Quality assets. Selective and profitable growth. Self-funding business model

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2 This presentation has been prepared by EDP Renováveis, S.A. (the "Company") solely for use at the presentation to be made on May 6 th, By attending the meeting where this presentation is made, or by reading the presentation slides, you acknowledge and agree to be bound by the following limitations and restrictions. Therefore, this presentation may not be distributed to the press or any other person, and may not be reproduced in any form, in whole or in part for any other purpose without the express consent in writing of the Company. The information contained in this presentation has not been independently verified by any of the Company's advisors. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Neither the Company nor any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation. This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity in any jurisdiction. Neither this presentation nor any part thereof, nor the fact of its distribution, shall form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. Neither this presentation nor any copy of it, nor the information contained herein, in whole or in part, may be taken or transmitted into, or distributed, directly or indirectly to the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities laws. This presentation does not constitute and should not be construed as an offer to sell or the solicitation of an offer to buy securities in the United States. No securities of the Company have been registered under U.S. securities laws, and unless so registered may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of U.S. securities laws and applicable state securities laws. Matters discussed in this presentation may constitute forward-looking statements. Forward-looking statements are statements other than in respect of historical facts. The words believe, expect, anticipate, intends, estimate, will, may, "continue, should and similar expressions usually identify forward-looking statements. Forwardlooking statements include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for future growth; liquidity, capital resources and capital expenditures; economic outlook and industry trends; developments of the Company s markets; the impact of regulatory initiatives; and the strength of the Company s competitors. The forward-looking statements in this presentation are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management s examination of historical operating trends, data contained in the Company s records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause the actual results, performance or achievements of the Company or industry results to differ materially from those results expressed or implied in this presentation by such forward-looking statements. The information, opinions and forward-looking statements contained in this presentation speak only as at the date of this presentation, and are subject to change without notice unless required by applicable law. The Company and its respective agents, employees or advisors do not intend to, and expressly disclaim any duty, undertaking or obligation to, make or disseminate any supplement, amendment, update or revision to any of the information, opinions or forward-looking statements contained in this presentation to reflect any change in events, conditions or circumstances. 2

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4 Output of 5.8 TWh on the back of strong operational excellence with 97.5% availability levels, although the 1Q15 registered a load factor 3% weaker than the P50 scenario Quality assets Avg. selling price improving 15% YoY due to increase in Spain, US and FX translation with active hedging price strategy more than compensating lower generation O&M strategy continues to deliver higher efficiency (Adj. Opex/MW ex-fx -9% YoY) Selective and profitable growth EBITDA of 319m (+10% YoY) and Net Profit of 70m (+7% YoY) reflecting operational performance and impacted by FX Executing strategic plan additions for 2015 with 601 MW under construction: 399 MW in the US, 120 MW in Brasil and 82 MW in Europe and more 0.9 GW for with PPA/LT contracts awarded Self-funding business model 220m of OCF (+7% YoY) with a portfolio mostly exposed to PPA/FIT regimes and with an expected remaining lifespan of at least 20 years $348m from an Asset Rotation established in the 3Q14 received in Apr-15; and new transaction in Mar-15 (solar US, $30m) with financial close expected in 2Q15 Net Debt increased to 3.5bn (+ 0.2bn vs. Dec-14) due to FX translation (+ 0.2bn) 4

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6 Installed Capacity (EBITDA MW + Equity Consolidated) +601 MW Under Construction Portugal 13% Rest of Europe 16% +399 MW Kansas (200 MW) Oklahoma (100 MW) California (99 MW) Spain 26% 9.0 GW +120 MW Rio Grande do Norte (120 MW) Brazil 1% North America 44% +82 MW Poland (53 MW) France (12 MW) Italy (10 MW) Iberia (8 MW) with additional 601 MW of wind onshore projects under construction with long-term visibility Notes: Installed capacity includes EDPR s Equity consolidated: 533 MW of EDPR s interest in ENEOP, and equity stakes of 174 MW in Spain and 179 MW in the US. Includes 82 MW of Solar PV. 6

7 Load Factor and Technical Availability EDPR Quarterly Load Factor vs. Average Quarters (%) 1Q15 D% YoY 1Q14 vs. average 1Q15 vs. average +12% % -3.8pp 119% 105% 34% -4.8pp 106% 89% +5% +5% +0% +2% 25% -1.9pp 97% 90% -3% -4% -3% 34% -4.2pp 112% 97% -7% EDPR Technical Availability 97.5% 0.0pp 1Q 2Q 3Q 4Q Although the 1Q15 had a wind resource below the expected scenario (P50), EDPR continues to achieve load factors above market average 7

8 TWh r% YoY Electricity Production (TWh) -6% Less windy quarter in Iberia YoY (still above average), and strong output growth in RoE +16% YoY 6.1-5% % Low wind resource in Central and Western regions, which offset the effect from capacity additions Outstanding load factor in 1Q14-7% Lower load factor YoY 1Q14 Capacity Growth Load Factor 1Q15 Electricity Output breakdown: 51% in Europe, 49% in US and 1% in Brazil 8

9 1Q15 r% YoY EDPR Price Evolution ( /MWh) % +26% YoY higher price in Spain; 0.6 TWh sold under hedges +15% +8% ex-fx $ % Higher PPA prices (+2% YoY); Non-PPA at $48/MWh including hedging for 0.5 TWh (+71% YoY) R$370 +8% Inflation adjustment 1Q14 1Q15 Selling price recovered from very depressed levels (1Q14) in Spain and in US and boosted by FX conversion 9

10 Main drivers for Revenues performance Revenues (1) ( million) Quality assets: +387 MW (EBITDA) YoY Load factor: 34% High availability: 97.5% % 418 Lower Electricity output: -5% YoY EU -6%; NA -4%; BR -7% Higher average selling price: +15% YoY EU +8%; NA +10%; BR +8% 1Q14 1Q15 Better pricing in Spain and US offset the weaker output YoY (1) Do not include gains with hedges accounted in financial results. 10

11 Opex (excludes Other Operating Income) ( million) +6% Adj. Opex/MW (ex-levies & Write-Offs) ( k) Levies & Write-Offs 103-2% ex-fx +2% % -9% ex-fx Adj. Opex (1) +7% -4% ex-fx 1Q14 1Q15 1Q14 1Q15 Operating costs per average MW were stable YoY, although ex-fx decreased 9% YoY Notes: (1) Opex excluding levies and write-offs. 11

12 EBITDA ( million) EBITDA per Region (%) +10% Portugal 15% Rest of Europe 20% Spain 23% 319m Brazil 1% North America 41% 1Q14 1Q15 EDPR operation in North America contributed with 41% of 1Q15 EBITDA 12

13 EBITDA to Net Profit ( million) r% YoY EBITDA % Higher efficiency and benefit of FX translation D&A % New capacity YoY (+387 MW) and FX EBIT % In line with EBITDA performance Financial Results (1) % Higher financial costs due to FX and lower profits from associates YoY (due to lower load factor) Taxes 33-13% Effective Tax Rate of 24.8% Minorities % Strategic partnership and Asset Rotation program Net Profit 70 +7% Net Profit totalled 70m Notes: (1) Includes Share of profit of associates. 13

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15 1Q15 Operational Performance in line with YE15 Outlook (presented in YE14 results) Electricity Output (GWh) 1Q15 generation decreased -5% YoY due to strong 1Q14 and 3% below expected load factor in 1Q15 Electricity output expected growth of % YoY on the back of 2014 new MW and ENEOP consolidation Average Selling Price ( /MWh) Average Selling price improved +15% YoY on the back of Spanish and US price recovery and active hedging strategy Average Selling price with positive evolution expected based on hedges in Spain and in US EBITDA ( m) EBITDA is +10% YoY with a stable 76% EBITDA margin EBITDA to grow at solid double digit benefiting from high efficiency levels and USD strength 15

16 Asset Rotation Increased competition from Institutional Investors is driving down targeted yields Ongoing appetite from investors for new structures of wind energy assets to benefit EDPR shareholders Tax Equity New Investors (including from new business sectors) driving down targeted yields for new transactions EDPR to continue to tap the market to capture improved shareholder value Debt Market Low bond yield environment creates good momentum for debt re-financing EDPR has re-negotiated with EDP part of its long-term debt arrangements 16

17 Favourable debt market conditions also allows EDPR to extend the average debt maturity EDPR executed the 1 st re-negotiation of loans with EDP 1.1bn (35% of loans with EDP) Before re-negotiation: 3.7 years 1.1bn reducing the interest costs from 5.1% to 2.9% with a positive impact in P&L After re-negotiation: 4.8 years 1.1bn c 23m on a FY basis (pre-tax) with a longer average maturity and lower interest cost already in 2015 (from the 2Q15 onwards) 17

18 Premium assets and high efficiency levels continue to deliver sound metrics even in periods with lower than expected load factor Improved pricing environment is in line with EDPR expectations, with hedging strategy more than compensating the lower production in the period Executing profitable growth with 0.6 GW under construction and progressing as planned Debt re-negotiation allows EDPR to take advantage of existing favourable debt market conditions with positive impact on P&L and extending debt maturities Strong performance expected for 2015 based on clear positive drivers, creates solid foundations for the execution of the 2017 strategic agenda 18

19 IR Contacts Rui Antunes, Head of Planning & Control and IR Francisco Beirão Maria Fontes Paloma Bastos Phone: Fax: Serrano Galvache 56, Edificio Olmo, 7 th Floor 28033, Madrid - Spain EDP Renováveis online Site: Link Results & Presentations: May 12 th 13 th Jun 2 nd 3 rd Jun 9 th 10 th Next Events Roadshow London Euronext Pan European Days (New York) BofA Merrill Utilities & Renewables Conf.

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