EDP Renovveis Presentation September, 2013 www.edpr.com 1 - - PowerPoint PPT Presentation

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EDP Renovveis Presentation September, 2013 www.edpr.com 1 - - PowerPoint PPT Presentation

EDP Renovveis Presentation September, 2013 www.edpr.com 1 Disclaimer This presentation has been prepared by EDP Renovveis, S.A. (the "Company") solely for use at the presentation to be made on September, 2013. By attending the


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EDP Renováveis Presentation

September, 2013 www.edpr.com

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Disclaimer

This presentation has been prepared by EDP Renováveis, S.A. (the "Company") solely for use at the presentation to be made on September, 2013. By attending the meeting where this presentation is made, or by reading the presentation slides, you acknowledge and agree to be bound by the following limitations and restrictions. Therefore, this presentation may not be distributed to the press or any other person, and may not be reproduced in any form, in whole or in part for any other purpose without the express consent in writing of the Company. The information contained in this presentation has not been independently verified by any of the Company's advisors. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Neither the Company nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity in any jurisdiction. Neither this presentation nor any part thereof, nor the fact of its distribution, shall form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. Neither this presentation nor any copy of it, nor the information contained herein, in whole or in part, may be taken or transmitted into, or distributed, directly or indirectly to the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities laws. This presentation does not constitute and should not be construed as an offer to sell or the solicitation of an offer to buy securities in the United States. No securities of the Company have been registered under U.S. securities laws, and unless so registered may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of U.S. securities laws and applicable state securities laws. Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements are statements other than in respect of historical facts. The words “believe”, “expect”, “anticipate”, “intends”, “estimate”, “will”, “may”, "continue”, “should” and similar expressions usually identify forward-looking statements. Forward- looking statements include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for future growth; liquidity, capital resources and capital expenditures; economic outlook and industry trends; developments of the Company’s markets; the impact of regulatory initiatives; and the strength of the Company’s competitors. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause the actual results, performance or achievements of the Company or industry results to differ materially from those results expressed or implied in this presentation by such forward-looking statements. The information, opinions and forward-looking statements contained in this presentation speak only as at the date of this presentation, and are subject to change without notice unless required by applicable law. The Company and its respective agents, employees or advisors do not intend to, and expressly disclaim any duty, undertaking or obligation to, make or disseminate any supplement, amendment, update or revision to any of the information, opinions or forward-looking statements contained in this presentation to reflect any change in events, conditions or circumstances.

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EDP Renováveis

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EDPR top quality and diversified portfolio

  • f 8.1 GW in 1H13

US Brazil Canada Poland Romania Italy Portugal France Spain Belgium UK

#1 #3 #1 #3 #2

1,010 MW 2,310 MW

Building the first wind farm 30 MW

3,637 MW 84 MW 314 MW 57 MW

Offshore under dev. up to 2.4 GW

320 MW 378 MW 40 MW

Notes: 1H13 Figures; Portugal installed capacity includes 391 MW from ENEOP (Equity Consolidated) 4

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EDPR a worldwide renewable

market leader

An outstanding growth rate over the last 5 years

7.8 10.9 14.4 16.8 18.4 2008 2009 2010 2011 2012

Electricity Production Evolution (TWh)

CAGR

+24%

Source: Companies‘ Reports

31.0 25.8 18.4 16.8 15.2 Iberdrola Nextera EDPR Longyuan Acciona

Top Wind Players (TWh, 2012) #3 worldwide wind energy producer

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Solid key metrics drivers…

Electricity Output Ongoing growth Selling Price Low risk portfolio Load Factor Quality assets

1H13 Operating Metrics 1H13 Financial Metrics

EBITDA Solid returns Free Cash-Flow Self funding strategy Net Profit Increased profitability …delivering stronger profitability and robust cash-flow generation

10.7 TWh

+8% YoY

33%

+0.7bps YoY

€64.3/MWh

+5% YoY

€560m

+11% YoY

€129m

+29% YoY

€298m

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Executing a clear strategy to enhance shareholder returns

Selective and profitable growth Self-funding business model Quality assets delivering increased profitability

Ongoing premium performance on key operating metrics: Load Factor, Availability and Cost Control Better visibility in the US: +250 MW PPA signed in the 1H13 for operating capacity Targeting 0.5 GW of capacity additions for 2013: +163 MW YTD & remaining under or to start construction Increased visibility on growth: +0.4 GW of PPA structured for new capacity to be installed in 2014/15 in US €368m cashed-in through asset rotation in the 1H13: 1st transaction with CTG concluded (Portugal) Self-funded growth to be enabled by additional transactions under negotiations with financial investors and CTG

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Quality assets delivering increased profitability

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First-class assets with 4.4 average years of age set to deliver premium returns

Assets’ Average Age and Residual Useful Life (Years; weighted average)

EDPR Assets Age

4.4 2.4 4.1 0.5 1.4 1.4 4.3 4.1 4.8 5.8

5 10 15 20 25

EDPR Brazil US Italy Romania Poland Belgium France Portugal Spain

Asset Base (MW)

2,310 1,011 8,150 314 57 320 378 40 3,637

Invested Capital (€ million)

Property, Plant and Equipment (-) PP&E, assets under construction (-) Cash grants received in the US (=) Invested Capital in Existing Assets 11,528 (gross) EDPR has €11.5bn invested in a very young asset base with 21 years of useful life 10,371 (net)

Notes: 1H13 Figures; Portugal installed capacity includes 391 MW from ENEOP (Equity Consolidated)

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Premium performance based on a distinctive expertise

Energy Assessment & Engineering

Wind assessment is knowledge-based and difficult to replicate Key value drivers to maximize load factors and revenues Provides site selection criteria Optimises layout for superior performance Supports turbine selection Strong in-house wind energy assessment knowledge delivering a structural competitive advantage Spanish Load Factor: EDPR vs. Market Average 28% 25% 26% 27% 25% 27% 2007 2008 2009 2010 2011 2012

Spanish Market

Load Factor: LT view on Current Assets 27% 27% 32% 27% 24% 24% 23% 24% 32%

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US Spot 11% US PPA 41% Brazil 1% Spain 29% Rest of Europe 9% Portugal 8%

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A diversified portfolio delivering balanced output

Electricity Output Breakdown

Balanced generation portfolio with increased output in Eastern Europe and lower merchant exposure in US

1H13 Electricity Output Breakdown (GWh; %)

(GWh, %)

16% 14% 37% 40% 30% 28% 10% 8% 6% 9% 2010 2011 2012

US Spot RoE Portugal Spain US PPA Brazil

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Diversified portfolio with 88% of PPA/Regulated frameworks with a long-term maturity

Capacity under Long-Term Remuneration Frameworks (MW; 1H13)

12% 7% 44% 44% 49% 45% >2025 Jun-13 FiT

Spot

Maturity <2020 2020-25 Green Certificates (floors/caps) PPA/ LT Hedges 88% of PPA/Regulated Frameworks with a long-term maturity beyond 2020 Portfolio exposed to a diversified set of economic regimes

Notes: PPA/LT Hedges: US, Brazil, Specific Polish projects, Belgium

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Solid price performance supported by low risk portfolio

1H13 average selling price of 64.3€ per MWh, meaning +5% YoY 2010 2011 2012 1H13 YoY% €88 €79 €83 €85

  • 3%

R$286 R$254 R$278 R$309 +11% $54

PPA/ Hedge

$52 $51 $52 +1% $31 $31

Spot

$30 $31 +24% €102 €94 €99 €108 +1%

Breakdown of Average Selling Price per MWh EDPR Average Selling Price (€/MWh)

58 58 63 64 2010 2011 2012 1H13 €107 €94 €96 €111 +4%

RoE

+5% YoY

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Operational excellence is at the core of EDPR throughout the projects’ life cycle

Proactive supervision through quality assurance and control inspections to identify serial/infancy defects

Closely manage the initial warranty contracts

  • 1. Full Scope agreements

with O&M contractors

  • 2. Modular Maintenance

Model (M3), keeping high value-added activities in-house

Post initial warranty O&M contract End of warranty

Exhaustive end of warranty inspections before launching competitive tenders

  • 2. Comprehensive O&M Strategy

Data from over 2 million sensors in >5,000 WTG, monitored and controlled in real time Proprietary management systems to analyse WTG performance

Remote control system and performance management Innovative product enhancements

Power-enhancing retrofits pioneered by EDPR to boost annual production

  • 1. Performance Optimisation

Systematic review of underperformance, root cause analysis and implementing improvement initiatives to maximize availability, efficiency and reduce costs

Continuous improvement

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Dec-12

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EDPR’s O&M strategy is successfully implemented, resulting in lower O&M costs

Breakdown by O&M Contracts (GW; 2012)

M3 Full scope contracts Initial warranty 8.0 GW 6% 10% 16% 68% Contracts Expiration Date

2013 2014 2015 >2015

84% of O&M costs predictable/fixed for the medium/long-term

Latest O&M Service Tenders (€k per MW)

Initial Warranty Cost Full Scope Contracts Cost M3 Estimated Cost

  • 20%
  • 15%

Combination of O&M strategic options, competitive tenders and market context yielding lower O&M costs

Adequate for wind farms with very stable track-record

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Strong discipline of controllable operating costs

Operating costs have been mostly penalised by the introduction of new levies (e.g. 7% tax in Spain)… …while on controllable costs EDPR has been demonstrating higher efficiency

Operating costs breakdown(1) (€ million, %)

48.8 47.3 2010 2012

Opex/MW Evolution (€k)

90% 87% 86% 79% 10% 13% 14% 21% 2010 2011 2012 1H13 Opex Levies

  • 3%

Notes: (1) Excludes write-offs.

O&M represent 40% of opex (2010-1H13)

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Stronger business metrics resulting in higher profitability since 2011

Selective growth towards most attractive markets and reduction of merchant exposure enabling increased returns

EBITDA per Average Installed Capacity (€k)

129 120 131 2010 2011 2012 1H13

  • Decreasing merchant exposure and

electricity price depressing EBITDA

  • Increased exposure to the higher realised

prices in Eastern Europe

  • PPAs signed in the US guaranteed lower

exposure to spot market, accretive to EBITDA 2011 2012… +5% YoY

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Selective and profitable growth

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EDPR to keep benefiting from a diversified portfolio…

Spain Structurally changes remuneration for regulatory life

  • RDL 9/2013 changes the remuneration framework for the sector

with key details still pending to be published

  • Return conceptually defined as Spanish 10Y Bond Yield + 300bps

Romania Rights preserved and limited impact on profitability

  • New law maintain number of GC per technology, although re-

profiles the projects’ cash-flows.

  • Draft proposal for new wind farms, reduction to 1.5 GC until 2017

and 3GC for solar PV

Poland New Law to potentially solve current price environment

  • Enactment of the new RES Law has been postponed, impacting the

Green Certificate market prices and new long-term contracts negotiations

US New growth opportunities on the short-term

  • PTC extension enabling a favourable environment in the US

triggering new RfP for PPAs (2013 YTD EDPR secured a total of 380 MW PPA for operating projects)

Long-term visibility for new projects

  • Italy: 2013 YTD renewable tenders successfully completed

(EDPR securing 60 MW with a 20-year PPA)

  • Brazil: Upcoming tenders in the 4Q13 to award 20-year PPA
  • France: Stable regulatory framework

Italy, Brazil, France Portugal Win-win solution and improved visibility

  • Decree-Law published in Feb-13 respecting the agreement

reached between the wind sector and the government to extend the remuneration framework

     

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0% - 30%

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…to execute a flexible growth model…

2014-15 Growth Breakdown (MW)

…enabling EDPR to capture opportunities in the most attractive countries PPA based growth to provide very high visibility on future returns Strong interest from institutional investors on US PPA assets to enhance asset rotation program Original Strategy Growth Shift US to be at the core of EDPR growth EDPR global growth not to exceed 500 MW/year

New Markets & Techs New Markets & Techs

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0.8 1.6 2.3

1H12 2H12 1H13

RFPs by Utilities for new PPA (GW)

+ +

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US emerging after PTC extension and improved fundamentals

PTC extension Increasing demand Regulatory Clarity Market Opportunity Top Notch Projects

  • 10-year PTC starting from COD
  • Start of construction to begin

before YE2013 (no time limit for COD)

  • Two options:

i) Demonstrate physical works

  • f continuous natures

ii) 5% capex spending “safe harbour” 2013YTD EDPR New PPAs

250 MW

Operating projects

Wind competiti- veness RPS based

280 MW

2014 COD

100 MW

2015 COD

630 MW EDPR competitive projects

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20yr 20yr 20yr

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EDPR is securing PPAs for 2014-15 projects at attractive returns

2013: PPAs for new projects in US

EDPR continues to execute a flexible business, adding high quality projects to the portfolio

117 c180

New PPAs 2014 80 California Yes Headwaters 2014 2015 200 100 Indiana Oklahoma Yes No Arbuckle Rising Tree MW State RPS COD PPA Duration

Load Factor 1st year PPA Price Price Escalator

New PPA vs. EDPR PPA US Installed Capacity (1H13)

▲ ▲ ▲ ▼ ▼ ▲ ▼ ▲ ▲

+50%

PPA duration

▲ ▲ ▲

EDPR US installed capacity

(including merchant)

EBITDA per MW - Portfolio vs New PPAs ($k)

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Self-funding business model

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Operating cash-flow and asset rotation as key sources of funding of EDPR

Operating Cash-Flow to clearly cover Capex needs

Operating Cash-Flow as % CAPEX (2012-15E)

>120%

Asset Rotation target

Proceeds from Asset Rotation (2012-15E)

€2bn

EDPR to keep debt levels and cost of debt under control in a growth environment

Balance sheet discipline

Sources of funds to both cover capex levels and allow for a reduction of Net Debt/EBITDA ratio Asset rotation program as key to support different capex scenarios

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EDPR’s high quality and low risk projects to be the focus of asset rotation and value crystallisation

Development Construction Operation Cost of Capital throughout the life cycle of a wind farm (WACC; %) High Risk Risk Reduction Low Risk Accelerate value growth through asset rotation:

1. Crystallise existing projects’ NPV (capture value created) 2. Re-invest in new value accretive projects

Operating Assets

Cumulative value creation

As an option to expand to

  • ther markets or technologies

Co-Development Assets to target

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EDPR has already executed two significant asset rotation transactions

November 2012:

Borealis acquires a 49% interest in US wind farms in Oregon, Minnesota, Texas and Illinois Transaction Scope: Total consideration: Implied Transaction Value (EV/MW): Average asset age:

599 MW $230m $1.3m 4.5y

Transaction Scope: Total consideration: Implied Transaction Value (EV/MW): Average asset age:

615 MW €359m €1.6m 6y

December 2012:

CTG acquires a 49% equity shareholding and 25% of the outstanding shareholder loans of wind farms in Portugal

China Three Gorges Corporation

Notes: (1) including all cash-flows generated by the projects since inception

€2.4m(1) $2.4m(1)

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China Three Gorges Institutional Investors

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Asset rotation program to be enhanced by Institutional Investors and US strategy

Further news on asset rotation deals expected to be announced throughout 2013

  • Looking for top quality projects with stable and visible

cash flows

  • Partnering with CTG for the sale of minority stakes in

wind farms and for a co-capex program through 2015

  • 2nd transaction with CTG in progress
  • Looking for projects with electricity output contracted

mainly through PPA/LT Hedges schemes

  • Ongoing negotiations for operating assets, specially in

the US, but also in European FiT asset type

  • US growth PPA based strategy to be an enabler of the

asset rotation strategy

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Spanish Regulation

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New framework in Spain still to be implemented structurally changes the remuneration scheme

Royal-Decree Law

Details of new regulation expected to be published in the 4Q13 Only after the publication of key parameters and standards the economic impact can be assessed

Royal-Decree Ministerial Order Spanish Energy Reform consists of several events with impact on Renewable Energy

RDL 9/2013 Project of Electricity Sector Law

  • Changes the remuneration

framework for Renewable Energy Sector

  • Outlines principles: return

defined as Spanish 10Y Bond Yield + 300 bps for the regulatory life

Approved Draft Published Pending

Government to announce remuneration components

  • Government will have 3

months after the RD approval to develop a Ministerial Order

  • Key parameters definition will

determine renewable energy remuneration for each segment of assets Draft of RD sent to the Energy Regulator (CNE)

  • Defines remuneration

methodology: based on past and future (Revenues-Costs)

  • f standard asset
  • Sets 6 year regulatory periods
  • Efficient asset will continue to

receive above-average returns

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Ministerial Order will define key parameters for each group of assets to yield an average 7.5% return

How to compute the 7.5% return for a standard asset?

  • When was the asset installed?
  • What was the standard investment cost?
  • Which cash-flows received a standard asset?
  • What is today the Net Asset Value of a standard asset?

Define the standard asset 1 Define future key parameters 2

  • How many years of regulatory life?
  • What is the future pool price?
  • What is average load factor for the standard asset?
  • What are the operating costs of a “well managed

company”?

  • What is the required capacity complement (on a per

MW basis) for a standard asset to obtain a 7.5% return?

Regular regulatory revision 3

  • Complement will be revisited every 6 years, following the

update of the Net Asset Value of the standard asset.

  • There will be interim revisions (every 3 years) to correct

deviations from the expected pool price. standard capex

A

1

Capitalised at 10Year Bond + 300bps capacity complement per MW

Net Asset Value

D C +

Discounted at 10Year Bond + 300bps

D COD Today

2

Today End of Regulation

(MW x average load factor x regulated price)

  • ( standard opex )

(MW x standard load factor x pool price(1) with cap & floor)

  • ( standard opex )

B

Net Asset Value

B A - C

Notes: (1) Forecasted.

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EDPR has younger assets with above market operating metrics

EDPR continuously delivering better load factors Installed Capacity in Spain (%, MW)

Higher load factor represents premium annual electricity sales (+c10% per MW) EDPR has younger assets, with 19 years of remaining useful life Spanish Load Factor: EDPR vs. Market Average 27% 27% 29% 29% 27% 28% 25% 26% 27% 25% 27% 2002 2004 2006 2008 2010 2012

Spanish Market

Average annual premium of 230bps Installed Capacity: EDPR vs. Market Average 2002 2004 2006 2008 2010 2012

Spanish Market

EDPR: 5.8 years; Market: 7.2 years

%

50% 100%

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1H13 Results

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Delivering a sound 1H13 performance

Strong financial growth Cash generation capabilities Premium assets and diversified portfolio

  • 8.1 GW of installed capacity (+648 MW YoY and +163 MW YTD)
  • Top-notch load factors of 33% (wind index at 105%)
  • +8% YoY on electricity output growth to 10.7 TWh
  • Revenues up 12% YoY: Output (GWh) +8% and Avg. Price +5%
  • EBITDA +11% YoY with performance more than offsetting new 7% tax in Spain
  • Net Profit up 29% YoY to €129m (or +17% adjusted)
  • Operating cash-flow increased 31% YoY (€472m) largely…
  • …covering the €104m Capex in the period
  • Net Debt of €3.0bn (-€0.3bn YTD) reflecting operating performance and

execution of asset rotation strategy

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101% 110% 105% 96%

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Strong growth allied to top performing assets

1H12 1H13 38% 36% 27% 31% 33% 25% 27%

97.6% 97.7%

1H3 vs. average Assets delivering leading operating metrics

Load Factor and Technical Availability

EDPR Technical Availability

32%

Electricity Production (TWh)

9.9 +0.6 +0.2 10.7 1H12 Capacity Growth Load Factor Performance 1H13 +8%

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Selling price increased +5% YoY to €64/MWh supported on higher output from Europe

61.4 64.3 1H12 1H13 +5%

Mix impact: +€2.4/MWh Forex impact:

  • €0.4/MWh

Higher output in Europe and stronger prices in the US driving the +5% YoY avg. selling price EU €94

  • 0.4%

Higher prices in RoE hampered by the end of the Transitory Regime (SP)

US $48 +5%

Benefiting from higher PPA prices and output

BR R$309 +11%

Inflation + working hours adjustment

1H13 % YoY

EDPR Price Evolution (€/MWh)

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Revenues increased 12% YoY to €756m...

...driving a continuous improvement in the portfolio’s metrics Quality assets: +648 MW YoY Top-notch load factor: 33% High availability: 97.7% Solid electricity output: +8% YoY EU +19%; US +0.2%; BR +5% Stronger average selling prices: +5% YoY EU -0.4%; US +5%; BR +11%

Revenues (€ million) Main drivers for Revenues performance

673 756 1H12 1H13 +12%

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Strong discipline of operating costs with performance penalised by new 7% tax in Spain

Opex (excluding Other Operating Income) (€ million)

Other Operating Income (1)

14 25 +€11m Ongoing focus on efficiency and control over Opex

Notes: (1) 1H13 impacted by $18m (€14m) from the restructuring of the off-taking volumes of a long-term PPA in the US (200 MW).

202 19 184 221 1H12 1H13 +20% +10% 1H12 1H13 +13% Opex/MW (€k) 1H12 1H13 +1% Opex/MW (ex-7% Tax in Spain & write-offs) (€k)

7% Tax in Spain

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129 327 560 21 56 121 233

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Solid financial growth from top to bottom

EBITDA to Net Profit (€ million)

D&A EBIT Taxes Minorities Financial Results D% YoY EBITDA New capacity, impairments and grants amort. +5% Performance benefiting from operational leverage +16% Lower interest costs (-4%) due to lower net debt

  • 6%

Tax Rate of 27.3% (vs. 31.1% in 1H12) +18% Borealis transaction and performance in Iberia +282% Strong top-line growth and costs under control +11% Net Profit Net Profit benefits from top-line performance +29%

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Free Cash-Flow €298m

39

Operating Cash-Flow increased 31% YoY Free Cash-Flow totalled €298m

1H13: Source and Use of Funds (€ million)

472 92 368 93 104 337 100 35 263 Operating Cash-Flow Other Payments Net Debt decreased €263m YTD (€464m QoQ) CTG-EDPR Portugal transaction concluded in 1H13 as expected (€368m)

Source of Funds Use of Funds

Cash Grant PP&E suppliers Capex Net Interest Costs(1) Asset Rotation (CTG)

Notes: (1) Net Interest cost (post capitalisation).

Debt Reduction +31% Dividends

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Debt reduction and lower cost of debt leading to a decrease of Net Interest Costs

1H13 Debt Breakdown (%)

Net Debt €3,042m 60% Loans with EDP 77% >=2018 81% Cash 36% Bank Loans 23% <2018 19% 4% Debt Currency Type Maturity €3,042m

  • Avg. €3,382m (-3% YoY)

Net Financial Debt Net Interest Costs €101m

  • 4% YoY

Cost of Debt 5.2%

  • 10bp YoY

1H13 Operating Metrics

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Annex

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IFRS 11

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IFRS 11 rules and impact in EDPR

…with impact in EDPR from 2014 onwards IFRS 11 rules…

Proportional consolidation will only be allowed when the partner has control over the assets and obligation for the liabilities, as defined in the agreement between the partners Joint ventures previously consolidated using proportional method will be consolidated by equity method

277 MW

Capacity included in reported EBITDA MW from 50/50 partnerships Estimated impact in 2014E Net Income from IFRS11 implementation none Estimated impact in 2014E EBITDA from IFRS11 implementation

c€30m

EDPR his currently consolidating proportionally assets in the US and in Spain from 50/50 partnerships Implementation of IFRS in EDPR will happen in 2014

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Regulation Pack

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SLIDE 45

Compulsory for all the assets under the special regime

45

Spain: New regulatory review yet to be fully disclosed

RD 2/2013

  • First 20 Years: €81.247/MWh (2013)
  • After Year 20: €67.902/MWh

Feed-in Tariff

  • Annual inflation excluding energy products and food, and

any impact of tax changes, minus “x” (50 bps).

Inflation Adjustments

RD 2/2013 to lose its effect once full framework enters into force (reference date Jul-2013)

RD 9/2013

  • Established as the Spanish 10-year Bond yields plus

300bps (currently 7.5%)

  • Remuneration method based on past and future returns
  • f a standard asset

Return

  • Legislation still pending to be published and approved

Visibility yet limited Further details expected in the 4Q13 7% General Tax over electricity sales generated in Spain was introduced in January, 2013

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SLIDE 46

Applicable to wind farms licensed until February, 2006.

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Portugal: Feed-in tariff according to wind farms’ COD

  • Duration: 15 years + 7 years
  • Initial duration (15 years): Feed-in tariff updated with

inflation

  • Duration extension (7 years): market price with a

cap/floor system (€74/MWh - €98/MWh)

  • Tariff is indexed to operating hours and is inversely

correlated with load factor.

Feed-in Tariff

Applicable to ENEOP’s wind farms

  • Duration: 15 years (or the first 33 GWh (per MW).
  • Price defined in a international competitive tender
  • €74 established tariff for first year. CPI monthly update

for following years.

  • After the initial period wind farms are to receive the

market electricity price and Green Certificate, if a GC market exists.

Feed-in Tariff All the capacity contributing to EDPR’s EBITDA is under the “old” regime ENEOP’s capacity is remunerated under the “new” regime

Before DL 33A/2005 After DL 33A/2005

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  • National market for electricity or bilateral contracts
  • 1 GC /MWh for wind during 10 years, with 5-year validity

and tradable on established market.

  • Cap and floor for GC:

Wallonia (€65-110) Flanders (€80-125)

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France and Belgium: Stable regulatory environment

  • First 10 years: Feed-in tariff is fixed at €82/MWh,

inflation-type adjusted.

  • Years 11-15: Tariff is revised in year 10, inversely

correlated with historical load factor: €82/MWh for an average 27% Load Factor €28/MWh for an average 41% Load Factor

France Belgium

Feed-in Tariff Market Price + Green Certificates

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Italy: Remuneration with long-term profile

  • Market price + GC until 2015. GCs are bankable for 3

years.

  • GSE has obligation to buy GCs issued until 2015 at

0.78*(€180/MWh – “P-1”), where “P-1” is the previous year average market price.

  • GSE buying price for 2013 is €80.3.
  • After 2015, remuneration is absorbed into a Feed-in

Premium scheme with premium defined as 0.78*(€180/MWh – “P-1”), where “P-1” is the previous year average market price.

  • Competitive annual tenders awarding 20-year PPAs

COD before 2013 COD equal to 2013 or later

Market Price + Green Certificates / Feed-in Premium PPA through competitive auctions

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SLIDE 49
  • Enactment of the new RES Law has been suffering delays.
  • New RES Law will define key parameters for new assets:

Number of Green Certificates per technology Quota of GCs for energy suppliers

49

Poland: Green Certificate system

  • Price achieved in market, bilateral contracts or selling to

distributor at regulated price (PLN201.4/MWh in 2013)

  • Wind receive 1 GC/MWh which can be traded in the

market.

  • Electric suppliers have a substitution fee for non

compliance with GC obligation. In 2013, the substitution fee was set at PLN297. Substitution fee is updated with inflation..

Framework for Existing Assets Draft for New Assets

Market Price + Green Certificates Market Price + Green Certificates

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SLIDE 50
  • Wind assets receive until 2017 2GC/MWh and after 2017

until completing 15 years receive 1GC/MWh. 1 out of the 2 GC earned until Dec-2017 can only be sold from Jan- 2018

  • Solar assets receive 2GC/MWh for 15 years. 2 out of the

6 GC earned until Mar-2017 can only be sold after Apr- 2017.

  • GC are tradable on market under a cap and floor system

(cap €58.8 / floor €28.9)

50

Romania: Green Certificate system

  • Draft proposal for new wind farms: 1.5 GC until 2017 and

0.75 GC from 2018 onwards until completing 15 years.

  • Draft proposal for new solar power plants: 3CG for solar

PV for 15 years.

Framework for Existing Assets Draft for New Assets

Market Price + Green Certificates Market Price + Green Certificates

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SLIDE 51

US: Electricity Sales + Tax Incentives

51

Framework for Existing Assets Draft for New Assets

  • Sales can be agreed under PPAs, Hedges or Merchant

prices.

  • Green Certificates (Renewable Energy Credits, REC

subject to each state regulation

Market Price + Green Certificates

  • Depending on the COD, wind also collect Production Tax

Credits (10-year period starting from COD) or Investment Tax Credit (in the amount of 30%, which – dependind on COD – could be monetised through the Cash Grant

  • ption)
  • Accelerated depreciations (MACRS) allows to fiscal

depreciate wind farms (95%) over the first 5 years

Tax Incentives

  • Sales can be agreed under PPAs, Hedges or Merchant

prices, with region being a determinant

  • Green Certificates (Renewable Energy Credits, REC

subject to each state regulation

Market Price + Green Certificates

  • Projects that start construction or have COD until Dec-

2013 are ilegible for a 10-year PTC / 30% ITC.

  • Accelerated depreciations (MACRS) allows to fiscal

depreciate wind farms (around 95%) over the first 5 years

Tax Incentives

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SLIDE 52

Brasil: Long-term PPA

52

Framework for Existing Assets New Assets

  • Electricity sold under 20-year PPA with price annualy

updated according with inflation-type adjustment.

  • Contracts established under incentive programs for

renewable energy

  • Competitive annual tenders awarding 20-year PPAs

PPA PPA through competitive auctions

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SLIDE 53

IR Contacts

Rui Antunes, Head of IR Francisco Beirão Maria Fontes Emanuel Sousa E-mail: ir@edpr.com Phone: +34 914 238 402 Fax: +34 914 238 429 Serrano Galvache 56, Edificio Olmo, 7th Floor 28033, Madrid - Spain

EDP Renováveis online

Site: www.edpr.com Link Results & Presentations: www.edpr.com/investors

Next Events

September 10th – Roadshow London September 11th – BBVA Conference (London) September 12th – Morgan Stanley Conference (London) September 13th – BPI Conference (Oporto) September 19th & 20th – Boston & NYC Roadshow September 19th – ESN Conference (Frankfurt) September 27th – Paris Roadshow

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SLIDE 54