L EOLICO LA RINNOVABILE EFFICIENTE PULITA E DISPONIBILE Rome

L’EOLICO: LA RINNOVABILE EFFICIENTE, PULITA E DISPONIBILE Rome, 15 th of June, 2011

Market and Geography Evolution of installed capacity in the word Wide geographical distribution derived from the maturity of the industry, increased 194 GW support schemes and the globality of the wind resource Source: GWEC. Global Wind Report 2010 2

Market and Geography Evolution of installed capacity in the word Annual forecast by Region 2010 -2015 Just a few years ago wind energy was considered a premium technology only for rich countries because too expensive. In 2010 more new wind power capacity was installed in developing countries and emerging economies than in the traditional wind market in the OECD. In the future wind generation will play an important role in the country's power mix Success key: q Improve the security of supply in the face of rapidity growing demand q Relieve the national budget of the burden of expensive fossil fuel imports at volatile price q Environmental factors : air quality, public health and carbon reduction commitment Source: GWEC. Global Wind Report 2010 3

Market and Geography Price reduction trend 75% Source: EWEA 2009 Also thanks to the increase of wind energy installed capacity cost of turbines has decreased during last three years. . . and additionally, the Capex/MWh will be improved by more efficient turbines 4

In Europe Renewables Energy Policy Since 1997, the European Union has had a successful renewable energy policy which has enabled significant progress to be made towards the EU’s objectives of q reducing greenhouse gas emissions, q ensuring security of supply and q improving EU competitiveness. Net electricity generating installations in EU 2000 – 2010 (MW) Wind 38% 76 GW Source: EWEA 2011 5

In Europe Renewables Energy Policy Due to the early adoption of ambitious national and EU targets, q European companies are world leaders in wind power technology, q Europe today gets approximately 20% of its electricity from renewable energy sources, including 5. 3% from wind energy. In 2020, according to the Renewable Energy Directive’s 27 National Renewable Energy Action Plans, q 34% of the EU’s total electricity consumption will come from renewable energy sources, including 14% from wind energy (41% of Renewables) 6

IBERDROLA INDEX • IBERDROLA IN THE WORLD • IBERDROLA RENOVABLES 7

IBERDROLA WIND SUN ENGINEERING DISTRIBUTION HYDRO PRODUCTION CCGT NUCLEAR MERCHANDISING GAS 8

IBERDROLA IN THE WORD 9

IBERDROLA IN THE WORLD MAIN DATA 2010 MW Installed: 44. 991 MW Energy production: 154. 073 GWh Distributed Energy : 203. 090 GWh Electrical Cable (transport): 31. 484 Km Electrical cable (distribution): 798. 221 Km IBEDROLA is the sixth Utility in the World for capitalization in the Stock Exchange For the consecutive eleventh year IBERDROLA has been selected in the Dow Jones Sustainability indexes Gas Supply: 157. 420 GWh Clients: 24, 5 (mill) Employers: 29. 641 10

IBERDROLA IN THE WORLD IBERDROLA INSTALLED POWER (MW) • CCGT • Nuclear • Renewable • Hydro • Coal • Cogeneration 13. 128 MW 3. 344 MW 12. 532 MW 9. 892 MW 4. 709 MW 1. 229 MW 27, 85% of Iberdrola installed power

IBERDROLA ARGOMENTI • IBERDROLA IN SPAGNA & NEL MONDO • IBERDROLA RENOVABLES 12

Iberdrola Bet on wind power 13

Iberdrola Bet on wind power After adding 1, 540 MW in the last 12 months, the Iberdrola now has an installed capacity of 12, 834 MW, strengthening its position as world leader in the Renewables sector Wind energy forms the core of IBERDROLA RENOVABLES’ business accounting for 97. 1% of output Pipeline At the end of 2010, IBERDROLA RENOVABLES has a project portfolio of 62, 613 MW. In terms of technology types: q 97. 3% correspond to wind power energy q and 2. 7% to other renewable energies. 14

Italy 2020 NREAPs Renewables’ share of electricity consumption per Member State (%) in 2020 according to the NREAPs Wind energy share of electricity consumption in Italy from 3, 4% in 2010 to 5, 3% in 2020 Vs 14% of European average NREAP 2020 12 GW ANEV 2020 estimation 16 GW

Italia Wind potential Wind energy average investments until 2020 Tecno 1: Feasible potential of RES according to Position Paper Italian Government (September 2007 estimation). 2, 300 M€/year Tecno 2: Feasible potential of RES according to IEA and UE Commission. 3, 200 M€/year Sources: Other scenarios BAU (Business as usual): Current market trend. Vinco 1: Required potential of RES according to Italy´s UE obligations 17% in 2020 (September 2007 estimation) Vinco 2: Same as Vinco 1 but considering energy efficiency measures.

“Oil and other hydrocarbons are a limited resource, and our own internal reserves are dwindling. Today we import around 50% of our energy. By 2030 that will be nearer 70%, if we continue with current policies. At the same time, with the rise of new economic giants like China and India, global demand for these hydrocarbons is increasing (. . . ) With its emphasis on renewable energy and a transformation to a low carbon economy, this revolution will help us to strike a major blow in the fight against climate change. At the same time, it will improve Europe’s energy security, and decrease geopolitical tensions. ” José Manuel Barroso “Europe’s energy policy and the third industrial revolution”; Madrid 1 October 2007. 2050”. Statement May 2010.

Italia Wind potential More than 243 billion US$ invested in clean technologies in 2010 96 billion US$ in WIND, 40% of total investments Investment in Clean Energy Wind keys: q Stable generation costs. Investment costs more longterm competitive q Jobs in rural areas contributing to its economic and social development q Represents an opportunity to develop a new domestic industry with high added value Source: BNEF (Data includes investment in renewable energy, biofuels, energy efficiency, smart grid, CCS and investments in infrastructure exclusively for the integration of 'clean energy‘)

CORE Toledo

Thanks Valerio Faccenda IBERDROLA RENOVABLES ITALIA S. p. A. Via dei Gracchi, 151 00192 Roma Telephone: +39 06 323 4167 Email: vfaccenda@iberdrola. com

Regulatory Renewable Regulatory decree n 28 of 3 th March 2011 q European Renewable Energy Directive (2009/28/EC): the National Renewable Energy Action Plan states a target for Wind Energy of 12. 000 MW within the next 9 years. Until now in Italy it is installed about 6. 000 MW. q The Legislative Decree n. 28 (published on 28 th March 2011) introduces the principles for the new Italian incentives scheme for the Renewables in order to achieve Italian obligations. q Linked to the Decree n. 28, some Implementing Decrees will enter into force within the 30 th of September and they will define all the details of the new incentive scheme (prices, mechanisms) q In order to ensure the profitability of the investments already made, the Decree n. 28 establishes particular conditions for the Renewable plants entering in operation BEFORE 1 th of January 2013 21

Regulatory Renewable Regulatory decree n 28 of 3 th March 2011 (Published on 28 th March 2011) Renewable plants in operation BEFORE the 1 st of January 2013 q The GSE delivers the GCs on a monthly basis (until now was on a yearly basis) q Obligation for the GSE to buy the exceeded GCs 2011 – 2015 q GCs price will be fixed until 2015 = 78% of Reference Price (180 €/MWh – POOL) q From the 2016 a FIT (Feed – In Tariff) will be assigned : fixed during the residual period of incentive. q The FIT value will be established by the Implementing Decrees within 30 th of September, but reasonably it shouldn't be so different from the GCs value in 2015 (the principle is to warrant the profitability of the existing investments) GREEN CERTIFICATES 2011 2012 2013 2014 FIT FEED IN TARIFF 2015 2016 2017 2018 2019 2020 2021 … 22

Regulatory Renewable Regulatory decree n 28 of 3 th March 2011 Renewable plants in operation AFTER the 1 st of January 2013 * q CAPACITY THRESHOLD (CT): An Implementing Decree will define a Capacity Threshold (this value will depend on energy source, in any case will not be lower than 5 MW – for wind it is estimated at least 2030 MW): Ø For WF smaller than CT a FIT will be assigned DIRECTLY; Ø For WF bigger than CT a FIT will be assigned by an AUCTION managed by GSE q CATEGORIES CAPACITY. The FIT value directly assigned will depend on the size: higher for WF with lower capacity. q FLOOR In the Auction process will be established an minimum incentive (“to insure the return of the investment”) q DURATION OF INCENTIVE. The FIT will be fixed and valid during all the WF service life. FIT DIRECT ASSIGNMENT Installed Capacity < CT FIT AUCTION Installed Capacity < CT PRICES LOWER THAN BEFORE BUT FIXED (NO UNCERTAINTY) 23

Regulatory Main Italian Wind Companies Workshop promoted by IBERDROLA q Workshop target • Achieve a shared proposal, follow up and lobby to influence in the IMPLEMENTING DECREES definition (30 th Sept) • Improve the influence in the National Wind Energy Association (ANEV). q Other target • IBERDROLA is a member of Directive Committee of ANEV (CM is Vice-president) Companies not invited in the Workshop because especially interested in conventional energy 24

Regulatory Main Italian Wind Companies Workshop promoted by IBERDROLA POSITION PAPER q INCENTIVES AFTER 2015: In order to not jeopardize the investments already realized warranting of profitability: after the 31/12/15 the incentives should be fixed all along the wind farm service life and equal to the average value of GC in the previous 5 years. q FEED IN PREMIUM: The incentive should be a FIP (feed in premium) instead of a FIT (feed in tariff). It could avoid disadvantage of Price Energy increases and It could reduce the negative effects of the inflation. q AUCTION MECHANISM: ü CAPACITY THRESHOLD (CT) = 50 MW Only the WF with a capacity bigger than 50 MW will participate to the Auction, the others ones will directly get a FIP ü FLOOR The WFs participating to the auction will get in any case a minimum incentive (Floor) that warrants the profitability ü MINIMUM REQUIREMENTS TO PARTECIPATE: The bidders should have a consolidated know-how and a proven financial capability ü Two different Auction procedures; Ø Permits and incentive assignment for WF off-shore or bigger than 100 MW. Ø Only incentive assignment for WF with power between 50 and 100 MW (projects already authorized) q OTHER PROPOSALS The workshop also drew up some proposals regarding the plant repowering and simplification of the authorization proceeding