1. EirGrid Group Customer Conference 2009 Key Industry Changes A new entrant’s perspective 13 th October 2009 Miguel Gonzalez Engineering Manager Endesa Ireland

2. Note: YE08 proforma figures (considering asset disposals to Acciona and including ESB) Presence in 10 countries Installed capacity: 39 GW Output: 147 TWh Customers: 24 million Employees: 27 thousand Core business: energy No.1 in Spanish electricity sector. Leading private electric utility in Latin America Present throughout the entire electricity and natural gas value chain A global dual power operator 2

3. ~ 40% Endesa ~ 60% Endesa Latin America 15 GW of installed capacity Output of 61 TWh 12 million customers E urope 24 GW of installed capacity Output of 86 TWh 12 million customers Note: YE08 proforma figures (considering asset disposals to Acciona and including ESB) A geographically diverse asset base 3

4. Endesa installed capacity: 39GW Breakdown by technology49% of the generation mix is carbon- free 49% carbon-free 51% fossil fuels Renewables 3% Nuclear 17% CCGTs 17% Hydro 29% Fuel gas 13% Coal 21% Note: YE08 proforma figures (considering asset disposals to Acciona and including Endesa Ireland) A diversified energy mix 4

5. Ireland in the context of European gas and electricity markets (i) In the European context, Ireland is a small market: Total installed capacity:  7,000 MW Peak load:  4,800 MW Total annual consumption:  27,000 GWh Around 2 million customers Demand growth in the last 10 years > 4% annual 2009 demand has decreased and it is expected to take 4 years to return to 2008 demand levels. Electricity demand 1997 - 09 Demand per-capita EU 15 > 20 GW Germany Spain France UK Italy Netherlands Sweden Norway Poland 10-20 GW Austria Belgium Denmark Finland Greece Portugal Czech Rep. Romania Switzerland < 3 GW Luxemburg Cyprus Estonia Latvia Slovenia Installed capacity by country Source: Eurelectric, EirGrid, International Energy Agency 5

6. Ireland in the context of European gas and electricity markets (ii) Ireland prices are still sensitive to Oil prices during winter peak, while NBP gas prices seem to be ruling during summer New CCGT capacity will also link Irish electricity prices to NBP gas during winter time Italy still shows the influence of Brent prices, as piped gas is mainly indexed to Brent Spain enjoys low prices due to increasing levels of wind energy, in addition to a well diversified piped gas and LNG supplies 6

7. 7 Ireland regulatory framework In summary, a relatively well balanced framework, with room for some improvements... Reasonably covers Capital Cost of Marginal Units (Distillate GT BNE) Needs to develop stability and predictability Tariff based, but this tariff doesn’t reflect real costs Market bids would better represent costs and would optimize total system cost (mainly for operative reserves) Needs improving to incentivize the most flexible (and expensive) technologies SMP based on Short-Run Marginal Cost Merit Order dispatch is an incentive for efficient technologies Variable costs naturally hedged Some costs not included (gas transmission costs)... but any change has to take into account the whole picture to avoid instability.

8. A great opportunity within reach … Wind power installed capacity in Europe in MW (2008) 7,0% 11,8% 1,7% 1,2% 1,8% 21,2% 9,3% 3,4% 1,3% 8,4% 3,3% 3,7% 3,8% Wind share of demand (2007) Source: EWEA (European Wind Energy Association), Eurostat....and also the framework to make it happen: REFIT Tariff Capacity Payments Ireland has some of best European wind areas with optimum conditions… 8 c. 5400 MW by 2020

9. …with many challenges ahead, but with technical solutions available 9

10. 10 In 10 years time the Irish system will show totally different characteristics and performance: Different Inertia Constant Different Generation Distribution Different Frequency Regulation Different Behaviour Feeding Faults Small Signal Stability issues may arise The Transmission Network strength is Key: Optimum Economical Dispatch (unconstrained) Optimum Renewable Production (remote areas) Optimum Secondary Regulation (AGC) N-1 criteria Lower System Impedance: More Effective Voltage Support Higher Short-Circuit ratios Improved Stability Limits SPAIN 200620072008 Wind Cap MW (EWEA) 159535081609 Circuit km (REE)200620072008 400 kV196130552 220 kV21037101 Graphs from L. Rouco « Wind Power Generation: Generator Technology vs. Grid Integration » Cigre Study Committee A1 Meeting

11. …with many challenges ahead, but with technical solutions available 11 The development of interconnections: Improved inertial response Instantaneous support in emergency conditions HVDC links can provide additional control features Interconnection Trading as a source of: Flexibility Renewables Production optimization (when excess) Flexible plants economical feasibility may improve Long term plan for Regional Market development Interconnection Trading rules must be revised Firm capacity must be maintained Harmonization on Gate Closure with BETTA Market Rules must be stable, predictable and comprehensive: Modifications in small steps with overall view Capacity payments need some adjustments Ancillary Services should be market based Develop a Balancing Market for System Operative Reserves Current Tariffs are not an incentive

12. …without forgetting the remaining 60% for Security and Flexibility 12 Resources available in the country that provide security Resources providing flexibility Critical aspect is the performance of the national Gas System With diversified resources: Resources from geopolitically stable origins and proved long term reserves LNG & depleted gas fields used as storage are a valuable source of flexibility 2020 - 60%

13. 13 …special mention to the gas system The Gas System will be critical to meet the challenge as a major source of security and flexibility. Natural Gas is a cleaner fuel than Distillate Dry Low NOx burners don’t need water injection The implicit storage in the pipe itself can accommodate sudden peaks of consumption Ireland has potential storage in depleted fields which are valuable resources to shave market peaks and secure strategic reserves LNG facilities are a great source of flexibility for the gas system, as well as security of supply 100 MW Aeroderivative GT latest technology needs: 220 HL/hour of Distillate 68 HL/hour of Demin Water 17 T/hour CO2 emissions higher than natural gas 100 MW Aeroderivative GT latest technology needs: 220 HL/hour of Distillate 68 HL/hour of Demin Water 17 T/hour CO2 emissions higher than natural gas One typical truck carries 300 HL At full load, one truck would be needed every 1 h 20 min One typical truck carries 300 HL At full load, one truck would be needed every 1 h 20 min In the event of a extended period of calm weather, the replacement of, i.e. 1.000 MW with this units would make circa 80 Distillate trucks on the roads per day. Distillate GT’s as BNE?

14. …and with the right technologies. 14 With attention to: Electric Vehicles Domestic Fuel Cells Microgeneration Smart Metering Efficient Demand As potential sources of: Flexibility Network Optimization Peak/valley shaving

15. 15 The target is getting a balanced and competitive mix

16. Thanks for your attention Miguel Gonzalez Engineering Manager Endesa Ireland miguel.gonzalez@endesaireland.ie