Understanding the Global Picture for Renewables and Opportunities for Mine Partnerships

November 2016

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Global Transition to Renewables

All efforts in the same direction…

Source: REN 21, IEEFA; IRENA; BNEF; Enerdata; GlobalData; TSOs 3

COP 21 Paris agreement: 111 Parties have ratified. Entered into force on 4 November 2016 Governments

Policy Makers

Private Sector

End Users

Renewable Sector Manufacturers, IPPs, Developers

Investors

100 countries accounting for 58% of global emissions are planning a carbon price or equivalent

Green bonds at record levels (65 billion 2016 vs 42 billion 2015)

Global investors shifting capital away from riskier carbon intense to clean: (The Dutch civil service pension fund ABP,

UK pension trust, California State Teachers Retirement System, Norwegian Sovereign Wealth Fund..)

Global oil & gas capital spending at lowest levels since 2007

Global new investment in renewable at record levels (2015 +5% vs 2014)

Increasing stranded asset risk for incumbents (Oil & Gas, Coal..)

In 2015, renewables accounted for more than 60% of net additions to global power generating capacity

The world now adds more renewable power capacity annually than it adds (net) capacity from all fossil fuels combined

Sustained investment cost and LCOE reductions for all RES technologies mainly wind and solar PV (impressive one)

Record (low) levels in last regulated auctions awarded prices (Dubai, Chile, Mexico)

83 of the most influential world companies committed to 100% renewable power (RE100)

Increasing interest for corporate green PPAs

Nearly two-thirds of Fortune 100 and nearly half of Fortune 500 companies have made renewable energy commitments

The real driver of the global transition to renewables is the reduction of costs (in its broadest sense)

Installed Capacity by Technology, 2004 – 2015

Achieved

Hydro Wind PV Biomass Total

850 GW

1.200 GW

433 GW

92 GW

226 GW 950 GW

1.970 GW

45GW 3 GW 50GW

2004

2015

Source: REN 21, The first decade: 2004 – 2014; IRENA; BNEF; Enerdata; GlobalData; TSOs

2015 Key facts

2015 record year in additional Wind capacity

(~ 63GW)

Record year in terms of PV additional

capacity (~50GW)

Hydro cumulative capacity represents ~60%

of total global RES capacity

Increasing n. of Countries with RES installed

capacity higher >100MW

The evolution of renewable energy over the

past decade has surpassed all expectations

Global installed capacity and production from

all renewable technologies have increased

substantially, and supporting policies have

continued to spread to more countries in all

regions of the world

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+41%

+766%

+104%

+7433%

+107%

Electricity Demand Growth till 2040 Renewables 2040

The RES market is expected to grow steadily worldwide

Developing countries will contribute over 60% to global growth in electricity production until 2040

It is estimated that RES will account for around 60% of new capacity additions

Expected

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Sources: National TSOs, Enerdata, IEA, EER, GWEC, EWEA, IRENA, Global Data, EPIA-SPE (2000-2013 figures). EGP estimates based on national

plans, Government targets, WEO, IEA “Medium Term renewable energy report”, GWEC, EWEA, SPE-EPIA, BNEF (2020-2030 figures).

New accelerations

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•Li-Ion currently leading technology due to flexibility, performance

and synergies with consumer electronics and emerging EV

industries

•Battery price decreasing @ 10-15% YoY rate

Lithium-ion battery pack price (Forecast)

(Source Rocky Mountain Institute)

•World wide: expected CAGR 70% over next 10 years

•Residential storage + PV to lead the massive deployment of

storage systems

New Installed Energy Storage for Renewable Integration

Energy Capacity by Application

(Source : Navigant)

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

(MW

h)

Utility-Scale Wind Integration

Utility-Scale Solar Integration

Residential ESRI

Commercial ESRI

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Enel Green Power leading Enel Group transition to renewables

Enel Green Power

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A Global Leader in renewable energy

Data as of June 30, 2016 (1H 2016 Financial Results) (does not include large hydro)

2.5 GW in operation

North America

0.3 GW in operation

Rest of World

5.6 GW in operation

Europe

1.6 GW in operation

Latin America

Countries of presence Advanced development Countries of interest

1.1 GW in operation

Central America

3%

23%

24%

50%

11.1 GW

Europe Central &Latin

America

North

America

Rest of

World

33.6 TWh

Wind

Small Hydro Solar

Geo

1. Includes 202 GWh of biomass

Total installed capacity by area

Net production by technology1

Capacity under construction and under development not shown

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Fixed incentive schemes (GC, Tariffs) Competitive mechanisms (tender/PPA)

Across all geographies and market schemes

16 countries of which 6 with competitive

mechanisms/PPA

50 countries of which 30 with competitive

mechanisms/PPA

2010 – EGP countries of presence 2016 – EGP countries of presence and interest

Country switched to auction or tender since 2010

Source: BNEF; internal analysis

EGP is focused on Mature Technologies… …and testing Innovative Solutions for the market

Technology Focus: Proven Renewables

Wind Onshore

We expand on our main portfolio driver

Solar Photovoltaic

We intend to play a key role in solar market

Geothermal Energy

We take advantage of our leadership in the sector

Hydroeletric

We concentrate on hydro to give a significant contribution to

the electricity demand

Biomass

We focus on converting conventional plants

Innovation: the key to compete

Storage

We work to make Renewable Energies fully dispatchable

Offgrid systems

We bring electricity even in remote areas

Hydrid Solutions

We work to optimize the reliability of the supply and to

reduce the cost of the RES electricity

Solar Home System

We want to offer full services to our customers

Enel Green Power Technologies

Enel Green Power RE Supply through C&I PPAs Long term PPAs with final commercial and industrial customers

USA: more than 2000 MW long term PPA signed with utilities and C&I customers and ~600 MW under negotiation with other industrial customers (Wind)

North America

Mexico & Panama: Over 900 MW long

term PPAs signed with industrial

companies (Wind & Hydro) and ~400

MW under negotiation (Wind & PV)

Chile, Colombia: 600 MW long term

PPAs under negotiations (all tech)

Peru/Argentina scouting ongoing

Latin America

Italy: ~ 50 MW PV and Wind PPA under negotiation

Sweden: Wind, negotiating ~150 MW PPAs

Germany/Turkey scouting ongoing

Europe

Morocco, South Africa, India &

Australia: ~500 MW Wind & PV long

term PPAs under negotiation with C&I

clients

Rest of the region: ongoing scouting

Africa & Asia

Worldwide approach to long term private off-takers 11

Competitive scenarios in the innovation field

EGP Microgrid, Storage and Hybrid solutions

Plants/Initiatives in Pipeline

California - USA

2MW / 8MWh

North Europe , Frequency regulation

> 20MW, > 30MWh

Italy, island

250kW RES + 3MWh ESS

Chile, Island

700kW PV + 2 MWh ESS

Lat-Am Isolated Systems

(0.25-30 MW)

07/05/2016

IPP and integrated

solutions O n/Off - grid

IPP On - grid

Storage

Plants/Initiatives in Operation Plants/Initiatives Under Construction

Ollagüe –

Chile

200kW PV, 30kW Wind, Diesel

250kW/752kWh (Fiamm)

Catania, 10 MW PV

1MW/2MWh (GE)

Potenza Pietragalla 18

MW Wind , HV connection 2MW/2MWh (Samsung)

Fenner, NY – USA 28MW

Wind, HV 4MW/1MWh (Toshiba)

Marcona - Peru

100kW/100kWh + 100kW Wind + 70kW PV+Diesel

Powerhive - Kenya

1MW/3MWh – 90,000 inhab . Cerro Pabellòn - Chile

150kW/150kWh Li - Ion

50kW/450kWh H2

+200kW PV

South Africa PV (up to 15kW)

BESS (up to 14kWh)

Inverter (up to 6kWh) 07/05/2016

Retail Distributed

Generation On/ Off - Grid

California – USA

200kW PV

200kW/800kWh

Storage is more than batteries…

EGP focused on exhaustive research of advanced scada and software tools to optimize

hybrid plants and microgrids reliability, performance and costs

Ollague Micro Grid

Advanced technology, fully monitored and managed remotely

with local community for O&M support

Ollague Micro Grid

Ongoing Upgrades of the Energy management system:

Advanced weather forecast and nowcast technologies

Real time monitoring of the loads (for Load forecast)

Modeling improvements of the genset management strategy

Rightsizing equipment modular additions according to demand increase

Integrate meters and provide innovative billing system: Enhance the system

performance and services by installing a metering system in order to monitor the

customer electricity usage and provide a prepaid service based on consumption

Metering infrastructure provided by Enel Infrastructure

and Networks (EI&N) Third Party’s prepayment and

Billing system integrated with

“La Silla” new technologies

• Installed capacity 1.5 MW

• COD 03/2016

• Subfield for tests three 500 kW

inverter

La Silla PV Plant

Subfield 1 Subfield 2 Subfield 3

Smart Jinko-Maxim modules

Technology

Smart optimized modules with solar

cell optimizers replacing by-pass

diodes

Expected benefit 4-8%

Megacell bifacial modules

Technology High Efficiency Bi-facial Monocrystalline

N-type Photovoltaic Module

Expected benefit 10-20%

It’s time for PV efficiency R&D

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Approach to partnerships Structuring & Pricing a tailored PPA

Potential RE supply solutions

Interests & needs

• Increase RES capacity

• Secure future revenues

• Geographical and technological

diversification

• Promote and develop new innovative

solutions

• Creating shared values (CSV)

Local contexts

• Regulation

• Power and energy markets

• Local resources

• Commodities

Interest & needs

• Predictable energy pricing

• Cost savings

• Carbon footprint reduction

• Secured supply

• Limited or No upfront capital

• No operating risks

• Corporate image improvement

Conventional supply or

Existing renewable And/or

Certificates (RECS, GoO,…)

Short & medium term solutions Long term solutions

Mature RES technologies Innovative value solutions

No upfront capital

Off site plant – financial or physical PPA

Designing together tailor-made solutions according to respective interests 18

Equity Partnerships

On site plant - physical PPA

Mines

Structuring and pricing

On-Grid Mine Off-Grid Mine

PPAs structures must take into account both parties risk aversion.

Common goal: Proper risk allocation always assuring project bankability

Mines On-Site--Off-Grid RE plant On-Site--Off-Grid RE plant Off-Site--On-Grid RE plant

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Deal Drivers

Structuring Challenges

Savings: avoided Diesel, carbon tax

Other Benefits: CSV, sustainability targets

Risk management: reliable supply, hedge

vs fuel volatility

Savings: vs regulated tariff/market price, carbon tax, network tolls

Other Benefits: CSV, sustainability targets,

Risk Management: reliable supply, hedge vs tariff/market price volatility

Bankability: PPA term vs mine life, curtailments, take or pay, termination, insolvency, guarantees

PPA structure: volume, fix vs variable price, price indexation, currency, green certs

Risk allocation: Construction, operative, credit & counterparty, FX, volume&price, out of the money PPA vs stranded asset protection,

Operative: O&M and dispatching rules, intermittency management

Equity partnerships?

Bankable minimum term?

Storage? Optimal size/tech?

Deployable-portable plant approach?

Storage? Optimal size/tech?

Net metering? Behind the meter?

Wheeling rules in place?

Land lease term vs PPA term?

Cost of Off-Grid -> On Grid?

Physical or Financial PPA?

Fix or variable price?

Indexation to commodity/spot/tariff?

FX hedge?

Volume tracking account?

Best approach to deal optimization

How to introduce this iterative process

RFP

Info Sharing

Q&A

NBO

Beauty

contest/Short

List

Term Sheet

definition

Binding offer

Governance

Bodies

approval

PPA

negotiation

Dead end PPA

signature

Into this linear one

Project Dev.

PPA Price PPA

Comm. Terms

Project Financing

It is key to understand interlinkages between commercial terms, price and financing cost.

A flexible and dedicated team IPP-Offtaker focused on best PPA price-risk structure should be

in place at some point of the competitive processes

Final Remarks

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Mining sector, as one of the main energy consumers, has a key role in the unstoppable low-carbon transition of global economy

Renewable energy competitiveness, driven by the cost reductions and innovation, provides a perfect fit between operating cost

optimization and sustainability targets achievement

Renewable IPPs and mines must work together defining tailored energy supply solutions. For this purpose it is key for the IPP:

To understand Mine RE sourcing strategy: Potential acceptable schemes, main current issues (product, price, flexibilities),

market evolution view (alternative tariff/market price), risk aversion…

To understand Mining business: energy consumption assessment, FX risk allocation, possibility of commodity indexed PPA

structures, mine life forecast, residual load after mine closing...

To assess the technical feasibility of the solution: interconnection infrastructure for onsite plants, load characteristics,

dispatching/control features…

And it is key for the mining company:

To understand plant bankability cornerstones and lenders concerns

To understand the generation profile: Seasonality, daily profile, intermittency, stochasticity….

To assess the operational capabilities of the RE plant: production forecast, remote-control, active/reactive power regulation..

Optimum rather than maximum risk transfer together with project bankability are common objectives

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Thank you