January 2020 This document has been prepared by EDP - Energias de - PowerPoint PPT Presentation

January 2020

This document has been prepared by EDP - Energias de Portugal, S.A. (the "Company") solely for use at the presentation to be made on this date and its purpose is merely of informative nature and, as such, it may be amended and supplemented. 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 to any other person in any jurisdiction, and may not be reproduced in any form, in whole or in part for any other purpose without the express and prior consent in writing of the Company. This presentation and all materials, documents and information used therein or distributed to investors in the context of this presentation do not constitute or form part of and should not be construed as, an offer (public or private) to sell or issue or the solicitation of an offer (public or private) to buy or acquire securities of the Company or any of its affiliates or subsidiaries in any jurisdiction or an inducement to enter into investment activity in any jurisdiction. Neither this presentation nor any materials, documents and information used therein or distributed to investors in the context of this presentation or 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 and may not be used in the future in connection with any offer (public or private) in relation to securities issued by the Company. 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; energy demand and supply; developments of the Company’s markets; the impact of legal and 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. Important factors that may lead to significant differences between the actual results and the statements of expectations about future events or results include the company’s business strategy, financial strategy, national and international economic conditions, technology, legal and regulatory conditions, public service industry developments, hydrological conditions, cost of raw materials, financial market conditions, uncertainty of the results of future operations, plans, objectives, expectations and intentions, among others. 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 directors, representatives, employees and/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. 2 INVESTOR PRESENTATION

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Balanced portfolio Avg. residual concession life 45 years Operating synergies Flow direction Legend: Pumped Storage Run-of-River Production (2) | 2018 Figures: EBITDA | EBIT | (1) Year that the plant was repowered with the aim of increasing capacity | (2) IPH 2018 = 1.05 (1.00 = LT average) | (3) End of Concession 5 INVESTOR PRESENTATION

12 th Mar 19 th Dec Jun ( APA, REN, DGEG, Competition Authority ) 6 INVESTOR PRESENTATION

% EDP’s EBITDA coming from Conventional Generation in Portugal Hydro resources in Portugal (deviation vs. historical average) % 50% 18% 13% 0% -50% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 11M19 2018 2020E (1) ex-disposed assets EDP hydro footprint in Iberia Market share of large hydro plants in Portugal (by Capacity) post-deal Iberdrola 15% Engie, CA 21% Assurances, 64% Mirova 100% (1) Assuming no EBITDA contribution from disposed assets. 7 INVESTOR PRESENTATION

EDP Hydro installed capacity in Iberia GW 5.5 4.6 additions disposal 2006 2020E Weight of pumping capacity 8 INVESTOR PRESENTATION

74% 26% 75% 25% 84% 16% (1) 2018 Figures 9 INVESTOR PRESENTATION

Implicit valuation of Hydro Iberia in EDP’s SoP (2) EDP’s hydro portfolio in Iberia – asset valuation EV/EBITDA 2018 € bn 14.4x 8.9 Min/Max Min/Max 7.5 12.1x 5.8 9.3x EDP SOP valuations Transaction multiple Valuations by Valuation @ Valuations by analysts (1) transaction multiple analysts (1) Avg. Price Target of €4.07/share in SOP (1) Includes the enterprise values attributed to hydro Iberia by the following analysts that disclose this detail: AllianceBernstein, Bank of America Merrill Lynch, Barclays, Caixa Bank BPI, Exane BNP Paribas, Goldman Sachs, JP Morgan, Kepler Cheuvreux, RBC, Santander and Société Générale. | (2) SOP: Sum of the Parts valuations 10 INVESTOR PRESENTATION

Difference in the monthly variable cost of gas and coal in Spain (1) , €/MWh Acceleration on renewables deployment targets in Iberia 15 Coal cheaper than gas 10 European discussion to reinforce emissions targets by 2030 5 0 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 -5 Continuing high regulatory costs in Iberia -10 Gas cheaper than coal -15 -20 Portuguese government intention to close coal plants by 2023 -25 (1) CCGT assumptions: Mibgas (cost of gas), efficiency 48%, VOM 2.5€/MWh, Variable TPA 0.5€/MWh, 7% generation tax (except for 4Q18 and 1Q19) and 0.65€/GJ g reen cent up to 3Q18 | Coal assumptions: API#2 (cost of coal), efficiency 35%, VOM 1.5€/MWh, cost of transport 3€/MWh, 7% generation tax (except for 4Q18 and 1Q19) and 0.65€/GJ green cent. 11 INVESTOR PRESENTATION

~€0.3 Bn cost before tax in 2019 2.0% ~€0.2 Bn impact on net profit Aboño 1&2 (0.9 GW) Soto 3 (0.3 GW) Plants deemed to operate as long as they generate adequate returns Decommissioning and dismantling costs were already provisioned Sines (1.2 GW) 9M19 Well before 2030 (1) EDP consolidated figures 12 INVESTOR PRESENTATION

By-product of steel production ~ (1) Blast furnace gas (“BFG”) is a product from blast furnaces generated over the steel industrial production. 13 INVESTOR PRESENTATION

Renewables generation Specific emissions Become coal-free (vs 2005 levels) 14 INVESTOR PRESENTATION

% of EBITDA Net Debt / EBITDA 4.0x Contracted exposure <3.2x in 2018 <3.0x Contracted exposure 2020 post-disposal 2018 2020 2022 15 INVESTOR PRESENTATION

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Clear investment framework… … with a track record of delivery Threshold Achieved 1 Top-3 PPAs secured in ~200 RfPs answered IRR/WACC USA 2016-18 5% PPAs won Attractive Renewables #2 C&I PPAs wind returns onshore in 2018 (0.7 GW NPV/CAPEX signed) Brazil Transmission auctions Contracted Regulated revenue/CAPEX 2 2017-2018, % period Sound contracted 12.8 profile and time Networks 9.2 to cash Contracted NPV Peers 1 Average last 60 projects as of Mar-19 | 2 Regulated revenue (RAP – Receita Anual Permitida) bid by the company and CAPEX assumed by ANEEL SOURCE: BNEF 17 INVESTOR PRESENTATION

Renewables Capacity LT contracts Projects already secured secured for 19-22 Build-out GW; Dec-19 , of 5.2 GW 5.2 GW which 2.2 GW since Jul-19 1.7 0.3 1.3 1.3 0.5 0.4 0.9 1.3 1.0 0.9 0.7 Dec-18 Dec-19 2019 2020 2021 2022 under construction by Sep-19 Wind onshore additions will be focused in the US for 2019/20 and also in Europe/Brazil for 2021/22 Solar PV additions focused in the 2021/22 period 18 INVESTOR PRESENTATION