2016 10.19 future eon equity story backup · 2016. 10. 19. · 2015 2020 0.3 strong financial...
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Backup
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accordance with IFRS and are therefore considered as "Non-IFRS financial measures". The Management of E.ON believes that
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profitability or liquidity, and should be considered in addition to, rather than as a substitute for, net income and the other income
or cash flow data prepared in accordance with IFRS. In particular, there are material limitations associated with our use of Non-
IFRS financial measures, including the limitations inherent in our determination of each of the relevant adjustments. The Non-
IFRS financial measures used by E.ON may differ from, and not be comparable to, similarly-titled measures used by other
companies.
Certain numerical data, financial information and market data (including percentages) in this presentation have been rounded
according to established commercial standards. As a result, the aggregate amounts (sum totals or interim totals or differences or
if numbers are put in relation) in this presentation may not correspond in all cases to the amounts contained in the underlying
(unrounded) figures appearing in the consolidated financial statements. Furthermore, in tables and charts, these rounded figures
may not add up exactly to the totals contained in the respective tables and charts.
1. Group overview
Strategic partnership Enerjisa
PreussenElektra
2. Financials
3. Core activities
Energy Networks
Customer Solutions
Renewables
4. IR Calendar and contacts
Agenda
Discontinued operations
as of AGM approval
At equity post registration
of spin-off & execution of
deconsolidation
agreement
New segment reporting starting Q2
Energy Networks
Renewables
Customer Solutions
Corp. Functions/ Other
Preussen Elektra
Generation
Renewables
Global Commodities
Exploration & Production
Germany
Other EU Countries
Non-EU Countries
GM / Consolidation
Reporting structure until Q1 2016 Reporting structure as of Q2 2016
Germany
Sweden
CEE & Turkey
Germany
UK
Other
Uniper
5
1. Group overview
Strategic partnership Enerjisa
PreussenElektra
2. Financials
3. Core activities
Energy Networks
Customer Solutions
Renewables
4. IR Calendar and contacts
Agenda
50% 50%
Source: IHS, EIA
Turkey EU28
Enerjisa – Market environment
Favorable growth environment
7
2015-2035
Annual Real GDP
Growth 3,4%
0,5%
10,5%
2,4%
4,7%
-0,6%
2006-2014
Population
growth
Electricity
consumption
growth
3,5%
1,7%
17,0%
2,3%
4,1%
0,5%
CAGR CAGR
Growth Growth
CAGR CAGR
Strong macro-economic indicators
Supportive regulatory environment
8
Source: EMRA
• Eligibility limit for regulated tariff
consistently reduced, but, ~90% of
residential customer accounts still
within threshold
• Full liberalization expected,
opening up new market and profit
pools
Evolution of market liberalization
Eligibility threshold (MWh p.a.)
25,0
5,0 4,5 4,0 3,6
2012 2013 2014 2015 2016
Source: Euromonitor, EMRA, E&Y, IHS Source: EMRA
• Stable cash flows from
USD-denominated feed-in-tariffs
(10years)
• Yearly flexibility to opt for either
feed-in-tariffs or market tariffs
• Higher feed-in-tariff if power plant
parts were manufactured in Turkey
73 73
Wind Hydro
Feed-in-tariffs 2015
USD denominated (USD/ MWh)
4
Regulatory incentive framework
• Return on RAB:
• Opex outperformance:
• Theft & loss allowance
outperformance:
• Financing outperformance:
Regulatory WACC (Pre-tax, local
currency)1
11,9%
6.1-8.0%
5,9% 4,5%
Turkey CEE Germany Sweden
1. Turkey and Sweden: Real return; CEE, Germany: Nominal return
2. Pro-forma calculated. Instead of using a WACC-approach the German regulator publishes allowed equity returns. WACC figures for existing (Return on equity: 7.14% pre corporate tax and
after commercial tax) and new investments (Return on equity: 9.05% pre corporate tax and after commercial tax) are assuming c. 4% cost of debt and a 60/40 debt/equity capital structure.
The pro-forma WACC figure of 5.9% is then derived by weighting the share of existing assets (WACC: 5.7%) and new assets (WACC: 6.5%)
3. Pre-tax real WACC for Sweden of 4.5%; Current WACC of 4.5% challenged in court by network operators; Average inflation expectation for Sweden amount to 1.6%
4. Applicable to ~95% of the hydro installed capacity
Eligible Non-eligible
Improvement through recent
regulatory review
• WACC: 9.97% to 11.91%
• Increased allowed Capex and T&L
performance
Energy Networks Renewables Customer Solutions
Country risk premia vs. Germany
Enerjisa – Market environment
2 3
1. Capacity under construction includes CCGT, lignite and hydro plants
2. Excluding state-owned EUAS
3. Unadjusted as per Enerjisa financial statements
4. Including trading result
5. Including optimization
Customer
Solutions
9 m customer accounts,
mainly in Istanbul, Ankara
and Adana regions
0.2 TL bn (13% of total)
Energy Supplier
by supplied energy
(TWh)
#1
Generation/
Renewables4
0.8 TL bn (40% of total)4 5
Generator
by installed capacity2 #1
Assets and
activities
Market
position
EBITDA
20153
Energy
Networks
Operating 207,000 km
grid within three core
regions of Turkey:
• Istanbul: Urban
growth engine, mega
city, financial hub
• Ankara: Capital, the
political heart
• Adana: high-growth
industrial center, young
and booming
population
0.9 TL bn (47% of total)
Distribution
Network Operator
by grid length
#1
Enerjisa
Under
construction1
1.1 GW Hydro
1.3 GW
Wind
0.2 GW
Gas
1.1 GW
Recognized market leader with diversified portfolio
9
TL bn
EBITDA – 2011A-2015A1
0.5
2015
0.8
1.9
CAGR: 39%
2014 2013
0.5
2012
0.5
2011
Performance improvements of privatized
distribution assets
• New leadership and more efficient management
structure
• Streamlined organization
• Stakeholder management focus
Capability transfer
• Technical support for project development and
execution
• Support for commercial and financial processes
Operational improvements
• SAP roll-out at group and operating units
• SCADA system implementation
Footprint build-up
• Acquisition of two distribution companies
• Build-up of 2.5 GW generation capacity
• Strong positioning of retail business through re-
branding
Enerjisa
Enerjisa – track record
1. Unadjusted as per Enerjisa financial statements
Enerjisa has been developed into a state-of-the-art company
10
11
622
-164
-314 -49
95 51
-31 -23 -24 -27
EnerjisaEBITDA
2015
Depreciation Financialexpenses
Tax, Other Enerjisa NetIncome 2015
E.ON share(50%)
Divestment-related
impairments(one-offs)
Acquisition-related
depreciationcharges (run-
rate)
FX hedgesand other
Contributionto E.ON
EBITDA/ NetIncome
Enerjisa net income to E.ON contribution bridge – 20151, € m
2
1. Unadjusted as per Enerjisa financial statements
2. Different FX translation methodology leads to €51 m > 50% of NI
3. Reversal of allocated step-up on acquired assets
Contribution to E.ON EBITDA/ Net Income mainly impacted by PPA
3
Enerjisa
Enerjisa generates sizeable EBITDA
2.3
Ankara
Istanbul
Adana
2.2 m subscribers
7.7 TWh consumption
Ayedas DisCo1 (2015)
Toroslar DisCo1 (2015)
3.2 m subscribers
15.9 TWh consumption
3.4 m subscribers
16.3 TWh consumption
Baskent DisCo1 (2015)
USP – High growth industrial
center, booming and young
population
Population – 7.9 m
Area – 46,596 km2
Total line length – 79,705 km
Toroslar at a glance
Overview of Networks regions
12
USP – Ankara as capital,
Turkey’s political “heart”
Population – 7.0 m
Area – 61,161 km2
Total line length – 106,144 km
Baskent at a glance
Sizeable footprint
Integration of new distribution companies well advanced
USP – Istanbul as megacity with
strong growth (regional (financial)
hub)
Population – 5.1 m
Area – 1,898 km2
Total line length – 21,191 km
Ayedas at a glance
Enerjisa
1. Distribution company
Generation: Portfolio overview
Capacities in MW Gas Hydro Wind Lignite
In operation 1.056 1.292 212
Under construction 596 62 450
In development 850
Bandirma I – 936 MW
Balikesir – 143 MW
(formerly Bares)
Canakkale
– 30 MW
Kentsa – 120 MW
Arkun – 245 MW
Cambasi – 45 MW
Pervari – 400 MW
Incir – 170 MW
Dagpazari I – 39 MW
Hacininoglu – 142 MW
Sarigüzel – 103 MW
Kandil – 208 MW
Dagdelen – 8 MW
Tufanbeyli I – 450 MW
Yamanli II – 82 MW
Menge – 89 MW
Kusakli – 20 MW
Köprü – 156 MW
Kavsakbendi – 191 MW
Dogancay – 62 MW
Istanbul
Enerjisa
13
Alpaslan – 280 MW Bandirma II – 596 MW
Ankara
TL bn
Net Income and EBITDA1
2020 2015
0.3
Strong financial discipline
Further investments mainly in
energy networks and
renewables/ distributed
generation
Selected disposals
Further debt financing
optimization (FX, tenor, Interest
rates)
Enerjisa
Enerjisa strategic focus for
2016 and beyond Key factors driving Enerjisa’s performance
1. Unadjusted as per Enerjisa financial statements
The outlook for Enerjisa is solid, with positives and challenges in balance
14
Positives
and
strengths
Challenges
Macro fundamentals and Enerjisa position
Power market growth still strong and regulatory
framework stable, i.e. future growth enablers
intact
Strong market position: Leader by most metrics,
strong brand
Excellent operational performance: CCGT
benchmark competitive vs. E.ON fleet,
successful in integration of 3 networks
Generation market and Enerjisa capital structure
Generation market to remain oversupplied in the
near-term due to overbuild, affecting power
prices and spreads
High Enerjisa financial debt resulting from
Ayedas/Toroslar acquisitions and generation
investments
Medium-term IPO potential
1.9
Net Income EBITDA
1. Group overview
Strategic partnership Enerjisa
PreussenElektra
2. Financials
3. Core activities
Energy Networks
Customer Solutions
Renewables
4. IR Calendar and contacts
Agenda
Asset overview
Decommissioning Shut down
Active and operated by
PreussenElektra
Start-up
year
E.ON
share
(%)
Net
Capacity
(MW)
Shutdown
year
(AtG)1
Active
nuclear
plants
E.ON
operator
Isar 2 1988 75.0 1,410 2022
Brokdorf 1986 80.0 1,410 2021
Grohnde 1985 83.3 1,360 2021
Active
nuclear
plants
E.ON
minority
share
Emsland 1988 12.5 1,335 2022
Gundremmingen C 1985 25.0 1,288 2021
Gundremmingen B 1984 25.0 1,284 2017
Shutdown
nuclear
plants
Grafenrheinfeld 1982 100.0 1,275 2015
Isar 1 1979 100.0 878 2011
Unterweser 1979 100.0 1,345 2011
Stade 1972 66.7 878 2003
Würgassen2 1975 100.0 640 1994
Brunsbüttel 1977 33.3 771 2011
Krümmel 1984 50.0 1,364 2011
Gundremmingen A 1966 25.0 250 1977 Active and minority share PreussenElektra
Brunsbüttel Brokdorf
Stade
Unterweser
Krümmel
Hannover Emsland
Grohnde
Würgassen
Grafenrheinfeld
Isar 1/2
Gundremmingen A/B/C
PreussenElektra
Geographic presence in Germany Overview of E.ON’s German nuclear plants
16 1. Atomgesetz
2. Start-up year 1971, transfer to Preußische Elektrizitäts-Aktiengesellschaft in 1975
1. Nuclear plants which have been shut down and are in majority owned by E.ON include Grafenrheinfeld, Unterweser, Isar 1, Stade, Würgassen. Active joint nuclear plants are
Gundremmingen B & C and Emsland
2. Including Brokdorf, Grohne and Isar 2. Controllable costs only include cost components that can directly be influenced and are not mainly driven by external factors (e.g. no nuclear fuel tax
and nuclear fuel costs are included)
3. Average across German nuclear power plants operated by E.ON
4. Based on pro forma figures - including participation income and effects from nuclear fuel cycle
5. Operational capex not taking into account decommissioning
• On average >90% availability over the
last 5 years
• Earnings with near term visibility through
forward hedging (>2 years)
• Controllable operational costs development
(incl. capex)2:
75848788
100
2015 2014 2013 2012 2011
Controllable costs, indexed to 2011 = 100 3
-25%
PreussenElektra
Excellent fleet track record Three active power plants1
Shut-down dates
Grohnde (1,360 MW) 2021
Brokdorf (1,410 MW) 2021
Isar II (1,410 MW) 2022
Financials
~€0.6 bn4 EBIT 2015
Capex 2016-2018 ~€0.1 bn5
Safe and efficient operations
17
~€0.8 bn4 EBITDA 2015
Near term visibility through forward hedging
100% 100%
82%
2016 2017 2018
Forward hedged price (€/ MWh)
37.6 32.9 26.6
PreussenElektra forward hedging overview 2016-2018
Hedged volumes (%)
PreussenElektra
18
Overview nuclear provisions
€ m FY 2015
Retirement and decommissioning 7,857
Containers, transports, operational waste, other 2,902
Interim storage 2,205
Schacht Konrad final storage facility 1,363
Final storage facilities for high active waste 2,647
Total nuclear provisions in economic net debt 16,974
PreussenElektra
19
1. Group overview
Strategic partnership Enerjisa
PreussenElektra
2. Financials
3. Core activities
Energy Networks
Customer Solutions
Renewables
4. IR Calendar and contacts
Agenda
+ Substantially increased earnings stability
+ Operations mainly under stable, well
established regulatory frameworks in low
risk markets
+ Sharply reduced commodity & FX risk
exposure
- Reduction of overall size and diversification
A higher share of regulated / long-term contracted earnings following spin-off
High share of regulated / long-
term contracted earnings
High cash conversion
Diversified portfolio
E.ON’s attractions
Attractive return on capital
Business profile post spin-off
1. Pro-forma figures – without Uniper contribution and excluding results from divested operations
2. Including Energy Networks, ~40% of Heat and ~60% of Renewables
EB
ITD
A 2
01
5
Renewables
Customer Solutions
PreussenElektra
and others
Energy Networks
~€5.0 bn1
~65% from
regulated / long-term
contracted businesses2
21
Profit & Loss Statement1
22 1. Pro-forma figures
€m 2015
Group EBITDA 5,844
D&A -2,281
EBIT
Energy Netw orks 1,811
Renew ables 391
Customer Solutions 806
Corporate functions/ other -403
Core EBIT 2,604
PreussenElektra 563
Divested operations 395
Group EBIT 3,563
Financial results -1,485
Income taxes -710
Non-controlling interests -270
Underlying net income 1,098
Other non-operating results -8,097
Net income/loss attributable to shareholders of E.ON SE -6,999
Cashflow Statement1
23 1. Pro-forma figures
2. Including proceeds from disposal/purchase of securities, financial receivables and fixed-term deposits as well as contributions to pensions
€m 2015
Cash provided by (used for) operating activities before interest and taxes
Energy Netw orks 1,637
Renew ables 563
Customer Solutions 1,581
Corporate functions/ other -265
Core cash provided by (used for) operating activities before interest and taxes 3,516
PreussenElektra 391
Divested operations 841
Group cash provided by (used for) operating activities before interest and taxes 4,749
Interest payments -619
Tax refunds (net) 61
Cash provided by (used for) operating activities 4,191
Purchase of invesments in intangibles, property, plant and equipment and equity investments -3,227
Proceeds from disposal of intangibles, property, plant and equipment and equity investments 4,522
Changes in restricted cash and cash equivalents 148
Cash provided by (used for) investing activities 1,442
2
Economic Net Debt
24
€m 31 Dec 20151
Liquid funds 7,829
Non-current securities 4,536
Uniper receivable (financial receivables) 11,626
Financial liabilities -15,791
Uniper payable (financial liabilities) 2 -8,547
Adjustment FX hedging3 218
Net financial position -129
Provisions for pensions -3,281
Asset retirement obligations4 -17,930
Economic net debt5 -21,340
Source: Spin-off Report, E.ON
1. Differences might occur due to rounding
2. Net figure; does not include transactions relating to our operating business
3. Net of profit and loss sharing agreements with Uniper
4. Thereof 16,974m related to nuclear AROs
5. Not including Nordstream transfer, capital measures and repayment of E.ON loan
1. Group overview
Strategic partnership Enerjisa
PreussenElektra
2. Financials
3. Core activities
Energy Networks
Customer Solutions
Renewables
4. IR Calendar and contacts
Agenda
62% 18%
20%
26
Overview
EBIT breakdown 20153
Leading European operator of electricity
and gas networks supplying several
million customers
Strong positioning based on €18 bn
RAB1 and geographically diversified
asset base in six countries2
E.ON ensuring efficient grid expansion
using ultra-modern technologies
Overview
E.ON’s network presence
Germany 351 59 19 11
Sweden 137 2 24 60
Hungary 84 18 52 21
Romania 55 21 17 49
Czech R. 66 5 28 6
Slovakia 38 - 43 -
Network
length
(tkm)
Market
share
(%)
P G P G
GER SWE
CEE &
Turkey 4 5
Power
Gas
1. Current total RAB of country/region, relevant for 2016 - In general, RABs from different regulatory regimes are not directly comparable due to significant methodical differences. These
include for example different regulatory asset lifetimes, asset valuation methods, or treatment of customer contributions for network connections. For example in Sweden, the calculation
of the asset base takes into account standard costs instead of actual costs.
2. Excluding Turkey
3. Pro-forma figures
4. Including at-equity result from Slovakia and Turkey
5. Differences might occur due to rounding
~70%
Energy Networks
Financials 1
27
Germany Sweden CEE & Turkey Contribution to E.ON Group (Group result)
1.686
489
558
2.733
2015
47%
EBITDA 2 3
1.129
329
354
1.811
2015
51%
EBIT 2 3
564
543
530
1.637
2015
34%
OCFbIT 2 3
1. Pro-forma figures
2. Including Slovakia and Turkey at equity
3. Differences might occur due to rounding
4. 2015 impacted by negative one-off working capital effects
Energy Networks
€ m € m € m
4
Additional
remuneration3
Sweden
N/A5
Energy Networks
Additional earnings from efficiency, investments and non-regulated activities
Operational
efficiency
Non-regulated
earnings
Other
earnings
Germany
7%-9%
5%-7%
1%-3%
4%-6%6
Performance-
specific
Slowly
growing
Varying
Based on grid
expansion
5%-7%
6%-8%
15%-17%4
Return on RAB + Regulatory D&A1
(2015)
~€1.05 bn
(~63% in 2015)
Normalized additional components (% of total EBITDA on a normalized level)2
Indicative EBITDA pro-forma
components
CEE7
N/A5
7%-9%
2%-4%
1%-2%
~€454 m8
(~84% in 2015) ~€470 m
(~96% in 2015)
1. RAB multiplied with pro-forma WACC plus regulatory D&A
2. For years 2016-2018
3. Grid expansion for Germany
4. Including income from minority participations in other regional utilities (~ €140 m)
5. RAB adjusted for investments during regulatory period
6. Difference between regulatory and IFRS accounting
7. Includes the Czech Republic, Hungary, and Romania (Slovakia and Turkey are not included)
8. In Hungary E.ON has to pay the so-called “utility tax” in an annual amount of
HUF12.5 bn (~€39 m). This tax is not recognized (as OPEX) by the Hungarian
Regulator. For the purpose of this analysis we reduce the “Return on RAB” by HUF12.5 bn to
show the effective regulatory performance 28
29
Regulatory D&A
Germany Sweden CEE2
€0.47 bn, 45%
€1.04 bn
€0.28 bn, 27%
€0.28 bn3, 27%
155%
116% 127%
Germany Sweden CEE
2016-2018 Capex / Regulatory D&A Average D&A p.a. by geography (2016-2018)1
Energy Networks
1. Differences might occur due to rounding
2. Excluding Slovakia and Turkey
3. Due to start of new regulatory period in Hungary, assuming 2017 and 2018 regulatory D&A equal to 2016
2
Introduction to German operations
30
(100%)
(67%)
(66.5%)
(61.5%)
Capex split 2016-2018
Highly fragmented, more than 800 network
operators in Germany
5,400 concessions granted by municipalities
are the basis of our business, which is the
largest among network operators in Germany
Our networks are concentrated in rural areas
Therefore we are positively affected by the
“Energiewende” and the installation of
renewables capacity
Sector & business specifics
€2.2 bn €0.9 bn, 41%
Replacement & other Growth
E.ON’s networks presence1
GER
€1.3 bn, 59%
1. Including network presence of E.ON‘s 110kV grid, excluding lost concession areas
Energy Networks
Regulation – General overview
Cost Audit
+
Benchmarking
Grid
expansion
Revenue cap incentive regulation
Cost audit and benchmarking once per regulatory period (5 years)
Total costs of historic base year basis for benchmarking & revenue cap
Efficiency level determines revenue path of regulatory period
DSO applies yearly for grid expansion
Increases revenue cap within a regulatory period
Based on revenue cap, estimated energy consumption and income differences (too high/ low) from prior years
Differs for different network areas within Germany
Yearly adjustment of revenue cap by
Consumer Price Index (CPI)
General efficiency factor of currently 1.5%
Individual efficiency factor from benchmarking
Yearly
revenue cap
Network tariff
every 5 years
yearly application
& adjustment
yearly adjustment
yearly adjustment
31
GER
Process steps of regulatory system
Energy Networks
Regulation – Regulatory schedule
32
GER
2nd regulatory period
Cost base for revenue cap (illustrative)
Base y
ear
Revenue cap (individual efficiency = 100%)
Base y
ear
Cost Audit
+
Benchmark
3rd 1st regulatory period
Cost Audit
+
Benchmark
Cost of base year 2011 are basis for allowed revenues from 2014 onwards
Regulatory cost audit and benchmarking took place from mid 2012 to end 2013
Replacement investments in the years 2012 to 2016 are reflected in allowed revenues from 2019 onwards
Benefits from performance measures effective in the years 2012 to 2016 can be kept until 2019
3rd regulatory period for gas beginning already in 2018
Regulatory cost audit gas will start in 2016
Final decision by the regulator on the allowed revenues gas expected in the second half of 2017
1. For gas distribution: first regulatory period ended 2012. Therefore the base year for the second period was 2010. The second period for gas lasts from beginning of 2013 to the end of 2017
Commentary Power distribution1
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Energy Networks
Building blocks of allowed revenues
33
GER
1. Old assets are those capitalized before 01/ 01/ 2006. New assets are those capitalized after 01/ 01/ 2006. Old assets are indexed up to 40% with asset-specific indices to determine the
current costs. Relevant asset base for power 2011, for gas 2010.
2. Return on Equity rate is post trade tax and pre corporation tax
Schematic illustration for 2015 (power & gas)
Totex indexed to
CPI and subject to
general and individual
efficieny targets
40%
Cap Opex
Capital
Costs
Reg
ula
ted
asset
ba
se
1
Old
assets
: C
urr
ent
costs
New
assets
: H
isto
ric c
osts
Deb
t b
ase
(rela
ted t
o a
ctu
al capital
str
uctu
re, m
inim
um
60%
)
Reg
ula
ted
Eq
uit
y b
ase
(rela
ted t
o r
egula
tory
capital str
uctu
re, m
axim
um
40%
)
Retu
rn o
n E
qu
ity 2
Old
assets
: 7.1
4%
New
assets
: 9.0
5%
Retu
rn o
n e
xc.
Eq
uit
y
~4%
for
equity in
excess o
f
40%
Tra
de
tax a
llo
wan
ce
Dep
recia
tio
n a
llo
wan
ce
(based o
n u
sually
40 y
ears
regula
tory
asset liv
es)
Op
era
tin
g c
os
ts
all
ow
an
ce
(based o
n a
ctu
al costs
of
his
toric b
ase y
ear)
To
tal
all
ow
ed
co
st
ba
se
(To
tex)
Ad
dit
ion
al
reven
ue
s
(netw
ork
expansio
n,
qualit
y b
onus/
penalty…
)
La
gg
ed
reco
veri
es
(nett
ing o
f actu
al vs.
allo
wed r
evenues)
Pass
-th
rou
gh
ite
ms
(charg
es o
f hig
her
grid
levels
, pensio
ns,
etc
…)
All
ow
ed
reven
ue
s
Pow
er
(Old
)
€2.2 bn
€2.3 bn
€0.3 bn
€5.1 bn
Pow
er
(New
)
Ga
s
(Old
)
Gas
~€0.7
bn
Pow
er
~€3.3
bn
Energy Networks
Gas
(New
) €10.0 bn
Business with 5,400 concessions
34
15%
10 - 15
years
30%
5 - 10
years
30%
20%
currently
open
5%
2036 2007
8%
92%
lost renewed
• The German Networks business is based on
long-term concessions granted by municipalities
in the network area
• Renewal of concessions every 20 years
• Of all expiring concessions since 2007, more
than 90% renewed1, which means losses are
less than 1% per year
• Loosing an expiring concession triggers a
mandatory disposal of assets to concession
holder which means cash-in for E.ON
1. In % of revenue cap; loss of Gas concession of City of Hamburg in 2017 not included (Otherwise 88% renewed)
2. Only concession based business, which means high voltage business (110kV) excluded
• Future renewals predictable and no real peaks
for the next round of concession renewals
• Positioning ourselves as preferred regional
partner via superior customer service and
operational excellence
Renewal rate
in % of
revenue cap2
TODAY
Track record
in % of
revenue cap
GER
Confident for future competition Good track record in the past
>15 years >5 years
Energy Networks
Introduction to Sweden operations
35
Power
Gas
Highly fragmented distribution market with ~165
distribution companies with strongly differing
potential to handle current and future challenges
E.ON is the largest local network operator in the
market
E.ON has mainly grids in the country side
E.ON has a good reputation among stakeholders
Great focus on connection of large wind farms in
recent years, offering attractive future business
areas
Sector & business specifics
€1.0 bn €0.5 bn, 48%
Replacement & other Growth
SWE
€0.5 bn, 52%
Capex split 2016-2018 E.ON’s networks presence
Energy Networks
Revenue Cap (~€4.0 bn)1
Asset base including investments
Cost of Capital Operational Costs
Efficiency
Demands Return
Influenceable costs Non-influenceable
costs
Depreciation
Quality Adjustment
OPEX CAPEX
36
SWE
1
3
2
CAPEX: Real linear calculation of capital cost. No
asset considered older than 38 years when the
period starts (2016). Limited contribution to revenue
cap between 40-50 years
OPEX: Historic costs 2010-2013 used as base.
DEA2 method used for efficiency requirements
Quality: Differentiated quality cost for different
customer categories, expected security of supply
based on the whole industry’s performance
SMART transformation: Incentives given for
efficient grid operation (grid losses and load factor)
3
2
1
4
• Revenue regulation is an important part in the
pull set-up of regulations
• 1st period revenue regulation period 2012-2015
• 2nd period revenue regulation period 2016-2019
1. Gross revenue cap for 2016-2019 , excl. intercompany eliminations of ~€540 m
2. Data envelopment analysis
Regulatory model 2016-2019 Principles of regulation model
4
Energy Networks
Regulation building blocks of the allowed revenue
Replacement value by
year
Build-up of regulatory asset base SWE
37
Lines
Cables
Transformers
Meters
Others
Standard price by component
(~800 standard components)
Company’s real assets Regulators standard price list
Lines
Cables
Transformers
Meters
Others
Component x Price = • Replacement value
Age profile
Linear
depreciation
• Regulatory Asset
Base (RAB) =
Energy Networks
Deep dive – improved performance and stable business SWE
38
Since 2014, business model based on competitive
contractor management
New period of contracts from 2016 (4 year period)
Very competitive contractor markets in all geographical
areas
Foresee a better cost and performance situation in
contractor management for 2016-2019
Evaluated and applied experiences from earlier periods to
optimize commercial conditions in new contract period
Connection of wind power parks has increased last 8-9
years
Currently, weak business cases for wind power companies
due to low market prices on energy and green certificates
Still high request from developers for pre calculation and
preparatory work
E.ON involved in pre calculation of projects with approx.
2,000 MW
Connections are mandatory as long as sufficient capacity in
the network exists – investments are reflected in RAB
In case sufficient network capacity is not available, park
owners are required to fund the connection
EBIT / CSV
Controllable Opex/ CSV
Capex / CSVSAIDI unplanned
Grid losses
E.ON Ellevio Vattenfall Industry
0
750
1.500
2.250
3.000
0
100
200
300
400
MW/ year MW/ Acc
Installed Renewable Forecast/ Year
Acc Forecast Acc
Improved performance by outsourced business Intra-market benchmark base for development
Connection of wind power parks
Energy Networks
39
Grid customers (k)
Grid length (tkm)
P: 6,700
E.ON grids2
CEE – Overview
G: 2,400
P: 243
G: 44
Strong investment incentive, high WACC and need
of high investment volumes due to increased grid
replacement
Gradual deployment of smart metering and other
intelligent grid components
Government support of “clean mobility” – electro
mobility and CNG1
Currently stable energy consumption with expected
modest growth
€1.1 bn €0.6 bn, 60%
Power Power & Gas Gas
Power Gas Power & Gas
€0.4 bn, 40%
1. Compressed natural gas
2. Excluding Slovakia and Turkey; Differences might occur due to rounding
Capex split 2016-20182 E.ON’s network presence
Region specifics
Replacement & other Growth
Energy Networks
1. Group overview
Strategic partnership Enerjisa
PreussenElektra
2. Financials
3. Core activities
Energy Networks
Customer Solutions
Renewables
4. IR Calendar and contacts
Agenda
Overview
49% 35%
16%
Germany
UK
Other
Covers energy sales (power & gas),
heat as well as new solutions
Serving B2C/ B2B SME customers
with “asset-light” and mass market
solutions
Serving B2B large/ B2M customers
with “asset-intensive”/ tailored
solutions
1. Excluding Turkey, including 49% stake in ZSE (Slovakia)
2. Excluding power/ gas volumes for heating
3. Pro-forma figures 41
EBIT
Power/ gas volume sold
Average EBIT margin
~€0.8 bn3
150 / 167
TWh2
~3%3
Customer accounts 23 m1
Customer Solutions
Energy sales and new
solutions (B2C/ B2B SME)
Heat & new solutions (B2B Large/ B2M)
Overview E.ON’s Customer Solutions presence
EBIT breakdown 20153
~15%
~85%
2015
Energy sales
District heating
New solutions
Financials1
42
UK Germany Other Contribution to E.ON Group (Group result)
402
452
258
1.112
2015
278
397
130
806
2015
729
487
365
1.581
2015
Customer Solutions
19% 23% 33%
EBITDA2 EBIT2 OCFbIT2
€ m € m € m
1. Pro-forma figures
2. Differences might occur due to rounding
Overview customer segmentation
43
Customer Solutions
Customer
groups
Energy sales and new
solutions (B2C/ B2B)
Heat & new solutions
(B2B/ B2M)
B2C1
B2B SME2
B2B large3
B2M4
Customer
needs
• Simplicity & affordability (“How can I
save costs with low effort?”)
• Convenience & comfort
• Specific to sub-segments: How to
become more sustainable, compliant
and self-sufficient?
• Reduce energy costs or achieve
compliance
• Become sustainable for own customers/
citizens
• All-round carefree energy-related
optimization
• Financing solutions
Key E.ON
advantages
• Superior scale of customer base and
operations
• Existing customer relations as
foundation for up- and cross selling of
new services
• Customer insights and understanding
• Strong track record in heat and onsite
generation
• Vendor & technology neutral: best
customer solution
• Integrated offerings and end-to-end
solution delivery
• Trustful and strong partnerships with
municipalities
1. Domestic customers, e.g. families, single-households (B2C = Business to consumer)
2. E.g. developers and landlords, hotels, farmers, small and home-offices (B2B = Business to business)
3. E.g. commercial chains, large manufacturers, large hotel chains (B2B = Business to business)
4. Municipalities
B2B large3
Commodity only
Power: 41 TWh Gas:
51 TWh 7,6
Number of customeraccounts (m)
Country profile - UK
11%
12%
16%
16%
24%
RWE
EDF
SSE
E.ON
Centrica
44
Power1
Customer Solutions – Energy sales
Competitive market with comparatively high
churn rates
Extensive regulatory agenda through Ofgem
and Competition and Markets Authority review
New entering smaller suppliers with growing
market share
Digital solutions as key development trigger for
future solutions business
TWh Sold
9%
9%
13%
12%
37%
1%
5%
6%
25%
34%
ScottishPower
RWE
SSE
E.ON
Centrica
Gas2
1. Q3 2015 domestic market share
2. Non-household: End of 2013 market share; Household: Q3 2015 market share
Source: Ofgem
Non-household
Household
Key competitors and market shares Country trends
Operations overview – 2015
Country profile – Continental Europe1
45
Power: 110 TWh
Gas: 116 TWh
TWh Sold
n.a.
3%
11%
20%
20%
21%
34%
Romania
Italy
Sweden
Germany
Czech Republic
Slovakia
Hungary
Power
23%
4%
19%
10%
8%
2%
11%
Gas3
Customer Solutions – Energy sales
Retail market situation strongly differs: ranging
from fully competitive markets (e.g. Sweden,
Germany) to partly competitive (e.g. Romania)
Trend towards customer demands for new
solutions and expanded service offerings
Increasing number of customers demand
digital services and solutions
Source: E.ON, BDEW
1. Including Germany, Romania, Hungary, Czech Republic, France, Slovakia, Sweden, Italy
2. 2014 market shares, Germany gas share based on E.ON sales volume in 2015 and market size of 2014
3. From 2016 customer based reduced by 600 k USP gas customers in Hungary
Market shares2 Country trends
Operations overview – 2015
15,4
Number of customeraccounts (m)
Country profile – Continental Europe (cont’d)1
46
Customer
accounts (m)
Power sales
(TWh)
Gas sales
(TWh)
Czech Republic 1.3 16 15
Germany 6.2 46 52
Hungary 2.4 14 10
Italy 0.7 8 11
Romania 3.1 5 25
Slovakia 0.9 6 2
Sweden 0.7 15 2
Customer Solutions – Energy sales
2015
1. Including Germany, Romania, Hungary, Czech Republic, France, Slovakia, Sweden, Italy; differences might occur due to rounding
Total 15.4 110 116
B2C Solutions overview – selected examples
47
Smart check Saving energy toolkit
(SET)
Smart Check with ~35,000 customers in Germany,
growing by ~10.000 registered users a month
SET in the UK (~1 m SaaS1, 0.8 m active)
Over 65,000 connected home devices deployed in large
scale pilot projects
C. 400,000 customers make use of value added services,
such as energy-related insurance services
PV B2C ~3,500 PV contracts signed
PV & battery launched in April 2016 for B2C customers
„Solarprofis“: 170 O&M contracts signed in first 7 weeks
Customer Solutions – New Solutions (B2C/ B2B SME)
1. Software as a Service provider: Opower
PV/ battery Customer engagement
Connected home Value added services
B2B SME solutions case studies
Customer
Microart e. K. based in Roding (Bavaria)
is a specialist in producing precision
components and systems
Solution
• Realized in less than 3 weeks time
• Optimized for customer’s own
consumption, with produced power
nearly 100% self-consumed
• Reduces energy costs and CO2
emissions at the same time
150 MWh Power production
annually
84 tons CO2 emission
reduction annually
48
Energy Toolkit
• Web-based advice on energy
efficiency measures, personalized by
each customer`s business and meter
data
• Energy saving advice hotline staffed
with engineers
• Over 40% of users have visited the
dashboard more than once
• More than 10% indicating interest in
their recommended energy savings
measures
400,000 Eligible SME
customers
15% Average savings
opportunities
Prior Now
80% Reduction of lighting
energy consumption
1.5 years Payback period
Customer
Tylex Letovice is a Czech textile
manufacturer (home and technical
textiles) with more than 180 years
tradition
Solution
• Project on lighting upgrade at
customer site and a financing solution
• E.ON decreased the lighting energy
consumption by 80% and increased
brightness level with payback period
up to 1.5 years
Lighting PV Digital audits
Customer Solutions – New Solutions (B2C/ B2B SME)
Country profile - Germany
49
Customer Solutions – Heat
Gas-based heat and CHP
Distributed solution renewable
Heat grid
Other „Energiewende“ projects
Local area heating
Growth with local area heating concepts, especially in urban
areas
Sustainable cities
Brownfield approaches to develop new or to transform
existing city areas following a sustainability approach
5%
6%
16%
RWE
E.ON
Vattenfall
District and local area heating
District heating concentrated in the urban regions of
Hamburg and Saxony-Anhalt
Local area heating especially concentrated around Munich
and Bavaria in general as well as Northern Germany
Strong stakeholder relationships
Regional presence and valued competence as heat supplier
and DSO2 enables the implementation of Customer
Solutions and long-term relationships
1. Incl. households contracted via business customers
2. Distribution system operator
3. Source: Monopoly Commission – Sector Assessment District Heating 2012
Operations overview – 2015 Attractive locations
Country trends
District heating3
Key competitors and market shares
~2.7 TWh heat and ~0.5
TWh power sold ~140,000 customers1
Country profile - Sweden
50
District heating transformation
Further integration of renewable heat sources
Extension of district heating and power distribution to sustainable
city concepts, e.g. already proven in Malmö
Flexible customer solutions with increased product offerings
including financial solutions will serve increasingly as competitive
advantage
6%
7%
11%
14%
Vattenfall
Göteborg Energi
E.ON
Fortum
District heating
Large scale, profitable heat systems in three main metropolitan
areas of Sweden (Malmö, Norrköping, and Örebro)
Growth opportunity in Stockholm being developed
Further heat systems in urban areas across Sweden
Competition mainly from alternative heating solutions (i.e. heat
pumps)
Strong stakeholder relationships and acceptance
High penetration and strong customer acceptance of heat as
renewable and sustainable energy source
Recognition as long-term reliable partner opens opportunities with
municipalities and businesses for growing existing heat footprint
Climate friendly production due to more than 80% of heat supplied
coming from renewables or recycled energy
Stockholm area
Norrköping
Malmö
Örebro
Customer Solutions – Heat
~5.7 TWh heat sold ~220,000 households
supplied1
Operations overview – 2015 Attractive locations and growth opportunities
Country trends
District heating
Key competitors and market shares
1. Incl. households contracted via business customers
Country profile - UK
51
Scotswood,
Newcastle
Blackburn Meadows,
Sheffield
Cranbrook &
Monkerton,
Exeter
Bath
Southampton Newbury
London
31 schemes
1.1 TWh heat sold1 ~15,000 customer
contracts
11%
12%
Cofely
E.ON
District heating2
Stevens Croft
Stoke
Leeds and Bradford
Port of Liverpool Policy driven growth
Distributed heat market expected to grow 30% annually until 2020
driven by carbon and building policies
Significant government commitment to the development of district
heating networks
Introduction of regulation
Introduction of the heat metering & billing regulations and the
establishment of the heat trust, a voluntary code of conduct
Devolved responsibility
Local authorities passing the burden of low carbon targets to
developers via planning permission process, creating B2B
relationships
Local area heating
Extensive footprint of local area networks across UK urban and
metropolitan centres. Current focus on London, but opportunities
present at a national level
Established capabilities in sustainable and profitable heat and
power production and project delivery for biomass plants
Strong stakeholder relationships
Delivery track record and very good capability set makes us
recognized as attractive partner for heat networks
Local area heating systems CHP and biomass sites
Customer Solutions – Heat
1. Sold to customer accounts and via business heat power solutions including O&M contracts. Excluding sites E.ON only operates but does not own
2. For new builds
Country trends
Key competitors and market shares
Operations overview – 2015 Attractive locations
Onsite generation UK
52
Overall characteristics UK:
Overall capacity operated1: >800 MW th
Mainly CHPs with capacity of 5-50 MW
Lead times up to 6 years
Contract durations of up to 15 years
Power: 43 MW Heat: 6 MWth Was named Scotland’s best renewable energy project
Stevens Croft: Biomass
Power: 4.5 MW Heat: 19 MWth
Client: Nufarm
Bradford
Power: 0 MW Heat: 64 MWth
Client: Michelin Tyres
Stoke
Power: 0 MW Heat: 24 MWth Client: DS Smith Paper
Kemsley 2
Power: 4.5 MW Steam: 22 MWth
Client: St James University Hospital
Leeds
Power: 30 MW Heat: 70 MWth Clients: Cargill, Peel Ports
Port of Liverpool
Power: 28 MW Heat: 25 MWth Provides power for 40,000 homes by converting recycled waste wood
Blackburn Meadows: Biomass
Customer Solutions – New solutions (B2B Large / B2M)
1. Capacity related to regional unit UK owned and managed assets as well as assets only managed by regional unit UK
Power: 4.9 MW Heat: 52 MWth
Client: Queens medical center
Nottingham
Onsite generation - Continental Europe above 10 MW
53
Overall characteristics
Overall capacity operated1: ~600 MWel
Mainly gas-turbines of 5-200 MW
Lead times up to 6 years
Contract durations of 13 – 15 years
Power: 41 MW Steam: 90 MWth Client: Chemiepark Gendorf
CHP-Plant Gendorf
Power: 30 MW Steam: 60 MWth Client: K+S
CHP-Plant Hattorf
Power: 37 MW Steam: 47 MWth Client: OPAL Gastransport
Industrial plant Greifswald
Power: 80 MW Steam: 120 MWth Client: Evonik Degussa
CHP-Plant Antwerpen
Kraftwerk Marl
Power: 60 MW Steam:100 MWth
Client: Evonik
Power: 125 MW Steam: 150 MWth Client: UPM
CHP-Plant Plattling
Power: 120 MW Steam: 350 MWth Client: Wacker Chemie
CHP-Plant Burghausen
Power: 40 MW Steam: 75 MWth Clients: DSM, BASF
CHP-Plant Grenzach-Wyhlen
Customer Solutions – New solutions (B2B Large / B2M)
1. Owned and managed by E.ON as well as only managed by E.ON
Onsite generation - Continental Europe below 10 MW
Customer Solutions – New solutions (B2B Large / B2M)
54
Power: 711 kW Heat: 1.1 MWth 25% energy-cost savings
Hospital Bayreuth
Power: 4.4 MW Heat: 1.6 MWth 20% reduction of energy cost, 6,300 tons of CO2 saved annually
International packaging company
Redwitz municipal (Bavaria)
Power: 15 kW Heat: 30 kWth Supplies heat for a school and open air swimming pool
Airport Berlin Brandenburg
Power: 8 MW Heat: 10 MWth
Third largest cold storage in Germany
1. Owned and managed by E.ON as well as only managed by E.ON
2. Including Sweden
Overall characteristics
Overall capacity operated1: ~1,100 MWth2
Mainly CHPs/CHCPs up to 10 MW, heat
pumps and boilers
Tailored solutions according to customer needs
Contract durations of 10 – 15 years
Close collaboration with local partners necessary
Power: 2 MW Heat: 14.6 MWth Extended heat capacity via CHP integration into heat grid
Otto E-Commerce, Hamburg
Power: 1.7 MW Heat: 2.1 MWth
Supplies ca. 300 housing units via heat grid
City of Oldenburg: Heat
Power: 45 kW Heat: 90 kWth Oil-fired heating system replaced, 205 t CO2 savings per year
Reha clinic, Buckow
Onsite generation case studies: Queens Medical Center
and Friatec
55
Customer Solutions – New solutions (B2B Large / B2M)
E.ON solution
Gas turbine installation generates electricity &
steam used for heating, cooling (absorption
chillers) and equipment sterilization
CHP plant was installed to supply the hospital's
energy needs over 15 years
Maintenance done by E.ON UK
Customer
Queen's Medical Centre in Nottingham is the largest
hospital in the UK and a center of excellence in
patient care, teaching and research
Reduction in carbon
emissions of 16,000 t
a year or 38%
Save 42% of the annual
energy consumption
Friatec E.ON to build, own and operate Europe’s first fuel cell power plant of MW size
1.4 MW fuel cell with an electrical efficiency of 47% planned to go into operation in June 2016
Energy efficiency concept
56
Customer’s future
energy cost without
E.ON involvement
Time
Historical customer
energy cost
Operation, maintenance &
continuous optimization
Customer share
of savings
E.ON share
of savings
Customer’s future energy cost
after E.ON involvement
Start of E.ON
involvement
Customer Solutions – New solutions (B2B Large / B2M)
Delivering life-time energy and operating cost savings to our customers
Savings guarantee for customers
Energy performance contract concept
€
Energy efficiency case studies
57
Customer Solutions – New solutions (B2B Large / B2M)
Large tire manufacturer
Energy performance contract across 6 plants in Europe
Design, installation & operation of highly efficient heating, ventilation, compressed air & lighting systems
30-89% reduction of energy costs1
Large pharmacy chain
Energy data management and in-store energy dashboard across 1,300 stores
Building energy management system for HVAC2 and intelligent lighting control across 100 UK stores
20% reduction of energy costs3
Energy efficiency – helping customers to reduce energy consumption
E.g. through remote control and optimization of assets at customer facilities, >32,000 sites under management
E.g. efficient lighting solutions – 20 large scale and >50 mid-sized projects delivered
1. Range across all sites; savings refer only to components optimized by E.ON
2. Heating, ventilation and air conditioning
3. Average across all 100 stores, with individual site savings ranging from 5-44%; savings refer to total annual energy costs
Energy efficiency examples
Flexibility case studies
58
“Demand Response”
up to
E.ON solution
Identify demand response
capacity of the furnaces, and
connect them to E.ON’s virtual
power plant engine
Pre-qualify capacity with
TenneT
Market demand response
capacity to TenneT and
dispatch loads whenever
requested
Customer
German producer of
metallurgical silicon operating
four electric arc furnaces with a
nominal capacity of 54 MW in
the TenneT balancing zone
15 MW secondary balancing
power
E.ON achievements
Monetize customer’s
controllable loads
Customer Solutions – New solutions (B2B Large / B2M)
“Demand Response”
up to
E.ON solution
E.ON markets the generation
flexibility of the biogas plant to
the grid, allowing the customer
to generate revenue from
spare capacity
Innovative project delivered a
complete in-house Virtual
Power Plant (VPP) platform
Reduced equipment and
maintenance costs
Customer
A group of 11 entrepreneurial
agriculturalists have joined
forces to own and operate a
biogas CHP plant
Benefits
• Revenue from spare heat and power capacity
• Subsidy for renewable energy and flexibility
• Innovative VPP solution for small onsite generators
1. Group overview
Strategic partnership Enerjisa
PreussenElektra
2. Financials
3. Core activities
Energy Networks
Customer Solutions
Renewables
4. IR Calendar and contacts
Agenda
Portfolio overview 1
~5.3 TWh
~0.6 TWh
Production
volumes2
2,310 MW5
328 MW
Owned
installed
capacity1
~45 €/ MWh
~150 €/ MWh
Average
revenue3
~0.7 TWh 257 MW ~126 €/ MWh
~0.4 TWh 159 MW ~102 €/ MWh
~0.4 TWh 155 MW ~64 €/ MWh
~0.4 TWh 117 MW ~48 €/ MWh
Renewables
60
1. Owned installed capacity as of 31 December 2015 including Amrumbank at 100%. Additionally, offshore wind adjusted for upgrade of Amrumbank to 301 MW in February 2016
2. Pro rata net production volumes for owned capacities in full year 2015. Net generation volumes defined as gross generation volume minus own consumption and line losses
3. Average revenue includes subsidies/ incentives (e.g. Production Tax Credit (PTC), Renewable Obligation Certificates (ROCs) etc.). E.ON reported financials classifies some of these
components as other income
4. For Rodsand, production volume is not consolidated, however for the attributable capacity, 20% of Rodsand are considered
5. Thereof 19 MWDC PV
Operated capacity countries
Project pipeline only
E.ON Renewables Footprint (2015)
Offshore
wind
~2.0 TWh
~0.5 TWh
646 MW
317 MW
~177 €/ MWh
~179 €/ MWh
~0.2 TWh 48 MW ~51 €/ MWh
NA4 41 MW NA4
Production
volumes2
Owned
installed
capacity1
Average
revenue3
Onshore
Wind + PV
Financials1
61
Contribution to E.ON Group (Group result)
1. Pro-forma figures
2. Cash generated from PTC scheme is not visible in the OCF bIT
750
2015
13%
EBITDA
391
2015
11%
EBIT
563
2015
12%
OCFbIT 2
Renewables
€ m € m € m
US:
Tax Credits (PTC and ITC)
Accelerated Depreciation
(MACRS)
Renewable Portfolio
Standards (RPS)
UK:
Renewable Obligation
Certificates (ROC)
Contracts for difference
(CfD)
Levy Exemption
Certificates (LEC) have
been withdrawn (Aug
2015)
Germany:
Feed-In Tariff (FIT) with
direct marketing obligation
for German offshore
For upcoming new projects
remuneration will be
determined through tender
processes
Current regulatory regimes and frameworks
Quota obligation & tradable certificates
Feed-in tariff
Premium
PAYMENT MECHANISM
ALLOCATION
Competitive auctions
Auctions legislated but yet to be held
or pilot auctions only
Others
SUBSIDY BUDGET
Capped
Source: Bloomberg New Energy Finance
Summary
913
62
Remuneration scheme by geography Market Highlights
1
Renewables
Current regulatory regimes and frameworks (cont’d)
63
Offshore
FIT with direct marketing obligation
Remuneration (EEG 14):
- Initial tariff: €154/ MWh for 12 years
(standard) or €194/ MWh for 8 years
(“Stauchungsmodell”)
- Base tariff: €39/ MWh
- Initial tariff extended for deep waters/
distance to shore
Applicable for all E.ON offshore
parks in Germany
Projects commissioning in 2021 or
later subject to auction system
Onshore
FIT with direct marketing obligation
Term: 20 years plus the year of start of
operation (initial tariff for min 5 years
followed by base tariff)
Remuneration (EEG 14):
- Initial tariff: €89/ MWh
- Base tariff: €49.5/ MWh
From 2016: ~0.4% quarterly digression
Applicable for all E.ON onshore parks
in Germany
Auctions to be introduced in ‘16
Onshore
Remuneration based on wholesale
market or PPA, plus certain incentive
features
Production Tax Credit ($23/ MWh)1
Renewable Energy Certificate (driven
by state-level Renewable Portfolio
Standards (RPS)
Accelerated Depreciation for tax equity
investors and developers (MACRS)
Solar
Remuneration based PPA plus certain
incentive features
Investment Tax Credit
(30% of investment)2
Renewable Energy Certificate (driven
by state-level Renewables Portfolio
Standards (RPS)
Accelerated Depreciation for tax equity
investors and developers (MACRS)
Offshore
ROC per MWh
Term: 20 years
Remuneration: Wholesale price plus
1.8-2.0 ROC/ MWh based on COD
Applicable for all E.ON offshore parks
in UK
Move to CfD system from 2014
(strike price in first auction
£114.39-119.89/ MWh)
Onshore
Wholesale price plus ROC (new
projects eligible for COD April 2016)
Term: 20 years
Remuneration: 0.9 ROC/ MWh
Applicable for all E.ON onshore
Ongoing transition period between
ROC and a CfD auction system
First CfD auction was held in February
2015 (strike price £79.23-82.50/ MWh)
UK
1. Production Tax Credit (PTC) annually inflation-adjusted, paying out over 10 years. Full value for projects that have begun construction before 2017, then gradually decreasing until no PTC for
projects beginning construction after 2019. Investment Tax Credit (ITC) also applies to wind: 30% for projects that have begun construction before 2017, and then gradually decreasing until
expiring in 2020
2. Investment Tax Credit (ITC) for Solar amount to 30% for projects that have begun construction before 2020, then gradually decreasing until 10% level for projects starting construction after 2021
US GER
Renewables
Example
Green assets
Monetizing parts of our development
pipeline and operating asset portfolio
through establishing long-term partnerships
Services
Offering full scale operations, maintenance,
asset & energy management services to
third party asset owners
Our customers (examples)
Green energy
Providing long-term Power Purchasing
Agreements (PPA) to Utilities and B2B
customers1
Renewables
1. Including selling renewable energy to customers across Europe via our local retail organizations
We serve customers & partners with attractive propositions
Our offering
Portfolio wind yield overview
Wind Onshore Wind Offshore
Wind speed (m/ s)
3 6 9
Site characteristics significantly influence
returns through load factor, costs and risks:
Continuous market scouting, as new sites
become accessible
World class skills in wind and solar yield
analysis and site assessment
Careful consideration of distance to shore
and water depth for offshore projects
Example Offshore: Rampion
The closest to shore with lowest water
depth at each tender round in the UK1
Example Onshore: Grandview
Potential 1 GW site in Texas
Load factor can reach >50%
Secured by early analysis of the grid
expansion program2
Source: 3Tier
65 1. Rampion COD is expected to be 2018, while all other projects have their planned COD between 2019 – 2024
2. Competitive Renewables Energy Zones (CREZ): Turning the Grandview site, among other areas, into a large site suitable for onshore wind installation
Our portfolio captures most attractive
wind locations Site selection approach
Renewables
O&M case study – onshore wind example
2014
83%
2013
85%
100%
2012
Spares strategy/ framework: Global gearbox
agreement, own purchase of consumables
Predictive maintenance: Retrofitted with
condition monitoring system
Smart maintenance: Self-hoist crane concept
O&M service concept: Previous mixed/ hybrid
team approach replaced by self-perform approach3
− Reduction of labor costs
− No extra labour and service costs in case of
repair/ emergency
− Full lever and immediate implementation of
improvements as sites are under E.ON’s sole
control
66
1. Example of single onshore wind plant operated by E.ON. O&M costs per MW in USD nominal
2. 2012 data recorded as time-based availability, hence not directly comparable with the energetic availability recorded in the fol lowing years
3. Mixed/ hybrid: E.ON Renewables team (EC&R) and OEM/ 3rd party as joint team with same tasks/ Self-perform: self-performed O&M managed by EC&R for high value work
98.2% 97.8%
N/A2
-1500 bps
81%
-200 bps -200 bps
98.8%
2015
2014 2013 2012 2015
Selected O&M improvement initiatives O&M costs per MW decreasing1
Availability increasing
Renewables
Partnering and third party services
67
Monetizing part of our development
pipeline and operating asset portfolio
through establishing long-term
partnerships
Increased financial flexibility and
diversified portfolio
Economies of scale, further development
of E.ON capabilities and of relationships
with long-term valuable partners
Complementary capabilities, allowing to
reduce LCOE and risks
Shared construction & operational risks
and smoother earnings profile
Additional income as construction
manager and operator of the sites
Full scale operations, maintenance, asset
and energy management services
Emergence of new financial players and
small/ midsized wind farm owners without
in-house technical competencies
Leveraging global experience to manage
risks on customer’s behalf
Asset-light business model and economies
of scale
Natural and complementary business
model to partnering
Partnering Third Party Services
Renewables
68
Alamo
Size: 24 MWDC
COD: May ’15
Buyer: Dominion
Maricopa West
Size: 28 MWDC
COD: Nov ’15
Buyer: Dominion
PV project delivery experience of >150
MW (14 projects), including development
and construction
Current geographical focus in US
Vast majority of the projects delivered on
time and on budget
In the past, focus on build to sell
Highly standardized development and
engineering to ensure end-to-end process
excellence and off-the-shelf PV project
delivery
Professional energy marketing enables
participation in tenders and requests for
proposals
92
49 11 152
US Italy France Total
1. Until end 2015
Recent projects (built & sold)
Key facts Capacity built1
Renewables
PV projects & initiatives
MW
1. Group overview
Strategic partnership Enerjisa
PreussenElektra
2. Financials
3. Core activities
Energy Networks
Customer Solutions
Renewables
4. IR Calendar and contacts
Agenda
E.ON Investor Relations contact
70
Dr. Stephan Schönefuß T +49 (201) 184 28 22
Manager Investor Relations stephan.schoenefuss@eon.com
Alexander Karnick T+49 (201) 184 28 38
Vice President Investor Relations alexander.karnick@eon.com
Martina Burger T +49 (201) 184 28 07
Manager Investor Relations martina.burger@eon.com
Florian Floßmann T+49 (201) 184 28 33
Head of Investor Relations florian.flossmann@eon.com
Reporting calendar & important links
71
Reporting calendar
May 11, 2016 Interim Report I: January – March 2016
June 8, 2016 2016 Annual Shareholders Meeting
August 10, 2016 Interim Report II: January – June 2016
November 9, 2016 Interim Report III: January – December 2016
Important links
Capital Market Story http://www.eon.com/en/investors/presentations/capital-market-story.html
Other Presentations http://www.eon.com/en/investors/presentations/special-topics.html
Annual Reports http://www.eon.com/en/about-us/publications/annual-report.html
Interim Reports http://www.eon.com/en/about-us/publications/interim-report.html
Facts & Figures http://www.eon.com/en/about-us/publications/facts-and-figures.html
Creditor Relations http://www.eon.com/en/investors/presentations/bonds.html
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