Innovation in Utilities?

©IBERDROLA

Installed capacity nearly 45 GW

Over 27 million customers

Leading wind producer worldwide: 12.5 GW installed and a pipeline over 61GW

32.000 employees in more than40 countries worldwide

Assets worth: €93Bn

Hydro 10 GW CCGT 13 GW

Renewable 12 GW Thermal 5GW

Nuclear 3 GW Cogen 1 GW

Electricity 24 MM

Gas 3 MM

Iberdrola, who we are?

R&D and innovation effort ~ 150 M€ / year

Iberdrola, who we are?... In the US today

Hydro

Distribution

Gas Storage

Wind

Thermal

5,598

4,634

25,000

Installed capacity (MW)

Wind installed capacity (MW)

Wind projects pipeline (MW)

1

2.5

Gas customers (M)

Electricity customers (M)

Present in 23 U.S. States and Canada

+ +(RG&E, NYSEG, CMP)

Iberdrola, who we are? Some History...

Sustainable energy is in our DNA as a company!Sustainable energy is in our DNA as a company!

More than a 100 Years of Experience...

+

Iberdrola started off hydro power plants… And hydro is still one important activity for RG&E…

Innovation, what are we talking about?

It´s not always about the product/service, but it´s always about the value and the sustainable results!It´s not always about the product/service, but it´s

always about the value and the sustainable results!

Thousands of definitions...

Innovation, in a commodity business?

Iberdrola offers a mature product, which is electricity / gas…Iberdrola offers a mature product, which is electricity / gas…

The difference is not in the product

• Image We are green, sustainable,…

• Business Model Renewables, combined cycles,…

• Vertical Integration Our own engineering, gas storage,…

• Added Services Quality, maintenance,…

Efficiency is the driver of innovationEfficiency is the driver of innovation

kWh is a commodity!kWh is a commodity!

Innovation, how we implement it? (I)

Governing Model of Iberdrola DecentralizedGoverning Model of Iberdrola Decentralized

Resources are limited Open Resources are limited Open

Innovation, how we implement it? (II)

R&DCommitte

EngineeringIBE

IT SystemsIBE

Real StateIBE

Regulated Business

IBE

Liberalized Business

IBE

CorportateIBE

WholesaleSP

NetworksSP

RetailSP

Corporate R&D Department- IBE/SP

R&DCommitte

R&DCommitte

R&DCommitte

R&DCommitte

R&DCommitte

R&DCommitte

R&DCommitte

R&DCommitte

Renewables

R&DCommitte

Support for the R&D Management

SP

R&D Coordinators Committee

Governing Model of Iberdrola Decentralized

R&D&Innovation Projects are developed within the business units, close to business!

Innovation, how we implement it? (III)

Resources are limited Open

IBERDROLA is aware that this is an effort that we cannot undertake alone. Therefore, we have an open innovation model where it is essential that we collaborate with:

Companies, universities, technological centres, industrial organizations and public institutions through programmes and agreements.

There are agreements with more than 70 universities in Spain, Europe and the US to collaborate in research activities. Some initiatives that involve collaboration with research departments and universities:

In the US: EPRI (Electric Power Research Institute), GTI (Gas Technology Institute),...

European Industrial Initiatives (EEI), EIT_KIC InnoenergyCIGREIberdrola´s Innovation Network

Major ongoing R&D and Innovation Efforts (I)

Networks (O&M) Quality of service (QoS) SmartGrids

Electric Vehicle Energy efficiency

Networks

Power generation and Retail

Clean technologies

Major ongoing R&D and Innovation Efforts (II)

Renewables

Offshore New technologiesWindpower (O&M)

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New Ventures within Iberdrola´s Innovation FrameworkWhy Iberdrola invests in disruptive technology?

As we have seen… Innovating in a “commodity” involves

• Improving efficiency on the existing processes

• Mostly: Incremental and evolutionary innovation

As we have seen… Best approach: Open & De-centralized Innovation Model

• Innovation within the business units, close to business

• So… Why investing in disruptive technology?

Technology to generate new sustainable core business

What about the long term?

13

New Ventures Program: PERSEO Program Description

Worldwide; special focus on IBE´s priority marketsGeographical Areas

6-9 M€ / yearProgram Size

Disruptive Energy Technology (see detail on next slide)Technology Focus

500 k€ to 3 M€ per deal (IBE´s first round)Deal Size

Minority participations in early stage companiesGoal

14

New Ventures Program: PERSEOInvestment Focus: Technology Areas

• Renewable Energy: Solar (PV & thermal), Wind (i.e. offshore), Marine (tidal

& wave), Biomass, ...

• Energy Efficiency: Energy Management Systems, Green Mobility, …

• Other energy related technologies: Emissions Abatement, Energy Storage, …

• Renewable Energy: Solar (PV & thermal), Wind (i.e. offshore), Marine (tidal

& wave), Biomass, ...

• Energy Efficiency: Energy Management Systems, Green Mobility, …

• Other energy related technologies: Emissions Abatement, Energy Storage, …

15

New Ventures Program: PERSEOProcess (I): Engaging with the business units

PERSEO Committee: formed by Directors from IBE´s business unitsInternal & External Evaluation

Involving the business units is key for…

• Iberdrola: Learning (Strategic and Technological Returns)• Portfolio Companies: Business opportunities; increasing their value

Management: dedicated team + key input from business units

16

New Ventures Program: PERSEOProcess (II) – Deal-flow: Perseo Award

The PERSEO Award, is an initiative designed to promote innovative technological applications in the clean energy sector, through the support for projects carried out in this field.

• CCS and Clean Combustion

• Energy Storage

I Perseo Award (2010)

II Perseo Award (2011)

• New Products for Energy Efficiency

• Innovative Biomass TechnologiesStart-ups from the US

17

New Ventures Program: PERSEOCompany Portfolio

Renewable EnergyRenewable Energy

Emissions AbatementEmissions Abatement

Prometeo

18

New Ventures Program: PERSEOSummary

…We use venture capital as a tool to ensure the sustainability of our future core investments by building the technology value chain and positioning Iberdrola on it

perseo@iberdrola.es

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Innovation in Utilities?Summary

Innovation is not always about the products and services!

Model for innovating in a utility business: de-centralized and open. Goal: improving your efficiency!

Even if you do great… long term solutions can disrupt your business…

Gain first hand access to them to ensure the sustainability of your business!

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