INVESTMENT AND OPERATION EXPERIENCE OF OFFSHORE WIND FARMS

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1 INVESTMENT AND OPERATION EXPERIENCE OF OFFSHORE WIND FARMS Volker Malmen, Country Manager DONG Energy Germany Munich 03 Nov 2017

2 Public DONG Energy at a glance Headquarters in Denmark Listed in the Nasdaq OMX: DENERG 5,600 employees Revenue in bn EBITDA in bn Divestment of Oil & Gas business to INEOS Phase out the use of coal by % * Bioenergy & Thermal Power Generates and sells power and heat to customers in Denmark and Northwestern Europe 84% * Wind Power Develops, constructs, owns and operates offshore wind farms in Denmark, Germany, the Netherlands and the UK. Development projects in Taiwan and the USA 12% * Distribution & Customer Solutions Power distribution grid on Zealand and sale of power and gas to customers in Northwestern Europe * Share of the DONG Energy Group s capital employed ** On 24 May DONG Energy entered into an agreement to divest its upstream oil and gas business to INEOS. On 29 Sep DONG Energy completed the divestment of its upstream oil and gas business to INEOS. *** Following the profound strategic transformation from black to green energy and the recent divestment of the upstream oil and gas production to INEOS, the name DONG Energy does not fit the company anymore. Consequently, DONG Energy will change its company name to Ørsted from 6 Nov. 2017

3 Significant transformation of DONG Energy over the past decade CO 2 emissions halved g/kwh Operating profit (EBITDA) tripled DKK Bn Business transformed Share of capital employed 1 % International expansion Share of operating profit (EBITDA) % 462 (50%) 3x International share >5x % 16% 24% % 84% % Excluding unallocated capital employed on DONG Energy group level

4 Investment strategy drives growth and returns Gross investment per business unit 2016 Wind Power Fuel global market leadership and profitable growth ambition of GW capacity by end of 2025 Bioenergy & Thermal Power Biomass conversions well under way to support zero coal from 2023 Distribution & Customer Solutions Transform utility to a smart, green and growing business 83% 13% 4% Gross investment guidance 2017: DKK bn (~ 2.5bn)

5 We have become too green for our name DONG is originally short for Danish Oil and Natural Gas. Over the past decade, we have transformed from an energy company based on coal, oil and natural gas to a global leader in renewable energy and a world leader in offshore wind. In line with our green transformation we have sought to find a name that reflects the green energy company we are today. In 2017, we divested our upstream oil and gas business, and by 2023, we will be completely coal-free. Starting Nov 6 we will be Ørsted.

6 Why Ørsted? Almost 200 years ago, the Danish scientist Hans Christian Ørsted discovered electromagnetism, establishing the foundations for the way we produce power today. Hans Christian Ørsted s groundbreaking discovery was driven by his curiosity, dedication and interest in nature. These qualities also characterise us as a company and are essential to changing the way we power the world. From black to green.

7 DONG Energy Wind Power overview DONG Energy Wind Power geographical footprint USA Europe Bay State Wind Asia Pacific Unparalleled experience and track record Boston office Ocean Wind Coastal Virginia Formosa 1.1 Formosa 1.2 Taipei office Greater Changhua projects 25+ years of experience and track record in the offshore wind sector In operation Walney Extension West of Duddon Sands Isle of Man Barrow Under construction Under development Burbo Bank Ext. Burbo Bank Decommissioned after 25 years Anholt Middelgrunden Walney 1 & 2 Horns Rev 1 & 2 Westermost Rough Hornsea 1 Hornsea 2 Hornsea 3 & 4 Race Bank Lincs Gunfleet Sands 1 & 2 Gunfleet Sands 3 Borssele 1&2 London Array Avedøre Vindeby Nysted Gode Wind 2 Gode Wind 3 Gode Wind 1 Borkum Riffgrund 1 Borkum Riffgrund 2 Borkum Riffgrund West 2 OWP West 22 offshore wind farms in operation 3.8 GW Constructed capacity 7.7 million Europeans with clean electricity 2,000 Dedicated employees 3.5 GW World's leading operator 7 offshore wind farms under construction 5.0 GW under construction 15 Partnerships

8 DONG Energy pioneered the offshore wind industry and is today the global leader Largest offshore wind player globally today Global offshore wind capacity GW 26% 8% 9% 8% 0% 1% 2% 4% 2% 1% 0% % 1% Operational Under Construction Wind Power s scale enables cluster synergies 1 UK West coast (East Irish Sea): Barrow, Burbo Bank, Burbo Bank Extension, West of Duddon Sands, Walney Extension, Walney 1 & 2 2 East UK North: Westermost Rough, Lincs, Race Bank, Hornsea 1, Hornsea 2 3 East UK South: Gunfleet Sands 1 & 2, Gunfleet Sands Demo, London Array 4 Germany: Borkum Riffgrund 1, Borkum Riffgrund 2, Gode Wind 1&2 5 Danish waters: Middelgrunden, Nysted, Horns Rev 2, Anholt 6 Dutch waters: Borssele 1 & 2 Synergies Lower logistics costs Fewer technician hours Fewer facilities needed Lower inventory levels 3.8 Installed Under construction Source: Bloomberg New Energy Finance, September 2017, DONG Energy analysis % share of global installed capacity Vattenfall Iberdrola SSE Van Oord EDPR Statkraft Northland Innogy E.ON EnBW Statoil WPD Power Operational offshore wind farms Offshore wind farms under construction Cluster 5 1. If a project is executed on behalf of a lead developer managing the construction, then 100% of capacity is allocated to the lead developer. If construction is executed by an integrated joint venture, capacity is allocated in proportion to the JV share

9 DONG Energy Wind Power has built a strong integrated end-to-end business model DONG Energy Wind Power core competencies ~2,000 Full-time employees Develop Build Operate Own Identify and mature projects Manage Conduct life-cycle Attract capital ~110 construction, ~1,150 maintenance ~640 through partnerships ~100 sourcing and supply Ability to design and optimise projects with a 'total life-cycle cost of wind farm' mindset Experience and expertise along the entire value chain allow for better understanding and management of risks End-to-end model reduces LCoE through fast feedback and learning across the entire organisation Full-time employees ~40 Northland Power ~75 ~100 ~160 ~250 ~250 ~650 Statoil SSE WPD Innogy EOn Vattenfall ~2, Front-end engineering design

10 DONG Energy is constantly maturing and standardizing the operations to reach a fully industrialized setup From project driven operation Core processes with variable performance as they are executed differently depending on projects Same roles are interpreted differently across windfarms of fleet Performance is only discussed on management level and targets are not cascaded to shop floor level Culture of firefighting and solving problems when they arise Technical issues causing downtime are tackled without using the full benefit of the fleet and backoffice Employees not fully involved in improving operations to industrialized operation Standardization of core processes to enable repetitive high performance e.g.: Service: Defined procedures how to conduct service Troubleshooting: Troubleshooting guides with best practice Mobilization Clear role descriptions for roles across all sites Performance is discussed on all levels of organization with clear targets and focus is on identifying and removing performance gaps Root Causes are solved in structured way The whole fleet including the backoffice works together on reducing their losses due to technical issues and solutions are transferred People taking ownership and are driven by continuous improvement SOURCE: Operation Production System team 9

11 The operations production system improves performance by addressing technical system, management infrastructure and mindset and behaviors Core maintenance processes need to be stabilized, streamlined and aligned across the organization to industrialize the setup and move into a more mature state of doing operations A Technical system Management Infrastructure Mindset & behaviors B The way of managing operations in this more mature setup needs to be defined and aligned between leaders in the organization C A cultural change need to be launched and supported to make the change happen and to ensure sustainability of the transformation 10

12 In our hub in Norddeich, Germany we operate the generation assets, including the WTG, array cables and substations WTG Substation Converter platform Export cable Onshore facilities BoP Generation assets Transmission assets Norddeich today with ~900MW installed capacity Godewind 1 and 2 Borkum Riffgrund 1 # of Turbines: 97 Model: SWT Turbine capacity: 6 MW Partner: GIP, talanx, Industriens Pension, Laegernes pension, pka # of Turbines: 78 Model: SWT Turbine capacity: 4 MW Partner: LEGO, William Demant 11

13 A Service Operations Vessel (SOV) is used as operations base, hotel and turbine transfer vehicle SOV Normand Jarl currently in use at Norddeich hub Gangway to transfer from SOV to turbine Built: 2013 Length: 107, 6m 69 cabins; 28 single and 41 double 7 offices and one conference room The SOV is used as a hotel for the technicians working in the windfarm Technicians can be transferred directly to the turbine via a gangway system or deployed by additional Crew Transfer Vessels (CTVs) It s the operational base with all parts and tools stored in a warehouse on board SOURCE: Operation Production System team 12

14 Different Partners Different Focus Industrial partner DONG Energy and partner share responsibility equally during construction Financial partner DONG Energy has full responsibility during construction Extensive project involvement Limited technical interest Partner focus Joint entering of contracts Staff seconded into the project organisation Demand for full transparency to budgets, tender processes, fact base, technical solutions, etc. Partner focus Focus on financial performance Clear financial forecasting and reporting DONG Energy Wind Power must show long term commitment to the project, e.g. as long term co-owner and O&M operator

15 Proven track record in developing long-term partnerships Major institutional investors are partners in DONG Energy's offshore wind projects Walney I & II (50.1%) 367 MW (2009 / 2010) Westermost Rough (50%) 210 MW (2014) Race Bank (50%) 573 MW (2016) Anholt (50%) 400 MW (2011) West of Duddon Sands (50%) 389 MW (2010) Horns Rev 1 (40%) 160 MW (2006) Burbo Bank Extension (50%) 258 MW (2016) Nysted (42.7%) 166 MW (2010) (KIRKBI) Lincs (25%) 270 MW (2017) Gode Wind 2 (50%) 252 MW (2014) Gunfleet Sands (50.1%) 173 MW (2011) London Array (25%) 630 MW (2009 / 2014) Borkum Riffgrund 2 (50%) 450 MW (2017) Borkum Riffgrund 1 (50%) 312 MW (2012) Gode Wind 1 (50%) 330 MW (2015) (KIRKBI) (%) represents DONG Energy ownership interest

16 Q&A