Enel Green Power Case History

Francesco Starace – CEO of Enel Green Power

Why Italy Matters

San Francisco – March 31st, 2011

2

Global Energy Demand

3

Graphical Oil Path - 1964 – 2010

Barclays Capital Projections (Weekly Oli Data Review 23 June 2010):• Demand 2009 84,6 mb/d • Average WTI 2009 62 $/b• Demand 2010 86,1 mb/d • Average WTI 2010 85 $/b

19641969

1973

1975 1978

1980

1980HIGH

1981

1983

1985

1986

1990

19962000

2004

2007

OIL ROLLER COASTER RIDE

This chart tracks the relationship between oil prices and oil consumption since 1964. Global oil consumption is shown on the horizontal axis and oil prices shown on the vertical axis. So when consumption is increasing and prices are flat, the line moves straight right. And when prices are rising and demand stops growing the line moves straight up.

30 40 50 60 70 80

$100

$90

$80

$70

$60

$50

$40

$30

$20

$10

World oil consumptionMillion barrels a day

Pric

e of

oil*

*Average annual price of West Texas Intermediate crude oil, adjusted for inflation using the Consumer Price Index.Posted prices (not spot prices) are shown before 1983. Source: Energy Information Administration, Federal Reserve, Bureau of Labor Statistics, Rocky Mountain Institute

90

1990 Iraq invades Kuwait

End 2000Record demand spurs a run up in prices

1982Recessions dampen demand

1979 -1980Iranian revolution, Iran – Iraq war

1973 The Arab oil embargo causes prices to soar

1997-1998 Asian financial crisis

Late 1960s, early 1970s Oil prices are steady and consumption grows quickly

What’s going on here?In the early 1980s, oil consumption fell. This is why the chart seems to turn around

2008

2009

2001 Sept.11 attacks

2010

4

Source: Enel estimates based on EPIA, GWEC, EER (2010); WEO 2010 New Policies scenario (2020 min); industry reports/McKinsey (2020 max); Ren21 “Rapporto Renewables Global Status” 2010 (2009), EGP estimates based on market capex (investments), Bloomberg New Energy Finance (R&D).(1) Calculated on 2020 max figures.

Renewable Energy: a growing industryExpected worldwide growth

Strong growth in all technologies and across all regionsDuring 2010, total R&D investments amounted to €28bn (€11bn from corporate)

~ €180bnTOTAL +82 GW~1,309 GW

2009-10 (GW) %

6.7%

~ 50Solar +15~38 67% 32%

Geothermal +0.3 ~11 3% 9%

~ 50Wind +35 ~194 +22% 16%

8.5%

~ 65Hydro +26~1,006 3% 2%

~ 15Biomass +6~60 11% 22%

2010 (€bn)CAGR 2009-2020(1)2010 (GW)

TechnologyGlobal

installed base

Global installed

base

Delta capacity

EGP tech. presence

Invest-ments

Expected growth

364251

2020 Max

2020 Min

2010

TOTAL

Africa

Asia

Europe

North America

Latin America

Geography

(GW) (GW) (GW)

550

616432 1,030

198172 330

5737 110

819416 1,000

2,0541,309 3,020

Expected growth

8%

9%

7%

11%

9%

8.5%

CAGR 2009-2020(1)

By technology By geography

~23

~11

~159

~980

~54

2009 (GW)

~1,227 GW

~ 1

5

Note: 1) Including ENEOP2) Including “new markets” (0,2 MW)

EGP presence

North America

Operating 788 MW

Production 2.6 TWh

In execution 0.3 GW

Pipeline 9,1 GW

Unrivalled footprint in 16 countries across all main renewable technologies

Iberia and Latin America

Operating 2,187 MW

Production 6.5 TWh

In execution 0.6 GW

Pipeline 13.7 GW

Italy and Europe

Operating 3,127 MW

Production 12.7 TWh

In execution 0.6 GW

Pipeline 6.2 GW

Enel Green Power

Operating 6,102 MW

Production 21.8 TWh

In execution 1.5 GW(1)

Pipeline 29.2 GW(2)

A global leaderEGP global footprint – FY 2010

6

Pipeline by technologyFY 2010

Installed capacity by technologyFY 2010

2%13%

42%

43%

Production by technologyFY 2010

Unique generation mix and diversified geographical presenceEGP portfolio overview

Total = 6.1 GW

Well-balanced asset base

Total = 21.8 TWh

3%2%

89%

Total = 29,2 GW

In execution by technologyFY 2010

10%1% 3%

86%

Total = 1.5 GW

OtherWindGeothermalHydro

6%

2%24%

51%

23%

7

FY2010 profit & lossFrom EBITDA to net income (€m)

8

On-shore Wind

Geo

Time

Develop-ment

Pilot

Smallscale

Large scale

Hydro

H2

Off-shore Wind

TidesWaves

Thermal solar

Solar PV

Biomass & biofuel

On-shore Wind

Geo

Time

Develop-ment

Pilot

Smallscale

Large scale

Hydro

H2

Off-shore Wind

TidesWaves

Thermal solar

Solar PV

Biomass & biofuel

• R&D efforts focused on improving power generation performances and reducing costs

Renewable energiesTechnological development status

Development status R&D efforts required

1 Mature

2 Early commercial

3 Still in the labs

1

• R&D required to make technologies more reliable and profitable

2

• R&D required to let technologies leave the labs

3

All the technologies could benefit from R&D effort – Some of them have yet to leave the labs: huge efforts will be required

Installed capacity

9

Renewable Technologies: Wind

Factors affecting developmentFactors affecting developmentState of the art and future evolutions

• Greater turbines resulting in reduction in costs of production

• Incentive schemes in many countries

1981 2008

0,06 MW 3,0 MW

• On-shore: new materials and more efficient designs allow for a greater dimension and efficiency of the turbines

• Off-shore: the dimensions tend to be increased (up to 5-6 MW) in order to exploit the stronger winds available

* Enel Analysis

10

0

10

20

30

40

50

60

70

0 1 2 3 4 5 6 7 8 9 10

Note: Capacity factor for M1 is 30,1%; Capacity factor for M2 is 17% at 6 m/s wind* IEC classifications: IEC III (0-7.5 m/s); IEC II (7.5-8.5 m/s); IEC I (8.5-10.0 m/s)

Source: http://www.windpower.org/en/tour/wres/pow/index.htm;

Capacity factor %

Average wind speed, m/s

M2

M153M1

M2 30

+77%

IEC* III

(low wind)

IEC* II

(med)

IEC* I

(high)

Annual power production from 20 MW capacity at 6 m/s

GWh

Higher efficiency at same wind speed conditions

WIND - In the past few years, turbine efficiency has increased significantly

11

Renewable Technologies: Photovoltaic Solar and Concentrated Solar

Factors affecting developmentFactors affecting developmentState of the art and future evolutions

• Technological developments (incremental or discontinuous)reduce the costs of the panels and increase efficiency, getting closer to “grid parity”.

• Incentive schemes in many countries

• Traditional technologies: silicon “mono-” and “poli- cristalline”

• New “thin film” technology: reduces the use of silicon (main cost component of the system) and the cost of energy production

• Enel’s commitment to developing concentrated solar

12

LCD*, PDP** price developmentUSD, at 2003 prices

* Liquid Crystal Display** Plasma Display Panel

Source: ICFAI

Price decrease expected in solar PV lower but similar to the high tech industry examples

EXAMPLE

2003 2004 2005 2006 20071,000

2,000

3,000

4,000

5,000

37-inch LCD*

42-inch PDP**

CAGRPercent

•The price reduction path expected for solar PV module between 2008 and 2020 is lower but similar to the high tech industry

•As an example, LCD* and PDP** technology price decreased ~20-25% p.a. over the last 4 years

-24%-24%

-21%-21%

13

PV Business Model Committed to the PV sector

ManufacturingManufacturing DevelopmentDevelopment EPCEPC Large scale plants O&M

Large scale plants O&M

3SUN (EGP, SHARP, STM) EGP EGP EGP

DevelopmentDevelopment EPCEPC

IPP – ESSE(1)

(EGP, SHARP)

Large scale plants O&M

Large scale plants O&M

Retail channel (Enel.si)

IPP – ESSE(1) IPP – ESSE(1)

EGP is strategically positioned across the whole PV value chain

Turn-keyinstallation to

domestic/business customers

(1) EGP Sharp Solar Energy.

14

• Enel Green Power• Sharp• ST Microelectronics

Partners(each 1/3)

• Catania, at STM M6 premisesLocation

Technology • Sharp triple-junction thin-film

Capacity

• 160 MW/y (Q4 2011)

• + 320 MW/y (2012-14)

At start

Ramp-up

Capex• ~ 320 M€ (160 MW/y)

• ~ 770 M€ (480 MW/y)

Enel Green Power : • Business Development • Retail Sales Network

Sharp: • Technology• International Sales Network

STMicroelectronics:• Manufacturing Experience and Site• Trained Personnel

Employment

• ~280 people (160 MW/y)

• ~700 people (480 MW/y)

• Over 400 people during construction

Partners’ contributions

3SunPV Factory Joint Venture

15

Enel.si: EGP Retail Arm

A unique approach to renewable distributed generation

Solar PV and other

distributed renewables

Energy Efficiency

Turn Key PV and other distributed renewable installations (mini-wind, geo-thermal heat pumps, solar-thermal) to domestic and business customers

Leadership in the Italian fast growing retail PV market

Energy efficiency and energy savings solutions for domestic and business customers

Partnerships with products and technology leaders

Business lines

1

2

Business model Franchising A strong growing franchising network with over

500 entrepreneurs franchisees with EGP brand

16

• Franchising: local entrepreneurs supported by Enel.si

• Enel.si offers to retail market - through its franchising network - distributed renewable energy generationproducts and services and energy efficiency solutions

• Enel.si provides to franchisees centralized communications, products, technical assistance, finance solutions, sales and technical training platform

• Over 550 franchisees with local distributed points of sale

• Over 250 MW photovoltaic plants installed

• Refueling product pipeline with new innovative retail applications and bundle offers for residential, SOHO, small-industrials segments

Over 550 franchiseeslocally distributed over Italy

Business modelBusiness model

OpportunitiesOpportunities

Enel.si: access to the fast growing retail market

17

Innovation in renewablesSolar thermodynamic – Archimede

Thermodynamic innovative system developedwith ENEA patent, integrated with a moderncombined cycle

Using molten salts (fertilizers) as a fluid that canreach temperatures of about 550 °C

Molten salts store the sun's heat to produceelectricity even in low sunlight (even during thenight)

Net capacity: 4,7 MWe

Gross annual production: 9,7 GWh

Being constructed in Priolo Gargallo (Siracusa)

Enter into exercise: July 2010

18

Tenerife /Greece / TurkeyResource evaluation

Italy In operation 730 MW

US - NevadaIn operation

47 MW

US - UtahDrilling17 MW

ChileDrilling80 MW

El Salvador In operation

200 MW

• 40 plants - 775 MW* - 5,000 GWh

• 460+ people involved in operation

• Types: dry steam, flash steam and binary cycle

• Operations since 1904

GeothermalGlobal Resources Availability and EGP presence

* Consolidated MW as of December 2010.

19

Enel Green Power Geothermal plants Binary cycle - North America

Salt Wells

Stillwater

Salt Wells and Still Water are the world largest binary cycle plants

They are the benchmark in binary geothermal energy generation

•A binary system with two fluids, hot water from underground wells

heats an organic fluid and turns it into a vapor that makes the turbine

generate power.

•They are “Closed-loop” systems that continually replenishe the

geothermal resource used in the power generation process, without use

of other Natural Resources (water)

•They will also be the first hybrid solar-geothermal applications in

the world.

Stillwater

(14 MW)

(33 MW)