Citigroup Reverse Roadshow October 27, 2009 - rwe.com · Citigroup reverse roadshow | October 27, 2009 2 This presentation contains certain forward-looking statements with in the

Citigroup Reverse Roadshow | October 27, 2009

Citigroup Reverse Roadshow October 27, 2009Market uncertainties: not a threat but a chance Dr. Bernhard Günther, CFO, RWE Supply & Trading GmbH

RWE’s portfolio management: being prepared for volatile marketsDr. Thomas Glimpel, Head of Portfolio Management, RWE AG

Offshore Wind EnergyProf. Dr. Martin Skiba, Head of Offshore Wind, RWE Innogy

2Citigroup reverse roadshow | October 27, 2009

This presentation contains certain forward-looking statements within the meaning of the US federal securities laws. Especially all of the following statements:

Projections of revenues, income, earnings per share, capital expenditures, dividends, capital structure or other financial items;Statements of plans or objectives for future operations or of future competitive position;Expectations of future economic performance; andStatements of assumptions underlying several of the foregoing types of statements

are forward-looking statements. Also words such as “anticipate”, “believe”, “estimate”, “intend”, “may”, “will”, “expect”, “plan”, “project” “should” and similar expressions are intended to identify forward-looking statements. The forward-looking statements reflect the judgement of RWE’s management based on factors currently known to it. No assurances can be given that these forward-looking statements will prove accurate and correct, or that anticipated, projected future results will be achieved. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Such risks and uncertainties include, but are not limited to, changes in general economic and social environment, business, political and legal conditions, fluctuating currency exchange rates and interest rates, price and sales risks associated with a market environment in the throes of deregulation and subject to intense competition, changes in the price and availability of raw materials, risks associated with energy trading (e.g. risks of loss in the case of unexpected, extreme market price fluctuations and credit risks resulting in the event that trading partners do not meet their contractual obligations), actions by competitors, application of new or changed accounting standards or other government agency regulations, changes in, or the failure to comply with, laws or regulations, particularly those affecting the environment and water quality (e.g. introduction of a price regulation system for the use of power grid, creating a regulation agency for electricity and gas or introduction of trading in greenhouse gas emissions), changing governmental policies and regulatory actions with respect to the acquisition, disposal, depreciation and amortization of assets and facilities, operation and construction of plant facilities, production disruption or interruption due to accidents or other unforeseen events, delays in the construction of facilities, the inability to obtain or to obtain on acceptable terms necessary regulatory approvals regarding future transactions, the inability to integrate successfully new companies within the RWE Group to realise synergies from such integration and finally potential liability for remedial actions under existing or future environmental regulations and potential liability resulting from pending or future litigation. Any forward- looking statement speaks only as of the date on which it is made. RWE neither intends to nor assumes any obligation to update these forward-looking statements. For additional information regarding risks, investors are referred to RWE’s latest annual report and to other most recent reports filed with Frankfurt Stock Exchange or SWX Swiss Exchange and to the material furnished to the US Securities and Exchange Commission by RWE.

Forward Looking Statement


Market uncertainties: not a threat but a chance!

Dr. Bernhard GüntherCFO, RWE Supply & Trading GmbH


“The future is uncertain… but this uncertainty is at the very

heart of human creativity.”Ilya Prigogine (25 January 1917 – 28 May 2003)*

* Ilya Prigogine was a Russian-born Belgian chemist and Nobel Laureate noted for his work on dissipative structures, complex systems and irreversibility

http://en.wikipedia.org/wiki/File:Ilya_Prigogine.jpg


Over the last few months we have seen a significant drop in average spot prices…

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€/M

Wh

7-day average

30-day average

EEX – Spot Prices (Phelix Base, May 2008 – June 2009)


… while price volatility keeps increasing both short term…

Growing proportion of renewables leads to higher price volatility. October 2008 to October 2009: 60 hours with negative prices; highest price reached + € 500/MWh, lowest - € 500/MWh

Source: EEX spot prices

494.26

€/ M

Wh

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Daily Min price (indicated in red when negative)Daily minimum price (indicated in red when negative)

Daily maximum price


… and long term

1 German base load electricity forward for the respective year as traded in the prior year.2 Average of the German EEX spot prices during the respective year.

2001 2002 2003 2004 2005 2006 2007 2008 2009

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0

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€/MWh

Maximum forward price1

Minimum forward price1Average forward price1

Average spot price (baseload)2


Early hedging protects us from recession and allows flexible short-term optimisation

30405060708090

100

Forward selling of RWE Power in the German market (base load forwards in €/MWh)

01.01.2006

Forw

ard

2009

1 Forward selling as of July 31, 2009; price data as of August 10, 2009

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ard

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ard

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01.07.2006 01.01.2007 01.07.2007 01.01.2008 01.07.2008 01.01.2009 01.07.2009 01.01.2010

> 20% sold> 20% sold > 25% sold> 25% sold > 35% sold> 35% sold > 65% sold> 65% sold > 90% sold> 90% sold> 10% sold> 10% sold

> 10% sold> 10% sold > 40% sold> 40% sold > 90% sold> 90% sold

> 50% sold> 50% sold






RWE sold forward Q1 2009 power generation from hard coal units in Q2 2008

Now, in Q1 2009 the prices of power and fuels have changed

In this example RWE would opt for “buying instead of making”

Power sold forward at 70€/MWh

Hard coal costs locked in at 40€/MWh

CO2 costs locked in at 20€/MWh

Locked in Clean Dark Spread +10€/MWh

Power price 40€/MWh

Hard coal costs 30€/MWh

CO2 costs 15€/MWh

Possible Clean Dark Spread (power plant is out of the money)

-5€/MWh

Power sold forward at 70€/MWh is covered by power bought today at 40€/MWh +30€/MWh profit

Hard Coal bought at 40€/MWh is sold at 30€/MWh -10€/MWh loss

CO2 bought at 20€/MWh is sold at 15€/MWh -5€/MWh loss

Total effect +15€/MWh

An illustrative example

> Forward hedging ensures the required return of our generation fleet.

> On this basis, we can decide every day if we produce the contracted power at the locked in clean dark spread or buy the power in the market instead.

RWE’s daily make or buy decision: Extracting additional value on top of forward selling


Flexibility is also key for our Gas Portfolio Management

Gas Sales Contracts

Gas Purchase Contracts

Gas Storage Contracts

Gas Transport Contracts

> Perform contract optimization (maximize the value against the market)

> Trade around positions

> Sales to RWE Energy, RWE Power / STPM, RWE Energy Nederland: serve as their sole or main supplier

> Manage the Gas Operations: handle nominations

> Trade underlying commodities: oil, coal etc.

Activities

Where:

Germany (all 12 market areas),

Czech Republic

but also:

Netherlands,

Austria

Slowakia


How Gas Portfolio Management changes with the emergence of a Gas Market

> “Distributers” such as Ruhrgas and RWE closed long term purchase contracts: Safeguard for seller (= producer of Gas) to cover investment cost

> Buyer would have gas available to sell

> Buyer needed flexibility, because of weather dependency

> “Take-or-Pay” of 80 %

The old days

> Separation of supply and demand theoretically possible (like in power generation):> managing the Gas to Oil Spread

from the long term supply contracts> buying all the customer demand

short-term

> Hybrid situation:> Before only long term gas supply

contracts, oil-indexed> Today also liquid markets, with fixed

price gas trading

New market opportunities

All of a sudden, the long term supply contracts and storage contracts have become an asset which can generate money in whole-sale markets and not only in retail markets


20,00

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8Sep

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n 09Mrz

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l 09

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/MW

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8Mrz

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l 08

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EUR

/MW

hThe additional value of optimizing our Gas Asset Portfolio

Normal situation

> Oil-indexed contract is in-the- money in winter

> And out-of-the-money in summer

Unusual situation

> Oil-indexed contract is out-of the money in winter

Provided the demand side didn‘t change optimizing the portfolio means: We are long Q4/2008 and short Q3/2009. We sell the Q4/2008 and buy the Q3/2009. We can deliver the same volume at on average lower prices

TTF

Oil-indexed Contract

TTFOil-indexed Contract


This means...

> Continuous monitoring of spreads (fixed price gas vs. oil-indexed gas)

> “locking in” spreads by selling gas & buying an oil swap> Trading gas and oil products at the same time

> Liquidity is the restriction: most of the time market depth doesn’t allow to do more

> The same logic can be applied to storage

> We hedge the total of the portfolio = the positions of all flexible contracts (assets)

The bigger your portfolio the more flexibility you have. And we are on a good way to a 60bcm p.a. gas portfolio1 by 2012.

1 contracted European gas supply purchase volume


While “out there” people question the necessity of additional gas infrastructure …

… more than 100,000 households in Bosnia's capital Sarajevo and other cities stood without heating in January 2009, due to lack of gas!


… the next crisis could be on the way

PUTIN SAYS RUSSIA UNABLE

TO MAKE GAS PAYMENTS FOR

UKRAINE RIA Novosti (23 June 2009)

EU expects for new conflict between Ukraine and Russia in July MIGnews (19 June 2009)

Ukraine Gas Payments: Russia reserves ´the right to act´

Russia Today Business (23 June 2009)Germany warns of renewed

Ukraine-Russia gas conflict

Energy Environment News (17 June 2009)

No easy solution to Russia-

Ukraine gas dispute

Xinhua (09 June 2009)

Gas transit through Ukraine to Europe may be suspended - Mr Putin

SteelGuru (12 June 2009)

Steinmeier calls on Ukraine to avoid another gas crisisDeutsche Welle (17 June 2009)


RWE prepares for the next crisis – with innovative ideas and with NabuccoRWE initiative to store gas in the Ukraine

> Given the fact that the Ukrainians seem to have serious cash problems, another payment default could trigger another crisis with similar delivery curtailments. A renewed gas conflict might threaten Europe’s security of supply – especially as the gas storage facilities in Ukraine are not fully utilised

> RWE proposes to fill these empty storages in summer, making this gas available to the market next winter. A win-win situation: The Ukraine receives income for (otherwise empty) gas storage facilities, Russia exports additional gas this summer and Europe improves its security of gas supply

RWE initiative to diversify Europe’s gas supply portfolio

> Against the background of renewed threat of supply interruptions, Nabucco will offer choice of both supply and transit for at least 150 million EU citizens

> Thus, the Nabucco pipeline will offer an important infrastructure link between Europe and the world’s largest combined gas reserves: the Caspian countries and the Middle East


Through Nabucco Caspian/Middle Eastern gas could reach some 10 million RWE customers

UK 2.7 m

Germany 3 m

Czech Rep. 2.3 m

Hungary 2.1 m

Netherlands 0.2 m

Potential gas supply sources for Nabucco

Egypt

IraqIran

Kazakhstan

Saudi Arabia

Turkmenistan

Azer- baijan

Russia

Note: Essent Deal not included

2.2

Nabucco pipeline

RWE pipelines

RWE customer markets

Number of RWE customers

> RWE serves some 10 million end customers in Europe with gas

> RWE’s gas downstream position is strongest in the Czech Republic, Germany, Hungary and the UK

> The Nabucco pipeline project links RWE’s downstream positions with the Caspian region and other potential gas resources

> Nabucco will also support RWE’s development activities in Turkey and South East Europe


Yes, Nabucco will come!

> The completion of the Inter-Governmental Agreement (IGA) on July 13 represents a significant breakthrough in the realization of the project. It provides the legal and regulatory certainty for the building and running of the pipeline – an important requirement for the gas supply countries in the Caspian region and Middle East to begin signing long term gas supply commitments.

> The Open Season process, involving binding capacity booking, will follow in early 2010. The European gas markets are ready for Nabucco: a preliminary market survey undertaken with gas buyers in the summer of 2008 revealed a strong level of interest. Non-binding indications from potential gas buyers far exceeded the planned maximum pipeline capacity of 31 bcm.

> Now detailed engineering and environmental work can also begin apace, with the procurement of large construction materials (e.g. steel).

> Financing discussions are well advanced, and Nabucco has received strong commitments from the EIB, EBRD and other multilateral and export credit agencies. The final investment decision is expected at the end of 2010.

> Gas is targeted to start flowing through Nabucco by 2014. By 2020 at the latest it is anticipated that 31 billion cubic metres of gas per year will be transported via the Nabucco pipeline - stretching from the Eastern border of Turkey to Austria and with access from there to the rest of Western Europe.


“The greatest challenge to any thinker is stating the problem in a way that will allow a solution.”

Bertrand Russell (18 May 1872 – 2 February 1970 )*

* Bertrand Russell, 3rd Earl Russell, was a British philosopher, logician, mathematician, historian, social reformer and pacifist.

RWE bears the challenge!

http://de.wikipedia.org/w/index.php?title=Datei:Russell1907-2.jpg&filetimestamp=20080314160948


Dr. Thomas Glimpel Head of Portfolio Management, RWE AG

RWE’s Portfolio Strategy - Being prepared for volatile markets


Agenda

1. Need for flexible generation capacity

2. Impact of a German nuclear lifetime extension on our Portfolio

3. The brake release – benefiting from increasing price levels


Price volatility keeps increasing in Germany – opportunities for a flexible portfolio like RWE’s

Growing proportion of renewables leads to higher price volatility. October 2008 to October 2009: 60 hours with negative prices; highest price reached + € 500/MWh, lowest - € 500/MWh

Source: EEX spot prices

494.26

€/ M

Wh

-500.02-150

-120

-90

-60

-30

0

30

60

90

120

150

180

210

240

270

300

01.1

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Daily Max price

Daily Min price (indicated in red when negative)Daily minimum price (indicated in red when negative)

Daily maximum price


RWE‘s hunting strategy to fetch flexibility premia is threefold.

0%

20%

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80%

100%

0 10 20 30 40 50 600%

20%

40%

60%

80%

100%

0 10 20 30 40 50 600%

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40%

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80%

100%

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Sprinting LurkingLurking Glide, Dive and rise

ramp capacity CCGT Lingen

ramp capacity hard-coal plant Hamm

ramp capacity nuclear e.g. Biblis

min min min

Gas capacities offer quick start-up capabilities. Partial load is expensive. Gas remains ideal to cover peaks, even in volatile markets.

net capacity net capacity net capacity

New coal capacities can be dispatched with 25% of rated output. The plants can profitably wait for high prices over a period with temporarily low demand.

Although designed for the baseload regime, nuclear plants can be dispatched more flexibly than any other plant type, and they can be operated to provide partial load.


In the early hours of October 4th the “Market-Clearing- Jackpot” blew up to 500 €/MWh – the recipe: go physically short and make the deal.

A flexible use of 1 GW generation capacity earns premium in a magnitude of almost €1m on just one weekend like the first October one.

€/MWh

Flexible dispatch optimisation on EEX hourly spot market prices of October 3rd and 4th

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-400

-300

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-100

0

100 21:00 00:00 03:00 06:00 09:00 12:00 15:00 h

EEX price

Forward selling price 2008 for Base

Short term marginal generation cost of hard coal

Premium spread by going physically short

e.g. hard coal


Westfalen hard coal plant

RWE Power‘s newbuilds ensure a strong market position beyond 2020.

BoA 2&3 lignite plant

Eemshaven hard coal plant

CCGT Lingen under constructioncommissioning in 2010

Predried lignite fired plant

Peaker GT Emsland gas plant CC

Optional CCGT plants

under constructioncommissioning in 2011


final permission phasepossible commissioning in 2013


permission phasepossible commissioning 2013 - 2015

permission phaseInvestment decision not before 2010

investment: ~500 million €efficiency: >59%

investment: 2.4 billion €efficiency: >43%

investment: 2.1 billion €efficiency: ~46%

investment: 2.4 billion €efficiency: >46%

investment: ~200 million €efficiency: ~50%


0 10 20 30 40 50 60 70 80 90 100

oil

gas

hard coal

lignite

nuclear

hydro

Merit order of the German wholesale generation portfolio in 20141,2

1) New-build projects currently under construction and announced decommissionings included; renewables with feed-in tariffs not on the supply-side of the wholesale market. Renewables and heat directed CHP reduce residual demand, which is partly compensated by increasing export-demand in Germany.

2) commodity prices: 5 €/MWh th lignite; 10 €/MWh th hard coal, 28 €/MWh th gas, 30 €/t CO2

GW

€/MWh

Lingen CCGT

BoA 2&3 lignite

Hamm hard coal

> RWE’s strategy is to operate a fuel diversified generation portfolio to stabilize the market position even in a volatile environment.

> RWE’s new builds will be the most efficient plants within the respective fuel type.

RWE’s generation portfolio remains well diversified – existing plants and new builds guarantee long term competitiveness.


Agenda





Phase-out of nuclear power in Germany as agreed in 2000 would result in seven reactor shut downs until 2013.

ObrigheimBiblis ANeckarwestheim-1Biblis BBrunsbüttelIsar-1UnterweserPhilippsburg-1GrafenrheinfeldKrümmelGundremmingen BGundremmingen CPhilippsburg-2GrohndeBrokdorfIsar-2EmslandNeckarwestheim-2

146257814878

11887

150158161168199201218231230236

TWh remaining by 2000 according to Nuclear Energy Act

1970 1980 1990 2000 2010 2020 2030

Feb 2009

Plant lifetime based on residual electricity generation

Transfer of 21.45 TWh from Mülheim-Kärlich to Biblis B (without governmental permission, lifetime extension until early 2013)

Shut down

Remark: RWE has a total allotment of 107.25 TWh from Mülheim-Kärlich

Stade 23


Nuclear lifetime extension will push some 7 GW of old hard coal plants out of the market within the next 5 years.

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oil

gas

hard coal

lignite

nuclear

hydro

nuclear capacity coming back into the market

1167 MW Biblis A785 MW Neckarwestheim 1

1227 MW Biblis B771 MW Brunsbüttel878 MW Isar 1

1345 MW Unterweser890 MW Philippsburg 1

____________________= ~7000 MW

hard coal capacity dropping out ~9500 MW of old inflexible hard-coal units with a block-size of c150- 350MW which were commissioned in the late 60s or early 70s

Merit order of the German wholesale generation portfolio in 2014 before nuclear extension1,2

Assumptions:

1) newbuild projects currently under construction and announced decommissionings taken into account; renewables with feed-in tariffs not on the supply-side of the wholesale market. Renewables and heat directed CHP reduce residual demand, which is partly compensated by increasing export-demand in Germany.

2) commodity prices: 10 €/MWh th hard coal, 28 €/MWh th gas, 30 €/t CO2

>Nuclear life time extension will bring 7 GW of additional capacity in the market.

>Plants fired today with subsidized hard coal mined in Germany will then not be redesigned to import coal but decommissioned in the next years. This is obligatory due to insufficient flexibility for peak load operation.

>The peak segment of the merit order will be almost not affected by a nuclear lifetime extension.

GW

€/MWh

+7GW

-9.5GW


Decreasing pressure on CO2 -prices will leverage lignite spreads, although power prices will fall by trend.

€/MWh €/MWh

fuel cost

nuclear phase out: merit order (2014) with flat pricing segment

nuclear extension: steeper merit order (2014) due to lower CO2 -cost

CO2 -cost

base price levelbase price level

> Nuclear lifetime extension results in some 70 million t of CO2 reduction p.a.

> Decreasing carbon mitigation pressure on the fossil fired portfolio reduces CO2 -prices in the EU for >5 €/t.

> Nuclear lifetime extension results in some 70 million t of CO2 reduction p.a.

> Decreasing carbon mitigation pressure on the fossil fired portfolio reduces CO2 -prices in the EU for >5 €/t.

> Nuclear lifetime extension results in up to 70 million t of CO2 reduction p.a.

> CO2 -price reduction of >5 €/t in the next years expected due to decreasing carbon mitigation pressure on the fossil fired portfolio.

> German power prices are directed 50% by gas and 50% by hard coal, both of lower carbon intensity than lignite.

> The market will see increasing spreads for older lignite capacity.

nuclear

oil

nuclearlignite

hard coalCCGT

GT

lignitehard coal

CCGT

GT

nuclear

GW

oil

lignitehard coal

CCGT

GT

nuclear

GW

illustrative

lignite spread


RWE will benefit in total from revising the phase out due to high portfolio shares of nuclear and lignite.

lignite-fired plants

old hard coal-fired plants

gas-fired plants

nuclear plantsImpacts of nuclear extension on the margins of the German power plant portfolio.

Load-factor: Nuclear plants will be operated in base-load regime. Extended plants can be operated further.

Spread: Only low merit-order effects on power prices expected, but a lower carbon price level will decrease power prices at the expense of nuclear spreads.

Load-factor: Existing plants will be operated with constant high load-factors in base load regime even if additional nuclear capacity remains in the market.

Spread: Decreasing CO2 -prices will have stronger impact on generation cost of lignite plants than on power prices. Spreads will increase.

Load-factor: Older hard-coal will be pushed out of the base load regime. Due to low flexibility, older plants cannot be operated in the peak-regime and will be decommissioned.

Spread: Typical intermediate load hours will be influenced most by merit-order price effects. Only falling CO2 -cost will act as a compensation.

Load-factor: No relevant load-factor variations for flexible peakers expected. Some CCGTs will face an insignificant load-factor decrease in the mid-merit-regime.

Spread: A falling spark-spread for CCGTs is to expect. The plants cannot benefit that much from falling CO2 -cost than coal fired power stations.

++- -

+-++

- -+-

+-- -

effect on profit margin: ++ positiv +- neutral - - negative


Agenda





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electricity base (EEX) in €/MWh Brent Crude Oil in $/bbl hard coal API#2 in $/t

The steepest contango since liberalising the sector! The market believes in increasing price levels.

Commodity forwards in October 2009


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Braunkohle

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Gas

Kernenergie

Laufwasser

Spread Leverage at increasing

commodity prices

Achievable Spreads are kept tight by weak demand and low fuel price levels.

18°

€/MWhel

GW

Merit order of the German wholesale plant portfolio in October 2009

fuel cost level: lignite 5 €/MWh th, hard coal 7 €/MWh th, gas 18 €/MWh th, CO2 15 €/t

LFO

lignite

hard coal

gas

nuclear

run of river


As price levels increase higher efficiency folds up into systematically higher spreads for efficient plants.

35°

€/MWhel

GW

fuel cost level: lignite 5 €/MWh th, hard coal 10 €/MWh th, gas 30 €/MWh th, CO2 30 €/t

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Merit order of the German wholesale plant portfolio in October 2009


commodity prices

LFO

lignite

hard coal

gas

nuclear

run of river


variable Kosten

O&M

full cost hard coal plant1 Merit Order of the German wholesale plant portfolio 2009

€/MWh

demand for generation capacity in GW

2) Forwards front year (2010) at 15 €/t CO2 , 23 €/MWhth gas, 8 €/MWhth hard coal (plus fuel transport cost)

1) financial average cost, plant price level 2009, efficiency factor of 46%, plant service time: 40 years at 7000 flh/a

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variable cost

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LFO

gas

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lignite

nuclear

run of river

capital cost

€/MWh

dispatch in the market

required base price level

We believe in market forces – And the market needs increasing spreads to cover full cost of new investment projects.


Spread escalation at increasing commodity prices won’t be stopped before long-run marginal cost levels are covered again.

Full costs1 of new hard coal-fired power plants and power price level€/MWh

With CO2 auctioning, covering the full costs of new plants needs further electricity price increase.

High commodity prices as in summer 2008 are necessary if the efficiency advantages of new plants are to generate adequate Spreads.

EU draft directive: no CO2 allocation

for new-builds!

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Power base forward1 Market-entry price hard coal2

with CO2 auctioningMarket-entry price hard coal2

with CO2 benchmark allocation

1) Valuation on basis of forward listings, front year for hard coal API#2, CO2 EUA, electricity EEX base 2) Efficiency: 46%, € 1,450/kW, O&M at 3% of investment p.a., 7,000 full-load h/a, 40 years useful lifeSource: CAWM, University of Münster; CERA


commodity prices


Prof. Dr. Martin Skiba Director Wind Energy Offshore RWE Innogy GmbH

Essen, 27th October 2009

Offshore Wind Energy


Content

RWE Innogy – An overview

Offshore Wind – Background / Present Development

Components for Offshore Wind Power Plants

RWE Innogy – Approach & Portfolio


RWE Innogy and Essent form a leading renewables generation position in Europe

> Together with more than 2GW renewable assets in operation - Essent contributes 636MW (232MW Netherlands, 405MW Germany) to RWE Innogy’s existing portfolio

> Strengthened combined project pipeline of 20GW – Essent contributes a 2.8GW project pipeline

> Improved diversified regional generation mix– Significant increase in Dutch and German onshore

wind capacity

RWE Innogy and Essent combined renewables capacity in operation (consolidated)

Total installed capacity: 2,052 MW

Biomass 6%

Germany 42%

Other 3%

RWE Innogy and Essent combined projects by technology (generation capacity in GWel , consolidated)1

Offshore windOnshore wind

HydroBiomass

Onshore wind 66%

Offshore wind 3%

Hydro 25%

UK 20%

Spain 20%

Netherlands 11%

France 3%

0

2

4

6

8

10

12

14

16

18

20

Under construction

Pipeline status 1

Pipeline status 2

Total pipeline

Pipeline status 3

0.51.4

7.5

10.9 19.7

1 Definition of pipeline status:Pipeline status 1 – Permitted projects: all permits (including grid) in place, but not yet under constructionPipeline status 2 – Unconsented projects: RWEI has rights to the project, e.g. land agreementsPipeline status 3 – Prospects: identified sites with a known MW capacity, initial discussion on agreements


We will be growing the business, but value creation is superior to additional megawatts

Our medium-term targets

> Capacity of 4.5 GW in operation or under construction by 2012.

> This translates into generation of 15 TWh/a in 2013.

> The planned acquisition of Essent will contribute 1 GW to our target.

Our roadmap

> Strong organic growth (incl. development of acquired pipeline) and strategic acquisitions.

> Value creation in line with RWE’s strict investment criteria.

RWE Innogy growth targets (capacity in operation or under construction – in GW, accounting view + PPA)

0

2

4

6

8

10

12Assets under construction

Assets in operation Essent

Assets in operation RWE Innogy

2.4 2.5

4.5

> 10

Dec 2008 June 2009 20202012


Risk diversification across technologies, regions and support mechanisms

… generation capacity … electricity generation

… country (electricity generation) … support mechanism (electricity generation)

RW

E In

nogy

targ

etpo

rtfo

lioby

…

Germany

UK

Spain

NetherlandsOther

Italy Certificate

Feed-In Tariff

OtherPower Price only

Premium Tariff

Hydro

Offshore Wind

Biomass

Onshore Wind

Hydro

Offshore Wind

Biomass

Onshore Wind


Content






50 mms -1

100 mms -1

> 9.0 > 10.0

8.0 – 9.0 8.5 – 10.0

7.0 – 8.0 7.5 – 8.5

5.5 – 7.0 6.0 – 7.5

< 5.5 < 6.0

Wind speed Offshore

Source: Risö, Dk

> because onshore sites become more and more scarce,> because Offshore-sites generate a higher energy yield,> because Offshore-potential is very high,> because bigger turbines can be developed due to the

progress in the development of technology,> because the dependency on imports can be

decreased.

Why Offshore?


Status quoCountry Project Number Type Capacity Commiss. annual sum

Uk Lynn & Inner Dowsing 54 3,6 MW, Siemens 194 MW 2008 > 349.00

B Thornton Bank 6 5 MW, REpower 5M 30 MW 2008

Deutschland Hooksiel 1 5 MW, Bard VM 5 MW 2008

NL Q7 Ijmuiden 60 2 MW, Vestas V80 120 MW 2008

UK Burbo Bank 25 3,6 MW, Siemens 90 MW 2007 > 410.00

Schweden Lillgrund 48 2,3 MW, Siemens 110 MW 2007

UK Barrow 30 3 MW, Vestas V90 90 MW 2007

NL Egmond aan Zee 36 3 MW, Vestas V90 108 MW 2006

UK Beatrice Field 2 5 MW, REpower 5M 10 MW 2006 > 118.00

UK Kentish Flats 30 3 MW, Vestas V90 90 MW 2005 > 90.00

Deutschland Ems/Emden 1 4,5 MW, E-112 4.5 MW 2004

UK Scroby Sands 30 2 MW, Vestas V80 60 MW 2004 > 64.50

Irland Arklow Bank 7 3,6 MW, GE 3.6 25.2 MW 2003

UK North Hoyle 30 2 MW, Vestas V80 60 MW 2003

Dänemark Nysted 72 2,2 MW, Bonus 158.4 MW 2003

Dänemark Frederikshavn 4 Bonus, Nordex, Vestas 10.6 MW 2003

Dänemark Samsø 10 2,3 MW, Bonus 23 MW 2003 > 277.20

Dänemark Horns Rev 80 2 MW, Vestas V80 160 MW 2002 > 160.00

Schweden Yttre Stengrund 5 2 MW, NEG Micon 10 MW 2001

Dänemark Middelgrunden 20 2 MW, Bonus 40 MW 2001

Schweden Utgrunden 7 1,5 MW Enron 10.5 MW 2000

UK Blyth Offshore 2 2 MW, Vestas V80 3.8 MW 2000

Schweden Bockstigen 5 550 kW, Wind World 2 MW 1997

Niederlande Donten (Ijsselmeer) 28 600 kW, Nordtank 16.08 MW 1996

Dänemark Tunø Knob 10 500 kW, Vestas 5 MW 1995

Niederlande Lely (Ijsselmeer) 4 500 kW, Nedwind 2 MW 1994

Dänemark Vindeby 11 450 kW, Bonus 4.95 MW 1991

Schweden Norgersund 1 220 kW, Wind World 0.22 MW 1990

Total 1443.25 MW

< 1MW Cl., Test phase

2MW Cl., Commercia-lisation

3-5MW Cl., Marketshift


Dong Energy

Vattenfall

Centrica

RWEInnogy

Others

E.ON

17% Centrica

6% E.ON

5% RWE Innogy

23% Dong Energy

29% Others

20% Vattenfall

Source: RWE Innogy GmbH, 2008

Operators of Offshore Wind Power Plants


Utilisation and Protection Areas

Source: BSH

Offshore Wind Farms, German North Sea


consent given

Alpha Ventus

BorkumRiffgrund

BorkumRiffgrundWest

Norder-gründe

Stralsund

Meerwind

Amrumbank/Nordsee-Ost

Dan Tysk

Nördlicher GrundSandbank 24

NSWP

HochseewindparkNordsee

Sky 2000

Baltic 1

Kriegers Flak

Ventotec Ost 2Arkona-Becken Südost

Rostock

WismarLübeckSwinoujscie

Kiel

Cuxhaven

Hamburg

Eckernförde

Husum

Flensburg

Norden

Leer

BremerhavenWilhelmshavenEmden

Butendiek

Amrumbank/W

Global Tech IGode Wind BARD I

Hochsee WindparkHe dreiht

Consented wind farm capacity: approx. 8 GW

Offshore Wind Power Plants in Germany

49Citigroup reverse roadshow | October 27, 2009Sources: Google Earth and http:www.offshorecenter.dk/OffshoreWindFarms/

Offshore Wind Farms in UK


Content






Capex split onshore wind farm (UK example)

(in % of total capex)

Capex split offshore wind farm (UK example)

(in % of total capex)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Turbine Foundations Grid & Electrical Other0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Turbine Foundations Grid/Other

> For both on- and offshore projects, wind turbines dominate the capex split – appropriate turbine prices are thus crucial for an attractive return on investment

> Offshore investment split varies according to project details, e.g. water depth, distance to shore, grid connection works etc.> Cost of grid connection depends on distance to coast, foundation also depends on depth of water – in contrast to the UK market,

the grid operator in Germany is obliged to connect the projects to the electricity grid and to bear capital and finance cost

Source: RWE Innogy

Turbines dominate cost of wind projects


Rotor diameter

Hub

hei

ght

Source: Bundesverband Windenergie, BTM Consult – World Market Update 2008 (March 2009).

1980 1985 1990 1995 2000 2005 2008Nominal capacity

30 kW 80 kW 250 kW 600 kW 1,500 kW 3,000 kW 6,000 kW

Rotor diameter 15 m 20 m 30 m 46 m 70 m 90 m 126 m

Hub height 30 m 40 m 50 m 78 m 100 m 105 m 135 m

Electricity output p.a.

35,000 kWh

95,000 kWh

400,000 kWh

1,250,000 kWh

3,500,000 kWh

ca. 6,900,000 kWh

ca. 22,000,000 kWh

> Wind turbines are getting larger – along with scaling-up efforts aiming to design Multi-MW turbines for offshore application, developers have demanded larger turbines– Average turbine size in 2008 was 1,419 kW,

some 73 kW above the 2007 level– Significant difference between mature (2,256 kW in UK)

and emerging markets (e.g. India with 999 kW)

Evolution of turbine technologies


2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

6,500

7,000

6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000Swept Rotor area (m²)

Rat

ed p

ower

(kW

) Multibrid 116/5000M

REpower 5M

E-112/4500

GE 3.6s

Vestas V90

122/Bard VM

Siemens 3.6

REpower 6M

E-127/6000

The multi-megawatt class


Source: Renewable Energy World, Vol. 6, No. 3, 2003, pp. 138

Wind energy turbines – concepts for 5MW-class


Energy yield

Accessibility> Helihoist> Access system> Katamarans or SWATH

Maintainability> Condition Monitoring> Maintenance frequency> Simplification of works> Tool storage in tower> Suitable crane system

Reliability> Track record> Proven technical concept> Redundant systems> Corrosion protection

Service strategy> Site specific concept in dependence on distance to service harbour and water depth

Key success factors to optimise energy yield


Accessibility: Resulting availability as a function of accessibility


Helicopter test at the REpower 5M in Brunsbüttel/Germany

Source: REpower Systems AG

Accessibility


Gravity foundationMonopile

TripodJacket

Foundation types


Pilot project „Beatrice“, Scotland 2006

Jacket-Structure

Source: REpower Systems AG


Offshore wind farm „Thornton Bank“, Belgium 2008

Source: C-Power n.V.

Gravity foundation


Monopiles Rhyl Flats


Source: Bladt

132 kV Transformer Platformfor offshore wind farm at Rødsand, DK

Total weight:600 tonnes

Substation platform


Source: E.ON Netz

Planned grid connection in Germany


Content






Speci-fication

Tendering Production Transport Installation Commis- sionning

BasicDesign

Detailed Engineer.

TenderingProduction Transport Installation

Design,Simulation

Tendering Production TransportCable Laying/Installation

Commis- sionning

-Project-devel.

-Finance

Wind turbine

Foundation

Grid connection

bottleneck

RWE Innogy is managing offshore wind farms across the whole life cycle – from developing to decommissioning. Bottlenecks in the supply chain have been identified and will be removed by new and innovative business approaches.

Value chain


A2Sea – Sea JackA2Sea – Sea Worker MPI – Resolution Smit – Lisa

Siemens – Titan 2

Jack-Up Barge BV – JB114

Dong CentricaDong

Operating Company A2Sea MPI Siemens Smit Jack Up Barge BV

Vessel name Sea Worker Sea Jack Resolution Titan 2 Lisa JB114/JB115

Vessel dimensions 55x32m 91x33m 130x38m 54x34m 73x40m 55x32m

Max. turbine size (Crane) 3.6MW 5.0MW 3.6MW 3.6MW 3.6MW <5.0MW

Max. water depth (Jack up system) 40m 35m 35m >40m 33m 40m

Market after A2Sea deal:

> A2Sea, the company with the most expertise, assets and manpower, is no longer available. It built 60% of operational offshore wind farms, and was bought by DONG

> 40% of market assets are no longer available

Current installation vessels


Seabreeze


“Pioneer” Phase

Commercial2015 + X

New, unproven O&M concepts required above 40km offshore

Innogy Offshore projects + Essent Nordsee Ost

Princess Amalia (Q7)

Burbo Bank

Samso

Belwind

Robin Rigg

Lynn & Inner Dowsing Lillgrund

Barrow Egmond aan Zee

Beatrice Field

Kentish Flats

Scroby Sands

Arklow Bank

North Hoyle

Nysted

Horns Rev

Innogy Nordsee 1

London Array

Nordergründe

Nordsee Ost

Sheringham Shoal

Lincs

Rødsand II

Côte d'Albâtre

Baltic 1

Bard Offshore 1

Greater Gabbard

Thanet

Gunfleet Sands

Horns Rev 2Rhyl Flats

Alpha VentusThornton Bank

Gwynt y Môr

Global Tech 1

Amrum Bank West

Dan-Tysk

Sandbank 24

Triton Knoll

Hochseewindpark De Dreiht

Gode Wind

Butendiek

Albatros

0

5

10

15

20

25

30

35

40

45

50

0 10 20 30 40 50 60 70 80 90 100

Shore Distance [km]

Wat

er D

epth

[m]

UK Round 3East Coast

Hochsee Windpark Nordsee

Planned OWF

Offshore Wind Farms - Shore Distance and Water Depth


Operational offshore wind farmsOffshore wind projects under construction

Thornton Bank

Rhyl FlatsNorth Hoyle

Offshore wind farms in development

Gwynt y Môr

Inch Cape

Triton Knoll

Greater Gabbard

Nordsee 1

Tromp Binnen

Project Name Country Status Current share

North Hoyle UK Operational 60MW

Thornton Bank 1 Belgium Operational 8MW

Rhyl Flats UK Under construction 90MW

Greater Gabbard UK Under construction 252MW

Thornton Bank 2 & 3 Belgium Pipeline 1

Pipeline 132MW38MW

Nordsee Ost (Essent) Germany Pipeline 1 288MW

Gwynt y Môr UK Pipeline 1 576MW

Nordsee 1 Germany After 2013 960MW

Tromp Binnen Netherlands After 2013 295MW

Triton Knoll UK After 2013 1,200MW

Inch Cape UK After 2013 675MW

Total 4,476MW

Nordsee Ost

Projects commissioning (in full or in part) before 2013

Projects commissioning after 2013

Project operated by RWE since 2004, part of Zephyr since 2005.

Diversified project pipeline across four regulatory regimes


> RWE was one of the first companies in the offshore market, gaining offshore experience during the last 10 years.

> RWE Innogy is capable to develop, construct and operate large offshore wind power plants.

> RWE Innogy has build extensive in-house know-how.

> RWE Innogy’s ability to remove bottlenecks in the value chain by innovative business approaches ensures a sustainable growth and a risk controlled project realisation.

Conclusions


Backup


> 60 MW

> 30 turbines V80 (Vestas)

> Westcoast UK

> First commercial offshore project in UK

> Construction 2003

> More than 5 years operational experience

North Hoyle


> Approximate output of 200 GWh/year, sufficient for ~40,000 homes

> Best performing UK offshore wind farm (see graph)

> North Hoyle load factor consistently higher than competitors

Nor

th H

oyle

Loa

d fa

ctor

0%

10%

20%

30%

40%

50%

60%

70%

Apr 20

06May

2006

Jun 2

006

Jul 2

006

Aug 20

06Sep

2006

Oct 20

06Nov

2006

Dec 20

06Ja

n 200

7Feb

2007

Mar 20

07Apr

2007

May 20

07Ju

n 200

7Ju

l 200

7Aug

2007

Sep 20

07Oct

2007

Nov 20

07Dec

2007

Jan 2

008

Feb 20

08Mar

2008

Apr 20

08May

2008

Jun 2

008

Jul 2

008

Load

Fac

tor

UK Offshore Average

North Hoyle Offshore Wind Farm

North Hoyle – operational experience


> 90 MW

> Construction start in 2008, foundations and cable

> 25 turbines Siemens 3.6 MW

> West coast UK

> Fully operational in 2009

> Once operational the 25 turbines with 3.6 MW each will meet the average needs of approx. 61,000 homes and will prevent the release of some ten thousand tonnes of CO2

(Under construction)

Rhyl Flats


> 500 MW

> 139 Turbines Siemens 3.6 MW with Monopiles

> East coast UK

> Shore distance 23 km, 30 m water depth

> Installation start in 2009

> Installation in two stages

> Fully operational in 2011

Greater Gabbard


> 576 MW

> Application submitted in 2005

> Consent received 3rd December 2008

> Consent for grid connection received

> Installation planned in three stages in 2011 – 2014

(Under construction)

Gwynt y Môr


Early experience of key technologies> REpower 5M

> Gravity base foundations

> North Sea location

Strategic investment> Well-advanced project.

> RWE’s first continental offshore wind farm, and the first for any German utility.

> Excellent strategic fit with other sites in NW Europe allowing us to build strong operations base.

Strategic rationale for investment: An opportunity to learn the use of 5MW technology in a low-risk way


> Approx. 1,000 MW

> Approx. 165 turbines REpower 6M

> German Bight, 40 km off shore of the Isle Juist, water depth 26 – 34 m; area 146 km²

> Nearly 4,000 full load hours

> Preferred area according to German regulations

> Consent expected in 2009

> Soil investigation 2009

> Thorough integrated layout optimisation

> Installation in three stages in 2012-2015

> Investment of approx. € 2.8 bn

> Annual CO2 reduction of approx. 3.1 million tonnes

Innogy Nordsee 1 (former ENOVA NSWP3)


> 35 km north from Helgoland

> Capacity 288 MW

> Water depth about 22-25 m

> Building permission since June 2004

> Stable wind conditions proven by metering mast in operation since April 2005

> Grid connection point: Brunsbüttel

> 90 km sea cable / 45 km land cable

> Voltage level: 150 kV/AC

Nordsee Ost

Nordsee Ost


> Sub location of Tromp – red area

> Size of 33 km2

> Optimal orientation wind direction

> Foundation: Monopile or Gravity

> 200-300 MW capacity range

> Cable distance to shore (75 km)

> Water depth (21 – 31 m)

> Soil type (fine-medium w. sand, slip sand)

Offshore Wind Netherlands Project development for Tromp Binnen


Round 3, UK

> Participation in R3 in UK as NRL and within the consortium Forwind consisting of - Scottish and Southern Energy - Statoil - Statkraft


Citigroup Reverse Roadshow October 27, 2009Market uncertainties: not a threat but a chance Dr. Bernhard Günther, CFO, RWE Supply & Trading GmbH

RWE’s portfolio management: being prepared for volatile marketsDr. Thomas Glimpel, Head of Portfolio Management, RWE AG

Offshore Wind EnergyProf. Dr. Martin Skiba, Head of Offshore Wind, RWE Innogy

Documents

Citigroup Reverse Roadshow October 27, 2009 - rwe.com · Citigroup reverse roadshow | October 27, 2009 2 This presentation contains certain forward-looking statements with in the