34
IBERDROLAAgenda Investor Day
Liberalization is a reality
Challenging times and opportunities
Drivers tor the tuture
Conclusions
2
Liberalisation of the Spanish Market IBERDROLA
Investor Day
11.:.&11l.ii:0i • • • • •
Tariffs abolished
(MITYC 2010E)
Industrial
SME
Residential
Spain
ontracts
100,000 120
1.6 Mili. 56
26.9 MilI. 89
The Last Resort Tariff is based on forward market
power pnces
Total 28.6 MilI. 265
... free market can now compete with Last Resort Supply 3
Liberalisation of the Spanish Market IBERDROLA
Investor Day
I
GENCO ..'o o .'..' .'.'
.'.'
\ j M····.'.'.'
.'.'
( POOL 1 I \
REGULATED
o 015TCO
4
Liberalisation of the Spanish Market 18 ERDROLA
Investor Day
Energy Balancing markets Company
•
System Operator
Market Operator:
• Spot (OMIE)
• Forward (OMIP)
5
IBERDROLANew sales scenario Investor Day
Electricity sales
2007 2010E
• System Operator
Spot Sales
Forward Sales (In 2010, Retail & LRS 93% Forward Markets 7%)
Day ahead price is no longer a reference as it was in the past 6
New sales scenario IBERDROLA
Investor Day
€IMWh 2009 Example Prices
67.462.859.8
Balancing Reserve market services
43.7 37.0
SPOT OMIP LRT Free
7
New sales scenario IBEROROLA
Investor Day
Final Energy Price Components* 59.8
€/MWh
37.0
Forward Cost of Balancing Capacity Risk Base load Profile Cost payments premium
Price**
.. As recognized by the Governmentfor the calculatíon ofthe Last resort toril!
.. .. Average Doy ahead príces, 2009 8
IBERDROLAGeneration mix -~ Investor Day
The challenge is to find the right sales strategy'
• Hydro 2010 • Nuclear • Cogeneration
• Renewables Base Generatían . CCGT (51 TWh) . Coal
Manageable Energy (16 TWh)
67 TWh
Iberdrola relies on a very flexible, competitive and low-emissions generation mix
67 TWIi of competitive generation to our customers
9
IBERDROLAAgenda Investor Day
Liberalization is a reality
Challenging times and opportunities
Drivers tor the tuture
Conclusions
10
Challenging times and opportunities IBEROROLA
Investor Day
Lower commodities Lower energy demand
demand
Increase of Excess of electricityExcess of natural gas renewables generation capacity supply contribution to
electricity demand
Lower commodity prices
Lower natural gas
prices
Competition torLess income tor base Lower spreads stable customers load power
11
IBERDROLAChallenging times and opportunities Investor Day
¡fhe Economic Crisis im~acts liberalised business in several ways ...
lower commodities lower energy demand(demand
Increase of Excess of electricityExcess of natural gas renewables generation capacity contribution to
electricity demand supply
lower commodity Lower natural gasprices
prices
less income tor base Competition tor [ J __s_ta_b_le_c_u_s_t_o_m_e_r_s--, lowe r spreadsload power
1
12
IBERDROLA Hedging base load generation Investor Day
Production 2010 Forward and Spot Sales TWh
Achieved price: Production: 67 TWh 51.0 €/MWh
Average variable cost: 20.9 €/MWh • Forward Sales • Market and SO
Coal2 .J-- .. ----------------------------------------------------~~ Hydrofirm 9 ~~~----------------------------------------------------
Renew 11
~----------------------------------
Nuclear 25
Market and so: 5.8
Hedged
Forward Sales:
45 .1
TWh
Almost 50 TWh of base generation already sold at over 50 €/MWh thanks to a stable customer portfolio
1 Mostly, contracts renewals during 2010 13
• • •
IBERDAOLA Managing less thermal share Investor Day
. .Demand and renewables Internationalliquid markets send
Thermal generation share
TWh
25
20 •••••• - 33%
•••••••...... 15........ 10
5
2009 2010E2008
••
Natural gas prices
Eur/MWh
Futures Jan 2008
Spot prices
Futures Jan 2009
2006 2007 2008 2009 2010
14
Managing gas supply excess IBEROROLA
Investor Day
Iberdrola has not entered into any Take-or-Pay obligation
Iberdrola's LNG supply (bcm)
6.0 - - - - - - - - - - - Long Term Contracts
Nominal Quantities
2007 2008 2009 2010E
...we have taken advantage of our contractual flexibility to reduce supplies to manageable quantity
15
Managing gas supply excess IBERDROLA
Investor Day
• Three LT contracts under negotiation
• On December 22nd , we successfully closed the renegotiation of a contract for more than 1 bcm allowing additional flexibility over the duration of the contract and a temporary reduction in volumes
• Medgaz supply (contract for 1.6 bcma not yet signed)
Anticipation is critical due,to long negotiation processes
16
IBERDROLA Managing gas supply excess Investor Day
I er ro a 15 a ance m gas or 2010, now wor mg on 2011 onwar s
17
Managing LNG Contracts
~ regas capacity secured In Isle 01 Graln 3'" phase la
Isle o/ Grain Regas Terminal
<!!!-InveSlor Oay
r 19 years starting In Q4 2010
Cargoes Destinations
..
Customer portfolio IBERDROLA
Investor Day
(years)
tl [!!
Average Lile o/ Customers Part/olio 20TWh -----.,
_____ 1 21 TWh .... ~~~~--------~~~_.r -----Ic: 1O u
.1
32TWhE
1
- - --.<:t ... 1...
- - __ 1
-+--------+---------------+---------------------------~.years1.5 4 8
70% of ttie committed electricity in 2010 is already committed for 2011
'* 27 TWh underLast Resort Tariff 19
Customer portfolio IBEROROlA
Investor Day
2nd retailer in Portugal New contracts per week
GWh
3,600
20% of the liberalized market
x 41
2008 2009
2007 Currently
ectnclty, as an Energy-Efficiency-Services-
20
IBEROROLACustomer Portfolio Investor Day
Ihe additional services p'rovided to our customers
Additional Products & Services Contracts
700,000
x 4.4 ../ ...:
... ... 157,000
.---~
2007 Jan'10
n i t ~etlC\lS rvi is planned tor the upcoming years
21
Customer Portfolio IBERDROLA
Investor Day
Industrial and Public Administrations
Managed by our own staff
,/ Personal Account Managers
,/ Specialized/Customized Telephone
SMEs and Residential
More than 3,000 FTE outsourced under our control
,/ Sales Force & Collaborators
,/ Telephone & Web
,/ Outsourced Iberdrola Attention Points
~ Collection
22
Customer Portfolio IBERDROLA
Investor Day
1.98% Debt >90 daysjAnnua/ Turnaver 6,760
• Pub/ic Administratians
Rest
.... Annua/ Turnaver
M€
Dec07 Jan 10 With the State guaranty
28 days
Average 16 days Callectian Periad .. (ACP)
Dec08
17 days
Dec 07 Dec08 Jan 10 23
IBERDROLAAgenda Investor Day
Liberalization is a reality
Challenging times and opportunities
Drivers for the future
Conclusions
24
18
X 2 •.' .. '.., ......... '
........' 20
..' 22
2009 2010E 2011E 2020E
Wind Power Capacity vs
Peak Demand
IBEROROLADemand and renewables Investor Day
. Afte~ financial crisis, ~recover.~ is graduallv. ex~ected
Renewables contribution to Wind Power Capacity electricity demand
%
2009 2010E 2011E 2020E
GW 35 ......••••....------.
25
IBEROROLAConsequences of wind volatility Investor Day
November 29th, 2009 Daily change in windGas fired power after the
production (%)main backup for wind 7.00 PM
3.00AM Wind: 18% _~ Wind: 50%
~_mbined
•• ' • • ••••• ••••••• ••••••• • • •• • • I 100%
7.3GW
. .... ..... ... ...... . .........................., -50%
Source: REE Sep09 Oct09 Nov09 Dec09
26
Consequences of wind volatility IBERDROUA
nvestor Day
November 9thl 2009
Demand coverage Spot prices GW Eur/MWhHour20 Hydro
HourS
pumping
Wind
Hydro
Renewable
CCGT
Coal
Nuclear
4 76 •· Pumping · · 30% of · + 75 Eur/MWh ¡J.,total wind
•••·
Wind •· · Hydro · ·
••·· Renewable CCGT · Coal 1 Nuclear
Demand Production Demand Production Hour5 Hour20
27
IBEROROLACombined Cyeles Investor Day
. New investments in CCGT in S~ain
•
Flexibility required by the system PCT 99% of daily differences between CCGT capacity
dispatched in peak and off-peak hours
22GW
lOGW 95%
•
Investment technical
frameworl< 45%
2009 2020E - % Total CCGT Ca pacity
... but market does require more flexibility as a consequence of Europe's commitment on renewables and efficiency
28
Hydro & pump storage projects
2 pump ¡toraJE! plants
"'"W •
<!!!-InveSlor Oay
"
IBERDAOLA
Investor DayHydro & pump storage projects
r-----The technical and economical interest of new
hydro projects has increased due to present and expected market results
% of generation on off-peak hours
30%, before
15%, after ! 11
% Spillage/total inflows
22%, before
5%, after , .l
30
Nuclear projects IBERDROLA
Investor Day
Iberdrola Generación is the only Spanish utility qualified as credible nuclear operator in UK
The joint venture with GDF-Suez and Scottish & Southern could build nuclear in UK if recovery of
investment is sufficiently guaranteed
Sellafield Site has been already acquired
Power plant could be operating by early 205
In this case, Iberdrola Generación energy share would be commercialised by Scottish Power
1""""'1 e1nuc ear~ eve opmen l m l ~WI ' ecomelrea ~W en1curren uncertainties are removed
31
IBERDROLANuclear projects Investor Day
Iberdrola Generación owns a large know-how in nuclear technology,
Reportable Events Licensee Response*
53 52 83%
. /berdr%
• Competitor 1 59%
37%38%
2003 2004 2005 2006 2007 2008 2009 2008 2009
* Published in Reactor Oversight Process by Consejo de Seguridad Nuclear 32
IBERDROLAAgenda Investor Day
Liberalization is a reality
Challenging times and opportunities
Drivers tor the tuture
Conclusions
33
IBEROROlAConclusions Investor Day
flexibility
Iberdrola investment strategy is once again . .- . 34
