Bundling renewables activities and competencies across RWE Group – Growth focus in onshore and offshore wind, hydro as strong operational backbone* – Research & Development and Venture Capital to drive the development of emerging technologies

1. European Trends in Wind Energy
Investment 2015 – a utilities’
perspective
Dirk Simons
Chief Financial Officer
RWE Innogy GmbH
4th Annual Renewable Energy Financing Forum
08th of May 2015, 09.00 – 09.40h, Wien

2. Page
RWE Innogy:
Focus on core competences Wind and Hydro
2
Overview
Business
Area
Focus and
Strategy
> Established in February 2008
> Bundling renewables activities and competencies across RWE Group
– Growth focus in onshore and offshore wind, hydro as strong operational backbone*
– Research & Development and Venture Capital to drive the development of emerging technologies
> European focus
> Asset portfolio of 3.1 GW in operation and 0.6 GW under construction mainly located in United Kingdom, Germany,
Spain, Netherlands, Poland and Italy (Accounting view + PPA as at Q4 2014)
> Project pipeline of 3.5 GW consisting mainly of wind and some hydro (Accounting view + PPA as at Q4 2014)
RWE Innogy
Wind onshore
˃ Key technology for
capacity growth
˃ Focus on organic
growth
˃ Focus markets include
UK, Germany, Spain,
Netherlands, Italy and
Central- and South-
Eastern Europe
Wind offshore
˃ Key technology for
capacity and service
growth
˃ Organic growth
strategy within
partnerships
˃ Focus markets include
UK and Germany
Hydro
˃ Operational
Excellence in hydro
run-of-river
˃ Selective development
options
New technologies
˃ Driving innovative
renewable
technologies to
commercial
applications via
• Venture Capital
• Cross functional
R&D and
demo plants
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective

3. Page
Agenda: European Trends in Wind Energy Investment
2015 – a utilities’ perspective
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 3
1 Attractiveness of Wind Energy investments (with particular reference to regulation)
2 Investment criteria for different shareholders
3 Alternative investment structures
4 Organisational and structural implications
5 Investment outlook

4. Page
Profitability of conventional power plants is irreversibly
changing – also coal is increasingly under pressure
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 4
Old hard coalNew lignite
2009 2010 2011 2012
Old lignite
New gas Old gas
40
45
50
55
60
65
70
2010 2011 2012
2014 base load forward (EEX)RWE avg. realised price
60
63
67
Average utilisation of typical German
power plants
German power price development
(€/MWh)
1. Attractiveness of Wind Energy investments (with particular reference to regulation)

5. Page
Especially highly flexible and low-emission gas-fired
power plants have significantly less operations time
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 5
Production in June and July 2009
Megawatt
Production in June and July 2011
Megawatt
June 2009 July 2009
400
300
200
100
0
June 2011 July 2011
400
300
200
100
0
1. Attractiveness of Wind Energy investments (with particular reference to regulation)

6. Page
Wind energy business in Europe is on a growing path for
years…
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 6
 11.8 GW of new wind capacity
installations across the EU in 2014 (∼
44% of total new installation)
– + 5.3 GW in GER
– + 1.7 GW in the UK
– + 1.1 GW in Sweden
 Today 129 GW installed wind power
capacity in the EU
– app. 121 GW Onshore
– app. 8 GW Offshore
 EU wide oil and coal fired power
plants continue on decommissioning
path
Annual wind power installations in the EU
5.8
6.5
7.2
9
8.5
10.3
9.9 9.7
12.1
11.2
11.8
0
2
4
6
8
10
12
14
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
in GW
Source: EWEA Annual Statistics 2014, Wind in power – 2014 European Statistics, Feb. 2015
1. Attractiveness of Wind Energy investments (with particular reference to regulation)

7. Page
… with steady investment developments in important
European renewable energy markets …
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 7
Europe (total)
UK
Germany
Netherlands
˃ Increase of 1% compared to 2013; only 45% of record in
2011
˃ Wind attracted ∼ 2/3 of total investment, esp. Offshore
˃ With $8 bn wind was most important technology
˃ 86% was attracted by Offshore projects (e.g. 402 MW
Dudgeon, 389 MW West of Duddon Sands)
˃ $8.2 bn investment into wind
˃ 61% was spent on three offshore projects (e.g. 350 MW
Wikinger, 277 MW Borkum Riffgrund)
˃ 2.5 times increase compared to 2013
˃ With 266% increase NL saw fastest growth in renewables
compared to 2013
˃ $3.8 bn investment for the 600 MW Gemini project
$53.2 bn
$13.9 bn
$11.4 bn
$6.4 bn
Details:Investment
2014
Source: Frankfurt School of Finance & Management, Global Trends in Renewable Energy Investment 2015,
1. Attractiveness of Wind Energy investments (with particular reference to regulation)

8. Page
… however, especially reforms in the national subsidy
mechanisms will increase competition for new builts
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 8
Rationale behind competitive auctioning:
˃ lower prices and correspondingly lower subsidy levels
˃ allow for budget and volume control to increase predictability of renewable energy supply
Country Subsidy mechanism Outlook
UK
Change from RO to CfD valid
from 2017 onwards
Clearing prices 10% lower in first
CfD auction compared to RO
Germany
Fixed feed in tariff; yearly
regression (PV quarterly)
Switch to general auctioning from
2017
Outcome of first PV auction
below expectations
Netherlands
Feed in premium including
auctioning system
Staged bidding process
(mechanism for Offshore
currently in development)
Poland
Green Certificates plus
wholesale price
Auctioning system beginning of
2016
1. Attractiveness of Wind Energy investments (with particular reference to regulation)

9. Page
An increasing number of investors discover the
renewable energy market for future growth…
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 9
Incumbent
Utilities
 Core
business
Many new players entering the market partnering with incumbent utilities to
tap on their competencies creating a win-win situation
Funds
 Investments in public market
equity
YieldCo
 Generating high cash-flow to
pass on to investors as dividend
Crowd-funding
 Investments in modest-sized
projects
Green Bonds
 Fixed-interest products
Development Banks
 Supporting expansion of
renewables via financing or equity
Institutional investors
 Asset-related low-risk and
predictable cash flow investment
2. Investment criteria for different shareholders

10. Page
… whereas the motivation and expectations of these
investors are similar.
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 10
MOTIVATION:
The renewable energy business becomes more and more attractive for investors from various fields:
˃ renewable assets entered a new stage of technological maturity
˃ renewables provide relatively high and stable returns in times of generally very low interest rates
˃ renewables are characterized by a favorable risk return ratio
EXPECTATION:
The renewable energy business becomes more and more attractive for investors from various fields but
requires:
˃ Long term stable investment climate
˃ No retroactive changes in legislation
˃ Necessity to earn back the invested capital to generate new investments
˃ Investors can manage project and market risks but regulatory risk only to a limited extent
˃ Avoid regulatory driven boom and bust cycles
2. Investment criteria for different shareholders

11. Page
It is clear that the traditional utility balance sheet
financing approach will not suffice
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 11
Combined 2008 Market
Cap : € 590 bn
Combined 2013 Market
Cap : € 260 bn
-56%
Market capitalisation of listed top utilities1 [€ bn]
91
68
89
125
51
47
28
25
1817
27
Feb 2008
16
GDF Suez
38
Iberdrola
41
25
E.ON EDF
24
Centrica
23
SSE
17 13
FortumRWE CEZ
10
Enel
25
National
Grid
33
Nov 2013
3,750
Euro
Stoxx 50
3,069
-18%
3. Alternative investment structures
1 Source: Reuters

12. Page
Alternative investment structures:
Example Nordsee One – project financing
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 12
Advantages Disadvantages
˃ Enable financing and
therefore construction of the
project even if the project’s
partner have not the
availability of the whole
financing amount
˃ Mitigating risks for sponsors
by non-recourse financing
˃ Better involvement of
international business
development banks, EIB and
export credit agencies
˃ Lower cash requirements,
only for the own equity share
˃ Off balance sheet structure
possible
˃ Higher external costs, due to
need of technical, legal,
financial and insurance
advisor
˃ Less flexibility in contracts,
all contract parties of the
project have to agree upon
the changes
˃ Reduce fungibility of the
project, selling parts of the
equity share in the project
requires the allowance of the
banks
˃ Complexity of structure is
much higher than for
corporate financed projects
˃ High mass of documentation
RWEI
15%
NPI
85%
Nordsee One
GmbH
.
Financing 30% Equity
10 Banks
Non-recourse
debt facility
agreement
REpower
Turbine supply
and warranty
agreements
Long-term
O&M of turbines
Contractors
3. Alternative investment structures

13. Page
Alternative investment structures:
Example Baltic 2 – EIB directly financing the sponsor
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 13
Advantages Disadvantages
˃ More flexibility in the contract
structure
˃ Less external costs by only
having one bank financing
the project via the sponsor,
no market sounding or
syndication cost necessary
˃ Less complexity in
structuring the projects
˃ Less cost and time for
negotiation needed, as there
is only one financing partner
˃ Off balance sheet structure
possible
˃ No non-recourse financing
possible, no risk mitigation
possible for sponsors
˃ On balance sheet structure,
only possible for investors
with a good financial
standing
3. Alternative investment structures
EnBW Macquarie
EnBW SPV
(Limited Partner)
Macquarie SPV
(Limited Partner)
General Partner OpCo
(Debt free)
EnBW Baltic 2 wind farm
long term
senior debt
0.02%
100%
50.09%
100%
49.89%

14. Page
Clear structural setup as prerequisite for professional
partnerships
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 14
Investment
Management
Service
Provision
Asset
Management
> Responsibility: Accountable for full portfolio of investments and responsible for
portfolio risk and result decisions
> Role: Commercially manage overall portfolio and risk profile by setting framework,
guidelines, and targets for optimisation on asset level and
(where applicable) procurement of enabling functions’ services via SLAs / KPIs
> Steering principle: Portfolio NPV
> Value Differentiator: Quality
> Responsibility: Accountable for asset(s) operations and responsible for asset
risk and result decisions
> Role: Commercially and technically manage asset(s) within framework set by
investment management including management of service providers which are
responsible for delivery on a day-2-day basis via SLAs / KPIs
> Steering principle: Asset(s) NPV
> Value Differentiator: Quality
> Responsibility: Responsible for service delivery and continuous improvement
> Role: Operationally responsible for delivery of services in quality and cost in line
with the defined SLAs / KPIs and in addition seeking to proactively support asset /
investment management in improving risk / result.
> Steering principle: KPIs and SLAs
> Value Differentiator: Cost, Quality or Flexibility
where
applicable
Board > Overall accountability for results (EBIT)
4. Organisational and structural implications

15. Page
Partnering for the expansion of renewables –
RWE Innogy demonstrates proven track record
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 15
Greater Gabbard > 504 MW
> 50% shareholder
> SSE lead operator in operation.
Rhyl Flats > 90MW
> 50.1% shareholder
> RWE lead operator
Gwynt y Môr > 576 MW
> 60% shareholder
> RWE lead operator
Dogger Bank
Forewind
> Up to 9000 MW
> 25% shareholder
Thornton Bank
C-Power
> 325 MW
> RWE Innogy is largest
shareholder at 26.7%
North Hoyle
Zephyr
> 60 MW
> 33% shareholder
> UKs first project financed
offshore wind farm
(+ other Belgian investment
& industrial companies)
Jüchen > 7 MW
> different stakeholders, e.g.employees
RWE Innogy, cooperative Bürger-
Energie, interested municipal utilities
> RWE lead operator
Green Gecco > 5 wind farms in Germany and the UK with
around 80 MW
> 51% Shareholder
> RWE lead operator
Zephyr > 331 MW
> 33% Shareholder
> RWE lead operator
Little Cheyne Court > 60 MW
> 59% Shareholder
> RWE lead operator
Middlemoor & Lindhurst
> 54 and 9 MW
> 51% Shareholder
> RWE lead operator
SuccessfulPartnerships
Offshore wind Onshore wind
4. Organisational and structural implications

16. Page
Case Study: Equity financial partnership – Greencoat UK
Wind plc
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 16
Green Investment Bank Greencoat UK Wind plc
RWE Innogy
Novusmodus LLC
(investment company)
Rhyl Flats Offshore
Wind Farm
Little Cheyne Court
Onshore Wind Farm
24.95%
24.95%
41%
£165.2m total investment
UK Government
59%50.01%
• 90 MW
• Constructed 2009 • 60 MW
• Constructed 2009
4. Organisational and structural implications

17. Page
Case Study: Equity strategic partnership – Gwynt y Môr
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 17
Gwynt y Môr
Offshore Wind Farm
10% 30% 60%
• £2.2 billion investment
• 576 MW
• Completion 2015
4. Organisational and structural implications

18. Page
Case Study: Equity municipal ownership – Green Gecco
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 18
Municipality A Municipality B Municipality C
RWE InnogyInvestment Holding Company
Green Gecco GmbH & Co. KG
Example 1 Example 2
49% 51%
• 20 MW Onshore wind farm
• An Suidhe in Scotland
• 20 MW Onshore wind farm
• Titz in Germany
> 120 m€ invested into 5 wind farms
with total capacity more than 80 MW
4. Organisational and structural implications

19. Page
Investments especially into wind energy will be one of
the major areas for future growth of utilities
29/05/15European Trends in Wind Energy Investment 2015 - a utilities' perspective 19
CHALLENGES:
˃ 2015 and 2016 will be characterized by a transition phase …
˃ … from subsidy mechanisms that were rather
focused on rapid expansion of wind energy
˃ … to more competitive subsidy mechanisms
that bring down subsides and allow for budget
and volume control to increase predictability
of renewable energy supply
Opportunities:
˃ Renewables play an important role in limiting global emissions
˃ Renewables are more and more seen as a stable and low risk investment by various investors
˃ Levelised cost of energy are continuing to fall due to technological progress; e.g. onshore wind (2009
vs. 2015: drop of 11.5% from $96 to $85 per MWh)
5. Investment outlook
Admin Strike
Price
Lowest
Clearing Price
% saving
Offshore 140 £/MWh 114.39 £/MWh 18%
Onshore 95 £/MWh 79.23 £/MWh 17%
First UK CfD auction 2015:
Saving on admin strike price for On- & Offshore

20. Thank you very much for your
attention!