Annual Investor Conference€¦ · BUILDING ELECTRIFICATION: 50 % increase in global building energy share by 2050. TRANSPORT ELECTRIFICATION: 27 % increase in global electricity

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Annual Investor Conference

Uday Yadav, President & COO, Electrical SectorMarch 2, 2020


We have a leading electrical franchise with broad capabilities• Regional expertise and global scale• Delivering strong market and financial results

Significant potential for base business growth• Driven by safety requirements, resilience investments, data growth, and electrification

Well positioned to benefit from “energy transition” growth trend• “Everything as a Grid,” enabling integration of renewables and sustainability solutions• New types of equipment, service, and software pulling through traditional equipment

Differentiated digital foundation• Enables new business models for the energy transition future

Today’s key messages


Industry Leadership


We are strongly positioned in the most dynamic and fastest growing part of the electrical power value chain

Power generation

Transmission Distribution

Commercial

Industrial

Data centers

Residential

Utility

Primary areas of focus

Machinery


Technology Innovation

• Arc science• Power electronics• Material science

Structural solutions

Life safety & Security

Power distribution & Circuit

protection

Power quality, Backup power & Energy storage

Control & Automation

Harsh & hazardous environment

solutions

Our capabilities are essential to the effective delivery of electric power






protection




solutions



Deep regional application expertise

End-to-end services

Partners & channels

Integrated digital platform

& insights



Residential Commercial

IndustrialData centers

Utility Machinery




protection




solutions

Deep regional application expertise

End-to-end services

Partners & channels

Integrated digital platform

& insights




We have built our capabilities and expanded through key acquisitions and partnerships…

US-focused power distribution and control business

Global geographic expansion

Built scalePower quality

and data center market

Extended capabilities

2004 2008 20131979 1994 2019/20

http://www.phoenixtec.com.tw/en/index.htm


…and continued organic investments to extend our capabilities and customer solutions

Leading service business

Advanced product innovation

Digital centers of excellence• Connectivity• Cybersecurity • Analytics


Insulgard Switchgear analytics improve health of medium-voltage systems

Leading service business

INDU

STRY

FIR

STS

Intelligent and remotely configurable breaker

Li-ion UPS with dual-rated cybersecurity

Advanced product innovation

Digital centers of excellence• Connectivity• Cybersecurity • Analytics

…and continued organic investments to extend our capabilities and customer solutions


Leading to profitable growth and market share gains

REVENUE INCREASED 6X OVER LAST 2 DECADES Operating profit from 7% to 18%

Global IT Channel Share

Source: National Electrical Manufacturers Association

NEMA Share

Sources: ICT, Context, NPD


Future GrowthSecular trends and targets


Our world is rapidly changing…

Electrical demand

BUILDING ELECTRIFICATION:

50% increase in global building energy share by 2050

TRANSPORT ELECTRIFICATION:

27% increase in global electricity demand by 2030

DATA AND COMPUTE:

4X increase in share of electricity demand by 2030



Electrical demand





DATA AND COMPUTE:


Decentralized supply

RENEWABLES:

50% of generation by 2035

STORAGE:

13Xinstalled base growth by 2030



Electrical demand Decentralized supply

RENEWABLES:

50% of generation by 2035

STORAGE:

13Xinstalled base growth by 2030

Infrastructure requirements

SYSTEM RESILIENCE:

5% -12% increase in outage minutes

OPTIMIZATION:

13Bconnected power devices by 2025

CYBERSECURITY:

84%of companies have had an IoT breach





DATA AND COMPUTE:



…creating strong future growth potential

Power infrastructure investments and grid

modernization

Electrical power value chain transformation

1

2


…creating strong future growth potential

Base businessexpansion

Energy transitionleadership

Digitalsolutions

Power infrastructure investments and grid

modernization

Electrical power value chain transformation

1

2


Targeting 50% revenue growth potential in 5 years

2020 Baseline revenue

Base business expansion

Energy transitionleadership

Digital solutions

$12B

$15B

2025 Organic revenue

$18B

2025 Electrical Sector revenue

Target acquisition value


Base Business ExpansionSafety, Resilience, Data Growth, Building Electrification


Portfolio of safety solutions driven by code and customer preference

Prevent the 40% of building fires that are electrical

2020 Code continues trend of requiring more sophisticated content

Heightened utility focus on preventing fires


Prevent the 40% of building fires that are electrical

2020 Code continues trend of requiring more sophisticated content

Heightened utility focus on preventing fires

Arc fault breakers, extending detection leadership

Intrinsically safe industrial components

Expulsion-free fuses to reduce utility fire risk

Portfolio of safety solutions driven by code and customer preference


Tailored solutions to support entire electrical power value chain resilience

Outages can cost >$1M per hour in critical applications

>$250B damage caused by weather

5% - 12% projected increase in downtime


Arc quenching switchgear fastest return to service

Underground switchgear hardens grid

Reclosers isolate and manage areas with high risk

Outages can cost >$1M per hour in critical applications

>$250B damage caused by weather

5% - 12% projected increase in downtime

Tailored solutions to support entire electrical power value chain resilience


Rapid growth of data stimulates medium-term growth in data center subsegments

IT spend in public cloud will grow 50% by 2022

Hyperscale data center players spent $185B in last 3 years

There will be $175B - $215B in edge computing hardware by 2025


Overhead busway for flexible design

1MW UPS for cost conscious co-los and cloud providers

Pow-R-Line XD switchboard reduces footprint

Hyperscale data center players spent $185B in last 3 years

There will be $175B - $215B in edge computing hardware by 2025

IT spend in public cloud will grow 50% by 2022

Rapid growth of data stimulates medium-term growth in data center subsegments


Significant increase in content due to building electrification

Developing economies: 20% point increase

Developed economies: 5% point increase

45% of building consumed power in 2050, up from 31%


Developing economies: 20% point increase

Developed economies: 5% point increase

Tier 1& 2 power distribution components tailored for developing world

45% of building consumed power in 2050, up from 31%

Redesigned 250V Ground Fault Circuit Breaker for kitchen applications

Significant increase in content due to building electrification


Energy Transition


Energy transition is changing the electrical power value chain, creating an “EVERYTHING AS A GRID” environment

EVs

Distributed Storage

Solar

Produce, consume & sell

energyTransmissionPower

GenerationDistribution

Grid-scale Renewables

Grid-scale Storage

Storage and Specialized Infrastructure Traditional Power Infrastructure Optimization Software Service


Energy transition: Preparing commercial buildings to optimally use EVs

Supporting Catholic University of Lille France

goal to achieve 0CARBONFOOTPRINTBY 2035


Energy transition: Preparing commercial buildings to optimally use EVs

Power distribution backbone

EVsEnergystorage

Solar generation

Building EnergyManagement System

above installed electrical content

19%Added Eaton content in commercial

building upgrade project


Our addressable market expands as the number of EV chargers in a commercial building or multi-unit residence increases

Total upgrade project value

25

50%

2

1%

• Larger power distribution modifications

• More energy storage

• More sophisticated control software

Additional Eaton

content

Charger value

Number of chargers installed per location10

10%


Energy transition: Enabling industrial plants to maximize resilience utilizing microgrids

South African plant reduced downtime

and energy costs by 50%


Energy transition: Enabling industrial plants to maximize resilience utilizing microgrids

above installed electrical content

10%Added Eaton content in industrial plant

microgrid project


Solar and diesel generation

Energystorage

Microgrid control


Energy transition: Enabling data centers to monetize under-utilized assets

Multi-tenant data center lowers cost by participating in

frequency response through

SALE OF POWERTO THE GRID


Energy transition: Enabling data centers to monetize under-utilized assets


Energy storage

UPS

EnergyAwareOptimization Software

above typical UPS content

2xAdditional Eaton content in a

greenfield data centerElectrical grid


Eliminate or dramatically reduce the use of SF6 gas

23,500 XIMPACT OF CO2

Our complete energy transition portfolio extends to industry first SF6-free solutions


History of leadership Shipped 1 million sections of SF6-free MV switchgear

We continue to innovateReleased multiple “green gas” switchgear models

Our complete energy transition portfolio extends to industry first SF6-free solutions


Digital Solutions


Our digital solutions support the base business and enable new business models in the “everything as a grid” electrical value chain

EVs

Distributed Storage

Solar

On-demand planning and decision support New business models Cyber-secure infrastructure

Collect, aggregate and analyze data,

digital platform

TransmissionPowerGeneration

DistributionGrid-scale

Renewables

Grid-scale Storage


We have built a digital platform to establish leadership in our end markets

Eaton’s digital platform

Apps & data monetization

Expanded mindshare and reach

Improved customer satisfaction

Devices | Software | Services

IoT enabled solutions

Eaton marketplace

Partner ecosystem and experience hub

Digital design | Field services

Manufacturing and services efficiency

Ready now and built for the future

Connected Intuitive Open Secure Intelligent


Decision support software to drive capacity planning and real-time decisions to integrate renewables

Distributed energy planning tools Real-time response with intermittent renewables

60% 20XOf the largest utilities

in North America use Eaton’s grid

planning software

Faster in modeling impact of renewables


Digital agriculture solution leverages Eaton’s field infrastructure and creates software as a service revenue

Cellular gatewayproductivity

30%Energy efficiency | Water conservation | Farmer productivity


We are monetizing our operational technology (OT) cybersecurity expertise while supporting digital adoption

Healthcare facility in midwest Eaton solution

AUDITEnvironment

maturity evaluation

ASSESSMENT & CORRECTIVE ACTION

Systemsanalysis

LIFE-CYCLEMANAGEMENT

Environment monitoringand upgrades

Reduction in cybersecurity risk

30%

-30%

Faster recovery timeif there is a cybersecurity incident


We have a leading electrical franchise with broad capabilities• Regional expertise and global scale• Delivering strong market and financial results

Significant potential for base business growth• Driven by safety requirements, resilience investments, data growth, and electrification

Well positioned to benefit from “energy transition” growth trend• “Everything as a Grid,” enabling integration of renewables and sustainability solutions• New types of equipment, service, and software pulling through traditional equipment

Differentiated digital foundation• Enables new business models for the energy transition future

Today’s key messages


Documents

Annual Investor Conference€¦ · BUILDING ELECTRIFICATION: 50 % increase in global building energy share by 2050. TRANSPORT ELECTRIFICATION: 27 % increase in global electricity