1. © VERBUND AG, www.verbund.com Investing to integrate Europe & ensure security of supply Teodor-Ovidiu Pop President of IRE, Director Verbund – Bucharest Office Bruxelles 19.11.2014 Vertraulich

2. © VERBUND AG, www.verbund.com Romanian transmission network 19.11.2014Seite 2Gesellschaft/OE/Verfasser/Vertraulich

3. © VERBUND AG, www.verbund.com Net Generating capacity 1 October 2014 Seite 3Gesellschaft/OE/Verfasser/Vertraulich19.11.2014

4. © VERBUND AG, www.verbund.comSeite 4Gesellschaft/OE/Verfasser/Vertraulich Investment plan in transmission network 19.11.2014

5. © VERBUND AG, www.verbund.com South-West Oltenia Development Region Romanian demo project “Getica CCS” Project Location  under going retrofitting process – deadline 2013  FGD system – deadline 2012  ash and slag “dense slurry” system – deadline 2012 Main technical features after retrofitting Steam Turbine + Electric generator Rated gross power330MW Maximum long term available gross power 310MW Annual average gross power280MW Steam Boiler Steam flow1035t/h Steam parameters (pressure / temperature) 192 / 540 bar / 0 C Efficiency88% Flue gas emission2,1 mil. Nm3/h

6. © VERBUND AG, www.verbund.com Why CCS in Romania? Because To reach 2020 EU targets of making CCS commercial we need to promote both onshore and offshore projects Romania has preliminary identified around 23 Gt onshore CO2 storage geocapacities (17Gt in saline aquifers and 4Gt in depleted oil&gas reservoirs) Romania has more than 150 years of history in the oil and gas industry, and currently operating natural gas reservoirs Maintaining operational the PPs running on fossil fuels (41% indigene coal and 12% hydrocarbons) and the mining sites exploitations has a positive economic & social impact for Romania It will contribute by the power of example to the CCS deployment in the South-East European region

7. © VERBUND AG, www.verbund.comSeite 7Gesellschaft/OE/Verfasser/Vertraulich CANDU 6 is a safe technology with a successful track-record over the last decades. CANDU 6 is an evolutionary design having safety features consistent with Generation III features. Cernavoda site designed for 5 units – licensed by Romanian Regulatory Body Take advantage of the advanced status of site civil works: 52% Unit 3 and 30% Unit 4 started on CANDU 6 technology No CO2 emissions Additional generated power will not have significant influence of the surrounding environment : water and biodiversity, air, etc. Improved technology to lower emissions (tritium). Safe dry storage of the spent fuel Existing infrastructure in design, engineering, nuclear fuel, heavy water equipment and materials Excellent expertise in operation and maintenance at Cernavoda Units 1&2 Availability of skilled staff Why Cernavoda 3 and 4 Units 2x700 MW? 19.11.2014

8. © VERBUND AG, www.verbund.com 4M Market Coupling 19 th of November – first transaction day

9. © VERBUND AG, www.verbund.com Market Coupling in Practice Theoretically Proved Optimal Day-Ahead Trading Form Several Implementation Project on voluntary basis Elaboration of harmonized EU legal background Flow-Based MC defined as day-ahead Target Model Implementation of European Price Coupling as soon as possible and involving at least all EU Member States Page 9

10. © VERBUND AG, www.verbund.com CEPS SEPS MAVIRTEL mTMF OTE OKTE EPEX OPCOM HUPX EPEX TSO Cloud TSO Joint System (mTMF+TSO Cloud) 4M MC PCR Cloud 4M MC topology Page 10

11. © VERBUND AG, www.verbund.com Project goals Main goals: Extension of CZ-SK-HU MC to Romania 4M countries wish to introduce benefits of market integration to market participants as soon as possible Get prepared for joining European Price Coupling – implement MC based on PCR solution Context: Stepwise market integration is the only way forward due to a blocked situation and slow progress in the CEE region Flow-based capacity calculation methodology Overlapping regions and other integration activities CEE regional solution is not agreed yet The extension does not hinder the regional development as it is an intermediate step towards European Price Coupling Page 11

12. © VERBUND AG, www.verbund.comSeite 12Gesellschaft/OE/Verfasser/Vertraulich Objective  The objective of the FB allocation method is to maximize economic welfare in the whole region where it applies (to optimize the market outcome by augmenting the volume of allocation for the capacity rights) General principles  It is based on a simplified grid model, the FB method identifies the physical flows that would result from any commercial exchange in the region and determines the maximum amount of physical flows that can be accepted on each border;  It determines and allocates the commercial capacity rights on the basis of the market participants’ bids. (this differs from the NTC-based allocation method, where commercial capacity offered to market participants is determined upfront by the TSOs after assessing the commercial capacity rights that could be requested by the market)  The commercial capacity is not determined border-by-border by the TSOs ahead of allocation but that it is instead the outcome, at regional level, of the allocation process itself, taking due account of the physical characteristics and constraints of the grid;  The allocation mechanism considers the physical flows induced by each bid and evaluates on this basis the impact they will have on congestion across the entire region; Advantages  Improvement of cross-border allocation, especially in highly meshed networks where the physical interdependence between borders is high;  More efficient allocation of capacity rights (allocation method should optimize capacity allocation in the whole region where it applies);  An incentive for regional cooperation between TSOs (the method requires grid calculations at regional level). New RO electricity market target – Flow based 19.11.2014

13. © VERBUND AG, www.verbund.com19.11.2014Seite 13VRP/RPM Thank you!