8/14/2019 2013-05-23 - SustentabilidadeEDP
1/76
Sustainable DevelopmentMay 2013
8/14/2019 2013-05-23 - SustentabilidadeEDP
2/76
Business Portfolio
Note: Data as of Mar-13
EDP Brasil
SpainPortugal
14% of EBITDA
Listed subsidiary: EDP Brasil (EDP has 51%)
Presence since 1996
Power generation: 2.0 GW (from which 1.8GW is hydro)
2 electricity distribution concessions
36% of EBITDAPrivatisation in 1997 (IPO)
Single electricity distributor
Power generation: 8.9 GW (ex-wind)
(from which 5.4GW is hydro)
20% of EBITDAPresence since 2001
Power generation 3.9 GW (ex-wind)
# 2 in gas distribution
Wind Power
31% of EBITDAListed subsidiary: EDP Renovveis (EDP has 77.5%)
IPO in Jun-08
Wind & Solar Power: 7.7GW
# 3 wind operator worldwide (present in 11 countries)
8/14/2019 2013-05-23 - SustentabilidadeEDP
3/76
Clients
Customers view is important for the decision
making process
Listen to customers, providing simple/clear answers
Anticipate customers needs
Results
Fulfilment of commitments embraced with our
stakeholders; Ensure transparency and
trustful relationship
Focus on anticipation and implementation
Demand for excellence at all levels
People Professional conduct combining rigour, enthusiasm and
initiative to emphasizing team work
Development of individual skills, capture of talent;
Ensure safety and welfare at work
Balanced private/professional life is key for success
Sustainability as one of EDPs commitments
Environment and Society Assumption of social/environmental responsibilities
(Involvement/alignment with communities and their
representatives )
Sustainable reduction of greenhouse gas emissions
Energy efficiency
EDP is committed with
Sustainability indicators are part of EDPs management Key Performance Indicators (KPIs)
The Executive Board of Directors assesses internal sustainability indexes every 3 months
8/14/2019 2013-05-23 - SustentabilidadeEDP
4/76
Dow Jones Sustainability Indexes: EDP ranked with thesame score as the sector and supersector leaders
Results of Sustainability Assessment(Absolute points 0-100)
49
6568
74 7582
8486 87
7679
7781
83 84
2004 2005 2006 2007 2008 2009 2010 2011 2012
EDP Best Score (Electric Utilities Worldwide)
The most detailed/intense sustainability assessment process among the ones that evaluate EDP
EDPs Ranking in this index is part of EDPs management KPIs since 2006
Best score in the following categories:
Economic Dimension:
- Risk Management
- Supply Chain Management
- Scorecards/Measurement Systems
Environmental Dimension:
- Environmental Reporting
- Biodiversity
Social Dimension:
- Stakeholder Engagement
- Social Reporting
- Human Capital Development
- Corporate Citizenship/Philanthropy
8/14/2019 2013-05-23 - SustentabilidadeEDP
5/764
Sustainability Recognition Corporate until 2013
Since 2007
Since 2011 (EDP SA and EDP Renovveis)
Since September 2008
Since 2009: CDP and OEKOM
Since January 2010
Since 2008
Since 2006
1stTime in 2011
Corporate Environmental
Management System
Since 2012
8/14/2019 2013-05-23 - SustentabilidadeEDP
6/76
8/14/2019 2013-05-23 - SustentabilidadeEDP
7/76
Sustainability within EDPs corporate governance
General and
Supervisory
Board
Companies/
Business Units
Corporate
Governance &
Sustainability
Committee(CGSC)
Executive Board
of Directors
Environment
& Sustainability
Board
Office/
Coordinator /
Environment
Responsible
Purpose: monitor and supervise
issues related with strategic
sustainability and internal codes of
ethics/conducts
Purpose: analyse, propose and
ensure proper implementation of
sustainability & environmentalstrategy
Purpose: ensure ethical procedures
are conducted within EDP, aiming
at maintaining confidentiality and
rights protection
Purpose: advise the Executive Board
of Directors in environment &
sustainability related matters
(namely on sustainability &
environmental strategy definition
and reports preparation)
Purpose: namely share information
upon and discuss major legislative
packages; share the development of
environmental performance
indicators; monitor the developmentof the action plans and activities of
the sustainability management
structures of EDP Group
Purpose: works with the CGSC;
propose regulatory guidelines on
issues for which it is responsible
for, promote their correct and
issue opinions in matters of the
code of conducts.
Approval of
Sustainability &
Environmental
projects/targets
Operational
responsibility
for the
execution of
approved
projects/targets
Corporate Area:SustainabilityDepartment
Sustainability
Committee
Corporate Area:Office of the
Ethics
Ombudsman
Ethics
Committee
8/14/2019 2013-05-23 - SustentabilidadeEDP
8/76
Shareholder structure after last privatisation stage
Dec-11: CTG was the winner of the privatization of a
21.35% stake in EDP (price offered of 3.45/share:
50% above market price on date of announcement).
Deal closed in May-12.
Commitment to a 4-year lock-up and standstill period
and limitation on voting rights of 25.0%; CTG
represented by 4 members in the General and
Supervisory Board
Feb-13: Parpblica (Portuguese State) sold its
remaining 4.14% through an accelerated book building
at 2.35 per share
Mar-13: Liberbank and Corporacin Masaveu
combined their stakes into a new company (Oppidum)
EDP Shareholder Structure(30-Apr-2013)
Shareholder stability and corporate governance, in the defense of best interests of all shareholders
CHINA THREE
GORGES, 21.35%
IBERDROLA,6.79%
OPPIDUM,6.18%
JOS DE MELLO,4.60%
SENFORA (ABUDHABI), 4.06%
BCP PensionFund, 3.35%
SONATRACH,2.38%
BES, 2.38%
QATAR, 2.27%
CAPITAL
INCOMEBUILDER, 2.06%
MFS, 2.02%
CAPITALRESEARCH,
2.01%
BLACKROCK,2.00%
TREASURYSTOCK, 0.84%
FREE FLOAT,37.70%
8/14/2019 2013-05-23 - SustentabilidadeEDP
9/76
Delivery: Clear outperformance with accumulated
8/14/2019 2013-05-23 - SustentabilidadeEDP
10/76
Delivery: Clear outperformance with accumulatedtotal return 51% above the Euro Utilities Index
No capital increase since 2004, no scrip dividend, 3.9bn in cash dividends paid in 2006-12 (1) (1.07/share)
Flat dividend of 0.185 per share fully in cash assumed in 2012-15 Business Plan
Total Shareholder Return EDP vs. SX6E (Jan-06/May-13)
(%)
-9%
+43%
(1) Including dividend from 2012 to be paid on May 23rd2013
1.00
2.00
3.00
4.00
5.00
6.00
J
an/06
Jul/06
J
an/07
Jul/07
J
an/08
Jul/08
J
an/09
Jul/09
J
an/10
Jul/10
J
an/11
Jul/11
J
an/12
Jul/12
J
an/13
EDP SX6E Index
11.0 12.5
14.015.5
17.018.5 18.5
42%
50%47%
55%58%
60%
67%
2006 2007 2008 2009 2010 2011 2012
Dividend per share ( cent)
Dividend Payout Ratio (%)
EDPs dividend performance 2006-2012
Sustainable Financial Gearing: consistent with low
8/14/2019 2013-05-23 - SustentabilidadeEDP
11/76
0.0
1.0
2.0
3.0
4.0
5.0
6.0
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Weight of 2012 EBITDA from Regulated Networks + PPAs (%)
NetD
ebt/EBITDA2
012(x)
REN
Terna
Snam
REE
Enags
Nat Grid
Iberdrola
GDF Suez
SSE
RWE
A2A
EDF
FortumVerbund
Centrica
Enel
2015EGas Natural
Sustainable Financial Gearing: consistent with lowoperating risk and long asset maturity
(1)Source: Bloomberg and Company Reports (2) Excluding regulatory receivables
European Utilities: 2012 Net Debt/EBITDA vs. Business Mix (1)
(x;%)
High weight of regulated and long term contracted revenues, portfolio of assets with long residual useful life
Slight increase of exposure to energy markets as hydro plants under PPA/CMEC gradually move to market prices
Focus on free cash flow & strengthening of credit ratios in 2013E-2015E: Target Net Debt/EBITDA
8/14/2019 2013-05-23 - SustentabilidadeEDP
12/76
Major Strategic targets by Principles of SustainableDevelopment
Note: for more detail on defined targets see slide [ ] of Annexes.
PRINCIPLES OF SUSTAINABLE
DEVELOPMENTMajor Targets
2013-2020
Eco-efficiency &
environmental protection:
Reduce CO2 emissions by70% until 2020 (vs. 2008)
Access to Energy:
Ensure that ICEIT and EIDCare above the levels set by
Regulators
Innovation:
Keep the financing in20m/year
Integrity and Good
Governance: Keep therecognition of the World
Most Ethical Companies ofEthisphere Institute
Social Development and
Citizenship: Increase thenumber of Volunteering
partnershipsby 50%
Economic & Social value:
26 GW of clean capacity
by 2015 (>70% of totalcapacity)
Human Capital anddiversity: Keep the Global
Satisfaction level ofemployees above 80%
Transparency anddialogue: complete the
report of GHG emissions,scope 3
Cli t h EU h d t d th 20/20/20 d
8/14/2019 2013-05-23 - SustentabilidadeEDP
13/76
Objectives for 2020 Binding?
Reduce primary energy consumption by 20% against BaU projections
through increased energy efficiency
Generate 20% of final energy consumption from renewable sources
Reach a 10% share of renewables in transports
Cut greenhouse gas (GHG) emissions by 20% relative to 1990 levels
Climate change: EU has adopted the 20/20/20 energy andenvironmental policy package with objectives for 2020
Efficiency
Renewables
Emissions
1
2
3
8/14/2019 2013-05-23 - SustentabilidadeEDP
14/76
EDP strategy to respond to environmental challenges
Wind & hydro: 67% of installed capacity in 2012, more than 2/3 in 2015E
Reduce exposure to CO2+ nuclear
Invest in Energy efficiency, smart grids and R&D
Installed capacity: +83% in 7 Years driven by
8/14/2019 2013-05-23 - SustentabilidadeEDP
15/76
Installed capacity: +83% in 7 Years driven bygreenfield investments
More than 2/3 of capacity is now hydro & wind
EDP Group Capacity by Technology: 2005-2015E(GW; %)
2005 2012 2015E
Hydro Wind CCGT Other
22.6
26.4
+17%
34%
38%
14%
13%
33%
17%
16%
35%
73%
44%
13%
40%
12.3
3%
+83%
(1)
(1) Including Pecm 2ndgroup (180MW synchronized to the electric system in Feb-13); and excluding Setbal (946MW of fuel oil capacity decommissioned PPA ended Dec-12)
Installed capacity growth driven mostly by greenfield wind power capacity additions outside Iberia
EDP Group Capacity by Geography: 2005-2012(GW; %)
2005 2012
Portugal Spain
USA BrazilRest of Europe
72% 42%
23%
27%
16%
10%
4%
4%
22.6
12.3
(1)
EDP expanded its presence to 5 new geographiesUS, France, Belgium, Italy, Poland and Romania
8/14/2019 2013-05-23 - SustentabilidadeEDP
16/76
EDP portfolio of assets with a long average residual life
(1) Reference Date: Dec-12; Excluding: Special Regime (Mini-hydro, Cogeneration and Biomass), Tunes and Carregado (for systems backup), and Setbal (fuel oil which PPA ended in Dec-12);Including: Pecm 2ndgroup (180MW that started the synchronisation with the electric system in Feb-13); (2) Including ENEOP (390MW Equity Consolidated)
Hydro concession rights in Portugal extended up to 2047
Sustainable cash flow stream over the next 24 years on average, without need of replacement capex
Average Residual Useful Life of EDPs Generation Portfolio by Technology Dec-2012(1)
(Years)
610
16
20
21
37
0 10 20 30 40
ConcessionEnd Dates
25 years totalasset life
4 years avg. ageof portfolio (2)
7.5
7.6
2.4
0.2
3.7
(% weight on total GW)
Years
(34%)
(35%)
(17%)
(1%)(11%)
GW
Hydro Wind & Solar CCGT Nuclear Coal with DeSOx
Average Residual Useful Life of
EDPs Generation Portfolio (Years)
16
24
Dec-2005 Dec-2012
0.6 (2%)
Coal without DeSOx
ifi i i i
8/14/2019 2013-05-23 - SustentabilidadeEDP
17/76
CO2specific emissions: -52% in 2005-15E backed by higher weight of Wind & Hydro
CO2emissions(ton/MWh)
0.6
0.320.29
2005 2012 2015P
Accumulated growth
Wind & Hydro:
% of Total output 47% 60% 62%
Hydro factor Portugal (x) 0.4 0.5 1.0
CO2specific emissions: -52% in 2005-2015E
-52%
C i f l i h
8/14/2019 2013-05-23 - SustentabilidadeEDP
18/76
(1) Capex net of investment subsidies , namely cash grants received in USA
Avg. Capex 2014-15E: cap of ~2.0bn/year with significant downside flexibility namely at the level of EDPR
Capex: execution of selective growth
Consolidated Capex Breakdown(1)
( bn)
2013 Expansion Capex:
EDP Brasil:2 hydro plants under
construction to be commissioned in
2015/17: ~600MW
New hydro plants in Portugal:5
hydro plants under construction tobe commissioned in 2014-16:
~1,450MW
Wind: ~500MW to be installed in
2013 mostly in Poland and Romania.
3.6
1.5
2.12.0 ~2.0
2006 2008
0.8 0.7 0.7
0.80.6 0.6
0.4 0.4 0.4
0.20.3 0.2
2011 2012 2013E
Other - Expansion
Brazil - Expansion
Portugal Hydro - Expansion
Wind - Expansion
Maintenance
New Hydro Plants in Portugal: the largest hydro
8/14/2019 2013-05-23 - SustentabilidadeEDP
19/76
New Hydro Plants in Portugal: the largest hydroprogram in Europe
Hydro: 2.3bn of total capex in new capacity, of which ~55% was already incurred
EBITDA contribution: ~100m in 2015E or ~175m on the 1stfull year of operation of all plants
Plant Type MW
Total
output
(GWh)
Net of
pumping
(GWh)
Start-up
date
Picote II Repowering 246 239 239 Nov-11
Bemposta II Repowering 191 134 134 Dec-11
Alqueva II Repow., Pumping 256 381 30 Dec-12
Ribeiradio New plant 81 134 134 2H14
Baixo Sabor New pl., Pumping 172 405 230 2H14
Venda Nova III Repow., Pumping 756 1,337 18 2H15
Salamonde II Repow., Pumping 207 274 81 2H15
Foz Tua New pl., Pumping 252 585 275 2H16
Total 2,161 3,489 1,141
5.6
1.7
1.4
Inst. Capacity
in Iberia
Ongoing
Investments
Under
Development
+31%
EDPs Investment Plan in Hydro Portugal
(GW)
+56%
Dec-2011 2012/2016 Post 2016
Pumping profitability is mainly backed by
8/14/2019 2013-05-23 - SustentabilidadeEDP
20/76
Premium / (Discount) versus pool price
Pumping profitability is mainly backed byspreads between peak and off-peak prices
Pumping enhances hydros high value even in dry years
The increasing weight of wind in the system boosts
price volatility
Pumping has storage value: is paid for its ability to
close gap between supply and demand
EDP Pumping activity Spreads versus avg. Pool price
(/MWh ; avg. 2010/11)
SellingPrice
2836
PumpingCost
Spread SellingPrice
PumpingCost
Spread
2010 2011
+5% -70% +10% -60%
Margins on pumping depend on the spreads between
off-peak and peak prices, rather than absolute prices
Distribution of Hourly Pool Prices in Spain
(/MWh)
Hours
0
20
40
60
80
100
1
201
401
601
801
1001
1201
1401
1601
1801
2001
2201
2401
2601
2801
Jan/Apr 2013 Jan/Apr 2012
EDP has the 2ndhighest exposure to hydro in
8/14/2019 2013-05-23 - SustentabilidadeEDP
21/76
g p ySouthern Europe
Source: Companies reports
In 2016, EDP will have the largest exposure to hydro amongst Southern European Players
Hydro Capacity in the Conventional Mix in Southern Europe
Major Players in the region
52%
45%43%
29%
24%20%
15%
EDP 2016 Peer 1 EDP 2012 Peer 2 Peer 3 Peer 4 Peer 5
2016E 2012
Hydro Plants in Portugal: Starting point for long term
8/14/2019 2013-05-23 - SustentabilidadeEDP
22/76
y g g p gsustainable involvement with local communities
Guaranteed purchase of local products
by contractors workers canteens (for 8
years in average)
Enhance new models of agriculture
A multiple-purpose agriculture, basedon eco-system services provider
Develop new distribution channels to be
in place after the end of construction
works
Agriculture/ecosystem services Handcraft Entrepreneurship
Deploy design products
Develop adequate distribution channels
Promote higher proximity from large
consumption centres
Improve professional skills of local
communities
Training for entrepreneurship
Support to new businesses
brainstorming sessions
Support to new business analysis and
set-up
Reduce environmental and social impacts from new plants:
Achieve no net loss or net gain on biodiversity; Shared decision-making process
Creating new business opportunities and promoting local job creation
Environment & Agriculture, based on a local socio-economic dynamic as development factor
Minimisation and Compensation Measures
EDPR: Diversified portfolio and stable revenue stream
8/14/2019 2013-05-23 - SustentabilidadeEDP
23/76
EDPR: Diversified portfolio and stable revenue stream
Note: Data as of Mar-13 (1) Does not include EDPR 40% stake in ENEOP consortium (equity consolidated, 390MW)
% total installed capacity
~80% LT PPAs/Hedged
~20% Merchant price
Canada
-
-
US
-
3,637 47%
Long term PPAs (15 years)
Brazil
-
84 1%
MW Under construction
Installed Capacity (MW)
86
7,673
France
Belgium
Italy-
-
-
314
57
40
Fixed tariffs indexed to inflation: Spain: for 20 years Portugal: for 15 +7 years France: for 15 years
4%
1%
UK
-
-
60% stake in 2.4GWwind offshore project Other Europe:
Long Term PPAs or
market price + green certificates
Portugal Spain
4 -
615(1) 2,310
Romania
Poland
54
28
266
350
Includes solar (39MW
3%
5%
30%8% 1%
Wind & Solar: selectively executing the most attractive
8/14/2019 2013-05-23 - SustentabilidadeEDP
24/76
US, Poland and Romania
y gopportunities
EDPR Growth Breakdown by markets
(MW; %)
33%
5%
48%
20%12%
2008-2012 2013-2015E
Capturing short-term opportunities and adjusting
plan to regulatory and fiscal environment
Electing new markets with attractive wind/solar resources
and political and regulatory stability
Stronger focus, also in US: implementing dual teams for wind
and solar development
NewMarkets+
Pipeline of projects with high quality and diversified towards markets with potential allows
EDPR to flexibly manage its growth plan
Ability to capture opportunities and execute
growth in most attractive countries
New Markets
Solar PV23-45%
45-60%
Solar: intensify activities as a result of the fast technology
8/14/2019 2013-05-23 - SustentabilidadeEDP
25/76
Solar PVLevelised Cost of Energy (LCoE) reduction
(2011 vs. 2009; %)
STEG parabolic through
w/storage
C-Si PV
Thin film PV
-13%
-20%
-40%
Technology Cost
Solar PV is the technology with the fastest cost declineamong renewable energy sources
Levelised Cost of Energy (LCoE)
Capex has dropped strongly in the last years leading to
LCoE of c100/MWh in the sunniest regions
CTG PartnershipPreferred access to the main PV suppliers in China, thathave dominated the module market in the last years
Source: New Energy Finance
Currently tracking opportunities in the most attractive solar markets
improvements
R&D in wind offshore
8/14/2019 2013-05-23 - SustentabilidadeEDP
26/76
EDPR is leading the
development of up to 2.4
GW of wind offshore
projects with a 60%
stake
Wind Float Project
Innovative floating structure to support offshore turbines
with great stability at depths below 40 m
Phase I: Large scale demonstration prototype with a 2 MW
turbine connected to the grid which already generated
~5GWh (3.4GWh in 2012)
Phase II: Pre-commercial phase with ~27MW (5 Wind Float
units) is being prepared
First wind offshore project in the world without
any heavy load support
EDP installed a wind floating
turbine in northern Portugalcoast (Aguadoura Pvoa do
Varzim)
UK Wind Offshore Partnership
R&D in wind offshore
Joint development of wind offshore project in UK
Inch Cape
0.9 GW
Moray Firth
1.5 GW
Partnering with Repsol, 1st class company in Energy Sector
with strong commitment to wind offshore capacity
development
Sites to be developed in transitional waters (30-60m of
depth) , 15-25 km shore distance
Upon getting key consents, construction and operation
could begin between 2015 and 2020
EDPs Thermal Power Generation Fleet: Diversifiedf li ll i b l k h i k
8/14/2019 2013-05-23 - SustentabilidadeEDP
27/76
EDP benefits from short term weakness of CO2prices through higher load factors at coal plants
Merchant thermal output: CCGTs output focused in the best hours and ancillary services
Our portfolio of clients enhances the integrated management generation & supply activities in Iberia
EDP Conventional generation Installed capacity in Iberia
(MW in Mar-13)
45%
21%
29%
5%
Mar-13
Hydro
Coal
CCGT
Others (1)
55% of capacity is merchant; 45% remunerated at 8,5% RoA real pre-taxes
78% of capacity with DeSOx
Our coal fleet is the most efficient in Iberia: lower transportation costs and heat rates
Lower-cost blast-furnace gases partially meet our Aboo needs
Favourable location: Plants located close to heavy energy consumption areas
Spanish coal -Our Soto 3 plant operates under RDL 134/2010 (Spanish coal):remuneration is guaranteed until 2014
Highly competitive technical features in a context of low working hours:
- Minimum operating level of 20%-40%, allowing to concentrate in the best hours;
- Capable to move up/down by 100MW in 15 min, boding well with ancillary services;
- Start-up time from idle of 20 min., boding well with ancillary services.
By working fewer hours in a balanced manor, the useful lives of our CCGT fleet can beextended
portfolio allowing to balance markets short term risks
Brazil: Electricity demand expected to grow at a an averagel t f 4 2% i 2011 2021
8/14/2019 2013-05-23 - SustentabilidadeEDP
28/76
annual rate of 4.2% in 2011-2021
Hydro Power Plant Thermal power plant Distribution Concession Area
EDP Brasil: Geographical footprint
Bandeirante
(part of So Paulo state)
Escelsa
(Esprito Santo)
Peixe Angical
499 MWEnd of PPA: 2016Concession: 2036Mascarenhas + Suia
227 MWEnd of PPA: 2016 (avg.)Concession: 2025
Lajeado
903 MW
End of PPA: 2030 (avg.)Concession: 2033
Jari (under construction)374 MWEnd of PPA: 2044To start operations in 2015
Cachoeira Caldeiro (under construction)
219 MWEnd of PPA: 2047To start operations in 2017
Pecm
360 MW coal plantEnd of PPA: 2026Concession: 2043
Sustainable and sound regulatory framework: Return of RAB in Distribution, long term PPAs in generation
Key drivers for strong growth in volume of
electricity distributed:
New clients (better housing conditions,
population growth)
Increase in consumption per capita (home
appliances, etc.)
Better public infrastructures, industrial growth
Generation capacity Additions:
2015: +373MW of hydro capacity Jari
2016: +120MW of wind power
2017: +219MW of hydro capacity Cachoeira
Caldeiro
Energy Efficiency: A strong focus on DSM and energy
8/14/2019 2013-05-23 - SustentabilidadeEDP
29/76
Voluntary actions (Portugal): 2.2m
Projects to mobilize consumers in all sectors to
improve energy efficiency , supported by the
regulator. Ex: distribution of efficient light bulbs,ECO bills, ECO website Since 2007 until 2012:
9 million efficient light bulbs distributed
5,2 TWh cumulative savings, corresponding to
1.84 Mton of CO2emissions avoided.
Energy Services (Portugal and Spain):
more than 30m
Offering new DSM consulting services regarding
energy efficiency, load and tariff optimization, fuel
switching and distributed generation: energy
auditing and certification, energy efficiency
measures, management of assets to capture
savings in buildings, solar thermal and PV solutions,
micro and mini generation
services
Energy Efficiency Programme (Brazil): R$28,4m
In 2012, projects realized 25 GWh estimated savings
(corresponds to an average consumption of 14,714 houses
by year) and reduction of peak demand of 14,4MW:
Good Energy for the Community, Good Solar
Energy and Good Energy in Schools project
Efficient and safe-oriented use of Energy
Replacement of inefficient lamps and appliances
Solar heating systems installation
Consumption reduction in public buildings, traffic
lights, hospitals, etc.
Load shifting
Smart Grids: key to cope with challenges of increasedrenewables distributed generation and electric vehicles
8/14/2019 2013-05-23 - SustentabilidadeEDP
30/76
renewables, distributed generation and electric vehicles
Benefitting costumers and offering a technological leap forward in network service and capabilities
Operational Efficiency
Energy Efficiency
Service Quality
Renewable Energy
Electric Vehicles
inovgrid is aligned with the most important world technological trends and already a reference in Europe
Cutting-edge Smart Grid project (30.000 EDP Boxes that substituted the old meters) is being commercially tested
in the Portuguese city of vora, the 1st Iberian inovcity, with a total investment of 15m
In 2013/14, a broader pilot will be implemented, with the installation of 100 000 EDP Boxes in seven locationswith different grid characteristics
The municipality of Aparecida do Norte (state of So Paulo, Brazil) will be the first Brazilian city equipped with a
smart grid. The project, lead by EDP Brasil, will include the installation of 15,000 smart meters.
Electric mobility: EDPs on the frontline of innovationd t h l
8/14/2019 2013-05-23 - SustentabilidadeEDP
31/76
3
and technology
Electricity
Network
Electricity
Supply
Slow Charging
Posts
Fast Charging
Posts
Other Mobility
Services
ElectricVehicle
Growth potential in the medium/long-term
Strong rationale for development
(decarbonisation, storage, reduce imports)
EDPs Project for Electric Vehicle Chargers
Pilot project for electric vehicles: 1,030 charging
stations activated and currently around 500 users
Strengths
Know-how and expertise; Synergies within the group
Close relationship with relevant entities
Electric Vehicles to become relevant for the electric utilities business over the medium/long-term
Opportunities
Natural positioning within EDPs business / industry / market
Leverage on existing commercial relationships
New service: sale of equipments for home charging, etc.
Weaknesses
Project involves several entities outside of EDP Group
Threats
Uncertainty on potential interest from auto industry
Lack of rules and of technological definition;
Low acknowledgement from potential users/agents
EDP: Reinforcing corporate culture and motivation,k titi d t
8/14/2019 2013-05-23 - SustentabilidadeEDP
32/76
3
Labour indicators above the sectors average; stability of companys performance evaluation by
RobecoSAM.
Absenteeism down from 3.35% in 2011 to 3,16 in 2012.
Employment
seen as key competitive advantages
Training: EDP group universe books 503k hours of training 2012 (+5,5% YoY).
EDP University: seven schools, two of which are transversal in nature and 5 are business oriented(generation, distribution, gas, renewables and supply). Since mid-2012 UEDP has been responsible for
defining and monitoring the EDP Group Training Plan and Budget and coordinating the initiatives forprofessional development.
Mobility: Mobility involved 588 employees in the EDP Group in 2012 (EDPs mobility includes
intra-company, inter-comany and international mobility).
Assessment of potential and performance based on Key Performance Indicators(KPIs) benchmarks:
2005: no program implemented.
2011: applied to over 50% of employees in EDP group and to 86% of employees in Portugal.
2012: applied to 100% of employees.
HR
Development
Reduction of EDP and Contractors frequency rate (from 4,65 in 2012 to 4,17 in 2012); increase of the
number of death accidents involving service providers (4 in 2011 to 13 in 2012)
Increased installed certified power (from 58% in 2011 to 72% in 2012).
Health &
Safety
EDP is increasing its commitment with Energy Accessfor Development
8/14/2019 2013-05-23 - SustentabilidadeEDP
33/76
3
for Development
EDP A2E Projects around the world
Executed
To be implemented
Guine Bissau
Kakuma, Kenya
Mozambique
South Africa
East Timor
Venezuela
Brazil Angola
Kakuma: a pilot project intended to empowervulnerable people and to cover basic energy needs
8/14/2019 2013-05-23 - SustentabilidadeEDP
34/76
3
vulnerable people and to cover basic energy needs
2011-
Maintenance by LocalPartner
Yearly visits by FEDP(Technical Assistance)
2008-2009
Opportunity ID
Site survey
Intervention proposal by EDP
On-site Community Engagement
Contract between EDP andUNHCR (UN Refugee Agency)
2010
Execution start-up
UNHCR Highcomissionerand EDP CEO visit
Execution wrap-up
Non-refundable social investment of 1.3 million by EDP to implement a 50kWp project in a UNHCR camp with
75.000 refugees
Kakuma: a pioneer example of how energy canmakea nowhere land into a place to live
8/14/2019 2013-05-23 - SustentabilidadeEDP
35/76
3
a nowhere land into a place to live
SOLAR LANTERNS FOR STUDENTS
4500 units | School attendance; Study by night; School-home safety
SOLAR COOK STOVES, SOLAR WATER PURIFIERS & AGRO-FORESTRY
Women capacity in solar cooking; Potable water; Kitchen garden
SOLAR PV SYSTEMS FOR LIGHTING AND ICT
50 kWp | 11 public buildings; 31 street lights with 147 homes; Capacity building
Direct Impact6.000refugees
300families
Savings of 50.000l/year of diesel
700tCO2 emissions avoided
For the first time in 9 years, there are A and B students, and there were no E grades
48% of students had A, B or C grades, while the average of the previous 8 years was 25%
Conclusions
8/14/2019 2013-05-23 - SustentabilidadeEDP
36/76
3
Responding to climate change through a strong improvement of environmental performance
Energy efficiency: campaigns encouraging efficient behaviors, development of energy services, promotion of
installation and use of distributed energy resources and electric vehicles
Keep-on investing in innovation: wind offshore (wind float), smart grids, electric vehicles, etc.
EDP is listed for the 5thyear in a row in DJ Sustainability Indexes and being a top ranked utility worldwide
Commitment towards the protection of nature and biodiversity, social engagement, enhancement and
achievement of certain levels of responsibility and accountability
#3 player worldwide in wind ; #1 largest hydro program in Europe
EDP is present in 13 countries; 29 nationalities of employees
8/14/2019 2013-05-23 - SustentabilidadeEDP
37/76
Annex
EDP strategic agenda: follow up for 2012-15controlled risk, superior efficiency and focused growth
8/14/2019 2013-05-23 - SustentabilidadeEDP
38/76
3
controlled risk, superior efficiency and focused growth
1) For the complete Business Plan period 2) Excludes Regulatory Receivables 3) Based on recurrent net profit. Dividend per share from 2011 as floor.
Strategic Priorities
Proactive management of legal
and regulatory agenda
Competitive refinancing and
accelerated deleveraging
Focus on Opex and Capex
efficiency
Value creating growth
Successful partnership with CTG
Business Plan 2012-2015 highlights
Becoming greener: >70% clean installed capacity in 2015
Capex
8/14/2019 2013-05-23 - SustentabilidadeEDP
39/76
3
130 130
2011 2012
EDP Sustainability Index: Environmental Dimension
(points)
EDP Sustainability Index
(points)
~0%
146 143
2011 2012
-1,5%
EDP Sustainability Index: Social Dimension
(points)
EDP Sustainability Index: Economic Dimension
(points)
111 109
2011 2012
-1%
131 137
2011 2012
5%Weight: 33% Weight: 31%
Weight: 36%
(1) Developed by EDP based on 26 sustainability performance indicators
Summary of indicators: 2012
8/14/2019 2013-05-23 - SustentabilidadeEDP
40/76
3(1) Market Cap as of Dec-31, 2012(4) Based on the net generation following the new GRI guidelines sector specific
(2) In accordance with London Benchmarking Group (LBG) methodology (3) Large hydro; Small hydro and Wind
Generated Economic Value (GEV): Turnover + other operating income + gains/losses with the sale of financial assets + gains/losses from associated companies + financial income
* Distributed Economic Value (DEV): COGS + operating costs + other operating costs + current tax + financial costs + dividend payment; ** Accumulated Economic Value (AEV): GEV DEV
Environmental
Some major events
Economic
Installed Capacity 23,380 MWRevenues 16,340 million
Primary Energy Consumption 197,793 TJDistributed Economic Value* 17,488 million
Social
Employees(5) 12,275 nb.
Average age 46 years
Training hours 503,272 hours
Absentee Rate 3.16 %
DJSI-For the fifth consecutive year, EDP is distinguished in the
publication world, "Sustainability Yearbook 2012" SAM, obtaining the
rank of gold for the third time and EDP in the top of world
sustainability in the Dow Jones Index for the fifth year in a row,
obtaining the same absolute score of the utilities leader.
Brand- EDP awarded as the most valuable Portuguese brand
according to a study from the Brand Finance consultant, with a brandvalue of EUR 2.4 billion.
Wind farms - EDPR agrees with CTG on the first investment in minority
stakes in wind farms.
Net Income 1,012 million Renewable Installed Capacity(3) 15,247 MW
Market Capitalization(1) 8,373 million ISO 14001 Environ. Certification MW17,665
SO2 specific emissions(4) 0.29 g/KWhTotal Community Contribution(2) 21 million
NOxspecific emissions(4) 0.29 g/KWhCommunity Contribution (% of EBIT) 1 %
CO2 specific emissions(4) ton/MWh0.323Accumulated Economic Value** 2,124 million
R&D Spending 31 million
Collective Employment Agreements 83 %
Male / Female Ratio 3.54 nb.
EDP frequency rate 1,82 nb.
(5) Excluding Corporate Bodies
DJSI Index: Assessment method and weights
8/14/2019 2013-05-23 - SustentabilidadeEDP
41/76
4
IndexIndex
Weight
EDP Points
(Max. 100)Index
Index
Weight
EDP Points
(Max. 100)Index
Index
Weight
EDP Points
(Max. 100)
Market Opportunities 7% 84 Electricity Generation (IS) 7% 84 Labor Practice Indicators 5% 78
Risk & Crisis Management 6% 100 Operational Eco-Efficiency (IS) 7% 58 Human Capital Development 5% 100
Codes of Conduct /Compliance/
Corruption & Bribery6% 99 Climate Strategy (IS) 6% 100
Talent Attraction &
Retention5% 65
Customer Relationship Management (IS) 5% 81 Biodiversity (IS) 3% 100 Stakeholder Engagement (IS) 5% 100
Corporate Governance 5% 73 Transmission and Distribution (IS) 3% 60Occupational Health &
Safety (IS)
4% 89
Price Risk Management 3% 93 Water Related Risks (IS) 3% 66Corporate Citizenship /
Philanthropy3% 90
Scorecards / Measurement Systems (IS) 3% 98 Environmental Reporting 3% 93 Social Reporting 3% 100
Environmental Policy /
Management System (IS)3% 93
Economic Dimenson (35%) Enivironmental Dimenson (35%) Enivironmental Dimenson (30%)
Industry Specific
59%
General
41%
Social
Economic
Environmental
8/14/2019 2013-05-23 - SustentabilidadeEDP
42/76
Fostering Knowledge
8/14/2019 2013-05-23 - SustentabilidadeEDP
43/76
4
Scientific support for structural decisions: overall impact of new technologies, go/no go
implementation based on long term environmental risk management
Influence the prioritization of biodiversity knowledge: connection corridors between preserved
areas; stock evolution of endangered species
Development of specific monitoring and other applied studies requiring advanced knowledge:
integrated cumulative impact of wind farms on birds; design improvement of fish ladders or in stream
flow optimization.
BiodiversityChair
Volunteer five years program of 2.5m, under EU Business and Biodiversity Initiative (15 projects
implemented with partnership of more than 40 scientific entities and ONG )
Promoted concrete actions on biodiversity ,constituting guidance for future actions
Capitalizes the goodwill of volunteer regeneration as a way to get an overall positive balance in
company activities impacting the environment
BiodiversityFund
Influence of climate change on Iberian fauna (which conservation measure are worse on the longrun).
Test adaptation to new environments: Reintroduction of osprey nesting in Portugal.
Long termstudies
Adaptive Management
8/14/2019 2013-05-23 - SustentabilidadeEDP
44/76
4
Tight collaboration with Scientific Institutions
Follow up of implemented measures and adjustment of management to meet the best possible results, optimizing investment
Transform costs of mandatory actions into investment
Maximization of value added to environment and learning from the results of it implementation.
Measures primarily oriented to habitats and ecosystems
Restoration to maximize long term results.
Deep involvement of local stakeholders
Make them our long term partners to preserve environmental improvements, getting economic and social value from betterecosystems and consolidating a sustainable way of life and creating economic benefits to both parts
Promote local stakeholders participation since the very begin of projects
Get their main opinion through the use of LOAM (Landscape Outcomes Assessment Methodology), consultation.
Defining a communication program for every project with significant impact in environment or quality of life
Tailored after a detailed evaluation of local stakeholders identification. A specific methodology for this project communicationstrategy is in place at corporate level The ComPro project.
Long Term Vision
8/14/2019 2013-05-23 - SustentabilidadeEDP
45/76
4
To be able to implement in advance measures in a cost effective way and take advantage of being first mover.
Identify the environmental and social long term trends and regulation risks
Member of WBCSD World Business Council of Sustainable Development
Where sustainability issues are systematically analysed, and worldwide solutions are proposed to governments and regulators.
EDP as Core Team of ecosystems focus area of WBCSD
Pilot test of EVI (Ecosystem Valuation Initiative), which give EDP international visibility, showing willingness to find and stabilizecommon metrics to evaluate environmental risks.
World pilot project to determine overall impact/benefits during its entire life, compared with others technological solutions.
Partnership with MIT Portugal, for a LCA- Life Cycle Assessment of the Baixo Sabor hydropower project
Geo-referenced database with all the information produced of any site, impacts, measures and follow up. Any scientist in theworld can review, comment results, and learn from experience.
Having Baixo Sabor Project as LTER Long Term Evaluation Research site
Invest in creating management skills to improve their wellbeing is a guarantee that good environment performance in longterm is going to be maintained.
Promote acceptable life condition for local communities
8/14/2019 2013-05-23 - SustentabilidadeEDP
46/76
What does Environment means for our business?
8/14/2019 2013-05-23 - SustentabilidadeEDP
47/76
4
Strong experience on renewable energies
Environment integrated at strategic level
High technical competences of our HR
Transparency and trust , associated with EMS -Environmental Management System
High public exposure
Member of WBCSD
International lobby to involve private sector on findingsolutions
Competitive advantage from external recognition, ex: DJSI
Increase efficiency (more tools available to supportbusiness, anticipate risks)
Increase reputation (high awareness of society)
Ability to attract and retain employees
High negative impacts on environment
Operations on high sensitive ecological regions(Biodiversity Hotspots) and inside protected areas/highecological habitats.
Strong dependences on ecosystem services
Internal expertise increasingly externalized
High public exposure
Increase operational costs due to licensing delays
High level international agreements to reduce biodiversityloss
Increase regulations constrains
Increase lending requirements (access to capital)
Damage to brand (external stakeholder pressure)
Challenge to social license to operate
Strengths
Opportunities
Weaknesses
Threats
Environmental dimension: 2012 performance
8/14/2019 2013-05-23 - SustentabilidadeEDP
48/76
4
Corporate Environment Management System (SIGAC): Certification ISO 14 001 since 2008
Higher number of installations certified under ISO 14 001 (235 generation facilities in 2012 (1)(+70 vs.2011)135 of 607 electricity substations; gas sector fully certified)
Ongoing program for EMAS registration of generation facilities in Iberia (62 in 2012; +15 vs. 2011)
Environmental
Management
Electricity
Generation
Reduced of electricity generated from CO2Free Generation(2)(-9% vs. 2011): CO2
Free Generation represent ~61%(1)of EDP total generation in 2012
Climate Change Increase CO2emissions: emission factor increase 13% YoY to 0.323 ton CO2/MWh
in 2012
Atmospheric
Emissions ~13% YoY increase of NOX emissions per KWh (0,29g/kWh) and 80% for SO2emissions (0,29 g/kWh)
Biodiversity
EDP commitment is explicit in Biodiversity Policy(www.edp.pt/en/sustentabilidade/ambiente/biodiversidade)
EDP has been publishing a Biodiversity Report since 2009, were explicitly defines itsstrategy, targets and achievements with respect to those targets.
For all generation sites under construction, stakeholder engagement is a processconducted under Environmental Impact Assessment process and Biodiversity isconsidered.
(1) Excluding nuclear (minority participation in Spanish company without management control), representing 156 MW (c1% of total capacity) and 1,230 GWh (c2,3% of total generation) in 2012(2) Excluded Thermal Generation and nuclear
What does Social issues mean for our business?
8/14/2019 2013-05-23 - SustentabilidadeEDP
49/76
4
Electricity/energy considered a basic need of a modern
society
High technical competences of our HR, low turnover
High public exposure
Strategic approach to stakeholder engagement isbecoming more robust
Encourage more informed decision making, based on theexpectations of society
Enhance reputation fostering greater public trust
Demonstrate the total shared value with society beyondfinancial distribution
Recruit, motivate and retain its employees
Prevent or reduce potential conflicts with consumers
Promote innovation and benefit from partnerships
Health and Safety of suppliers
Multi geographic and cultural exposure
High public exposure
Different backgrounds of many business units regardingstakeholder management.
Becoming global raises new social issues
Sharing responsibility through value chain is increasinglybeing considered a core sustainability practice
External stakeholder pressure is increasing
Many EDPs initiatives seen as philanthropy if notinternalized into business practices
Strengths
Opportunities
Weaknesses
Threats
Social dimension: 2012 performance (1/3)
8/14/2019 2013-05-23 - SustentabilidadeEDP
50/76
4
Labour indicators above the sectors average; stability of companys performance evaluation by
RobecoSAM
Absenteeism down from 3.35 in 2011 to 3.16% in 2012.
Employment
EDP operates in 4 continents and does business in 13 countries. Has 12,275 employees.
Training: EDP group universe books 503k hours of training 2012(~+5% YoY).
EDP University: 7 Schools, 2 group wide (oriented towards EDPs culture and personality) e 5 functional(oriented towards business areas).
Diversity: EDP initiated its participation in an External Forum, energized by CITE , sharing good pratices ;
EDP approved its Diversity Policy.
Assessment of potential and performance based on Key Performance Indicators(KPIs) benchmarks:
2005: no program implemented
2011: applied to over 50% of employees in EDP group and to 86% of employees in Portugal
2012: applied to 100% of employees.
HR
Development
Reduction of EDP and Contractors frequency rate (from 4,65 in 2011 to 4,17 in 2012), as well thenumber of death accidents involving service providers (4 in 2011 to 13 in 2012).
Increased installed certified power (from 58% in 2011 to 72% in 2012).
Health &
Safety
(1) Comisso para a Igualdade no Trabalho e no Emprego
Social dimension: 2012 performance (2/3)
8/14/2019 2013-05-23 - SustentabilidadeEDP
51/76
5
EDP Group overall procurement reached 2,782M.
13% of total procurement are from foreign suppliers.
Most of fuels purchased was come from suppliers that have advanced Corporate Social Responsibility
policies and have also signed up to Bettercoal initiative. EDP plans to join this initiative in 2013. Develop a pilot program with Siemens More Sustainability in the Supply Chain in order to improve
performance in the supply chain, namely in the areas of health and safety.
Suppliers
Since 2008, EDP has a report that combines economic and financial aspects,with social and environmental performance. Since 3rdquarter semester reports
also sustainability information integrated with interim results of EDP Group.
Sustainability
Report
Implementation of a social accounting system (SAP) in Portugal; it will be extended to all geographiesduring the next 2 years.
Social investment on community represents about 1% of EBIT: more than 400 community projectssupported (total contribution amounted to 21M (1)in 2012 in accordance with the LBG (2) method) inthe area of social innovation, access to energy and education, cultural, sports and environmentalpromotion and entrepreneurship
Contribution to
the community
(1) Value of 2012 not yet validated by Corporate Citizenship; (2) London Benchmarking Group: for detailed please see: www.edp.pt/en/sustentabilidade/sociedadeecultura/avaliar/Pages
Social Report Publication of EDP Social Report for the 5thyear consecutive
Social dimension: 2012 performance (3/3)
http://www.edp.pt/en/sustentabilidade/sociedadeecultura/avaliar/Pageshttp://www.edp.pt/en/sustentabilidade/sociedadeecultura/avaliar/Pages8/14/2019 2013-05-23 - SustentabilidadeEDP
52/76
5
Stakeholder
Engagement
Since 2009, EDP has implemented an internal process to assess the companys maturity levelagainst AA1000 APS(2008) standards.
Set up the institutional relations and stakeholder department and a Stakeholders ManagementCommittee. These new structures will enhance the communication of EDPs stakeholders,contributing to a more fluid and systematized information about EDPs activities.
To guarantee the total cover of stakeholders, EDP promote different channels to reinforce dialogwith all stakeholders, such as the Ethics Ombudsman. This is a channel managed at a corporatelevel by the Communication office and all issues around stakeholder engagement are forwarded tothe Stakeholder engagement office.
KPMG verified EDPs report in accordance to AA 1000 AS 2008, Type 2. This verification processincludes information disclosed in EDPs Annual Report and the alignment of EDPs practices with theprinciple of inclusion, materiality and response.
EDPs materiality issues were identified, in 2012, through the Accountabilitys methodology, whichensures a balanced and cleared assessment of data collected internally and throughout thedifferent channels opened for different stakeholders. For consult list of stakeholders see next slide.
Economic dimension: 2012 performance
8/14/2019 2013-05-23 - SustentabilidadeEDP
53/76
5
Consolidation of Internal Ethics Management System: review of the Code of Ethics Regulation and theInternal Regulations of the EDP Group Ethics Committee. Revision of Ethics of Code has begun and willbe completed in the first half of 2013.
EDP participates in the Gesto Transparente.org initiative.
Completed the training program integrated in the ticaedp Programe. This program was been object ofpublic analysis and debate in the program for the international MBA at the Catlica Porto BusinessSchool.
Mr. Jos Figueiredo Soares is the EDP Group Ethics Ombudsman, replacing Mr. Carlos Loureiro.
Ethics
9,900,394 customers of electricity and 1,059,436 customers of gas.
The levels of satisfaction with electricity improved in 2012 (+5pp than 2011)- 78% declare to besatisfied; the levels for gas didnt change from 2011- 85% declare to be satisfied.
EDP has as a ombudsman customer: Mr. Luis Valadares.
Customer
Relationship
Consolidated investments amounted to 2,010M in 2012, a ~7% decrease when compared to 2011. Thisdecrease was essentially explained by lower investments in wind operations (less 231M in USA,
explained by lower wind capacity targets).
EDP invested about ~32m in R&D projects (energy efficiency, renewable energy, clean generation,carbon capture and micro-generation).
Market
Opportunities& Energy
Efficiency
Research and Development: main strategic areasof innovation
8/14/2019 2013-05-23 - SustentabilidadeEDP
54/76
5
Offshore wind energy- EDP reconfirmed is commitment to
offshore/ocean energy as one of the areas of focus in its innovation
effort- Wind Float project;
Solar Photovoltaic energy- Sunlab project;
Search for long-term decarbonisation of the sector.
Renewable &
Generation
Technologies
Smart Grids InovGrid: smart electricity grids (transform existing distribution
system into intelligent system, based on telemanagement)
Inovation
ecosystem
Venture Capital- Risk Capital Fund- by the end of 2012, it had
invested about 7M in innovative companies and funds in the clean
tech area.
Electric Mobility
Mobi.E: implementation of a grid-integrated electric mobility
system; OpenCharge: Development of a low-cost electric vehicle
charging station using open-source hardware
Energy Efficiency
Home Energy Management services plataform
Implementation of new plataform (Upower) for testing different
technologies in the area of smart grids
Engaging stakeholders: identification of importantsustainability issues
8/14/2019 2013-05-23 - SustentabilidadeEDP
55/76
5
Climate Change
Energy Efficiency
Environmental Protection
Renewables Promotion
Good Governance
Supply chain empowerment
Free Market
Local Development
Security of facilities
Corporate strategy and New
Businesses/Markets
Human Rights
EDPs Important Issues shared with society:
List with the main stakeholder segments and mostrelevant topics (1/3)
S k h ld M i l i h l T i f l i 2012
8/14/2019 2013-05-23 - SustentabilidadeEDP
56/76
5
Stakeholder Main consultation channels Topics of most relevance in 2012
- Dedicated telephone line and e-mail
- External perception study - Macro-economic context
- Regulatory framework
- Financial debt / Dividend policy sustainability
- Investors Day - Liquidity and financing costs
- Strategic partnership with China Three Gorges
- EDP Group strategy
- Dialogue with DECO
- Market studies - Market liberalisation
- Complaint communication channel - Quality of supply
- Focus groups - Price policy
- Customer Ombudsman (Portugal) - Transparency and proximity
- Customer Managers - New services and technologies
- Energy efficiency barometer - Energy efficiency
- Satisfaction surveys
- Bi-annual survey on organizational
environment- Career evolution and qualification
- Chairman's direct line - Professional fulfillment
- Ethics Ombudsman
- Meetings with unions and worker's
committees
- Specific and thematic surveys - Occupational health and safety
- Channel for whistleblowing - Ethics at the workplace
- Chairman of EBD meets with employees - Balancing employment and family life
- Performance Evaluation Process
- Surveys sent by Socially Responsible
Investors (SRI)
- Periodical Confecence Calls and Roadshows
on spectific thematics
Customer / Consumer's Rights
Associations
Emplyees / Unions
- Appropriate remuneration, recognition and
equal opportunities
Investors
List with the main stakeholder segments and mostrelevant topics (2/3)
8/14/2019 2013-05-23 - SustentabilidadeEDP
57/76
5
Stakeholder Main consultation channels Topics of most relevance in 2012
projects - Environmental management and promotion
- COMPRO project / Local surveys - Infrastructure safety conditions
- Energy efficiency
- Promoting renewable energies
- Seminars and conferences - Climate change
- Co-creation innitiative - Innovation and new technologies
- Partnerships and collaboration agreements - Environmental and Biodiversity management
- Renewable energies
- EDP's intitutional image/Reputation
- Renewable energies
- Hydroelectric projects- Dedicated telephone line and e-mail - Tariffs and energy prices
- Market studies - Quality and security of electricity supply / Investment on grids
- Thematic meetings with members the EBD - Environmental and Social responsibility
- Press conferences - Innovation (smart grids; off-shore wind projects)
- Financial performance / Privatization process
- Liberalised market
Local communities
Academic world
- Environmental Management Systems with
EMAS registration
Media
List with the main stakeholder segments and mostrelevant topics (3/3)
8/14/2019 2013-05-23 - SustentabilidadeEDP
58/76
5
Stakeholder Main consultation channels Topics of most relevance in 2012
- Qualified workforce
- Health and Safety
- Price policy and quality of service
- Ethics Ombudsman - Strengthening communication channels
- Surveys on quality of service - Promoting renewable energy
- Internationalisation
- Periodical meetings - Market liberalisation
- Follow-up visits to new projects - Tariffs and prices
- Environmental Management
- Renewable energies
- Social responsibility- Climate change
- Collaboration agreements - Energy efficiency and new technologies
- Projects monitoring committees - Environmental management, particular focus on
- Consultation channel - Renewable energies
- Responsible marketing
- Ethics and transparency
- Regular meetings with ongoing
building/supply contracts
- Representation of the company in
various committees and sectoral
Suppliers
Regulators and Governmental
Institutions
NGO
China Three Gorges: profile and partnership with EDP
8/14/2019 2013-05-23 - SustentabilidadeEDP
59/76
5(1) As of Dec-2011.
Chinas largest clean energy group with an ambitious renewable energy expansion plan
One of the major Chinese Corporates: Sound financials and competitive access to long term capital
100% owned by Peoples Republic of China
(S&P & Fitch: AA- / Moodys: Aa3)
CTG credit rating: S&P: A / Moodys:A1;
Sound relationship with some of the worlds major
banks: ICBC, China Construction Bank, Bank of China,
China Development Bank, etc.
Generation Capacity (1): 25.2 GW installed + 49.6 GW
under construction, mostly large hydros
i) Three Gorges Hydro Power Plant: 22.5 GW(largest
hydro plant in the world).
ii) Other Renewable: 1GW of wind capacity in operation;
solar power development projects.
EDP-CTG strategic partnership agreed in Dec-11:
Committed credit facility of 2bn provided to EDP at corporate level by China Development Bank
2012-15: CTG to invest 2bn in minority stakes in renewable capacity (incl. co-investment)
8/14/2019 2013-05-23 - SustentabilidadeEDP
60/76
Securitisation options on EDPs regulatoryreceivables in Portugal
EDP Regulatory Receivables in Portugal: Amortisation Profile
8/14/2019 2013-05-23 - SustentabilidadeEDP
61/76
6
EDP Regulatory Receivables in Portugal: Amortisation Profile
(Mar-13 stock + Future 2013 Securitisable Tariff Receivables) ( bn)
2012 Securitisable Tariff Receivables
2013 Securitisable Tariff ReceivablesAvg. Receivables Maturity
Mar-13: 3.1 years
Securitisable deficits with relatively short maturities (3.1 years), low risk and adequate remuneration
In Apr/May-13 EDP securitized 291m of 2012 Tariff Receivables. Further deals to be considered in near term
Tariff deficit tranches available for
securitisation by EDP:
2012 Securitisable Tariff
Receivables: 973m to be collected
in 2013-16, 6.32% interest rate
(291m securitized in Apr/May-13)
2013 Securitisable Tariff
Receivables: 1,421m to be
collected in 2013-17 (1,275m in
debt by 2013YE); interest rate of
~5.85%0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
2013 2014 2015 2016 2017
0.7
1.4
0.6 0.6
0.3
Other
Wind: A competitive technology to meet electricitydemand
8/14/2019 2013-05-23 - SustentabilidadeEDP
62/76
6Notes: Analysis based on: Gas 7.0$/Mmbtu, Coal $80/ton, CO2 15/ton, /$ 1.35
Levelised Cost of Energy by Technology
(/MWh, European Case for new investments)Wind Levelised Cost of Energy (LCoE)
(/MWh on Load Factor scenarios)
20
40
60
80
100
120
20% 25% 30% 35% 40%
Dismantling
CO2Fuel
O&M
Investment
58
69 7278 79
Hydro Wind
Onshore
Nuclear CCGT Coal
Wind is becoming a cost-adequate alternative energy within national long-term electricity system plans
Lower capex cost
and higher useful life
Excludes
intermittency
costs
EU mandatory targets for 2020 indicate strongunderlying increase of the wind capacity...
8/14/2019 2013-05-23 - SustentabilidadeEDP
63/76
6Notes: Source: EWEA; NREAP
RES in Energy mix
(%)
EU Renewable capacity per technology in 2020
(GW)
8.5%
20%
2005 2020
+2.4x
Sector
(%)
Heating and
Cooling
Transport
47%
30%
82103
26 233
+90+32
+58
+21+38
172
135
84
44 41
7 4
Windonshore
Hydro Solar PV Biomass Windoffshore
Solar CSP Other
Wind onshore is expected to be the major contributor for renewables capacity growth
New Capacity
2010 Capacity
Electricity
23%
...on which the market has recurrently raised severalquestions about its sustainability
8/14/2019 2013-05-23 - SustentabilidadeEDP
64/76
6
Is wind the most cost competitive renewable technology today?
1
Is wind a cost adequate technology to meet increasing demand?
2
Is wind profitable at current electricity wholesale prices?3
Is wind tariff generating an over-cost in the electricity systems?
4
Is wind the most cost competitive renewabletechnology today? Yes
Weight of renewable generation and premium(1)Levelised Cost by technology
8/14/2019 2013-05-23 - SustentabilidadeEDP
65/76
6Notes: Source: EDPR Internal Analysis; (1) EDPR European Countries
Weight of renewable generation and premium
(%, by technology)Levelised Cost by technology
(/MWh)
69
96
125
225244
Wind
Onshore
Biomass Wind
Offshore
Solar PV Solar CSP
82%
53%
5%
6%
11%
34%
2% 7%
Generation Premium
Fuel
O&M
Investment
Wind
onshore
Wind
offshore
Solar
PV
Solar
CSP
61%
18%
19%
22%
14%
42%
6%18%
Generation Premium
Wind is the most efficient and mature renewable technology
2010 2020E
8/14/2019 2013-05-23 - SustentabilidadeEDP
66/76
Is wind profitable at current electricity wholesaleprices? No, but...
Market Price - Levelised CostIBERIAN MARKET
8/14/2019 2013-05-23 - SustentabilidadeEDP
67/76
6Notes: Source: EDPR Internal Analysis; Clean Spark Spread, assumptions: heat rate CCGT 51.4%, emissions factor 0.365 ton/MWh; Forex 1.35/$, C02 15/ton; Brent 102.5$/bbl
Electricity
market price
at market prices providing a sustainable CCGT operation, wind is competitive
CCGT
Clean Spark Spread CCGT Return Wind Return
Market Price - Levelised Cost
18
8
-2
-12
-22
80
70
60
50
40
11
1
-9
-19
-29
2
-8
-18
-28
-38
/MWh /MWh/MWh/MWh
Is wind tariff generating an over-cost in the electricitysystems? Yes, but...
Electricity System with Wind Capacity Electricity System without Wind Capacity
8/14/2019 2013-05-23 - SustentabilidadeEDP
68/76
6Notes: Source: EDPR Internal Analysis based on 2010 Iberian production figures from REE and REN
Electricity System with Wind Capacity
(Illustrative simulation, Iberian Market)Electricity System without Wind Capacity
(Illustrative simulation, Iberian Market)
excluding wind from the energy mix translates into higher market electricity prices,
mitigating the impact of wind over-cost
/MWh
Market(260 TWh)
47
90
Wind(52 TWh)
Total Consumption(312 TWh)
up to+7
/MWh
Wind over-cost ~2bn
(endogenous resource)
Increase in electricity cost ~2bn
(mainly imported)
EU ETS supply and demand balance
Mton 2008-2028E
The EU ETS should remain unbalanced in theshort-term...
Accumulated - 900Mton set-aside
Accumulated - 30% 2020 capAccumulated - Baseline
Annual - Baseline
8/14/2019 2013-05-23 - SustentabilidadeEDP
69/76
6
Mton, 2008 2028E
-277-232-151-110-71-44-14
305889117139
905
446248
-35
-475
-2.000
-1.500
-1.000
-500
0
500
1.000
1.500
2.000
2.500
282726
288
252422212019122008 09 10 11 13 14 15 2316 17 18
-435-382-319
Absence of backloading
leads to increasing
oversupply and lack of shortterm confidence in the
market
Supply/demand
equilibrium by 2018 should
sustain price
Increased demand from sectors such
as aviation and limitation of offsets
rebalances the market in Phase IV
Source: BNEF (Apr-2013); DPE analysis
Accumulated - 900Mton set-aside Annual - Baseline
but structural reform and market dynamics could restore equilibrium in Phase IV
Regulatory update: EDPR to keep benefiting from adiversified portfolio and flexible business model
Win-win solution and Decree-Law published in Feb-13 respecting the agreement reached between the
8/14/2019 2013-05-23 - SustentabilidadeEDP
70/76
6
Spain
EDPR still open to dialogueand find constructive solutions
Unilateral decision to eliminate the variable option regime; all assets in Spainunder fixed tariff regime from Jan-13 onwards
Romania
Rights preserved, but potential
impact on cash collection
Potential postponement of 1 Green Certificate cash collection (out of 2) for wind(2 GC out of 6 for Solar)
Potential reduction to 1.5 Green Certificates for new wind assets (clarification tolead to pipeline optimisation in the country)
28MW under construction as of Mar-13
Poland
New Law to potentially solve
current price environment
Enactment of the new RES Law has been suffering delays impacting the GreenCertificate market prices and new long-term contracts negotiations ;
54MW under construction as of Mar-13
US
New growth opportunities on
the short-term
PTC extension enabling a favourable environment in the US and new RfP forPPAs being setup; EDPR secured in Apr-13 a 250 MW PPA for operating projects
Long-term visibility for
new projects
Italy: 1strenewable tender successfully completed in the 1Q13; EDPR secured40 MW with a 20-year PPA
Brazil: Exclusive wind tender announced for Ago-13 with stricter rules benefiting
long-term players; EDPR secured 120MW with a 20year PPAItaly & Brazil
Portugal
Win-win solution and
improved visibilitywind sector and the government to extend the remuneration framework ;
4MW under construction as of Mar-13
Strategic targets by Principles of Sustainable Development(1/3)
P i i l f S t i bl
8/14/2019 2013-05-23 - SustentabilidadeEDP
71/76
7
2013
Principle of Sustainable
DevelopmentTarget
Economic & Social Value
Keep the SAM Gold Class
EBITDA CAGR 5% per year Net Profit CAGR : low single digit
Payout ratio between 55% and 65% of recurrent Net Profit (minimum
0.185 per share) Annual average Operational Investment: EUR 2,000m Total investment on renewable energies: 60% annual average
2011-2015
2012-2015
2015
Installed Capacity of 26 GW Clean installed capacity higher than 70% of total installed capacity OPEX savings of EUR 130 m in 2015 Ratio Adjusted Net Debt/EBITDA lower than 3.0x
Strategic targets by Principles of Sustainable Development(2/3)
Principle of Sustainable
8/14/2019 2013-05-23 - SustentabilidadeEDP
72/76
7
2013
Principle of Sustainable
DevelopmentGoals and Targets
Eco-efficiency and
environmental protection
Increase 426 MW of installed capacity certified by ISO 14 001
Join the Better Coal international Initiative
Reduce CO2 specific emissions by 70% until 2020, in comparison with 2008values
2020
Innovation Keep the financing in 20m per year 2013-2015
Integrity and Good
Governance
Keep the recognition of the World Most Ethical Companies of EthisphereInstitute
Revision of EDP's Code of Ethics in 2013 Preparation and launching of new training programmes in 2013/2014 Initiate monitoring the performance of EDP's ethics system (according to
Code of Ethics Regulations)
2013-2014
Strategic targets by Principles of Sustainable Development(3/3)
Principle of Sustainable
8/14/2019 2013-05-23 - SustentabilidadeEDP
73/76
7
2015
Principle of Sustainable
DevelopmentGoals and Targets
Transparency and dialogue Complete the report of GHG emissions, scope 3
Obtain and maintain a corporate certification of the Safety Management System Reduce the frequency of on-duty accidents with EDP employees and
service providers by 5%, compared to 2012 Keep the Global Satisfaction level of employees above 80%
Implement the action plan of the Diversity Policy between 10 and 15measures
2013Human Capital and
diversity
Acess to energy Ensure that ICEIT and EIDC are above the levels set by Regulators 2013-2015
Social Development and
Citizenship
Increase the number of Volunteering partnerships by 50% Budget allocated to Fundao EDP up to 0.1% of the Group's 2011 turnover 2013-2015
Models of external evaluation
EDP sustainability practice is evaluated by several external entities that create and maintain sustainability
8/14/2019 2013-05-23 - SustentabilidadeEDP
74/76
7
Corporate Indexes:
Dow Jones Sustainability Index World e Enlarged
Dow Jones Sustainability Index Europe
FTSE4Good Index Series
Bloomberg indexes ESG
ECPI Ethical Index Euro ECPI Ethical Index MEU
ECPI Ethical Index Global
Ethibel Sustainability Index
CDLI Carbon Disclosure Leadership Index
Storebrand (1)
Oekom (1)
Regional Indexes: Accountability Rating Iberia
ndice de Sustainability Empresarial (ISE) - Portugal ndice de Sustainability Empresarial (ISE)- Brasil
Databases:
Asset4 Bloomberg Fortune
GS Sustain (Goldman Sachs)
Recognitions:
Prmio Cidadania das Empresas e dasOrganizaes Portugal
Prmio Qualidade de Esprito Santo (PQRS)-Brasil
susta ab ty p act ce s e a uated by se e a e te a e t t es t at c eate a d a ta susta ab tyindexes, sustainability ratings and databases.
EDP has been evaluated and, as a result, integrates the following indexes/databases or received the
following recognitions (list not exhaustive):
(1) ) New evaluation during 2012. The last one dates were in 2009 and 2011, respectively. More details see www.edp.pt/en/sustentabilidade/abordagemasustentabilidade/
DJSI - EDP World Top in the Electricity Sector OEKOM - EDP is one of the best in the electricity sector
Sustainability Performance of EDP (Core Broad(1))
Top 2
8/14/2019 2013-05-23 - SustentabilidadeEDP
75/76
7(1) Core SRI - is composed of the following strategies (with possible combinations):Norms- and values/ethical- based exclusions (three or more criteria)Positive screening, including Best-in-Class and SRI thematic
funds (2) EDP does not integrate the CDP Global 500 index in 2011, but CDP Iberia
SRI: 8 bn USD
FTSE4Good Index Series
SRI: 8 bn Euros
SRI: 90 bn Euros
7590 85
96
0
2040
60
80
100
120
Absolute Score
2009
2010
2011
2012
Carbon Disclosure Project Global 500 and CDP Iberia (2)
Performance and Score: EDP member of CDLI
SRI: 78 bn USD
A- BBTop 4 Top 5: CDP Iberia
Top 3Top 2
8/14/2019 2013-05-23 - SustentabilidadeEDP
76/76
Top Related