E.ON Business Deep Dive - Renewables
December, 2015
Agenda
E.ON Renewables Position
E.ON Renewables Business Approach
Market Trends
2
E.ON Renewables highlights

4.5 GW diversified portfolio (average age of 8 years)
across Europe & US1

Global #2 in offshore wind

Global #12 in onshore wind

Multi-technology developer, constructor, operator and
asset partner with broad international footprint

12.3 TWh electricity produced in 2014

€ 823 m EBITDA generated in 2014
1. Owned portfolio, forecasted 2015 FY pro-rata share (includes Humber + Amrumbank both at 100%)
Since 2007 E.ON has built a top-tier renewables player
3
Portfolio overview1
Chicago
2310
San Francisco
207
 Headquarter
Office location
Austin
Malmö
913
Hamburg
Essen
Coventry

Szczecin
Capacity (MW)
Onshore wind
Offshore wind
Solar
155
462
95
328
US
Rome
48%
52%
Europe
5.2 GW of operated capacity
1. Forecasted 2015 FY pro-rata share (includes Humber + Amrumbank both at 100%)
We own a diversified renewables portfolio of 4.5 GW across Europe and US
4
Investments in renewables
Investments (bn€)
Key facts
2,3
1,5
2007
2008
1,2
1,2
1,0
1
 Total investments of ~11bn
(gross) in new capacity since
inception of EC&R
1,7
2009
2010
1,0
0,9
2011
2012
2013
2014
2015
Capacity built (GW)
 Portfolio has grown 10 times
since July 2007, despite recently
tighter capex situation
>10x
5,9
5,3
5,2
4,8
4,5
4,2
3,6
2,8
1,9
1,1
0,4
May
2007
2008
2010
Onshore wind development
2012
2014
Offshore wind development
 In the first four years focus largely
on onshore wind, since then an
increased share in offshore wind
Disposals
 Strict investment discipline
applied with IRRs exceeding
WACC by more than a defined
minimum hurdle
 1.4 GW disposed through capital
rotation and strategic country
exits
Solar development
1. Including equity and debt for the acquisitions of E2I and Airtricity
5
E.ON has a proven track-record based on > €10bn successful investments
since setup of EC&R in 2007
Track-record
Key facts
 5.9 GW of capacity built since 2007
 Extensive construction expertise
 > 50 projects delivered
 > 90% of projects delivered in budget and
on time
 2 offshore projects constructed in parallel
(CODs in 2015)
 Grandview I (211 MW US onshore wind)
completed within 180 days (FID to COD)
 Competitive edge in development: top-class
site assessment
 In-house O&M workforce trained to industry
standards
 Excellent execution capabilities on back
of continuous development of new projects
1.
2.
Project examples
London Array, the world’s
largest offshore wind farm
COD:
Q2 2013
1
Capex :
€ 2400m
E.ON share:
30 %
Capacity:
630 MW
Grandview I, onshore wind
farm in Panhandle, Texas
COD:
Q4 2014
1
Capex :
€ 331m
E.ON share:
50%
Capacity:
211 MW
Maricopa West, PV park in
Kern County, California
COD:
Q4 2015
Capex1:
€ 55 m
E.ON share:
100 %
2
Capacity :
28 MW
100% of Capex
PV capacity in MW DC (Direct Current)
We deliver outstanding performance based on our expertise and capabilities
6
Earnings
EBITDA Development (€bn)
Key facts
 EBITDA growing since inception
with a CAGR of 33%
0.8
0.7
0.6
 Growth pace fastest in the phase
2007-2010
0.6
0.5
0.3
0.2
2008
2009
2010
2011
2012
2013
2014
2015
 Strong capex focus on offshore in
2013-2015
Revenue Mix 2015
US
 Since then capital rotation and
disposals slightly impacted
earnings development
UK
Continental
Europe
 Majority of earnings supported by
regulated / long-term contracted
revenues ~60%
 ~25% of 2015 EBITDA in US
onshore, ~40% in Europe offshore
and rest in Europe onshore
Merchant
Regulated / long-term contracted
Earnings have grown continuously over past 7 years
7
Agenda
E.ON Renewables Position
E.ON Renewables Business Approach
Market Trends
8
E.ON key success factors and portfolio approach
E.ON Key Success Factors in
Renewables
E.ON Portfolio Approach in
Renewables
Access to premium sites
Focus on attractive technologies
Cost competitiveness and end-toend process excellence
Capture attractive remuneration
schemes across different markets in
stable countries
Scale advantage
(supported by partnering and capital
rotation)
Prudent and disciplined capital
allocation
We have a holistic and value creating approach to renewables
9
Site selection
Examples – offshore wind
Example – Grandview (Texas, US)
Water depth [m]
50
Positioning of
UK round 3 projects1
45
40
London Array
Rampion
35
Alpha Ventus
30
Amrumbank West
25 Kårehamn
20
Humber Gateway
15
Scroby Sands
10
Size of this circle corresponds
to 200 MW wind farm size
Robin Rigg
5 Blyth
Rødsand 2
0
0
10
Site layout
In operation
20
30
40
50
 Grandview secured by early analysis
of the grid expansion program in
Texas in 2010
Under construction
60
70
80
Distance to shore [km]
Start with near shore, shallow water projects before moving
to deeper water, far shore projects
 Potential size of the site: ~ 1.0 GW
(211 MW already built and 200 MW
under construction)
 Avg. load factor: >50%
1. Source: Renewables UK, 4COffshore
Attractive site selection with improved economics
10
Current regulatory regimes and frameworks
Remuneration scheme by geography
E.ON Market Highlights
Summary
PAYMENT MECHANISM
Feed-in tariff
Premium
Quota obligation & tradable certificates
Others
ALLOCATION
Competitive auctions
Auctions legislated but yet to be held
or pilot auctions only
SUBSIDY BUDGET
Capped
913
US:
 Tax Credits (PTC and ITC)
 Accelerated Depreciation
(MACRS)
 Renewable Portfolio
Standards (RPS)
 Expected positive impact
from Clean Power Plan
UK:
 Renewable Obligation
Certificates (ROC)
 Contract for differences
(CfD)
 Levy Exemption
Certificates (LEC) have
fallen away (Aug 2015)
Germany:
 Feed-in tariff (FIT) for
German offshore
(“Stauchungsmodell”)
Source: Bloomberg
11
Attractive regulatory regimes and policy support still prevailing in our core
markets
Industry learning curve
LCOE1
Fixed subsidies
High policy support
Installed capacity
Tenders
Higher competition
& cost pressure
1. Levelized Cost Of Electricity
As markets mature and competitiveness increases, operational excellence will
remain key for sustainable, profitable growth
12
LCOE development trends
LCOE global trend1
LCOE key drivers
Offshore Wind
Coal
Onshore Wind
Gas
(€/MWh)
CAPEX and OPEX Reduction
140
120
100
80
Output Optimization
60
40
2013
2017
2020
2023
1. Assumed conversion rate €/$ = 1.12. Average of China, India, US and Europe
Source: Stiftung (Offshore Wind), Bloomberg New Energy Finance (Onshore Wind, Coal, Gas)
Wind LCOE competitive with other technologies
13
LCOE development at E.ON
Cost Structure – Example of onshore wind
Installation
Generation cost
E.ON project LCOE examples (€/MWh)1
Offshore
-22%
Risk-margin
100%
Other CAPEX
78%
Turbines
CAPEX
2015 (Rampion)
2011 (Humber)
Other OPEX (only
partially controllable)
Onshore
-40%
100%
OPEX
60%
O&M
2009 (Pyron)
1. At final investment decision (FID).
-10% CAPEX reduction equates to ~110 bps IRR increase
14
2015 (Colbeck’s
Corner)
CAPEX reduction
CAPEX/MWh examples1
CAPEX reduction levers
Optimized design
Offshore
 LCOE-driven layout (optimizing wind yield and
installation costs)
2011
(Humber)
100%
-18%
 Fit for purpose design/selection of components (site
specific economically optimal wind turbine types)
 Standardized and integrated process
2015
(Rampion)
82%
Rigorous application of procurement best practices
 Central procurement applying optimized procurement
strategy
Onshore North America
 Increased supplier choice/competition by proactive
supplier development, involvement of global
suppliers, e-auctions
2009
(Pyron)
100%
-44%
2015
(Colbeck’s Corner)
56%
 Bundling and volume effect of a long term charter
Project / construction management excellence
 Recent examples: Completed latest two offshore
projects (combined 500 MW) and latest US onshore
project (200 MW) on time and budget
1. At final investment decision (FID).
15
We continuously drive down required capital by optimizing design,
procurement and construction
OPEX reduction
O&M cost containment – Onshore1
O&M levers
O&M improvement measures
2011 baseline for 2015
 O&M contracting and concept: Roll-out of self-perform
and mixed team sites; break-out of full service contracts
into standard contract modules
100%
O&M
Contracting
4%
Spares concept
& contracting
4%
CMS/ Smart
Maintenance
3%
Other initiatives
2%
Additional
cost reduction
Estimation YE 2015
1.
5%
-18%
 Spares concept and contracting: Application of global
framework for major components and own purchase of
consumables
 Smart Maintenance: Retrofit with Condition Monitoring
System and development of a predictive maintenance
strategy
 Other initiatives
Additional potential due to active asset management
concepts by
 Further contract re-negotiation
82%
 Other initiatives
Based on portfolio as per 2011 baseline for 2015.
Operation & maintenance as key lever for OPEX reduction
16
Load factor and availability
Offshore
46
50
36
40
Load factor
(%)
Onshore US
50
50
35
40
35
34
37
40
30
30
20
20
20
10
10
10
0
0
0
2013
2014
50+% load factor in recent projects3
Net load factor for ~5 years old farms1
96
100
94
98
96
98
97
98
100
80
80
60
60
60
40
40
40
20
20
20
0
0
0
COD in 2009-2010;
Offshore: Ambrumbank West;
30
25
2014
2013
2014
farms1
2014
98
97
2013
97
97
2014
Energetic availability for ~3 years old farms2
2. COD in 2011-2012 (onshore) and in 2013 (offshore)
Onshore: Grandview 1 and Colbeck‘s Corner
We have excellent performances in terms of both availability and load factors
17
30
Net load factor for ~3 years old farms2
100
Energetic availability for ~5 years old
25
2013
80
2013
1.
3.
36
30
2013
2014
48+% load factor in recent projects3
Energetic
Availability
(%)
Onshore EU
IRR vs WACC spreads examples
Bps above WACC
1.000
750
500
250
Size of this circle corresponds
to 200 MW wind farm size
WACC
2009
2010
2011
2012
2013
2014
2015
Year of final investment decision
Onshore wind
Offshore wind
Attractive returns above WACC plus hurdle
18
Additional value creation
Partnering
Third Party Services
 Third party investors, especially in large-scale
projects, increase flexibility and support a
diversified portfolio development
 Offering full scale operations, maintenance, asset
& energy mgmt. services to third party asset
owners
 Partnering supports economies of scale and
further development of E.ON capabilities
while at the same time developing
relationships with long-term valuable partners
 Unique value proposition towards customers as
E.ON’s experience and capabilities in building &
operating renewable farms is strong
 Partnering allows for shared construction &
operational risks and smother earnings profile
 E.ON generates additional income as
construction manager and operator of the
sites
 Strategic partners offer complementary
capabilities, allowing to reduce LCOE and
risks as well as enhancing success rate in
tenders
 Emergence of new financial players as well as
small/ midsized wind farm owners without inhouse technical competencies seeking steady
cash flow and lower risk profile
 Leveraging global experience and portfolio allows
E.ON to takeover and manage risks on customer’s
behalf
 Asset-light business model and economies of
scale (e.g. technical support, procurement) by
increasing operational portfolio with customer sites
 Natural and complementary business model to
partnering
19
Partnering & Third Party Services allow risk diversification and further
leveraging our capabilities
Capital recycling
Transaction type Main rationale
Partnering
 Reduce exposure to cluster and regulatory
risks of large projects
 Increase flexibility and support a diversified
portfolio development
 Additional value from Third Party Services
 Lock-in value upside especially from US
PV
Build to sell
Past transactions
Rampion
(Offshore)
Cap: 400 MW
Sold:
49.9%
Year:
2015
Alamo (PV)
 Rapid monetization of created value
Cap1:
Sold:
Year:
Capital rotation
of operational
assets
 Advance monetization of value from
existing projects to fund new ones
 Additional value from Third Party Services
24 MW
100%
2015
US
Onshore
Rödsand
(Offshore)
US
Onshore
Cap: 433 MW Cap: 207 MW Cap: 406 MW
80%
Sold:
50% Sold:
80% Sold:
Year:
2012 Year:
2013 Year:
2014
1. PV capacity figures in MW DC (Direct Current)
20
Successful capital recycling has contributed to E.ON’s renewables
development in the past
PV projects & initiatives
Key facts
 PV project delivery experience of >150 MW
(14 projects), including development and
construction
Capacity built1 (MW)
152
92
49
11
US
Italy
France
 Current geographical focus in US
 ~90% of the projects delivered on time and
on budget
 In the past, focus on build to sell
 Highly standardized development and
engineering to ensure end-to-end process
excellence and off-the-shelve PV project
delivery
 Professional Energy Marketing enables
participation in tenders and RFPs
Recent projects1 (built & sold)
Alamo
Size: 24 MW
COD: May ’15
Buyer: Dominion
Maricopa West
Size: 28 MW
COD: Nov ’15
Buyer: Dominion
1. Until end 2015. All capacity figures in MW DC (Direct Current)
E.ON can rely on existing capabilities and experience also in solar PV
21
Total
Agenda
E.ON Renewables Position
E.ON Renewables Business Approach
Market Trends
22
Market trends – renewable capacity growth
Global1 (GW)
Global growth trends
Recent market development
2.000
7%
 Wind & Solar cover largest share of capacity
additions with focus on emerging markets
1.000
0
2015
2020
2025
2030
 Largest markets for Wind & Solar until 2020:
China, India, United States, Germany, Japan
EU1 (GW)
Investments in Solar and Wind
1.000
 > $300bn of global renewable investments per
annum expected for the next 25 years
4%
500
0
2015
2020
2025
2030
Key drivers for future growth
 Competitiveness: Renewables cost decreasing
US1 (GW)
 Security of supply: Fuel independence
1.000
 Industrial policy: Local content requirements
500
 Climate change: Low-carbon generation
4%
 Competitiveness of storage
0
2015
2020
2025
2030
1. Installed capacity, excluding large-scale hydro; Growth expressed as CAGR
Source: IHS
Utility PV
Offshore wind
Onshore wind
Renewables energy market growing fast, especially in Wind and Solar PV
23
Others
E.ON key strengths
Proven track record in the most attractive technologies across
different markets
Cost competitiveness & process excellence as well as best site
selection and scale
Solid position and grow path in core markets
Well positioned to further benefit from continuous growth in renewables
24
Agenda
E.ON Renewables Position
E.ON Renewables Business Approach
Market Trends
Appendix
25
Current regulatory regimes and frameworks (cont’d)
UK
Germany
Offshore
 ROC per MW
 Term: 20 years
 Remuneration: Wholesale price
plus 1.8-2.0 ROC/MWh based on
COD
 Applicable for all E.ON offshore
parks in UK1
 From 2014 move to CfD system
(strike price in first auction
£114.39-119.89/MWh)
Offshore
 FIT with direct marketing obligation
 Remuneration (EEG 14):
- Initial tariff: 154 €/MWh for 12
years (standard) or 194 €/MWh
for 8 years (accelerated model)
- Base tariff: 39 €/MWh
- Initial tariff extended for deep
waters/distance to shore
 Applicable for all E.ON offshore
parks in Germany2
Onshore
 Wholesale price plus ROC (valid
until 2016)
 Term: 20 years
 Remuneration: 0.9 ROC
 Applicable for all E.ON onshore
 From Feb. 2015, CfD system
(strike price in first auction £79.2382.50/MWh )
Onshore
 FIT with direct marketing obligation
 Term: 20 years plus the year of
start of operation (initial tariff for
min 5 years followed by base tariff)
 Remuneration (EEG 14):
- Initial tariff: 893 €/MWh
- Base tariff: 49.5 €/MWh
 From 2016: ~0.4% quarterly
digression
 Applicable for all E.ON onshore
parks in Germany
US
Onshore
 Remuneration based wholesale
market or PPA, plus certain
incentive features
 Production Tax Credit ($23/MWh)
or Investment Tax Credit (30% of
investment) in place for projects
completed by 2016
 Renewable Energy Certificate
(driven by state-level Renewables
Portfolio Standards (RPS)
 Accelerated Depreciation for tax
equity investors and developers
(MACRS)
Solar
 Remuneration based PPA plus
certain incentive features
 Investment Tax Credit (30% of
investment) in place for projects
completed by 2016 – after drops to
10%
 Renewable Energy Certificate
(driven by state-level Renewables
Portfolio Standards (RPS)
1. Including Rampion
2. Including Amrumbank and Alpha Ventus
3. Base on reference turbine
ROC: Renewables Obligation Certificate; CfD: Contract for Difference; FiT: Feed-In-Tariff
Capturing attractive regulatory remuneration schemes
26
E.ON project examples
Summary
Amrumbank (COD ´15)
 288 MW
 FIT („Stauchnungsmodell“)
 100% share
Colbeck's Corner (COD ´16)
 200 MW
 Merchant
 100% share
Maricopa West1 (COD ´15)
 28 MW
 100% share
 To be disposed in ‘15
Rampion (COD ´18)
 400 MW
 20 years ROC scheme
 75% share
Countries with projects under development
1. PV capacity in MW DC (Direct Current)
E.ON has diversified portfolio of projects under construction
27
Disclaimer
This presentation may contain forward-looking statements based on current assumptions and forecasts made
by E.ON Group Management and other information currently available to E.ON. Various known and unknown
risks, uncertainties and other factors could lead to material differences between the actual future results,
financial situation, development or performance of the company and the estimates given here. E.ON SE does
not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to
conform them to future events or developments.