Introduction: E.ON Strategic Co-Investments

EcoSummit

An Overview of E.ON �  At facilities across Europe, Russia, and North

America, our more than 72,000 employees generated approx. €122 billion in sales in 2013. In addition, there are businesses in Brazil and Turkey we manage jointly with partners. In total E.ON has over 35 million customers

�  With our strategy of cleaner & better energy, we're transforming E.ON into a global provider of specialized energy solutions which will benefit our employees, customers, and investors alike

�  Our objective is to make energy cleaner and

better wherever we operate �  Strategic Co – Investments is part of E.ON’s

Technology and Innovation Department (T&I)

E.ON to split into two publicly listed companies

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Empowering customers

Shaping markets

•  E.ON to spin off a majority stake in its power & gas up- and midstream business (‘New Company‘) to its shareholders

•  Intention to divest remaining stake in the new company over the medium term post spin-off

•  Internal spin-off expected to be completed in 2016

•  Divestment Spanish activities agreed to; divestment of Italian activities under evaluation; E&P North Sea under review Two highly competitive companies with distinct identities

Technology & Innovation 4

E.ON Corporate Strategy

Provide cleaner and better energy for the system

Cleaner generation mix, better product portfolio

Transform E.ON from a utility to a solution provider

T&I informs corporate strategy, improves and develops businesses & is guided by group strategy

E.ON Technology & Innovation

Detect disruptive change

Explore technologies and innovation opportunities

Prepare new business for E.ON

Major T&I activities

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T&I constantly screens mega- and subtrends as starting point for decision on future innovation area

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Health & well-being

New work

Consumption shift

Ubiquitous intelligence & computing

Disruptive technology

& innovation

Individuality Diffusion of power

Urbanization

Knowledge society

Climate

New social structure

Resources & energy

SUSTAINABILITY

NEW SOCIETY & ECONOMY RISE OF THE INDIVIDUAL

ACCELERATED TECHNOLOGY

Megatrends

Technology & Innovation 6

“Technology & Innovation” within GM with three distinct functions

�  Innovation Scouting & Co-Investments: Focus on detection of new and disruptive technologies and CVC activities

�  Innovation Portfolio Management: Ensure transparency across all technologies to enable active portfolio management

�  Energy System Innovation: Provide a holistic view on energy systems

E.ON Innovation Centers cover new technologies from today's businesses to drive them forward to a new level of operations

“Project Executing Units” execute all projects and programs of the group wide E.ON Innovation centers. PEU are E.ON business units and E.ON Technologies

Technology & Innovation is organized as a network

E.ON Innova-

tion Center

E.ON Innova-

tion Center

E.ON Innova-

tion Center

E.ON Innova-

tion Center

E.ON Innova-

tion Center

Tech- Nology & Innova-

tion

Illustrative

T&I

EIC

PEU

Three main building blocks

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EIC

�  E.ON Innovation Centers function as networks and steer all activities within their Technology & Innovation area across E.ON business units

�  Each EIC includes a multitude of activities, i.e., innovation programs and projects, as well as tracking activities

�  All E.ON internal resources taking part in these activities are part of the EIC, regardless of their geographic position

�  Each EIC has a dedicated Head of EIC, respon-sible for translating the Technology & Innovation strategy into innovation programs and ensure close collaboration with businesses

�  Heads of EICs are embedded in business units and led by SVP Technology & Innovation in GM following the steering & leadership principles (functional steering)

E.ON Innovation Centers (EIC) manage the majority of Technology & Innovation activities within E.ON

Principles of setup E.ON Innovation Centers*

*Including T&I Incubator

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�  All projects are executed by an E.ON business units or E.ON Technologies with responsibility for project management and reporting to the Technology & Innovation community

�  New projects are developed by PEU’s

�  In order to incorporate and maintain the knowledge within the group and make it available to all parts of the group, ETG function as a knowledge hub with more than 100 FTE working for Technology & Innovation

�  Involvement of business units ensure that activities are close to the needs of the business and implementation is prepared

Projects are executed by units across the whole group with ETG functions as a center of gravity 45 E.ON Project Executing Units* (PEU) Principles of responsibility

a

*Incl. EC&R North America

Add. PEU 2014 Add. PEU 2013

A

ETG PEU 2011 Add. PEU 2012

Single project in Russia

Strategic co-investments – Combining start-up innovation with E.ON resources to shape E.ON future

WHERE

�  Screen outside innovation �  Bring external innovations into E.ON �  Info and capital to de-risk commercial deals �  Benefit from upside provided by E.ON

�  Equity investments linked to -  E.ON’s demonstration / validation

-  E.ON’s commercial roll-out

�  Residential and C&I solutions �  Renewables balance of systems

�  Distributed energy and storage

�  Smart grid (regulated and unregulated)

�  IT (Big data, cyber security, comms, etc)

HOW

�  E.ON T&I set-up brings value beyond capital -  SCI & EIC close collaboration

-  EIC imbedded in business

WHAT

WHY

= Capital 35 m customers 15 countries

5 GW renewables Expertise

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why

Why Strategic Co-Investment – We create a win-win situation for E.ON…

Screen outside innovation for developments in the markets and technology trends and

derive implications for E.ON

Find disruptive technologies and business models

Bring external innovations into E.ON (either by investment or by facilitating contact to

the right partners within E.ON) and develop strategic partnerships for technology

development and commercialization

Increase the rate of technology development in core areas of interest to E.ON

Combine investments with commercial agreements to maximize business impact for

both start-up and E.ON

Gather information during the financial due diligence process on the company to reduce

risk on commercial agreements

Participate in the economical upside to the start-up that the collaboration with E.ON

brings

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why

Why Strategic Co-Investment – We create a win-win situation for E.ON…and the start up company

“Company A” valuation

“Company A” valuation after E.ON’s

investment

Access to E.ON’s operational and market expertise Access to E.ON resources (engineers, experts, facilities and systems) and suppliers

KNOWLEDGE  

Technology validation Strong reference customer/partner with brand credibility

VALIDATION  

Additional channels to market Access to one of the biggest customer bases in the utility sector Potential of high volume of purchase orders and strong customer pipeline

COMMERCIAL  ROLL-­‐OUT  Access to growth capital via equity co-investment Reliable investor for follow-on rounds Network into the VC landscape

FINANCIAL  STRENGTH  

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What type of investments – Four building blocks define the type of investments we make

�  Products can be used or leveraged by E.ON (invest for value creation through combina-tion of investee and E.ON)

�  E.ON may need to rely on in the future (invest for long-term absorption of external innovation into core business)

�  Board represen-tation in portfolio companies preferred

Companies Products / services Financials Governance

�  Later and growth stage companies with technologies ready for deploy-ment (or close to it), typically B/C-round

�  Strong and reliable syndicate partners and co-investors

�  Typically holding minority stakes (<20%)

�  Typical investments between EUR 3 m and EUR 5 m per portfolio company

wha

t

Fund Managers

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Co-Investments To Date - Portfolio (May 2015) IT (cybersecurity, comms, infrastructure, etc)

Residential and C&I solutions

Smart Grid

Renewables BOS

Distributed energy