ENGIE

From subsidies to PPA, evolution of RES

competitiveness

22 November 2018

Energy France Renewable as part

of Engie Group

ENGIE : presentation of the Group

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154 950 EMPLOYEES, 97,200 OF

WHOM ARE DEVOTED TO ENERGY

EFFICIENCY

OPERATIONS IN 70

COUNTRIES AROUND

THE WORLD

€1.5 BILLION IN

INVESTMENTS FOR

NEW TECHNOLOGY

INNOVATION AND

DEVELOPMENT

50% OF NEW POWER GENERATING

PROJECTS DEDICATED TO RENEWABLES

- 20% IS THE

GREENHOUSE GAS

EMISSIONS

REDUCTION TARGET

FOR 2020

2,8 MILLION OF POWER CUSTOMERS,

10 MILLION OF GAS CUSTOMERS,

ENERGY EFFICIENCY 20%, IT'S THE

AVERAGE ENERGY SAVING WITH

ENERGY PERFORMANCE CONTRACTS

230 URBAN HEATING AND COOLING

NETWORKS

In France : A 100% RES BU ~6,9 GWMid 2018

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2400IN AVERAGE

ALTISERVICE

Offshore wind ~ 2x 500 MW

PROCJETS

LANGA ~ 170 MW

ENGIE GREEN ~ 2 310 MW

CNR ~ 3 700 MW

SHEM ~ 783 MW

@100%

@100%

@100%

@49,97%

@47%

@100%

ENGIE

Offshore wind tender

DUNKERQUE

Floatting offshore wind

PILOT FARM AT LEUCATE

~ 1900 MW onshore wind

~ 1200 MW solar

~ 3800 MW hydro

~ 2 offshore wind projects

Dieppe le Tréport (296 MW) and

Yeu Noirmoutier (496 MW)

~ PPE goal : 10% of green gas in

final consumption in 2030

ENGIE’s position on French renewables market : Leader in Wind & Solar

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ENGIE leader in wind with 15 % market share

Fin 2017

Fin 2017

ENGIE leader in solar with 12 % market share

Solar and wind : leader and most competitive player in France

We are n°1 in wind and solar and we will increase our front runner position

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➢ More than 800 MW secured with the most

attractive PPA based on the 2016 Feed-in-

Tariff (82 €/MWh for 15 years) ;

➢ Very competitive business model:

➢Huge pipe and 1st in class model:➢2017-2018, #1 in solar tenders:

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100

200

300

400

500

600

ENGIE (y.c.Langa)

Urbasolar Quadran/Total Neoen Valorem EDF Photosol RES Valéco Générale duSolaire

Résultats cumulés des 4 premières sessions du quatrième AO de la CRE (2017-2018)

ENGIE large leader of solar tenders :

- Around 550 MW won when our first competitor

won less than 200 MW

Our offshore wind projects : 2 * 500 MW off the French coast

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7%

2 offshore wind projects of 500 MW each

French wind offshore awarded in May 2014

Two projects: Le Tréport (500 MW)

Îles d’Yeu et de Noirmoutier (500 MW)

Supplier: Siemens – 8 MW turbine,

Remuneration mechanism: feed in tariff for 20 years

Equity ownershipFinancial indicators

Total Capex: €2.0bn / project

Project Finance

Caisse des Dépôts

EDPR 47%43%

10%

Hydro at the heart of ENGIE’s strategy

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SHEM

➢ 800 MW

➢ Hydro storage + run of river

➢ Merchant + Regulated (30%)

CNR

➢ 3000 MW

➢ Run of river

➢ Merchant

⚫ ENGIE is positioning itself throughout the entire value chain of the biomethane industry:

from project development, in close collaboration with farmers, to the sale to end consumers.

— By 2030, ENGIE and its partners aim to mobilize a total of €2 billion to produce 5 TWh

per year of biomethane by that date.

⚫ The Group’s objective is to support the sector’s industrialization to reduce costs by about 30

to 40% by 2030 and thereby achieve cost parity with natural gas.

⚫ ENGIE is concentrating on standardizing, massifying and digitizing projects, and will be

partnering with suppliers to facilitate their expansion in the market. This industrialization will

enable the emergence of nationally-focused SMEs and will help increase the proportion of

French technologies in relevant biogas projects.

With an ambitious plan to accelerate on biomethane

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The result is that we are reinforcing our leadershipAccelerated ambitions which are part of ENGIE strategy to become a leader of the energy transition, especially on its domestic market

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Stable and ambitious growth

in wind onshore

from 1,5 GW in 2015 to

3 GW in 2021 means build

additional capacities of 1,5

GW in 6 years (average of 245

MW/y)

x2 by 2021 (vs 2015)

3 GW In 2021

Good perspectives :- Offshore wind:

Dunkerque, …

- Floating offshore:

2 projects (500 MW)

should be launched in the

next 2 years.

through tenders by 2021

Target to win

2 GW Offshore Wind2,2 GW In 2021

Strong acceleration

in solar

from 550 MW built in 2015 to

2,2 GW in 2021 means build

additional capacities of 1,6

GW in 6 years (average of

260 MW/y)

x3-4 by 2021 (vs 2015)

Renewable global market trends

Massive acceleration of renewable development around the world

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2,179 GW Global renewable generation

capacity at the end of 2017

8.3% Growth in renewable capacity during

2017

167 GW Increase in global renewable

generation capacity in 2017

64% Share of new renewable capacity

installed in Asia in 2017

85% Wind and solar share of new capacity in

2017

146 million Revised number of people

served by offgrid renewable power

Source : Irena

Wind solar and Gas are reshaping power sector

13Source : IEA

Their cost decrease and they now compete with conventional energy

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• The low end levelized cost of onshore wind-generated energy is $29/MWh

• Vs marginal cost of $36/MWh for coal

• The levelized cost of utility-scale solar is nearly identical to the illustrative marginal cost of coal, at

$36/MWh

Source : Lazard LCOE 2018

Fous on wind and solar price decrease

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• The mean levelized cost of energy of utility-scale PV technologies is down approximately 13% from

last year and the mean levelized cost of energy of onshore wind has declined almost 7%

Source : Lazard LCOE 2018

• Costs have been falling rapidly and are

expected to decline by a further 30% by

2030, leading to an expected growth in

installed capacity to 128 GW by 2030 and

521 GW by 2050

• Offshore wind capacity grew by 25%

between 2016 and 2017

• Compared to other renewable energy

technologies, offshore wind still makes up

a small part of global power generation.

Today, there is slightly less than 19 GW of

installed offshore capacity, two-thirds of

which is generated by G7 countries, but

the global growth trend is impressive

And a bright Future For Offshore Wind

16Source : Irena

Since 2017 : 0 subsidies bids in Germany and Denmark

Bioenergy are still a very important part of the RES and biogas grow fast in Europe

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108 958 MW installed in the world 36 738 MW installed in Europe

Source : Irena

Zoom on the french market

A dynamic French market : solar growth outlook + 2GW/yLarge growth ; Long term vision

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➢ Growth depending on French tenders: around 1GW/y for 3 years (except in 2016, less than 600 MW

due to the absence of tender in 2014)

➢ 2016-2018: ca. 1 GW/y by tender, in large utility scale (built maximum 2 years after)

➢ From 2018: strong acceleration in growth in line with PPE trajectory ->1.7 GW/y tender in large utility

scale (almost double)

0

5 000

10 000

15 000

20 000

25 000

French solar park evolution (MW)

Outlook: 2GW/y

PPE2023 20,2 GW

PPE2023 18,2 GW

PPE2018 10,2 GW

UK : 12 GW

IT : 20 GW

DE : > 40 GW

A dynamic French market : wind growth outlook + 2GW/yLarge growth ; Long term vision

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➢ A sustained and regular growth (more than 1000 MW/y for 3 years and a record year in 2016 with

more than 1300 MW installed and 2017 with around 1700 MW)

➢ Acceleration in growth outlook within the PPE (Programmation Pluriannuelle de l’Energie) trajectory :

0

5 000

10 000

15 000

20 000

25 000

30 000

French wind farm evolution (MW)

PPE2023 26 GW

PPE2018 15 GW

PPE2023 21,8 GW

Outlook ~ +2GW/y

UK : 20 GW

SP : 25 GW

DE : >60 GW

How do we decrease RES cost ?

Key challenges for the development of new RES capacities

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➢ Land availability

- Given the high ambitions of RES development, land availability has become one of the biggest challenge for

energy developers.

- The strategy consists in locking lands for future developments. For instance, ENGIE has partnererd with Suez in

order to develop solar plants on all its sites.

➢ Project competitiveness

- CAPEX : decreasing cost of wind turbine, solar panels,… ;

- OPEX : decreasing cost of operation and maintenance ;

- Energy yield : increasing production

Greenfield is ENGIE’s historical way to develop projects in France.

This favored for several reasons:

➢ Capture the whole value of development: With a strong local presence : close to our

stakeholders to find lands to develop project

➢ Master and optimize the design of projects: Given Engie’s integration of key expertise for

the various stages of the projects, it seems important to be able to optimize and adapt the

design of our projects, rather than buying projects for which the possibilities of adaptation

are weak

➢ Control the pace of development and costs: in PV and wind, it is particularly

important to make a relevant selection of origination of projects in order not to incur

costs for land that have little chance of succeeding. The potential of good lands is

limited and it is strategic for an ENR developer to secure the best lands at early stage in

order to control the development.

Our proven results :1. Origination

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Our proven results :2. Industrialisation through platforms

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An effective and optimized procurement platform :

➢ Wind: Master Supply agreements with major suppliers

• Solar: ENGIE Solar global procurement :

An effective O&M platform : to be agile and able to address all maintenance processes :

⚫ Full Scope : Long Term Service Agreement (historical Future Energy model)

— LTSA with Original Equipment Manufacturer (OEM)

— LTSA with Independent Service Provider (ISP)

⚫ Hybrid maintenance :

— With several levels : from internalization of simple maintenance operations to strategic parts of

the machine internalisation (i.e. gearbox) :

⚫ Steered Maintenance :

— Need maintenance bases and experienced teams ;

— Need investor confidence and references for financing ;

— The only way to choose and develop an industrial operation strategy on life of the assets

Proven results :2. Industrialisation through platforms

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➢ An innovative digital platform : Darwin

➢ All ENGIE’s parks worldwide will be

connected in 2018 ;

— Estimated gain of 1% yield

Since 2010

WindSolarHydro

17 countries

4.7GW

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As a result : RES are close to be sold

directly to final customers

RE100: The world’s most influential companies, committed to 100% renewable power

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RE 100

RE100 is a collaborative, global

initiative uniting more than

100 influential

businesses committed to 100%

renewable electricity, working to

massively increase demand for - and

delivery of - renewable energy

155 RE100 companies have made a

commitment to go '100% renewable’

To achieve this goal, they must match

100% of the electricity used across

their global operations with

electricity produced from

renewable sources – biomass

(including biogas), geothermal, solar,

water and wind – either sourced from

the market or self-produced.

RES are more and more competitive compare to

traditional mix

Prix (

€/M

Wh)

EnR

Traditional

energy mix

➢ PPA will become the main economic model for the development of renewable energies in

France (decline in cost of technologies, rise of electricity market prices, the end of

subsidies, the need for industrialists to commit for the energy transition with physical assets

and not certificates)

PPA are seen as one of the main drivers of ENR development by 2030Create value with the diversity of technologies

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… and allow for less risky and more cost-effective

tender effects in the long run

Prix (

€/M

Wh)

EnR

Traditional

energy mix

Client price

How business models evolves : from subsidies to direct sell

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subsidies

FIT, FIP, CFD

Renewable Energy

Certificates

PPA

« as produced »PPA « baseload »

29Wind Solar HydroConsommation client Production ENR de type:

Clientconsumption

vs RES

production

Today

StorageMix marché

Green certificates + market to allow 100%

Green energy consumptionsou + +et/

ou

➢ In order to accelerate is development, ENGIE target large partnerships with land owners

to secure large areas through a national approach

Next step : multi-energy platefomsCreate value with the multiplicity of technologies

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➢ Solar parks become energy

platforms: transforming a solar park

into a multi-energy platform serving

the regions

Thank you for your attention

Questions ?

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