1. A new Energy Policy for the new EU Commission Matthias Dürr Head of the Brussels Representation, RWE AG 17 th December 2014

2. RWE AG – CEA-PSEITE 2 Nur für den internen Gebrauch Agenda A new Energy Policy for the new EU Commission 1.The RWE Group: Europe is our market 2.Choices to be faced for future Climate and Energy Policy 3.The EU 2030 framework 4.The reality of the energy market 5.The way forward

3. Conventional Power Generation RWE Generation Supply/ Distribution Networks Germany RWE Deutschland Supply Netherlands/ Belgium Essent Supply United Kingdom RWE npower Central Eastern and South Eastern Europe RWE East Renewables RWE Innogy Upstream Gas & Oil RWE Dea Trading /Gas Midstream RWE Supply & Trading As of 31 December 2013. Europe is our market RWE Group structure We generateabout € 54 billion in revenue. We employ 66,000 employees. We produce about 3 billion cubic metres of gas and We generateabout 217 billion kilowatt-hours of electricity. We sell 271 billion kilowatt-hours of electricity and 335 billion kilowatt-hours of gas. We supply nearly 16 million electricity and about 7 million gas customers. We have about 370,000 shareholders.

5. PAGE 5 RWE AG CEA - Weale Choices to be faced for future Climate and Energy Policy 1.How many goals and instruments to apply: –Role of renewables / efficiency targets vs. CO 2 goals needs careful justification 2.How to support renewables: –whether the capacity (MW) or the output (MWh) 3.How much “economics” can be maintained in policy decisions: –Should price of power reflect long-run costs and play optimal role in decarbonisation –Is more cost-reflective consumer pricing structure better for a market-based approach? Should the fixed part of price reflect all fixed costs along supply chain? RWE AG

6. PAGE 6 RWE AG CEA - Weale Choices to be faced for future Climate and Energy Policy 4.How much can be expected from the Energy Only Market? –Role is to achieve efficient dispatching of plants - without acceptance of scarcity pricing it may not adequately incentivise investment in renewables or ensure supply security –Therefore a capacity mechanism may be required (already under consideration) 5.How curtailing any one source of power (e.g. nuclear, lignite) will affect: –Dispatching of other national sources and imports –Prices, supply security, and emissions 6.How much will national goals achieve in the context of European / International targets and how will national policy decisions impact on other Member States and EU Policies? RWE AG

7. RWE AG – CEA-PSEITE 7 Nur für den internen Gebrauch Greenhouse gas emissions Renewable energy Energy efficiency until 2020 -20 % reference year 1990 20 % of energy consumption 20 % absolute reduction compared to business as usual until 2030 -40 % reference year 1990 27 % of energy consumption 27 % absolute reduction in compared to business as usual Inter- connectivity 10 % 15 % from national capacity New targets: from 20/20/20 (+10) to 40/27/27 (+15) Decisions taken by the European Council -Only CO 2 reduction target will be translated into national binding targets -Renewables and efficiency targets are EU level targets -Energy efficiency target is only indicative -New governance structure to coordinate EU and national policies  transparency, predictability, regional cooperation +

8. RWE AG – CEA-PSEITE 8 Nur für den internen Gebrauch EU 2030 framework Assessment from RWE’s perspective EU2030 overall Despite the economic crisis, EU sticks to its climate-protection agenda 40% CO2 emissions reduction target: ambitious but feasible when fair burden sharing between Member States ETS will be strengthened through higher linear reduction factor and MSR stable and higher CO 2 prices and increased trust in the system ETS Need for back-up capacity is recognised – a first step towards a European approach for capacity mechanisms CRM Abstention from binding renewable targets at national level: positive signal for more market and more flexibility renewa bles Non-binding target allows a market-based approach and gives room for better framework conditions energy efficiency

9. SEITE 9 CEA-P The reality of the energy market Generation business under pressure – not only in Germany 1)Rough profitability analysis for 2013 to 2015 in % of installed capacity of RWE’s conventional generation portfolio (economic stake) in Germany, United Kingdom and the Netherlands (in total ca. 44 gigawatts) based on market parameters as of January 2013 Revenues of the conventional power plants of RWE 1) For 20-30% of the plants, electricity revenues don’t even cover the O&M costs O&M costsDepreciationCapital costs For 5-15% of the plants, electricity revenues only cover the O&M costs as well as parts of the depreciations For 5-15% of the plants, electricity revenues cover the costs of operation and maintenance (O&M) as well as depreciations, but not the capital costs For 50-60% of the plants, electricity revenues cover all costs (incl. capital costs)

10. PAGE 10 The principle: one goal - one instrument Non-discriminatory system to reward availability of firm power generation capacity Market integration of renewable energy Goal: Security of supply Goal: Affordable electricity A reformed ETS with a long-term target to reduce CO 2 emissions Goal: Climate protection The way forward A new policy framework and a new energy market design

11. SEITE 11 CEA-P A market for firm capacity may supplement the energy only market – kind of an airbag or insurance €/Megawatt hour GenerationTradingTransportSalesConsumerEEG €/Megawatt hour €/Megawatt firm capacity Supplement the energy-only-market by a market for firm capacity. Retailers (decentralized) or grid operators (centralized) define, how much firm capacity is reguired. They buy required firm capacity from power plant operators. Power plant operators must deliver, once the market gets tight. new

12. RWE Generation SE | Dr. Ulrich HartmannSEITE 12 Our way into the future… „Smart Country“ „Smart Operator“

13. Thank you very much for your attention!