June 2, 2016 5. 5. 6. 6. 1 Disclaimer The information - - PowerPoint PPT Presentation

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Inside ENGIE Tractebel Energia

June 2, 2016

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Disclaimer

The information contained herein has been prepared by ENGIE Tractebel Energia S.A. (“ENGIE Tractebel Energia”, “Tractebel” or “the Company”) solely for meetings to be held with investors and/or potential investors. This material does not constitute

• ffering material in whole or part, and you must
• btain

further information before making an investment decision in respect

• f the common

shares of the Company. This material has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities and should not be treated as giving investment

• advice. It is not targeted to the specific investment
• bjectives, financial situation or particular needs of

any recipient. No representation or warranty, either express or implied, is made as to the accuracy, completeness

• r

reliability

• f

the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own

• judgment. Any opinions expressed in this material

are subject to change without notice and ENGIE Tractebel Energia is not under obligation to update

• r keep current the information contained herein.

The Company and their respective affiliates, agents, directors, partners and employees accept no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this material. You should consult your own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent that you deem necessary, and you must make your own investment, hedging

• r trading decision based upon your own judgment

and advice from such advisers as you deem necessary and not upon any view expressed in this material. This material includes forward-looking statements subject to risks and uncertainties, which are based

• n

current expectations and projections about future events and trends that may affect the Company’s business. These statements include projections

• f

economic growth and energy demand and supply, as well as information about competitive position, the regulatory environment, potential opportunities for growth and other matters. Several factors may adversely affect the estimates and assumptions on which these statements are based, many of which are beyond our control.

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Inside ENGIE Tractebel Energia Part 1: Prospects for the Energy Market

June 2, 2016

Marcos Keller Amboni

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GDP and electricity correlation (1)

4.5% 3.9% 4.8% 2.6% 0.8% 7.9% 3.3% 4.1% 3.7% 3.8%

• 1.8%

3.1% 4.0% 6.0% 5.0%

• 0.2%

7.6% 3.9% 1.8% 2.7% 0.1%

• 3.8%
• 5%
• 3%
• 1%

1% 3% 5% 7% 9% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Change (%) Demanda de Energia Elétrica (YoY) Produto Interno Bruto (YoY)

Source: Banco Central do Brasil/ONS

Energy demand (YoY) Gross Domestic Product (YoY)

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GDP and electricity correlation (2)

Source: Banco Central do Brasil/EPE CHANGE (%)

GDP Residential Industrial Commercial Other

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Low residential and commercial growth in 2015 and 2016

Source: EPE 2016 is referred to the 1st quarter

5.6% 3.8% 4.8% 5.1% 6.7% 6.4% 4.4% 4.8% 6.5% 5.7%

• 0.6%
• 3.7%

7.0% 4.4% 5.9% 5.1% 5.9% 6.0% 6.2% 7.5% 5.9% 7.3% 0.6%

• 4.4%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20161Q

Residential Commercial

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GDP: historical x projection

Source: Banco Central do Brasil

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Projection: demand

Source: ONS/ENGIE Tractebel Energia * ONS revised the calculation methodology of the actual demand from 2014 and 2015

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Generation and transmission recurring delays

Source: PSR - Energy Report

1000 2000 3000 4000 5000 6000

jan/14 fev/14 mar/14 abr/14 mai/14 jun/14 jul/14 ago/14 set/14

• ut/14

nov/14 dez/14 jan/15 fev/15 mar/15 abr/15 mai/15 jun/15 jul/15 ago/15 set/15

• ut/15

nov/15 dez/15 jan/16 fev/16 mar/16 abr/16 mai/16 jun/16 jul/16 ago/16 set/16

• ut/16

nov/16 dez/16

Commercial Capacity - MWa

Previsto PMO* Realizado Previsto PMO abril

* PMO of January from de current year

Jan/14 Feb/14 Mar/14 Apr/14 May/14 Jun/14 Jul/14 Aug/14 Sep/14 Oct/14 Nov/14 Dec/14 Jan/15 Feb/15 Mar/15 Apr/15 May/15 Jun/15 Jul/15 Aug/15 Sep/15 Oct/15 Nov/15 Dec/15 Jan/16 Feb/16 Mar/16 Apr/16 May/16 Jun/16 Jul/16 Aug/16 Sep/16 Oct/16 Nov/16 Dec/16

Actual April estimated PMO* Estimated PMO*

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Current situation (1)

12.3 13.6 15.1 15.9 14.7 12.2 9.5 6.6 16% 17% 18% 18% 17% 14% 11% 8%

2016 2017 2018 2019 2020 2021 2022 2023

GWa

System Energy Balance

 Does not consider future auctions  Considers work delays (TBLE propositions)  Considers Reserve Energy

Source: PSR - Energy Report

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Current situation (2) System Energy Balance

 Does not consider future auctions  Considers work delays (TBLE propositions)  Does not consider Reserve Energy

9.6 10.5 11.2 10.4 8.6 6.1 3.4 0.6 13% 14% 14% 13% 11% 7% 4% 1%

2016 2017 2018 2019 2020 2021 2022 2023

GWa

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PLD

Source: CCEE

100 200 300 400 500 600 700 800

jan/09 jun/09 nov/09 abr/10 set/10 fev/11 jul/11 dez/11 mai/12

• ut/12

mar/13 ago/13 jan/14 jun/14 nov/14 abr/15 set/15 fev/16

R$/MWh Southeast Spot Price

Mensal MM12meses MM36meses MM60meses

Jan/09 Jun/09 Nov/09 Apr/10 Sep/1 Feb/11 Jul/11 Dec/11 May/12 Oct/12

Maverage 12months

Mar/13 Aug/13 Jan/14

Maverage 36months

Jun/14 Nov/1 4 Apr/15 Sep/15 Feb/16

Maverage 60months Monthly

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Relevant factors that influence energy pricing

 Economy recovery  Distributed energy growth  Energy pricing models calibration

composition (for example: risk level)

 Hydrology (wet or dry year)  Delays in the schedules of

generation and transmission projects

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Volatility:

PLD and volatility

PLD is intrinsically a business of very high volatility.

Source: Bovespa/CCEE

0% 50% 100% 150% 200% 250% 300% 350% 400% 450% 100 200 300 400 500 600 700 800 900 01/01/2008 01/01/2009 01/01/2010 01/01/2011 01/01/2012 01/01/2013 01/01/2014 01/01/2015

Annual Volatility SE Market PLD [R$/MWh] Ibovespa [points/100]

PLD volatility x iBovespa

PLD Médio Semanal SE Ibovespa Médio Semanal (/100) Volatilidade Anual PLD SE Volatilidade Anual iBovespa Weekly Average SE PLD SE Market PLD Annual Volatility Ibovespa Annual Volatility Weekly Average Ibovespa (/100)

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Hydrological uncertainty in the energy pricing

• Supply 2020 (storage sensibility 25% and 35% in the SE)

25% Storage 35% Storage

Inflow Energy

Internal Studies

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CCEAR new energy: auction results

Does not include Botox plants Reference: Apr/16

296.1 230.2 222.6 199.7 166.1 147.0 191.1

50 100 150 200 250 300 SOLAR TERMELÉTRICA BIOMASSA PCH EÓLICA HIDROELÉTRICA MÉDIA R$/MWh 36,183 MWa 12,075 MWa 6,490 MWa 698 MWa 2,302 MWa 679 MWa 13,938 MWa

AVERAGE HYDRO WIND BIOMASS THERMAL SHP SOLAR

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Average tariff of DISCOs

151 129 189 210 244 110 91 80 73 82 29 12 27 62 71 290 232 296 346 397

50 100 150 200 250 300 350 400 450 2012 RTE 2013 2014 RTE 2015 2015 R$/MWh TE TUSD Fio TUSD Encargos TF

ACR Tariff Comparison

• 14%

+11%

• 17%
• 12%
• 59%

+131%

• 20%

+28%

+37 %

Sample:

• CPFL Paulista
• AMPLA
• CEMIG
• CEMAT
• ENERSUL
• AES SUL
• COELBA
• Bragantina
• RGE
• COPEL
• Eletropaulo
• ESCELSA
• CELG
• CELESC
• ELEKTRO
• EBE
• Piratininga
• CEEE
• Energisa-MG
• Energisa-PB
• COELCE
• CELPE
• CEAL
• Cepisa
• Light

+16% +11 % +14% +17% +46%

• 12%

+127 %

• 8%

+15%

Source: Aneel

Energy Tariff TUSD Wire TUSD Charges X Wire Tariff

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DISCOs tariff will remain high

260.92 256.32 254.15 249.61 236.55 236.34

303.45 313.97 305.68 305.72 286.78 280.57 197.11 182.84 183.47 181.41 172.93 173.61

100 150 200 250 300 350 2016 2017 2018 2019 2020 2021

R$/MWh

TE Média Maior TE Menor TE

Higher Energy Tariff Average Energy Tariff Lower Energy Tariff

Internal Studies Data-base: Apr/16

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Regulated market (ACR) balance

Source: CCEE/Aneel

• 10.000

20.000 30.000 40.000 50.000 60.000 2016 2017 2018 2019 2020 2021 MWa Leilão de Energia Existente Leilão de Ajuste Leilão de Fontes Alternativas Leilão de Energia Nova Proinfa Cotas Estruturantes Bilateral Itaipu V.Demanda 60,000 50,000 40,000 30,00 20,000 10,000 Existing Energy Auction Alternative Sources Auction Adjustment Auction New Energy Auction Proinfa Bilateral Quotas Structuring Itaipu Demand

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Strong incentive to migration

623 655 750 1,203 1,449 2,471

1,826 2,104 3,221

dez/15 abr/16 dez/2016 (esperado)

Number of Consumers

Livres Especiais Dec/15

100 200 300 400 500 600 700

2012 2013 2014 2015 2016

R$/MWh

Energy Tariffs x Prices

Tarifa DISCOs PLD

+15% Incentive to migration +53% Free Specials

DISCOs Tariff

Apr/16 Dec/16 (expected) Source: Internal Studies/CCEE

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

The economic crisis was much more serious and long-lasting than expected and affected load growth (3 years of decline)



Uncertainty surrounding the timing of resumption in demand: recovery could be rapid



Low per capita consumption (North/Northeast, class B and C): indications for resumption in residential growth



ENA continues to be the principal variable of influence on PLD and consequently on market prices, mostly with reservoir still needing to recover



ENGIE Tractebel Energia

 Generating complex made up of energy sources of a complementary nature  Policy of anticipated contracting  Diversified client portfolio High degree of resilience in the face of unfavorable market scenarios

Conclusions

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Inside ENGIE Tractebel Energia Part 2: Retrospective 1998 - 2016

June 2, 2016

Manoel Zaroni Torres

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Trends of ENGIE Tractebel Energia in numbers

Proprietary Capacity (MW) Market Capitalization Total Shareholder Return – TBLE3 x Ibov x IEE Net Income and Distributed Earnings

1,500 835

• 400
• 200

200 400 600 800 1,000 1,200 1,400 1,600 1,800 1999 2001 2003 2005 2007 2009 2011 2013 2015 R$ Milhares 3,719 7,044

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000 8,000 1998 2000 2002 2004 2006 2008 2010 2012 2014 5,000 10,000 15,000 20,000 25,000 1999 2001 2003 2005 2007 2009 2011 2013 2015

R$ Milhões 21,860

1,000 2,000 3,000 4,000 5,000 6,000 7,000 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 IBOV IEE TBLE 639 IBOV 12% /year 1,606 IEE 18% /year 5,983 TBLE 27% /year 100

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Where it all began – Privatization of the Electricity Sector

 Acquisition of 51% of the voting capital of the state-owned Gerasul

• Installed capacity of 3,719 MW.
• Value of the acquisition: R$ 946 million (US$ 801 million).
• Debt: R$ 1,153 million (US$ 977 million).
• Labor contingencies amounted to R$ 54 million (US$ 46 million) from 935

lawsuits.

• Commitment to conclude the building of Itá Hydroelectric Power Plant

(1,450 MW) and the William Arjona Thermoelectric Power Plant.

Taking the final decision Press Conference

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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Some necessary house-keeping

 New corporate structure: fewer hierarchical levels.  Optimization of human resources: reduction from 1,275 to 828 employees, through an incentivized severance package program  Adoption of bonus scheme based on meritocracy.  Creation of an energy marketing and sales department.

First anniversary celebrations

2016 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1998

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First achievements

Keep this brand name in mind

2016 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1998 1999

 With the startup in operations at the Itá Hydroelectric Power Plant, the Company´s proprietary installed capacity reaches 4,846 MW  30% growth.  Signature of the first agreement with a free consumer.  The Company’s Code of Ethics is approved.

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A year in the dark

2016 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1998 1999 2000

 Energy rationing.  Sales office set up in São Paulo, the state with the greatest concentration

• f free consumers in the Federation.

 Startup of operations at the William Arjona Thermoelectric Power Plant: first plant to use natural gas from the Bolivia-Brazil pipeline.  Installed capacity of 5,036 MW  growth of 35%.

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2016 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1998 1999 2000 2001

 The Company concludes its first energy sale via public auction in Brazil.  Law 10.438 establishes the Energy Development Account (CDE).  Expansion into the Brazilian Center - West: startup of operations at the Cana Brava Hydroelectric Power Plant on the Tocantins River with an installed capacity of 450 MW.  Start of operations at the Machadinho Hydroelectric Power Plant on the Uruguai River with an installed capacity of 1,140 MW.  Installed capacity amounts to 5,890 MW  58% growth since 1998.  The Company adopts the brand name of its controlling company: Tractebel Energia.

Heading north – but with consolidation in the South

Energy being produced... Energy being sold...

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Debut in the alternative sources segment Diversifying into the alternative energy

2016 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1998 1999 2000 2001 2002

 Taking the first steps for obtaining ISO 9001 and ISO 14001 certification.  The Company surpasses the 500a MW mark in sales to free consumers.  Startup of operations at the Lages Cogeneration plant with a capacity

• f 28 MW. First plant to use wood

waste as an energy source in the GDF SUEZ Group.  Installed capacity reaches 5,918 MW  growth of 59%.

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2016 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1998 1999 2000 2001 2002 2003

 Approval of the new regulatory framework (Law 10.848) – Establishment of the Electric Energy Trade Board (CCEE) in succession to the Electric Energy Wholesale Market(MAE).  Seven of the Company’s 13 plants receive ISO 9001 (procedures) and ISO 14001 (environment) standard certification.

Regulatory framework for the electric energy sector approved

 Tractebel Energia exports energy to Argentina for the first time.  Tractebel Energia consolidates its participation in the free market. Agreements exceed 700a MW.  Installed capacity  5,918 MW.

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 The Controlling Company launches a public offering to increase share liquidity:

• Six times over subscribed.
• Shareholder base doubles. Allocation is equally distributed –

Brazilian and overseas investors.

• Transaction surpasses R$ 1 billion. Controlling Company’s stake

falls from ~78% to ~69%.  Adherence to the Novo Mercado’s Corporate Sustainability Stock Index (ISE).  Extinguishment of the Company’s Initial Power Purchase Agreements.  Sale of 200a MW at the first new energy auction.  Free consumer agreements exceed 1,000a MW.  Installed capacity  5,918 MW.

Getting closer to the market again

2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1998 1999 2000 2001 2002 2003 2004

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One more rewarding year

2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1998 1999 2000 2001 2002 2003 2004 2005

 Tractebel Energia is recognized with Investor Relations Magazine’s 2006 award for the Best Progress in Investor Relations.  Sale of 148a MW from the São Salvador Hydroelectric Plant.  All 13 of Tractebel Energia’s plants have obtained ISO 9001 and ISO 14001 standard certification.  Installed capacity  5,918 MW.

The First Inside Tractebel

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 Creation of the Sustainability Committee.  Sale of 220 thousand carbon credits annually through to 2016.  Launch of the Company’s first Annual Sustainability Report.  Net income surpasses the R$ 1 billion mark for the first time.  GDF SUEZ sales 256a MW from Estreito HPP.  Acquisition of the already built Ponte de Pedra HPP.  1st “Alternative Sources” Auction (SHPs and Biomass).  Installed capacity grows to 6,094 MW, an increase of 64%.

Record profits with a sustainable vision

2016 2008 2009 2010 2011 2012 2013 2014 2015 2016 1998 1999 2000 2001 2002 2003 2004 2005 2006

Ponte de Pedra Hydro Power Plant

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A new growth cycle begins

2016 2009 2010 2011 2012 2013 2014 2015 2016 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

 Merger between SUEZ and Gaz de France, resulting in GDF SUEZ.  Acquisition of the first SHPs totaling 50 MW

• f installed capacity.

 Sale of 33 MW from Ibitiúva Thermoelectric Power Plant fired from sugarcane bagasse.  São Salvador Hydroelectric Power Plant begins commercial operations.  Installed capacity reaches 6,387 MW, growth of 72%.  GDF SUEZ acquires Econergy, obtaining the Jirau HPP concession.  Installed capacity  6,188 MW.

Unveiling of São Salvador HPP

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Growth and record breaking in times of crisis

2016 2010 2011 2012 2013 2014 2015 2016 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

 World financial meltdown.  Acquisition of a 40.07% stake in the Estreito Hydroelectric Power Plant, adding a further 436 MW of installed capacity to total 6,580 MW, a growth of almost 77%.  Conclusion of construction work on the São Salvador Hydroelectric Power Plant.  Operational records:

• Monthly generation - 5.414aMW.
• Instantaneous generation – 6,807 MW.
• Uptime – 98.9%.

 Installed capacity  6,431 MW.

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Ongoing development

2016 2011 2012 2013 2014 2015 2016 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

 New model for transfer of assets.  Tractebel Energia’s shares were one of the highlights of the electricity sector, reporting an appreciation of 27.5% in 2010.  The Company assigned an increase in its corporate ratings.  New record in instantaneous generation – 7,074 MW.  Production begins at Areia Branca SHP and at Ibitiúva Bioenergética, increasing installed capacity to 6,472 MW.

Areia Branca SHP Ibitiúva Thermal Plant

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Resilience in the face of adversity

2016 2012 2013 2014 2015 2016 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

 With some of heaviest rainfall ever recorded in Brazil, the Company successfully protects its revenue maintaining high contraction volume, net income growing 19.5%.  First investment grade rating in the history of the Company.  Combination of assets of International Power and GDF SUEZ.  Estreito Hydroelectric Power Plant begins operations, increasing installed capacity to 6,908 MW.  For the first time, the Company is elected one of the best companies to work for in Brazil.  Unveiling of the Entre Rios do Sul Cultural Center (RS).

New Company headquarters Cultural Center

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Year of change in the regulatory sphere

2016 2011 2013 2014 2015 2016 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

 Publication of MP 579, subsequently transformed into Law 12.783/13, establishing rules for renewal of energy generation and transmission concessions resulting in major changes in the sector.  Authorization of BNDES financing for the first wind plants supplying energy to the free market - the Trairi Wind Complex.  Modernization work begins on the Salto Santiago, Passo Fundo and Ponte de Pedra hydroelectric power plants.  Opening of Estreito Hydroelectric Power Plant.  Inclusion of the Trairi Wind Complex in the United Nations Clean Development Mechanism.

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Sustainable management and awards

2016 2011 2014 2015 2016 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2012

 Unveiling of the Alto Bela Vista Cultural Center in the region of ITHPP and the Tractebel Environmental Park in the JLTPP, both in the state of Santa Catarina.  Capture of 40 new free clients, 24 of which being special consumers.  Hydroelectric generation begins to feel the effects of the hydrological deficit crisis (GSF).  Acquisition of the Campo Largo Wind Complex in Bahia – with more than 600 MW of installed capacity.  Two of the four wind farms in the Trairi Wind Complex in

• perations.

 Acquisition of 100% of Ferrari Termoelétrica’s capital stock.  Installed capacity  6,965 MW.

Fleixeiras I Wind Farm Mundaú Wind Farm

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Assured growth in the midst of crisis.

2016 2011 2015 2016 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2012 2013

 Inauguration of the fourth Cultural Center in Quedas do Iguaçu (PR).  Severe drought sees the hydroelectric generation deficit reaching 9.4%.  Reduction in payout to 55% for supporting investments and as protection against the hydrological crisis.  Sale of 386.9a MW in the A-5 auction.  Entry into operation of the largest photovoltaic plant in Brazil and of two wind farms.  Work begins on expansion of Ferrari TPP and the installation of the Santa Mônica Wind Farm.  Proprietary installed capacity of 7,027 MW.

Cidade Azul Photovoltaic Solar Plant

 Tractebel Energia shares rejoin Ibovespa.

1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 6.

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 GDF SUEZ becomes ENGIE and Tractebel Energia adopts new logo.  Deficit in hydraulic generation reaches 15.4%.  Publication of Law 13.203 – renegotiation of hydrological risk.  First sale of solar energy in the Regulated Contracting Environment (Assú V Photovoltaic Plant).  Sale of 46a MW from the Santa Mônica Wind Complex in the A-3 Auction.  Start on the implementation of the first phase of the Campo Largo Wind Complex.  Licensing and initial work on Pampa Sul TPP, state of Rio Grande do Sul.

Projects under development materialize and agreement reached on renegotiation of hydrological risk

2016 2011 2016 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2012 2013 2014

 Expansion work on Ferrari TPP concluded.  Proprietary installed capacity of 7,044 MW.

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42

 Company expands its operations to the distributed energy market where there is major growth potential.

Decarbonization, decentralization, digitization

2016 2011 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015