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PPC RENEWABLES S.A.

The Promise of Renewable Energy Sources & their Impact on Security of Supply Manthos Kallios Director, Corporate Strategy & Business Development “Energy Without Frontiers” Conference Athens , 22 May 2008. PPC RENEWABLES S.A. Global Market Overview Greek RES Market.

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PPC RENEWABLES S.A.

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  1. The Promise of Renewable Energy Sources & their Impact on Security of Supply Manthos Kallios Director, Corporate Strategy & Business Development “Energy Without Frontiers” ConferenceAthens, 22 May 2008 PPC RENEWABLES S.A.

  2. Global Market Overview • Greek RES Market

  3. International organizations predict drastic growth of RES in order to combat climate change… Global Energy Production1 [EJ2] KEY GROWTH DRIVERS • Global decisions to promote a cleaner environment • Environmental conscience and acknowledgment of need to tackle climate change • Oil independence policies • Reduction in initial investment cost • More productive technology 1 Source:WGBU 2 1 EJ = 278.000 GWh …however dominance by RES is still far in the future

  4. 1.000.000 The total costs of electricity production from RES exceed those from conventional sources… Initial Investment Cost perMW Production Cost* per MWh € MM € … but the evolution of technology and economies of scale are progressively reducing the cost differences between methods * Includes levelized CapEx and OpEx Sources: OECD/IEA

  5. Demand for solar is accelerating although forecasts differ

  6. This has resulted in a dramatic market capitalization of the solar sector

  7. The RES sector is evolving with utilities entering the sector aggressively…

  8. …leveraging also M&A initiatives

  9. M&A Map for Wind

  10. IPO Analysis – Recent Transactions

  11. Financial performance differs across RES sectors

  12. Solar sector stock performance is strong, despite the recent correction

  13. Currently, offshore plays a minor role in wind energy production; however revamped interests indicates that substantial growth will take place

  14. Key Uncertainties • Continuous growth for the solar industry or boom-bust cycles? • Tightness or abundance of supply from wind turbine manufacturers? • The government dilemma: What incentives, how much and when? • How can Network absorption impede or facilitate RES expansion? • Will RES expansion be used actively by governments as a lever to secure supply?

  15. Global Market Overview • Greek RES Market

  16. Some of the highest solar irradiation rates in Europe Greece has significant natural wealth for RES… • Wind potential forsome 14.000 MW • Geothermal fields with production potential of ~350 MW (equivalent to 1.500 MWof wind power) • Many springs and rivers for hydroelectric power …but exploiting it fully will involve overcoming serious obstacles

  17. The EU has set environmental improvement targets based on RES use which as a rule are not yet being met 2001: All EU member states adopt national targets for the proportion of electricity consumption that should come from RES (Directive 2001/77/ΕU) Electricity produced from RES in Europe, by country[% consumption] • For 2020, the European Commission proposed the binding targets known as «20-20-20» • 20% of the European energy production portfolio to be RES • 20% reduction in Greenhouse Gas emissions, compared to 1990 • 20% energy savings • 10% of fuel used in transport to be biofuel • Greece’s target for total energy consumed to come from RES has been set at 18%; hence RES have to account for 30-35% of electricity generation (this means some 10,000 MW of RES production by 2020) [%] Status 2005 Gap to 2010 target EU Target Source: State of renewable energies in Europe, EurObserv’ER 2006 2007: EU member states decide to increase total energy produced from RES to 20% by 2020

  18. Implementation of RES projects must be accelerated in order to achieve the 20,1 % target following the 77/2001/EC directive Target (20,1%) Sources: DOE/EIA, ΥΠ.ΑΝ. Wind will be the main driver for Greece to meet her RES targets

  19. We hope that the 20,1% target will be achievedby 2012 The 20,1% target will not be achieved by 2010 * Includes 4,5 TWhfrom large HPP Sources:Dept. of Energy/EIA, MinDev, RΑΕ, PPCR estimates

  20. The interest for RES projects in Greece is significant… • The above mentioned Operation Licenses include RES projects from the Combined Production Permits of PPC • These include the projects with Operation Licenses, Installation Permits and do not include Revoked Licenses • These include the projects with Production Permits as well as Revoked Licenses Source: RAE

  21. …driven, in part, by attractive Feed-in Tariffs * According to RES Law 3468/06, increased by €2,82 in July 2007 These prices may be altered by the Ministry of Development following a proposal from RAE

  22. Some key steps to accelerate RES expansion in Greece • Review of Installation and Production Permits (and Grid connection terms) for wind parks that haven’t yet begun construction • Different regulatory regime for PV installations <150 kWp • Broader scope for subsidizing RES projects, without allowing excess profits • Further improvement of the Permit Issuance process and the Land Use Plan

  23. In Conclusion • There is already potential for RES to play a role in electricity supply both globally and in Greece in the short term • However, dominance of RES to the extent that we can talk about a real contribution to security of energy supply is still a distant prospect and should only be viewed in the medium to long term • In the short term, RES can only have limited role in security of supply • In the medium term RES should be able to play a more significant role in the security of supply of the electricity supply market if national targets are met (e.g. 29% by 2020 for Greece) • In the long term and as RES’ share in the electricity supply market increases with the development of new RES technologies and the efficient operation of a fast growing RES market, RES can play an even greater role in the security of supply of the electricity supply market; • In the even longer term, with the greater development of new RES technologies and the efficient operation of the RES market, RES could play the role of the catalyst that will drive the development of new consumer and industrial products that until today traditionally are “fueled” on petroleum or natural gas. This effective transition from petroleum “fueled” products would also have to be supported by the necessary State incentives both for industry and consumers in order to drive for this new technology and thus decrease even further countries’ dependence on these two fuels.

  24. Thank you for your attention! Manthos Kallios +30-211-211 8000 mkallios@ppcr.gr

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