L’EOLICO: LA RINNOVABILE EFFICIENTE, PULITA E DISPONIBILE

Rome, 15th of June, 2011

Market and Geography

2

Evolution of installed capacity in the word

Source: GWEC. Global Wind Report 2010

Wide geographical distribution derived from the maturity of the industry, increased support schemes and the globality of the wind resource

194 GW

Market and Geography

3

Evolution of installed capacity in the word

Source: GWEC. Global Wind Report 2010

Annual forecast by Region 2010-2015

Success key: Improve the security of supply in the face of rapidity growing demand Relieve the national budget of the burden of expensive fossil fuel imports at volatile price Environmental factors : air quality, public health and carbon reduction commitment

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

Market and Geography

4

Price reduction trend

Also thanks to the increase of wind energy installed capacity

cost of turbines has decreased during last three years...

75%

Source: EWEA 2009

...and additionally, the Capex/MWh will be improved by more efficient turbines

In Europe

5

Renewables Energy Policy

Source: EWEA 2011

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 reducing greenhouse gas emissions, ensuring security of supply and improving EU competitiveness.

Net electricity generating installations in EU 2000 – 2010 (MW)

Wind

38%

76 GW

In Europe

6

Renewables Energy Policy

Source: EWEA 2011

Due to the early adoption of ambitious national and EU targets,European companies are world leaders in wind power technology,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, 34% of the EU’s total electricity consumption will come from renewable energy sources, including 14% from wind energy (41% of Renewables)

7

IBERDROLA

•IBERDROLA IN THE WORLD

•IBERDROLA RENOVABLES

INDEX

8

IBERDROLA

GASNUCLEARCCGT

HYDRO

WIND SUN ENGINEERING DISTRIBUTION

MERCHANDISINGPRODUCTION

9

IBERDROLA IN THE WORD

10

IBERDROLA IN THE WORLD

MW Installed: 44.991 MW

Employers: 29.641

Clients: 24,5 (mill)

MAIN DATA 2010

Distributed Energy : 203.090 GWh

Electrical Cable (transport): 31.484 Km

Electrical cable (distribution): 798.221 Km

Energy production: 154.073 GWh

IBEDROLA is the sixth Utility in the World for capitalization in the Stock Exchange

Gas Supply: 157.420 GWh

For the consecutive eleventh year IBERDROLA has been selected in the the Dow Jones Sustainability indexes

11

• CCGT 13.128 MW• Nuclear 3.344 MW• Renewable 12.532 MW• Hydro 9.892 MW• Coal 4.709 MW• Cogeneration 1.229 MW

27,85% of Iberdrola installed power

IBERDROLA INSTALLED POWER (MW)

IBERDROLA IN THE WORLD

12

IBERDROLA

•IBERDROLA IN SPAGNA & NEL MONDO

•IBERDROLA RENOVABLES

ARGOMENTI

Iberdrola

13

Bet on wind power

Iberdrola

14

Bet on wind power

PipelineAt the end of 2010, IBERDROLA RENOVABLES has a project portfolio of 62,613 MW. In terms of technology types: 97.3% correspond to wind power energy and 2.7% to other renewable energies.

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

Italy2020 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 2020Vs

14% of European average

NREAP 202012 GW

ANEV 2020 estimation16 GW

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.

ItaliaWind potential

“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.

More than 243 billion US$ invested in clean technologies in 2010

Investment in Clean Energy

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‘)

96 billion US$ in WIND, 40% of total investments

ItaliaWind potential

Wind keys:

Stable generation costs. Investment costs more long-term competitive

Jobs in rural areas contributing to its economic and social development

Represents an opportunity to develop a new domestic industry with high added value

CORE Toledo

Valerio Faccenda

IBERDROLA RENOVABLES ITALIA S.p.A.  Via dei Gracchi, 151   00192 Roma 

Telephone:   +39 06 323 4167Email: vfaccenda@iberdrola.com

Thanks

RegulatoryRegulatory

21

Renewable Regulatory decree n 28 of 3th March 2011

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.

The Legislative Decree n. 28 (published on 28th March 2011) introduces the principles for the new Italian incentives scheme for the Renewables in order to achieve Italian obligations.

Linked to the Decree n.28, some Implementing Decrees will enter into force within the 30th of September and they will define all the details of the new incentive scheme (prices, mechanisms)

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 1th of January 2013

RegulatoryRegulatory

22

The GSE delivers the GCs on a monthly basis (until now was on a yearly basis)

Obligation for the GSE to buy the exceeded GCs 2011 – 2015

GCs price will be fixed until 2015 = 78% of Reference Price (180 €/MWh – POOL)

From the 2016 a FIT (Feed – In Tariff) will be assigned : fixed during the residual period of incentive.

The FIT value will be established by the Implementing Decrees within 30th 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)

Renewable plants in operation BEFORE the 1st of January 2013

Renewable Regulatory decree n 28 of 3th March 2011 (Published on 28th March 2011)

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 …

GREEN CERTIFICATES FITFEED IN TARIFF

RegulatoryRegulatory

23

* 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 20-30MW): For WF smaller than CT a FIT will be assigned DIRECTLY; For WF bigger than CT a FIT will be assigned by an AUCTION managed by GSE

CATEGORIES CAPACITY. The FIT value directly assigned will depend on the size: higher for WF with lower capacity.

FLOOR In the Auction process will be established an minimum incentive (“to insure the return of the investment”)

DURATION OF INCENTIVE. The FIT will be fixed and valid during all the WF service life.

Renewable Regulatory decree n 28 of 3th March 2011

Renewable plants in operation AFTER the 1st of January 2013

Installed Capacity < CT

FITDIRECT ASSIGNMENT

Installed Capacity < CT

FITAUCTION

PRICES LOWER THAN BEFORE BUT FIXED (NO UNCERTAINTY)

24

RegulatoryRegulatory

Main Italian Wind Companies Workshop promoted by IBERDROLA

Workshop target• Achieve a shared proposal, follow up and lobby to influence in the IMPLEMENTING DECREES

definition (30th Sept)• Improve the influence in the National Wind Energy Association (ANEV).

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

RegulatoryRegulatory

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.

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.

AUCTION MECHANISM:

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

FLOOR The WFs participating to the auction will get in any case a minimum incentive (Floor) that warrants the profitability

MINIMUM REQUIREMENTS TO PARTECIPATE: The bidders should have a consolidated know-how and a proven financial capability

Two different Auction procedures; Permits and incentive assignment for WF off-shore or bigger than 100 MW. Only incentive assignment for WF with power between 50 and 100 MW (projects already

authorized)

OTHER PROPOSALS The workshop also drew up some proposals regarding the plant repowering and simplification of the authorization proceeding

Main Italian Wind Companies Workshop promoted by IBERDROLA POSITION PAPER