Past achievements and outlook of the Future Water and Energy supply of Aruba

Lighting Up the Future

Stakeholder Encounter with WEB Aruba ManagementAugustus – November 2019

Leading ChangeRELIABLY

AFFORDABLY

SUSTAINABLY

& SAFELY

Click to see video

Tree of Content

2. AchievementsReal Achievements in real time

1. Great Expectations“Take nothing on its looks; take

everything on evidence. There’s no better rule.”

Great Expectations – Charles Dickens

3. WEB Aruba NV TodayCurrent asset conditions and upcoming challenges in power and water production – an outlook

What’s in it for Aruba?The OUTCOMES and BENEFITS of the

program compared to the RISKS of the program

Outlook Beyond 2022Business cases currently in

development. Potential future major projects

4. Outlook 2019 – 2022 Projects in Execution

S

Our Stakeholder’s Expectations are Central – RAS(S) Framework

AAFFORDABLELOWER TARIFFSTARIFF STABILITYIMPROVED TARIFF MANAGEMENTR

RELIABLEINCREASE IN RELIABILITY

REDUCED RISK FOR BLACKOUTS/BROWNOUTS

SSAFEIMPROVED SAFETYIMPROVED WORK ENVIRONMENT

Great Expectations – Wishes & Desires

SUSTAINABLE IMPROVED PRODUCTION EFFICIENCY

IMPROVED ORGANIZATIONAL EFFICIENCYOPTIMAL MIX OF RE & NRE S

Real Achievements in Real Time

6,180 6,166 6,2275,635

5,2964,922 4,992

4,1723,791 3,852 3,664 3,846 3,834

3,679

6,180 6,258 6,403 6,166 6,228 6,209 6,278 6,077 6,108 6,056 6,189 6,328 6,344 6,221

0 45 87263

461637 636

942 1,147 1,091 1,249 1,228 1,2421,258

0

500

1000

1500

2000

2500

3000

3500

4000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

mT

/CO

2 pe

r day

Bbl/

day

HFO Consumption (Actual) HFO Consumption (Do Nothing) Emissions savings

RECIP PHASE 1

RECIP PHASE 3 + SWRO 2

SWRO Mobile

FESS+ BESS +IGMS/DATA

WIND VP

SOLAR SN

RECIP PHASE 2 + SWRO 1

BASE CASESTM+MSF

Investments & Results

Real Achievements in Real Time

18%40%less Fuel Consumption**from 2005

Renewable Energy penetration** AVG per year

Results:

Total Investments:

$ 268 Million

COMPLETED in 13 years

Total estimated Savings:

$ 620 Million

Savings compared to Base-scenario

25,975,545

52,978,416

7,633,885

123,731,522

9,649,167 7,062,724

29,222,222

12,277,778

0 1,550,1393,334,565

15,090,10518,879,013

34,416,946

46,561,824

71,428,102

82,213,18479,597,210

75,002,891

67,438,379

59,918,66465,214,513

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Inve

stm

ent i

n $

Savi

ngs i

in $

/yr

Projects Investment ($) Savings (ACT) Savings (Platts)

RECIP Ph 3+ SWRO 2

RECIP Ph 1

RECIP Ph 2+ SWRO 1

WP VP

B2P SWRO Mobile + EDI

SOLAR/FESSBESS/DATACEN

IGMS + AUX

Power Tariff comparison in Caribbean

Source: Caribbean Power and Water Production Benchmark - 2014

Power & Water Tariff comparison Locally

Source: WEB Aruba, WEB Bonaire, Aqualectra, GEBE per Jan. 1, 2019

Historical Trend Fuel Price & Tariffs

0 92

175531

9321,286 1,286

1,9042,317 2,204

2,525 2,482 2,510 2,542 2,566$36.2

$46.4$52.1

$77.8

$55.5

$73.3

$99.2 $102.8$97.2 $98.95

$81.4$74.5

$65.4$70.3

$60.0

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

HFO in

$/Bbl

Saving

s in Bb

l/day

Delta ACT HFO Cost HFO Cost Platts

IMO 2020 starts 1st January 2020, future of HFO price & supply more uncertain

WEB Aruba TodayPressures & Challenges

Age of Production AssetsOld and inefficient production assets.Boilers are practically all written off.No gains in renovating old and inefficient assets.

Fuel Oil Volatility & O&M CostFuel oil volatility and Geopolitics.

Rising O&M cost on fuel oil.Fuel oil market instability.

MindsetNo more Monopoly.The sky is not the limit.

Tariff Pressure & ElasticityTariff lowering pressure.

Poor or no tariff elasticity.Financial hedging just buys time and not

tariff sustainability.

Reliable & EfficientReliable reserves and efficient fuel consumption are

antagonistic forces. Peak demand and average demand gap is widening.

The CompetitionDecreasing cost of distributed RE

Companies with deep pockets offering lease deals.

Changing Landscape of the Electricity MarketWEB Aruba Today

Lease Agreements with fixed monthly tariffs. Net-Zero and Grid

Defection options are becoming more feasible for the Low &

Middle Class Consumers.

Rise of the Autonomous distributed Renewables Market

ENERGY SAVERS

AUTONOMOUSPV-SOLAR

HOME BATTERY STORAGE

LEASE DEALS

Outlook 2019 - 2022

Capital Projects

Non-Capital Projects

RECIP conversion

to Gas if LNG

Approved

Grand Dismantling(OPEX)

OMOA:O&M

Organizational Adaptation

T&DP:Training &

Development Project

Business Continuity

Plans

6 W50DF RECIP Phase IV

New SWRO 3

RECIP Phase IV6 W50DF RECIP engines. All boilers are

replaced. Total 102 MW Installed Capacity. Grass Root project. Q1 2021

(RECIP Conversion to NG)All RECIP engines converted to DUAL Fuel operation (NG/HFO). 10 Engines

total. 92 MW capacity. Depends on LNG FID approval Q4 2020

New SWRO 3>18000 M3 capacity new SWRO unit.

Grass root project. 2022

IGMS/ILS advanced system controlsImplementation of advanced system controls

technology in preparation for high RE grid penetration. Robust ICT Infrastructure enabling all technologies for

controlling all the generation unitsQ1 2020

Capital Projects

RECIP Phase IV

RECIP to NG

New RO3

Outlook 2019 - 2022

IGMS/ILS advanced

system controls

LNG Import Business Case in Development in pursuit of going HSFO Free by 2023 (Programa 2020)

Outlook 2019 - 2022Impact of RECIP phase IV and SWRO 3 Projects

6,180 6,166 6,227

5,6355,296

4,922 4,992

4,1723,791 3,852

3,6643,846 3,834 3,679 3,616

3,0142,771

6,166 6,228 6,209 6,2786,077 6,108 6,056 6,189 6,328 6,344 6,226 6,182 6,182 6,182

0 45 87 263 461 637 636942 1,147 1,091 1,249 1,228 1,242 1,258 1,270

1,568 1,688

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

mT /

CO2 p

er d

ay

Bbl/d

ay

HFO Consumption (Actual) HFO Consumption (Do Nothing) Emissions savings

Forecast

RECIP PHASE 4

SWRO 3

BASE CASESTM+MSF

Outlook 2019 - 2022Impact of RECIP phase IV and SWRO 3

Projects

Renewable Energy penetration** AVG per year

18%

Results:

55%

Total Investments:

$ 147 Million

PROJECT IN EXECUTION

less Fuel Consumption**from 2005

Total add. Savings per year*:

$ 27 Million*At $60/Bbls (RECIP4 + SWRO3)

Outlook Beyond 2022Potential Projects currently in Business Case Development Phase

6,180 6,166 6,227

5,6355,296

4,922 4,992

4,1723,791 3,852

3,6643,846 3,834 3,679 3,616

3,0142,771

2,055

6,166 6,228 6,209 6,2786,077 6,108 6,056 6,189 6,328 6,344 6,226 6,182 6,182 6,182 6,182

2,121

0 45 87 263 461 637 636942 1,147 1,091 1,249 1,228 1,242 1,258 1,270

1,568 1,6882,042 2,382

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

mT /

CO2 p

er d

ay

Bbl/d

ay

HFO Consumption (Actual) HFO Consumption (Do Nothing) Emissions savings

Potential Projects

SOLAR2 + WIND2 + W2E

Forecast

NG EquivalentPotential Project

HFO to LNG CONVERSION

BASE CASESTM+MSF

The Water Tariff is largely determined by the cost of electricity. With the increase in power production efficiency the water tariff management and stability is improved. This realistically increases the possibilities for a responsible downward trend in water tariffs.

Affordable and Sustainable Water Tariffs

The crux of the electricity tariff is 3-fold: The price of fuel, the thermal efficiency, and the organizational O&M efficiency. The Programa 2020 is designed to improve on all three influential parameters. Affordable and innovative new power tariff structures are made possible. Power Tariff stability, responsible downward pressure, and Power Tariff competitiveness is improved.

Affordable and Sustainable Power Tariffs

In conjunction with the projects led by the ARES Group, a technically and financial responsible mix in RE and NRE is achieved in an economic justifiable way. By negotiating favorable RE capital cost projects and/or IPP tariffs, the supplement of RE in the mix results in improving the robustness of power tariffs.

Balanced Mix RE & NRE Improving Tariff stability

New and Modernized Power Generation Assets, in conjunction with state of the art system controls will considerably improve the reliability and flexibility of power generation across the board. Faster ramping and responding units (RECIPS) practically guarantee a continuity of power production that is currently unavailable but necessary.

Improved Power Generation Reliability

The environmental value of the WHOLE is incalculable and its IMAGE as a Caribbean FIRST in Tourism is of great value.

What's in it for ARUBA

Outlook 2019 - 2022

Photographic View

Project Desmantelation 2020

Flywheel Park

Battery Energy Storage System’ (BESS)

Sunrise Solar Park – Lago Heights

Renovation Pipe Bridge Spaans Lagoen

RECIP ENGINE

Project RECIP IV

History in the Making'59, '91, 2006, and now 2019!

Cleaner, more Agile, more Competitive.

Renewables & Natural Gas fully Integrated at most

Competitive Tariffs.A FIRST in the Caribbean!

MASHA DANKI