Enel Green Power Latin America

II Congreso del FuturoCiencia, tecnología Humanidades y ciudadanía

Santiago 17th January 2013

Uso: Aziendale

The Energy Mix Strategy to address Country and business risk

Risk

Energy Mix

Financial Energy Security Regulatory Competitive

Fossil fuel- based energy prices

increasing as global demographics and economic growth boost demand

The Fukushima disaster and political turmoil in the Middle East highlight energy-

availability risk

Regulation tightens as stakeholders demand that

companies do more to mitigate the

environmental impact

Operational efficiency becomes a key differentiator in the economic downturn

A diversified energy matrix as an instrument to mitigate

business & country risk

Uso: Aziendale

The Renewable Energies Market Renewables’ Response to the Energy Trilemma

Renewable Energies

Supply Independency

Increasing Global Energy

Demand

More renewables in the mix help mitigate the risk profile of the Energy system

• Renewable energy is a key element of a balanced primary energy mix at affordable costs and improving energy security and independence

• Short time to market and modularcharacteristic allows wind and solarto adapt very well to changingenergy demand scenarios

Uso: Aziendale

5.0%

Min Max

7% 16%

7% 8%

5% 9%

4% 9%

2% 7%

Expected GrowthCAGR ‘11-’20

8.7%

2020 Max

110

1,000

1,030

550

330

(GW)

3,020

2020 Min

53

921

655

371

207

(GW)

~2,206

Installed base

27+2%

513+11%

460+10%

252

+6%

173+3%

2011 (GW)

~1,4255.0%

Min Max

13% 24%

7% 11%

10% 15%

2% 2%

5% 24%

8.7%

Investments

~113

~2

~65

~58

~13

2011 (€bn)

~€250bn+112

‘10-11 (GW) %

+31 78%

+0.2 2%

+41 21%

+29 3%

+11 17%

Delta capacity

8.5%

Installed base

~71

~11

~238

~1,034

~71

2011 (GW)

~1,425

Installed base

Source: EPIA, GWEC, EER (2011); WEO 2011 New Policies scenario (2020 min); industry reports/McKinsey (2020 max); BNEF, EGP estimates

Note: Investments estimated based on BNEF figures and assuming an fx of 1.3 €/$. Large Hydro investments estimated assuming 29GW of new installations and 2.0M€/MW capex.

Renewable energy investments: a growing industryExpected worldwide growth

TOTAL

Solar

Geothermal

Wind

Hydro

Biomass

Technology

TOTAL

Africa

Asia

Europe

North America

Latin America

Area

By technology By geography

Expected Growth

CAGR 2011-20

~40

~11

~197

~1,005

~60

2010 (GW)

~1,313

Installed base

26

461

419

239

168

2010 (GW)

~1,313

Uso: Aziendale

233383 419 460

746185

231 239 252

486

132

162 168173

301

219

428461

513

1,070

22

25

2627

84

792

1,2301,313

1,425

2,687

2000 2009 2010 2011 2020

Latin America

Africa

Europe

Asia

North America

Fonti: Enerdata, WEO 2011 (World Energy Outlook pubblicato annualmente dall’International Energy Agency), EER (Emerging Energy Research), GWEC (Global Wind Energy Council), EWEA (European Wind Energy Association), EPIA (European Photovoltaic Industry Association), NREAPs (National Renewable Energy Action Plans), REN 21, target nazionali, stime EGP

Renewable Market Forecast – EGP view 2000 – 2020 Installed Capacity by Area

CAGR:+5,0%

YoY:+6,8%

YoY:+8,5%

CAGR:+7,3%

Renewable Energy growth involves all continents

GW

Uso: Aziendale

745

979 1,005 1,034

1,33917

159197

238

767

428

68 71

82

153

792

1,2301,313

1,425

2,687

2000 2009 2010 2011 2020

Others

Wind

Hydro

CAGR:+5,0%

YoY:+6,8%

YoY:+8,5%

CAGR:+7,3%

Renewable Market Forecast- EGP view2000 – 2020 Installed Capacity by Technology

Source: Enerdata, WEO 2011, EER, GWEC, EWEA, EPIA, NREAPs, REN 21, National targets, EGP estimate

Wind and Solar PV the technologies that will contribute most significantly to the projected growth

Solar

GW

Uso: Aziendale

The renewable energy marketStrengths and opportunities

Predictable

• EU experience shows RES integration closer to real time markets

• Spain: unbalances management

• Italy: RES participation in the unbalancing market from 2013

• Progressive integration of regional markets

• Grid support and progressive integration of distributed generationReliable

• Renewable energy proved to be competitive in terms of pricing

• Capex reductions do to competition, economy of scale and efficiency

• Progressive integration of intermittent production in competitive markets

Competitive

Uso: Aziendale

Paradigm shift in the energy supply of the future

Future

Past Supply DemandFollows

Supply Demandinterdependent

Smart Homes, Smart grids and storage are some examples of elements that are and will guide the transition

Uso: Aziendale

Chile: Trends and market scenarios

7 7.8 8 8.4 8.9

12.232.7 34.8 36.7 37.3 39.2

52

2013 2014 2015 2016 2017 2022

Capacity (GW) Production (TWh)

CAGR Capacity 2013-2017:6,3%

CAGR Production 2013-2017:4,6%

A single technology can not cover the

increasing demand. A more balanced

energy mix is needed

Nuclear issues: acceptance (Fukushima);

significant costs; time to market

Hydro: high reliance on Hydropower expose

systems to the risk of droughts (Brazil)

Thermal- based power: essential but affects the

carbon footprint of the economy

Renewables play an important role in the matrix differentiation

Uso: Aziendale

Chile: main issues at stake

Upcoming challenges in the renewable energy market will shape the context in which investors are called to participate

Transmission

ENRC debate

Permitting

Energy Supply

Bottlenecks force to use inefficient local generation and cause risky operations. Black Out risks

Current ERNC quota set at 10% 2024 does not provide correct market signals

Transparent rules to favor interested players to boost investments in the Country

• Long term energy selling mechanism and increasing recourse to tenders

Uso: Aziendale

Strategy and opportunities for public acceptance of low carbon investments

Enel Green Power is strongly committed at

making renewable sources not only

sustainable, but also increasingly competitive

with traditional generation technologies,

increasing their efficiency and reliability

Corporate Social responsibility

Enel’s mission is to generate and distribute value in theinternational energy market, to the benefit of our

competitiveness and the requirements of our customers, theinvestments of our shareholders and the expectations of

everyone who works with us.Enel acts in the service of communities, respecting the

environment with the intention of ensuring a better world tocoming generation

Enel Green Power enacts its CSR activities

based on the following four principles:

� Responsible growth

� Climate change combat

� Transparent and continuous mutual communication with local communities

� Promotion of human rights

Social responsibility as an opportunity to competitive success - Porter

11

12

• More efficient regulation in mature markets

• Increasing recourse to tenders

• Market design to increase flexibility

• Innovation, scale and competition driving down technology costs, especially in wind and solar

1

1 2

• Significant growth of all main technologies in all geographical areas

• Several new markets opening quickly

4

• Large variety of new industrial and financial players entering at regional and global level

3Market Scenario

CompetitiveScenario

RegulatoryFramework

Cost of Technology

New Challenges in the Renewable Energies MarketThe Industry’s Circle of Technology, Regulation, Competition and Market

Uso: Riservato Aziendale

13

Thank you for your attention

Maurizio Bezzeccheri

Enel Green PowerHead of Iberia and Latin America

Uso: Riservato Aziendale

14

BACK UP

Uso: Aziendale

CSR- a concrete example

Barefoot college

� Enel Green Power SpA and the Barefoot College have initiated a partnership to establish Community Empowerment Centres (CECs) in five countries in Latin America.

� The Centres will also serve as Rural Electronic Workshops to support the solar electrification of remote, rural villages in Guatemala, Chile, Brazil, Peru and Colombia.

Established in 1972, the Barefoot

College is a non-government

organization that has been

providing basic services and

solutions to problems in rural

communities, with the objective

of making them self-sufficient

and sustainable.

The partnership with EGP The approach

� The Barefoot Approach: women from these rural communities will be trained as Barefoot Solar Engineers. After 6 months of training at the Barefoot College in India, they will return to their countries to solar electrify their own communities.

� These women will then become trainers themselves and train other women at the CECs in each country

Society and corporate performance: an integrated, essential approach

15

Uso: Aziendale

EGP presence

North America

Operating 1,010 MW

Production 2.92 TWh

Iberia e Latin America

Operating 2,486 MW

Production 6,97 TWh

Italy and Europe

Operating 3,583 MW

Production 12,58 TWh

Enel Green Power

Operating 7,079 MW

Production 22.48 TWh

Installed capacity by technologyFY 2011

Production by technologyFY 2011

EGP Number and figures– FY2011Geographical diversification and multi-technological approach

Total = 7.1 GW

3%11%

36%

50%

Total = 22.48 TWh

3%25%

45%

27%

16

16 Countries across all main renewable technologies

Uso: Riservato Aziendale

17

Agenda

1. EGP Latin America

− EGP presence at a glace

2. Chile

− The Institutional environment

− General framework and market design

− Selling mechanism and nodal prices

− RES: renewable incentive mechanism

3. Mexico

− The Institutional environment

− Market functioning

− Regulatory developments

4. Brazil

− The Institutional environment

− The Brazilian power system

− Auction based scheme: the Brazilian experience

5. Panama, Costa, Rica Guatemala, El Salvador and Cross Issues

Regulatory Affairs - LATAM

EGP Business Plan: flexibility in capital allocation

17

Uso: Riservato Aziendale

Technology cost reduction - Wind

Note: wind plant cost estimation is based on a standard onshore 50 MW plant, equipped with 2 MW wind turbines (HH=80m, D=90m)Source: McKinsey, May 2012; BNEF, Wind turbine price index, July 2012.

WTG capitalcost

reduction

Innovation (materials, control

systems)

Supply chain cost improvements

Competition

Cost estimation – Wind plant 2012-2022 (€/W)

1.2

1.1

0.9

0.9

0.7

0.5

0.8

1.1

1.4

2012 2017 2022

Base Case Low Case

Economies of scale

Uso: Riservato Aziendale

Technology cost reduction - PV

Note: cost estimates refer to c-si PV modulesSource: McKinsey, May 2012; Photon Consulting, The true cost of solar power, July 2012; PV Insight, Sept 2012

PV modules cost

reduction

Economies of scale

Throughput efficiency

Innovation (materials, efficiency)

Competition

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Jan 20121110092008

Cost estimation - PV plant 2012-2022 (€/W)

1.4

1.2

1.0

1.0

0.8

0.5

0.8

1.1

1.4

1.7

2012 2017 2022

Base Case Low Case

PV modules spot market price ($/W)

Wind energy cost – Recent data

Brazil – 2011 A-3 tender

Brazil – 2011 A-5 tender (*)

Mexico – 2012 Oaxaca wind tender

(Sureste I – Phase II)

0

20

40

60

80

100

120

140

160

180

200

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

Expected CFE

tariff (USD/MWh)

CFE Bid offer

(USD/MWh)

0 BRL/MWh

20 BRL/MWh

40 BRL/MWh

60 BRL/MWh

80 BRL/MWh

100 BRL/MWh

120 BRL/MWh

2011 A-3 2011 A-5

Natural Gas

Hydro

Wind

(*) mainly large hydro projects expansion