1. Investment projects in energy sector – a perspective of HEP Group Ivona Štritof, HEP d.d. Brussels, hotel Thon EU, 21st Jan 2015

2. HEP Group at a glance Operating across the entire market spectrum 2 Mission To provide secure and quality energy supply to customers, with a high degree of social responsibility. Vision HEP Group as a strong regional, modern and socially responsible company, recognized as an example of efficient energy generation and supply to customers.

3. Investment projects’ pillars in the EU context Climate Action and Energy Reform and reorganise Europe’s energy policy in a new European Energy Union CEF Energy (electricity and gas) An amount of €5.85 billion will be made available for improving the trans-European energy infrastructure for the period 2014-2020. Operational Programme Competitiveness and Cohesion 2014 - 2020

4. HEP Group - Project list LNG Hrvatska d.o.o. Program Sava d.o.o. HEP d.d. Construction of a regasification terminal in Omišalj on the island of Krk (760mil€) Multipurpose hydro-engineering system project - protection, development and utilization of river Sava from Slovenian border to Sisak (Zagreb on Sava), including 7 HPPs with total installed capacity of 150 MW (1208 mil€) *Share of energy production of the entire programme is around 40%. TPP Plomin location - CO 2 storage HPPs projects – Molve, Osijek, Senj

5. CEF Energy (electricity and gas) The first PCI list was adopted by the EC in October 2013 and the TEN-E Regulation no 347/2013 foresees that it shall be updated every two years.no 347/2013 Corridor (“NSI East Gas”) i. Cluster Krk LNG including the following PCIs: LNG Regasification vessel in Krk (HR) Gas pipeline Zlobin – Bosiljevo – Sisak – Kozarac – Slobodnica (HR) LNG evacuation pipeline Omišalj – Zlobin (HR) – Rupa (HR)/Jelšane (SI) – Kalce (SI) or Gas pipeline Omišalj (HR) – Casal Borsetti (IT) ii. PCI Interconnection Croatia – Slovenia ( Bosiljevo – Karlovac – Lučko – Zabok – Rogatec (SI)) Corridor (“NSI East Electricity”) i. Cluster B&H– CRO: Interconnection Banja Luka (B&H) - Lika (HR) Internal lines Brinje, Lika, Velebit & Konjsko (HR) ii. Cluster CRO – HU – SLO : Interconnection Žerjavenec (HR)/Heviz (HU) and Cirkovce (SI) Internal line Divača - Beričevo (SI) Internal line Beričevo - Podlog (SI) Internal line Podlog - Cirkovce (SI)

6. OP Competitiveness and Cohesion 2014 - 2020 Open issues: State aid Eligibility ITI Opportunities for HEP projects to be funded from the ESI funds Three-folded role: Direct user Partner Service provider PA 4 - Supporting the shift towards a low- carbon economy in all sectors Supporting energy efficiency, smart energy management and renewable energy use in public infrastructure, including in public buildings, and in the housing sector (energy efficincy in housing, district heating..) Developing and implementing smart distribution systems that operate at low and medium voltage levels (distribution operator) PA 7 - Promoting sustainable transport and removing bottlenecks in key network infrastructures Developing and improving environmentally-friendly and low- carbon transport systems PA 1 - Strengthening research, technological development and innovation Promoting business investment in R&D

7. Improvement of the efficiency of district heating system – SO 4c3 The main goals of the projects are: decrease of energy losses in distribution network, decrease of ratio of water added to the network volume, improvement of the energy efficiency of plants producing thermal energy and increase of share of the RES used in production of thermal energy Time line: 2015 - preparation of project documentation and project application 2016 - start of project implementation Integrated territorial investments (ITI) - financial instrument 7 cities: Zagreb, Split, Rijeka, Osijek, Slavonski Brod, Zadar, Pula, Purpose: sustainable urban development (min. 5% of ERDF) based on an integrated strategic documents that include economic, environmental, climate and social aspects and take care of connecting the city with the surrounding area.

8. Projects No.The name of the project DescriptionEstimated cost (mil€) 1. The revitalisation of hot water pipelines in Zagreb The replacement of 100 km of old classical hot water pipelines by new preinsulated ones. 104,5 2. The revitalisation of main hot water pipeline from cogeneration plant TE- TO Osijek to heating plant from HEP- TOPLINARSTVO The replacement of existing main hot water pipeline DN 550 with the new one DN 800. 9,1 3. The construction of central heating system in Velika Gorica, Zaprešić and Samobor The modernisation of existing local plants, the connecting of local plants in mentioned areas with the common distribution network, introducing the cogeneration system and renewable energy resources. 13,4

9. No.The name of the projectDescriptionEstimated costs (mil HRK) 1. Investments in Systems for management Standardization of the system, interconnections and improvement of the management system. 24,8 2. HV(MV)/MV substation refurbishment and SCADA implementation Aim is to make SCADA more efficient by implementing it in every HV(MV)/MV substation. Results in less outages and shorter fault duration. 10 – 15 per year 3. Automation and management per depth of grid It is necessary to create strategic document in which system concept and requirements on individual components of distribution network would be defined 20 – 30 per year (continuously from 2017) 4. Implementation of new smart technologies Programme connected with project 4. At the moment realization of small pilot projects 2 for 2015 5. Advanced Metering Infrastructure It is planned to install 5.900 smart/advanced meters in pilot phase. In the second phase the goal is to install advanced metering devices for measurement of total energy consumption in low-voltage substations 8 yearly Investment programme in implementation of smart grids (SO 4d1)

10. Energy Efficiency and Renewable Energy Sources Info Centres –20 centres (public awareness, education etc.) energy service providing company - ESCO concept - develops, executes and finances EE projects on a commercial basis buildings public lightening industry energy supply systems Thermography –HEP ESCO service Supporting energy efficiency (PA 4)

11. eMobility (Electric charging infrastructure) Partners Local and regional authorities Academic and research institutions Producers PA 1(b) – Strengthening research, technological development and innovation (refering to promotion of investments in product and service Development) PA 7(ii) - Promoting sustainable transport and removing bottlenecks in key network infrastructures (refering to environmentally- friendly and low- carbon transport systems)

12. Q & A Thank you for your attention Ivona Štritof EU and Regulatory Affairs Department ivona.stritof@hep.hr www.hep.hr HEP - more than electricity 12