Edp S.a. · EURONEXT:EDP
Edp — Energias de Portugal — Investor Day (May 2010)
139 slides from Edp's investor day presentation, May 20, 2010
Slide 1: EDP Investor Day
EDP Investor Day May 20th, 2010
Slide 2: EDP Brasil
EDP Brasil António Pita de Abreu CEO EDP Investor Day May 20th, 2010 93
Slide 3: Brazil: Macro Scenario
Brazil: Macro Scenario Current Data (as of May 17th, 2010) Forecasts Inflation Country Risk (EMBi Brazil): 210 points Selic Interest Rate Selic Interest Rate: 9.50% 11.75% 11.5% 11.0% TJLP: 6% 8.75% 5.5% 4.8% 5.1% EUR/BRL: R$ 2.22 4.3% EUR/USD: US$ 3.24 2009 2010e 2011e 2012e Country Risk (EMBi) Pub
Slide 4: Brazil: Increasing consumption of electricity
Brazil: Increasing consumption of electricity Consumption Brazilian installed capacity (Avg. MW) 5.0% per year (GW) CAGR 4.5 % +48% 112 167 5.6 % Nuclear +55GW 85,231 Gas 68,542 71,554 Coal 55,444 Oil Hydro Hidro Small Power Plants Biomass Wind 2010 2014 2015 2019 2010 2019 2010 Installed Capacity 2
Slide 5: Regulatory Framework – Basis
Regulatory Framework – Basis Electricity prices at regulated auctions Centralized Power System Planning (R$/MWh) • Every year electricity distribution utilities inform the New Hydro energy Ministry of Energy their additional power need for the year New Thermal Energy +5. 145 • Public auctions are or
Slide 6: Distribution: Regulation Framework
Distribution: Regulation Framework Regulation Methodology Regulated Asset Base (RAB): Assumed at market value of the assets, under rules defined by the regulator Return on RAB: 15% before taxes (9.95% after taxes) Cost Base: Benchmark costs (reference company) for operation and maintenance - Set by
Slide 7: Holding structure
Holding structure 1Q10 EDP Group Free Float Electricity Generation (ex-wind): 1,741 MW 65% 35% (23 facilities) Electricity Retail: 2.7m Customers EDP Energias Lajeado do Brasil Generation Distribution Peixe Angical Pecém 60% 100% Peixe Angical EDP Bandeirante 73% 100% Lajeado EDP Escelsa 100% EDP Es
Slide 8: Company History
History IPO EDP Brasil Investment in Investment in Acquisition of Acquisition of Peixe BOVESPA wind power Lajeado Iven (Escelsa Angical (partnership Company and Enersul) with Furnas) A-5 auction Pecém coal plant Follow-on of Acquisition of treasury Bandeirante Asset swap shares (Enersul for Lajeado)
Slide 9: Generation: Installed Capacity
Generation: Installed Capacity Energias do Brasil: Installed Capacity Evolution (MW) 360 18 (3) 2,150 29 7 (1) 1,738 2 1,741 32 (2) 1,702 Under 516 Construction 2005 2008 Santa Fé Power 2009 Power 1Q10 Tramandaí Pecém Power 2012 SHP Upgrade Upgrade Upgrade Projects Under Construction and Near Term D
Slide 10: Significant Generation Business
Significant Generation Business HPP Lajeado HPP Peixe Angical 902.5 MW 452 MW Concession: 2032 Concession: 2036 Pantanal Energética CESA 52.2 MW 61.9 MW Concession: 2029 Concession: until 2025 Costa Rica SHP Santa Fé 16 MW 29.0 MW Concession: until 2031 Concession: 2031 CENAEEL Energest 6.2 MW2 212.
Slide 11: Distribution: Companies Profiles
Distribution: Companies Profiles EDP Brasil Distribution Companies EDP Brasil Distribution Companies (2009) EDP Bandeirante EDP Escelsa 9 Located in São Paulo, main Volume: 13,292 GWh Volume: 8,021 GWh economic center of Brazil with 23% 21% high industrial concentration 35% 39% 9 Concession period:
Slide 12: Financial Highlights
Financial Highlights Net Revenue (R$ million) Net Revenue Breakdown (1Q10) CAGR: 1% 11% 4,528 4,610 4,648 17% 10% 72% 1,116 1,229 2007 2008 2009 1Q09 1Q10 Generation Distribution Commercialization Opex (R$ million) and Opex/Gross Margin (%) 46% 38% Inflation: 35% 35% 35% +7.8% 952 827 Inflation: 746
Slide 13: Financial Highlights
Financial Highlights EBITDA (R$ million) and Margin (%) EBITDA Breakdown (1Q10) (1) 29.6% 30.5% 30.5% 29.0% 24.8% 4% Generation 1,363 1,419 1,123 Distribution 43% 53% Commercialization 340 356 2007 2008 2009 1Q09 1Q10 Net Income (R$ million) and Margin (%) Capex (R$ million) 13.5% Generation Others
Slide 14: Financial Highlights
Financial Highlights Gross Debt and Net Debt / EBITDA Total Debt Breakdown (Mar-10) (R$ million) (%) 1.8x 1.9x 1.8x 1.4x Fixed Rate 1.3x 4% 3,159 2,974 3,138 3,029 2,782 Floating TJLP 51% 45% Rates (2) 2006 2007 2008 2009 Mar-10 * Last 12-month EBITDA Debt Amortization Schedule (Mar-10) (1) Credit L
Slide 15: Financial Highlights
Financial Highlights Since the IPO, in 2005, EDP distributed to its shareholders R$1.1 billion and: At the same time, EDP Brasil invested approximately R$4.4 billion in CAPEX Company leverage ratio remains at a comfortable level (1.4x Net Debt / EBITDA 2009) Payout (R$ million) and Dividends (R$ / s
Slide 16: Share Price Performance and Price Target
Share Price Performance and Price Target Energias do Brasil vs. EDP Portugal vs. EDP Renováveis Energias do Brasil – Evolution of Price Target (R$) EDP – Energias do Brasil – R$ EDP Renováveis - Euros EDP Portugal – Euros 180 41.99 42 170 160 +59% 40 150 38 140 130 36 120 110 34 +5% 100 32 90 80 30
Slide 17: EDP Brasil - Conclusions
EDP Brasil - Conclusions Low risk free cash flow Stable revenue stream, CPI update, average maturity 15 years (long-term PPA’s) New Generation under analysis: Diversified portfolio Bid for new PPA contracts always under strict risk/return criteria Demanding and transparent reg regulatory lator en en
Slide 18: Consolidated Financials
Consolidated Financials Nuno Alves CFO EDP Investor Day May 20th, 2010
Slide 19: EBITDA Breakdown by division
EBITDA Breakdown by division Power plants and energy supply to clients in free market Portugal/Spain Liberalized 14% 9 Power plants: 6.0 GW; 45% Portugal, 55% Spain; 55% CCGT, 25% Coal Activities Iberia 9 Electricity & gas supply: 1.6 mn clients, 32TWh sold 9 Margin locked-in: 2010: >100% and 2011>4
Slide 20: Capex 2010: No change over previous guidance
Capex 2010: No change over previous guidance Projects Execution on time and at cost ~€3.0bn Other 4% Conclusion of CCGT investments in Iberia Brazil 10% 9 Soto V CCGT in Spain, 424MW: to be commissioned in 1Q11 Hydro 15% PPA coal plant in Brazil under construction 9 Pecém, 360MW@50%: to be commissio
Slide 21: Capex 2011-2012: Reduction from €3bn to €2.4bn/year
Capex 2011- 2011-2012: Reduction from €3bn to €2.4bn/year Average capex 2011-2012 (€ billion) ~ 3.0 Lower capex in wind power: ~ 2.4 Other 2% • Delay in Energy Bill enactment Brazil 6% postpones USA development Hydro 22% • Lower capex/MW (based on new Expansion Expansion ~1.8 turbines contract) ~2.4
Slide 22: EBITDA growth rate 2009-2012E: At the high single digits
EBITDA growth rate 2009- 2009-2012E: At the high single digits EBITDA Growth (€ million) CAGR 7- 8% 11% 3,363 18% Liberalized Iberia 19% Brazil 16% 30% Wind 16% Networks Iberia 25% 22% LT Contracted Iberia 24% 19% 2009 2012E EBITDA growth supported on Higher Efficiency (€160m OPEX plan) + Commission
Slide 23: Regulatory Receivables 2010-2012
Regulatory Receivables 2010- 2010-2012 Regulatory Receivables (€ million) 771 ~ 600 Portugal CMECs 524 ~300 Spain 554 Portugal Reg. Distrib. Average -305 2010 & Supply 2011-12 Brazil -2 Mar-10 Gradual reduction of tariff deficit in Spain with annual securitization deals in 2010/2012 Maintenance of a
Slide 24: Net Debt: Peaking in 2010 and decreasing thereafter
Net Debt: Peaking in 2010 and decreasing thereafter Consolidated net debt (€ billion) > 15.0 < 15.0 14.0 2009 2010E 2011E 2012E Free cash flow positive in 2011 and 2012 115
Slide 25: EDP's consolidated net debt position
EDP’s consolidated net debt position EDP consolidated net debt (March 31, 2010) (€ million) 9 90% of consolidated debt raised at the holding level: - On-lent to the core business subsidiaries on arms length EDP S.A. and Other 12.712 basis - Efficient consolidated debt management and no material rest
Slide 26: Foreign operations funded in local currency
Foreign operations funded in local currency: Reduces impact from volatility in forex markets Debt by Currency (Mar-10) (%) US Dollar USD • EDP Renováveis USA funded in US Dollar, through USD debt at EDP level 21% and institutional partnerships 7% Brazillian Real BRL 72% • All locally funded through
Slide 27: EDP consolidated debt maturity profile
EDP consolidated debt maturity profile EDP consolidated debt maturity profile (March 31, 2010) (€ million) Commercial paper Brazil: € 219 M Other companies Project Finance: € 89 M Average Debt Maturity EDP SA + BV Mar-10: 5.3 years €0.5bn Bond: Jun-10 3.500 €0.7bn Bond: Mar-11 19% 3.000 2.500 14% 14
Slide 28: EDP liquidity position Mar-10
EDP liquidity position Mar- Mar-10 (€ million) Sources of liquidity (Mar-10) Instrument Maximum Number of Utilised Available Maturity Amount counterparties Revolving Credit Facility (US$1.5bn) 1,113 22 1,113 - 02-07-2014 Revolving Credit Facility 1,600 19 - 1,600 04-03-2012 Domestic Credit Lines 375
Slide 29: EDP main sources and uses of funds in 2010-2011
2010--2011 EDP main sources and uses of funds in 2010 Liquidity Available Refinancing needs next 24 months • Refinancing needs in the bond market 2010-2011: • Cash & Equivalents (Mar-10): €2.6bn • Available Credit Lines (Mar-10): (Mar 10): €2 5bn €2.5bn Bond issue maturing in Jun-10: €0 5bn €0.5bn B
Slide 30: Average cost of debt
Average cost of debt Assumptions on evolution of EDP avg. cost of debt (%) Sensitivity to spread widening on refinancing: 4.6% ~ 4.0% Assuming refinancing spreads in excess of 3.5% current market conditions Impact would be: Less than 2% of EPS by 2012 (< €20m) 1Q10 2010E 2011E/2012E Assumption of a
Slide 31: Credit ratios
Credit ratios Net debt / EBITDA FFO** / Net debt (x) (%) >20% 4.2x ~3.5x 16.5% 4.0x* 2009 2012E 2009 2012E Ratios to improve significantly with EDP’s expansion Improvement of credit ratios capex slowdown in 2011/2012 and concentration of allow EDP to be in the A region of credit rating metrics new c
Slide 32: Consolidated Financials - Conclusions
Consolidated Financials - Conclusions Low risk operating cash flow: EBITDA CAGR 2009-2012E 7%-8% Capex 2011E/2012E cut to €2.4bn/year: lower MW additions and capex/MW in wind Maintenance of a significant level of flexibility Free cash flow positive in 2011-2012 Financial liquidity covers funding nee
Slide 33: Conclusion
Conclusion António Mexia CEO EDP Investor Day May 20th, 2010
Slide 34: EDP: Reinforcing its distinctive equity story
EDP: Reinforcing its distinctive equity story EDP 2009 vs. 2012 EDP 2012 vs. Utilities Average More Power… More Flexible… Lower CO2… More renewable… Installed Capacity (GW) Cut on Capex/year 2011-12E Free CO2 as % EBITDA 2012E %Wind and Hydro (GW) +20% 24.6 €3.0bn 24.6 €2.4bn 7% 20.6 3% 65% 2005 200
Slide 35: Controlled Risk: Country diversification
Controlled Risk: Country diversification Distinct macro and energy sectors dynamics EBITDA Breakdown by Geography Electricity Consumption Renewables (2009) (€m;%) 2009 Per Capita (MWh) CAGR (%) 2009/20E (as % Power Production) Romania 2.5 2% 0% Other 2% USA 6% 7% Poland 3.8 1% 3% 11% Brazil 16% 19%
Slide 36: Controlled Risk: Control exposure to market volatility
Controlled Risk: Control exposure to market volatility Wind Power Capacity Additions 2010E-2012E(1) Iberian Market – EDP Sales to clients (GW) (% of Generation Output) - 0.7GW 4.3 ~140% 3.6 119% 0.8 Flexibility Nov-08 Target New Target 2009 2012E Slower PPA market in US: • Focus on direct energy sup
Slide 37: Controlled Risk: Less exposed to the 2013 carbon cliff
Controlled Risk: EDP is one of the European Utilities less exposed to the 2013 carbon cliff CO2 Emissions Market value of CO2 Free Allowances ETS attributed in 2009 (ton/MWh) as a % of 2012E EBITDA consensus Bloomberg (1) 22% -27% 20% 18% 0.36 16% 14% 0.27 12% 10% 8% 6% 4% 2% 0% 2009 2012E EDP Peer
Slide 38: Controlled Risk: Maintain high weight of low risk activities
Controlled Risk: Maintain high weight of low risk activities EBITDA Breakdown by Business (1) (€m;%) Regulated & LT Contracted Quasi-Regulated Liberalised Maintain low risk profile: • Low exposure to liberalized activities in 2009-2012, even 11% considering new hydro plants 19% 30% • Growth concentr
Slide 39: Controlled Risk: Improve credit ratios, maintain A rating
Controlled Risk: Improve credit ratios, maintain A rating European Utilities: 2009 Net Debt/EBITDA vs. Business Mix (x;%) Net Debt/EBITDA FFO/Net Debt** 6 National Grid REN ~3.5x >20% United Utilities Snam 5 International Power Severn Trent Net Debt/ EBITDA 2009 Gas Natural 4 REE Enagas Galp Iberdro
Slide 40: Efficiency: Opex reduction by €160m/year in 2012
Efficiency: Opex reduction by €160m/year in 2012 Opex reduction program - Sustained efficiency improvement Efficiency Program 2010-12 annual savings (1) (€ m) Human Resources Supplies and services 9 Personnel costs: 160 Increase of efficiency levels per employee 120 9 Supp Supplies es & services: se
Slide 41: Efficiency & Growth: Long residual life of generation portfolio
Efficency & Growth: Long residual life of generation portfolio, Lower replacement capex, O&M and CO2 costs Average Residual Useful Life of EDP’s Generation Portfolio by Technology Dec-2009(1) (Years) Hydro 36 CCGT 22 Nuclear 19 Wind 18 Coal 9 Fuel Oil 2 Avg. EDP 22 0 5 10 15 20 25 30 35 40 Long resi
Slide 42: Growth: 20% increase of installed capacity in 2009-2012
Growth: 20% increase of installed capacity in 2009- 2009-2012 EDP Group Installed Capacity by Technology 2010-12 Installed Capacity Additions (GW; %) (%) Hydro Wind CCGT Other Brazil Hydro +20% Portugal Other 11% 24.6 14% 20.6 19% 8% 24% 15% 16% 35% 27% 66% 67% 33% 31% Wind 2009 2012E 2009-12: Growi
Slide 43: Growth: €4.6bn of capital already invested in EBITDA growth
Growth: €4.6bn of capital already invested in EBITDA growth for 2009 2009--2012 and for post 2012 EDP Works in Progress (€bn) Payment in 2008 for 2014-2052 Hydro Rights in Portugal Other Works in Progress Growth visibility post-2012: Generation projects under construction By Dec-09 €4.6bn 9 Hydro ri
Slide 44: Commitments
Commitments Cost cutting program of €160m will enhance operating efficiency EBITDA CAGR 2009-2012: 7%-8% Net Debt / EBITDA: ~3.5x by 2012 Net profit CAGR 2009-2012: 6%-8% Dividend per share to continue to increase €0.015 per year; €0.20 by 2012 135
Slide 45: Keeping growth track with strong free cash flow improvement
Keeping growth track with strong free cash flow improvement EBITDA and Capex 2008-2012E (€ million) EBITDA Maintenance Capex Total Capex Efficient Capital Allocation Capex peak In 2008 + K D Key Drivers i off F Free C Cash h Fl Flow G Growth hPPost 2012 2012: • Start of operations of New Hydro Plant
Slide 46: Low risk, profitable growth strategy puts EDP in a unique position
Low risk, profitable growth strategy puts EDP is in an unique position 2012 + 2006-2008 2009-2012 … which puts EDP in a unique The right strategy… …for the current context… position • Creation of Growth options (i.e. wind, hydro) • Execution and creation of new ategy • Proactive risk growth options
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Slide 48: Iberian Regulated Energy Networks
Iberian Regulated Energy Networks António Martins da Costa Board Member EDP Investor Day May 20th, 2010
Slide 49: EDP Energy Regulated Networks Iberia: Geographical footprint
EDP Energy Regulated Networks Iberia: Geographical footprint Geographical Presence 2010E Regulated Revenues(1) Electricity Gas Electricity Gas Portugal Electricity & Gas Spain Asturias Cantábria 3% Basque Country Gas Spain 8% 13% Oporto north coast 75% Electricity Portugal Diversified portfolio Port
Slide 50: EDP Energy Regulated Networks Iberia: 2009 Highlights
EDP Energy Regulated Networks Iberia: 2009 Highlights ( ) % Weight on Total Regulated Networks Iberia Regulated Networks Iberia Owned by EDP 100% 100% 72% 63.5% EDP Distribuição HC Distribución EDP Gás Distribuição Naturgas Energia EDP Serv. Universal HC Explotación Redes EDP Gás Serv. Univ. EDP Sol
Slide 51: Electricity distribution Portugal: regulatory metrics 2009-2011
Electricity distribution Portugal has a clear and stable regulatory framework: regulatory metrics for 2009- 2009-2011 2009 2010 (1) 2011 E Electricity Distribution Regulated Asset Base: €2.8 bn Regulated Asset Base Working Capital: €146m(2) €121m Return on RAB 10 Year Portuguese Government Bond Yiel
Slide 52: Electricity Distribution Portugal: Revenues with low sensitivity to consumption
Electricity Distribution Portugal: Revenues with low sensitivity to energy consumption and economic cycle Electricity Distribution Portugal: Breakdown of 2009 Regulated Revenues (3) 2009 Demand 1Q10 Demand €1,321m Variable Revenues Depends on GWh distributed in ~10% - 5% YoY + 6% YoY Non-low Voltage
Slide 53: Electricity Distribution Portugal: Efficiency improvements
Electricity Distribution Portugal: Efficiency improvements Network Capex(1) & Equivalent Interruption Time(2) Opex(3)/km of Network (€m; min.) (‘000€/km) Expansion Service Quality Other EIT (Internal) Average CAGR 2005-2009 -2% 385 New regulatory targets on customer service quality 180 2.6 2.4 2.6 2
Slide 54: Electricity Distribution Spain: New Return on RAB system
Electricity Distribution Spain: New Return on RAB system will improve visibility of returns on new investments Until 2008: Stable regulated revenues updated annually, but no clear Return on RAB system New Return on RAB framework: 2009 was the 1st transition year; final settings expected in 2010 Prov
Slide 55: Gas Distribution and Transmission Iberia: Limited impact expected
Gas Distribution and Transmission Iberia: Limited impact expected from future reviews Gas Spain Gas Portugal Return on asset base Return on asset base (concession assets revaluation) Transmission + Distribution + Costs Base Costs Base Regulated Revenues Supply margin updated annually (return on work
Slide 56: Assets acquired from Gas Natural in Dec-09
Assets acquired from Gas Natural in Dec- Dec-09: Reinforcement of #2 position in gas distribution in Spain Geographical fit with EDP’s assets EBITDA of assets acquired from Gas Natural (€m) (€m) Acquisition assumptions 11 1Q10 1Q10 Forecast EDP gas distribution assets prior to transaction Gas distri
Slide 57: Capex & Regulated Revenues: Expected Integrated Performance 2009-2012
Capex & Regulated Revenues: Expected Integrated Performance 2009- 2009-2012 Average Annual Capex: 2010E-2012E Regulated Revenues (€bn) (€m) Electricity Portugal Electricity Spain Electricity Portugal Electricity Spain CAGR Gas Portugal Gas Spain Gas Portugal Gas spain Assets acquired from Gas Natura
Slide 58: Efficiency and EBITDA
Efficiency and EBITDA Stable and low risk profile businesses Opex II Programme(1): EDP Distribuição EBITDA: 2009-2012E (€m) (€m) Electricity Portugal Electricity Spain CAGR Gas Portugal Gas Spain ~2% ~50 852 12 1Q2010 2012 Target 2009 2012E Stable regulatory framework + continuous Greater operationa
Slide 59: Conclusions
Conclusions Stable regulatory environment; Good visibility on regulated revenues: ~€1.7bn for 2010 Energy distributed volumes: low impact on regulated revenues from changes in energy demand Capex 2010E-2012E: average of €0.4bn/year Focus on service quality improvements; network expansion Strong focu
Slide 60: Energy Supply Short-medium Term Challenges
Energy Supply Short- Short-medium Term Challenges Jorge Cruz de Morais Board Member EDP Investor Day May 20th, 2010
Slide 61: EDP Commercial Platforms in Iberian Electricity and Gas
EDP Commercial Platforms in Iberian Electricity and Gas: Energy Supply Iberia EDP Serv. Univ. EDP Gás Serv. Univ. NE Suministro SUR HC Ultimo Recurso EDP Comercial EDP Gás.Com NE Suministro HC Energia EDP Soluções Comerciais Electricity Suppliers Gas Suppliers Gas Suppliers Electricity Suppliers Und
Slide 62: Liberalization process: Gradual transfer of clients to free market
Liberalization process: Gradual transfer of clients from regulated integral tariffs to a free market environment EDP’s energy supply in Iberia 2007-2010E: Volume breakdown Regulated Integral Tariff vs. Free market price (TWh; %) Electricity Gas Regulated/Last Resource Supply Regulated/Last Resource
Slide 63: Commercial Activity: Improvement of Customer Satisfaction
Commercial Activity: Improvement of Customer Satisfaction Portugal Electricity: Customer Satisfaction Iberia Natural Gas: Customer Satisfaction 2008 2009 2008 2009 74 96 70 70 86 95 71 69 66 78 Electricity Supply Overall customer Overall satisfaction Gas Supply Overall customer satisfaction with EDP
Slide 64: Commercial activity: efficiency improvement
Commercial activity: efficiency improvement Invoicing Costs (Portugal) Collecting Costs (Portugal) Avg. Costs Weight electronic invoicing Avg. Costs 2009 Mix (€) (%) (€) (%) Automatic Other -16% Bank -5% Transfer Agents 15% 0.37 11% 0.23 0.35 0.19 12% 7% 57% 16% 3% ATM 2008 2009 2008 2009 2012E 2009
Slide 65: Commercial Activity: Control over bills collection
Commercial Activity: Control over bills collection Matured Debt / Invoicing (1) Average Collecting Period Average Invoicing Mix (€m; %) (Days) (%) Matured Debt Matured Debt/Invoicing (last 12 months) 2009 222 215 “Conta-certa” & Monthly 200 Other (2) 32.2 24% 19% 5% 31.6 Quarterly 4% 4% 1% 56% 2007
Slide 66: Energy Efficiency: A new business line for EDP
Energy Efficiency: A new business line for EDP EU targets a 20% improvement in energy efficiency until 2020, incentives under analysis New business opportunity to utilities: Depending on evolution of regulatory incentives Energy efficiency: small business but growing, relevant for customer & regulat
Slide 67: Smart Grids: Key to meet challenges of more renewables
Smart Grids: Key to meet challenges of more renewables, distributed generation and electric vehicles Benefitting consumers and offering a technological leap forward in distribution network service and capabilities 43% of consumption in Portugal already with smart metering Operational Efficiency Rene
Slide 68: Electric Vehicles: EDP actively involved in future business model
Electric Vehicles: EDP is actively involved with governments on the set- set-up of the future business model Slow Fast Other Electricity Electricity Charging Charging Mobility Network Supply Posts Posts Services EDP Distribuição EDP Municipalities EDP Distribuição Comercial EDP Distribuição Service
Slide 69: Conclusions
Conclusions EDP is focused on its customers satisfaction: key success factor in liberalization process Commercial services efficiency is improving: Key to be competitive in the supply market Tight control over doubtful debts: Even more important on a low economic cycle Leading the way for innovation
Slide 70: EDP Renováveis
EDP Renováveis Ana Maria Fernandes CEO EDP Investor Day May 20th, 2010
Slide 71: A top global leader on the right path of sustainability and value creation
A top global leader on the right path of sustainability and value creation Growth company in a growing sector Committed to deliver focused growth… …sustainable profitability… Integrated …controlled risk Strong human profile portfolio capital and management distinctive core competences 82
Slide 72: EDPR grew by more than 2.8x over the last 3 years
EDPR grew by more than 2.8x over the last 3 years… Evolution of Installed Capacity EDPR: #3 wind player worldwide (Gross MW) (MW) +2.8x 6,259 #3 +4,132 2,127 #5 2006 2006-1Q10 1Q10 2006 2010 capacity growth Delivery on growth targets at an average of 1.4 GW/year to become 3rd largest player in the w
Slide 73: Selective approach to new markets: portfolio in 11 countries
…through a selective approach to new markets building a sound portfolio in 11 countries... 1Q10 Gross MW Canada - UK - US Poland - Belgium 1,300 3,257 120 70 19,198 1,466 Romania France 62 259 228 Italy Spain 613 Portugal 1,092 Brazil - 809 2,586 84 520 595 4,966 1,152 Installed + under construction
Slide 74: Promoting sustainable growth through renewable technologies
…which are determined to promote sustainable growth through renewable technologies Wind market in US + EU: target-driven growth (GW) Europe targets set for 20% of energy produced from renewable 388 sources by 2020 +3.4x +1.8x US current RPS targets at state 114 level, adding up to 13% by 2020 62 200
Slide 75: EDPR actively manages its portfolio through an integrated approach
EDPR actively manages its portfolio through an integrated approach EDPR’s fundamental value Key value drivers in portfolio management • Maximize long-term visibility on Stability Operating expected return assets 6.3 GW and • Minimize short-term volatility of visibility cash-flow streams Optionality
Slide 76: Wind operating assets under visible remuneration schemes
EDPR’s wind operating assets are under visible remuneration schemes with stable prices for the long- long-term 2010E EDPR’s production breakdown Short-term Long-term (GWh weighted by revenue source) market exposure remuneration view Feed-in tariffs + 16% Limited Long-term PPAs 80% of 2010E Floor pri
Slide 77: Adapting the growth pace to rebalance portfolio mix
Adapting the growth pace and taking advantage of optionality to rebalance portfolio mix maintaining the risk profile EDPR’s average annual capacity additions EDPR’s new additions geographic breakdown (Gross GW) (% of EBITDA MW + ENEOP) Gross MW EBITDA MW BR 2% 22% 1.4 49% 1.1-1.2 38% 17% EU 56% 12%
Slide 78: Efficient capex program and 30% annual EBITDA growth through 2012
Efficient capex program and a 30% annual EBITDA growth through 2012… 2010-12E Capex plan 2009-12E: EBITDA (€bn) (€m) CAGR -22% +30% 5.7 4.4 543 2007-09 2010-12E 2009 2012E • Ongoing increase of the installed capacity in • Overall reduction of unitary cost of building attractive markets (-10% in Cape
Slide 79: Distinctive core competences providing competitive advantage
...based on distinctive core competences providing a competitive advantage to EDPR Development Technical Procurement O&M Track record being applied in 11 countries Top quality load factors Long-term procurement strategy Maintenance of high efficiency levels Optimizing costs and Efficient and focused
Slide 80: Preparing the company for sustainable long-term value creation
Preparing the company to a sustainable long- long-term value creation Preparing the company with options to invest in …ensuring a sustainable company new technologies in the future… in the present Offshore Stakeholders Value Awarded in the UK Round 3 with Number 1 in Reputation among the 1.3 GW in S
Slide 81: EDPR's business strategy for sustainable long-term growth
EDPR’s business strategy is set to deliver a sustainable and profitable long- long-term growth …based on A sustainable accretive growth… value… +1.1-1.2GW/year 30% EBITDA CAGR 2010-12E …at a low and controlled risk >80% production with no exposure to market volatility 92
Slide 82: Disclaimer
Disclamer This document has been prepared by EDP - Energias de Portugal, S.A. (the "Company") solely for use at the presentation to be made on the 20th of May 2010 and may be amended and supplemented. By attending the meeting where this presentation is made, or by reading the presentation slides, yo
Slide 83: Introduction
Introduction António Mexia CEO EDP Investor Day May 20th, 2010
Slide 84: Capacity to foresee the challenges ahead
Capacity to foresee the challenges ahead… We saw it… "Supply provides margin and a hedge to the generation business: (1) Margin stability regardless of market spreads pressure (2) Guaranteed volume crucial to manage gas take-or-pays“ - EDP Strategic Presentation Jul-06 "In a context of short-term ov
Slide 85: EDP's strategy proved to be even more adequate
EDP’s strategy proved to be even more adequate Strategic agenda for 2009-2012 presented in Nov-08: 1 Manage regulatory agenda to maintain a low risk profile of free cash flow Controlled 2 Actively manage exposure to energy markets through hedging strategies risk 3 Reduce CO2 emissions through
Slide 86: Dealing with tough energy markets
Dealing with tough energy markets Electricity Demand: 2009 vs. 2008 Thermal Power Demand Iberia Pool Price Spain: Forecast Nov-08 vs. Real (∆%) (TWh) (€/MWh) Forecast Nov-08 Real + Current Forwards -33% 33 70 67 22 37 38 Spain USA Portugal Brazil 1Q09 1Q10 2009 2010E -1.1% -1.4% -4.4% -4.5% Depresse
Slide 87: EDP's performance less affected by adverse energy markets
EDP’s performance less affected by the adverse energy markets environment EBITDA EPS10E Consensus: Change from Jan-09 to Date (1) (€m) (%) CAGR Current Forecast ~12% EDP 2.9% CAGR Previous ENDESA Forecast (Nov-08) ~13% CAGR Previous 2,041 CENTRICA Forecast (Jan-07) ~11% SSE RWE 2005 2010E FORTUM IBE
Slide 88: Controlled risk: (1) Hedging Policy
Controlled risk: (1) Hedging Policy Sales to clients as a % of liberalised generation output EDP’s Liberalised Activities Iberia: EBITDA 2006/09 EDP Iberia Peers’ Average EBITDA EBITDA/MW 633 119% +2x 73% 74% 64% 68% 314 42% 116 111 34% 98 113 32% 2006 2007 2008 2009 2006 2007 2008 2009 Hedging = lo
Slide 89: Controlled risk: (2) Successful follow up of key regulatory issues
Controlled risk: (2) Successful follow up of key regulatory issues Securitization of 2008-2009 tariff deficit: forecasts of tariff balance in 2010 Ongoing liberalisation process in gas and electricity PORTUGAL Electricity distribution: Stable regulated revenues for the 2009-2011 period Environmental
Slide 90: Controlled Risk: (3) Reduction of CO2 emissions
Controlled Risk: (3) Reduction of CO2 emissions EDP’s total Generation Capacity: Dec-05 vs. Mar-10 CO2 Emissions (GW) (ton/MWh) CCGT Wind Hydro Other (1) -40% 20.7 0.60 +68% 24% 12 3 12.3 0 36 0.36 33% 39% 60% wind & 27% hydro 44% 16% Dec-05 Mar-10 2005 2009 Expansion focused in low CO2 technologies
Slide 91: Controlled Risk: (4) Improvement of liquidity & credit ratios
Controlled Risk: (4) Improvement of Financial liquidity & credit ratios Available Liquidity (€m) Net Debt/EBITDA (x) Available Credit Lines Net Debt / EBITDA Cash & Equivalents 5.1 Net Debt / EBITDA adjusted* +1.8x 2.5 4.4 2.8 4.2 Active in Credit Markets: 3.0 2.7 1.9 Bonds issues & EIB: ~€4.5bn Tar
Slide 92: Efficiency: (1) Decline in absolute operating costs
Efficiency: (1) Decline in absolute operating costs in a period of strong expansion of generation capacity Operating Costs(1): 2005-2009 Installed Capacity 2005-2009 (€ millions) (GW) Growth Rate Growth Rate EDP Renováveis EDP Renováveis Operating costs excluding EDP Renováveis Installed capacity ex
Slide 93: Efficiency: (2) Lowest Opex/Gross Profit ratio among Iberian peers
Efficiency: (2) Achieving the lowest Opex/Gross Opex/Gross Profit ratio among Iberian peers Efficiency Program 2008-12 annual savings (2) Opex/Gross Profit: 2005-2009 (€ million) Human Resources Supplies and services 160 35% 109 28% 96 46 40 63 56 Measures taken Target 2009 Target 2012 2005 2006 200
Slide 94: Efficiency: (3) Delivery of new capacity on time and at cost
Efficiency: (3) Delivery of new capacity on time and at cost CCGT Portugal: Lares 863 MW Wind US: Meadow Lake 200 MW Wind US: Arlington 200 MW Wind US: Meridian Way 201 MW Wind US: Top Crop I 102 MW Wind US: Lost Lakes 101 MW Wind US: Blue Canyon V 99 MW Wind Poland: Margonin 120 MW (€bn) 2.33 -1% v
Slide 95: Growth (1): Creation of #3 worldwide player in wind power
Growth (1): Creation of # 3 worldwide player in wind power Identification of competitive advantage for EDP: Early mover, internal know-how, scale Business with attractive returns, low risk profile, key growth drive in power sector, reduces exposure to CO2 EDPR: #3 Leader in the Sector Wind Power Ins
Slide 96: Growth (2): #1 Hydro Developer in Europe
Growth (2): #1 Hydro Developer in Europe EDP’s Investment Plan in Hydro Portugal (GW) +69% +33% 1.8 Developments since 2008: 1.7 • Plants which started construction: 5.0 Ribeiradio (Nov-09) Venda Nova III (Jan-10) 6 plants under construction • Environmental E i l permits i advancing: d i €300m inves
Slide 97: Growth: (3) Higher weight of a strong growth market
Growth: (3) Higher weight of a strong growth market EDP Brasil: 2005-2009 EBITDA(1) (€ million) European Utilities: Weight of Brazil on EBITDA 2009(2) CAGR Generation Distribution 510 +14% 16% 301 50% 12% 11% 7% 6% 5% 89% 50% 2005 2006 2007 2008 2009 EDP Endesa Iberdrola GDF Suez Enel • Significant
Slide 98: EDP's growth accelerated in 05-09
EDP’s growth accelerated in 05- 05-09 IPO EBITDA EDP rights EDPR €bn issue (€1.2bn) (€1.6bn) Horizon US Acquisition 3.4 3.2 Spain Spain IPO 1st EBITDA HC@40% HC@97% 2.6 from Brazil +64% 2.3 2.0 2.1 1.7 1.8 1.6 1.6 1.5 1.5 1.4 05-09 +30% 97-05 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20
Slide 99: Almost doubling asset base with a balanced capital structure
Almost doubling asset base with a balanced capital structure… Assets Equity and Liabilities (€ bn) (€ bn) Fixed Assets in Progress Equity Tax Equity Fixed Assets 28.3 Minorities Net Debt +81% 3.9 7.3 15.6 +1.4x +52% 1.4 1.6 2.2 4.8 24.4 1.3 +74% 14.0 14.0 9.7 +44% 2005 2009 2005 2009 • Asset base: +
Slide 100: Continued improvement of shareholders' return
…continued improvement of shareholders’ return return…… EDP’s Return on Equity: 1997-2009 (%) Non Recurrent Impacts on EPS Recurrent ROE 14.0% 14.5% 8 5% 8.5% 8 5% 8.5% 9 0% 9.0% 12 0% 12.0% 13.8% 7.6% 7 5% 7.5% 7 9% 7.9% 11 8% 11.8% 7.4% 6.3% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2
Slide 101: Turning EDP into a distinctive company
…turning EDP into a distinctive company EDP 2005 vs. 2009 EDP 2009 vs. Utilities Average More Power… More Investment in Future… Lower Merchant Risk… Cleaner… Installed Capacity (GW) Works in Progress (€bn) % Regulated + LT Contracts %Wind and Hydro (GW) 20.6 +67% 21 +1.4x 12.3 3.9 81% 1.6 60% 2005 2
Slide 102: Agenda of the day
Agenda of the day Introduction António Mexia, CEO Iberian Market Context Pedro Ferreira, Head of Energy Planning Iberian Generation & Supply João Manso Neto, Generation Iberia COO Iberian Regulated Energy Networks António Martins da Costa, EDP Board Member Energy Supply Short-medium Term Challenges
Slide 103: Iberian Market Context
Iberian Market Context Pedro Neves Ferreira Energy Planning EDP Investor Day May 20th, 2010
Slide 104: Iberian power and gas demand showing signs of recovery
Iberian power and gas demand is showing signs of recovery, and power demand expected to grow at ~1.5%/year post 2010 Demand showing signs of recovery Medium term outlook for % growth power demand vs. 1Q09 vs. 1Q08 Two new 32.6% cogeneration • 2008 levels fully plants 27.1% recovered by 2010 in Portu
Slide 105: Retail is fully liberalized in Spain and progressing in Portugal
Retail is fully liberalized in Spain and rapidly progressing in Portugal Share of liberalized retail business for electricity Liberalization calendar % Spain Portugal 70 Spain • Regulated Portugal tariffs still in 60 Electricity • End of tariffs place (end since 01/07/09 by 2011?) • Tariff of last 5
Slide 106: Current Iberian wholesale market context is challenging
Still, current Iberian wholesale market context is challenging Low pool prices, below thermal gen. costs Low thermal load factors €/MWh, 1Q10 %, 1Q10 Portugal Spain 1Q07-1Q09 avg 79% 26 59% 54% 43% 32% 29% 23% 19% -13 -16 Pool Gas spread Coal spread Coal Gas • Hedging strategies strongly mitigate im
Slide 107: Short/medium term factors: high wind and hydro, gas oversupply
This scenario is caused by short/medium term factors, such as high wind and hydro generation and gas oversupply Low international gas prices attracting Strong wind and hydro during 1Q’10 additional gas into Iberia % load factor, 1Q10 €/MWhg, OTC for 2H10 Portugal Spain 1Q07-1Q09 avg 22.7 62% 19.3 17
Slide 108: Uncertainties affecting global gas markets
Several uncertainties affect global gas markets, although balance expected by 2012- 2012-2015 World LNG excess supply Key uncertainties %, 2008-2015 8% • Supply 6% Pessimistic scenario - LNG supply 4% - Unconventional gas development Optimistic - Contractual flexibility (volume: ToP, 2% scenario pri
Slide 109: Structural reasons: increased back-up function of thermal generation
Structural reasons also explain current market context – increased back- back-up function of thermal generation due to RES Thermal demand to remain stable… … But capacity is needed TWh, Iberia Reserve margin(1) Portugal Spain 1.3 1.2 Reference 1.1 level = 1.1 1.0 155 131 105-110 100-130 2008 2009 20
Slide 110: Increased renewables penetration puts a premium on flexibility
Increased renewables penetration will also put a premium on flexibility (CCGT and hydro) and storage (pumping) Generation by technology in Spain on 30/12/09 Hourly price duration curves in Spain MW €/MWh 4Q09 90 1Q10 80 70 60 50 10% of the Other special hours in regime 40 1Q10 at Wind 0 €/MWh 30 CCG
Slide 111: Increased electrification key to achieve CO2 reductions
In the longer term, increased electrification of energy usage will be key to achieve CO2 reductions Strong push to reduce CO2… … will require more electricity with (near) GtCO2e, EU27 emissions targets zero emissions Emissions % CO2 emissions factor 5.6 reduction -8% Zero -20% Decarbonise power • Re
Slide 112: EDP's business model fits market challenges and trends
EDP’s business model fits well with market’s short term challenges and medium term trends Market context is challenging… …But EDP has the key features to be a winner 9 Exposure to generation assets with fixed returns 9 Low pool prices 9 Hedging strategy integrated at Iberian level 9 Low clean spread
Slide 113: Iberian Generation & Supply
Iberian Generation & Supply João Manso Neto Board Member EDP Investor Day May 20th, 2010
Slide 114: EDP has done well even in challenging market conditions
EDP has done well even in challenging market conditions EDP - EBITDA Iberian Generation & Supply (€ million) LT Contracted generation(1) Liberalised activities(2) +9% CAGR CAGR LT Contracted Generation: 1,466 • Stable results: 8.5% ROA before inflation and taxes 1,118 +26% Liberalised activities: +1
Slide 115: Profitable growth in liberalised activities
Profitable growth in liberalised activities prompted by strong presence in clients supply, expansion in installed capacity EDP – Sales to clients (% of generation output) • Stable relationship with clients • Long position in clients in 2009 119% • ‘Produce-or-buy’ daily decision 62% 67% 63% backed b
Slide 116: EDP's distinctive portfolio is well prepared for current market context
EDP’s distinctive portfolio is well prepared for current challenging market context and is aligned with MT trends Key features to be a winner EDP’s distinctive assets and strategy 9 Exposure to generation assets with fixed returns 9 >60% capacity long term contracted 9 New investments outweigh decom
Slide 117: EDP's distinctive portfolio is well prepared for current market context
EDP’s distinctive portfolio is well prepared for current challenging market context and is aligned with MT trends Key features to be a winner EDP’s distinctive assets and strategy 9 Exposure to generation assets with fixed returns 9 >60% capacity long term contracted 9 New investments outweigh decom
Slide 118: Today >60% of conventional generation in Iberia is Long Term Contracted
Today >60% of our conventional generation in Iberia is Long Term Contracted EDP - Generation & supply portfolio in Iberia (2006-09, MW & EBITDA) MW EBITDA Market Market(2) 39% 35% 61% 65% Long Term Long Term Contracted(1) Contracted(1) The bulk of LT Contracted generation is PPA/CMEC: Remuneration a
Slide 119: PPA/CMEC generation: hydro accounts for 74% of present value
PPA/CMEC generation: hydro capacity accounts for 74% of present value PPA/CMEC: Present value(1) breakdown PPA/CMEC: Lifetime (%) (GW) Hydro Thermal Dec-09: Barreiro 56MW Dec-10: Fueloil 6% 8 Fueloil Carregado 710MW Dec-12: Coal 20% 7 Fueloil Setúbal 946MW Fueloil 6 Dec-17: Sines 5 1,180MW Coal 4 Hy
Slide 120: Material impact from transfer of Hydro plants to merchant
Material impact from transfer of Hydro plants to merchant after the end of PPA Thermal PPA Gross profit(1) EBIT(1) MW Thermal PPA PPA Plants end date (€ mn) (€ mn) • Fueloil plants expected to be terminations decommissioned after the end Carregado 710 Dec-10 97 55 2010-12 of PPA Setúbal 946 Dec-12 1
Slide 121: PPA/CMEC: New investments outweigh PPA thermal decommissioning
PPA/CMEC: Positive impact from new investments outweigh PPA thermal decommissioning EBIT(1) - Impact from new investments and PPA thermal decommissioning (2010-16, € million) • Fueloil: expected decommissioning Fueloil PPA after the end of PPA (Carregado in -120 Termination Dec-10, Setúbal in Dec-12
Slide 122: Our position in CO2 licenses meets our needs up to 2014-15
Our position in CO2 licenses meet our needs up to 2014- 2014-15 EDP - 2008-2012 coverage of CO2 emissions (1) (Mton) • Increase of EDP’s capacity concentrated in low CO2 emissions technologies Expected emissions 2008-12 • Lower working hours in thermal generation • PPA/CMEC generation: CO2 costs pas
Slide 123: Thermal plants work more hours than the Spanish average
EDP’s thermal generation plants work more hours than the Spanish average… Coal – Average load factor CCGT – Average load factor (%) (%) EDP (merchant plants) Spain EDP (merchant plants) Spain 82 60 59 75 45 48 43 40 51 46 46 34 2007 2008 2009 2007 2008 2009 …supported by clear competitive advantages
Slide 124: Coal plants have distinctive features and competitive costs
Our coal plants have distinctive features which result in highly competitive production costs Coal production costs – EDP vs Spain Our merchant coal plants have distinctive features (2009, €/MWh) Aboño 1 Aboño 2 Soto 2 Soto 3 -22% Higher efficiency & Lower freights(1) 9 9 9 9 36 Blast Furnace 28 Gas
Slide 125: CCGT fleet has distinctive technical characteristics
EDP’s CCGT fleet has distinctive technical characteristics which guarantee greater operational flexibility Distinctive features of our CCGT plants in Spain Quantification Min operating levels 30%-50% 30%-45% 20%-40% Low minimum • Extraordinary minimum operating operating levels levels (up to 20% of
Slide 126: Comfortable gas take-or-pay position
EDP has a comfortable gas take- take-or- or-pay position even in a scenario of <3,000 working hours at our CCGT in 2010 2010--12 Gas sourcing, 2010E (TWh) • Several LT gas sourcing contracts renegotiated: volumes, pricing and destiny Spot Market clauses; Other renegotiations ongoing Sonatrach 17% Ga
Slide 127: Gas supply to final clients: >15% expected growth
Gas supply to final clients: >15% expected growth prompted by market liberalisation and consolidation EDP - Gas supplied in Iberia (TWh) Spain Portugal >+15% Portugal: Start-up of operations in industrial segment in Apr-09 26 9~25% of market share, 1TWh sold in 1Q10 22 15% Spain: • Higher weight of
Slide 128: Hedging: High visibility for 2010
Hedging: High visibility for 2010 EDP: Electricity forward contracting - 2010 EDP: Electricity supplied in Iberia - 2010 (%) (TWh) Volumes contracted with prices and spreads locked-up Volumes contracted with unlocked prices(1) 24TWh Pool ~+20%(2) Purchases 28 100% contracted 24 Hydro 9% 8% with Nucl
Slide 129: Hedging: 9TWh with prices and spreads closed for 2011
Hedging: 9TWh with prices and spreads closed for 2011 EDP: Electricity forward contracting – 2011 (%) 9TWh • ~9TWh sold to clients with spreads closed: 9 Avg. price: ~€50/MWh Not 9 Avg. Clean Thermal Spread: ~€10/MWh Contracted • EDP has a strong track-record in forward contracting sales and lock-up
Slide 130: Hedging for 2011: Growth potential from further liberalisation
Hedging for 2011: Significant growth potential from further liberalisation in Portugal EDP – Liberalised output and total electricity supply EDP: Electricity supplied in Iberia - 2011 (2010E, TWh) (TWh) Merchant output Supply to clients in free market(1) Volumes contracted w/ price/spreads locked-in
Slide 131: EDP's distinctive portfolio is well prepared for current market context
EDP’s distinctive portfolio is well prepared for current challenging market context and is aligned with MT trends Key features to be a winner EDP’s distinctive assets and strategy 9 Exposure to generation assets with fixed returns 9 >60% capacity long term contracted 9 New investments outweigh decom
Slide 132: Increasing exposure to Hydro: 55% of conventional portfolio in 2020E
EDP is increasing exposure to Hydro capacity: 55% of conventional portfolio in 2020E EDP – Conventional installed capacity in Iberia (MW) Hydro Nuclear CCGT Coal Other • Hydro: CO2 free technology 9 55% of EDP’s portfolio(1) 4% 4% 17% 16% • Hydro with pumping: storage capacity 19% 9 ~44% of our Hydr
Slide 133: Secured pipeline represents a 69% increase in hydro capacity
Our secured pipeline represents a 69% increase in hydro capacity up to 2020E EDP - Hydro installed capacity in Iberia (MW) PPA/CMEC Merchant New merchant MW +69% • 3,468MW of new hydro capacity 8,472 9 ~50% already under construction 9 ~50% secured, under development 7,136 5,005 • 4,094MW 4 094MW cu
Slide 134: EDP is building 1.7GW of new hydro capacity in Portugal
EDP is building 1.7GW of new hydro capacity in Portugal… To enter in Hydro plants Type MW GWh/Year(1) operation Picote II Repowering 246 Dec-2011 239 Bemposta II Repowering 191 Dec-2011 134 Alqueva II Repowering w/ Pumping 256 Jul-2012 381(2) Ribeiradio New Plant 77 Oct-2013 134 Baixo Sabor New plan
Slide 135: EDP has already invested ~€300m in hydro under construction
… In which EDP has already invested ~€ ~€300m EDP - Hydro capacity under construction (€ million) Capex EBITDA ~1,500 ~150 ~250 ~300 ~300 37 276 <= 2009 2010E 2011E 2012E >2012E Total 2012E 1st Full-year ~€300m invested up to Mar-10: 30% of EBITDA from new projects not fully total capex already incu
Slide 136: Firm pipeline of 1.8GW of Hydro projects under development
Moreover EDP has a firm pipeline of 1.8GW of Hydro projects under development Potential EBITDA contribution by 2020: >€180m Total capex: €1.9bn(1) 1st full year Hydro Plans Type MW GWh/Year Status operation Foz Tua New Pl.. w/ Pumping 251 585(2) 2015 Environmental compliance Fridão New Plant 238 295
Slide 137: EDP extended rights to operate hydro plants until 2047
EDP extended the rights to operate hydro plants in the market after the end of PPA and until 2047 EDP - Extension of Hydro domain: Present value implicit in the price paid in Apr-08 (€ billion) Price paid Residual value attributable to EDP by PPA contracts PV of hydro domain in Dec-10 Time value ~2.
Slide 138: Diversified thermal portfolio aligned with medium term trends
EDP has a diversified thermal portfolio aligned with medium term trends 9 System needs thermal backup capacity to guarantee adequate reliability Need for capacity payments CCGT to guarantee adequate 9 However, expected low working hours remuneration are insufficient to assure minimum profitability l
Slide 139: Conclusions
Conclusions High weight of sales to clients, flexible plants, balanced gas position, produce-or-buy optimisation Hedging: 2010 fully hedged; Good level of coverage of liberalised production for 2011 PPA/CMEC: Stable 8.5% ROA reduces EDP exposure to market until Dec-16 2010/12 end of fueloil PPAs; 20