 proportionate	Scatec Solar: Plants in operation & under construction in 11 countries
cash flow to equity	SN Power: Plants in operation in 3 countries
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The Solar market

Solar & wind expected to provide 50% of all power globally by 2050

62%	The global power	77%
sector towards 2050:
Increase in global		Of new demand to be
electricity demand		covered by renewables

12,000 GW	98%
New power	Demand growth in
generation capacity	non-OECD-countries
Solar from 2% to 22%	Fossil from 64% to 20%
market share in power	market share in power
Source: Bloomberg New Energy Outlook 2019.	16

Solar is one of the world's most competitive sources of energy

• Solar is now the lowest cost source of energy across the sun-rich regions globally
• The levelised cost of solar has come down 85% since 2010 - industry scale and technology
• Storage and hybrid solutions are expected to become increasingly important for demand
• New business propositions are emerging when solar is cost competitive with base load

Cost of alternative energy sources (LCOE, USD/MWh)

250
200
150
100
50
0
Solar PV		Wind	Gas base		Coal		Nuclear Gas peak	Diesel
						load						load
		Source: Lazard Capital, LCOE v13, Scatec Solar.						17
		LCOE: Levelised cost of energy

Solar market expected to reach 170 GW of annual installations in 2022

Multiple governmental drivers for solar demand

Time-to-

market

Climate
treaty	Cost of
& national
energy
action
plans	Main
	drivers
Employment	Energy
and economic
security
growth
	More foreign
	investments

Annual global solar demand forecast - GW

Europe		Other Asia		MENA
Mainland China		North America & Caribbean		Sub-Saharan Africa
India		Central & South America		Rest of the world
				170
				158
	141
	118
	108
75
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2014 2016 2018 2019 2020 2021 2022

Source: Bloomberg NEF Q2 2020 Global PV Market Outlook 2020, forecast by region.	18

Battery costs expected to be reduced by almost 60% by 2030

Expected battery cost development

600 GW of large scale diesel/HFO installed globally

USD/kWh

325		Installed large scale diesel/HFO (GW)	250

255

219

183	161	130	130

149	137	100

2018	2020	2022	2024	2026	2028	2030	Americas	Africa	Europe	Asia
Source: Bloomberg NEF 2019. Fully installed equipment in 2019 USD..			Source: IEA World Energy Outlook, BNEF, MarketResearchFuture, Scatec Solar analysis.

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Project pipeline update

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Project pipeline increased by 900 MW - several new large projects maturing

Europe &

Central Asia

430 MW

Backlog &	Africa &	Rest of Asia
pipeline	MiddleEast
2,516 MW	2,340 MW
7,040 MW
Latin America
	1,234 MW

All figures are as of Q3 2020 reporting date.

2021 target

4,500 MW

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Project opportunities in key pipeline markets

South Africa (1,338 MW)					Vietnam (930 MW)
Development Status	Market Opportunities			Development Status	Market Opportunities
• Large ready to bid portfolio	•	RMIPPP* in 2020			• Broad set of projects	•	Targets 20+ GW by 2025
• Permits to also include batteries	•	REIPPP* Round 5 and			pursued across solar,	•	FiT for wind beyond 2021
• Wind portfolios under	•	following			floating solar, wind and	•	+5 GW solar tender expected
negotiation	Coporate PPAs			near-shore wind

(*) RMIPP: Risk Mitigation IPP Procurement Program. REIPPP: Renewables IPP Procurement Program	22

Project opportunities in key pipeline markets

Brazil (1,100 MW)					India (900 MW)
Development Status	Market Opportunities			Development Status	Market Opportunities
• Large PV project in mature	•	Auctions			•	Negotiating participation in	•	A large growth markets
stage	•	Corporate PPAs				large projects	•	Acquisition of 'Ready To
• Partnerships with large energy	•	Merchant market			•	Preparing for future	•	Build' projects
companies						tenders	State and regional tenders

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Our business model

Scatec Solar's value chain

We develop, build, own & operate solar plants for 20 years

	Project development		Financing		Construction		Operations		Ownership (IPP)
•	Site development &	•	Debt/Equity structuring	•	Engineering and	•	Maximise performance and	•	Asset management
	permitting	•	Due diligence		procurement		availability	•	Financial optimisation
•	System design	•	Construction management	•	Maintenance and repair

• Business case development
• PPA negotiation

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Partnering with Development Banks for project finance and risk mitigation

• Multilateral development banks (DFIs) are providing project debt to infrastructure in emerging markets
• DFIs are often advising governments on design of renewable programmes to promote private / public partnerships
• Project structures and contracts are set up to mitigate risk and facilitate non-recourse project level debt

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Our business model and typical project structure

Simplified illustration of company structure and main contracts in place

Component

Suppliers

Sub-Contractors

100%

Scatec Solar O&M / EPC

World

Bank/others

Scatec Solar

Equity co-

investors

39%-100%

Shareholders agreement

Land lease

Land owners

agreements

Single Purpose

• EPC contract

Vehicle

Loan agreements

• O&M contract

Project financing

• Asset Management

contract

PPA

agreement

• Sovereign guarantee

• Concession

Political risk insurance

State owned

agreement

(when relevant)

utility

State

government

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Scatec Solar's growth capacity continues to increase

Our business model and typical project capital structure:

	75
	(75%)
USDm	100
(100%)
	10
	(10%)
	15	11
	(15%)

Total capex	Non-recourse	Partner's equity	SSO equity SSO D&C margin
	project finance	share 40%	share 60%

100 MW project example

Scatec Solar's growth capacity

• As the asset portfolio grows, more dividends/operating cash flow is available for investments
• In addition the integrated business model adds to our growth capacity - D&C margin generation
• Timing, size & type of funding depends on several factors:
• • Size and timing of new projects
  • Debt leverage of projects
  • Scatec Solar ownership in projects

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Utilising new technology to reduce costs and improve power plant performance

Operation & Maintenance (O&M)

• Improved workflows through automation of processes
• Actionable analysis sent directly to decision makers
• Examples:
• • Using drones to detect module level issues
  • Cleaning robots to reduce soiling
  • Digital field workers

Global control & monitoring centre, Cape Town

• Leveraging economies of scale - MW/FTE doubled from 2018
• Real-timedata from all plants globally 24/7 - remote monitoring and support
• Using state-of-the-art analytics to detect and mitigate underperformance of our PV plants

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Improving cost, design and performance for future solar plants

Bi-facial solar panels

• 390 MW Benban project, Egypt - world's largest solar plant using bi-facial panels
• Test- and production data enables design optimisation of new plants

Larger PV modules

• 500Wp+ modules available
• Working with leading vendors to implement the latest technology
• Further reduction of capex and LCOE*

						Joint initiatives
	Self-powered trackers
	•	Incudes wireless			•	Improve operations'
		communication			•	efficiency and plant design
	•	Enables cost reduction			Cooperation with
		and simpler installation				universities and research
		and commissioning				institutes
						• Examples: AI & machine
							learning, floating solar and
							bi-facial characteristics

*LCOE: Levelised cost of energy

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Environmental, Social & Governance (ESG) is integrated in our operating model

Opportunity

Project

Financing

Delivery

Power

Development

Production

Continuous compliance

risk assessment, integrity due

diligence and monitoring

Conduct E&S

due diligence

CO2

emissions

Identify, mitigate

and monitor environmental and social impacts

avoided

Stakeholder

engagement, grievance mechanism and local development

programmes

Establish local E&S team

Health & Safety

Responsible Procurement

Calculate Scatec

Solar's emissions

DG3: Final

investment

End

of life

decision

management

Sustainability

Key ambitions 2020:

22 sustainability targets for 2020

ResponsibleClimate

procurementaction

Engaging key suppliers to capture more of our value chain's total environmental impact

Setting and pursuing an emission reduction target for our company

Climate reporting: Strategic priority and key stakeholder focus

Scope 1

Scope 2

Scope 3

CO2 emissions from

Vehicles &

Equipment

our business 2019:

2019

Diesel

10,972 tons

Purchased Electricity

generators

Business Air Travel

CO2 emissions avoided

Transformer

from our solar plants in

operation in 2019:

stations

Purchased Heating/Cooling

870,637 tons

2020	Ambitions:
•	Reporting on more indirect emissions in scope 3
	•	Engaging with several of our key suppliers to
		capture more of our total environmental impact

Financials

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Our priorities when investing in solar stay firm

Continue to stay selective

• Focus on value and risk adjusted returns
• Secure D&C margin - key for equity funding

Transactional and operational control

- Scatec Solar - the lead developer and investor

Debt & Equity partnerships

- Maximise return on equity and mitigate political risk

Capital structure approach remains unchanged

• Maximise leverage at the project level
• Moderate group level debt

Dividend policy stays firm

• Pay out 50% of free cash flow from operating power plants

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Increased power production - strong growth in project pipeline

Proportionate financials

Quarterly (NOK million)

EBITDA Revenues

1,522

	433		319	556

Q3 19

Q3 20

EBITDA 28%57%

Last 12 months (NOK million)

6,365

3,989

1,4661,517

Q3 19

Q3 20

23%38%

Third quarter 2020

• Year on year increase in Power Production revenues and EBITDA
• Continued strong focus on project development - but limited D&C revenues in Q3
• Change in segment mix resulting in EBITDA margin of 57% compared to 28% last year
• Expensed transaction cost of NOK 35 million related to the acquisition of SN Power - impacting corporate segment

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Power Production

Steadily increasing power production

Quarterly (NOK million)

EBITDA Revenues

457

	291	343		379

Q3 19

Q3 20

EBITDA 85%83%

Last 12 months (NOK million)

1,671

1,388

969

807

Q3 19

Q3 20

83%83%

The 162 MW Apodi solar plant in Brazil.

• Year on year increase in production mainly from South Africa, Egypt and Ukraine.

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Services

Revenues growth while EBITDA is affected by O&M contract mix effects

Quarterly (NOK million)

EBITDA Revenues

60

49

2322

Q3 19

Q3 20

EBITDA 47%37%

Last 12 months (NOK million)

234

144

88

53

Q3 19

Q3 20

37%38%

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Development & Construction

Low construction activity - strong project pipeline development

Quarterly (NOK million)

EBITDA Revenues

1,121

133	30

		-27
	Q3 19	Q3 20
Gross margin	15%	13%

Last 12 months (NOK million)

5,223

2,049

659

142

Q3 19

Q3 20

15%14%

The 117 MW Guanizuil project in Argentina.

EBITDA	12%	-91%	13%	7%

• Stable D&C opex level

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A solid financial position - NOK 3.5 billion of available liquidity

•	Group free cash of NOK 1,885 million
•	Undrawn credit facilities of NOK 1,600 million

Consolidated financial position (NOK million)

As of 31.12.2019

As of 30.09.2020

• Group* book equity of NOK 7,158 million -

equity ratio 91%

NOK million	Consolidated	SSO prop. share	Group level*
Cash	4,002	3, 240	1,885
Interest bearing
liabilities*	-13,748	-9,506	-747
Net debt	-9,746	-6,266	1,138

21,578	21,578
4,495	3,640
	2,750
17,083	15,190
Assets	Equity &
	Liabilities

23,919	23,919
5,455	5,485
	3,433
18,464
	15,000
Assets	Equity &
	Liabilities

*Defined as 'recourse group' in the corporate bond and loan agreements

Current assets		Equity		Non-current liabilities
Non-current assets		Current liabilities

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Q3'20 movement of free cash

NOK million

1,933	70	-19	17	-52					1,884
				-104	-67
					-131
					237
					Ukraine
End Q2	Distributions	Cash flow to	Cash flow to	Cash flow	Project equity	Project	Dividend	Working	End Q3
	from operating	equity D&C	equity Services	to equity		Development	distribution	Capital/other
	power plants			Corporate		capex

In addition: Undrawn credit facilities of NOK 1,600 million

Movement of cash in 'recourse group' as defined in the corporate bond and loan agreements.

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Short term guidance

• D&C value of portfolio under construction: NOK 1.1 billion
• • Remaining NOK 45 million value to be recognised
  • Low D&C revenues expected in Q4 2020
• Power production from plants in operation end of Q3 2020:

GWh	Q3'20	Q4'20e	2020e
Proportionate	430	410-425	1,580-1,630
100% basis	793	770-800	2,900-3,000

• Services revenues is expected to reach NOK 240 million in 2020 with an EBITDA margin of around 35%.

The 60 MW Agua Fria solar plant in Honduras.

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Outlook and summary

Raymond Carlsen, CEO

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Building a global leader in renewable energy

Where we come from

Where we are now

Where we are going

Regional solar

Global top-tier

A global multi-technology

developer/IPP

developer/IPP

renewables developer/IPP

Solar	Solar	Solar
	Hydro	Hydro
	Wind	Wind
	Storage	Storage

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Stable production and strong growth in project pipeline

• Acquiring SN Power - building a global leader in renewable energy
• Project pipeline increased to 6.5 GW - new project additions in large growth markets
• Solid financial position
  - available liquidity of NOK 3.5 billion
• Targeting installed capacity* of 4.5 GW by end 2021

*In operation and under construction.

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Thank you!

Our asset portfolio - July 2020

In operation:								Under construction:				Project backlog:
			CAPACITY	ECONOMIC			CAPACITY ECONOMIC			CAPACITY	ECONOMIC
			MW	INTEREST			MW	INTEREST			MW	INTEREST
Egypt: Benban	390	51%		Ukraine: Kamianka,				Tunisia	360	65%
South Africa: Upington	258	46%		Progressovka, Chigirin	289	96%		Ukraine	65	65%
Malaysia: Gurun, Jasin,									Argentina: Guañizuil	117	50%		Bangladesh	62	65%
Merchang	197	100%		Total	352	80%		Mali	33	64%
South Africa: R1 & R2	190	45%						Total	520	65%
Brazil: Apodi Solar	162	44%
Ukraine: Rengy, Boguslav	101	77%
Honduras: Agua Fria, Los
Prados I	95	51%
Malaysia: Redsol		47	100%
Jordan: EJRE/GLAE,	Oryx	43	62%
Mozambique: Mocuba	40	53%
Czech Republic		20			100%
Rwanda: Asyv				9				54%
Total		1,552				59%

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