EDPR Presentation March 2011 Istanbul

I.EDPR II.Designing an attractive renewable framework Remuneration and processes Lessons learnt III.Application to Turkey Agenda

2 A balanced wind portfolio located in highly selective attractive markets 1H10 EBITDA MW + Eólicas de Portugal Portugal Spain Brazil US UK France Belgium Italy Romania Poland Under construction Pipeline + prospects Installed 8 European countries, 26 States in the US, Brazil and Canada Canada

3 Consistent delivery of strong growth in installed capacity Historic Capacity Growth (Gross MW) Consistently delivering targets and a robust growth over the past 4 years Back-end loaded installation profile driven by wind farm construction schedule Capacity installed during 2009 to deliver stable cash-flows from 2010 onwards CAGR >40%

: Executing a flexible growth strategy and taking advantage of optionality to maintaining the risk profile EDPR’s average annual capacity additions (Gross GW) Flexible growth by adjusting the pace to current economic and market environment… EDPR’s new additions geographic breakdown (% of EBITDA MW + ENEOP) Gross MW EBITDA MW …re-balancing the portfolio to maintain the low risk and high visibility profile of the company US EU BR

I.EDPR II.Designing an attractive renewable framework Remuneration and processes Lessons learnt III.Application to Turkey Agenda

What do stakeholders seek? Renewables investors Governments Low riskHigh return Low returnHigh risk Develop local industry Pay exactly what is needed (avoid risk of over/under paying) Minimise system costs Feed-in tariffsMarket systems

There are four general policy systems to promote wind energy Although hybrid systems are often put in place Feed- in tariff Market price + Green Certificate Tenders Financial and tax incentives Main systems Secondary systems System description Producers of green electricity receive a fixed price (normally set for a period of several years) A variant of the feed-in tariff scheme is the fixed premium scheme in which a premium is paid above normal electricity spot price Renewable energy has two revenue streams: − Conventional power prices from the conventional market − Revenues from the sales of green certificate in a secondary market Secondary market is created when government forces a participant in the supply chain (generators, suppliers) to prove that part of its supply has GCs associated to them, thus creating demand for GCs Renewable energy producers supply GCs Price for GCs is set by market supply and demand The State places a series of tenders for the supply of renewable electricity: − Selection based on price and other quantitative criteria (scoring system) − Electricity supplied on a contract basis at the price resulting from the tender − Additional cost typically passed on to end consumer through a specific levy Reduction or exemption of electricity taxes applied to all producers Investment grants as a reduction of capital and/or total costs due to low interest loans

Each Government has to weigh up to pros and cons of every system before deciding the system to implement Feed- in tariff Simple and low cost: easy to implement and supervise Reduces regulatory and market risk for investors and loan risk for financial companies A stable investment environment promotes the development of manufacturing Effective in promoting different technologies Risk of over/under funding: -It can be partially compensated with market monitoring and adjustment -Need to adjust tariffs as targets are achieved or market conditions change AdvantagesDisadvantages Market price + Green certificates If working well, they lead to the best cost solution because is a market instrument If it works well, the targets are exactly met Increased risk and required return for investors, thus increasing effective costs, due to volatility & uncertainty on future prices Administrative costs System may not create enough incentives to invest. Since companies may avoid buying the GC by paying a penalty, GC price may not rise to a level to make investment profitable Needs a banding to promote different technologies Tax incentives Easily linked with existing fiscal and financial structures Does not create long-term certainty of investments Risk of over/under funding Tenders Long term captaincy about receiving support Bidding price can fall so low that contracts cannot be fully implemented Increases project preparation costs The stop-and-go nature does not conduct to stable conditions

Most of the European successful countries have a feed- in tariff systems Germany Spain France Denmark Portugal Greece Austria Italy UK Sweden Poland Belgium Netherland s Finland Switzerland Capacity installed in 2009YE by regulatory system Feed- in tariff Market price plus Green Certificates Others MW

Two main issues to consider when designing a framework for wind energy Policy design (Financial support) Permitting process A regulatory framework that provides financial incentives for investors to participate in the development of wind energy market Wind developers need to fulfil different steps to obtain the necessary permits and the grid connection Main steps are administrative processes (Environmental Impact Assessment permit, building permit, among others) but also includes the access to the grid

Policies on permitting and licensing, and grid issues are also critical to meet wind energy penetration Permitting and licensing Grid related issues IssueTypical barriersPossible solution Set deadlines for the administrative process: if the authority is not able to meet the deadline, the project goes automatically to the next stage Reduce the number of authorities involved Provide a clear, streamlined and transparent procedure and decision- making process Complex and time consuming process Many institutions involved No clear authorization procedures Long time to obtain extensions or reinforcements in the grid No transparent rules for bearing and sharing the necessary grid investment Reduce the average grid connection lead time by setting deadlines for the administrative process, and training and allocating the necessary civil servants to handle the applications Reinforce transmission system Lower the connection cost by: - making the transmission operator contributing to the cost - adapting the cost to the project size

12 Overview of the regulation in the main geographies France Unchanged € 87 Feed-in Tariff Spain Agreement between Industry Ministry and wind sector € 84 Pool + Premium Feed-in Tariff US Ongoing discussion on Energy Bill $ 48 (1) Power + REC Tax Incentives Romania Legislative update for the renewable sector € 134 (2) Green Certificate Poland Unchanged Green Certificate € 98 (2) Unchanged € 95 Feed-in Tariff Portugal Notes: (1) excluding institutional partnership revenues; (2) based on 2009 market price + green certificates CountryRegulatory Update Remuneration Scheme EDPR: 2009 Realized Price

I.EDPR II.Designing an attractive renewable framework Remuneration and processes Lessons learnt III.Application to Turkey Agenda

Main lessons learnt from countries that have achieved large wind deployment Long-term political targets Predictable revenues Transparent and straightforward permitting Avoid fragmentation Tenders Successful countries in developing wind energy, have set long-term political targets and have drawn up structured action plans supported at the highest level to reach them It´s essential to provide a stable framework with predictable revenues that assure the profitability of the project It´s necessary to create a process that will facilitate increase generation in a timely and simple manner Transparent rules for bearing and sharing the necessary grid investment costs are necessary Fragmentation can prevent wind development, specially in countries with low wind penetration The allocation of groups of capacity, together with the development of industrial projects can be an effective tool to avoid fragmentation and spur the economy

Minimum annual generation of GWh (~4% of electricity in ) Electricity supply for more than 2,3 M inhabitants Allocated capacity committed operators to develop an Industrial Project EDPR’s consortium, in which EDPR ‘s participation was 40%, won the tender for the MW installed capacity together with TP, Finerge and Generg, and Enercon Turbine Supplier Energy system Investment Development of National economy Regional development & employment Tender Description Direct investment of M€ between Wind farm development: M€, factory units and associated services: 161 M€ and founding for the National Scientific System: 35 M€ Industrial project will represent 2,5% of the Regional Product (Minho-Lima) Reduction of regional socio economic differences Creation of new long term jobs indirect jobs Increase on exports >60 % of generation will be exported Decrease on generator component and raw material imports More than 1MtonCO 2 not emitted per year: 24 M€ annually saved and avoidance of ~80 M€ of external fuel payments Tenders are sometimes used to create a positive impact for the economy Example: Portugal - ENEOP Tender system for MW capacity allocated Benefits for the country 5 Back-up

I.EDPR II.Designing an attractive renewable framework Remuneration and processes Lessons learnt III.Application to Turkey Agenda

With an adequate remuneration scheme, Turkey will be poised for growth Long-term political targets Predictable revenues Transparent and straightforward permitting Fragmentation Issue Evaluation of current situation Comments The Ministry of Energy announced its target to install 20 GW of wind energy by 2020 Feed-in tariff is not enough by itself to make investment attractive and currently wind farms are selling energy in the wholesale market New energy law In November 2007, EMRA received wind farm applications for 78 GW The first production licenses have been issued only after 3 years Nearly 58 GW of the 78 GW applications came from 20 companies