www.edprenovaveis.com

EDPR PresentationMarch 2011

Istanbul

I. EDPR

II. Designing an attractive renewable framework

• Remuneration and processes

• Lessons learnt

III. Application to Turkey

Agenda

3

A balanced wind portfolio located in highly selective attractive markets

1H10 EBITDA MW + Eólicas de Portugal

Portugal SpainBrazil

USUK

France

Belgium

Italy

Romania

Poland

99

19 246

Under construction

Pipeline + prospects

70

1 439

53

571

-

1 300

308

4 9676

39

1 138

13

62

-

520

60

1 406

228

613

2 859

14 680

-

2 278

220

57

-

120

-

Installed

8 European countries, 26 States in the US, Brazil and Canada

Canada

-

-

120

4

Consistent delivery of strong growth in installed capacity

Historic Capacity Growth

(Gross MW)

• Consistently delivering targets and a robust growth over the past 4 years

• Back-end loaded installation profile driven by wind farm construction schedule

• Capacity installed during 2009 to deliver stable cash-flows from 2010 onwards

CAGR>40%

5

2010-12: Executing a flexible growth strategy and taking advantage of optionality to maintaining the risk profile

EDPR’s average annual capacity additions(Gross GW)

Flexible growth by adjusting the pace to current economic and market environment…

EDPR’s new additions geographic breakdown

(% of EBITDA MW + ENEOP)

Gross MW

EBITDA MW

…re-balancing the portfolio to maintain the low risk and high visibility profile of the company

US

EU

BR

I. EDPR

II. Designing an attractive renewable framework

• Remuneration and processes

• Lessons learnt

III. Application to Turkey

Agenda

What do stakeholders seek?

Renewables investors

Governments

Low risk High return

Low return High risk

Develop local industry

Pay exactly what is needed

(avoid risk of over/under paying)Minimise system costs

Feed-in tariffs Market systems

There are four general policy systems to promote wind energyAlthough hybrid systems are often put in place

Feed- in tariff

Market price + Green

Certificate

Tenders

Financial and tax incentives

Mai

n s

yste

ms

Sec

on

dar

y sy

ste

ms

System description

• Producers of green electricity receive a fixed price (normally set for a period of several years)

• A variant of the feed-in tariff scheme is the fixed premium scheme in which a premium is paid above normal electricity spot price

• Renewable energy has two revenue streams:

− Conventional power prices from the conventional market

− Revenues from the sales of green certificate in a secondary market

• Secondary market is created when government forces a participant in the supply chain (generators, suppliers) to prove that part of its supply has GCs associated to them, thus creating demand for GCs

• Renewable energy producers supply GCs

• Price for GCs is set by market supply and demand

• The State places a series of tenders for the supply of renewable electricity:− Selection based on price and other quantitative criteria (scoring system)− Electricity supplied on a contract basis at the price resulting from the tender− Additional cost typically passed on to end consumer through a specific levy

• Reduction or exemption of electricity taxes applied to all producers

• Investment grants as a reduction of capital and/or total costs due to low interest loans

Each Government has to weigh up to pros and cons of every system before deciding the system to implement

Fee

d-

in t

ari

ff • Simple and low cost: easy to implement and supervise• Reduces regulatory and market risk for investors and loan

risk for financial companies• A stable investment environment promotes the

development of manufacturing• Effective in promoting different technologies

• Risk of over/under funding:- It can be partially compensated with market

monitoring and adjustment- Need to adjust tariffs as targets are achieved or

market conditions change

Advantages Disadvantages

Mar

ket

pri

ce +

G

reen

ce

rtif

icat

es • If working well, they lead to the best cost solution because is a market instrument

• If it works well, the targets are exactly met

• Increased risk and required return for investors, thus increasing effective costs, due to volatility & uncertainty on future prices

• Administrative costs• System may not create enough incentives to invest.• Since companies may avoid buying the GC by paying a

penalty, GC price may not rise to a level to make investment profitable

• Needs a banding to promote different technologies

Tax

in

cen

tive

s

• Easily linked with existing fiscal and financial structures• Does not create long-term certainty of investments• Risk of over/under funding

Ten

der

s

• Long term captaincy about receiving support • Bidding price can fall so low that contracts cannot be fully implemented

• Increases project preparation costs• The stop-and-go nature does not conduct to stable

conditions

Most of the European successful countries have a feed- in tariff systems

Germany

Spain

France

Denmark

Portugal

Greece

Austria

Italy

UK

Sweden

Poland

Belgium

Netherlands

Finland

Switzerland

Capacity installed in 2009YE by regulatory system

Fee

d-

in t

ari

ffM

arke

t p

rice

plu

s G

reen

Cer

tifi

cate

sO

ther

s

MW

Two main issues to consider when designing a framework for wind energy

Policy design (Financial support)

Permitting process

• A regulatory framework that provides financial incentives for investors to participate in the development of wind energy market

• Wind developers need to fulfil different steps to obtain the necessary permits and the grid connection

• Main steps are administrative processes (Environmental Impact Assessment permit, building permit, among others) but also includes the access to the grid

Policies on permitting and licensing, and grid issues are also critical to meet wind energy penetration

Permitting and licensing

Grid related issues

Issue Typical barriers Possible solution

• Set deadlines for the administrative process: if the authority is not able to meet the deadline, the project goes automatically to the next stage

• Reduce the number of authorities involved

• Provide a clear, streamlined and transparent procedure and decision-making process

• Complex and time consuming process

• Many institutions involved

• No clear authorization procedures

• Long time to obtain extensions or reinforcements in the grid

• No transparent rules for bearing and sharing the necessary grid investment

• Reduce the average grid connection lead time by setting deadlines for the administrative process, and training and allocating the necessary civil servants to handle the applications

• Reinforce transmission system

• Lower the connection cost by:- making the transmission operator

contributing to the cost - adapting the cost to the project size

13

Overview of the regulation in the main geographies

FranceUnchanged € 87Feed-in Tariff

Spain

Agreement between Industry Ministry and wind sector

€ 84• Pool + Premium• Feed-in Tariff

USOngoing discussion on Energy Bill $ 48 (1)• Power + REC

• Tax Incentives

Romania

Legislative update for therenewable sector

€ 134 (2)Green Certificate

PolandUnchanged Green Certificate € 98 (2)

Unchanged € 95Feed-in TariffPortugal

Notes: (1) excluding institutional partnership revenues; (2) based on 2009 market price + green certificates

Country Regulatory UpdateRemuneration

Scheme

EDPR: 2009

Realized Price

I. EDPR

II. Designing an attractive renewable framework

• Remuneration and processes

• Lessons learnt

III. Application to Turkey

Agenda

Main lessons learnt from countries that have achieved large wind deployment

Long-term political targets

Predictable revenues

Transparent and straightforward

permitting

Avoid fragmentation

Tenders

• Successful countries in developing wind energy, have set long-term political targets and have drawn up structured action plans supported at the highest level to reach them

• It´s essential to provide a stable framework with predictable revenues that assure the profitability of the project

• It´s necessary to create a process that will facilitate increase generation in a timely and simple manner

• Transparent rules for bearing and sharing the necessary grid investment costs are necessary

• Fragmentation can prevent wind development, specially in countries with low wind penetration

• The allocation of groups of capacity, together with the development of industrial projects can be an effective tool to avoid fragmentation and spur the economy

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2

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• Minimum annual generation of 2.700 GWh (~4% of electricity in 2010-2012) • Electricity supply for more than 2,3 M inhabitants

• Allocated capacity committed operators to develop an Industrial Project• EDPR’s consortium, in which EDPR ‘s participation was 40%, won the tender for the 1.200 MW

installed capacity together with TP, Finerge and Generg, and Enercon Turbine Supplier

Energy system

Investment

Development of National economy

Regional development &

employment

Tender Description

• Direct investment of 1.700 M€ between 2006-2010• Wind farm development: 1.476 M€, factory units and associated services: 161

M€ and founding for the National Scientific System: 35 M€

• Industrial project will represent 2,5% of the Regional Product (Minho-Lima)• Reduction of regional socio economic differences• Creation of 1.800 new long term jobs + 5.500 indirect jobs

• Increase on exports >60 % of generation will be exported• Decrease on generator component and raw material imports

• More than 1MtonCO2 not emitted per year: 24 M€ annually saved and avoidance of ~80 M€ of external fuel payments

Tenders are sometimes used to create a positive impact for the economyExample: Portugal - ENEOP

Tender system for 1.200 MW capacity allocated

Benefits for the country

5

Back-up

I. EDPR

II. Designing an attractive renewable framework

• Remuneration and processes

• Lessons learnt

III. Application to Turkey

Agenda

With an adequate remuneration scheme, Turkey will be poised for growth

Long-term political targets

Predictable revenues

Transparent and straightforward

permitting

Fragmentation

Issue

1

2

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Evaluation of current situation Comments

• The Ministry of Energy announced its target to install 20 GW of wind energy by 2020

• Feed-in tariff is not enough by itself to make investment attractive and currently wind farms are selling energy in the wholesale market

• New energy law

• In November 2007, EMRA received wind farm applications for 78 GW

• The first production licenses have been issued only after 3 years

• Nearly 58 GW of the 78 GW applications came from 20 companies