Overview on current market trends Renewable energy outlook EGP Strategic View

1. 30th October 2015
Disruptive trends &
Enel Green Power
Strategy
Amoroso Riccardo
Head of Innovation and Sustainability at
Enel Green Power

2. 2 Renewable energy outlook
3 EGP Strategic View
1 Overview on current market trends
Agenda
1

3. Tcf
Source: EIA, Annual Energy Outlook 2015, Dry Natural Gas Production
US will become a net exporter of natural gas in the near future
Shale gas on total gas production is forecasted to increase up to 55% Up to 2040
Shale gas leads the gas production in US
NaturalGasProductioninUS
Share of
shale gas
2

4. US oil and gas production
Source: World Energy Outlook 2012
The surge in unconventional oil & gas production had
implications well beyond the US
The Shale Revolution
3

5. Shale VS Conventional production
Source: The Economist
4

6. Oil and gas collapsed in the last year losing almost the 50% of their 2014 value
In August 2015 oil and gas prices reached respectively 43$/Bar and 2,8 $ per Mill. Btu
0
2
4
6
8
10
12
14
0
20
40
60
80
100
120
140
160
180
Jan-00
Jun-00
Nov-00
Apr-01
Sep-01
Feb-02
Jul-02
Dec-02
May-03
Oct-03
Mar-04
Aug-04
Jan-05
Jun-05
Nov-05
Apr-06
Sep-06
Feb-07
Jul-07
Dec-07
May-08
Oct-08
Mar-09
Aug-09
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Jun-10
Nov-10
Apr-11
Sep-11
Feb-12
Jul-12
Dec-12
May-13
Oct-13
Mar-14
Aug-14
Jan-15
Jun-15
WTI Oil Spot Price Henry Hub Gas Spot Price
Oil Price
($ per Barrel)
Gas Price
($ per Mill. Btu)
Source: EIA
Impact on Oil and Gas prices...
Prices strongly impacted by commodities’ abundance
V ?orL
5

7. Oil
-51%
Coal
-60%
Copper
-25%
Silver
-14%
...and on other relevant commodities prices
Prices reduction in last 12 months
Note: Prices reduction refers to the Sep 2014-Sep 2015 period
Source: Stowe Global Coal Index, Bloomberg Oct. 2015
Fateful combination: abundance of resource supply and economic downturn
6

8. Mil. of barrels per day
Consumption
Production
Since 2006 oil consumption steadily declined
This is likely the beginning of a long-term trend
Source: EIA
An unexpected demand trend
The US case (1980-2014)
7

9. Historical demand
GDP
0,8
0,9
1,0
1,1
1,2
1,3
1,4
1,5
1,6
1,7
150
170
190
210
230
250
270
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Source: Bloomberg New Energy Finance, Apr 2015
TWh AUD trillion
New trends in Electricity Market
Australian national electricity market actual vs forecast
electricity demand FY2004-FY2025
8

10. Historical demand
2010 Forecast
GDP
0,8
0,9
1,0
1,1
1,2
1,3
1,4
1,5
1,6
1,7
150
170
190
210
230
250
270
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Source: Bloomberg New Energy Finance, Apr 2015
TWh AUD trillion
New trends in Electricity Market
Australian national electricity market actual vs forecast
electricity demand FY2004-FY2025
9

11. Historical demand
2010 Forecast
GDP
0,8
0,9
1,0
1,1
1,2
1,3
1,4
1,5
1,6
1,7
150
170
190
210
230
250
270
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Source: Bloomberg New Energy Finance, Apr 2015
TWh AUD trillion
2011
New trends in Electricity Market
Australian national electricity market actual vs forecast
electricity demand FY2004-FY2025
10

12. Historical demand
2010 Forecast
2011 Forecast
GDP
0,8
0,9
1,0
1,1
1,2
1,3
1,4
1,5
1,6
1,7
150
170
190
210
230
250
270
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Source: Bloomberg New Energy Finance, Apr 2015
TWh AUD trillion
New trends in Electricity Market
Australian national electricity market actual vs forecast
electricity demand FY2004-FY2025
11

13. Historical demand
2010 Forecast
2011 Forecast
GDP
0,8
0,9
1,0
1,1
1,2
1,3
1,4
1,5
1,6
1,7
150
170
190
210
230
250
270
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Source: Bloomberg New Energy Finance, Apr 2015
TWh AUD trillion
2012
New trends in Electricity Market
Australian national electricity market actual vs forecast
electricity demand FY2004-FY2025
12

14. Historical demand
2010 Forecast
2011 Forecast
2012 ForecastGDP
0,8
0,9
1,0
1,1
1,2
1,3
1,4
1,5
1,6
1,7
150
170
190
210
230
250
270
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Source: Bloomberg New Energy Finance, Apr 2015
TWh AUD trillion
New trends in Electricity Market
Australian national electricity market actual vs forecast
electricity demand FY2004-FY2025
13

15. Historical demand
2010 Forecast
2011 Forecast
2012 ForecastGDP
0,8
0,9
1,0
1,1
1,2
1,3
1,4
1,5
1,6
1,7
150
170
190
210
230
250
270
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Source: Bloomberg New Energy Finance, Apr 2015
TWh AUD trillion
2013
New trends in Electricity Market
Australian national electricity market actual vs forecast
electricity demand FY2004-FY2025
14

16. Historical demand
2010 Forecast
2011 Forecast
2012 Forecast
2013 Forecast
GDP
0,8
0,9
1,0
1,1
1,2
1,3
1,4
1,5
1,6
1,7
150
170
190
210
230
250
270
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Source: Bloomberg New Energy Finance, Apr 2015
TWh AUD trillion
New trends in Electricity Market
Australian national electricity market actual vs forecast
electricity demand FY2004-FY2025
15

17. Historical demand
2010 Forecast
2011 Forecast
2012 Forecast
2013 Forecast
GDP
0,8
0,9
1,0
1,1
1,2
1,3
1,4
1,5
1,6
1,7
150
170
190
210
230
250
270
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Source: Bloomberg New Energy Finance, Apr 2015
TWh AUD trillion
2014
New trends in Electricity Market
Australian national electricity market actual vs forecast
electricity demand FY2004-FY2025
16

18. Historical demand
2010 Forecast
2011 Forecast
2012 Forecast
2013 Forecast
2014 Forecast
GDP
0,8
0,9
1,0
1,1
1,2
1,3
1,4
1,5
1,6
1,7
150
170
190
210
230
250
270
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Source: Bloomberg New Energy Finance, Apr 2015
TWh AUD trillion
The “New Normal”: electricity demand and GDP are following two different
trajectory, is that a separation or a divorce?
New trends in Electricity Market
Australian national electricity market actual vs forecast
electricity demand FY2004-FY2025
17

19. New trends in Electricity Market
Electric consumption per unit of GDP versus GDP per
capita, 1980-2012
GDP and Electricity demand increase correlation is breaking
and new energy paradigms are emerging
Source: Bloomberg New Energy Finance, Aug 2015
18

20. Green Revolution - Electrical Vehicles
“Prices on electric cars will continue to drop until they’re within reach of the average family”,
19

21. Green Revolution - Electrical Vehicles
“Prices on electric cars will continue to drop until they’re within reach of the average family”,
The Washington Post, 1915
20

22. Green Revolution- Energy Storage
TESLA: Power Wall and Gigafactory
Increasing efforts and appetite in storage technology to drive costs down and
deliver solutions in several market segments
21

23. HIVE home
heating
controls
Residential
energy
storage
Smart
thermostats to
reduce churn
BEMS for DR and
energy efficiency
Digital Life
connected
home service
1m connected home
customers
Smart home
platform (AT&T)
Smart home
hubs
???
Bundled electricity,
entertainment and
home automation
HEMS platform
DR and retail
services
Energy supply and
services
Virtual mobile
operator – 80k
customers
Registered energy
supplierBundled telecoms and
energy supply
Smart home
partnerships/investment
Smart lighting
/ home
automation
Bundled telecoms,
electricity supply
beginning in 2016
Bundled insurance,
telecoms and energy
Bundled electricity
telecoms services
HEM tools
and DR
IHD and smart
thermostat
program
Home energy
management
Source: Bloomberg New Energy Finance, Apr 2015
New Players and Energy Services
The Energy retail battlefield
Market focus is moving from generation to other segments of the value chain
22

24. World GDP Growth Outlook
2014-2020 CAGR, April 2015
Strong
> 5%
Mid
~ 4%
Low
< 2,5%
Global GDP will decline because of stagnating mature economies
and slowing down of emerging economies
Source: IMF Apr 2015
6%
4%
Historical
(2004-2014)
Forecast
(2014-2020)
World’s GDP
Historical Vs. Forecasted
Growth (CAGR)
23

25. Emerging market indices - August 2015
Half of all emerging market indices were in bear territory,
Emerging market stocks have fallen significantly, in many cases more than those in
Europe and the US
Source: BNEF October 2015
24

26. A Decade of Change
From the old model…
A simple and linear model
Generation Transmission Distribution Retail Customer
25

27. A Decade of Change
…to a new energy market paradigm
Bulk
Generation
Transmission
Distribution
Retail
Customer
Distributed
generation
Demand
response
Storage
Micro grids
New entrants
Link supply to load
Focus on baseload
Customer becomes
producers
Customers become
active consumers
Storage used to
manage grids
Customers go or
remain off-grid
Offer new products
and services
Become an active
partcipant
Engage with
customers
Actively manage
the grid
New
market
paradigm
26
Note: PWC Report: “The road ahead - Gaining momentum from energy transformation”, 2014

28. Agenda
2 Renewable energy outlook
3 EGP Strategic View
1 Overview on current market trends
27

29. The Renewable Energy escalation
The evolution of renewable energy over the past decade has surpassed all
expectations. Global installed capacity and production from all renewable technologies
have increased substantially, and supporting policies have continued to spread to more
countries in all regions of the world
Source: REN 21, The first decade: 2004 – 2014; IRENA; BNEF; Enerdata; GlobalData; TSOs
 2014 record year in additional Wind
capacity (~ 50 GW)
 Record year in terms of PV additional
capacity (~40 GW)
 Record year in terms of geothermal
additional capacity (~ 1 GW)
 Increasing n. of Countries with installed
capacity higher >100MW: 37 for PV and
55 for Wind
2014 Key Facts
Hydro Wind PVBiomass Total
850 GW
1.165 GW
370 GW
90 GW
175 GW
950 GW
1.815 GW
45 GW 3 GW50 GW
2004
2014
Renewable Installed Capacity by Technology, 2004 – 2014
28

30. Global electricity demand evolution (2014-2020) Changes in the power production mix until 2035
Renewable role in demand growth
Source: Bloomberg New Energy Finance, “New Energy Outlook 2015”, Jun 2015
29
• Renewables are expected to grow steadily all over
the World
• Developing countries will account for over 60% of the
global growth of electricity generation in 2035
• Renewables are expected to account for about 50%
of future energy supply growth
-1.000 0 1.000 2.000 3.000 4.000 5.000
Coal Gas Nucleare Rinnovabili
Note: Countries are clustered based on average annual growth of electricity
demand :
Negative – demand decreases;
Low – growth < 0.5% ;
Medium – growth between 0.5% and 4%;
High – growth > 4%.
Cina
India
USA
EU
M.East
Africa

31. 30
Evolution of incentive schemes in areas of interest
2010 – EGP Countries 2015 – EGP Countries/Areas of Interest
16 EGP countries of which
6 Tender/PPA
48 EGP Countries of Interest of
which 29 with Tender/PPA
Fixed Incentive Schemes (GC, Tariffs)
Competitive Incentive Schemes (tender/PPA)
Note: analysis based on EGP countries. Remuneration mechanisms refer to RES Utility-scale plants.

32. Renewable Energies
NEX Clean Energy Index 2013-15 YTD
Clean energy companies delivered a profit to their shareholders equal to 50%
Note: Values as o 01 April 2015; Stowe, NEX and S&P 500 rebased to 100 on 01 Jan 2013
Source: Bloomberg New Energy Finance, Apr 2015
31

33. Source: IEA, Apr 2015; BNEF Apr 2015
Wind: 69-120 $
PV: 75-120 $
Europe
PV: 85-89 $
Chile
Wind: 48 $
PV: 75 $
US
Wind: 54 $
PV: 81 $
Brazil
PV: 88 $
India
Wind: 52 $
PV: 66 $
South Africa
Global prices reference (recent auctions outcome, $/MWh)
Bid auction results are driving downwards RES costs making them
increasingly competitive compared to fossil fuels
Renewable Energies
Increasing competitiveness of Renewable Sources
32
Wind: 36-40$
Egypt
PV: 58 $
UAE

34. Job creation
Energy independence and
reduction of prices volatility
Scalability and modular
approach
Environmental Sustainability
Simplicity in Installation and
Operation
Competitiveness
1
2
3
6
5
4
The Green Revolution
Success factors
33

35. The Energy field
A competitive scenario
34
A complex scenario in which EGP
competes with large utilities,
YieldCos and new types of players
Renewables
Generation
Competition between big
utilities
Entry of YieldCos
The new competitive
scenario
Big Utilities launch new companies
committed to develop renewable
energy projects
Focused on managing existing
assets rather than creating true
value

36. The Energy field
YieldCos role
35
• Spin-off listed in stock exchange constituted by operating
plants and characterized by a stable cash flow and high
dividend
• Yields exposed to rising interest rates and regulatory
risks
• Business focused more on financial management of
existing assets than on creating value
North America
• From 2013 to 1H2015 YieldCos have collected $12bn in
IPOs and increased their market value by 84 %
• High volatility of their value: negative performance in
recent months with falling securities up to 50 % of its
value
PerformanceYieldCos
Europe
Source: Bloomberg New Energy Finance, July 2015; Bloomberg platform

37. Agenda
2 Renewable energy outlook
3 EGP Strategic View
1 Overview on current market trends
36

38. Global player with a diversified footprint
2.1 GW in operation
0.4 GW in execution
0.1 GW contracted
North America
10 MW in operation
0.5 GW in execution
0.7 GW contracted
Africa
5.8 GW in operation
0.2 GW in execution
Europe
2.0 GW in operation
1.8 GW in execution
0.6 GW contracted
Latin America
Expertise across 5 technologies
Operations across 17 countries
Industry leading load factor at 40%
Highly efficient operations
Enel Green Power today
0.2 GW in operation
Asia
37

39. Deploying a global business model...
…with a differentiated local approach
Growth momentum
and synergies with
the Enel Group
Latin America
Steady growth with
low risk profile
North America
Opportunities for
divestment and
aggregation
Europe
Prospective growth
opportunities
Asia-Pacific
South Africa as a
platform for growth
in the Sub-Saharan area
Africa
Country of interestCountry of presence Country under screening
38

40.  Identification of projects
 Screening of opportunities
 Development and
evaluation
 CAPEX allocation
 Realization of approved
projects
 Technology development
 Acquisition integration
 CAPEX expenditure
 Operation of plants
 Production optimization
 Operational improvement
 Generation of EBITDA
Integrated business model
Industrial and commercial approach to the value creation
Business
Development
EPC
Integrazione M&A
Operation &
Maintenance
Financing
Commercial offering
39

41. Financing
Development Cost
Opex (incl. Tax)
Modules & BOP
31%
21%
45%
4%
Solar
31%
19%
46%
4%
Wind
Turbines & BOP
Opex (incl. Tx)
Financing
BOP
22%
Modules
23%
Turbine
35%
BOP
11%
Note: approximate values
Development Cost
Wind and Solar projects: NPV of cost breakdown
40

42. Competitive scenarios on the innovation field
41
New RES technologies
Electrification in emerging markets
Storage to improve RES dispatching
Applying Storage to retail markets
GeoHydroWind BiomassSolar
Ocean High altitude wind
MINIMIZZAZIONE
SBILANCIAMENTI
ENERGY SHIFTING
CAPACITY BESS
LIMITATA
Ollagüe
Powerhive
Marcona
Current
portfolio
Possible new
entries
D
A B
C

43. 42
EGP currently operates 5 technologies…
GeoHydroWind
BiomassSolar
… and might add new ones
 Wave energy
 Thropospheric wind
A
New possible generation technologies from renewables

44. Clear sky day
Cloudy day
-100
0
100
200
300
400
500
600
700
800
16/03/201419:12 17/03/201400:00 17/03/201404:48 17/03/201409:36 17/03/201414:24 17/03/201419:12 18/03/201400:00
AverageOutputPower[kW] MaximumOutputPower [kW] MinimumOutputPower [kW]
-100
100
300
500
700
900
1100
21/03/201419:12 22/03/201400:00 22/03/201404:48 22/03/201409:36 22/03/201414:24 22/03/201419:12 23/03/201400:00
AverageOutputPower[kW] MaximumOutputPower [kW] MinimumOutputPower [kW]
PV power plant:
• Large Variation in few minutes in case of cloudy days
• Good average forecast
Wind power plant:
• Large amount on power changing within minutes
• Potential On-Off behavior in case of strong wind
• More challenging forecast compared to PV
Time-window
for energy
release
0
100
200
300
400
500
600
700
800
900
1000
1 21 41 61 81 101 121 141 161 181 201 221 241
43
B
Renewables: threat or opportunity

45. 44
B
Global Market is expected to rapidly grow for utility scale
ESS

46. • Primary regulation
• Secondary regulation
• Terziary regulation
• Reactive supply and Voltage control
Ancillary
services
• Curtailments: due to transmission:
• constraints and generator flexibility, energy
• storage helps to increase grid flexibility and
• reduce curtailment.
• Day/night
Price Arbitrage
(Energy-shift,
peak-shaving)
• Mitigate RES generation unbalance and reduce
relevant penalties together with the
improvement of weather forecast:
• Day-ahead market
• Intra-day market
Unbalance
45
B
Possible business models enabled by battery storage
systems

47. UNBALANCING
REDUCTION
ENERGY
SHIFTING
Night Production
46
B
Catania 1 Bess project – RES dispatchability
10 MW PV plant
1MW / 2MWh Battery
Storage System
Operative since Q3
2015

48. 47
LatAm
Africa
• OFF-GRID VILLAGES
• SOLAR HOME SYSTEM
• SOLAR LANTERN
• NO ACCESS TO ELECTRICITY
Example market
Area Pacific
USA, EU• HIGHLY CONNECTED
ADVANCED GRID
∙
∙
• MILDLY CONNECTED GRIDS
∙
Energy ‘Ladder’
Examples of EGP’s applications at the
bottom of the piramid
OLLAGÜE - Chile
STATUS: IN OPERATIONS
SIZE:
• PV, 200 kWp 3Sun thin film modules
• WIND TURBINE vertical axis, 30kWp
• STORAGE NaNiCL2, 250 kW 520kWh
• Diesel Generator as backup, 250kW
Microgrids - Kenya
STATUS: under negoziation
SIZE:
• 100 microgrids
• Project size (PV only) 950 kW
• Average generation capacity per site 9.5 kW
• Max output capacity (PV + batteries) 2,400 kW
MARCONA - Perù
STATUS: approval at Inn. Committee
SIZE
• PV fix modules (crystalline): 63 kWp
• Mini Wind system: 60 kW
• Electrochemical Storage system (Li-ion): 70kW/70kWh
• Diesel generator: 2x72 kWel
Still today, 1.4 billions of people do not have adequate access to
electricity therefore relying on oil lamps or, in the best cases, diesel
generators.
These conditions offer emerging business opportunities for green
sustainable solutions, that can be tailored to meet specific
requirements.
C
Innovative off-grid applications: electrification in emerging
markets

49. MAIN EVIDENCES
A full charge of the battery
allows to sustain the
community load during night in
real operation conditions
Possible further optimizations
of the Energy management
system,
advanced weather forecast
and nowcast technologies
 the real time monitoring of
the loads
 looking to possible
improvements of the
generation set.
18:302:30
2 21
Typical day of operation (in wintertime)
C
Ollagüe Project -PERFORMANCE ANALYSIS

50. 49
Clients are beginning to seek energy independence trough stand-alone, cheap and green systems.
This driver, coupled with an attractive design, is the base for the development of a residential market for
batteries.
Technological Partners
Tesla
Samsung
LG
Innovative Li-Ion storage
systems for domestic
usage are designed to
maximize the self
consumption from
photovoltaic systems,
but they can as well
provide services such as
back-up or, in the future,
grid services through
Virtual Power Plants
D
Retail storage technologies: selecting the most advanced
solutions…

51. 50
General plant data
Historical/real time
production analysis
Weather forecast
Alerts
Energy Saving
New offers
General plant data:
 Activation date
 Last access
App functionalities
Production monitoring:
 Historical and real time production analysis (plant capacity)
 Predictive analysis of plant production within 36/72 hrs
Weather forecast:
 Real time weather forecast to support predictive analysis on
plant production
Alerts:
 Alerting system to inform the user about plant malfunctioning,
production trend, battery level, etc.
Customer support
Customer support:
 Customer assistance and quick response to the user through
call centre and instant messaging with available operators
Energy Saving:
 Main suggestions on plant energy saving
New offers:
 Section that includes new commercial offers for the client
PV Panel
& storage
Client
App
Usage/Consumption monitoring:
 Historical and real time consumption information
 Benchmark with other users’ consumptionProduction/Consumpti
on monitoring
PULLPUSH
D
… and implementing innovative mobile applications for
monitoring the system’s production and consumption

52. 51
EGP First mover in key emerging markets
High quality of its pipeline
Strategic partnerships along the entire value chain
Commercial synergies with Enel
Development of Innovative Solutions
Geographical and technological diversification
EGP Industry Leader able to increase its own competitive advantage
Final remarks
Enel Green Power strengths