Renewable

Energy

Generation Ltd

Overview

Developing the World’s Renewables

2Renewable Energy Generation

Introduction to REG

• Renewable Energy Generation is the largest publicly quoted renewable energy company in the UK dedicated to investing in operating plant

• Market capitalisation of €100m

• Listed on the London Stock Exchange’s AIM market with the symbol RWE

• REG’s mission is “to build the value of its shareholder equity by owning and operating renewable energy projects thereby contributing to national sustainable energy targets”

• REG has a vastly experienced development and operational team and already owns– The Cornwall Light & Power Company Ltd and through it;– The Goonhilly Downs wind farm in Cornwall – CLP Wind Projects – 24 UK wind projects, 5 consented

• In addition REG is the main equity investor in Poland’s largest wind farm at Tymien – 50MW

• REG has no debt and €55m of cash in hand

Goonhilly Downs

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REG shareholders

• REG’s shareholders include some of the largest financial institutions in Europe– Legal and General– Invesco Perpetual– Fidelity– New Star– Foreign and Colonial– Hendersons– Credit Suisse– UBS

• REG has recourse to its shareholders if further capital required

• But we must now build out what we have acquired

Goonhilly Downs

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REG’s current investments

Tymien 1 – Poland50MW – Fully Operational in Q1

2006Near Baltic Coast15 year PPA, partnered with EEZ

and Invenergy, IRR above REG portfolio average

Stable, attractive renewable energy incentive scheme provided by accession to EU

£7.9m

Goonhilly Downs – Cornwall, UK5.6MWExcellent 12 yr production record2.5 yr PPA signed at very high pricesFreedom to explore repowering

potential Freedom to play the green power

market£4.5m

Goonhilly Downs

CLP Wind Projects – UK75MW when developed24 sites across UK, 5 consented Developed by National Wind Power –

RWEGood wind regimes: cost competitive£4m

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Tymien, Poland

• Poland’s largest wind farm – 50MW

• Uses 25 Vestas V90 machines

• REG is main equity investor in project

• Working with Invenergy of the US and EEZ of Poland

• EU backed project

• 15 year PPA with 2 state owned distribution companies

• Two follow on stages taking total capacity to 150MW

• An excellent first project in Eastern Europe for REG

Tymien

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REG’s future plans:

Tymien 2 & 3, Cisowo – Poland118MWFirst right as principal investor in

Tymien 1 IRR similar to Tymien 1Tymien 1, 2 & 3 will total 150MWCisowo will total 18MWScheduled for 2006 and 2007

WindWorks – UK75MWHigh Sharpley, High Pow, Braich Ddu

close to constructionPipeline of projects

Goonhilly Downs – Cornwall, UKRepowering Programme – 15MWThe wind turbines currently in use are

0.4MW each, modern turbines are typically >1MW

Goonhilly Downs

Other CEE RegionGreece has existing projects

and infrastructureRomania anticipates EU entryBulgaria has excellent resources

Latin AmericaBrazil has strong renewables

programMexico stalled on regulatory

issuesChile — developed country

infrastructure

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Carbon Sales

• Carbon Sales important to emerging market projects– Value in range of €20 per tonne (long-term contracts are

lower)– Depending on carbon intensity, can mean €15 per MWH

• CDM is virtually useless in providing project support– Process highly uncertain — “additionality” makes

outcomes highly uncertain– Mechanism is “amateur” — CDM Executive Board is part-

time and underfunded– RESULT: Few trades and little interest

• JI offers better prospects– National basis– Not well understood in prospective markets– Need for support by EU

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Institutional Barriers

• LDCs often present substantial barriers to renewable energy development

• Transparency a concern — local utilities may have entrenched interests opposed to new equipment suppliers

• Land registration and title — massively important to renewables particularly wind

• Deregulation is not on national agendas — traditional western country PPA structure may not be viable

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Conclusion

• Increasing interest in private sector equity investment in renewables in emerging markets

• Need action to deal with barriers– Reform of Carbon Trading

> Begun at Montreal Conference, but needs momentum

– Deal with institutional barriers> Need to build on work of IFC/World Bank in electricity reform

• Renewables are economic, especially in high cost LDC power markets

• Renewed efforts needed to spearhead change