EDP Renewables SA · EURONEXT:EDPR
EDP Renewables SA — EDP Renováveis — Non-Deal Roadshow (January 2010)
55 slides from EDP Renewables SA's roadshow presentation, January 2010
Slide 1: Roadshow Presentation
Roadshow Presentation January, 2010
Slide 2: Agenda
Agenda I EDP Renováveis II Competitive Strengths III 9M09 Results IV Conclusions 1
Slide 3: EDP Renováveis
° ‘)\ EDP Renovaveis SJ
Slide 4: EDPR: a pure wind player with a sound asset base
EDPR: a pure wind player with a sound asset base… USA Poland Belgium 2,530 - France 427 57 120 18,062 Romania 13 211 1,466 62 30 - Portugal 1,221 159 682 596 Spain Brazil 128 2,169 574 417 14 5,012 - 1,509 Gross MW – 9M09 Installed Under Pipeline + Capacity Construction Prospects MW Installed Capaci
Slide 5: Well positioned to capture long-term profitable growth
…and well positioned to capture long-term profitable growth EDPR Growth Targets (Gross GW) +3.6 10.5 GW Strong asset base delivering low risk cash-flows and attractive returns +1.3 5.6 GW Robust pipeline of 29 GW providing optionalities to value al e oriented gro growth th Value maximization through
Slide 6: Competitive Strengths
C Competitive titi Strengths St th
Slide 7: EDPR: clear competitive strengths oriented to value creation
EDPR: clear competitive strengths oriented to value creation Strong track record on growth delivery and visible pipeline to feed superior growth Pure player in a sector with regulatory support and improved business model for long-term Above market load factors to deliver premium assets and maximize
Slide 8: Continuous delivery of strong capacity growth
Continuous delivery of strong capacity growth Historic Capacity Growth 9M09 Capacity Increase (Gross MW) (Gross MW) +1,423 +798 5,577 5 052 5,052 +611 4,155 3,640 2,126 (1) 2006 2007 2008 9M08 EU US 9M09 • Consistently delivering a robust growth track record throughout last years of operation • On t
Slide 9: 2009 target supported by favorable track record
2009 target supported by a favorable track record on new installations and current capacity under construction 9M2009: YTD capacity additions profile 9M2009: Under construction (Gross MW) (Gross MW) 1.2-1.3 GW EU 866 US 427 515 525 276 3Q 183 2Q Total 1,293 66 1Q 9M08 9M09 4Q09E 2009 Target Confiden
Slide 10: EU: 866 MW under construction in 6 European countries
EU: 866 MW under construction in 6 European countries EU: 9M09 Capacity Under Construction (Gross MW) MW Installed Capacity MW Under Construction Spain Belgium g Poland oa d • Matured under construction works on 417 MW to be 57 - Spain commissioned in 2009 and 2010 13 120 2,169 417 Portugal • Progre
Slide 11: US: successful construction activity in 2009
US: successful construction activity in 2009 with 700 MW commissioned in the 4Q09: +328 MW vs. Sep. 09 US: 9M09 Capacity Under Construction (Gross MW) MW Installed Capacity Commissioned in 4Q.09 MW Under Construction Iowa Lost Lakes 101 Minnesota Oregon 101 New York Illinois 301 334 Iowa Top Crop
Slide 12: Targeting 1.3-1.4 GW of capacity additions for 2010
Targeting 1.3-1.4 GW of capacity additions for 2010 and keeping a strong growth pace to achieve 2012 goal… Annual Capacity Additions EDPR Growth Targets ((Gross GW)) ((Gross MW)) Installed 9M09 Under Construction 9M09 +3.6 10.5 GW Under Development 9M09 1.3 - 1.4 1.2 - 1.3 +1.3 5.6 GW 2009 guidance
Slide 13: Supported by a robust and visible pipeline of projects
…supported by a robust and visible pipeline of projects 9M09 Pipeline Pipeline and Growth Targets (Gross MW) (Gross GW) Tier 1 Tier 2 Tier 3 Prospects Total Spain 373 485 1,814 2,341 5,012 28.6 Portugal 351 14 9 200 574 France 55 58 356 753 1,221 Prospects 9.8 Belgium - - 37 25 62 Short-term pipelin
Slide 14: UK wind offshore: EDPR to enter a new market
UK wind offshore: EDPR to enter a new market and to develop new skills and capabilities UK Round 3 EDPR and SeaEnergy Partnership (75%/25%) 9 zones tottaling up to 32 GW Zone 1 1 • Zone Development Agreement for 1.3 GW in Zone 1, located on the Smith Bank in the Moray Firth, Scotland (near other Sea
Slide 15: EDPR and SeaEnergy offshore project development phases
EDPR and SeaEnergy will first proceed with the study and development phase of the offshore project Project j Construction Award Consent Development and Operation • The Crown Estate • Site identification • Apply for consents • Start construction awards Zone Partner • Environmental and • Obtain cons
Slide 16: EDPR: clear competitive strengths oriented to value creation
EDPR: clear competitive strengths oriented to value creation Strong track record on growth delivery and visible pipeline to feed superior growth Pure player in a sector with regulatory support and improved business model for long-term Above market load factors to deliver premium assets and maximize
Slide 17: EU: supportive regulation and well defined targets
EU: supportive regulation and well defined targets European • Stable regulatory environment U i Union • The 20% 2020 target for renewables was reaffirmed • Well defined government targets for 2010 and 2016 Spain • Current remuneration framework is valid through 2012 • New targets for 2020 under disc
Slide 18: Spain: New plan increases visibility for the wind sector
Spain: New plan announced in November by the Spanish Government increases visibility for the wind sector Spain: Wind installed capacity targets Current economic regime RD 661/2007 (GW) 29.0 • Pool price + €31/MWh premium 23.6 Remuneration • €76/MWh floor and €91/MWh cap 20.2 16.0 • Jan 08 – Dec 12 i
Slide 19: Eastern European countries: strong growth potential
Eastern European countries: strong growth potential through solid defined targets and a stable regulation Poland: Renewable Energy Quotas • Remuneration: power price + green certificates 11.9% (€97/MWh@9M09) 10.4% 7.0% • Green certificates can be sold through PPAs or to the Polish Power Exchange Ach
Slide 20: UK: wind offshore market attractive returns
UK: wind offshore market to deliver attractive returns supported by a well established regulatory framework UK(1): Compulsory Renewable Energy Quota (%) • Renewable Obligation Order was recently extended until 2037 15.4% 14.4% 13.4% • Remuneration: wholesale price + ROC(2) + LEC(3) 10.4% • Tradable
Slide 21: US: Current remuneration based on long-term PPA plus tax incentives
US: Current remuneration is based on long-term PPA contracting plus federal tax incentives • The Renewable Portfolio Standard (RPS) enforced at state level creates a mandatory demand for renewables Brown Electricity Price • Utilities need to purchase renewable energy, being the long-term PPA for + 1
Slide 22: US: Green mandatory demand main growth driver
US: Green mandatory demand has been the main growth driver for the wind sector in the US WA: 15% by 2020 MI: 10% MWh and Renewable Energy Portfolio Standards (RPS) by State 1,100 MW by 2015 OR: 25% by 2025 OH: 12.5% by 2025 CA: 33% by 2020 WV: 25% by 2025 MT: 15% by 2015 KY: Report recommends NV: 25
Slide 23: US: New Administration increasing regulatory support
US: New Administration is increasing the regulatory support and short-term initiatives are already proving its success Approved and guidelines released Pending guidelines / legislation Short-Term Long-Term (American Recovery and Reinvestment Act) Cash Grant program Energy Bill Approved on the AR
Slide 24: Brazil: strong long-term growth potential
Brazil: strong growth potential for the long-term driven by a rich wind resource Brazil: Installed Capacity ((MW)) • Established in 2002 to foster renewable energy • 1,400 MW approved under the program to be ~140 GW PROINFA commissioned until Dec. 2010 Program • Remuneration: 20y PPA with federal po
Slide 25: EDPR: clear competitive strengths oriented to value creation
EDPR: clear competitive strengths oriented to value creation Strong track record on growth delivery and visible pipeline to feed superior growth Pure player in a sector with regulatory support and improved business model for long-term Above market load factors to deliver premium assets and maximize
Slide 26: Delivering top-quality load factors
Delivering top-quality load factors… 2008 QoQ Load Factors 9M09 Load Factors (%) (%) Avg. load factor for the year 9M08 9M09 US 40% 38% 34% 37% US 31% 31% EU 31% EU 24% 24% 26% 28% 24% 20% Total 28% 28% 20% 1Q 2Q 3Q 4Q • Strong load factors and above sector average on a quarterly and annual basis •
Slide 27: Load factors achieving above market levels
…which are continuously achieving above market levels, underlining the premium quality of EDPR’s assets Spain example: Quarterly load factors (%) Historical premium of 2-3p.p. in the load factor 9M09 EDP Renováveis - Spain (1) 40% 9M09 Spanish Market Historic avg. EDPR (02-08) (1) Historic avg. Span
Slide 28: EDPR: clear competitive strengths oriented to value creation
EDPR: clear competitive strengths oriented to value creation Strong track record on growth delivery and visible pipeline to feed superior growth Pure player in a sector with regulatory support and improved business model for long-term Above market load factors to deliver premium assets and maximize
Slide 29: EDP Renováveis located in highly selective attractive markets
EDP Renováveis is today located in highly selective attractive markets 9M09 Gross MW in Country operation (under constr.) Remuneration Scheme 9M09 Price/MWh Wind Resource 2,530 (427) PPA or Merchant +Tax Incentives $48(1) USA Feed-in tariff, or 2,169 (417) €86 market option with premium Spain 596 (1
Slide 30: Balanced portfolio and hedging policy support revenue stability
EDPR’s balanced portfolio and hedging policy continue to support revenue stability Production Breakdown Avg. Selling Price (%; GWh) (€/MWh or $/MWh) 9M09 9M08 % 7,295 GWh (1) + 15% Feed-in Stable feed-in tariffs €97 €95 +2% tariff Market + Premium 30% €86 €99 -13% 83% in Spain was hedged or + Hedgi
Slide 31: Hedging decision in Spain driven by active risk management
Hedging decision in Spain driven by active risk management practice in support of cash flow stability Total 9M09 production in Spain Pool price and EDPR hedging (%) (€/MWh) No market exposure or protected 70 EDPR fwd. price 2,156 GWh quarterly breakdown 18% 60 EDPR avg. avg fwd 50 price €47/MWh 40 8
Slide 32: Resilient long-term PPA contracts in the US
Resilient long-term PPA contracts in the US enhanced by a positive quarterly price evolution Total 9M09 production in the US Quarterly PPA price evolution in the 9M09 (1) (%) ($/MWh) No market exposure +13% 4,050 GWh 55 52 49 84% 16% 1Q09 2Q09 3Q09 Total PPA or long- Merchant term hedges • Improveme
Slide 33: EDPR: clear competitive strengths oriented to value creation
EDPR: clear competitive strengths oriented to value creation Strong track record on growth delivery and visible pipeline to feed superior growth Pure player in a sector with regulatory support and improved business model for long-term Above market load factors to deliver premium assets and maximize
Slide 34: Already achieving capex savings and improving projects' NPV
Already achieving capex savings and improving projects’ NPV Capex main inputs (%) Negotiation: Competitive process on the new projects Construction cost to start construction BoP 30-20% 30 20% driven by local market dynamics Action: Take advantage from the local dynamics in several markets and revis
Slide 35: Balanced turbine supply with top manufacturers
Balanced turbine supply with top manufactures at competitive prices EDPR current + contracted turbine portfolio Global Steel Price Index (%) (Carbon steel index: April 94=100) Other Gamesa 300 Latest EDPR 16% framework 15% agreement was 250 negotiated before the sharp increase in Acciona commodities
Slide 36: EDPR: clear competitive strengths oriented to value creation
EDPR: clear competitive strengths oriented to value creation Strong track record on growth delivery and visible pipeline to feed superior growth Pure player in a sector with regulatory support and improved business model for long-term Above market load factors to deliver premium assets and maximize
Slide 37: Robust balance sheet and framework agreement with EDP
Robust balance sheet and a solid framework agreement with EDP to face ongoing growth Enterprise Value Debt by Source Debt by Currency (%) (%) (%) 22% Financial Institutions 52% USD 67% Equity (1) 78% Shareholder Loans with EDP 4% Minorities (2) 9% TEI EUR 48% 21% Net Debt 9M09 9M09 9M09 • 4.7% of av
Slide 38: In the US, increased financing alternatives and tax credits monetization
In the US, increased financing alternatives and tax credits monetization options… • Framework agreement g with the p parent company p y and lower costs Corporate Loans giving more certainty on growth execution • $750m of Credit Subsidy Cost approved: advantages for EDPR in Debt DOE Loan Guarantee te
Slide 39: Optimise maximization of project value creation
…enables, under different scenarios, to optimise the maximization of the project’s value creation Illustrative NPV Low tax equity cost High tax equity cost • High capex • Low load factor Cash Flip Cash Grant PTC Tax Equity Cash Flip Cash Grant PTC Tax Equity • Low capex • High load factor C h Fli Ca
Slide 40: EDPR pioneer on Cash Grant Flip structures
EDPR is the pioneer on Cash Grant Flip structures and is already improving the Cash Grant scenario New institutional partnership structures: Cash Grant vs Cash Grant Flip Cash Grant Flip (Investment Structure) For each $100m invested, ~$43m of tax capacity are needed just in the 1st year. New struct
Slide 41: Low operational risk to the tax equity investor
…and delivers low operational risk to the tax equity investor Tax Equity Liability: Cash Grant Flip vs PTC Tax Equity (illustrative example) 100% Cash Grant Flip PTC Tax Equity • c80% of the Tax Equity Liability is retired over the first year of investment: Cash Grant and Bonus Depreciation (50% of
Slide 42: EDPR realized $525 million in tax credits
EDPR realized $525 million in tax credits, granted for the 700 MW installed in the US in 2009 EDPR: 2009 projects Tax credits realized (MW) ($ million) Wheat Field Top Crop I 400 Cash Grant 216 Meadow Lake I Rail Splitter Cash Grant 200 Flip 192 Lost Lakes PTC Tax Blue Canyon 100 Equity 117 Total 70
Slide 43: 9M09 Results
9M09 Results R lt
Slide 44: Gross Profit increased 23%
EDPR’s Gross Profit increased 23% benefiting from a strong capacity growth and a low risk portfolio… Gross Profit: contribution by region Gross Profit: contribution by type (€ million) (€ million) +23% +78 496 +102 +18 496 -3 -26 +19 402 402 (1) (1) Forex/ (2) 9M08 EU US Other 9M09 9M08 9M09 Vol
Slide 45: Solid EBITDA growth and top tier EBITDA margin
…resulting in a continuous solid EBITDA growth and a top tier EBITDA margin EBITDA: contribution by region EBITDA: YoY Growth (€ million) (€ million) +20% +20% +60 369 +19 1 -17 +19% 307 +23% 369 271 154 (1) (1) 9M08 EU US Other 9M09 1Q09 1H09 9M09 • On the back of a strong gross profit increase and
Slide 46: Solid financial growth resulting in 19% increase at Net Profit
Solid financial growth from top-to-bottom resulting in a 19% increase at Net Profit Net Profit Evolution (€ million) +19% +62 +5 +15 +4 -72 70 59 (1) Net Profit EBITDA D&A Financial Taxes Minorities Net Profit 9M08 Costs 9M09 • Net profit continues to benefit from a robust EBITDA growth and strong q
Slide 47: Capital expenditures amounted to €1,487m
Capital expenditures in the period amounted to €1,487m… 9M09 Capital Expenditures QoQ Work in Progress (1) (€ million) (€ million, cumulative on Balance Sheet) Turbine deposits and MW under development MW under construction 689 US 1,648 422 1,487 543 Iberia 1,226 251 RoE 9M09 1Q09 2Q09 3Q09 • 54% in
Slide 48: Increase in Net Debt
…which mainly explains the increase in Net Debt Net Debt Evolution and Cash Flow (€ million) +€1,010m +1,447 +22 -147 1. 2nd instalment of Vento III ($50m) 1Q09 2. Cash Grant $48m 3Q09 3. Cash Grant Flip $102m 3Q09 2,079 -311 1,069 Net Debt YE08 Operating Cash Investing Institutional Forex Net Debt
Slide 49: Conclusions
” ‘)\ Conclusions SJ
Slide 50: EDPR: a wind player with clear competitive strengths
EDPR: a wind player with clear competitive strengths oriented to value creation Pure play renewable energy Robust obust ba balance a ce company with a sheet and solid sound asset base Strong track framework with record on growth EDP and targets delivery Pioneer on i innovative ti financing structure
Slide 51: Annex
Annex
Slide 52: US: EDP Renováveis footprint
US: EDP Renováveis footprint Gross MW Iowa 9M2009 Illinois In operation In operation Pioneer Prairie I 198 Mkt Twin Groves I 198 PPA Minnesota Indiana Pioneer Prairie II 102 PPA Twin Groves II 198 PPA In ope operation at o In operation Under Construction R il S Rail Splitter litt 101 Mkt Prairie Sta
Slide 53: US: High quality short term pipeline – Tier I & II
US: High quality short term pipeline – Tier I & II Tier 1 + Tier 2 per Region Tier 1 + 2 Pipeline Milestones (1) (MW as of September 09) (MW as of September 09) EDPR presence Total Tier 1 + 2 = 6,112 MW Upper Midwest Great Lakes 200 MW 1 550 MW 1,550 6,112 5,167 3,959 Northeast 770 MW Land Secured I
Slide 54: Installed Capacity 9M09
Installed Capacity 9M09 Wind Farms in 9M09 Installed Capacity Gross (100%) EBITDA MW Net (% Held) Spain 2,169 1,752 1,691 under Transitory Regime 1,474 1,101 1,086 under RD 661/2007 695 651 605 Portugal 596 553 576 under old remuneration 553 553 533 under new remuneration 43 - 43 France 211 211 211
Slide 55: EDP Renováveis
edp renovaveis powered by nature