RWE – a sustainable electricity supply for the future Dr. Hans-Peter Meurer, RWE AG TBLI Europe 2006, Paris, November 9/10, 2006

Key demands for a sustainable energy supply C E S C Competitiveness Provision of a cost-efficient European energy supply E Environmental compatibility Climate protection Minimization of classic emissions (NO X /SO 2 /dust) Preservation of resources S Security of supply Consideration of whole value chain: fuel supply, generation, transport, distribution, service The well-balanced application of target criteria ensures a sustainable, long term orientated energy supply.

Provision of a cost-efficient European energy supply

Climate protection

Minimization of classic emissions (NO X /SO 2 /dust)

Preservation of resources

Consideration of whole value chain: fuel supply, generation, transport, distribution, service

Boundary conditions which determine RWE´s generation portfolio: Ressources Fuel mix *) Advantage Challenge Lignite 40,5% domestic source high CO 2 emissions low production costs medium SO 2 , NO x emissions Hard coal 18,4% availability high CO 2 emissions moderate costs medium / high SO 2 , NO x emissions Nuclear 24,1% availability nuclear safety CO 2 free electricity generation disposal of spent fuels and waste low production costs Gas 14,6% low C0 2 emissions medium to high generation costs Water 1,4% CO 2 free electricity generation extension nearly unpossible Wind 0,6% CO 2 free electricity generation high generation and transport costs impact on landscape *) contribution to own generation in 2005

Fuel mix *) Advantage Challenge

Lignite 40,5% domestic source high CO 2 emissions low production costs medium SO 2 , NO x emissions

Hard coal 18,4% availability high CO 2 emissions moderate costs medium / high SO 2 , NO x emissions

Nuclear 24,1% availability nuclear safety CO 2 free electricity generation disposal of spent fuels and waste low production costs

Gas 14,6% low C0 2 emissions medium to high generation costs

Water 1,4% CO 2 free electricity generation extension nearly unpossible

Wind 0,6% CO 2 free electricity generation high generation and transport costs impact on landscape

*) contribution to own generation in 2005

Boundary conditions which determine RWE´s strategy: Regulatory framework Germany: 100% liberalized market LCPD alike pollutant legislation since 1980 Ownership of mining, generation, transport, distribution, retail Access to transport grid supervised by Federal Grid Agency Emissions trading installed UK: 100 % liberalized market Adaption to LCPD until 2008 Ownership of generation and retail Emissions trading installed

Germany:

100% liberalized market

LCPD alike pollutant legislation since 1980

Ownership of mining, generation, transport, distribution, retail

Access to transport grid supervised by Federal Grid Agency

Emissions trading installed

UK:

100 % liberalized market

Adaption to LCPD until 2008

Ownership of generation and retail

Emissions trading installed

RWE´s strategy: No regret Maintain a broad based fuel mix Increase efficiency in electricity generation Develop new technical solutions for electricity generation and CO 2 abatement Take into account future costs for CO 2 emissions Support the efficient use of energy Make use of emissions trading and JI/CDM Flexibility is a key element to meet future challenges and to secure a no-regret-strategy.

Maintain a broad based fuel mix

Increase efficiency in electricity generation

Develop new technical solutions for electricity generation and CO 2 abatement

Take into account future costs for CO 2 emissions

Support the efficient use of energy

Make use of emissions trading and JI/CDM

Technology of today: New Power Plant Projects in Continental Europe Topping gas turbines Weisweiler 2 x 190 MW Construction and operation permit received in Feb. 2005) Start of construction in April 2005 Expected start of commercial operation: July 2006 Budget: €150m BoA 2/3 twin unit Neurath 2 x 1,050 MW Permit received in June 2005 Start of construction in January 2006 Expected start of commercial operation: January 2010 Budget: €2.2bn Hard coal-fired power plant Hamm 2 x 800 MW Announced in November 2005 (poss. with partners) Expected commissioning: 2012 Budget: €1,500m CCGT plant Lingen 850 MW Construction option: kept open Preliminary approval received in December 2004 Budget: €400m Hard coal & bio mass fired power plant Netherlands 2 x 800 MW Announced in April 2006 Expected commissioning: 2012 / 2013 Budget: €1,600m

Construction and operation permit received in Feb. 2005)

Start of construction in April 2005

Expected start of commercial operation: July 2006

Budget: €150m

Permit received in June 2005

Start of construction in January 2006

Expected start of commercial operation: January 2010

Budget: €2.2bn

Announced in November 2005 (poss. with partners)

Expected commissioning: 2012

Budget: €1,500m

Construction option: kept open

Preliminary approval received in December 2004

Budget: €400m

Announced in April 2006

Expected commissioning: 2012 / 2013

Budget: €1,600m

Technology of today: Modernizing our UK power plant portfolio Replanting steam turbines at Aberthaw Turbine contracts already placed All three units will be retrofitted by 2008 Thermal efficiency will increase from 36.5% to 38.9% Additional capacity of 69 MW Replanting steam turbines at Tilbury Programme of turbine improvements underway All three available units will be upgraded by the end of 2007 Reduction of fuel input and emissions by up to 1.5% Additional capacity of up to 15 MW per unit achievable Flue gas desulphurization at Aberthaw Retrofit three units to comply with "Large Combustion Plant Directive" Preliminary enabling work has begun Scheduled to be completed by 2008 Upgrading turbines at CCGT plants Investigating options for improving efficiency and output at Didcot B and Little Barford Target heat rate improvement of +1% New build of a CCGT plant Final decision not yet taken: investments will depend on environmental legislation and market conditions Option 1: Applied for consent to build a 2,000 MW plant in Pembroke Option 2: 1,500 MW consented site at Staythorpe

Turbine contracts already placed

All three units will be retrofitted by 2008

Thermal efficiency will increase from 36.5% to 38.9%

Additional capacity of 69 MW

Programme of turbine improvements underway

All three available units will be upgraded by the end of 2007

Reduction of fuel input and emissions by up to 1.5%

Additional capacity of up to 15 MW per unit achievable

Retrofit three units to comply with "Large Combustion Plant Directive"

Preliminary enabling work has begun

Scheduled to be completed by 2008

Investigating options for improving efficiency and output at Didcot B and Little Barford

Target heat rate improvement of +1%

Final decision not yet taken: investments will depend on environmental legislation and market conditions

Option 1: Applied for consent to build a 2,000 MW plant in Pembroke

Option 2: 1,500 MW consented site at Staythorpe

Technology of tomorrow: Increase in efficiency – the priority development target for CO 2 reduction 700°C power plant (hard coal & lignite) Efficiency increase of 4%pts possible Projects: COMTES700 – Component Test Facility for a 700°C Power Plant – initiated by a group of major European power generators (incl. RWE) and material tests in existing power plants of RWE and others Budget: €22m Lignite pre-drying/ALPC (Advanced lignite pulverized coal) Efficiency increase of 4%pts possible Technology successfully proved, from 1993 on, at an RWE pre-drying plant in Frechen To introduce this technology on a commercial scale, RWE has started the construction of a lignite pre-drying prototype plant at the BoA 1 plant (Niederaussem). Operations will start at the end of 2007. Budget: €50m for construction and operation Lignite pre-drying plant at Frechen Extra investment will lead to significantly improved efficiency rates and lower fuel consumption, so that electricity production may be kept constant and CO 2 output be reduced

700°C power plant (hard coal & lignite)

Efficiency increase of 4%pts possible

Projects: COMTES700 – Component Test Facility for a 700°C Power Plant – initiated by a group of major European power generators (incl. RWE) and material tests in existing power plants of RWE and others

Budget: €22m

Lignite pre-drying/ALPC (Advanced lignite pulverized coal)

Efficiency increase of 4%pts possible

Technology successfully proved, from 1993 on, at an RWE pre-drying plant in Frechen

To introduce this technology on a commercial scale, RWE has started the construction of a lignite pre-drying prototype plant at the BoA 1 plant (Niederaussem). Operations will start at the end of 2007.

Budget: €50m for construction and operation

Technology of the Future: RWE to gain leadership in Europe in CO 2 -free power plant technology 1) IGCC: Integrated gasification combined cycle 2) CCS: carbon capture and storage RWE Power plans to develop and build a CO 2 -free 450 MW-coal-fired IGCC 1) plant including CO 2 transport and storage in Germany to demon-strate the whole CCS 2) -chain. Commissioning is scheduled for 2014. In parallel, CO 2 scrubbing for lignite and hard coal will be developed further for advanced conventional power plant technology, also as a retrofit option. 1 2 3 In addition, RWE npower will conduct a feasibility study for a clean coal 1000 MW hard coal fired power plant at Tilbury.

Time schedule for development of technology Efficiency increases Beyond CO 2 -free power plant with CO 2 sequestration and storage Today Exploitation of existing efficiency potential Tomorrow Increased efficiency due to new power plant technology Commissioning CO 2 sequestration and storage 2012 2016 2020

Down stream energy efficiency Continue to invest in decentralized, good CHP (biomass and gas fired power plants) Expand energy services and consultation of small and medium business customers to use energy effectively Support campaigns to save energy in households and small business: - dena *) initiative in Germany - Energy Efficiency Commitment in UK *) dena: German Energy Agency

Continue to invest in decentralized, good CHP (biomass and gas fired power plants)

Expand energy services and consultation of small and medium business customers to use energy effectively

Support campaigns to save energy in households and small business: - dena *) initiative in Germany - Energy Efficiency Commitment in UK *) dena: German Energy Agency

CDM/JI projects enable RWE to access cost-effective opportunities to reduce greenhousegas emissions Options presently pursued: Direct investment in CDM/JI projects: RWE Power has set up a budget totaling €150 million until 2012 for investments in greenhouse gas abatement projects like utilizing coal mine gas otherwise emitted to the atmosphere Purchasing carbon credits from third party-projects: Means to make CDM/JI projects developed by third parties financially viable. Example: Decomposition of greenhouse gas emissions in chemical plants in China. Participating in carbon funds: RWE has been contributing to the Prototype Carbon Fund of the World Bank since 2000. This fund kick-started the global carbon credit market. Clean Development Mechanism (CDM): Emission reductions caused by investment of an industrialized country in a country without reduction commitments are credited to the emission account of the investor country Joint Implementation (JI): Emission reductions caused by investment of one industrialized country in a second industrialized country are credited to the emission account of the investor country Germany/UK Germany/UK China Emission rights Russia Emission rights

Options presently pursued:

Direct investment in CDM/JI projects: RWE Power has set up a budget totaling €150 million until 2012 for investments in greenhouse gas abatement projects like utilizing coal mine gas otherwise emitted to the atmosphere

Purchasing carbon credits from third party-projects: Means to make CDM/JI projects developed by third parties financially viable. Example: Decomposition of greenhouse gas emissions in chemical plants in China.

Participating in carbon funds: RWE has been contributing to the Prototype Carbon Fund of the World Bank since 2000. This fund kick-started the global carbon credit market.

And what do others say: Dow Jones Sustainability Indexes World and STOXX 2007: Industry Leader for Multiutilities Climate Leadership Index of Carbon Disclosure Project 2006: „Best in Class“ in Utility Sector

Dow Jones Sustainability Indexes World and STOXX 2007: Industry Leader for Multiutilities

Climate Leadership Index of Carbon Disclosure Project 2006: „Best in Class“ in Utility Sector