Capital markets day Efficiency and stability are the name of the game

December 8, 2016 Moscow, Capital markets day Agenda

Nikolay Shulginov Chairman of • Opening remarks. Preliminary results of 1 the Management Board – RusHydro Group in 2016 General Director

George Rizhinashvili • RusHydro Group Development Strategy Management Board member, 2 • Overview of capital raising to refinance RAO ES First Deputy General Director East debt

Sergey Kirov Management Board member, • Optimization of capital and operating costs 3 First Deputy General Director • Operating efficiency improvement plan

Q&A session

2 Capital markets day RusHydro: the leading Russian utilities and renewables company

No. 2 Russian power generation company, GW No.3 world’s hydropower co. by capacity, GW

15% 15% 11% 10% 7% 6%

38.9 38.2(2) 29 27 19 16 38 36 30(2) 29 28 26

Source: companies’ data, System operator Source: companies’ data 15% - share of total installed capacity of Russia

No.6 heat producer in the world, mn GCal 12% of total Russia’s electricity output in 2015

12% (2)

1,050 TWh 117 108 45 39 37 31 25

Source: companies’ data Source: companies’ data, System operator

3 Capital markets day RusHydro – a leading Russian genco

Russia’s largest genco and one of the world’s largest publicly-traded predominantly hydro generation companies, with capacity of 38.7 GW (ca. 16% of the Russian total) The biggest winner from electricity market liberalization in Russia due to extensive exposure to low- cost hydro generation A developing and succesful dividend story: 5 consecutive years of increasing dividend payments since 2010; dividend payout in the amount of 50% of net profit as of 2016 Focus on the Russian market: extension of life-time and improving efficiency of existing hydro assets, implementation of value-accretive hydro projects, streamlining existing assets Diversified holding company with hydro engineering and design assets

Conservative financial management: target debt/EBITDA ≤ 3x Ownership structure

Other One of the most liquid generating companies of the Russian shareholders stock market: local shares in Level 1 list on MOEX, GDRs listed 28.3% on the LSE, ADRs trading on OTC QX in New York Quasi-treasury Shares included in MSCI Russia shares Russian 4.9% Federation 66.8% Green utility – one of the world largest renewable energy players

4 Capital markets day Geography of key assets

European Russia Siberia Far East (1st price zone) (2nd price zone) (non-price zone)

1 200 74 Hydro Hydro 5 133 14,355 7,186 13,284 Hydro Fossil fuel MW Pumped storage MW MW 8 077 Geothermal 13 155 100%

Hydropower

Hydropower u/construction

Non-hydro renewables

Fossil fuel plants

Electricity retail

3 4

2

5 1 6 400 Armenia 561 MW

2 997 2 650 2 404 2 010 1 467 1 391 1 370 1 330 1 200 1 020 1 000 900 720 549 520

Sayano- Boguchanskaya Volzhskaya Zhigulevskaya Bureyskaya Primorskaya Saratovskaya Cheboksarskaya Zeyskaya Zagorskaya Votkinskaya Chirkeyskaya Kolymskaya Khabarovskaya Kamskaya Nizhegorodskaya Shushenskaya HPP HPP HPP HPP TPP HPP HPP HPP PSP HPP HPP HPP TPP-3 HPP HPP HPP

5 Capital markets day RusHydro – among top 20 green generators of the world (1)

№ Company Country Nuclear,GW Hydro, GW Renewables, GW CO2 free, GW CO2 free/IC 1 Acciona Spain 0.0 0.9 7.7 8.6 100% 2 China General Nuclear (CGN) China 14.9 1.6 12.5 29.0 100% 3 China National Nuclear Corp. China 11.5 0.0 0.0 11.5 100% 4 Energoatom Ukraine 13.8 0.3 0.0 14.2 100% 5 Rosatom Russia 26.6 0.0 0.0 26.6 100% 6 Hydro Quebec Canada 0.0 36.4 0.0 36.4 99% 7 BC Hydro Canada 0.0 11.9 0.0 11.9 99% 8 Cemig Brazil 0.0 7.2 0.1 7.3 98% 9 China Three Gorges China 0.0 51.4 6.0 57.5 97% 10 Eletrobras Brasil 2.0 38.7 0.9 41.6 92% 11 Verbund Austria 0.0 7.8 0.4 8.2 88% 12 Statcraft Norway 0.0 15.0 0.9 15.9 86% 13 Ontario Power Generation Canadа 6.6 7.4 0.0 14.0 82% 14 PG&E US 2.2 3.9 0.2 6.3 82% 15 Axpo Switzerland 3.0 3.5 0.4 7.0 80% 16 RusHydro Russia 0.0 28.7 0.1 28.8 78% 17 Evrosibenergo Russia 0.0 15.0 0.0 15.0 77% 18 EDF France 73.0 21.7 7.7 102.3 76% 19 Energias de Portugal (EDP) Portugal 0.2 7.8 9.3 17.2 71% 20 Exelon US 19.5 1.6 2.0 23.1 71%

(1) Energy Intelligence New Energy Top 100 Green Utilities, November 3, 2016 6 Capital markets day What’s driving investment story turnaround?

What has changed?  In 2016, management approved reduction of rehabilitation and modernization capex by ca. RUB 60 bn in 2016-2019 while maintaining high level of reliability and safety of operations;  By 2020, rehabilitation and modernization capex shrinks to the level not exceeding RUB 28-30 bn; Substantial investment  RusHydro nears completion of large investment projects, including covered by capacity delivery agreements; liabilities/commitments  Management has no plans to initiate new large-scale investment projects, and gave up a number of large-scale projects, not offering sufficient return (Cascade of Verkhne-Naryn HPPs in Kirgizia, flood-control HPPs in the Russian Far East);  Positive FCF expected as of 2018

 Best dividend story among Russian state-owned utilities: consistent and steady dividend growth since 2010 Low dividend yield, lack of dividend visibility for  50% of 2015 net profit paid out as dividends (yielding 6.5%), high probability of maintaining 50% payout for mid-term investors  Ruble-denominated instruments becoming more attractive as economic situation stabilizes and interest rates go down

 Planned refinancing of RAO ES of the East debt through capital-raising forward deal and optimization of its subsidiaries debt portfolio to significantly improve financial position of RusHydro Group and increase bottom line projections due to RAO ES of the East: problematic reduction of interest payments; regulated asset, saddled with huge debt and requiring significant funds  Proceeds from capital-raising will be used exclusively for refinancing of the RAO ES of the East debt portfolio; for replacement of obsolete facilities  Forward mechanism creates strong incentives for value-creation and stimulation of the market capitalization growth;  Non-initiation of large new developments in the Russian Far East

 Approval and implementation of asset divestments plan; Lack of clear asset management  Efficient sale of Angara cascade dams to for RUB 10.95 bn (incl. VAT); strategy, a portfolio of diverse non- core assets  Efficient sale of Energy Retail Company of Bashkortostan for RUB 4.1 bn;  Planned sale of most of quasi-treasury stock as part of the recapitalization of RAO ES East debt

7 Capital markets day Key highlights of 2016

Key figures 48 25.5 +20% -9% 3.88 ~60 9.5 ~980 RUB bn Growth of RusHydro’s Planned reduction of Kopecks per RUB bn HPPs output for 9 operating costs of RUB bn RUB bn RUB bn Consolidated EBITDA of Consolidated net profit months of 2016 RusHydro group in 2016 share Optimization of Savings as a result of Additional excepted RusHydro Group in of RusHydro Group in (adjusted for projected dividends, approved by rehabilitation and procurements revenue from 1H’16 1H’16 inflation) AGM in June modernization capex optimization of 100%liberalization of (+43%) (+37%) programs in 2016-2019 RusHydro Group in 9M hydropower capacity (+148%) 2016

1 RAO ES East subgroup debt  Key decisions made on capital raising of RUB 55 bn to refinance the debt

2 Operating efficiency • Independent audit of expenses  • Reduction of non-productive, SG&A expenses

3 Dividends  Payout of record dividend of 50% of net profit totaling RUB 15 bn

4 • Consolidation of 100% in RAO ES of East Organizational development  • Start of management and HQ consolidation of RusHydro and RAO ES of East

5 Operations • Total electricity output of the Group increased for 9 months of 2016 by 12.6%  • Pick-up in hydro output in FY’16 could exceed 15% compared to 2015

6 Corporate governance Approval of new long-term incentive plan (LTIP) for top management, based on  best Russian and global practice

7 Efficient sale of assets  Sale of assets for a total of > RUB 15 bn

8 Capital markets day Commissioning of electric and thermal capacity in 2016-2020

Commissioning of new electricity generation capacity, MW 84 270 840

342 143

120 140 120 (2) 320 41,365 194 140

38,652(1)

2016 Zelenchukskaya Yakutskaya TPP-2 Nizhne-Bureyskaya Vostochnaya Sakhalinskaya CHPP Zaramagskie Ust'- Zagorskaya Hydro rehab & Other HPP-PSP (1st stage) HPP CHPP TPP-2 (1st stage) Sovetskaya Gavan' HPP Srednekanskaya PSP-2 modernization HPP

Commissioning of new thermal capacity, GCal 237 300

200 421 18

19,621(2) 470

17,975 2016 Yakutskaya TPP-2 Vostochnaya Sakhalinskaya TPP-2 CHPP Boiler of Other (1st stage) CHPP (1st stage) Sovetskaya Gavan' Yakutskaya TPP

(1) Including Boguchanskaya HPP (JV of RusHydro and UC RUSAL) – 2,997 MW (2) Excluding potential capacity decommissioning during the period 9 Capital markets day Best dividend story and practice among Russian SOE utilities

Dividends (RUB bn)

. RusHydro is one of the few Russian state-owned utilities companies 15 paying and consistently increasing dividend payments from 2010

. RusHydro is committed to gradual and consistent increase of yearly dividends to benefit all shareholders, together with the company’s 6,0 development priorities and its financials 5,2 3,7 2,5 2,5  On June 27, 2016, AGM has approved dividends in the amount of RUB 0.038863 per share or 50% of RAS net profit of PJSC RusHydro for 2015 (higher than the profit under IFRS: RUB 30 bn vs RUB 27.2 bn) 2011 2012 2013 2014 2015 2016 (25% IFRS (50% RAS revenue) revenue)

Dividend yields of Russian generating companies Dividends per share and dividend yield

(1) 2011 2012 2013 2014 2015 2016 4,5 Krasnoyarskaya HPP 0.0% 4.9% 0.0% 0.0% 0.0% 0.0% 3.88 7,5% 4 DPS, Quadra 1.9% 2.6% 0.0% 0.0% 0.0% 0.0% 6,5% 3,5 kopecks (EON Russia) 0.0% 2.6% 10.8% 16.2% 8.8% 7.2% 6,5% 3 Div. yeild, % 5,5% RusHydro 0.6% 1.0% 1.3% 2.3% 2.5% 6.5% 2,5 Irkutskenergo 0.4% 0.8% 3.3% 5.4% 7.7% 0.0% 4,5% 2 0.6% 1.7% 2.2% 4.6% 1.0% 3.6% 1,56 3,5% 1,36 1,5 InterRAO 0.0% 0.0% 0.0% 0.0% 0.1% 0.8% 0,86 0,96 2,5% 1 0,79 Russia 0.0% 0.0% 0.0% 5.0% 9.0% 0.0% 2,5% 1,0% 2,3% 1,5% TGK-1 0.2% 0.5% 1.7% 2.6% 4.8% 4.9% 0,5 0,6% 1,3% OGK-2 0.3% 0.1% 0.0% 0.0% 2.9% 2.1% 0 0,5% 2011 2012 2013 2014 2015 2016 (KES Holding) 0.0% 0.0% 0.0% 0.0% 0.00% 0.0% (25% IFRS (50% RAS revenue) revenue)

(1) Calculated as at close of trading day when AGM approved dividend payments 10 Capital markets day 1H 2016 financial results review

Key highlights

. 2Q 2016 EBITDA – RUB 20,8 bn (+43.0%), 1H 2016 EBITDA – RUB 48 bn (+42.4%) . Key growth factors:  significant growth of electricity output from hydropower plants in 1H’16 liberalization of . Underlying (adjusted) net profit in 1H 2016 – RUB 29.8 bn (+46.8%) capacity sales from hydro in Siberia to 100% as of May 1, 2016 . Only 2.8% increase in operating costs driven by cost optimization primarily in  increase in regulated tariffs and growth of heat sales in RAO ES East Subgroup PJSC RusHydro and other segments . Negative factors affecting profitability:  flattish unregulated power prices in the European part of Russia increase in electricity . Weighted-average EPS in 1H 2016 increased to RUB 0.0728 per share vs 0.0594 distribution expenses due to growth of electricity transmission tariffs in 1H 2015  Fuel costs increase, including for gas from Sakhalin-1

Revenue, RUB bn Operating expenses, RUB bn

Government grants +10.2% 194.3 Revenue from operations +2.8% 176.3 6.5 5.5 +10.2% 107.7 +2.5% 97.7 +10.2% 3.3 86.6 +3.0% 3.1 78.6 2.5 3.2 94.6 104.4 76.2 83.5 170.8 187.9 84.8 87.0 69.8 71.9 154.6 158.8

1Q 2015 1Q 2016 2Q 2015 2Q 2016 1H 2015 1H 2016 1Q 2015 1Q 2016 2Q 2015 2Q 2016 1H 2015 1H 2016

EBITDA, RUB bn Net profit, RUB bn

+42.4% 29.8 EBITDA EBITDA margin Net profit Net profit (adj.) (1) +48.4% 20.1 +42.4% +43% 16.9 25.3% 24.0% 24.7% +34.3% +71.9% 12.6 (+5.7pp) (+5.5pp) (+5.6pp) 12.9 19.6% 18.5% 19.1% 7.5

19.1 27.2 14.6 20.8 33.7 48.0 11.9 15.1 6.7 10.4 18.6 25.5

1Q 2015 1Q 2016 2Q 2015 2Q 2016 1H 2015 1H 2016 1Q 2015 1Q 2016 2Q 2015 2Q 2016 1H 2015 1H 2016

(1) Net profit is adjusted for the effects of impairment of fixed assets, loss on impairment of accounts receivable, profit on disposal of subsidiaries and joint ventures, loss on disposal of property, plant and equipment 11 Capital markets day 9M 2016 operating results and hydrological situation at the end of 2016

Europe and Siberia (price zone), GW Far East (non-price zone), GW

+1,4% +20.2%

9 057 11 342 Far East hydro 22 179 Siberia 16 156 RAO ES of East (fossil 5 349 6 853 South of Russia fuel) 24 242 22 439 28 389 30 930 Center of Russia

9M'15 9M'16 9M'15 9M'16

Water resources in major reservoirs of HPPs as of December 2016 . Water reserves in reservoirs of main HPPs close to 2015 2016 long-run average or higher (111% of long-run 120% average in Zeyskoye reservoir) 100% . The accumulated reserves guarantee required 80% output during the autumn-winter season of 2016- 60% 112% 115% 111% 96% 99% 95% 103% 103% 2017 40% 89% 69% 20% . Water reserves in main reservoirs of Volga-Kama 0% cascade are close to long-run average. Verkhne- Sayno- Vilyuskoe Chirkeyskoe Zeyskoe Volzhsky Shushenskoe . Early snowfalls create preconditions for strong cascade spring flooding.

12 RusHydro Group development strategy

Overview of capital raising to refinance RAO ES East debt

George Rizhinashvili Management Board member, First Deputy General Director Capital markets day RusHydro Group strategy target indicators

Strategic goals

Reliable and secure operations of Sustainable development of Development of the Far Eastern Company’s value growth the Company's facilities power generation energy sector

Key tasks

Investment policy and changing approaches to the investment Operating efficiency Development and improvement of program development and transparency performance of production and technological complex Improvement of the Far East assets management and the Far East energy development

Human resources management

IMPLEMENTATION MEASURES IN MAIN STRATEGIC AREAS

KEY STRATEGY INDICATORS

14 Capital markets day RusHydro Group strategy targets

2015 2020 2025

37.1 (1) Installed electric capacity, GW +2.4 (2) +2.4 (2)

570 (4) 607 (4) ~300 Equity value, RUB bn 523 (3) 570 (3)

73 EBITDA, RUB bn 133 (5) 163 (5)

25% Dividend payout, % 50% (6) 50% (6)

< 3x Debt / EBITDA 1.8x 1.2x

(1) Installed capacity including 50% of capacity of Boguchanskaya HPP, a 50/50 JV between RusHydro and UC RUSAL (2) Not including projected anticipated commissioning of RAO ES East plants capacities and capacity additions due to rehabilitation and modernization (3) Assuming extrapolation of existing regulatory regime in the Far East power industry (4) In case of implementation of mechanism allowing compensation of missing revenue of RAO ES East subgroup (5) EBITDA targets calculated without accounting for opex and capex optimization measures developed in 2016 (6) 50% - current requirement of the Russian federation government regarding distribution of SOEs profits. Change in the profit distribution would require decision by RusHydro’s distribution and respective decisions by the government of the Russian Federation 15 Capital markets day Key factors of RusHydro Group equity value growth (in 2016 prices)

+28 +40 +7.5

+37

+19

431 300

Baseline value New constrution RAO ES East debt Compensation of missing Divestment of assets Opex reduction Target equity value refinancing revenue of RAO ES East

16 Capital markets day KPIs and top management long-term incentive plan

RusHydro’s long-term incentive plan developed in order to align interests of top management and shareholders

Annual KPIs Contribution of annual KPIs, %

1 Return on equity (ROE), % 20% 15% 2 EBITDA, RUB mn 7 1 3 Share of procurement from SMEs, % Management 2 15% KPIs 4 Labor productivity, RUB ‘000/person per hour 6 5 OPEX reduction, % 20% 3 6 Threshold number of accidents, # of accidents 5 4 10% 7 Capacity commissioning timeline and financing plan , % 10% 10%

Long term incentive program (LTI) KPIs Contributions of LTI program components, %

1. TSR, % (TSR > MICEX Index) 2. Free cash flow (FCF), RUB mn 25% 2 3. Integrated innovation KPI, % Long term incentive LTIP’s goals and principles 50% program 1 . Motivating management towards solution of strategic tasks . Aligning interests of shareholders and management in sustainable capitalization growth 3 . Transparency for shareholders . Compensation based on the level of KPI implementation 25% . Compensation determined through unified procedure . Equitable conditions for entitlement to compensation

17 Capital markets day Peer comparison: key ratios – RusHydro vs other Russian utilities

RusHydro will strive for “premium” valuation due to unique nature of its assets, high margins and efficiency of its core business, strong position in the market

Price / revenue 2016 Price / revenue 2017 14 8

12 7

6 10 Median = 4,7 5 8 Median = 5,4 4 6 3

4 2

2 1 1,64 2,63 3,2 4,36 5,4 5,48 6,97 6,99 12,4 1,82 2,63 2,69 3,99 4,7 5,33 6,41 7 7,45 0 0 RusGrids TGK-1 OGK-2 Mosenergo FedGrid Enel Russia InterRAO Unipro TGK-1 OGK-2 FSK Mosenergo InterRAO Enel Russia Unipro

EV / EBITDA 2016 Book value/ price 7 2 1,8 6 1,6 5 1,4 Median=3,95 1,2 4 1 3 0,8

2 0,6 Median =0,34 0,4 1 2,48 2,93 3,09 3,52 3,95 3,96 4,96 5,28 6,15 0,2 0,18 0,29 0,3 0,32 0,34 0,46 0,64 0,94 1,87 0 0 Mosenergo TGK-1 RusGrids FedGrid InterRAO Enel Russia OGK-2 Unipro RusGrids Mosenergo TGK-1 OGK-2 FedGrid InterRAO Enel Russia Unipro

18 Capital markets day Overview of the capital raise

Simplified deal overview Key transaction highlights

1 Signing of the forward purchase agreement and SPA At the transaction’s inception . RusHydro sells to the bank newly issued and treasury shares for a total Cash consideration of RUB 55 bn . Newly issued shares cannot be placed lower than nominal price (RUB 1 per share) Shares . Simultaneously with the acquisition the parties sign a 5-year non-deliverable RusHydro Forward contract forward contract on 100% of these shares, acquired by the bank During the lifetime of the transaction . The parties jointly implement all necessary measures aimed at increasing in RusHydro’s shareholders value and market capitalization and subsequent sale of the stake to strategic investor (-s) 2 Settlement of the forward contract At maturity of the transaction . Depending on the sale price, one of the parties will compensate to the other the difference between forward price and sale price RusHydro . Forward price includes nominal value of the financing, accrued interest payments, Cash* calculated based on the interest rate agreed by the parties in the forward agreement, and subtracts distributed dividends * Direction of the settlement depends on the sale Shares Cash . In case the sale to a strategic investor would take place, the sale price would be price and is calculated as the difference between confirmed by an independent appraiser and agreed with the Russian gov’t forward and sale prices minus dividends Recognition of the Forward in RusHydro’s consolidated accounts Strategic investor (-s) . At initial recognition, the forward will be recorded at a fair value on the balance sheet of RusHydro Group as financial liability. Also, at initial recognition, the fair value of forward will be reflected in the Company’s capital as a component of selling price of shares and will not affect P&L. . Subsequent changes in fair value of forward as of each reporting date will be Significant volume of RusHydro’s potential liabilities will be covered by reflected in profits and losses. third party investors via sale of RusHydro’s shares and dividend paid to the . The fair value of forward capitalized at initial recognition is not a subject to Bank change, as subsequent changes in fair value do not result from interaction with The transaction creates strong long-term incentives for the management to shareholders. maximize shareholders’ value.

19 Capital markets day Overall transaction scheme

1 Share issue and payment for 40 bn additional shares @RUB 1 per share

Russian gov’t 3 Five year forward contract (nominal value = RUB 55 bn)

Sale of 15 quasi-treasury shares 4 Transfer of RUB 2 3 Shareholders 15 bn from sale @RUB 1 per share agreement of quasi-treasury shares 7 Preliminary approval of sale of shares to investor(s) RusHydro’s subsidiaries RusHydro

8 Selling RusHydro shares (55 bn shares)

Buyer(s) of RusHydro shares 5 Transfer of RUB 55 bn via intra-group loans RAO ES East Group 6 Redemption of debts of RAO ES East companies

Banks-current lenders

20 Capital markets day Forward contract efficiency

. Even given the current level of Rushydro share price the effective forward rate is substantially lower than the weighted average interest rate of the Group debt portfolio and lower than current debt financing offerings . In case of growth of RusHydro’s share price, implementation of forward will lead to a significant optimization of the Company’s capital structure . RusHydro Group’s financial model confirms a possibility of growth of RusHydro’s share price in 2021 to a target level that will ensure zero liabilities of RusHydro under forward contract (incl. implementation of measures aimed to increase shareholders’ value) . Signing of the forward contract will impede growth of loan servicing expenses and increase the average loan repayment period

Effective forward rate calculation (1)

5 ∗ forward rate 20 Forward nominal value (1 + 4 ) − dividends− selling price of shares Forward nominal value -1

-1,8% 1,4 -6,7% -9,5% -12,8% 1,2

1 -21,3% 0,9 0,8

0,6 -37,0%

RusHydro share price in 2021, RUB/share Effective forward rate

(1) The calculations are of indicative nature and are based on preliminary parameters of the forward contract and assumptions, including conservative assumption of future RusHydro dividends 21 Capital markets day Key benefits of the capital raising deal

Optimization of capital structure

. Refinancing of RAO ES of the East debt portfolio and optimization of the holding companies debt portfolio . Considerable improvement in balance sheet of RusHydro Group after refinancing . Increase in compound net profit projections due to lower interest expense

Advantages of transaction structure Use of capital

. Raising of considerable funding at very . Proceeds will be used only to refinance the debt attractive terms of RAO ES of the East

. The transaction creates strong long-term Increase in shareholders’ value . Decrease in debt needs of RAO ES of the East to incentives for the management to maximize cover the short-fall in revenue (> RUB 5 bn per shareholders’ value and market capitalization year)

. Conformance with the existing Group’s . Timely implementation of planned investments covenants and repairs & maintenance at RAO ES of the East facilities to ensure energy security

Benefits of sale to strategic investor (-s)

. Maximization of the company’s sale price . Advantages of strategic partnership without ceding control in the company . Development of joint projects with the potential strategic partner

22 Capital markets day Evolution of shareholder structure of RusHydro

Current shareholder Est. shareholder structure structure after the deal

~13,00%

33,16%

~26,50%

66,84% ≥60,50%

Russian Federation Bank Other shareholders

2. Completion of 4 major thermal projects in 3. Settlement of forward contract the Far East

2017 2018 2019 2020 2021 2022

1. Refinancing of RAO ES debt (RUB 55 bn), signing 5-year forward contract

23 Capital markets day Asset management and efficient sale of assets

Sale of Power Retail Company of Bashkortostan (RUB bn) . On Oct 7, 2016, RusHydro BoD approved the sale of 5 dams of 3 hydropower plants owned and operated by PJSC Irkutskenergo for a total of RUB 10,95 mn (incl. VAT). . On November 11, 2016, the Board of Directors of RusHydro approved sale of LLC ESC Bashkortostan (electricity retail co.) to InterRAO group’s companies for ~3,2(2) RUB 4.1 bn. 4,1 . RusHydro’s management will continue to improve asset portfolio management, including sale of non-core assets and assets not directly related to the core business of the ~0,87 Group. Net asset value Selling price IFRS profit

Sale of dams of the Angara cascade (RUB bn)

 +9.3 +2.2

-5.3 2016 -7.6 -9.3 +2.3 +4.0 +2.2

Acquisition Share premium Acquisition WACC=12% PV PV of Cash Sale price NPV Angara LLC ESCB Non- Non-core Other Real estate price (nominal) price Flows cascade controlling businesses (effective) dams equity stakes

(1) Preliminary data as of September 30, 2016 (2) Excluding tax effects 24 Optimization of capital and operating costs

Operating efficiency improvement plan

Sergey Kirov Management Board member, First Deputy General Director Capital markets day Preliminary results of optimization in 2016

RusHydro Group operating expenses in 1H 2016 (RUB mn)

Key groups of operating costs optimization in PJSC RusHydro and its subsidiaries in 2016 Operating expenses in 1H 2015 154,569

Other materials -192 ~30% • Third party services (consulting, IT, security, PR) Other & taxes other than on income +558 ~24% • Employee benefit and other social expenses Purchased electricity and capacity -1,120 +2.8% Total growth +1.1% of expenses Third party services +446 increase in ~19% • Repair & maintenance of property, plant and equipment manageable group of costs +3.3% Water usage expenses +200 CPI in Russia in 1H 2016 ~10% • Rent +7.5% Employee benefit expenses +87 Annual CPI in Russia ~9% • Charity Depreciation +904

Fuel costs +1,502

Electricity distribution +1,876 Key groups of operating costs optimization in RAO ES East subgroup segment in 2016 Operatig expenses in 1H 2016 158,830 ~46% • Employee benefit and other social expenses

~17% -550 • Repair & maintenance of property, plant and equipment -777 3,084 ~16% • Other

~7% • Charity 2,536 146,639 -825 ~5% 143,171 • Third party services (consulting, IT, security, PR)

Operating PJSC RusHydro ESC RusHydro RAO ES East Other Misc and Operating expenses in subgroup subgroup undistributed expenses in % % of reduction of total estimated amount of cost cutting 1H 2015 (1) operations 1H 2016 (1)

(1) Operating expenses excluding depreciation and other non-cash items 26 Capital markets day Assessment of the Group’s cost reduction potential and key groups of operating costs optimization

Largest potential for cost cutting is in 1 325 845 optimization of RAO ES East subgroup 2 983 operations 17 381 154 289 737

268 739

OPEX 2014 JSC RusHydro RAO ES East ESC RusHydro Other Misc & OPEX 2015 subgroup subgroup intragroup costs (electricity retail)

Cost reduction by at least 1% on 6 groups of semi- 72 871 controlled costs translates into more than 5% increase in operating profit 60 805

54 087 361 826 42 663

32 345 22 477 9 202 2 844 17 809

46 723

Revenue (2015, IFRS) Labour costs (icluding Purchased power and Fuel costs Cost of power Third party services Depreciation and Other materials Water utilization Other costs and taxes, Operating profit taxes and pension capacity distribution amortization expences other than profit tax (2015, IFRS (1) costs)

(1) Not including other operating one-off costs of RUB 8 230 mn – Potential for managing operating cost groups 27 Capital markets day Estimated aggregate effect from optimization

Three key areas of RusHydro Group’s activities have been analyzed. Estimated effect from optimization may amount to RUB 8.8-15.1 bn annually in operating expenses and RUB 62.8 bn in capital expenses.

1 Operating expenses 2 Control/management & optimization of SG&A costs

Areas of analysis: Areas of analysis: • Plants’ equipment operation processes • Organizational structure • Equipment repairs and maintenance system • Corporate governance • Supply and inventory management system • Holding structure • Operating staff load and efficiency • General and administrative expenses • Third party services expenses Potential effect: RUB 7.9-13.7 bn p.a. Potential effect: RUB 0.9-1.4 bn p.a.

RUB 8.8-15.1 bn annually 3 Capital expenses • The annual effect should be achieved within 2-3 years Areas of analysis: • New construction projects • The annual effect provides for achievement of estimated value from base value during certain period of time and • Technical rehabilitation and modernization projects its further maintenance (it doesn’t imply that expenses should be decreased by an estimated amount every year) Aggregate effect: RUB 62.8 bn, including:  Effect from initiatives implemented in 2016: RUB 57.8 bn • Effect expected in 2017-2021: ~ RUB 5 bn

28 Capital markets day Operating expenses optimization

Optimization of four items of operating expenses with the biggest potential and cost control option will allow to decrease costs by 2.4-4.7% or RUB 8.8-15.1 bn p.a.

Operating cost reduction target in Operating cost structure in 2015, Effect from implementation, Conservative Max. 2016-2021, RUB bn RUB bn(1) RUB bn (2) effect effect

1 Employee benefit exp. 72 2,4 4.4 -3.3% -6.1%

2017 4.6 2 Fuel 54 ∑ = 53% 1,6 4.1 -3.0% -7.6%

3 Third party services 32 3,6 5.0 -11.3% -15.9% 2018 11.1

4 Other materials 9 0,2 0.6 -1.7% -6.3%

2019 15.1 Purchased electricity 5 and capacity 61

2020 15.1 6 Electricity distribution 43

7 Depreciation 22 2021 15.1 8 Other expenses 22

2016-21 61 9 Release of working capital 1.0

TOTAL 316 8.8 6.3 15.1 -2.4% -4.7%

Conservative effect Maximum effect

(1) Consolidated financial statements of RusHydro Group under IFRS for 2015. (2) Assessment of potential effect is based on 2015 results and doesn’t include the inflation rate during the period of its achievement 29 Capital markets day Key measures to optimize operating expenses of PJSC RusHydro

Target effect from PJSC RusHydro’s operating costs optimization might be achieved within three years

Efficiency improvement measures Implementation schedule Prioritization of measures

2017 2018 2019

Transfer to combined service strategy 1 6 Repairs Updating of standards for implementation of

2 repair and maintenance works High

3 Increase in machinery and motor vehicles loading Transport Amending transportation services tariff 4 calculation procedure 3 4

Positive effect Positive 5 5 Transfer to centralized supply with introduction 2 of category management 1 Supply 6 Introduction of category approach and Low inventory management KPIs 7 8 7 Reduction of current amount of repair parts and tools inventories High Low

Implementation complexity

30 Capital markets day Key measures to optimize operating expenses of PJSC RAO ES East

Target effect from RAO ES East Subgroup operating costs optimization might be achieved within three years

Efficiency improvement measures Implementation schedule Prioritization of measures 2017 2018 2019 Updating methodology for calculation of staff 1 Employee number and alignment of operating staff resource loading benefits 7 2 Organizational structure standardization

Transfer to combined service strategy 1 3 High Updating standards for implementation of Repairs 4 repair and maintenance works 4 3 Development of approach to determine the 6 5 most preferable way of repair works

Improvement of control system over key Fuel 6 technical and economic indicators deviation effect Positive 2

7 Transfer to centralized supply with introduction Low 9 of category management 10 8 8 Reduction of fuel inventories High Low Supply Introduction of category approach and 9 inventory management KPI Implementation complexity 10 Improvement of dealing with unsaleable goods and unclaimed liquid assets

31 Capital markets day Potential of the Group’s operating expenses optimization

Areas of optimization Effect, RUB bn

1 Optimization of operating staff charges 1.5 3.0

2 Optimization of repair and maintenance costs 2.5

PJSC RusHydro 3 Optimization of fuel costs 1.6 4.1 & RAO ES East Subgroup 4 Optimization of transportation costs 0.6

5 Optimization and development of centralized supply system 1.7 3.5

TOTAL 7.9 5.8 13.7

* Assessment of potential effect is based on 2015 results and doesn’t include the inflation rate during the period of its Conservative Maximum achievement effect effect

(1) According to estimates potential effect from supply system optimization will be 1-3%. To get more accurate figures in-depth analysis should be conducted. 32 Capital markets day Potential of SG&A costs reduction

Areas of optimization Effect, RUB bn

PJSC • Smooth improvement of management standards to internal RusHydro best practice in PJSC RusHydro 44 66

• Reduction of number of administrative and managerial staff in RusHydro’s branches to internal best practice 57 119

• Reduction of management levels and improvement of 31 100 management standards in PJSC RAO ES East

RAO ES East • Liquidation of representative offices in Moscow 44 subgroup • Partial transfer of administrative and managerial duties of branches to DEK, DGK, DRSK, optimization of branches’ 376 functions and decrease in the number of executive staff of DEK, 651 DGK, DRSK

• Regulation of number of administrative and managerial staff in 206 operating divisions

RusHydro • Integration of headquarters of PJSC RusHydro and 111 219 PJSC RAO ES East with advanced management Group standards and optimization of management levels • Analysis and evaluation of optimal balance of staff TOTAL 869 536 1,405 number and possible reallocation of personnel between the headquarters and regional offices of RAO ES East Conservative effect Maximum effect

* Assessment of potential effect is based on 2015 results and doesn’t include the inflation rate during the period of its achievement

33 Capital markets day Optimization of RusHydro Group investment plan for 2016-2021

~RUB 60 bn . Adjustment of technical projects with new technical condition assumptions, adjustment of works’ schedule:  In respect of modernization of hydro in Dagestan, North Ossetia, Kuban’; Total optimization of hydropower rehabilitation and  Selection of cheaper equipment (China, south Korea). modernization capex in nominal prices in 2016-2019, . Optimization and improvement of terms of existing agreements to supply new equipment: carried out without compromising reliability and safety of works and operations  In respect of agreement with Voith Hydro to supply hydro turbines for Saratovskaya HPP  In respect of agreement with Power Machines to supply hydro units for Votkinskaya and Rybinskaya HPPs. . Extension of works’ schedule: > RUB 5.5 bn  Optimization of capex outlays due to delay of a number of works; Optimization of RAO ES East subgroup capex in 2016, due  Adjustment of terms and schedule to supply hydromechanical equipment for Volga-Kama hydropower plants to shift in funding of additional infrastructure for 2017 and . Adjustment of scope of works: carrying out per-unit reconstruction instead of total replacement of equipment reduction of funding of rehabilitation and modernization . Cutting non-productive costs: adjusting the scope and cost of works that do not affect electricity output. projects

Optimization of RusHydro Group investment plan for 2016-2021 (1)

+6% ПрочееOther 128.4 -19% ХолдингRAO ES РАО East ЭС Subgroup Востока 115.6 109.1 Приоритетные4 fossil fuel projects проекты in theна ДВ Far East 98.0 103.8 1,0 НовоеNew строительствоhydro construction РусГидро и ДО 3,6 Техперевооружение ГЭС РусГидро 34,5 Hydro rehab & modernization 3,2 -13% 21,1 28,4 73.2 -15% 69.1 63.8 -32% 25,1 59.4 0,9 23,2 24,4 50.5 47.2 47.5 20,8 1,0 1,2 1,3 21,0 26,2 16,7 21,3 13,6 17,2 17,3 3,6 0,2 0,2

29,5 26,1 28,8 28,5 29,2 28,6 28,7

2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 2021 корр. корр. корр. корр. корр. new new new new new

(1) Includes VAT. Investment plan does not include funding of BEMO project and rehabilitation and reconstruction of 840 MW Zagorskaya PSP-2 – the project is now under technical scrutiny and cost estimate. 34 Capital markets day Key areas for further optimization of RusHydro Group’s investment plan

2 key areas for improvement

Optimization of control system over investments in technical Implementation of selective initiatives aimed at optimization upgrade and new construction projects of investment program • Development of transparent approach to technical • cancellation of a number of projects; upgrade, reconstruction and new construction program; • adjustment of unit costs to the level of Russian and • design quality and capex plan accuracy improvement; international peers; • • strengthening control over adherence to estimated and shift of implementation terms of technical upgrade and budget limits; reconstruction projects, etc. • change of approach to signing agreements, including decrease in the amount of supplies; • improvement of approach to economic efficiency valuation of investment projects.

Potential effect – up to 5% of investment plan for Potential effect – up to 3.4% of investment plan for 2017-2021 2017-2021

Potential effect – up to 8.4% of investment plan in 2017-2021

35 Capital markets day Optimization of technical upgrade and reconstruction program

-20% Number of technical -41% • Optimization of HPPs’ technical upgrade and exposures 101 92 reconstruction program allowed to reduce the in 2016-2020, 81 number of technical exposures to the main units -34% equipment. The amount of reduction ranges 62 54 from 20 to 41% in 2016-2020. 41 • Technical upgrade and reconstruction costs were optimized through adjustment of technical solutions from current technical conditions of facilities and optimization of Generators Turbines Transformers equipment delivery agreements with Voith Hydro and Power Machines (allowed to reduce costs by RUB 6.4 bn in total) -46% 68.1 Funding in 2016-2020, -48% RUB bn 39.7 36.7  20.7 Optimization of technical upgrade and 9.3 9.3 reconstruction costs allows to maintain major part of equipment in good or

Generators Turbines Transformers sufficient conditions

Before optimization After optimization

36 Capital markets day Detailed assessment of supply function efficiency

5. External integration

Stable long-term relations with contractors. Joint efforts to decrease total ownership value of procured goods, works and services. Focus on personnel development and individual decision making. Centralized risk and quality management. 4. Internal integration Detailed assessment of supply 5-10 years function of the Group revealed that the function is now at its Strategic control. Procurements classification. Focus on total value of transitional stage from ownership. Creation of cross-functional working groups. Centralized commercial role to coordination processes of inventory management and contractor relations. Integration of roles. Process-based management. 3. Coordination 3-5 years

Centralized control over supplies. Centralized procurements with divided identification lists. Unified regulations of supplies. Focus on control functions. “Price-quality” criterion. Unified regulatory information database. Centralized control.

2. Commercial 2-3 years Decentralized planning of needs. Partial centralization of procurements. Focus on minimal prices and timely execution of transaction. Excessive number of suppliers and their frequent change. Relationship formalization. Decentralized control over regulatory information database. 1. Operating 1-2 years

Search for suppliers with no formalized profile. No procurement strategy. Procurements are decentralized. No regulatory information database.

37 Capital markets day Areas for supply function improvement

Five potential areas for improvement have been discovered as a result of supply function review

Potential savings, Initiatives Areas for improvement RUB mn 1.1. Transfer from procurements to supply Operating supply model 1 optimization 1.2. Adding new functions and optimization of process and role-based model of supply 1.3. Development of organizational structure adjusted to operating supply model: • Combination of RusHydro and RAO ES East procurements • Creation of a strong vertical line “Parent company – subsidiaries” • Introduction of category managers ~1,700-6,000* • Introduction of project managers • Creation of divisions responsible for enhanced supply supply function

Introduction of category 2. Categorization of procured items 2 and project management tools 3. Introduction of category management tools

Development of a 4. Development of a unified list of materials, equipment and services 3 unified regulatory information database 5. Introduction of a unified database of suppliers Quality Automatization 6. Development and implementation of template IT solution of seamless integration of all IT effect 4 systems from planning of need to payment (with contiguous processes) KPIs amendment 5 7. Enhancement of supply function KPI

TOTAL ~ 1,700 –6,000*

38 Appendices Capital markets day Preliminary 2017 disclosure and IR calendar

January 18-20 Deutsche Bank CEEMEA Conference (London) January 30 FY 2016 operating results March 1-2 JPMorgan CEEMEA Conference (London) March 2 FY 2016 RAS Results March 23 FY 2016 IFRS Results March 27-29 Raiffeisen Bank Conference (Zurs) April 20 1Q 2017 Operating results April 28 1Q 2017 RAS results June * Renaissance Capital Investor Conference (Moscow) June* Annual General Meeting of Shareholders 1 June 7 1Q 2017 IFRS results June 27-29 UBS EMEA One on One Conference (London) June * Dividend record date (2) July * Morgan Stanley GEMs Conference (New-York) July 20 1H 2017 Operating results July 31 1H 2017 RAS results August 29 1H 2017 IFRS results September 4-6 HSBC Investor Conference (London) September* Morgan Stanley Power & Utility Summit (London) October* VTB Capital Investment Forum "Russia calling!" (London) October 20 9 M operating results 2017 October 31 9 M 2017 RAS results November 13-14 Goldman Sachs CEEMEA 1x1 Conference (London) November 29 9 M 2017 IFRS results

The dates are preliminary and subject to possible change

(1) The Annual General Shareholders Meeting is held no earlier than two months and no later than six months after the end of the fiscal year. (2) In accordance with the Federal law No. 282-FZ of December 29, 2012, from 2014 the dividend record date may not be earlier than 10 days, and may not be later than 20 days after, the date of the resolution of the general shareholders meeting approving the payment of the dividend. 40 Capital markets day Non-consolidated financial results under Russian accounting standards (RAS) for 9M2016

PJSC RusHydro 9M’16 RAS financial results, key highlights, RUB mn  Strong financial results reflected a 9M’16 9M’15 Chg 3Q’16 3Q’15 Chg significant increase in electricity generation Revenue 86 765 78 023 11% 29 554 26 811 10% by hydropower plants, management’s Expenses (39 568) (45 558) -13% (13 558) (16 831) -19% efforts to optimize operating expenses, Gross profit 47 197 32 465 45% 15 996 9 980 60% EBITDA 58 495 43 044 36% 19 784 13 586 46% stable pricing environment in the Net profit 42 806 27 558 55% 14 380 7 382 95% wholesale electricity market Net profit (adjusted) 39 710 25 173 58% 13 266 5 747 131%

. EBITDA margin in 3Q 2016 – 67% (+16 p.p.), Revenue, RUB mn in 9M 2016 – 67% (+12 p.p.) 9M’16 9M’15 Chg 3Q’16 3Q’15 Chg Electricity sales 59 651 53,693 11% 20,718 19,146 8% . Increase in revenue driven by significant Capacity sales 26,432 23,406 13% 8,649 7,375 17% output on back of favorable hydrology; Other sales, 682 924 -26% 187 290 -36% Total 86,765 78,023 11% 29,554 26,811 10% commissioning of 100 MW of Gotsatlinskaya HPP; increase in capacity sales following Operating expenses, RUB mn 100% liberalization of hydro capacity market 9M’16 9M’15 Chg 3Q’16 3кQ’15 Chg in the second price zone; increase in the Depreciation 11 298 10 579 7% 3 788 3 606 5% average prices on the “day ahead” market. Purchased electricity and capacity 5 221 9 950 -48% 1 792 3 535 -49% Labor expenses, taxes and contributions 5 096 5 947 -14% 1 538 2 437 -37% Property tax 5 049 4 964 2% 1 688 1 670 1% . Expenses decreased by 13% due to ongoing Repairs and maintenance 2 275 2 244 1% 975 1 033 -6% headcount optimization, as well continuing Other third-party services 2 197 2 136 3% 906 891 2% overhaul of employees’ and top Services of System Operator, ATS, CFS 2 112 2 133 -1% 707 746 -5% Security expenses 1 307 1 282 2% 428 416 3% management’ incentive systems; decrease Insurance expenses 1 200 1 080 11% 457 493 -7% in purchased electricity and capacity, Rent 1 071 892 20% 357 305 17% reduction of other expenses by 54% due to Water tax 974 687 42% 360 228 58% Lease expenses 155 220 -30% 51 68 -25% effort aimed at restraining non-operating Other 1 613 3 444 -54% 511 1 403 -64% costs. Total 39 568 45 558 -13% 13 558 16 831 -19%

41 Capital markets day RusHydro pays special attention to sustainable development, energy efficiency and protection of environment

RES development (R&D, pilot projects) Energy efficiency in 2015 Protection of environment • RUB 900 mn (+21%) – growth of environment • Small HPPs (design, beginning of construction): protection expenses in 2015 Barsuchkovskaya, Bolshoi Zelenchuk, Ust’- • 307.3 GWh – electricity saving by PJSC • Approbation of International hydropower Dzhegutinskaya, Zaragizhskaya RusHydro association Sustainability assessment protocal • 5 solar power plants commissioned in Yakutia in • ~30 GWh – additional output due to HPPs in application to various stages of HPP 2015 (1MW) regime optimization lifecycle. Adaptation of the Protocol to specific conditions of the Russian Federation • 2 power plants commissioned in 2015 - in • 3.75 mn m3 of gas, 188 reference tonnes of Ust’Kamchantsk, (600 kW) and Novikovo (450 kW) diesel fuel, 31.8 thousand reference tonnes of • Membership in Russian partnership for • Construction of pilot binary block on Pauzhetskaya other fuels – fuel saving by RAO ES of East climate conservation geothermal PP (2.5 MW) • Projects in the fields of biodiversity protection • 39.5 thsd Gcal – heat saving by RAO ES of East • R&D: research in utilization of hydropower potential (fish stocking, equipping transmission lines of small rivers and non-HPP hydrotechnical facilities • 65.3 GWh – electricity saving by RAO ES of East with birds protection devices, support of national parks)

Number of investors-signatories to UN Principles for “Clean” stocks during last 5 years responsible investment (PRI)(1) outperformed “dirty stocks” (2) 1380 1260 Solar index Wind energy index 1188 1070 Biofuel companies index Mining companies index

800 Coal companies index 719 531 59 362 45 263 32 34 Coal and mining 21 24 companies are 18 outsiders 10 13

2007 2008 2009 2010 2011 2012 2013 2014 2015

Assets under management, $ trillion Number of signatories 30.09.11 30.09.12 30.09.13 30.09.14 30.09.15 30.09.16

(1) The Principles for responsible investment (PRI) were developed by a group of international investors under the aegis of UN Secretary-General in response to growing challenges of interrelations between environmental and social issues, as well as corporate governance issues and investment practice. (2) Bloomberg data 42 Capital markets day RAO ES of East Group: overview and regulation

Key aspects and problems of Far Eastern power sector . Far Eastern energy system is not connected to the Unified Energy System (UES) of Russia Installed electric capacity 8,972 MW and is composed of Unified Energy System of the East (UES East) and several isolated Installed heat generation capacity 17,973 GCal/h energy systems; Electricity T&D lines 103 thousand km . Annual volume of power consumption is around 44 TWh, of that 31.8 TWh is the Electricity generation (2014) 33,156 GWh consumption in the UES East; . Power production mix in the UES East: 67% - fossil fuel, 33% - hydro; in isolated zones: Heat generation (2014) 31,359 thousand Gcal 55% - fossil fuel, 41% - hydro, 4% - other.

Tariff regulation Chukotenergo . Power generation in UES East – regulatory period of 1 year based on price index formulas: 153 MW • Fuel prices are indexed in accordance with Ministry of Economy forecast. 404 Gcal/h • Investment costs in excess of depreciation are not covered by tariffs. . Power generation in isolated energy systems – regulatory period of 1 year based on cost+ method partially using price index formulas: Magadanenergo • Tariff growth is limited by a price cap set up by the Federal Antimonopoly Service; 320 MW • Operating costs are covered to “fit” the price cap, investments are limited by 773 Gcal/h depreciation. • CAPEX exceeding depreciation is covered by the regional budgets. . RAB-regulation is used only in UES East distribution and transmission grids. Kamchatskenergo • Return on invested capital is technically included in the regulated tariffs; 462 MW • The actual growth rate is close to 0% resulting in CAPEX cuts, reduction of rate of 1,380 Gcal/h return, and smoothing tariff policies. Yakusktenergo Fuel mix 1,434 MW 2,883 Gcal/h 2% Sakhalinenergo Coal 544 MW 43% Gas 801 Gcal/h 55% Fuel oil Far Eastern Generating Co. (DGK) 5,843 MW 12,585 Gcal/h Peredvizhnaya energetika (1) 215 MW

(1) The company supplies electricity to isolated small towns in northern territories from mobile gas turbines, develops wind projects 43 Capital markets day Origins of RAO ES East subgroup debt overhang

RAO ES of East Holding debt vs. EBITDA dynamics Average annual inflation, tariffs, costs for 2009-15

Financial debt Average annual growth of personnel costs (1) 12.6%

EBITDA Average annual growth of repair costs 7.%

Average fuel price 9.0%

Average annual heat tariff 8.5%

Average annual electricity tariff 5.4%

46 11 44 12 52 13 53 12 65 17 78 15 89 13 Average annual inflation 8.6%

2009 2010 2011 2012 2013 2014 2015

Contributing factors for high leverage of RAO ES of East Current debt portfolio of RAO ES of the East . Interest payments of RAO ES of the East in 2015 exceed expenses for repairs and maintenance .RUB 39.9 bn – debt transferred to RAO ES of the East Holding on July and are not covered by tariff revenue; 1, 2008, in the process of restructuring of JSC RAO UES of Russia . RusHydro Group’s Debt/EBITDA has reached the critical threshold, further significant borrowings will have highly negative consequences .RUB 41.58 bn – borrowings to cover lack of funds as a result of Gross debt structure as of November 1, 2016 insufficient tariffs European Other Investment . 7.8% RUB 20.47 bn – implementation of the investment projects with no Bank – 3.7% return on investments (gas supply to generating facilities, preparation to APEC 2012) – as per government’s requests EBRD – 9.7% RUB 108.4 .RUB 10.35 bn – implementation of a number of RAO ES East projects Rosbank bn(2) (offsite infrastructure facilities for 4 priority projects in the Far East 13.1% State banks and construction of Vostochnaya CHPP) 65.7%

(1) Explained by annual indexation as per collective union agreements, need to retain personnel and additional reimbursements to personnel working in difficult climate environment (2) Includes also loans from the parent company – PJSC RusHydro 44 Capital markets day Latest Russian power market developments

Electricity production and consumption dynamics in UES of Russia, GWh Progress of deregulation of capacity sales from Siberian HPPs (1)

990 989 1 000 1 016 1 010 1 014 1 008 943 8% 163 170 173 177 172 181 195 164 35% 57%

100% 688 627 676 691 700 676 677 671 92% (3) 65% ~43%(2) 157 167 159 156 155 175 167 160

2008 2009 2010 2011 2012 2013 2014 2015 2014 2015 2016 2017

Capacity selection price Regulated capacity tariff Hydro Fossil fuel Nuclear Electricity consumption

Results of the first 3-year capacity auction (KOM) for 2017-2019 and KOM-2020 . In November 2015, System Operator RUB/MW/month 3-year capacity auction results (4) held 2016 capacity auction (KOM) 2015 2016 2017 2018 2019 2020 st under new rules; 1 price zone (Europe) 125,524 112,624 113,207 110,992 110,451 115,199 2nd price zone (Siberia) 131,696 189,191 181,760 185,739 190,281 190,512 . In December 2015, first 3-year capacity auction was held for 2017- st 2019; Russian power market 1 3-year capacity auction . From 2015 KOM includes the whole price zones (before – only inside free flow zones) 2015 2016 2017 2018 2019 2020 2021 2022 . KOM prices in 2017-2019 will be hiked to CPI of the preceding year minus 1 pp. X+4 yrs

(1) Deregulation of capacity sales doesn’t encompass electricity and capacity volumes sold at regulated tariffs to households (~15-18% of total output for most power generating companies) (2) 65% of capacity sales from hydro were deregulated since May 1, 2014 (3) Average for the full year. 100% liberalization was introduced as of May 1, 2016. (4) Average capacity prices for RusHydro’s facilities 45 Capital markets day 9M 2016 operating results of RusHydro Group

. 3Q’16 and 9M’16 overview – solid recovery of hydropower output after a mediocre 2015 production: . total water inflow to reservoirs of the Volga-Kama cascade in the 3rd quarter of 2016 was close to normal, in the 9M’16 – above long-run average; . water inflow to major reservoirs of Siberia in the 3rd quarter and 9M of 2016 was significantly above average; . increased electricity generation by hydropower plants of the South of Russia on the back of 100 MW new capacity commissioning and low base effect; . electricity generation by TPPs of RAO ES of East Holding was effectively ousted by hydropower plants of the Far East, which should have a positive impact on financials. . Associates: . Electricity generation by Boguchanskaya HPP in 9M’16 amounted to 10,517 GWh (+3.2%); . Total production in 2016 is expected at ca. 14 TWh . FY’16 forecast: . Water inflow to reservoirs of major hydropower plants of the Group in 4Q 2016 is expected to be close long-run average or could deviate from long-run average by ±10%

3Q’16/3Q’15 – Europe & Siberia (price zones), GWh 3Q’16/3Q’15 – Far East (non-price zone), GWh

+25.4% +3.4%

Siberia Far East hydro 9 859 South of Russia 3 131 4 632 4 631 RAO ES of East Center of Russia 2 020 (fossil fuel) 2 667 6 422 5 244 10 074 8 446

3Q'15 3Q'16 3Q'15 3Q'16

9M’16/9M’15 – Europe & Siberia (price zones), GWh 9M’16/9M’15 – Far East (non-price zone), GWh

+20.2% +1.4%

22 179 Siberia 9 057 11 342 Far East hydro 16 156 6 853 South of Russia 5 349 RAO ES of East Center of Russia (fossil fuel) 24 242 22 439 28 389 30 930

9M'15 9M'16 9M'15 9M'16

46 Capital markets day Hydro production trends 2011-9M 2016

Center of Russia, GWh Siberia, GWh

2013 5 500 2013 2014 3 500 2014 5 000 2015 2015 4 500 3 000 2016 2016 4 000 Long-run average Long-run average 2 500 3 500 2 000 3 000 1 500 2 500

2 000 1 000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

South of Russia & N. Caucasus, GWh Far East, GWh

2013 2013 1 400 1 600 2014 2014 2015 1 200 2015 2016 2016 1 400 1 000 Long-run average Long-run average 800 1 200

600 1 000 400

200 800 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

47 Capital markets day Water inflows to major reservoirs in 2013-9M’2016

Water inflow to reservoirs of the Volgo-Kama cascade, m³/s Water inflow to the Sayano-Shushenskaya HPP, m³/s

50 000 7 000 45 000 6 000 40 000 35 000 5 000 30 000 4 000 25 000 20 000 3 000 15 000 2 000 10 000 1 000 5 000 0 0 J F M A M J J A S O N D J F M A M J J A S O N D

2013 2014 2015 2016 Long-run average 2013 2014 2015 2016

Water inflow to the Chirkeyskaya HPP, m³/s Water inflow to the Zeyskaya HPP, m³/s

700 17 000 600 15 000

500 13 000

11 000 400 9 000 300 7 000

200 5 000

100 3 000

1 000 0 J F M A M J J A S O N D -1 000 J F M A M J J A S O N D

2013 2014 2015 2016 2013 2014 2015 2016

48 Capital markets day Electricity spot market overview

. Non-indexation of gas tariffs for industrial consumption in 2016, expected increase in 2017 – 3%. . Increase in cross-flow between the 1st and 2nd price zones after removal of restrictions in 2014 led to long-term growth of average prices in Siberia. . Full commissioning of 2,997 MW Boguchanskaya HPP (50/50 JV of RusHydro and RUSAL) with projected electricity production of ~14 TWh in 2016 and ~17 TWh in 2017 has no pronounced effect on pricing in Siberia. . Stagnating demand and general overcapacity on the market coupled with below-inflation hikes in gas tariffs (3% in 2017-2018 according to Ministry of Economy) will lead to stabilization of unregulated power prices in European Russia in the medium-term.

Europe and Urals (1st price zone), RUB/MWh (1) Siberia (2nd price zone), RUB/MWh (1)

1300 1298 1000 1026 1 254 1201 994 1233 983 1200 1164 1224 1204 1154 1199 914 1184 1179 1167 900 922 1104 1147 1 136 895 1100 1116 1120 1122 846 854 789 825 1043 800 1000 800 1002 777 764 718 762

700 723 900 714 677 662 639 800 600 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013 2014 2015 2016 2013 2014 2015 2016

(1) Day ahead selling prices data from the Administrator of the trading system (ATS) 49 Thomson Reuters Extel 2014: . No.1 IR Team in Russian Utilities . Best IRO, Russian Utilities Thomson Reuters Extel 2013: . No.1 IR Team in Russian Utilities . Best CFO, mid-cap (Russia), #1 . Best IRO. mid-cap (Russia), #2 . Best overall IR, mid-cap (Russia), #3

Thomson Reuters Extel 2012: No.1 IR Team in Russian Utilities

Thomson Reuters Extel 2011: No.1 IR Team in Russian Utilities IR contact details tel.: +7 (495) 225 32 32 ext. 1607, 1319, 1304 [email protected]