Infrastructure Investment in a context of Energy Transition Perspectives from a Long-Term Equity Investor

September 2019 A New World for Energy Investment

The global low carbon transition is about replacing carbon by long term capital under strong public policy constraints (1)

Global Investment in Energy Supply Total investment in energy supply to 2040: $42.3 trillion

Source: International Energy Agency, World Energy Investment, Source: International Energy Agency, World Energy Outlook, 2018 2019

1 A New World for Energy Investment

The global low carbon transition is about replacing carbon by long term capital under strong public policy constraints (2)

Source: International Energy Agency, World Energy Investment, 2019

2 A New World for Energy Investment

OECD Countries are not the center of gravity anymore: towards a global frontier 20002001200220032004200520062007200820092010201120122013201420152016201720182019202020212022202320242025202620272028202920302031203220332034203520362037203820392040

United StatesChina

EuropeanUnited StatesUnionChina

European UnionChinaIndia

European UnionAfricaIndia Source: International Energy Agency, European UnionAfricaIndia World Energy Outlook, 2018

SoutheastMiddle AsiaEast

SoutheastMiddle AsiaEast

1 000 2 000 3 000 4 000 Mtoe In 2000, more than 40% of global demand was in Europe & North America and some 20% in developing economies in Asia. By 2040, this situation is completely reversed

3 A New World for Energy Investment

The global low carbon transition happens in a disruptive technology environment (1)

Cost developments across the energy spectrum Costs in 2040 relative to 2014

Source: International Energy Agency, World Energy Investment, 2019 Source: International Energy Agency, World Energy Outlook, 2015

4 A New World for Energy Investment

The global low carbon transition happens in a disruptive environment (2)

Microgrids: small is beautiful but super Lithium-ions battery prices complex?

Source AIE, 2018 Source ENEA, 2017

5 A New World for Energy Investment

Capturing and financing small low-carbon assets: a new frontier?

Source: International Energy Agency, World Energy Investment, 2019

6 Flexibility: the Next Big Need

Integration of renewables will require to develop low carbon flexibility solutions

Phases of integrationPhases with of integration variable renewables with variable share, renewables 2017 share, 2030

Integration phase

6 All sources of flexibility needed 5

4 Targeted investment European Union in flexibility needed European UnionChina Germany 3 UnitedUnited States KingdomIndia China 2 Mobilise existing India power system flexibility 1

Source: International Energy Agency, World Energy Outlook, 2018

7 Globally, Flexibility is still provided by Fossil Fuel Energies

Power plant flexibility Other flexibility 3 400 GW 220 GW

Coal Gas 23% 29% Interconnections 5%

Oil 6% Hydro Batteries 0.1% 28% Nuclear 3% Demand response Other 1% 1% Pumped hydro 4%

Source: International Energy Agency, World Energy Outlook, 2018

8 Meridiam-sponsored UK-Germany NeuConnect Interconnector - Overview

• First direct link between German and UK networks – Connecting two of the Europe's largest energy markets.

• NeuConnect is a 710km invisible highway of up to 1.4GW of electricity, enough to power 35 million homes over the life of the project.

• The link will be a HVDC bi-directional submarine cable (2 x 525 kV) , for an estimated project capital expenditure of £1.4bn – Currently the single largest UK-Germany investment project.

• Two distinct regulatory regimes for a single project. German regulatory set-up still to be implemented. UK’s more advanced (cap and floor).

9 UK-Germany NeuConnect Interconnector - Why NeuConnect is needed Focus - Benefits

Focus on NeuConnect 2017 Cost Benefit Analysis (CBA) results for both UK and Germany

11 Focus on the Cap& Floor regime (UK side)

• Ofgem (UK Regulator) introduced in 2014 a ‘Cap & Floor’ (C/F) model to incentivize investors and non Transmission Operators (TSO) to invest in new interconnectors

• C/F support lasts for 25 years. Revenues below a set floor trigger payments to the interconnector owner and any revenues exceeding the cap are returned to consumers.

• C/F levels established at Final Project Assessment and allow for capital invested and Opex UK-Germany NeuConnect Interconnector - What benefits does NeuConnect offer UK-Germany NeuConnect Interconnector - Project delivery timeline UK-Germany NeuConnect Interconnector - Project key Progress UK-Germany NeuConnect Interconnector - Project key Progress Back-up: Overview of Meridiam Involvement in Energy Transition in Europe and Africa

17 Focus on Meridiam Transition

Meridiam Transition targets unaddressed energy transition opportunities to contribute to deliver the COP 21 Agreement in Europe

Context Leading investors Meridiam Transition Approach

• In 2015, Meridiam launched Meridiam Transition, together with French insurer CNP Assurances Background and • Support French insurers and long-term institutional objectives investors seeking to invest in projects designed to help Europe transition towards a low carbon economy

• Resilience of electric systems • Circular Economy & Biogas Targeted segments • Smart grids & smart cities

• Target unaddressed energy transition market opportunities Targeted projects • Relatively small and midsize projects contributing to the low carbon transition

Targeted • Europe (50% min in and 80% min across the geographies Eurozone)

Financial • Equity and quasi-equity with potential financing up to instruments 100% of projects 1 2

Investment • Final closing reached at €485m in excess of target capacity/size

1. Fonds de Réserve pour les Retraites: investing by the public authorities on behalf of the community with the 2. Le Régime de Retraite additionnelle de la Fonction publique: mandatory scheme for the benefit of public aim of financing the pension system. 18 servants of the French State (civil and military), territorial and hospital, as well as magistrates Meridiam Transition portfolio by the end of 2019

RESILIENCE OF ELECTRIC CIRCULAR ECONOMY SMART CITIES SYSTEMS & BIOGAS & ELECTROMOBILITY €80m €160m €180m

• Decentralized electricity • German Biogas platform • Allego European EV charging demand side management infrastructure platform with Voltalis • French Biogas platform • MEGA-E (Metropolitan Greater • Guiana hydrogen storage • Mayenne Biogas Cogeneration Areas Electrified) pan-European project high-power charging network • Waste Gas Recovery platform (WAGABOX)

• Black Pellet Unit and Biomass Cogeneration plant

19 Illustration of Meridiam Transition contribution to SDG 13 “Take urgent action to combat climate change and its impacts”

Energy related GHG emisson from selected sector, 2017 and 2040 IEA’s Sustainable Development Scenario (SDS)

40.0

37.5

35.0 9.3 Other 32.5

30.0 3.4 27.5 Buildings

25.0 2.6

Oil & Gas eq - 22.5 4.7 Steel & Cement 4 Selection of Meridiam Transition

20.0 projects GtCO2 17.5 5.5 8.2 1 Black Pellet Unit Cars & Trucks ICE 15.0 2 Wagabox and Biogas platforms 12.5 3.0 2.3 Gas generation 3 10.0 0.5 3 Allego 3.2 7.5 2 Decentralized electricity 4 demand side management 10.5 5.0 Coal generation 3.6

2.5 1 2.2 0.0 1.1 2017 2040 SDS

Other Buidlings Oil and Gas Steel & Cement Cars & Trucks ICE Gas generation Coal generation

20 Illustrative examples of Meridiam Energy Transition Oriented Projects in Africa

Senergy & Ten Merina Solar Tulu Moye Geothermal

▪ 60MW of sustainable, low cost power ▪ Ethiopia’s first major IPP ▪ Micro-credit facility for women & young ▪ 500MWp clean baseload adults geothermal power to meet the ▪ Renewable energy research centre demands of a booming economy and population

Kahone & Touba Solar ▪ 80MWp of sustainable, low cost power ▪ First projects in West Africa under the IFC’s Scaling Solar ▪ Targeted capacity building with the implementation of innovative technologies ▪ Lowest tariff in Sub-Saharan Africa

NEOT Offgrid

▪ Provide access to reliable renewable energy for local communities ▪ Enables new businesses ▪ Capacity building with the implementation of innovative technologies for the country Office Kinguele Hydro Biokala Biomass Energy Assets in Portfolio ▪ Country’s first IPP ▪ 46MW Biomass plant providing baseload ▪ Detailed biodiversity action plan clean energy. ▪ Contribute to the sustainable use of ▪ Create commercial opportunities for small freshwater resources in accordance local producers with rigorous conservation and biodiversity protection measures 21