RWE Innogy green growth continued

RWE Innogy green growth continued Paul Coffey Chief Operating Officer RWE Innogy GmbH Commerzbank Growth & Responsibility Conference Frankfurt, 11 March 2010

Renewable Energy in RWE Group today: A leading renewables generation position in Europe RWE Group renewable energy capacity in operation by technology and country (Accounting view 1 + PPA, as of December 31, 2009) Hydro 31% Offshore wind 6% Biomass 6% Onshore wind 57% France 3% Netherlands 11% Spain 16% UK 20% Other 4% Total installed capacity: 2.5 GW 3 Germany 47% > 2.5 GW operational renewables assets (end 2009) account for roughly - 5% of the Group s generation capacity and - 3% of energy generation > The vast majority of 2.2 GW is operated by RWE Innogy, in which RWE pooled its renewable energy activities > The outstanding 0.3 GW have not been transferred to RWE Innogy in February 2008 and are held by RWE s regional companies (former RWE Energy) and RWE Power 1 Capacity with <50% RWEI ownership is consolidated to 0 MW, capacity with 50% is consolidated to 50% of capacity, and capacity with >50% RWE Innogy ownership is consolidated to 100% of capacity. 3 RWE Group capacity, of which 2.2 GW are operated by RWE Innogy. RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 2

RWE s generation portfolio is set to be 75 % zero or low carbon by 2025 focus on Renewables RWE generation mix (capacity in %) Capacity 2009 Renewables Gas Nuclear Pump storage, other Lignite & hard coal Capacity 2025: ~65 GW Renewables 75% Gas Pump storage, other Lignite & hard coal Nuclear RWE generation mix (output in %) Output 2009 Gas Nuclear Renewables Pump storage, other Lignite & hard coal Output 2025 Renewables Gas Pump storage, other Lignite & hard coal Nuclear RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 3

Nearly 6 billion earmarked for renewable energy projects in 2010 2013 Other 7.0 bn p.a. +/- 10% 100m p.a. Upstream Renewables CEE Netherlands/ Belgium UK 1,000m p.a. 1,400m p.a. 900m p.a. 1,000m p.a. 500m p.a. > Renewable energy activities account for 20% of RWE s planned annual capital expenditures > and represent one third of the Group s growth investments of 14 billion in 2010 to 2013. Germany 2,100m p.a. ~50% Generation ~50% Sales & Distribution Capital expenditures 2010 2013 RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 4

RWE Innogy: Strong European footprint with focus on wind and hydro (as of 31 December 2009, accounting view 1 ) RWE Innogy capacities by technology RWE Innogy capacities by region Biomass (5%) Hydro (24%) Offshore wind (7%) France (3%) Netherlands (10%) Spain (19%) United Kingdom (23%) 2.2 GW 2.2 GW Onshore wind (64%) Other countries (4%) Germany (41%) Onshore Wind Offshore Wind Biomass Hydro New Applications UK Portugal Spain France NL BE GER Switzerland Czech Republic Poland 1 Capacity with <50% RWE Innogy ownership is consolidated to 0 MW, capacity with 50% is consolidated to 50% of capacity, and capacity with >50% RWEI ownership is consolidated to 100% of capacity. RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 5

We plan to increase the installed generation capacity significantly Capacity growth targets (in GW, pro rata) Ramp-up capacities until 2013 12 Assets in operation or under construction 10 Assets under construction 8 Assets in operation RWE Innogy > 10 Target capacity: 4.5 GW 2.6 GW 6 4.5 4 2 0 1.3 1) Dec 2007 1.7 2) 2.6 3) Dec 2008 Dec 2009 2012 2020 2009 2010 2011 2012 2013 In operation Under construction > We want to increase our capacity to 4.5 GW in operation or under construction by 2012 and exceed 10 GW by 2020 Strong organic growth (incl. development of acquired pipeline) and selective strategic acquisitions. > Minimum annually generated electricity of 15 TWh/a to be achieved from 2013 onwards on that basis. > We keep operating in markets we know our focus is on Europe 1) Composed of 1.1 GW capacity in operation and 0.2 GW under construction. 2) Composed of 1.3 GW capacity in operation and 0.5 GW under construction. 3) Composed of 2.2 GW capacity in operation and 0.4 GW under construction. RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 6

RWE Innogy s basis for organic growth: Our project pipeline (as of 31 December 2009) Project pipeline by technology & status (electricity generation capacity in GW, accounting view + PPA 1 ) New Applications Hydro Biomass Offshore Wind Onshore Wind 8.3 7.5 17.1 > Total pipeline with projects until 2020 amounts to 17.1 GW el up by more than 30 % year-on-year > Strongly geared towards onshore (42%) and offshore wind (35%) > We are concentrating on technologies which promise to become largely independent of subsidies in the foreseeable future 2.2 0.4 1.2 In Operation Under Construction Pipeline Status 1 Pipeline Status 2 Pipeline Status 3 Total Pipeline Note: Pipeline status 1 Permitted projects: all permits (including grid) in place, but not yet under construction Pipeline status 2 Unconsented projects: RWEI has rights to the project, e.g. land agreements Pipeline status 3 Prospects: identified sites with a known MW capacity, initial discussion on agreements 1) For pipeline projects no power purchase agreement (PPA) is assumed. Therefore pipeline projects with <50% RWEI ownership are consolidated to 0MW, pipeline projects with 50% are consolidated to 50% of capacity, and pipeline projects with >50% RWE Innogy ownership are consolidated to 100% of capacity. RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 7

Risk diversification across technologies, regions and support mechanisms RWE Innogy target portfolio by generation capacity Onshore Wind country (electricity generation) Italy Other Biomass Netherlands Hydro Offshore Wind Germany electricity generation Onshore Wind Offshore Wind Biomass Hydro support mechanism (electricity generation) Power Price only Premium Tariff Other Certificate Spain UK Feed-In Tariff RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 8

Value creation is superior to additional Megawatts RWE Innogy operating results: 2009 performance and outlook 2010 & 2013 million 500 Value enhancing growth strategy > Objective is profitable growth of renewables business > Value creation in line with RWE's strict investment criteria - IRR has to be above hurdle rate (cost of capital plus value contribution) 55 56 2008 2009 2010 2013 + + First-time consolidation of Essent s wind activities Further results from growth investment programme Upfront costs of large investment programme 2010 forecast > Operating result is expected to improve significantly in 2010 > From 2010 onwards, Essent s wind electricity generation will be stated under RWE Innogy Earnings increase accelerating > We anticipate that RWE Innogy s operating result will post double-digit growth rates every year. > By fiscal 2013, the company aims to have hit the 500 million operating result mark. RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 9

Comparing offshore and onshore wind Wind Offshore Wind Onshore Criteria Maturity of technology > Some technical hurdles but industry is making substantial progress > Mature Markets Specialities Size of projects (capacity) > UK: growing > Germany, Netherlands, Belgium: emerging > Deep water technology at demonstration stage > Partnerships share risk and expertise > Lack of industrial scale experience > Infrastructure not suitable > Limited competition in component supply and shortage of installation vessels > Offshore wind competitiveness driven by subsidy schemes > Large (500 1,000 MW) > CE/SE: stable > EE: growing > SEE: emerging > Partly fragmented markets large scale repowering not happening yet > As markets recover debt financed project return to market and potentially increase prices > M&A > Small to medium (20 200 MW) Approx. load factor 35 40% 20 25% Average capex & trend 3.0 3.5 million / MW 1.5 2.0 million / MW RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 10

Turbines dominate cost of wind projects Capex split offshore wind farm (UK example) (in % of total capex) Capex split onshore wind farm (UK example) (in % of total capex) 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% Turbine Foundations Grid & Electrical Other 0% Turbine Foundations Grid/Other > For both on- and offshore projects, wind turbines dominate the capex split appropriate turbine prices are thus crucial for attractive return on investment > Offshore investment split varies according to project details, e.g. water depth, distance to shore, grid connection works etc. > Cost of grid connection depends on distance to coast, foundation also depends on depth of water in contrast to the UK market, the grid operator in Germany is obliged to connect the projects to the electricity grid and to bear capital and finance cost Source: RWE Innogy. RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 11

RWE Innogy has strong starting position in offshore wind Examples of offshore wind projects > 150 MW offshore wind farm (North Hoyle 1, Rhyl Flats) in operation and 252 MW (Greater Gabbard) under construction > 27% stake in Belgian offshore wind project Thornton Bank 30 MW of planned total capacity of 300 MW already operational Rhyl Flats North Hoyle Greater Gabbard Thornton Bank Nordsee Ost In operation 3 Under construction 4 Wind Farm North Hoyle Rhyl Flats Greater Gabbard 1 Nordsee Ost Size 60 MW (30 x 2.0 MW Vestas) 90 MW (25 x 3.6 MW Siemens) 504 MW 1) (140 x 3.6 MW Siemens) 295 MW (48 x 6 MW REpower turbines) Distance to shore 7 km off the coast of North Wales 8 km off the coast of North Wales 25 47 km offshore 32 45 km offshore Water depth Shallow water (7 11 m) Around 15 m 24 34 m 22 26 m First generation Nov 2003 Dec 2009 First electricity production early 2011, fully operational in late 2011 First generation in 2012, full generation in 2013 1) 50% owned by RWE Innogy. RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 12

Offshore wind project pipeline: Critical mass reached RWE Innogy project pipeline: RWE Innogy s Offshore Wind Projects Close to 800 MW installed by 2013 Triton Knoll Dogger Bank Project pipeline of 9.7 GW (pro rata) and 6.4 GW (accounting view) as of December 2009, incl. UK Round 3 Critical mass reached to contemplate alternative logistic supply strategy North Hoyle Gwynt y Môr Rhyl Flats Bristol Channel Greater Gabbard Nordsee Ost Innogy Nordsee 1 Tromp Binnen Thornton Bank Projects in operation or under construction Projects consented or in development RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 13

Talking about offshore wind: What are the major challenges? 1. Demanding weather conditions 2. Key components have to be installed in large numbers > in deep water (up to 40m) > great heights (100m+) 3. Unsufficient availability of installation vessels with fitting design 4. Difficult environment and low level of experience for operation and maintenance RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 14

Example Rhyl Flats: Which steps have to be taken to build an offshore windfarm? 2002: Jun - Sept 2007, Apr - Oct 2008: May - Jul 2008: Aug - Nov 2008: Apr - Oct 2009: Met Mast Installation Scour Protection (preparing seabed for installation) Installation of foundations Export Cable Laying Turbine Installation Inter array cable laying RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 15

Weather changes carry significant financial risk exposure > Winter months with its rough conditions and extended period of bad weather can seriously impede installation/ maintenance works > Delays cause increased installation costs, but also foregone revenues from missing power generation 30 25 20 15 10 5 Average days with good weather 1 > Superior planning, smooth logistics and excellence in execution of construction are key to success. 0 January February March April May June July August September October November December 1 12 hours installation windows per month at 1.5 m significant wave height and maximum wind speed of 10 m/s, statistical values for German North Sea RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 16

Future projects in deeper water and further offshore Avg. water depth [m] 50 45 40 35 Beatrice Field Thornton Bank Innogy Nordsee 1 Dan-Tysk Alpha Ventus 30 Gode Wind Greater Gabbard Belwind Nordsee Ost 25 Côte d'albâtre Thanet Princess Amalia (Q7) Sheringham Shoal Amrum Bank West 20 Barrow Triton Knoll Egmond aan Zee Butendiek Baltic 1 London Array 15 Samso Lincs Gwynt y Môr Horns Rev 2 Rhyl Flats North Hoyle 10 Lynn & Horns Rev Inner Dowsing Lillgrund Rødsand II Nysted NordergründeCommercial Gunfleet Sands 5 Scroby Sands Robin Rigg Burbo Bank Kentish Flats Arklow Bank 0 Planned OWF Bristol Channel Pioneer Phase 2015 + X Sandbank 24 Bard Offshore 1 Albatros Hochseewindpark De Dreiht Global Tech 1 Hochsee Windpark Nordsee 0 10 20 30 40 50 60 70 80 90 100 Shore Distance [km] UK Round 3 East Coast Dogger Bank [125 km] RWE Innogy Offshore Projects RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 17

Deepwater installations require giant component dimensions Monopiles weight: ca. 250 t plus transition piece ca. 180 t height: ca. 30 m material: steel turbine: 3.6 MW weight: ca. 2,500 t height: ca. 60 m material: concrete turbines: 5/6 MW weight: ca. 1,000 t height: ca. 60 m material: steel turbines: 5/6 MW Gravity Foundations Jackets RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 18

Availability of vessels is extremely limited design of existing vessels does not meet offshore needs Max. depth (m) 60 Maximum conditions for current installation vessels 50 40 Dong Centrica Dong 30 20 10 0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Turbine capacity (MW) Offshore Parks in operation under construction / development RWE Innogy projects RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 19

Our approach: In the end it comes down to perfect project organisation, logistics and own vessels Seabreeze Programme: > Construction of 2 self propelled Jack-Up vessels > Specially designed for turbines in the 5 to 6 MW class > and deepwater environment: possibility to be used in water depth > 45 meters (using leg extensions) > Less exposed to weather conditions RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 20

Development and construction of an offshore windfarm is one thing, operating it at a high level another > Long distances to shore and rough weather makes operation & maintenance of offshore windparks challenging North Hoyle load factor consistently higher than competitors (% load factor) > New solutions have to be developed for projects far out in the sea > Steep learning curve in operation of offshore windfarms, but Innogy has a good foundation with North Hoyle and Rhyl Flats. 70% 60% 50% 40% North Hoyle Offshore Wind Farm UK Offshore Average > Reduced risks as maintenance contracts include guarantees for specific technical availability or even minimum electricity generation for 5 years and more 30% 20% > Early mover, having build first commercial offshore wind farm in the UK (North Hoyle, 60MW, 2003): Today North Hoyle is best in class in the UK. 10% 0% Apr 2006 Jun 2006 Aug 2006 Oct 2006 Dec 2006 Feb 2007 Apr 2007 Jun 2007 Aug 2007 Oct 2007 Dec 2007 Feb 2008 Apr 2008 Jun 2008 RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 21

To be trusted leaders in sustainability, renewable energy and innovative technology RWE Innogy aims to... be among the top 5 companies in the European renewable energy sector contribute to the RWE Group s growth strategy provide sustainable value added to the RWE Group be a key element in RWE s CO 2 reduction programme stand for state of the art operation of renewable technology be a leading player in developing new renewable technologies RWE Innogy Commerzbank Growth & Sustainability Conference, Frankfurt 11 March 2010 PAGE 22