Share EDP s view on the future of electricity generation from renewable energies. Provide visibility to EDP s wind and hydro assets

Transcription

1 EDP Going Green António Mexia, EDP s CEO 0 Objectives of EDP s Renewables Day Share EDP s view on the future of electricity generation from renewable energies Provide visibility to EDP s wind and hydro assets Provide visibility on EDP s capabilities in wind and hydro development & operation Present EDP s investment opportunities in wind & hydro and prospects of returns Wind & hydro weight in EDP s business portfolio: today and the future 1

2 Agenda 10:30 EDP Going Green António Mexia, EDP CEO 10:40 Why Wind & Hydro Pedro Ferreira, Head of Energy Strategy 10:55 The Value of Hydro António Castro, EDP Produção Chief Development Officer 11:20 Wind Europe: NEO João Paulo Costeira, NEO CEO 11:40 Coffee Break 12:00 Wind USA: Horizon Gabriel Alonso, Horizon Chief Development Officer 12:20 NEO + Horizon = EDP Renováveis Ana Maria Fernandes, EDP Renováveis CEO 12:40 EDP in Renewables: A Low Risk profile Nuno Alves, EDP CFO 12:50 EDP s Strategy for Renewables António Mexia, EDP CEO 13:00 Q&A 13:30 Lunch 2 Clear capex plan imply more efficiency which result in a sustainable increase of EBITDA CAPEX LEVEL EBITDA SUSTAINABLE GROWTH OF TWO DIGITS Capex / Cash flow % % (CAGR) E M2007 INCREASE OF EFFICIENCY INCREASING WEIGHT OF NON-IBERIAN OPERATIONS Net Opex / Gross Profit % Weight of non-iberian operations on EBITDA** % M M2007 * Average ** Excluding restructuring costs 3

3 EDP is extremely well positioned to generate value in a changing World The global energy outlook is changing making Renewables growth an unstoppable trend in which EDP is uniquely positioned to create value Global consumption is growing Cost of fossil fuels and CO2 are rising Climate change: a global challenge Tremendous Renewable resources Technological development makes Renewables cheaper Growing regulatory support Located in geographies with high growth potential in renewables Proven track record in pipeline development and execution Global trends towards renewables support EDP s strategy 4 Total Investments in was focused on renewables Other activities 30% Hydro Power Generation 70% Wind Power Generation Wind & Hydro represented 70% of Investments in

4 Wind and hydro Posicionamento will be da EDP key Brasil no value mercado de growth capitais drivers for EDP over the next 5 years The markets in which EDP is present have a strong need for these technologies Investment opportunities with attractive risk/return profiles Improving generation portfolio with efficient and free CO2 emissions assets Proven track record in hydro and wind development and operation Wind and Hydro are key drivers in EDP s High Growth / Low Risk Investment Profile 6 Why Wind & Hydro Pedro Neves Ferreira, Head of Energy Planning 7

5 Global trends Global energy trends Renewable trends 1 2 Global electricity demand growing Technological development accelerating 5 Cost of fossil fuels and CO 2 emissions rising Concerns over security of supply rising Climate change established as a global challenge 4 3 Capital inflows towards renewables rising Growing regulatory support Growth of Renewable Energy Several driving forces are fuelling a global trend towards renewable energy 8 Global energy trends: new challenges 1 Electricity demand (10 3 TWh) Brent prices (Brent, $/bbl monthly avg.) EU energy dependence (% net imports/consumption) CO 2 concentration (ppm) +98% 29,7 +257% 91,0 +17 pp +11 pp 67% +35% +22% % 56% ,0 25,5 '05 '30E Jan '00 Dec ' E Pre- Industrial Demand growth is putting pressure on fossil fuel prices, environment, and raises concerns over security of supply Source: US-NOAA, IEA, Eurostat (European Energy and Transport trends to 2030 update 2005; News release 126/2006) 9

6 Global energy trends: CO 2 cost and regulation CO 2 Emission cost (EU ETS) ( /ton) CO 2 regulation 1-20% reduction target vs EU ETS sectors to reduce greater share Full auctioning for power sector as of 2013 (new EU Directive) Analyst forecasts USA Regional initiatives emerging Federal legislation gathering momentum for next Presidential mandate Rising cost of CO 2 due to stringent reduction targets further improves competitiveness of renewable energy 10 Renewable trends: traditional obstacles being overcome Traditional obstacles Description New developments 2 Overcost High CAPEX and O&M costs Low maturity of certain technologies Increasing cost competitiveness through Technological innovation and efficiency High fossil fuel costs + CO 2 Reliability and predictability Dependence on uncontrollable and hard to predict availability of natural resources Imbalance costs driving more accurate forecasting technologies Diversification effect as penetration increases Intermittence and lack of storage Lack of mass storage limiting larger penetration of nondispatchable technologies Renewed incentive for pumping capacity Increased interconnection Storage technologies under development Traditional obstacles affecting renewable technologies are gradually being overcome by new developments 11

7 Renewable trends: strong technological evolution 2 Technological advance Variable 1990 Today % Change Wind Onshore Turbine capacity (MW) Rotor diameter (m) 0,05-0, % +300% Investment cost (M 2008 /installed MW) 1,6 1,3-20% Area (m 2 /kw) % Solar PV Efficiency (%) Investment cost (M 2008 /installed MW) 10-12% 11, % 1 5,4 +50% -55% Technological development and innovation have played a key role in increasing renewables competitiveness Source: IEA Technology Perspectives 2006; Global Energy Decisions Renewable Generation Technologies (2006); EPIA Solar Generation IV (2007) 1. Refers to thin-film monocrystalline technology 12 Renewable trends: increasing cost competitiveness 2 Generation cost of Renewable technologies ( /MWh, ) Geothermal Onshore Wind Hydro Biomass Offshore Wind Marine Solar Thermo (CSP) Solar PV Technological innovation and growing world installed capacity will keep driving costs down Costs expected to fall as much as 40% in some technologies by 2020 Onshore Wind and Hydro among most cost competitive technologies Marginal conventional generation cost Growing capacity and continuing innovation expected to drive costs down as much as 40% in some techs Source: EDP estimates 13

8 Renewable trends: growing capital inflows Global investment and transactions in clean energy by type ($bn, 2007) Clean energy investment trends 3 71,9 117,2 Presidential campaigns in the US announced revival of R&D spending in clean energy Clinton - $50Bn over next decade Obama - $150Bn over next decade 18,9 10,5 7,4 45,3 In Europe Strategic Energy Technology Plan (SET Plan) and EU targets set to provide stable funding for clean energy investment 8,5 VC/PE Public Markets Corp. R&D Gov. R&D Total Company Investment Asset Finance and Small Projects Total New Investment Growing private interest in clean energy indicates expected cost-effectiveness in 5-7 years Clean energy is now the 3rd largest VC category (~10% of total VC investment) Worldwide investment in clean technology exceeded $115bn in 2007 and is set to increase Source: New Energy Finance; Morgan Stanley 14 Renewable trends: growing regulatory support in the EU 4 Share of renewables in EU energy mix 1 (%) Sectors Share of Renewables in each sector (%) EU Directive (Jan 23 rd ) 2,4x 20,0 8, Electricity 23% Transport 30% Heating and Cooling 47% 2,5x ~14% 15 6x ~2% 2 1,7x ~10% ~35%-45% 39 ~10%~15% 10 ~15%-20% 18 Burden sharing based on GDP per capita defined national targets to comply with EU binding target of 20% Flexibility for member states to choose most adequate support scheme - expected weight of each sector in 2020 final consumption EU 2020 targets imply more than doubling the share of renewables in European electricity consumption (cheapest way to comply with overall EU renewables targets) Source: COM(2006) 848 final of 10Jan07, Renewable Energy Road Map ; EDP Estimates; Renewables Make the Difference -EU 1. Share of final consumption 15

9 Growth of Renewables: expected to accelerate 5 World Renewable generation (10 3 TWh, , IEA Reference scenario) Share of Renewables 1 in total generation by region (%, ) 7,5 Optimistic Scenario Reference Scenario 66% 71% 3,3% 5,2 58% 2,3 2,2% 2,9 3,3 3,8 23% 19% 19% 15% 36% 28% 17% 10% 12% 17% 35% 23% 23% 14%15% E 2020E 2030E '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 '05 '30 North Europe OECD Africa Latin Rest of the America Pacific America World Renewable penetration will increase significantly and consistently across the world Source: EC World Energy Technology Outlook 2050 (2006); IEA World Energy Outlook 2007 (2007) 1. Including Large Hydro 16 Key renewable technologies: Wind and Hydro Renewable generation growth by technology (share of added TWh per renewable technology, ) 5 Hydro Wind Other Mature technologies 15% 12% 25% 31% Lower cost 33% Significant untapped potential 74% 42% 50% 19% Large scale penetration of Wind allowed by Hydro (dispatchable + pump storage) '90-'05 '05-'20 '20-'30 Wind and Hydro will keep being the main technologies driving investment in the sector Source: EC World Energy Technology Outlook 2050 (2006); IEA World Energy Outlook 2007 (2007) 17

10 EDP: Keeping focus and creating opportunities Conventional Hydro 5 Technological Maturity Mature Experimental Next generation Selective investment opportunities in attractive geographies Enhanced Geothermal Solar PV (Centralized) Tide and Wave Conventional Geothermal Solar CSP Mini Hydro Wind Offshore Biomass Wind Onshore Key EDP focus Low (< +10 GW)) Medium (+10 to +100 GW) High (> +100 GW) Growth Growth potential to to 2020 (additional capacity) EDP is carefully mapping the outlook for renewables and taking selective positions in high potential opportunities Source: EDP analysis 18 The Value of Hydro António Castro, EDP Produção Chief Development Officer 19

11 The Value of Hydro Hydro operating flexibility provides higher revenues per MWh than other technologies: 1. Capacity to concentrate output in periods of stronger demand 2. Major provider of ancillary services: gaining importance with wind power growth 3. Capacity to store energy through pumping (namely surplus/cheap wind power) Low operating costs: CO 2 emissions free, zero marginal cost, low O&M costs; Long asset life: Low maintenance capex The value of hydro assets is increasing and they are scarce: No significant greenfield growth opportunities in Europe and there are no assets for sale 20 Hydro achieves higher prices than the remaining technologies Realized Price: Hydro vs. Other Technologies ( /MWh) (Example Spain 2007E) Index Capacity Charge Ancillary Services Pool 20 0 Final Price Nuclear Hydro Coal CCGT Higher price than average justified by (1) ability to concentrate sales in peak-hours (2) capacity to compensate sudden changes in system balance (3) energy storage capacity through pumping Source: EDP 21

12 Hydro is able to concentrate electricity sales in peak hours, which have better prices Pool Prices and Market Output (Portugal) Three categories of hydro plants: Pumping Hours MW /MWh 55 Avg. hourly pool price 2H07 Consumption Pumping: Capacity to store cheap and/or surplus energy (eg. wind output at night) and to sell it at higher prices in peak hours Imports Reservoir Run of River Fueloil Reservoir: Storage capacity between 1 week and 4-6 months. Concentrates production in peak- hours over the year Hours CCGT Coal Special Reg. Run of River: EDP has run of river plants (éclusees) have a storage capacity up to ~6 hours allowing to sell at peak hours over the day 1 Source: REN/OMEL 1 Excludes Mini-hydros 22 Hydro is the main technology for ancillary services receiving revenues for assuring electricity system stability 4500 Market Output by Technology at (PT) Portugal MW Turbine start up time (min.) Reservoir Hydro ~450MW were suddenly out of the system Run of River Fueloil Gasoil CCGT Extremely Expensive 1500 CCGT Coal/Fueloil Hours Ancillary services market: balances electricity demand and supply close to real time, gaining relevant in moments of system instability Coal Hot Start Source: EDP Warm Start Hydro and CCGTs are the key providers of ancillary services; Cold Start Ancillary services market provides an important source of revenues: 375m in the Spanish market in 2007 Source: REN/OMEL Source: EDP 23

13 Value of hydro rises with higher weight of wind in the system Weight of wind in the Iberian Market (GWh) Wind and Hydro Output ( ) Portugal 19% 3000 MW Avg. Selling price: 82 /MWh 16% 17% Avg. Pumping price: 52 /MWh 8% 8% % Portugal Spain Iberia Portugal Spain Iberia E Hours Wind Output Hydro Pumping Hydro Output Price Hydro pumping storage: Matching intermittent wind output with demand needs* Value of hydro increases with intermittent generation weight growth, namely wind Source: REN/OMEL * Pumping price has to be 30% lower than selling price to compensate energy losses 24 Hydro plants in operation have a long expected useful life Remaining Expected Useful Life of EDP s Generation Capacity in Iberia by technology Fuel 4 In Spain: Ley de la Água The concession can be extended for 10 years if a significant refurbishment is done. Gasoil CCGT 3 24 In Portugal: Lei da Água Allows the extension of the concession period between years Coal 11 Hydro Hydro has the longest useful life and potential to extend it Source: EDP estimates 25

14 Hydro plants deserve higher EV/MW multiple than other technologies Fixed O&M Costs ( /kw) Hydro Nuclear Wind Biomass Coal CCGT Valuation (M /MW) 2,2 1,8 1,4 Investment (M /MW) 1,0 1,6-2,0 1,9-2,1 1,2-1,4 0,6-0,8 2,4-2,6 0,9-1,1 0,4-0,5 0,6 0,2 Hydro Wind CCGT Repowering New Plant Nuclear Wind Biomass Coal CCGT Higher revenues per MWh, lower operating costs and longer useful life period justifies a valuation premium in terms of multiples vs. other technologies Source: EDP estimates. Valuation multiples based on recent transactions 26 EDP s Hydro Assets 27

15 EDP has the highest weight of hydro among major generation portfolios in Southern Europe Hydro Capacity in the Conventional Mix in Southern Europe Major Players in the Region (Sep-07) 45% 38% 37% 31% 24% 18% edp *** Iberdrola ENEL (exc. Endesa) Endesa * PPC Union ** Fenosa Source: EDP estimates and company reports Hydro is key in EDP s Generation Mix * 2007E ** 2006 *** includes Alqueva 28 Today 80% of EDP s hydro assets In the Iberian market are remunerated by PPAs/CMECs EDP s Hydro Inst. Cap. in Iberia Plant Type Remuneration Total (Iberia) 5172 Reservoir/ pumping 21% Reservoir 30% Until the term of the former PPA contract if not before Jun-17: PPA/CMEC CONTRACTED GROSS MARGIN: LT Contracted Plants: PPA/CMEC 4095 Run of River 49% ROA 8.5% real pre-tax + Annual Depreciation + Contracted O&M (Values updated to inflation) (80%) After the term dates of PPA/CMEC or after Jun-17: Energy to be sold in the market Merchant Plants (18%) Mini-Hydro* (2%) Reservoir/ Reservoir 15% pumping 41% Run of river 44% Energy sold in the market Fixed Tariffs: In /MWh (updated to inflation) * Includes 100% of Pebble Hydro 29

16 The value of the extension of the hydro domain Concession of hydro plants (years) Average Duration of MW under CMEC 9 In Feb-07 EDP reached an agreement with the Portuguese government to operate hydro plants that where under PPAs beyond the end of these contracts and until the end of their useful life (2047 in average); Average duration of MW the Market Average Duration of Hydro Assets Main assumptions in the agreement: electricity price at 50/MWh (real) and WACC of 7.8%: Cash payment to be done by EDP: 759m; The extension of the Hydro Domain allowed edp to relaunch its repowering program Source: EDP. 30 Weight of EDP s hydro capacity in the market will increase to 50% by 2015 and 100% by 2017 Hydro Installed Capacity Evolution in Iberia MW Hydro in Liberalised Market Hydro with PPA/CMEC PPA/CMEC Liberalised Market EDP s hydro assets retain the full upside of long term power prices Source: EDP. 31

17 Growing in Hydro 32 Portugal has a high level of hydro potential undeveloped Developed hydro potential in Europe -Why Portugal has lagged behind its Peers? France Italy Germany 86% 86% 97% System security reasons: (1) High weight of hydro in Portuguese generation mix (2) Low level of interconnection with Spain; (3) volatility of annual hydro production in Iberia PPA term dates did not incentive repowering investments Spain 78% -Growth drivers Finland 65% 2020E Ongoing 2x increase of interconnection capacity with Spain PORTUGAL 46% 67% Start up of MIBEL Greece 42% Targets for renewables as a % of primary energy Increase, of oil, coal and CO 2 prices Hydro potential available Hydro potential developed Higher wind penetration increases the value of hydro due to: (1) hydro s storage capacity through pumping (2) hydro s ancillary services capability Source: Ministry of Economy 33

18 EDP expects to increase its hydro capacity by 36% until 2015 in the Iberian Market Edp s Investment Plans in Hydro MW 18% 36% Inst. Cap. in Iberia Ongoing Investments Repowering Projects Potential Projects Dec / / Source: EDP. 34 EDP s ongoing hydro investments in Portugal: 883 MWs, accumulated capex of 856m Ongoing Investments Hydro Plans MW Capex To enter in Operation Type Status Picote II Repowering Under construction Bemposta II Repowering Construction to start in 2Q08 Ribeiradio (@55%) New Plant Construction to start in 1Q09 Alqueva II Repowering Construction to start in 2008 Baixo Sabor New Plant Construction to start in 2Q08 TOTAL Commissioning of ongoing hydro investments concentrated in Source: EDP. 35

19 EDP has repowering projects in advanced stage of study, which totals 918MW and operating by 2015 Repowering Projects in Advanced Stage of Study Hydro Plan Repowering Project Hydro Plant Venda Nova III Salamonde II Cabril II Paradela II TOTAL MW To enter in Operation Repowering is the refurbishment of a plant by including a new generator group taking advantage from the existing reservoir. EDP has exclusive rights on repowering of its plants Lower Capex/MW; lower environmental restrictions The IRR of Repowering is in average higher than the IRR of a New Plant New Plant Old Plant Reservoir Source: EDP. 36 Portuguese government announced intention to award 10 new hydro plants with a total of 1,096 MWs National Hydro Plant Hydro Plants Basin MW Foz Tua Douro 234 EDP has a preference right To be Subject to an international tender Fridão Padroselos Gouvães Daivões Vidago Almourol Pinhosão Girabolhos Alvito Douro Douro Douro Douro Douro Tejo Vouga Mondego Tejo EDP already made a preliminary assessment of these projects and intends to compete for them in the international tender. EDP has a proven track-record on developing and operating hydro plants in Portugal. EDP will target attractive IRRs Total 1096 EDP considers to be in a good position to be awarded a significant number of these projects Source: EDP. 37

20 Hydro in Brazil 38 Brazil: Strong demand growth, tight reserve margin and high level of undeveloped hydro Electricity Demand (CAGR) System s reserve margin (GW) 5.0% 5.2% Needs of additional capacity Source: EPE Source: PDEE 2007; Energias do Brasil Brazil expects an increase in hydro generation capacity of approximately 60 GW from 2005 to 2020; Investments in electricity are set to rise in the next years. The main bottleneck to Brazil s Hydro growth is environmental licenses; Brazil has a stable and clear regulation with 75% of hydro power being sold through long term PPAs with distributors; New large hydro plants are contracted through auctions (2 auctions scheduled for 2008); Mini-Hydro plants & Repowering: More flexible and lighter environmental licensing process with shorter construction period (~2 years); Source: EDP. 39

21 EDP s hydro capacity in Brazil: 1,043 MW in operation, 1,589 MW projects under study EDP Hydro Capacity In Brazil Hydro Plants MW Contract Type Maturity Avg. Price 07 (R$MWh) Peixe Angical Lajeado Mascarenhas 12 Mini-Hydro PPA PPA PPA PPA & Merchant MW until MW until 2037 Avg * EDP has a proven trackrecord on developing and operating hydro plants in Brazil TOTAL ,043 Avg. Life of PPAs: 10 years EDP Hydro Development Projects Hydro Plants Under Construction 24 Mini-Hydro Plants <30 MW 12 Hydro Plants Under Study TOTAL MW ,022 1,560 1,589 Hydro Development Under Study Santa Fé PPA contracted until 2038 ( R$/MWh); Under Development analysis - concession can be directly attributed to EDP by the Brazilian regulator (main restriction: environmental licence) Studies - Concessions to be awarded through competitive auctions. Source: EDP. * Average price from 2008 onwards - R$121,92/MWh 40 Conclusion: Hydro plays an important role in EDP s generation portfolio and it should continue to increase The value of hydro has been increasing in recent years, namely given the increase of fossil fuels and CO2 prices and increasing penetration of wind EDP has the highest weight of hydro in the generation mix in Southern Europe, 80% of capacity is under PPA/CMEC but EDP retains full long-term market upside Portugal has a 56% of undeveloped hydro power, which supports EDP s unique 36% expected growth of hydro capacity in Iberian market in In Brazil EDP is also looking for value enhancing growth opportunities in Hydro 41

22 Wind Europe: NEO João Paulo Costeira, NEO s CEO 42 Wind Capacity in Europe: Expected to increase 140% in Wind Capacity (MW, 2007E cumulative) Installed capacity growth per country* (MW, ) Spain German y France UK Portugal Italy Poland Greece Sweden Turkey Norway Ireland Belgium Netherl ands Denmar k Austria ROE 13,414 22,422 2,430 2,562 2,416 2, ,734 3, TOTAL (MW) 56, ,152 Countries in which NEO is present represent 50% of expected growth in Europe in Source: Emerging Energy Research Wind Energy Country Forecasts (Nov07) * Including 10,453 offshore 43

23 Wind Regulation: EDP is present in geographies that provide attractive remunerations Old Regulation: New Regulation: Visibility on Future Revenues: Spain Fixed Tariff Market Little revenue risk - Remuneration defined for the whole life of the project Potential upside in market options with limited downside Portugal Stable tariffs for 15 years France Stable tariffs for 15 years Belgium Energy price + Green Certificates or PPAs Poland Energy price + Green Certificates or PPAs Italy Energy price + Green Certificate or PPAs UK Energy price + ROC * or PPAs Germany Stable tariffs for 15 years Greece Stable tariff for 20 years Regulatory frameworks ensure stable and attractive remunerations 1 Assuming pool price of 60 /MWh, extreme values for pool prices of 0 and In previous regulatory regime: For year 6-15 tariff value depends on average production in the first 5 yrs. In current system for year tariff value depends on average production in the first 10 yrs 3 Assumes a pool price of 50 /MWh, minimum GC value 65 /MWh maximum 125 /MWh 4 Assuming a pool price of 56 /MWh * ROC Renewable Obligation Certificates 44 EDP wind operations in Europe 1st MW in 1992 (Genesa) Mar-02 - EDP holds interest in Genesa Dec-05 - Acquisition of Nuon (274 MW in operation; 1,186 MW in pipeline) Dec-06 - Acquisition of Agrupación Eólica (155 MW in operation 585 MW in pipeline) 25% 25% 424 MW 20% Dec-05 NEO acquires 30 MW to be developed Dec-06 Acquisition of Agrupación Eólica (9 MW in operation and 459 MW in Pipeline) 26% 1,639 MW 8% 24% 28% 87 MW 4% 20% % JV with GreenWind (development 95 MW) 20% Dec-07 NEO acquired Relax Wind Parks (1,022 MW to be developed in Poland) Creation of Enernova; Ending 2003 with 65 MW in operation 1st MW in 1996 (Enernova) Oct-06 - NEO wins auction for 480 MW wind power greenfield licenses 27% Capacity (Gross MW) Market Share (Net MW) Load Factor (Avg. Country) Load Factor (Avg. NEO*) * As of Sept-07 45

24 European Ranking Wind Installed Capacity: Neo is #3 European Ranking - Installed Capacity Net GW (Source: Emerging Energy Research Capacity as of 31-0ct-07) 5,0 4,0 6% 15% Growth Oct-07/Dec-06 Dec-06 Oct-07 3,0 2,0 1,0 0,0 25% 14% 34% 22% 42% 23% 18% 27% 11% 0% 1% Iberdrola Acciona & Endesa Neo Energia International Power E.ON B&B Enel Vattenfall Dong EDF EN RWE Essent Gas Natural NEO shows one of the highest growth rates among major players in Europe Source: Emerging Energy Research Capacity as of 31-Oct NEO organizational structure Strong and experienced management team Board/Exec. Committee A total of 14 Offices in Europe TECHNICAL SERVICES Equip. Procurement/ Construction / O&M /... CORPORATE CENTER International Expansion & Business Develop. Human Resources /... DEVELOPMENT FRANCE & PORTUGAL SPAIN POLAND BELGIUM NEO - Headcount Evolution in Neo Energia Offices H

25 Neo is #3 player in Spain with superior site locations Spain: Ranking Installed Capacity Net 2007 GW % 33% YoY Growth Market Share (%) % 47% 55% 2% 0 Iberdrola Acciona & Endesa Neo Energia Eufer Olivento Gas Natural 2007 Market Share (%) 28% 26% 8% 4% 3% 3% Average load factor of 27% in 9M07 vs. 26% for the whole market: superior site quality NEO recorded the highest YoY growth rate in 2007: 58% Source: AEE Jan-08 (Capacity as of 31-Dec-07) 48 Wind regulation in Spain: attractive and stabilized since 2007 Two options Market option is preferable to fixed tariff for pool prices above 38/MWh Market Fixed Tariff Wind farms that started operations before 31-Dec-07: Pool price + ~ 38/MWh No cap or floor until Dec-2012: not affected by windfall profits claw back until then, retaining full benefit from upside in power prices Can choose between this option or RD 661/2007 (New regulation) Wind farms that started operations after 31-Dec-07 (RD 661/2007): Pool price /MWh Cap: 87.8/MWh; Floor: 73.7/MWh Premium, cap & floor updated CPI-X (X Factor: 0.25% until 2012 and 0.50% onwards) for 20 years Wind farms that started operations before 31-Dec-07: ~ 70/MWh for 2008 Can choose between this option or RD 661/2007 (New regulation) Wind farms that started operations after 31-Dec-07 (RD 661/2007): ~ 76/MWh for 2008 updated at CPI-X (X Factor: 0.25% until 2012 and 0.50% onwards) for 20 years Source: RD 436/2004; RD 661/

26 Growth in Spain fueled by pipeline under development Attractive Growth Prospects in Spain: 2016 Government target: 29,000 MW 2020 UNESA Forecast: 36,250 MW Further growth potential opportunities: Capacity Expected to be awarded by regional governments: Regional governments capacity awarding: NEO expects to be awarded ~900 MW (not included in NEO pipeline figures) Future potential for repowering: Galícia: + 2,300 MW Pais Basco: MW Aragón: + 1,500 MW Spanish market with 20% potential First additional 2,000 MW benefit from a 7/MWh premium in the tariff NEO holds 16% stake in an ongoing repowering project (Pesur) Canárias: MW Castilha La Mancha: + 2,500 MW Andalucía: MW 50 NEO is #2 player in Portugal and growing Portugal: Ranking Installed Capacity Net MW (Source: Emerging Energy Capacity as of Nov-07) Nov-07 Mkt Share (%) Growth Nov-07/Dec-06 (%) 7% Dec-06 23% Nov-07 26% 98% - B&Brown NEO Generg Suez Endesa 23% 18% 14% 10% 6% 2007 Portuguese market: 2,170 MW 2012 government target: 5,700 MW Pipeline growth in Portugal driven by recent capacity tenders: 1,200 MW to EDP consortium (NEO@40%) 400 MW to Ventinvest (Galp/Martifer) NEO growth in Portugal supported by participation in Eólicas de Portugal consortium (40% stake) Source: Emerging Energy (Capacity as of Nov-07) & EDP 51

27 Wind Regulation in Portugal: Attractive and stabilized since 2005 Attractive Feed-in tariffs: no market related Wind Farms licensed : until Feb-06 Applies to: NEO s 2007 total capacity and 150 MW in pipeline; Feed-in tariff 2008: 85-95/MWh* Guaranteed for 15 years (inflation updated) Wind farms licensed after Feb-06 Applies to: NEO s 480MW stake in the Eólicas de Portugal consortium Feed-in tariff 2008: 73-74/MWh Guaranteed for 33GWh with a 15 years limit (inflation updated) Long term stability of return: Feed-in tariffs defined for the next 15 years, updated at inflation * Real feed-in tariff per MWh inversely correlated with the load factor achieved by each wind farm: Decreases premium returns to wind farms with higher load factors 52 NEO s 40% stake in Eólicas de Portugal consortium Yearly entry into operation of MW attributable to NEO Economics of the project: Project finance project: D/E ratio of 80%/20% Turbines fully contracted with Enercon: First turbine to be delivered in 2009 Average capex per MW: 1.225m/MW Accounting method: Equity method consolidation by NEO until Dec-12 (date of expected full operation of the 1,200MW) Full consolidation of NEO s attributable 480MW from Jan-13 onwards. A successful experience in a competitive bid which can be used in other markets 53

28 France: 10,000 MW growth potential in France: Ranking Installed Capacity (Net MW) - (Source: Emerging Energy Capacity as of Nov-07) France Expected Growth Wind installed capacity * (MW) # La Française d Éoliennes La Compagnie du Vent EOLE RES MAÏA Eolis B&Brown NEO E 2010 E 2015 E Very fragmented market structure Top 6 players in France in the MW range Several promoters with lack of critical size Further consolidation likely in the short-term Attractive growth potential France hard-pressed to meet its 2010 goal of 13,500 MW (includes 1,000 MW offshore) NEO has presently a total pipeline of 468 MW in France NEO s presence in Belgium: Managed in an integrated way with French operation 57 MWs to be operational in Belgium in 2008 Source: Emerging Energy Nov-07 and Emerging Energy Research Wind Energy Country Forecasts (Nov07) * Including Offshore 54 Wind regulation in France/Belgium: France: Attractive feed-in tariffs in line with Portugal: 15 years guaranteed Wind farms contracted until Jul-06 Applies to: 9 MWs of NEO installed capacity Feed-in tariff 2008: 84/MWh Guaranteed for 15 years (1) (2) (updated to L factor inflation) Wind farms contracted after Jul-06 Applies to: NEO s remaining capacity and pipeline Feed-in tariff 2008: 82/MWh Guaranteed for 15 years (1) (3) (updated to L factor inflation) Belgium: Energy Contracting Options PPA with distributors (5-10 years) Electricity market + Green certificates (4) 1 Visibility of feed-in tariffs for 15 years, but adjusted for productivity factors 2 For new projects rate falls 3.3% per year on real terms 3 For new projects rate falls 2% per year on real terms 4 Minimum value for Green Certificates in Wallonia is 65/MWh and in Flandres 80/MWh 55

29 Poland: Largest wind market in Eastern Europe Polish Market Wind installed capacity * (MW) NEO pipeline in Poland E 2010 E 2015 E Ideal Weak 13 projects with 1,022 MW at different stages of development; 120 MW ready to build: start of operations expected in 4Q09; Presence in Poland can be used as a platform for expansion into neighboring markets in Eastern Europe Wind Regulation in Poland - Energy Contracting Options: (1) Energy Market + Green Certificate (2) PPA Green certificates have a cap of PLN 242.4/MWh ( 64/MWh) Guaranteed minimum PPA price before green certificates: PLN 119.7/MWh ( 31/MWh) Bulk of new capacity is being contracted through PPAs Source: Emerging Energy Nov-07 and Emerging Energy Research Wind Energy Country Forecasts (Nov07) Off h * Including 56 NEO track-record on pipeline delivery Iberia Ranking MW Constructed 2006 Iberia Ranking MW Constructed 2007 Neo Acciona & Endesa Iberdrola Iberdrola Acciona & Endesa NEO B&Brown EUFER Enerfin Olivento NEO was the #1 in terms of wind capacity constructed in 2006 in Iberia and #3 in 2007 Source: AEE, Emerging Energy and EDP 57

30 Organic growth and acquired pipeline development represent 78% of NEO past 5 years incremental capacity Track Record and Excellence in Execution - EDP Incremental Capacity Gross MW 205 MW 123 MW 202 MW 421 MW 617 MW 582 MW 2,150 MW 23% 13% 38% 31% 49% 100% 100% 100% 64% 37% 60% 29% 25% 9% 22% < TOTAL Greenfield Acquisition of Pipeline MW 1 Acquisition of MWs in Operation or Under Construction Significant increase of annual incremental capacity between 2003 and 2007 in Europe 78% of EDP growth in wind capacity comes from organic growth and acquired pipeline development 1 Planned MW not yet in operation or under construction at the time of acquisition. These MW are developed until start of operation by Neo Energia 58 NEO successfully achieved its 2006 and 2007 targets of wind capacity Year 2006 Gross MW Year 2007 Gross MW +65% 1,568 Agrupación Eólica (155 MW) +37% Target 2006 YE (Jul-06) Target 2007 YE (Jan-07) Reliability in the delivery of announced targets Targets were successfully achieved 59

31 High level of turbine needs already contracted for 2008 and 2009 NEO Turbines Portfolio (%) E Turbines needs vs. contracted (%) 10% 10% 6% 6% 6% 11% 8% 16% 3% 6% 100% 90% 40% 26% 36% 25% 31% Gamesa Vestas GE Ecotecnia Enercon Siemens Other Needs Contracted To be contracted Well diversified wind turbines portfolio enabling for lower risk, capture of various technologies and increased bargaining power 60 NEO wind pipeline in Europe is higher than 4,000 MW (Gross MW) 2007 E TOTAL WIND PIPELINE Certain 1 Probable 2 Potential 3 WIND 2,150 4,060 2, ,421 Spain 1,639 1,797 1, Does not include 900 MW expected to be awarded in the Spanish regional tenders Portugal France Poland 0 1, Belgium Weight (%) - 100% 51% 14% 35% 51% of NEO s current European wind pipeline has a high probability of success Note: NEO s pipeline does not include ~900MW which NEO expects to be awarded by Regional Governments in Spain 1 Pipeline with 90%-100% probability of success (including MWs under construction); 2 Pipeline with ~50% probability of success 3 Pipeline with ~20% probability of success 61

32 NEO expects another 2,000 MW of gross wind capacity to start operations during the period Wind generation capacity Gross and Net GW 2010E Wind capacity breakdown Gross MW Gross GW Net GW 2.7 x 3.3 x 3,6 3,0 3,0 2,5 2,2 1,6 1,7 1,1 4,2 3, Portugal 25% Poland 5% 2% Belgium 6% France 62% Spain For , NEO expects to build on average 600 MW per year Capex / MW should range between 1.2m and 1.4m in the Iberian Peninsula 62 NEO: Conclusions 1 NEO NEO s markets represent 50% of growth in in Europe EDP Group s strategic priorities Superior efficienc y Controlle d risk Profitabl e growth 2 Present in markets with attractive and stable regulations 3 Strong track-record of pipeline delivery 4 High level of turbine needs secured 5 Expected to reach 4,200 MWs installed by