Factbook 2020 LEGAL NOTICE
DISCLAIMER This document has been prepared by Iberdrola, S.A. ("IBERDROLA") and contains information relating to IBERDROLA and the group of companies of which IBERDROLA is the controlling entity, within the meaning established by law. and it is issued solely for its incorporation in Factbook 2020 data base for information purposes. This document does not constitute an offer, recommendation or advice, or an invitation to purchase, sale hold or exchange, nor a request for an offer of purchase, sale, hold or exchange of shares or securities, nor to execute any transaction whatsoever. It should not be treated as giving investment advice, nor is it intended to provide the basis for any evaluation of any securities.
This document is issued only and for the exclusive use of its recipient. It is strictly forbidden to publish, disclose, use or reproduce by any other means the information herein, either partially or completely, without the express and prior consent of IBERDROLA.
The information and any opinions or statements made in this document have not been verified by independent third parties; therefore, no express or implied warranty is made as to the impartiality, accuracy, completeness or correctness of the information or the opinions or statements expressed herein. Likewise, some of the information presented herein is based on statements by third parties.
No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of this information or any other information or opinions contained herein, for any purpose whatsoever. IBERDROLA undertakes no obligation to publicly update or revise any information on this document or to provide the recipient with access to any additional information or to update this documentation or any information or to correct any inaccuracies in any such information.
IBERDROLA shall not be liable, whether for negligence or any other reason, for any loss or damage whatsoever and howsoever arising as a result of your use of or reliance on the information contained in this document.
Neither this document nor any part of it constitutes a contract, nor may it be used for incorporation into or construction of any contract or agreement. Certain numerical data relating the profits of IBERDROLA in this document have been rounded according to established commercial standards. As a result, the aggregate amounts (sum totals or interim totals or differences or if numbers are put in relation) in this document may not correspond in all cases to the amounts contained in the underlying (unrounded) figures appearing in the consolidated financial statements.
IMPORTANT INFORMATION This document does not constitute an offer or invitation to purchase or subscribe shares, in accordance with the provisions of: (i) the restated text of the Securities Market Law approved by Royal Legislative Decree 4/2015, of 23 October; (ii) Regulation (EU) 2017/1129 of the European Parliament and of the Council, of 14 June 2017, on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC; (iii) Royal Decree-Law 5/2005, of 11 March; (iv) Royal Decree 1310/2005, of 4 November; and (v) their implementing regulations.
In addition, this document does not constitute an offer of purchase, sale or exchange, nor a request for an offer of purchase, sale or exchange of securities, nor a request for any vote or approval in any other jurisdiction.
The shares of IBERDROLA may not be offered or sold in the United States of America except pursuant to an effective registration statement under the Securities Act of 1933 or pursuant to a valid exemption from registration. The shares of IBERDROLA may not be offered or sold in Brazil except under the registration of IBERDROLA as a foreign issuer of listed securities, and a registration of a public offering of depositary receipts of its shares, pursuant to the Capital Markets Act of 1976 (Federal Law No. 6,385 of December 7, 1976, as further amended), or pursuant to a valid exemption from registration of the offering. 2 LEGAL NOTICE
FORWARD-LOOKING STATEMENTS
This document contains forward-looking information and statements about IBERDROLA, including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, capital expenditures, synergies, products and services, and statements regarding future performance. Forward-looking statements are statements that are not historical facts and are generally identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions.
Although IBERDROLA believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of IBERDROLAshares are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of IBERDROLA, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward- looking information and statements. These risks and uncertainties include those discussed or identified in the documents sent by IBERDROLA to the Spanish Comisi n Nacional del Mercado de Valores, which are accessible to the public.
Forward-looking statements are not guarantees of future performance. They have not been reviewed by the auditors of IBERDROLA. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date they were made. All subsequent oral or written forward-looking statements attributable to IBERDROLA or any of its members, directors, officers, employees or any persons acting on its behalf are expressly qualified in their entirety by the cautionary statement above. All forward-looking statements included herein are based on information available to IBERDROLA on the date hereof. Except as required by applicable law, IBERDROLA does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
3 IBERDROLA CORPORATE PURPOSE
Focused on the well-being of people and on the preservation of the planet Our Purpose: To continue building together each day a healthier, more accessible energy model, based on electricity
Reflects the strategy that the Group has been implementing for years and its commitment to continue fighting for:
A real and global An energy …healthier for …more …built in energy transition model that is people accessible collaboration
Boosting decarbonisation more electric... for all and electrification of the Abandoning fossil Being aware that Favouring Involving energy sector, and the fuels short-term health inclusion, players and economy as a whole Generalising and well-being of equality, equity society as a Contributing to the fight renewable energy people depend and social whole against climate change sources, the on the development Generating new efficient storage of environmental opportunities for energy, smart grids quality of their economic, social and and digital environment environmental transformation development 4 AGENDA
1. Iberdrola Today (page 5)
2. Networks (page 15)
3. Renewables (page 42)
4. Generation & Retail (page 87)
5. Financing (page 112)
6. ESG (page 124)
5 IBERDROLA TODAY
Iberdrola is one of the largest electric utilities in the world
Data as of December 2019 (1) Consumers: for electric power, total number of customers is used where there are areas of electricity distribution and retailing, supply points are used for the other areas. For gas: total number of gas customers is used, except for the United States, where total number of supply points is used. (2) Net total investments for financial year 2019 were €7,240 million. 6 IBERDROLA TODAY
Focus on regulated businesses and international diversification
EBITDA by business 2019 EBITDA by geography 2019
3% 8% IEI(1) 24% 52% Mexico Networks Generation & supply 14% 40% Brazil Spain €10,104 M €10,104 M 24% 19% Renewables US 16% UK
Data as of December 2019 (1) Iberdrola Energía Internacional, formerly RoW 7 IBERDROLA TODAY
Presence focused on the Atlantic Area
United States Power and gas distributor in New United Kingdom York, Maine, Connecticut and 100% renewable energy Massachusetts through 8 T&D networks in Scotland, regulated utilities Wales and England 3rd wind producer
Mexico 1st private producer of electricity
Eurozone Brazil 1st wind producer in Europe and Spain Leading utility in Brazil and Largest electric company in Spain LatAm
8 IBERDROLA IN SPAIN
Largest electric company
Installed Capacity (MW) 26,624
Renewable Capacity (MW) 16,526
Production (GWh) 58,560
Distributed Energy (GWh) 93,516
Consumers (M)(1) 11,1
Km of lines 270,258
Wind farms Hydroelectric plants Photovoltaic plants
Combined cycle gas plants Cogeneration plants Nuclear plants (1) Total number of electricity and gas customers Thermal plants Projects under construction
Principal Offices Electricity Distribution Area of influence
Data as of December 2019 9 IBERDROLA IN UK
100% renewable electricity. Electricity and gas supply. Transmission and distribution networks in Scotland, Wales and England
Installed Capacity (MW) 2,520
Renewable Capacity (MW) 2,520
Production (GWh) 4,640
Distributed Energy (GWh) 33,670
Consumers (M)(1) 4.7
Km of lines 110,083
Wind farms Offshore wind farm Underwater power line (1) Total number of electricity and gas customers
Projects under construction
Principal Offices Electricity Distribution Area of influence
Data as of December 2019 10 IBERDROLA IN US: AVANGRID(1)
83% of production from renewables Electricity and gas distributor in New York, Maine, Connecticut and Massachusetts
Installed Capacity (MW) 8,361
Renewable Capacity (MW) 7,521
Production (GWh) 20,960
Distributed Electricity (GWh) 38,441
Distributed Gas (GWh) 64,234
Consumers (M)(2) 3.3
Wind farms Hydroelectric plants Photovoltaic plants Km of lines 170,755 Combined cycle gas plants Cogeneration plants Presence in 24 States Batteries Projects under construction (2) Total number of electricity and gas supply points Principal Offices Electricity Distribution Area of influence
(1) Avangrid: 81.5% owned by Iberdrola
Data as of December 2019 11 IBERDROLA IN BRAZIL: NEOENERGIA(1)
Energy leader in Brazil and Latin America
Installed Capacity (MW) 4,079
Renewable Capacity (MW) 3,546
Production (GWh) 14,007
Distributed Energy (GWh) 67,875
Consumers (M)(2) 14.1
Km of lines 640,417 Presence in 18 States
Wind farms Hydroelectric plants Combined cycle gas plants (2) Total number of electricity supply points Projects under construction
Principal Offices Electricity Distribution Area of influence
(1) Neoenergia: 51.04% owned by Iberdrola
Data as of December 2019 12 IBERDROLA IN MEXICO
Second-largest electricity producer
Owned Installed Capacity (MW) 3,152
Third-party Installed Capacity (MW) 6,380
Owned Renewable Capacity (MW) 860
Third-party Renewable Capacity (MW) 103
Owned Production (GWh) 13,198
Third-party Production (GWh) 37,684
Wind farms Wind farms for third parties Photovoltaic plants Presence in 13 States Combined cycle gas plants Combined cycle gas plants for third parties
Cogeneration plants
Areas with projects Principal Offices Area of influence under construction
Data as of December 2019 13 IBERDROLA ENERGÍA INTERNACIONAL (1)
100% Renewable Energy in the rest of the world
Renewable Capacity (MW) 965
1 Offshore wind farm (MW) 350
28 onshore wind farms (MW) 609
4 solar PV plants (MW) 6
Production (GWh) 2,665
Consumers (M)(2) 0.8
Wind farms Offshore wind farm Photovoltaic plants (2) Total number of electricity and gas customers Projects under construction
Principal Offices Area of influence Areas with supply business presence
(1) Formerly Rest of the World
Data as of December 2019 14 AGENDA
1. Iberdrola Today (page 5)
2. Networks (page 15)
3. Renewables (page 42)
4. Generation & Retail (page 87)
5. Financing (page 112)
6. ESG (page 124)
15 NETWORKS
1.2 M Km power lines, over 4,400 substations and 1.5 M transformers to supply 31 M clients
RAV Iberdrola Networks business areas
Brazil Spain Spain UK USA Brazil 16% Transmission - electricity 30% € 31.1 Distribution - electricity bn 30% Distribution - gas USA 24% UK
Leaders in Smart grids
Smart meters installed: • Spain: 11 M • UK: 1.4 M • US: 1.4 M • Brazil: 490,000
Data as of December 2019 16 NETWORKS: Visibility of Revenues
Long term regulatory frameworks and reasonable rates of return in all jurisdictions are the foundations of a balanced investment mix in T&D across countries Actual Regulatory WACC 2020 2021 2022 (Nominal, post-tax) (1)
i-DE 2020 - 2025 4.2 % (2)
SPT Apr 13 - Mar 21 Mar 21 - Mar 26 7.1 % SPD/SPM Apr 15 - Mar 23 5.9 %
NYSEG/RGE stay out May 20 - Apr 23 6.4 % CMP-D stay out Mar 20 - Feb 21 stay out Jan 22 - Dec 22 6.2 % UI stay out Jan 22 – Dec 24 6.4 % SCG Jan 18 - Dec 20 stay out Jan 22 - Dec 24 6.8 % CNG Jan 19 - Dec 21 stay out 6.8 % CMP-T/UI-T Annual update 7.9 %
COELBA/COSERN Apr 18 - Mar 23 12.1 %
ELEKTRO Aug 19 - Jul 23 12.1 %
CELPE Apr 17 - Mar 21 Apr 21 - Apr 25 12.1 %
Note: Best estimate of the entry into force of the new rate cases 1) Nominal WACC post-tax has been calculated based on each country’s specific remuneration framework. Distribution: ESP: 5.58% Nominal WACC pre-tax; UK: 6% Real COE post-tax; USA-Nominal ROE post-tax allowed for each DisCo; BRA: 8.09% Real WACC post-tax; Transmission UK: 7% Real COE post-tax; Transmission USA: 10.57% Nominal ROE post-tax 2) Nominal post tax WACC for 2020: 4.5%, based on 6.003% Nominal WACC pre-tax 17 NETWORKS: SPAIN
As of December 2019, ~11 M smart meters installed and digitisation of over 100,000 transformers
2019 RAV (Eur Bn) 9.2
Distributed energy (GWh) 93,516
Points of supply (M) 11.1
Kms of lines 270,258
Data as of December 2019 18 NETWORKS: SPAIN
Distribution: Circular 6/2019 CNMC. Regulatory period: 2020-2025 • Remuneration calculated by WACC methodology and reviewed every 6 years (regulatory period): 6.003% (before taxes) in 2020 and 5.58% from 2021 onwards. Until 31 December 2019 the remuneration was linked to 10 Year-Treasury Bond (6.5%)
• The remuneration has four components: i. Remuneration of net regulatory asset value (CAPEX): It maintains the regulatory asset (RAV) of investments made until 2018. o Remuneration of existing assets at 31 December 2014 calculated according to Royal Decree 1048/2013 (Standard Costs (SC) are the reference for calculating regulatory assets): o SC corrected by a coefficient per company o Ceded assets are subtracted (assets prior to 1998 are estimated) o Assets are remunerated during their regulatory useful life (depending on accountability by company) o Assets in operation since 1 January 2015 until 31 December 2018 o Intermediate value between Standard Costs and audited cost o Assets are remunerated during their useful life (40 years for network assets and 12 for control systems) o New assets in operation since 1 January 2019: audited cost per installation ii. Remuneration of Manageable Component (OPEX): o O&M and “Other assets investments” (systems not associated with digitalization, machinery, vehicles, buildings and tools): This term evolves according to the increase in remuneration for investment in electricity assets and with an adjustment factor, which takes the value of 0.97 per year, with the aim of bringing it closer to the real cost of the companies. o Efficiencies: companies are able to retain 100% of the efficiency gains obtained from the OPEX additional to the previous adjustment factor iii. Other regulated tasks: reading, contracting, defaults, invoicing, customer service channels, planning and structure… according to SC and public domain use tax -7% compared to the previous period
iv. Incentives: o Quality and losses reduction: Each company will have bonuses or penalties, so that the whole is a "zero-sum". In the case of the loss incentive, a 2-year moratorium is proposed to analyse a possible zoning of the networks. o Fight against fraud: according to detected fraud. Eliminated from 2022 onwards • Annual maximum investment limit stablished by the Government: 0.13% GDP 19 NETWORKS: SPAIN
Distribution: Circular 6/2019 CNMC. Regulatory period: 2020-2025
RAV until 2018 RAV calculated according to Royal Decree 1048/2013 (previous methodology) (i) Base remuneration Real cost per installation New facilities Accrual and payment of remuneration in year n+2 st From 1 January 2019 +adjustment at each half-period if the set deviates from the standard costs O&M (electric & non- electric assets) Evolution linked to investment remuneration -3% (ii) Manageable annual adjustment Component (1) Other assets Increased by new investments and asset transfers Remuneration investments (year n) (iii) Other Meter reading, Standard costs regulated tasks contracting, tele- Initial remuneration reduction of -7% compared to the remuneration assistance, planning previous period (Due to smart metering efficiencies)
New Scheme of Losses According to real losses between years n-2 “Zero-sum”: penalties (from 2022 onwards) Limits: underdevelopment. for one company are According to SAIDI(2) and SAIFI(3) bonuses for others Quality of supply between years n-4 and n-2 (iv) Incentives (from 2020 onwards) +/-2% of remuneration in the first half of the Company against the period Fraud reduction sector average (vs +/- 3% in the second half of the period company against (Eliminated from itself) 2022 onwards)
(1) Other assets include: systems and communications not associated with digitalization, machinery, furniture, vehicles, buildings and tools (2) SAIDI: System Average Interruption Duration Index (3) SAIFI: System Average Interruption Frequency Index 20 NETWORKS: SPAIN
Distribution: Circular 2/2019 CNMC. Financial Remuneration Rate for the period 2020-25 (WACC Methodology)
Financial leverage Cost of Equity CE Ratio between equity and Capital Asset Pricing Model debt Comparators Cost of Debt CD Methodology (CAPM) (6 years) IRS + CDS Risk- free rate RRF : 2.97% (average of FL Interest Rate Swap (IRS): (reference to the 2012-2017 contributions to the 10-year 50% Treasury Bond) base rate) Market risk Premium MRP: 4.75% Credit Default Swap (CDS): (reference to (weighted average Europe - arithmetic and risk) geometric average) 10-year CDS average contributions (2012- Tax Rate Coeficient : 0.72 (non-diversifiable risk 2017) measure, Beta Bloomberg comparators) Spain 2017 Statutory Comparators rated above Baa3 or BBB- Rate C = R + ( * MRP) E RF TR 25% 6.40% 2.63%
WACC after taxes: 4.19%
CE * (1 - FL) + CD * (1 – TR) * FL Financial Remuneration Rate FRR: 5.58% (before taxes) Financial Remuneration Rate in 2020: 6.003% (before taxes) (due to the application of a maximum variation of 0.50 bp y- o- y) 21 NETWORKS: UK
One of the largest Distribution companies and one of the 3 companies with Transmission licenses in the country
2019 RAV (GBP Bn) 6.7 Scottish Power Distribution 29% Scottish Power Manweb 31% Scottish Power Transmission 40%
Distributed energy (GWh) 33,670 Scottish Power Distribution 54% Scottish Power Manweb 46%
Points of supply (M) 3.5 Scottish Power Distribution 57% Scottish Power Manweb 43%
Kms of lines 110,083 Scottish Power Distribution 53% Scottish Power Manweb 43% Scottish Power Transmission 4%
Data as of December 2019 22 NETWORKS: UK REGULATORY ENVIRONMENT
Form of control Baseline Revenue
• Currently regulated under Ofgem’s incentive-based ‘RIIO’ model i.e. • Efficient level of expected costs necessary to carrying out activities are Revenues are earned from the delivery of incentives, innovation and outputs assessed through total expenditure (TOTEX). set against regulatory targets. • Regulatory Asset Value (RAV) is a major input to the setting of Allowed • Method: Ex-ante revenue cap. Regulator sets majority of maximum allowed revenue fixed upfront and on a real basis. Revenue. Revenue components for depreciation (effectively a capex • Duty on regulator to ensure that regulated networks are able to finance their allowance) and return allowance are calculated from RAV. licensed activities – maintain an investment grade credit rating. • Following the application of the TOTEX incentive mechanism, TOTEX is Price Control Overview allocated into a “fast pot” and “slow pot” determined by the capitalisation Electricity Transmission Electricity Distribution rate (electricity distribution: 80%, electricity transmission: 90%).
Price Control RIIO – ET1 RIIO – ED1 • The capitalised slow pot is added to the RAV and remunerated over time through allowances for return on capital and depreciation (Depreciation 8 Year Term 2013 - 2021 2015 – 23 Rate: 45 years post 2013/14 investment, 20 years pre 2013/14 investment, Allowed return on 4.37% (2017–18) 3.59% (2017-18) with a transition period increasing on a straight line basis). The “fast pot” RAV 4.20% (2018–19) 3.46% (2018–19) (ED: 20%, ET: 10%) is treated as an in year ‘pay-as-you-go’ allowance. RAV* £2.714b SPD - £1.923b • Provision for tax. SPM - £2.082b
Incentives, Uncertainty Mechanisms and Adjustments Adjustments
• Potential to increase outturn returns through financial rewards gained from • Annual adjustment of allowed revenues for: spending less than expected and outperformance against measures related • RPI** indexation of baseline revenues; to defined outputs. • Incentive rewards/penalties; • Totex incentive mechanism shares under/overspend on allowed TOTEX • Innovation funding; between networks and customers through adjustment to allowed revenues, based on efficiency incentive rate (electricity distribution: 46.5%, electricity • Non controllable costs i.e. uncertainty mechanisms; and transmission: 50%). • True Ups, including for differences in actual demand versus forecast • Provisions to manage specific cases of uncertainty risk through possible demand as network companies are not exposed to demand volatility. revenue changes during price control e.g. indexation, uncertainty mechanisms, volume drivers and pass-through costs. • Revenues from incentive rewards and uncertainty mechanisms are recovered with a two-year lag.
* As at 2018 financial year end * *RPI measures the change in the cost of a representative sample of retail goods and services, including the cost of housing. The measure has now generally been superseded by CPI. 23 NETWORKS: UK
High level illustration of allowed revenues derivation
Totex Efficiency incentive rate Over/underspend ED: 46.5%, ET: 50% Tax Allowance
Allowed (1)TIM Performance Capitalisation rate Fast Pot Totex 80% ED/ 90% ET (20% ED/10% ET)
Closing Opening Opening RAV Slow Pot RAV RAV Depreciation Depreciation Allowance
Average Vanilla RAV WACC(2) Return on Capital
Baseline Revenue
Uncertainty Innovation Performance RPI Indexation Mechanisms Funding against Incentives Annual Adjustment
Allowed Revenue
(1) Totex incentive mechanism incentivises efficiency by sharing under/overspend on allowed totex between networks and customers through adjustment to allowed revenues, based on efficiency incentive rate (ED: 46.5%, ET: 50%). (2) Vanilla WACC: pre tax cost of debt, post tax cost of equity Ofgem Annual Iteration Process: https://www.ofgem.gov.uk/publications-and-updates/ofgem-publishes-2019-annual-iteration-process-network-price-controls 24 NETWORKS: USA
8 Regulated Utilities in New York, Connecticut, Maine and Massachusetts
RAV (USD Bn) 10.4 Points of supply (M) 3.3 NYSEG - Electricity 2.2 Electricity 2.3 NYSEG - Gas 0.6 NYSEG 40% RG&E - Electricity 1.5 RG&E 17% RG&E - Gas 0.5 CMP 28% CMP - Distribution 0.9 UI 15% CMP - Transmission 1.6 Gas 1.0 NYSEG 26% UI - Distribution 1.1 RG&E 31% UI - Transmission 0.7 MNG 0% SCG 0.6 BGC 4% CNG 0.5 CNG 18% BGC 0.1 SCG 20% MNG 0.1
Distributed energy (GWh) 102,676 UIL Electricity 38,441 NYSEG 42% F RG&E 19% Electricity Gas CMP 25% Kms of lines/pipelines 170,754 44,097 UI 13% NYSEG 46% 31% Gas 64,234 RG&E 12% 33% NYSEG 26% CMP 32% 0% RG&E 28% MNG 0% 1% MNG 4% UI 9% 0% BGC 5% SCG 0% 15% CNG 19% CNG 0% 15% SCG 18% BGC 0% 5%
Data as of December 2019 25 NETWORKS: USA
Base Allowed ROEs Allowed returns as of December 31, 2019
11,70%
CMP T UI T 11,20% 10.57 - 10.57- 11.74% 11.74%
10,70%
10,20% BGC NYSEG RGE MNG (2) 9.70% (2) 9.55% 9,70% 9.75% 9.75% Base: 9.0% CMP D Base: 9.0% 9.45% SCG CNG 9,20% UI D 9.25% 9.30% 9.10% 8,70%
8,20% Bubble size reflects each company’s relative rate base(1) 7,70%
(1) 2019 Estimated Average Rate Base of $10.5B. (2) Includes 75bp allowance before sharing. 26 NETWORKS: USA
New York Rate Plans NY State Electric NY State Gas Rochester Rochester Gas (NYSEG-E) (NYSEG-G) Electric (RGE-E) (RGE-G) Jurisdiction New York Regulator New York Public Service Commission (NYPSC) Term 3 year rate case settled June 2016. Tariffs increase effective May 1, 2016 Annual Rate Increases Year 1 - $54M, Year 2 - $73M, Year 3 - $81M Avg. Rate Base (Apr ’19) $2,089 M $580M $1,393M $489M Allowed ROE / Equity Ratio 9.0% / 48% Earnings sharing at 50% equity Year 1 (5/1/16 – 4/30/17): Year 2 (5/1/17 – 4/30/18): Year 3 (5/1/18 – 4/30/19): 100% up to 9.5% 100% up to 9.65% 100% up to 9.75% Earnings Sharing 50% up to 10.0% 50% up to 10.15% 50% up to 10.25% 25% up to 10.5% 25% up to 10.65% 25% up to 10.75% 10% above 10.5% 10% above 10.65% 10% above 10.75% Rate Year Forecast • Recovery of more than $260M for past storm expenses. • Rate Adjustment Mechanism up to $40M/yr ($19.3M NYSEG-E, $5.2M NYSEG-G, $11.4M RGE-E and $4.4M RGE-G) Trackers / for major storms, gas leak prone pipe replacement, NYSEG Electric Pole Attachment revenues, and REV costs & fees that are not covered by other recovery mechanisms. Reconciled Costs • Other: Revenue Decoupling, Environmental, Electric & Gas Vegetation Management, Economic Development Programs, Pension & Other Post Retirement Benefits, Property Taxes, Energy Supply (pass through), Variable Rate & New Fixed Rate Debt, Accounting, Tax, Legislative, Low Income, etc. (Joint Proposal’s pages 34-40 & 155-158) ROE filing Annually (filed end of July) 2018 (after-sharing)(1) 6.2% 8.6% 9.9% 8.3% (2)
OEs R OEs 2017 (after-sharing) 8.6% 10.0% 9.8% 9.7% 2016 (after-sharing)(3) 8.7% 9.8% 9.1% 9.8% ed ievAch ed 2015 (after-sharing) 7.9% 9.7% 6.0% 4.2% 2014 (after-sharing) 9.7% 10.0% 9.5% 7.3% 2013 (after-sharing) 9.7% 8.6% 9.6% 9.8% (1) ROEs for the 3rd rate year (5/1/18 - 4/30/19) under 3 year rate plan settled June 2016. (2) Amended ROEs for the 2nd rate year (5/1/17 - 4/30/18) under 3 year rate plan settled June 2016. (3) Amended ROEs for the 1st rate year (5/1/16 - 4/30/17) under 3 year rate plan settled June 2016. 27 NETWORKS: USA
Connecticut Rate Plans United Illuminating Southern Connecticut Connecticut Natural Distribution (UI-D) Gas (SCG) Gas (CNG) Jurisdiction Connecticut Regulator Public Utilities Regulatory Authority (PURA) 3 year plan 2017-2019 3 year plan 2018-2020 3 year plan 2019-2021 Term Effective January 2017 Effective January 2018 Effective January 2019 Year 1 - $43.0M Year 1 - $1.5M Year 1 - $9.9M Annual Rate Increases Year 2 - $11.5M Year 2 - $4.7M Year 2 - $4.6M Year 3 - $2.9M Year 3 - $5.0M Year 3 - $5.2M Avg. Rate Base (Sep ’19) $1,108M $580M $528M Allowed ROE 9.10% 9.25% 9.30% Allowed Equity Ratio 50% 52% 54% ’19 / 54.5% ’20 / 55% ’21 Earnings Sharing 50/50 above ROE 50/50 above ROE 50/50 above ROE Rate Year Forecast · Revenue Decoupling · Revenue Decoupling · Revenue Decoupling · Major Storms · System Expansion Rate · System Expansion Rate Trackers / · Energy Supply (pass through) · Energy Supply (pass through) · Energy Supply (pass through) Reconciled Costs · Low Income · Low Income · Low Income · Distribution Integrity Mgmt · Distribution Integrity Mgmt Program Program ROE filing Quarterly Quarterly Quarterly 2019 (after-sharing)(2) 10.0%(1) 9.5%(1) 7.5%(1) (1) (1) (1)
OEsR 2018 (after-sharing) 9.6% 8.4% 6.7%
(1) (1) (1)
deeviAch 2017 (after-sharing) 9.3% 8.1% 5.9% 2016 (after-sharing) 6.8%(1) 8.1%(1) 8.7%(1) 2015 (after-sharing) 8.5% 8.2% 8.6% 2014 (after-sharing) 9.7% 8.7% 9.9% (1) Based on actual equity ratios vs allowed. (2) ROEs for the twelve months ended 9/30/2019. 28 NETWORKS: USA
Maine & Massachusetts Rate Plans Central Maine Power Maine Natural Berkshire Gas Distribution (CMP-D) Gas (MNG) Company (BGC) Jurisdiction Maine Massachusetts Regulator Maine Public Utilities Commission (MPUC) Department of Public Utilities (DPU) 10 year plan thru 4/26/16 3 year plan 2019-2021 Term 1 year plan 3/1/20 – 2/28/21 subject to Year 7 review Effective January 2019 Year 1 - $2.3M Annual Rate Increases Year 1 - $17.4M Years 2 & 3 - Freeze Avg. Rate Base (2018) $898M $80M $112M 9.25% less 1.00% mgmt. Allowed ROE 9.55% 9.7% efficiency adjustment(1) Allowed Equity Ratio 50% 50% 54% Earnings Sharing No 50/50 above 12.05% No Rate Year Forecast Forecast Historic · Revenue Decoupling · No Revenue Decoupling · Revenue Decoupling · Major Storms · Gas Supply (pass through) · Gas Supply (pass through) · Greater Minor Storm recovery Trackers / ($8.1M/year vs. $4M prev.) Reconciled Costs · Vegetation mgmt. funding increased 25% · Environmental · Gas Supply (pass through) ROE filing Annually Annually Annually 2018 4.2% NA NA 2017 12.7% NA NA
2016 11.4% NA NA 2015 7.6% NA NA 2014 9.6% NA NA Achieved ROEs ROEs Achieved 2013 10.8% NA NA (1) ROE management efficiency adjustment until customer service metrics achieved for 18 months. 29 NETWORKS: USA
FERC Jurisdiction Rate Plans Central Maine Power United Illuminating Transmission (CMP-T) Transmission (UI-T) Regulator Federal Energy Regulatory Commission (FERC) Term Annual filing by July 31 T FERC ~$2.1B Rate Base by Avg. Rate Base (2018) $1,460M $622M earned ROE ($M) Allowed ROE 10.57-11.74% 10.57-11.74% Equity Ratio Actual (~53-59%) Actual (~53-57%) ROE 10.57% $0.3B Earnings Sharing No No Decoupling No No
• Annual true-up to actual operating expenses and revenue ROE 11.07% requirement $0.4B • Capital investments not included in rate base until they are placed in service, unless a specific FERC incentive is granted allowing for Trackers / the inclusion of Construction Work in Progress (CWIP) in rate base Reconciled Costs • We are allowed to calculate an Allowance for Funds Used During Construction (AFUDC) as a non-cash carrying charge added to CWIP and recovered over the life of the asset on all other projects ROE 11.74% that do not receive the CWIP in rate base incentive $1.4B
ROE filing Annually Main projects 2018 11.8% 11.3% receiving 11.74%: 1) ( 1) 2017 11.4% 11.3% • MPRP OEsR • 2016 11.2% 11.4% Middletown-
ed ievhcA ed 2015 10.6% 11.4% Norwalk 2014 10.5% 12.1% • NEEWS 2013 11.3% 12.2% (1) Based on actual equity ratios vs allowed. 30 NETWORKS: USA
Regulated generation facilities
Installed Capacity Year(s) Operating Company Facility Location Facility Type (MW) Commissioned
NYSEG Newcomb, NY Diesel Turbine 4.1 1967, 2017 NYSEG Blue Mountain, NY (1) Diesel Turbine 2.0 2019 NYSEG Long Lake, NY (1) Diesel Turbine 2.0 2019 NYSEG Eastern New York (6 locations) Hydroelectric 61.4 1921-1983 RGE Rochester, NY (3 locations) Hydroelectric 57.1 1917-1960 UI Connecticut (3 locations) Fuel cell / Solar 13.4(2) 2015 - 2017
(1) Blue Mountain and Long Lake Diesel Turbine are rented facilities (2) Includes 2.2 MW of solar
• UI is party to a 50-50 joint venture with certain affiliates of Clearway Energy, Inc. in GCE Holding LLC, whose wholly owned subsidiary, GenConn, operates two 200 MW* peaking generation plants in Devon and Middletown, both in Connecticut.
*Nameplate value
Data as of December 2019 31 NETWORKS: USA
How to model
Approach for Network Income Calculation
+ Rate Base * Equity Ratio(1) * Regulatory ROE (8 utilities)
Other Income: • Allowance for funds used during construction (AFUDC) • Carrying costs on regulatory assets & liabilities + not included in Rate Base • Be sure to tax effect values
+ Equity Investments (GenConn, NY Transco) = Networks “Income”
(1) Connecticut companies, CMP, and Transmission based on actual equity ratio.
32 NETWORKS: USA
Economics
• Rate Base = Gross plant in service - Book depreciation - Deferred income taxes +/- working capital +/- regulatory assets & liabilities (not accruing carrying costs) + prepaid + materials and Rate Base supplies • Average rate base for a 13-month period used for gas and electric distribution and UI transmission. Year-end rate base used for CMP Transmission
• Utilities accrue AFUDC on longer-term construction projects prior to being placed in-service AFUDC & Carrying • Utilities accrue Carrying Costs on certain regulatory assets & liabilities not in rate base Costs • This has an impact on current earnings, but there is no current cash flow impact
• 50% JV with affiliates of Clearway Energy (GenConn) in 2 regulated peaking plants with ROE of Equity 9.85% Income • 20% investment in NY Transco: Rate Base $204M, ROE 10%, Equity Ratio 53%
Earned • Based on formulas approved by regulator and used in annual compliance filings ROE • Formulas based on operating income with certain regulatory adjustments
Additional regulatory information in Avangrid Factbook: http://www.avangrid.com/wps/portal/avangrid/Investors/investors/financialoperationalreports 33 NETWORKS: USA
Flagship Projects: NECEC (I)
Transmission project selected in MA RFP
• 1,200 MW Transmission project delivering Canadian hydro-power to Massachusetts EDCs
• $950 M capital cost, excluding AFUDC
• Expect all state permits by early 2Q ’20 & final project approvals by mid ’20
• Expect to begin construction in 3Q ’20 with COD by year-end ’22
• Already control 100% of rights of way o 73% in existing transmission corridor o 27% in industrial forest
Additional information on NECEC and other projects here: http://www.avangrid.com/wps/portal/avangrid/Investors/investors/financialoperationalreports 34 NETWORKS: USA
Flagship Projects: NECEC (II)
Project economics(1) Capacity: 1,200 MW Transmission
Contract Price: $9.16/kW month(2) Year 1 (2023) escalating ~2% annually through Year 20 $7.38/kW month(3) Years 21-40 Depreciation: 40-Year Straight Line (GAAP) / 15-Year MACRS (Tax) Tax Rate: 21% (Federal) / 8.93% (State-ME)
AFUDC (4) Capex ($M): Investment $24 $60
$353 $378 $5 $83 $72 $105 2019 2020 2021 2022 (1) As of February 26, 2019. (2) Equivalent to $12.55/MWh for a 100% load factor. (3) Equivalent to $10.11/MWh for a 100% load factor. (4) Allowance for Funds Used During Construction (both debt and equity portions) on a pre-tax basis. Note: Project economics are based on levelized, fixed-price transmission service agreements; therefore, capital spending amounts are not added to rate base & collected through a FERC tariff. ROEs are expected to start lower and increase over contract life to achieve an equivalent 10.57% levelized average. All third party construction financing is incurred at the holding company level. Amounts may not add due to rounding. MA – Long-term contracts with Electric Distribution Companies, 18-64 – eeaonline.eea.state.ma.us/DPU/Fileroom/dockets/bynumber 35 NETWORKS: BRAZIL
Energy leader in Brazil and Latam
2019 RAV (BRL Bn) 21.5 Elektro 19% Coelba 43% Celpe 22% Cosern 9% Transmission 8%
Distributed energy (GWh) 67,875 Elektro 28% Coelba 37% Celpe 25% Cosern 9%
Points of supply (M) 14.0 Elektro 19% Coelba 43% Celpe 27% Cosern 11%
Kms of lines 640,417 Elektro 19% Coelba 48% Celpe 24% Cosern 9%
Data as of December 2019 36 NETWORKS: BRAZIL
Regulatory framework
Concession Concession/ Renewal Tariff / Revenue process authorization term
• Tariff structured to remunerate for: • Possible (+30 yrs) - Parcel A = Non manageable costs (pass through): energy supply + transmission + sector • 30 years • May be changed charges Contractual • Competitive - Parcel B = manageable costs (Incentive model): Distribution • Due date: Aug conditions auctions capex + opex. Annually adjusted by inflation + 2027 to Mar- • Indemnification for demand growth – X factor 2030 non-depreciated • Tariff review every 4-5 years: redefinition of assets Part B, X factor and regulatory level for energy loss and bad debt
• Possible according to certain • 30 years • RAP defined in the Concession Auction contractual • Competitive conditions • Due date: Aug • Revenue yearly adjusted by inflation Transmission auctions 2027 to Mar- • Indemnification for 2049 • Tariff review every 5 years (only WACC) non-depreciated assets
37 NETWORKS: BRAZIL
Distribution
Return on Capital Efficiency
∆ OPEX Regulatory Asset Base (BRR) ∆ Losses WACC +/- ∆ Bad Debt + ∆ Market Growth Depreciation Penalty / Compensations
38 NETWORKS: BRAZIL
Distribution: Tariff components
Parcel A Energy purchase, transmission and sector Pass through charges
Regulatory Losses Benchmarking
Regulatory Bad Debt Benchmarking Parcel B Regulatory OPEX Benchmarking
Regulatory Depreciation Gross Regulatory Asset Base * Depreciation Rate
Remuneration on Capital Net Regulatory Asset Base * WACC
39 NETWORKS: BRAZIL
Distribution: Tariff Review Processes
Every 4 or 5 years Tariff reviews • Pass through: energy supply + transmission + sector charges Tariff Coelba, Celpe and • Definition - Regulatory Asset 2013 Cosern Review rd Base ( RAB) and OPEX 3 RTP Elektro • Establish standards for losses, 2015 4rd RTP quality and an efficiency factor Celpe 2017 4rd RTP Yearly except on Coelba and Cosern 2018 rd Tariff Review year 4 RTP 2019 Elektro Annual • Pass through: energy supply + 5th RTP transmission + sector charges Tariff Celpe 2021 5th RTP Adjustment • Manageable costs (Parcel B) - Coelba and Cosern Adjusted by inflation + demand 2023 5th RTP growth – X factor Elektro 6th RTP
40 NETWORKS: BRAZIL
Flagship projects - Transmission 1 lot awarded in December 2019 (Lote 9), together with 4 lots in December 2018 and 6 lots in 2017 (April and December) in or close to our Service Areas. Investments of BRL ~ 8 Bn. COD between 2020-2022
Bahia y Lote 4 Lote 27 Tocantins Lote 6 Ceará Paraiba
Rio Grande do Norte (Cosern) Pernambuco (Celpe) Lote 9 Bahia (Coelba) Mato Grosso do Sul (Elektro) Rio de Janeiro y Minas Gerais Mato Grosso do Sul Lote 3 Lote 4 Lote 2 Rio de Janeiro Paraná y Santa Catarina Lote 1 São Paulo Lote 14 (Elektro) Rio Grande do Sul y Santa Catarina Lote 22 Santa Catarina São Paulo Lote 20
Information on auction results : http://www.aneel.gov.br/resultados-de-leiloes 41 AGENDA
1. Iberdrola Today (page 5)
2. Networks (page 15)
3. Renewables (page 42)
4. Generation & Retail (page 87)
5. Financing (page 112)
6. ESG (page 124)
42 RENEWABLES
Leading position in renewables
Capacity by region Capacity by technology
Solar & IEI (2) Other
(1) Mex & Bra 3% 3% 14% Onshore wind(1)
Hydro 41% 32.0 GW 32.0 GW 53% USA 23%
52% 8% Spain 3% UK Offshore wind
(1) Including 103 MW of onshore wind capacity for third parties (2) Iberdrola Energía Internacional, formerly Rest of the World
Data as of December 2019 43 RENEWABLES
Capacity (MW) Spain UK US Mexico Brazil IEI (1) Total
Onshore owned 6,005 1,906 7,259 492 516 609 16,788 Onshore for third parties - - - 103 - - 103 Offshore - 614 - - - 350 964 Hydro 9,715 - 118 - 3,031 - 12,864 Mini-hydro 306 - - - - - 306 Solar 500 - 130 368 - 6 1,004 Others - - 13 - - - 13
Total 16,526 2,520 7,521 963 3,546 965 32,042
Production (GWh) Spain UK US Mexico Brazil IEI (1) Total
Onshore owned 12,491 3,706 16,953 693 1,993 1,379 37,215 Onshore for third parties - - - 227 - - 227 Offshore - 934 - - - 1,277 2,211 Hydro 9,082 - 179 - 8,680 - 17,941 Mini-hydro 618 - - - - - 618 Solar - - 273 731 - 9 1,013 Others - - 75 - - - 75
Total 22,190 4,640 17,480 1,651 10,674 2,665 59,300
(1) Iberdrola Energía Internacional, formerly Rest of the World Data as of December 2019 44 RENEWABLES: SPAIN
Top 1 renewable player with 16,526 MW
Onshore Wind Hydro
Year of Installation MW * Region Total MW Pumping hydro MW
1998 21 Mediterranean Basin 2,360 1,317 1999 36 Duero Basin 3,530 1,126 2000 323 Sil Basin 1,582 348 2001 308 Tajo Basin 2,243 217 2002 471 2003 552 Total 9,715 3,008 2004 1,019 2005 424 2006 296 Mini-hydro 2007 683 Total MW * 2008 289 2009 553 Mini-hydro 306 2010 269 2011 130 2012 332 * 2 MW consolidated through equity method 2018 18 2019 281 Solar PV Total 6,005 Project Region MW * 244 MW consolidated through equity method Nu ez de Balboa Badajoz 500
Data as of December 2019 45 RENEWABLES: IBERIA
Projects under construction
Project Type Region MW Year of installation
Pradillo Onshore Andalucía 23 2020 Puylobo Onshore Aragon 49 2020 Panondres Onshore Asturias 21 2020 Capiechamartín Onshore Asturias 34 2020 Cordel Vidural Onshore Asturias 37 2020 Verdigueiro Onshore Asturias 37 2020 Fuenteblanca Onshore Castilla Le n 10 2020 Encinillas Onshore Castilla Le n 23 2020 Cavar Onshore Navarra 111 2020 Martín de la Jara Onshore Andalucía 36 2021 Herrera II Onshore Castilla Le n 63 2021 Andévalo Solar PV Andalucía 50 2020 FV Teruel Solar PV Arag n 50 2020 Complejo Campo Ara uelo Solar PV Extremadura 140 2020/2021 Olmedilla Solar PV Castilla La mancha 50 2021 Barcience Solar PV Castilla La mancha 50 2021 Romeral Solar PV Castilla La mancha 50 2021 Puertollano Solar PV Castilla La mancha 100 2021 Arenales Solar PV Extremadura 150 2021 Ceclavín (Oriol) Solar PV Extremadura 328 2021 Francisco Pizarro Solar PV Extremadura 590 2021 Pe arrubia Solar PV Murcia 50 2021 Támega Hydro Portugal 1,158 2021-2023
Total 3,208
46 RENEWABLES: SPAIN
Renewables, cogeneration and waste: Law 24/2013, Royal Decree 413/2014 and Royal Decree Law 17/2019
• Allowed rate of return (before taxes) of 7.398% until 2031 for facilities in operation before RDL 9/2013. For facilities in operation after RDL 9/2013, allowed rate of return of 7.09% until 2025 following CNMC published WACC methodology For those facilities in operation before RDL 9/2013 with any pending arbitration or judicial proceeding related to the modification of the Remuneration Regime after RD 661/2007, early termination of arbitration or judicial procedure or the waiver of the perception of compensation is a mandatory requirement prior to obtain the 7.398% allowed rate of return until 2031. (Royal Decree Law 17/2019) • Remuneration based on revenues from market participation, with a specific additional remuneration articulated in two terms: - RI: A term per unit of installed capacity (€/MW) that covers the investment costs of a standard installation that cannot be recovered by the sale of energy. Allowing the installation to achieve a reasonable return defined by the Government. - RO: A term for operation (€/MWh) that covers the difference between operating costs and the revenues from the market participation of such standard installation. The installation of renewable energies, cogeneration or waste will not receive such remuneration for operation as long as its income from the sale of electricity in the system is higher than its operating costs. • Parameter modification: - Every 6 years all the parameters could be changed (including reasonable return) for the remaining useful life, except for the useful life and standard value of the initial investment of an installation; - Order TED/171/2020 establishes the remuneration parameters to estimate the regulated remuneration of renewables and cogeneration for the 2020-2025 regulatory period. The main changes are: • It has recognized a higher cost of CO2, a higher fuel price (which improves the RO of these plants by 14 €/MWh) and the remuneration for the cost of the System Operator (0.14 €/MWh) - Every 3 years, and for the rest of the regulatory period, the estimation of revenues from the market will be reviewed, valuing the energy sold at market price based on market price evolution and the forecast for operating hours - At least annually, the values of remuneration for operation will be updated for those technologies whose operating costs depend essentially on the price of fuel.
47 RENEWABLES: SPAIN
Renewables, cogeneration and waste: Royal Decree-Law 9/2013
Return along asset life
Complementary incentives Earned revenues (RI €/MW + RO €/MWh) Incentive (€/MW)
Allowed rate of return: Useful 7.398% / 7.09% before /after life RDL 9/2013 Wholesale revenues According to estimated Competitive process market price for new assets July 2013 Standard Capex Defined on RD 413/2014 and Law 24/2013 Ministerial Order IET/1045/2014
48 RENEWABLES: SPAIN
Flagship projects: Francisco Pizarro solar PV plant
Largest PV plan in Europe
Extremadura, Spain
COD 2021
Capacity 590 MWdc / 430 MWac
Information of interest:
Technology: mono & polycrystalline modules Tracker: tracker STI-250 Panels: 1.5 M modules Extension: 1.115 hectares Annual output: 1.094 GWh
Location map – PV Francisco Pizarro
49 RENEWABLES: IBERIA
Flagship projects: Alto Tâmega giga battery
Largest hydroelectric project in the history of Portugal
. The project will give Iberdrola a 15% market share in Portugal . Construction of 3 reservoirs: Gouvâes (880 MW), Daiv es (118 MW) and Alto Tâmega (160 MW).
Location: North Portugal Installed capacity: 1.158 MW Storage capacity: 20 GWh Investment: EUR 1.500 M
Pennstock CH Gouvâes, ALTO TÁMEGA / Portugal
50 RENEWABLES: UK
Top 1 renewable player
Facilities (1/3)
Year of Onshore (I) Region MW Support Regime Installation
Carland Cross Rep England 20 1992 1.0 ROC/MWh Coldham England 16 2005 1.0 ROC/MWh Lynemouth England 26 2011 1.0 ROC/MWh Coal Clough Repowering England 16 2014 0.9 ROC/MWh Corkey Northern Ireland 5 1994 1.0 ROC/MWh Rigged Hill Northern Ireland 5 1994 1.0 ROC/MWh Elliots Hill Northern Ireland 5 1995 1.0 ROC/MWh Callagheen Northern Ireland 17 2006 1.0 ROC/MWh Wolf Bog Northern Ireland 10 2007 1.0 ROC/MWh Barnesmore Rep. of Ireland 15 1997 PPA (Expired) Hagshaw Hill Scotland 16 1995 1.0 ROC/MWh Dun Law Scotland 17 2000 1.0 ROC/MWh Hare Hill Scotland 13 2000 1.0 ROC/MWh Beinn an Tuirc Scotland 30 2002 1.0 ROC/MWh Cruach Mhor Scotland 30 2004 1.0 ROC/MWh Black Law I Scotland 97 2005 1.0 ROC/MWh Beinn Tharsuinn Scotland 30 2006 1.0 ROC/MWh Black Law II Scotland 28 2006 1.0 ROC/MWh Wether Hill Scotland 18 2007 1.0 ROC/MWh
Data as of December 2019 51 RENEWABLES: UK
Facilities (2/3)
Year of Onshore (II) Region MW Support Regime Installation
Greenknowes Scotland 27 2008 1.0 ROC/MWh Hagshaw Hill Extension Scotland 26 2008 1.0 ROC/MWh Whitelee Scotland 322 2008 1.0 ROC/MWh Clachan Flats Scotland 15 2009 1.0 ROC/MWh Dun Law Extension Scotland 30 2009 1.0 ROC/MWh Arecleoch Scotland 120 2011 1.0 ROC/MWh Mark Hill Scotland 56 2011 1.0 ROC/MWh Whitelee Extension Scotland 217 2011 1.0 ROC/MWh Beinn an Tuirc Ext Scotland 44 2012 1.0 ROC/MWh Middleton Scotland 12 2012 1.0 ROC/MWh Harestanes Scotland 136 2013 1.0 ROC/MWh Black Law Ext (Phase 1) Scotland 45 2016 0.9 ROC/MWh Black Law Ext (Phase 2) Scotland 18 2016 0.9 ROC/MWh Dersalloch Scotland 69 2016 0.9 ROC/MWh Ewe Hill Scotland 14 2016 0.9 ROC/MWh Ewe Hill Phase 2 Scotland 37 2017 0.9 ROC/MWh Glen App Scotland 22 2017 0.9 ROC/MWh Hare Hill Extension Scotland 30 2017 0.9 ROC/MWh Kilgallioch Scotland 239 2017 0.9 ROC/MWh P&L Wales 15 1992 1.0 ROC/MWh
Total 1,906 Note: 15 MW consolidated through equity method
Data as of December 2019 52 RENEWABLES: UK
Facilities (3/3)
Offshore MW Year of Installation Support Regime Support level/MWh
West of Duddon Sands 194(1) 2014 ROC 2.0 ROC East Anglia I 420(2) 2019 CfD 119.89 £/MWh (real 2012+CPI)/15 yrs
Total 614
(1) 50% of total 389 MW. Full consolidation 194 MW. (2) MW installed as of December 2019, corresponding to a project under construction with COD in 2020 (714 MW in total, full consolidation). Minority stake (40%) sold to Green Investment Group (GIG, Macquarie Group) in August 2019
Data as of December 2019 53 RENEWABLES: UK
Projects under construction
Project Type Region MW Year of Installation
East Anglia I Offshore Crown Estate 714 2020 Beinn an Tuirc 3 Onshore Scotland 50 2020 Halsary Onshore Scotland 30 2020 Cornwall LEM Batteries England 1 2020 Whitelee Batteries Scotland 50 2020 Barnesmore Batteries Ireland 3 2020 Gormans Batteries Ireland 50 2021
Total 898
54 RENEWABLES: UK REGULATORY ENVIRONMENT
Renewables Obligation Contracts for Difference
Form of Control Form of Control • Previous remuneration system for incentivising the growth of renewable • The current mechanism for incentivising low carbon generation in GB. energy across the UK. • 15 year contracts allocated via competitive auctions. • Demand-led scheme. • Long-term contract to stabilise revenues at a pre-agreed level (the Strike • Renewable Obligation Certificates (ROCs*) issued to eligible / accredited Price) for the duration of the contract linked to CPI***. stations. • Budget of £557 million allocated for future CfD auctions. • RO closed to all new onshore generating capacity on 31 March 2016. • All accredited stations continue to enjoy the benefit for the term of the ROC Remuneration – ROCs issued for 20 years. • Generator receives wholesale market plus the difference between the contract Strike Price (set at CfD auction) and the market reference price (a Remuneration measure of the average GB electricity market price) based on metered • Generators receive wholesale market plus ROC based on metered output. output. • ROC level of support (banding) set by technology type and commissioning • Generator pays back if the market reference price is higher than the strike date: price. o Onshore wind 0.9 - 1 ROCs / MWh • AR3 (2019 auction) strike prices of between £39.65 – £41.61 MWh (in o Offshore wind 1.8 - 2 ROCs / MWh 2012 prices) equivalent to a delta of £44.95 – £47.18 /MWh if indexed to 2019 prices. • The value of a ROC is based on buyout + recycle price. Buyout price is indexed annually to RPI** and is set at £50.05 for 2020/21. The recycle price is variable and is dependent on the level of ROC qualifying Timing generation compared to demand from electricity suppliers. The recycle • CfD auctions held in 2014, 2017 and 2019. price has yet to be announced for 2019/2020 or 2020/21 (the price in • Next auction (AR4) due to take place in 2021 and will be open to both 2018/19 was £7.82). The recycle price can never be negative. established technologies (onshore wind and solar) and less-established technologies (offshore wind). • Auctions expected to be held every 2 years thereafter. Timing • Closed to onshore wind on 31 March 2016 (subject to 12 month grace Offshore Transmission Regime period). • Generators build the transmission assets and then transfer them to • Closed to all other technologies on 31 March 2017. transmission operator at construction completion. • Licences to operate new offshore transmission assets are allocated via competitive tender process.
* ROCs are electronic certificates issued to accredited renewable generating stations into the ROC Register for. Operators can trade ROCs with other parties. ROCs are used by suppliers to demonstrate they have met their obligation to source an increasing proportion of the electricity they supply from renewable sources. Normally, a renewable generator will transfer the related ROCs through Ofgem's electronic registry when it sells power to an electricity supplier. ** Retail Price Index measures the change in the cost of a representative sample of retail goods and services, including the cost of housing. The measure has now generally superseded by CPI. *** Consumer Price Index is the official measure of inflation of consumer prices of the United Kingdom , based on 700 different goods and services excluding the cost of housing. 55 RENEWABLES: USA
3rd Largest Wind Operator with ~7.3 GW Wind & Solar in Operation & ~700 MW in Construction with COD by Late ’20(1)
Wind AVANGRID Solar Thermal
Under Construction
(1) Includes joint ventures. Under construction is net of 158 MW Otter Creek, 155 MW Tatanka Ridge, 306 MW La Joya (I & II), and 81 MW Roaring Brook. Data as of December 2019 56 RENEWABLES: USA
2019 – Renewables Capacity Growth Montague, Coyote Ridge, 2017 – El Cabo, Tule I, Karankawa, Deerfield, Twin Buttes Patriot 9.000 II (534 MW) + Gala (753 MW) Solar (70 MW) 2018 – Wy ’East 8.000 Solar (13 MW) 2013-2016 Selective Growth – Baffin Wind and Amazon Wind 7.000 Farm East (410 MW)
6.000 2009-2012 ITC(1) Cash Grant Projects (~3,416 5.000 MW)
4.000
3.000
2.000 1999-2003 Total 1.000 26 MW
0
(1) 2009-2012 Projects funded with Section 1603 ITC cash grants (Renewables received ~$2B in cash for ~$6B investment; no PTCs).
Notes: Avangrid Renewables also owns 536 MW Cogeneration (2001), 100 MW Peaking (2009). Solar capacity is being reported in MWdc. 57 RENEWABLES: USA
Portfolio characteristics
Total Installed capacity of 7.4 GW in 21 states & 7 electric power markets; 7.3 GW of wind and 130 MW solar PV(1) generation
69% of installed capacity under long-term contract
9.5 years average remaining PPA life
Target 75%-85% capacity under contract
Weighted Average PPA price realized to date = $51/MWh
Escalators on ~43% of PPAs
Industry-leading energy management capabilities
24/7 operations, maintenance, dispatch, & load balancing for 65(2) operating wind & solar assets
(1) Solar capacity is now being reported in MWdc; FY '19 106 MWac. (2) Includes joint venture assets
Note: Includes ~78 MW of onshore wind that is installed but not yet operational; Owned & JV onshore wind in operation is ~7,181 MW.
Data as of December 2019 58 RENEWABLES: USA
Portfolio characteristics
Contracted & Merchant Installed Capacity Distributed Across Regions
• Price exposure managed with PPAs, fixed price power & gas hedges • Target overall 75% PPA or Power Hedge
Notes: Includes share of joint venture assets. Includes ~78 MW of onshore wind that is installed but not yet operational; Owned & JV onshore wind in operation is ~7,181 MW
Data as of December 2019 59 RENEWABLES: USA
Wind facilities (1/3)
Year of NERC Contracted/ Location Wind Project Turbines MW PTC/ ITC Tax Equity installation Region Merchant
Arizona Dry Lake I 30 (Suzlon S88, 2.1 MW) 63 2009 WECC Contracted ITC Cash Grant Arizona Dry Lake II(1) 31 (Suzlon, 2.1 MW) 33 2010 WECC Contracted ITC Cash Grant California Dillon 45 (Mitsubishi, 1 MW) 45 2008 WECC Contracted PTC Expired California Manzana 126 (GE, 1.5 MW) 189 2011 WECC Contracted ITC Cash Grant California Mountain View III 34 (Vestas V47, 0.66 MW) 22 2003 WECC Merchant PTC Expired California Phoenix Wind Power 3 (NMicon-Vestas,0.66MW) 2 1999 WECC Merchant PTC Expired California Shiloh 100 (GE, 1.5 MW) 150 2006 WECC Contracted PTC Expired Tax Equity California Tule 57 (GE, 2.3MW) 131 2017 WECC Contracted PTC Colorado Colorado Green 108 (GE, 1.5 MW) 162 2003 WECC Contracted PTC Expired Colorado Twin Buttes 50 (GE, 1.5 MW) 75 2007 WECC Contracted PTC Expired Colorado Twin Buttes II 30 (Gamesa, 2.1MW); 6 (Gamesa, 2.0MW) 75 2017 WECC Contracted PTC Illinois Providence Heights 36 (Gamesa G87, 2.0MW) 72 2008 MRO Merchant PTC Expired Illinois Otter Creek(2) 38 V136 3.8 & 4 Safe H V126 3.45 78 2020 MRO Contracted PTC Streator Cayuga Illinois 150 (Gamesa, 2.0MW) 300 2010 MRO Merchant ITC Cash Grant Ridge South Iowa Barton 80 (Gamesa, 2.0 MW) 160 2009 MRO Contracted ITC Cash Grant Iowa Flying Cloud 29 (GE, 1.5 MW) 44 2004 MRO Contracted PTC Expired Iowa New Harvest 50 (Gamesa G87, 2.0MW) 100 2012 MRO Contracted ITC Cash Grant Iowa Top of Iowa II 40 (Gamesa G87, 2.0MW) 80 2008 MRO Contracted PTC Expired Iowa Winnebago I 10 (Gamesa G83, 2.0MW) 20 2008 MRO Contracted PTC Expired Kansas Elk River 100 (GE, 1.5 MW) 150 2005 MRO Contracted PTC Expired Tax Equity Mass. Hoosac 19 (GE, 1.5 MW) 29 2012 MRO Contracted ITC Cash Grant
(1) Jointly owned; capacity amounts represent only Renewables’ share of the facility. (2) Total MW installed as of December 2019, corresponding to a plant under construction with COD in 2020
Data as of December 2019 60 RENEWABLES: USA
Wind facilities (2/3) Year of NERC Contracted/ Location Wind Project Turbines MW PTC/ ITC Tax Equity installation Region Merchant
Minnesota Elm Creek 66 (GE, 1.5 MW) 99 2008 MRO Contracted PTC Expired Minnesota MinnDakota MN 64 (GE, 1.5 MW) 96 2008 MRO Contracted PTC Expired Minnesota Trimont 67 (GE, 1.5 MW) 101 2005 MRO Contracted PTC Expired Tax Equity Minnesota Elm Creek II 62 (Mitsubishi, 2.4) 149 2010 MRO Contracted ITC Cash Grant Minnesota Moraine I 34 (GE, 1.5 MW) 51 2003 MRO Merchant PTC Expired Minnesota Moraine II 33 (GE, 1.5 MW) 50 2009 MRO Contracted ITC Cash Grant Missouri Farmers City 73 (Gamesa G87, 2.0 MW) 146 2009 MRO Merchant ITC Cash Grant New Hampshire Groton 24 (Gamesa G87, 2.0MW) 48 2012 NPCC Contracted ITC Cash Grant New Hampshire Lempster 12 (Gamesa, 2.0 MW) 24 2008 NPCC Contracted PTC Expired New Mexico El Cabo 149 (Gamesa, 2.0 MW) 298 2017 CAISO Contracted PTC Tax Equity New York Hardscrabble 37 (Gamesa G90, 2MW) 74 2011 NPCC Merchant ITC Cash Grant New York Maple Ridge I(2) 70 (Vestas V82, 1.65 MW) 116 2006 NPCC Merchant PTC Expired Tax Equity New York Maple Ridge II(2) 27 (Vestas V82, 1.65 MW) 45 2006 NPCC Merchant PTC Expired Amazon Wind Farm North Carolina 104 (Gamesa, 2.0 MW) 208 2016 SERC Contracted PTC U.S. East Partially North Dakota Rugby 71 (Suzlon S88, 2.1 MW) 149 2009 MRO ITC Cash Grant Contracted Partially Ohio Blue Creek 152 (Gamesa G90 – 2.0 MW) 304 2012 RFC ITC Cash Grant Contracted Oregon Hay Canyon 48 (Suzlon S88, 2.1 MW) 101 2009 WECC Contracted ITC Cash Grant Oregon Klondike I 16 (GE, 1.5 S – 1.5 MW) 24 2001 WECC Contracted PTC Expired Oregon Klondike II 50 (GE, 1.5 S – 1.5 MW) 75 2005 WECC Contracted PTC Expired 44 (Siemens, 2.3 MW);80 (GE, 1.5 SLE, Partially Oregon Klondike III 224 2007 WECC PTC Expired 1.5 MW); 1 (Mitsubishi, 2.4 MW) Contracted Oregon Klondike IIIa 51 (GE, 1.5 MW) 77 2008 WECC Contracted PTC Expired Partially Oregon Leaning Juniper II 74 (GE, 1.5 MW);42 (Suzlon, 2.1 MW) 199 2011 WECC ITC Cash Grant Contracted Oregon Montague 51 (Vestas V136 3.6); 5 (Vestas V126 3.45) 201 2019 WECC Contracted PTC Oregon Pebble Springs 47 (Suzlon S88/2100, 2.1 MW) 99 2009 WECC Contracted ITC Cash Grant Oregon Star Point 47 (Suzlon, 2.1 MW) 99 2010 WECC Contracted ITC Cash Grant
Data as of December 2019 61 RENEWABLES: USA
Wind facilities (3/3)
Year of NERC Contracted/ Tax Location Wind Project Turbines MW PTC/ ITC installation Region Merchant Equity
Pennsylvania Casselman 23 (GE, 1.5 MW) 35 2008 RFC Merchant PTC Expired Pennsylvania Locust Ridge I 13 (Gamesa G87, 2.0) 26 2006 RFC Contracted PTC Expired Pennsylvania Locust Ridge II 50 (Gamesa G83, 2.0 MW) 100 2009 RFC Partially Contracted ITC Cash Grant Pennsylvania South Chestnut 22 (Gamesa, 2.0 MW) 44 2012 RFC Contracted ITC Cash Grant South Dakota Buffalo Ridge I 24 (Suzlon, 2.1 MW) 50 2009 MRO Contracted PTC Expired South Dakota Buffalo Ridge II 105 (Gamesa G87, 2.0 MW) 210 2010 MRO Contracted ITC Cash Grant South Dakota MinnDakota SD 36 (GE 1.5) 54 2008 MRO Contracted PTC Expired 35 (GE, 2.52 MW); 4 Safe H (GE116 South Dakota Coyote Ridge(2) 19 2020 MRO Contracted PTC 2.3 MW) Texas Baffin 101 (Gamesa G97, 2.0 MW) 202 2015 TRE Merchant PTC Texas Barton Chapel 60 (Gamesa, 2.0 MW) 120 2009 TRE Merchant ITC Cash Grant 22 (GE116 2.3 MW); 93 (GE127 2.52 Texas Karankawa 307 2020 TRE Contracted PTC MW); 9 (GE116 2.5 MW) Texas Pe ascal I 84 (Mitsubishi, 2.4 MW) 202 2009 TRE Partially Contracted ITC Cash Grant Texas Pe ascal II 83 (Mitsubishi, 2.4 MW) 199 2010 TRE Partially Contracted ITC Cash Grant 58 (Vestas V136 3.6 MW); 5 (Vestas Tax Texas Patriot 226 2019 TRE Merchant PTC V126 3.45 MW) Equity 8 (Gamesa G97, 2.0 MW); 7 (Gamesa Vermont Deerfield 30 2017 NEISO Contracted PTC G87, 2.0 MW) Washington Big Horn I 133 (GE, 1.5 MW) 200 2006 WECC Contracted PTC Expired Washington Big Horn II 25 (Gamesa, 2.0 MW) 50 2010 WECC Contracted ITC Cash Grant Washington Juniper Canyon 63 (Mitsubishi, 2.4 MW) 151 2011 WECC Partially Contracted ITC Cash Grant
Total 7,259
Note: 213 MW consolidated through equity method
Data as of December 2019 62 RENEWABLES: USA
Solar & Thermal facilities
Year of Contracted/ Location Project Type MW NERC Region PTC/ ITC installation Merchant
Pinal County, Arizona Copper Crossing Solar Ranch(1) Solar 12 2011 WECC Contracted ITC Cash Grant Alamosa County, Colorado San Luis Valley Solar Ranch(2) Solar 35 2012 WECC Contracted ITC Cash Grant Prineville, Oregon Gala Solar Solar 70 2017 WECC Contracted ITC Cash Grant Sherman County, Oregon Wy’East Solar Solar 13 2018 WECC Contracted ITC Cash Grant Klamath Falls, Oregon Klamath Cogeneration Thermal 536 2001 WECC Partially contracted n/a Klamath Falls, Oregon Klamath Peakers Thermal 100 2009 WECC Partially contracted n/a
Total 766
Note: 12 MW consolidated through equity method (1) Jointly owned; capacity amounts represent only Renewables’ share of the facility (2) Operated pursuant to a sale-and-leaseback agreement
Data as of December 2019 63 RENEWABLES: USA
Projects under construction
Project Type State MW Year of Installation Income Regime
Otter Creek Onshore Illinois 158 2020 PPA La Joya Onshore New Mexico 306 2020 PPA Tatanka Onshore South Dakota 155 2020 PPA Roaring Brook Onshore New York 80 2020 PPA Bakeoven Solar Solar PV Oregon 80 2021 PPA Montague Solar Solar PV Oregon 211 2021 PPA Lundhill Solar PV Washington 194 2021 PPA Mohawk Solar PV New York 125 2021 PPA Vineyard Wind(1) Offshore Massachusetts 800 No earlier than 2023 MA Clean Energy RFP
Total 2,108
(1) 50/50 partnership with Copenhagen Infrastructure Partners (CIP)
64 RENEWABLES: USA
Renewables P&L Components
+ Wind & Solar (~90% of Renewable Gross Margin in 2018 [excl. MtM]) Installed Capacity (MW) * Capacity Factor * Sale Price Assumptions(1):
• Installed Capacity: . Increases by 2.1 GW, including 400 MW for Vineyard Wind; Plus 325 MW repowering • Average Net Capacity Factor: . Onshore ~33% (incl. New Build ~40%), reflecting revised ‘normal’ wind forecast to ‘life of asset’, combined with effects of “boost” software installs and repowering activities Gross . Solar ~28% Margin . Offshore ~46% • Average Sale Price: . Merchant plus RECs $32/MWh; Existing PPA $53/MWh . New PPA incl. Vineyard Wind $32/MWh . New PPA excl. Vineyard Wind $27/MWh • Assumes tax equity financing on El Cabo wind in ’18 & projects through ’20
+ Thermal & other (~10% of Renewable Gross Margin in 2018) Include Klamath (used to firm and balance loads for certain PPA contracts in the Northwest), biomass (contractual purchase of energy and resale from biomass facility owned by third party), transmission sales and limited proprietary power trading
(1) Assumptions in Avangrid Long Term Outlook 2018-2022. Source: http://www.avangrid.com/wps/portal/avangrid/Investors/investors/financialoperationalreports 65 RENEWABLES: USA
Renewables P&L Components
O&M • 1/3 related to non-wind operational aspects (growth, thermal, corporate costs …) Expenses
Depreciation • ~37 years average for windfarms on a straight line basis, net if ITC amortization
Other Taxes • Property, Franchise, and Payroll Taxes Expense
Other Income • Consists of: Finance income (primarily capitalized interest) combined with gains on non-current assets, & Deduction offset by other deductions (non-service pension costs & charitable giving)
Interest • Financial Expenses: consisting of intercompany debt and any other borrowings. Excludes TEI financing Expense costs, included within Minority interest under HLBV accounting.
• MACRs tax treatment allows wind & solar assets to be depreciated over 5 years Recorded in the tax line and captured through deferred tax assets Income Tax • ITC & PTC can only be utilized at consolidated level and after NOLs are monetized Line PTCs generated over 10 years and can be used over 20 years AGR is considered one taxpayer. After the NOLs are monetized, annual PTC utilization is limited to 75% of the consolidated tax liability
Minority • Minority Interest driven by HLBV accounting for tax equity structures. The HLBV method allocates earnings to the noncontrolling interest, which considers the cash and tax benefits provided to the tax Interest equity investors
66 RENEWABLES: USA
Accounting criteria
• P&L GAAP (10Q,10K): For periods after 1/1/2018, PTCs with Tax Equity are indirectly included in Net income/(loss) attributable to non-controlling interests and retained PTCs are booked in the income tax line. Prior to that, PTCs with Tax Equity were booked in revenues and retained PTCs in the income tax line. IFRS (projections): All PTCs are booked in revenues. • Balance Sheet For periods after 1/1/2018, PTCs with Tax Equity reduce ‘Non-controlling interests’ in the Equity section. In prior periods, PTC PTCs with Tax Equity reduced ‘Tax equity financing arrangements - VIEs’ in the Non-current Liabilities section. Retained PTCs reduce deferred income taxes. • Cash Flow Retained PTCs hit the ‘Deferred taxes’ line in Cash Flow from Operating Activities. For periods after 1/1/2018, PTCs with TEI impact the ‘Distributions to noncontrolling interests’ line under Cash Flow from Financing Activities. For prior periods, PTCs with TEI impacted ‘Payments on tax equity financing arrangements’. These lines include payments of PTCs and remaining debt/equity.
• P&L GAAP (10Q,10K): Booked on D&A (they lower D&A), below EBITDA ITC IFRS (projections): Booked as Other Operating Income, above EBITDA • Cash Flow ITCs provide an initial deferred tax benefit equal to 50% of the total ITC, recognized in year one.
• Wind farms under tax equity structures are fully consolidated in the consolidated balance sheet and the results of their operations (including depreciation) are reported in the consolidated statement of operations. Investors share is reported as Minority Interest.
Tax Equity • Recorded as a financing obligation and amortized with the allocation to the tax equity investor of its share of cash distributions, MACRS, PTCs, and the tax impact of taxable income. 67 RENEWABLES: MEXICO
Facilities
Onshore(1) State MW Year of Installation Income Regime
La Ventosa Oaxaca 80 2008 Commercial PPA (Self-supply) Bee Ni Stipa Oaxaca 26 2010 Commercial PPA (Self-supply) La Venta III Oaxaca 103 2011 PPA(Independent Power Producer) La Ventosa (ampliaci n) Oaxaca 22 2013 Commercial PPA (Self-supply) Dos Arbolitos Oaxaca 70 2015 Commercial PPA (Self-supply) Pier II Puebla 66 2015 Commercial PPA (Self-supply) Pier(2) Puebla 139 2019 Commercial PPA (Self-supply) Santiago E lico(2) Guanajuato 88 2019 Commercial PPA (Self-supply)
Total 594
(1) Including capacity for third parties of 103 MW (2) MW installed as of December 2019, corresponding to plants under construction with COD in 2020 (220 MW and 105 MW respectively)
Solar PV State MW Year of Installation Income Regime
Santiago San Luis de Potosí 232 2018 Commercial PPA Hermosillo Sonora 137 2018 Commercial PPA
Total 368
Data as of December 2019 68 RENEWABLES: MEXICO
Projects under construction
Year of Project Type State MW Income Regime Installation
Santiago E lico Onshore Guanajuato 105 2020 Commercial PPA (Self-supply) Pier Onshore Puebla 220 2020 Commercial PPA (Self-supply) Cerro Iguana Onshore Oaxaca 202 2021 Commercial PPA (Self-supply) Cuyoaco Solar PV Puebla 274 2020 Commercial PPA
Total 801
69 RENEWABLES: MEXICO
Regulatory framework: before the Energy Reform (1/3)
Generation Transmission Distribution Supply Users CFE Dispatch
Private Generators
Independent Energy Producer Vertically integrated entity Self Supply with public service monopoly Cogeneration + Private generation for self supply Exports or supply to CFE Imports Applicable laws According to this law, reformed in 1992, private companies were allowed to participate in the Ley de Servicio P blico de following ways: Energía Eléctrica (LSPEE) • Independent Power Production (sale to CFE through PPAs) • Little production, self-supply (autoabasto) and cogeneration (sale to private customers)
Sustainability and The Law for the Use of Renewable Energies and the Financing of Energy Transition, which allows renewable generation the participation of renewables and efficient cogeneration through the mechanism of self-supply.
The Energy Regulatory Commission (CRE) is the authority that grants permits for electricity Regulatory bodies generation. 70 RENEWABLES: MEXICO
Regulatory framework: after the Energy Reform (2/3)
Applicable laws Wholesale Electricity Market Structure
Constitutional Reform: Allows private participation in Generation Supply Dispatch of the Qualified Users generation and supply activities. Transmission and distribution Electricity continue to be a public service provided by CFE. Market
Qualified Service Ley Industria Eléctrica (LIE): Establishes a new model for the Supplier electricity sector based on free competition in generation services and supply to qualified users (industrials). CFE
Reform Reform Basic Supply Users exclusively provides transmission and distribution services and Private Generator Spot Energy s generation and supply to retail users (domestic). It defines the Market Basic Service structure of the new Wholesale Electricity Market (MEM - Supplier Mercado Eléctrico Mayorista). Transmission Distribution Energy Ley de Transici n Energética: Defines the legal basis to promote a transformation towards a sustainable energy and economic model in the long term.
Basics of the LIE
Respect the rights of Legacy Permits granted under the LSPEE will be respected in all its terms and conditions. Permits (LSPEE) In any case, these permits may voluntarily migrate to the Wholesale Electricity Market (MEM).
Liberalisation of the electricity supply Private companies are allowed to provide supply services to qualified users (industrials).
Green Energy Certificates Main instrument together with auctions to promote investments in clean energy. (CEL) Allows the system to reach the target of having 35% of clean energy generation by 2024.
Wholesale Electricity Market (MEM) Market that operates through Market Bases. 71 RENEWABLES: MEXICO
Regulatory framework (3/3)
• 20 year PPA with CFE through auctions. Predictable revenues, fixed for each MWh produced.
IPP • Asset owned by Iberdrola when PPA expires.
LSPEE • Supply of energy and capacity to self-supply partner (industrial clients) under different criteria, depending on each client: o Discount over regulated tariff (Suministro Básico) o PPA - Fixed price for contracted capacity, etc. Self-supply
• Generation to satisfy the needs of Iberdrola Clientes (qualified supplier) with hedging energy contract of the wholesale market products (Mercado Eléctrico Mayorista - MEM):
Energy Ancillary services Green certificates (CELs) Capacity
• These products can be sold through bilateral contracts or in the market
Clean Energy CEL requirement Targets • In 2019, the rules were modified so that Legacy Power Plants of CFE can receive CEL 2018: 5% 2018: 25% • Suppliers, Qualified Suppliers participating in the 2019: 5.8% 2021: 30% Centros (CEL) (CEL) MEM, who are isolated self-supplied and 2020: 7.4% 2024: 35% de Carga are obliged to acquire them to comply
Ley(LIE) Industria Eléctrica with a percentage of clean energy supplied 2021: 10.9% 2033: 39.9% 1 MWh = 1 CEL 2022: 13.9% 2050: 50% Clean Energy certificates Energy Clean
72 RENEWABLES: BRAZIL
Onshore facilities
Onshore State MW IBE Year of Installation Income Regime
Caetité I Bahia 30 2012 Commercial PPA Caetité II Bahia 30 2012 Regulated PPA 2010/A-3 Caetité III Bahia 30 2012 Regulated PPA 2010/A-3 Canoas Paraíba 32 2017 Regulated PPA 2014/A-5 Lagoa 1 Paraíba 32 2017 Regulated PPA 2014/A-5 Lagoa 2 Paraíba 32 2017 Regulated PPA 2014/A-5 Rio do Fogo Rio Grande do Norte 49 2006 Regulated PPA PROINFA Mel II Rio Grande do Norte 20 2012 Regulated PPA 2010/A-3 Arizona I Rio Grande do Norte 28 2013 Regulated PPA 2010/A-3 Calango I Rio Grande do Norte 30 2013 Regulated PPA 2010/A-3 Calango II Rio Grande do Norte 30 2013 Regulated PPA 2010/A-3 Calango III Rio Grande do Norte 30 2013 Regulated PPA 2010/A-3 Calango IV Rio Grande do Norte 30 2013 Regulated PPA 2010/A-3 Calango V Rio Grande do Norte 30 2013 Regulated PPA 2010/A-3 Calango VI Rio Grande do Norte 30 2016 Regulated PPA 2014/A-3 Santana I Rio Grande do Norte 30 2016 Regulated PPA 2014/A-3 Santana II Rio Grande do Norte 24 2016 Regulated PPA 2014/A-3
Total 516
Data as of December 2019 73 RENEWABLES: BRAZIL
Hydro facilities
MW attributable Year of Hydro State Total MW Income Regime to IBE Installation
Itapebi Bahia 462 462 2003 Commercial PPA Corumba III Goias 96 68 2009 Regulated PPA Baguari Minas Gerais 140 71 2009 Regulated PPA Dardanelos Mato Grosso 261 133 2011 Regulated PPA Telespires Pará / Mato Grosso 1,820 928 2016 Regulated & Commercial PPAs Belo Monte Pará 11,233 1,123 2019 Regulated & Commercial PPAs Baixo Iguaz Paraná 350 245 2019 Regulated & Commercial PPAs
Total 14,362 3,031
Note: 2,195 MW consolidated through equity method
Data as of December 2019 74 RENEWABLES: BRAZIL
Projects under construction
Year of Project Type State MW Income Regime Installation
Chafariz onshore wind complex Onshore Paraíba 471 2022 Regulated & Commercial PPAs Oitis onshore wind complex Onshore Piauí 567 2022 Regulated & Commercial PPAs
Total 1,038
75 RENEWABLES: BRAZIL
Regulatory framework
Concession Concession/ Renewal Revenue process authorization term
• 20-year PPAs to Discos • Authorization • 30 - 35 years through competitive auctions request within • No contractual with price yearly adjusted by ANEEL Wind • Expiry date: provision inflation 2031 until • Competitive 2054(1) • Bilateral contracts at free auctions market
• Possible according to • 30-year PPAs to Discos • 35 years certain through competitive auctions contractual with price yearly adjusted by • Competitive Hydro • Expiry date: conditions(2) inflation auctions 2035 until 2049(1) • Indemnification • Bilateral contracts at free after concession market expiry
Information on auction results : http://www.aneel.gov.br/resultados-de-leiloes
(1) Refers to the first and the latest assets to expire, considering operational an pre-operational assets (under construction). (2) Exception to Belo Monte and Teles Pires – no contractual provision 76 RENEWABLES: BRAZIL
Energy Auctions for Regulated Market (ACR)
Large Projects, G and T Neoenergia Strategy
Wind, Solar Do not participate on structuring projects Hydro, gas and others Only bid for generation projects A–7 A–6 A–5 A–4 A–3 A–2 A–1 A without transmission risks Power Plants in Operation Be the controlling shareholder: operate • Previous Environmental License obtained by the Government and consolidate the • Long-Term Contracts with Distributors business • Price set at auction and yearly adjusted by inflation
77 RENEWABLES: IEI – IBERDROLA ENERGÍA INTERNACIONAL(1)
Facilities
Onshore MW Year of Installation Support Regime
Cyprus 20 2011 FiT Greece 259 1998-2011 FiT Hungary 158 2008-2011 FiT Portugal 92 2005-2009 FiT Romania 80 2011 Market + Green Certificate
Total 609
Offshore Country MW Year of Installation Support Regime Support level
190 €/MWh / 8yrs + Wikinger Germany 350 2017 Compressed tariff 150€/MWh / 4 yrs (flat)
Solar MW Year of Installation Support Regime
Greece 6 2006-2012 FiT
(1) Formerly RoW
Data as of December 2019 78 RENEWABLES: IEI - IBERDROLA ENERGÍA INTERNACIONAL(1)
Projects under construction
Year of Project Type Country MW Installation
Pyrgari Onshore Greece 16 2020 Mikronoros Onshore Greece 34 2021 Algarve y Set bal Solar PV Portugal 186 2020/2021 Port Augusta Hybrid Australia 317 2021
Total 553
(1) Formerly RoW 79 RENEWABLES: IEI
Regulatory framework
Romania Greece
Green Certificates Feed-in-Tariff (FiT) • Defined by Law No. 220/2008 with subsequent amendments. • Defined by Law No. 3468/2006 (currently under Law No. 4254/2014). This • Wind farms receive 1 GC per MWh produced during 15 years, with a GC scheme expired on 31 December 2015. floor price of 29.4€ and a cap price of 35€. • The FiT agreement is limited to 20 years and the FiT price depends on project details (technology, size, capex subsidy, installation on mainland or isolated islands, etc.). Due to reduction of FiT, under some conditions, Hungary it may be extended by additional 7 years with a revision on FiT price and a cap of NEHs. Feed-in-Tariff (FiT) Feed-in-Premium (FiP) • Defined by Decree No. 389/2007 with subsequent amendments. • Defined by Law No. 4414/2016. FiP PPAs are two-way CfDs limited to 20 • Electricity sold at fixed tariff during maximum 15 years at fixed price years, awarded through technology specific and neutral competitive updated annually with inflation. tenders.
Portugal Cyprus Feed-in-Tariff(FiT) Feed-in-Tariff (FiT) • Defined by DL 339-C/2001 and DL 35/2013 • Defined under Law No. 112/2013 (later modified by 212/2015 and • FiT under DL 339-C/2001 limited to 15 years. Under Option B of DL 157/2015). The feed-in tariff is limited to 20 years but it may be extended 35/2013, wind farms opt to receive a FiT extension for 7 years with floor for 5+5 years under some conditions. of 74€/MWh and cap of 98€/MWh (June 2020 prices).
80 RENEWABLES: Offshore
Offshore projects and pipeline
Europe U.S.
WoDS North Sea Baltic Eagle 486MW(1) 195MW EA 1 714MW Baltic Sea
Irish Sea Wikinger 350MW St Brieuc 496MW
(2) Projects in Operation: 545 MW Work in progress: 1,604 MW Vineyard Wind (Massachusetts), COD no earlier than 2023 West of Duddons Sands (195 MW) Park City Wind (Massachussets), COD 2025 Wikinger (350 MW) Work in progress: 1,700 MW Pipeline: ~6,700 MW Vineyard Wind (Massachusetts): up to 3 GW(2), East Anglia 1 (714 MW), COD 2020 including Vineyard Wind and Park City wind Saint Brieuc (496 MW), COD 2023 Vineyard Wind 2nd MA Lease: potential capacity up Baltic Eagle (486 MW)(1), COD 2024 to 2 GW(2) Kitty Hawk (North Carolina): up to 2.5 GW, site Pipeline: ~ 3,300 MW assessment plan approved by BOEM
(1) Including 10 MW corresponding to Wikinger Sud (2) 50% corresponding to Avangrid
81 RENEWABLES: Offshore
Flagship projects
East Anglia ONE Baltic Eagle
Number of turbines: 102 Siemens-Gamesa turbines (7 MW) Number of turbines: 50-52 Vestas turbines (9.5 MW) Installed capacity: 714 MW Installed capacity: 476 MW COD: 2020 COD: 2024 Capex: 2.6 Bn GBP including transmission Capex: 1.1 Bn Eur Income: CfD 119.89 £/MWh (real 2012+CPI)/15 yrs Income: Market + variable premium (min. ~65€/MWh) / 20yrs
St Brieuc
Number of turbines: 62 Siemens-Gamesa turbines (8 MW) Installed capacity: 496 MW COD: 2023 Capex: 2.4 Bn Eur Income: 155 €/MWh (real 2012) / 18yrs - indexed
82 RENEWABLES: Offshore
Projects USA
• Vineyard Wind’s(1) 800 MW project selected in • Vineyard Wind’s(1) 804 MW project was selected in MA’s Offshore Wind RFP in May ’18 CT’s Offshore Wind RFP in Dec ’19 • Vineyard Wind’s OCS-A 0501 Lease Area • Vineyard Wind’s OCS-A 0501 Lease Area • Project COD no earlier than 2023 • COD expected by year-end 2025 • 20-year contract • 20-year contract Highlights Highlights
• BOEM’s new schedule for delivering the Final • Reduces regional greenhouse gas emissions, creates Supplemental Environmental Impact Study is jobs, & direct economic benefits of ~$890M, 11/13/20 & Record of Decision by 12/18/20 including energy cost savings to CT ratepayers, & up • Other key permits have been secured to $26.5M in workforce development initiatives • Anticipate qualifying for 18% ITC • Partnership with Marmon Utility, LLC in CT to supply • ~156 MW (summer) / ~278 MW (winter) awarded offshore inter-array cable cores, creating the first capacity in ISO-NE capacity auction in February ’20 U.S. Tier 1 offshore wind supplier (including 54 MW awarded in ’19) • Establishes Bridgeport, CT as an offshore wind hub
(1) AVANGRID’s 50/50 partnership with CIP. 83 RENEWABLES: Offshore
Vineyard Wind
Project economics
Capacity: 800 MW JV Ownership: 50% Avangrid Renewables / 50% Copenhagen Infrastructure Partners Contract Price: Phase 1: $74/MWh Year 1 escalating 2.5% annually through Year 20 Phase 2: $65/MWh Year 1 escalating 2.5% annually through Year 20 Net Capacity Factor: ~46% (P65) Tax Rate: 21% (Federal) / 8% (State-MA) Capital Structure: Equity / Debt / Tax Equity
Useful links:
• VW – www.vineyardwind.com • MA – Long-term contracts with EDCs(1), 18-76 – eeaonline.eea.state.ma.us/DPU/Fileroom/dockets/bynumber • MA – Energy Facilities Siting Board; FSB 17-05/D.P.U. 18-18/18-19 – search.mass.gov/?q=17-05&org=energy-facilities-siting-board and eeaonline.eea.state.ma.us/DPU/Fileroom/dockets/bynumber • MA Clean Energy – www.macleanenergy.com • Liberty Wind – www.libertywind.com/the-project-1 • Park City Wind – http://www.parkcitywind.com
(1) Electric Distribution Companies 84 RENEWABLES: Offshore
Other US Offshore Wind Lease Areas
Vineyard Wind 2nd MA Lease 50/50 Partnership with Renewables & CIP
• Lease area has potential capacity of up to 2 GW • 132,370-acre area; 16.7 nautical miles from Nantucket & 44.5 nautical miles from Block Island • Awarded to Vineyard Wind in December ’18 auction ($135.1M investment)
Kitty Hawk - 100% Ownership by Avangrid Renewables
• Lease area has potential capacity of up to 2.5 GW • 122,405 acres; 24 nautical miles from shore • Grid connection application at Virginia Beach for 3x800 MW submitted to PJM Project has secured a queue position for 2.4 GW in area where high demand is expected • Virginia issued its ’18 Energy Plan, with an objective of deploying 2 GW of Offshore Wind by ’28
• Expected timeframe as early as ’25
Additional information in Avangrid Factbook: http://www.avangrid.com/wps/portal/avangrid/Investors/investors/financialoperationalreports 85 RENEWABLES: Offshore
US Offshore Wind Lease Areas
1 Vineyard Wind, MA 50% (Joint with CIP) Up to 3 GW
Projects: Vineyard Wind, Park City Wind
1
2 2 Vineyard Wind, MA 50% (Joint with CIP) Up to 2 GW
3 Kitty Hawk, NC 100% Avangrid Renewables Up to 2.5 GW
3 Site Assessment Plan approved by BOEM 2/20/2020
86 AGENDA
1. Iberdrola Today (page 5)
2. Networks (page 15)
3. Renewables (page 42)
4. Generation & Retail (page 87)
5. Financing (page 112)
6. ESG (page 124)
87 GENERATION
Capacity (MW) Spain US Mexico Brazil Total
Nuclear 3,177 - - - 3,177 Gas Combined Cycle owned capacity 5,695 204 1,946 533 8,377 Gas Combined Cycle capacity for third parties - - 6,277 - 6,277 Cogeneration 353 636 346 - 1,335 Coal 874 - - - 874
Total 10,098 840 8,569 533 20,040
Production (GWh) Spain US Mexico Brazil Total
Nuclear 23,737 - - - 23,737 Gas Combined Cycle owned production 9,697 3 8,940 3,334 21,974 Gas Combined Cycle production for third parties - - 37,457 - 37,457 Cogeneration 2,586 3,477 2,834 - 8,897 Coal 349 - - - 349
Total 36,369 3,480 49,231 3,334 92,414
Data as of December 2019 88 GENERATION
Average thermal efficiency at generation facilities(1)
Spain USA Brazil Mexico
2019 2018 2019 2018 2019 2018 2019 2018
Combined cycle 52.07 49.67 N/A N/A 55 55 56 55
Conventional thermal 34.34 34.28 N/A N/A N/A N/A N/A N/A
Cogeneration 55.47 63.24 47.23 48.00 N/A N/A 54 57
Report boundary
2019 2018
Combined cycle 55.11 54.22
Conventional thermal 34.34 34.28
Cogeneration 56.24 55.62
(1) Average of efficiencies weighted by the annual production of each thermal power plant
Source: Sustainability report https://www.iberdrola.com/wcorp/gc/prod/en_US/corporativos/docs/IB_Sustainability_Report.pdf
89 GENERATION: SPAIN
Facilities (1/2)
MW Year of Nuclear Region Total MW % IBE attributable to installation IBE
Almaraz I Cáceres 1,049 53% 553 1983 Almaraz II Cáceres 1,044 53% 550 1984 Asc II Tarragona 1,035 15% 155 1984 Cofrentes Valencia 1,102 100% 1,102 1986 Trillo Guadalajara 1,066 48% 512 1988 Vandell s II Tarragona 1,087 28% 304 1988
Total 6,384 3,177
Year of Gas Combined Cycle Region Total MW Installation
Castell n III Castell n 793 2002 Castej n Navarra 386 2003 Tarragona Power Tarragona 424 2004 Aceca III Toledo 392 2005 Arcos I Cádiz 396 2005 Arcos II Cádiz 379 2005 Santurce Vizcaya 403 2005 Arcos III Cádiz 837 2006 Escombreras Murcia 831 2006 Castell n IV Castell n 854 2008
Total 5,695
Data as of December 2019 90 GENERATION: SPAIN
Facilities (2/2)
MW attributable Year of Cogeneration Region Total MW to IBE Installation
Energyworks Villarrobledo Albacete 24 24 1995 Energyworks Carballo La Coru a 13 13 1998 Peninsular Cogeneraci n SA Madrid 39 19 2001 Energyworks Cartagena Murcia 95 95 2002 Investee companies n.a. 69 38 1990-2006 Energyworks Michelin (Vitoria, Valladolid y Aranda) n.a. 126 126 2001-2002 Pig slurry treatment plants (4 plants) n.a. 37 37 2003-2007
Total 403 353
Year of Coal(1) Region MW Installation
Velilla I Palencia 155 1964 Lada IV Asturias 358 1981 Velilla II Palencia 361 1984
Total 874
(1) Coal capacity will be shut down by 2020 Data as of December 2019 91 GENERATION: SPAIN
Basis for remuneration model: Law 54/1997 and Law 24/2013
MARKETS OPERATOR PRODUCTS Before dispatch Bilateral contracts + Forward contracts Forward OTC, OMIP (up to D-1) forward market physical, financial market Daily Day ahead market OMEL Hourly energy market
Technical restrictions and Restrictions market REE Day previous to security of supply dispatch
(D-1) Ancillary services: Secondary reserve: MW Secondary reserve REE Tertiary reserve: MWh Upwards reserve
Short term Intraday markets OMEL Hourly energy markets Dispatch day Deviation and restrictions (D) management in real time Energy injected Restrictions after intraday REE (increase/decrease) markets Tertiary reserve
92 GENERATION: SPAIN
Taxes on generation: Law 15/2012
Tax on electricity Green cent Nuclear tax Hydro canon production(2) • Spent nuclear fuel • 25.5% on total • Fuel consumption in (2,190 €/Kg) power plants • 7% tax on total revenues revenues • Nuclear waste • 2.5% plants up to • 0.65 €/GJ gigajoule 50MW (1) (6,000 €/m3 waste) to coal and gas • 2.5% pumping
IMPACT IMPACT(3) IMPACT IMPACT(3)
Coal: ~6.5 €/MWh ~2-3 €/MWh ~6 €/MWh ~10-12 €/MWh
(1) Abolished green cent to gas and cogeneration consumption from 7 October 2018 (2) Suspended for 6 months from 7 October 2018 (Q4 2018 and Q1 2019) (3) Estimated impact for wholesale prices around 50 €/MWh 93 GENERATION: SPAIN
CNMC Circular 3/2020
• Tolls are only applied to final consumption and to own generation consumption: - It removes the generation toll (currently 0.5 €/MWh), with explicit exemption for energy stored in pumping (currently 0.65 €/MWh) or in batteries.
- It gives a mandate to Red Eléctrica to make a billing proposal in 3 months to regulate the own generation consumption
94 GENERATION: SPAIN
Capacity payments
• Investment incentive : € 10,000/ MW per year during 20 years - For all installations built post 1998 which did not have any subsidized regime. - Received by all CCGTs and some hydro and pumping plants. - Initially it was established as a payment of € 20,000 /MW per year during the first 10 years of the plant life, but it was modified under the Royal Decree-Law 9/2013 that determined the current parameters. Under this new regulation, the remaining number of years entitled to receive this capacity payment were calculated for each installation, doubling the period and reducing the amount to the abovementioned €10,000. For this reason, the end of the incentive depends on the outstanding years in 2013.
• Environmental incentive (desulphurization plants): € 8,750 /MW per year during 10 years - For coal plants that installed desulphurization plants. - This incentive is close to end.
95 GENERATION: SPAIN
Cogeneration: Royal Decree-Law 9/2013 and Royal Decree-Law 17/2019
• Allowed rate of return (before taxes) of 7.398% until 2031 for facilities in operation before RDL 9/2013. For facilities in operation after RDL 9/2013, allowed rate of return of 7.09% until 2025 following CNMC published WACC methodology For those facilities in operation before RDL 9/2013 with any pending arbitration or judicial proceeding related with the modification of the Remuneration Regime after RD 661/2007, early termination of arbitration or judicial procedure or the waiver of the perception of any compensation is a mandatory requirement prior to obtain the 7.398% allowed rate of return until 2031. (Royal Decree Law 17/2019) • Remuneration linked to 10 Year-Treasury Bond at the year “n” plus 300 bp, until 31 December 2019 (7.5%) and reviewed every 6 years (regulatory period) • Remuneration based on revenues from market participation, with a specific additional remuneration articulated in two terms: - RI: A term per unit of installed capacity (€/MW) that covers the investment costs of a standard installation that cannot be recovered by the sale of energy. This return on investment allows the installation to achieve a reasonable return defined by the Government. - RO: A term for operation (€/MWh) that covers the difference between operating costs and the revenues from the market participation of such standard installation. The installation of renewable energies, cogeneration or waste will not receive such remuneration for operation as long as its income from the sale of electricity in the system is higher than its operating costs. • Parameter modification: - Every 6 years all the parameters could be changed (including reasonable return) for the remaining useful life, except for the useful life and standard value of the initial investment of an installation; - Order TED/171/2020 establishes the remuneration parameters for estimating the regulated remuneration of renewables and cogeneration for the 2020-2025 regulatory period. The main changes are: • It has recognized a higher cost of CO2, a higher fuel price (which improves the RO of these plants by 14 €/MWh) and the remuneration for the cost of the System Operator (0.14 €/MWh) - Every 3 years, and for the rest of the regulatory period, the estimation of revenues from the market will be reviewed, valuing the energy sold at market price based on market price evolution and the forecast for operating hours - At least annually, the values of remuneration for operation will be updated for those technologies whose operating costs depend essentially on the fuel price. 96 GENERATION: SPAIN
Cogeneration: basis for remuneration - RD 413/2014
Market price Specific remuneration RI+RO
RI: remuneration to investment (€/MW) RO: remuneration to operation (€/MWh)
Additional to market revenues to obtain For technologies that don´t cover their the reasonable return on investment operating costs with market revenues (7.398%)
RI + RO only if the plant has not reached yet Once reasonable return is reached, the reasonable return only RO will be received
97 GENERATION: SPAIN
Nuclear
• The Draft of the National Energy and Climate Plan (PNIEC) considers that 4,200 MW of nuclear generation will close in the period 2025 – 2030. • The nuclear operators, together with ENRESA, has agreed on an order for closure of nuclear power plants. This closing schedule complies with all security, technical, age, waste and decommission resources criteria.
Closing schedule Almaraz I nov-27 44.2 years Almaraz II oct-28 44.3 years Asc I oct-30 45.8 years Cofrentes nov-30 45.6 years Asc II sep-32 46.4 years Vandell s II feb-35 46.9 years Trillo may-35 46.7 years Average life 45.7 years
• The nuclear plants Almaraz and Vandell s II have already applied the protocol, for the operation license extension, as agreed in the protocol signed with ENRESA.
• Royal Decree 750/2019 has risen the waste fee charged by ENRESA to 7.98 €/MWh as of 1st January 2020 (+ 19% vs. previous rate of € 6.69 / MWh).
Note: The dismantling and management of radioactive waste is an essential public service, whose management is entrusted by law to the State-owned company Enresa (Empresa Nacional de Residuos Radiactivos, S.A.) 98 GENERATION: MEXICO
Facilities
Year of Gas Combined Cycle(1) State MW Income Regime Installation
Dulces Nombres (Monterrey) Nuevo Le n 1,008 2002 PPA (Independent Power Producer) Altamira III & IV Tamaulipas 1,077 2003 PPA (Independent Power Producer) La Laguna II Durango 537 2005 PPA (Independent Power Producer) Altamira V Tamaulipas 1,143 2006 PPA (Independent Power Producer) Tamazunchale San Luis Potosí 1,179 2007 PPA (Independent Power Producer) Dulces Nombres II (Monterrey V) Nuevo Le n 300 2016 Commercial PPA (Self-supply) Baja California III Baja California 324 2017 PPA (Independent Power Producer) / LIE (2) Escobedo Nuevo Le n 878 2018 PPA (Independent Power Producer) El Carmen Nuevo Le n 866 2019 Commercial PPA (LIE)(2) Topolobampo II Sinaloa 911 2019 PPA (Independent Power Producer)
Total 8,223
(1) Including 6,277 MW of installed capacity for third parties (2) LIE – Power Industry Law (2014)
Year of Cogeneration State MW Income Regime Installation
Enertek Tamaulipas 144 1998 Commercial PPA (Self-supply) Monterrey Nuevo Le n 41 2003 Commercial PPA (Self-supply) Ramos Coahuila 52 2016 Commercial PPA (Self-supply) Altamira Tamaulipas 57 2017 Commercial PPA (Self-supply) Bajío Querétaro 52 2018 Commercial PPA (Self-supply)
Total 346
Data as of December 2019 99 GENERATION: MEXICO
Projects under construction
Year of Project Type State MW Income Regime Installation
Topolobampo III CCGT Sinaloa 779 2020 PPA (Independent Power Producer) Tamazunchale II CCGT San Luis Potosí 514 2022 Commercial PPA (Self-supply) Tuxpan I CCGT Veracruz 1,135 2022 Commercial PPA (Self-supply)
Total 2,428
100 GENERATION: MEXICO
Regulatory framework: before the Energy Reform (1/3)
Generation Transmission Distribution Supply Users CFE Dispatch
Private Generators
Independent Energy Producer Vertically integrated entity Self Supply with public service monopoly Cogeneration + Private generation for self supply Exports or supply to CFE Imports Applicable laws According to this law, reformed in 1992, private companies were allowed to participate in the Ley de Servicio P blico de following ways: Energía Eléctrica (LSPEE) • Independent Power Production (sale to CFE through PPAs) • Little production, self-supply (autoabasto) and cogeneration (sale to private customers)
Sustainability and The Law for the Use of Renewable Energies and the Financing of Energy Transition, which allows renewable generation the participation of renewables and efficient cogeneration through the mechanism of self-supply.
The Energy Regulatory Commission (CRE) is the authority that grants permits for electricity Regulatory bodies generation. 101 GENERATION: MEXICO
Regulatory framework: after the Energy Reform (2/3)
Applicable laws Wholesale Electricity Market Structure
Constitutional Reform: Allows private participation in Generation Supply Dispatch of the Qualified Users generation and supply activities. Transmission and distribution Electricity continue to be a public service provided by CFE. Market
Qualified Service Ley Industria Eléctrica (LIE): Establishes a new model for the Supplier electricity sector based on free competition in generation services and supply to qualified users (industrials). CFE
Reform Reform Basic Supply Users exclusively provides transmission and distribution services and Private Generator Spot Energy s generation and supply to retail users (domestic). It defines the Market Basic Service structure of the new Wholesale Electricity Market (MEM - Supplier Mercado Eléctrico Mayorista). Transmission Distribution Energy Ley de Transici n Energética: Defines the legal basis to promote a transformation towards a sustainable energy and economic model in the long term.
Basics of the LIE
Respect the rights of Legacy Permits granted under the LSPEE will be respected in all its terms and conditions. Permits (LSPEE) In any case, these permits may voluntarily migrate to the Wholesale Electricity Market (MEM).
Liberalisation of the electricity supply Private companies are allowed to provide supply services to qualified users (industrials).
Green Energy Certificates Main instrument together with auctions to promote investments in clean energy. (CEL) Allows the system to reach the target of having 35% of clean energy generation by 2024.
Wholesale Electricity Market (MEM) Market that operates through Market Bases. 102 GENERATION: MEXICO
Regulatory framework (3/3)
Independent Power Producer (IPP) - • 25 year PPA after auctions held by Comisi n Federal de Electricidad (CFE). Asset own by Iberdrola when PPA expires • Predictable revenues:
Fixed Capacity ~19%
payments O&M ~7% ($/kW) Reserve capacity for fuel ~6%
Variable Fuel (pass-through) ~67% costs O&M ~1% LSPEE(1992) (1992) ($/kWh)
Self-supply (Autoabasto) • Supply of energy and capacity to self-supply partners (industrial clients) under different criteria, depending on each client:
o Discount over regulated tariff (Suministro Básico) Ley Servicio P blicoServicio Ley EnergíaEléctrica P blico Servicio Energía Eléctrica o PPA - Fixed price for contracted capacity, etc.
• Generation to satisfy the needs of Iberdrola Clientes (qualified supplier) with hedging energy contract of the wholesale market products (Mercado Eléctrico Mayorista - MEM): Eléctrica Energy Ancillary services Capacity
LIE (2014) • These products can be sold through bilateral contracts or in the market – Industria
Ley 103 GENERATION: BRAZIL
Facilities and regulatory framework
State Type MW
Termopernambuco Pernambuco CCGT 533
Concession/ Concession process Renewal Revenue authorization term
• Possible • 30 years according to • 20-year PPAs to CELPE • Authorization certain (390MW) and COELBA Gas (1) request within • Expiry date: contractual (65MW) - Thermo Priority ANEEL Dec / 2030 conditions Program (PPT)
(1) Refers to Termopernambuco terms
Data as of December 2019 104 RETAIL
Retail & Smart Solutions: Key figures 2019
25 M services to customers
MEXICO UK 3k I&C services to customers 7 M services to customers 50 TWh energy sales 46 TWh energy sales
BRAZIL SPAIN & CE
113k I&C services to customers 18 M services to customers 15 TWh energy sales 84 TWh energy sales
105 RETAIL
Solving new needs of customers
Smart Energy Services Smart Home
• Assistance and maintenance services for • Control from your mobile phone the different electricity and gas. Billing services and devices related to energy payment - Smart thermostat - Electrical & gas emergencies - Smart lighting - Protection for white goods & air-conditioning - Consumption monitor - Household appliance protection - Payment protection insurance / fixed payment /e-billing
Smart Solar Smart Mobility
Integrated solutions: personalized Private Charging Integrated solutions: Smart Charging Residential analysis, PV + storage, installation, Solutions + Green tariff + Maintenance and SME maintenance, financing, insurance and digital management Public Charging Public facilities + digital solutions Solutions
PV on-site or I&C utility scale solutions with PPA Industry Charging Smart charging for fleets, employees Solutions and customers + digital solutions
106 RETAIL
Services to customers: >25 M contracts
Thousand contracts
Spain 16,844 Spain liberalised 13,394 Electricity 6,626 Gas 1,048 Smart solutions 5,719
Spain Last resort tariff 3,450
International 1,513 Portugal 867 France 231 Italy 385 Germany 23 Ireland 7
UK 6,609 Electricity 2,816 Gas 1,891 Smart Solutions 374 Smart Meters 1,529
Mexico 3
Brazil 113 Electricity 0.4 Smart Solutions 112
TOTAL 25,082 Data as of December 2019 107 RETAIL: SPAIN
Regulated tariff (PVPC) and Social Bonus: RD 216/2014 / RD-Law 15/2018
PVPC
• Regulated tariff. Entitled consumers with capacity contracted < 10 Kw
• Components: - Hourly prices in wholesale market, published by Red Eléctrica - Access tariff and fees, published in the Official Spanish Gazette (BOE) - Supply margin, published in the Official Spanish Gazette (BOE) - Taxes (VAT – 21% / Electricity tax – around 5%)
Social Bonus
• Discount applied to electricity bill (25% / 40%), according to - Income criteria - Limits to consumption
• Two types of vulnerable consumers and groups with special conditions
• Financed by electricity supply companies
• TEC/1080/2019: establishes a financing quota for Iberdrola of 34.623232%, which represents a reduction of 0.42% with respect to 2018.
108 RETAIL: SPAIN
Electricity access fees. CNMC Circular 3/2020
• It establishes the methodology to calculate transmission and distribution annual access fees. (In force before 1st November 2020)
- New costs imputation: - 75% of the cost of the High Voltage (HV) network is attributed to the fixed term. - In the case of Low Voltage (LV), this allocation is 75% for the 2.0TD (≤ 15 kW) and 100% for the 3.0TD (> 15 kW) - Previously, the CNMC will adapt the communication formats between agents (in 3 months) and distribution and supply companies must adapt meters, systems and contracts
• It modifies hourly prices - A single 3-period option on LV ≤ 15kW (domestic), taking advantage of the deployment of meters with remote management - A single 6-period calendar for LV > 15 kW and HV
Note: Low voltage tariffs: They will apply to supplies made to voltages not exceeding 1 kV
• 2.0TD tariff: simple rate for low voltage, power under 15 kW. Three periods of energy and two of power. • 3.0TD tariff : general rate for low voltage, power over 15 kW. Six periods of energy and power.
109 RETAIL: UK
Energy retail regulatory framework
Form of Control
• Operates in the liberalised UK energy market for gas and electricity under the energy regulator Ofgem with a regulatory framework of both prescriptive and principles based obligations. • As of June 2019 the UK domestic energy market consists of approximately 23.5m gas and 28.5m electricity supply points.
Price Regulation
• Price regulation exists for certain customer groups: o The default tariff cap came into force from 1 January 2019 and applies to customers on a standard variable rate tariff – impacting around 11 million customers*. The level of the cap is reviewed every 6 months, and is in place until at least year-end 2020, but may be extended annually until 2023 if Ofgem believe conditions are not in place for effective competition. o The safeguard tariff applies to prepayment customers (April 2017) – impacting around 4.5m customers. The level of the cap is reviewed every 6 months and the prepayment cap is in place until year-end 2020. Before the default tariff cap started on 1 January 2019, people who got the government’s Warm Home Discount and were on a default tariff (including standard variable tariffs) were protected by the Prepayment Price Cap.
Obligated support for low income and fuel poor customers
• Warm Home Discount scheme is government scheme aimed at addressing fuel poverty and takes the form of a one-off discount on energy bills set at £140. The scheme is paid to customers in low income groups or in receipt of pension credits, and is paid to approximately two million customers. • Energy Company Obligation Scheme is a government scheme to help reduce carbon emissions and tackle fuel poverty. The scheme requires suppliers to invest in energy efficient measures, the size of suppliers obligation is based on customer number and supply volumes.
* Excludes customers protected by the prepayment safeguard tariff
Source: Ofgem’s State of the Energy Market 2018 110 RETAIL: MEXICO
Retail (Iberdrola Clientes) regulatory framework
• Sale of energy and capacity generated by Iberdrola power plants under self-supply or cogeneration regime (autoabasto)
• Medium and long tem contracts with self-supply partners (industrial clients), according to different criteria depending on each client LSPEE(1992) Legacy Regime Legacy
• Additive tariff incorporates the costs of all the activities in the system. The Federal Government set the target of maintaining the basic supply tariff throughout the six-year period. • Components of the additive tariff : (2014)) Variable Fixed costs costs
Regulated Tariff Regulated ($/kWh) ($/kW) Suministro Básico Eléctrica
• Supply to liberalised clients (demand >1 MW) Industria Industria
• Requirements for long term hedging with Iberdrola power plants defined by Comisi n Reguladora de Energía (CRE)
• Qualified supply tariff:
MEM (Ley (Ley MEM o Fixed costs: according to regulated cost of the basic supply tariff (suministro básico)
IberdrolaClientes Clientes o Variable costs: according to the generation portfolio that supplies Iberdrola Clientes in the market. (Qualified Supplier)
111 AGENDA
1. Iberdrola Today (page 5)
2. Networks (page 15)
3. Renewables (page 42)
4. Generation & Retail (page 87)
5. Financing (page 112)
6. ESG (page 124)
112 DEBT RECONCILIATION
Note 20 of Iberdrola Consolidated Annual Report 2019
Thousand euros 31/12/2019
Loans and borrowings and obligations or other securities (Note 27) 38,926,290
Equity instruments having the substance of a financial liability (Note 22) 215,533
Derivative financial liabilities 425,313
Leases (Note 30) 1,767,117
Fixed assets suppliers (Note 31) 16,857
Gross Debt 41,351,110
Derivative financial assets 753,895
CSA Derivatives value guarantee deposits (Notes 4 and 14.b) 112,550
Cash and cash equivalents (Note 19) 2,113,279
Total treasury assets 2,979,724
Net Debt 38,371,386
Market value of treasury stock cumulative hedges 602,459
Adjusted Net Debt 37,768,927
Iberdrola Consolidated Annual Financial Report 2019: https://www.iberdrola.com/wcorp/gc/prod/en_US/corporativos/docs/gsm20_FinancialStatements_AuditorsReport_Consolidated.pdf
113 DEBT STRUCTURE BY COMPANY
As of December 2019
Total Debt: EUR 1,785 m Guaranteed senior unsecured notes Bonds: EUR 12 m Iberdrola, S.A. Loans : EUR 1,746m Intercompany Loans Intercompany Loans
Intercompany Loans Intercompany Loans
100.0% 51.04% 100.0% 100.0% Total Debt: EUR 10,057m 100.0% 81.5% Hybrid EUR 1,250m (as per Fitch due to 50% Avangrid (US) Iberdrola Iberdrola Iberdrola 100.0% Iberdrola equity content) Other SPW Investments Bonds: EUR 2,114m Espa a S.A Brazil Mexico International B.V. Bonds: EUR 9,843m Loans: EUR 154m Ltd Loans: EUR 454m 100.0% 100.0% Scottish Power, Ltd RG&E Total Debt: EUR 62m 100.0% Iberdrola Total Debt: EUR 7,046m Total Debt: EUR 954m Total Debt: EUR 5,045m Total Debt: EUR 589m Bonds: EUR 6,932m Bonds: EUR 937m Loans EUR 948m Bonds: EUR 2,102m Loans : EUR 588m Loans : EUR 60m Finanzas, S.A. 100.0% Loans: EUR 114m Loans: EUR 21m Loans : EUR 2,931m Scottish Power UK plc CMP Bonds: EUR 1,063m 100.0% Bonds: EUR 1,338m Iberdrola Finance Total Debt: EUR 198m Loans: EUR 37m Ireland Ltd Bonds: EUR 186m Loans: EUR 219m Loans : EUR 11m NYSEG Scottish Power Bonds: EUR 1,367m Manweb plc Loans: EUR 21m 100.0% Iberdrola Total Debt: EUR 4,421m Bonds: EUR 408m Financiacion S.A. Loans: EUR 67m BGC Loans: EUR 4,170m Bonds: EUR 41m Scottish Power CNG Distribution Bonds: EUR 409m Bonds: EUR 143m Loans: EUR 81m SCG Scottish Power Bonds: EUR 219m Transmission UI Bonds: EUR 407m Bonds: EUR 773m Loans: EUR 14m Loans: EUR 25m
Scottish Power Avangrid (consolidated) (consolidated): Debt: EUR 7,997m Total Debt: EUR 3,196m Bonds: EUR 6,736m Bonds: EUR 2,562m Loans : EUR 1,260m Loans : EUR 628m
Total Adjusted External Gross Debt at 2019 YE: EUR41bn as reported by Iberdrola including Unpaid accrued interest and Derivatives liabilities. Figures represent group / companies’ contribution to Iberdrola Group consolidated adjusted external gross debt
114 STRUCTURAL SUBORDINATION
As of December 2019* Subordination during the period 2018-2022*
Mexico Other 1% 1% Average Target USA 22% 21%
6% 30% threshold UK Corporate 68% 8% 1%
Other 2%
* Not taking into account NEO, which finances itself on a standalone basis 115 DEBT STRUCTURE BY MARKET
Debt balance structure by markets as of December 2019
Bank loans 17% (including green TEI 1% . Consolidating green financing loans 3%) strategy Green . The leading private company financing Project finance . New green financing done in 2% Brazil
Bonds . Eurobond will be our main Multilaterals 10% 32% Eur 39.9 bn* (including Bond source of financing green bonds market . Main source of financing in all 15%) countries Commercial paper 7% Other bonds 5% Supra - . Iberdrola considered strategic Bonds Bonds national partner (EIB, BNB, BNDES, …) 18% 8% (including lenders & . Taking advantage of tax credits green bonds TEI in the United States 3%)
* At 2019 YE, Iberdrola had 2,500 M of Hybrid bonds not included in the graph above 116 GREEN FINANCING
Iberdrola Group is the world leading private group in green bonds issued
Green Financing: EUR 11,036 M Green / Sustainable Financing*: EUR 20,077 M
Hybrid DCM 2,500 EUR Bank loans 359 79%
Multilateral loans 685
Public Senior DCM 5,700 AGR DCM 1,210 USD 19%
Neo DCM 287 BRL 2% Private Senior DCM 295
In 2019 Iberdrola signed new transactions totaling EUR 8.4 bn, out of which EUR 4 bn was green/sustainable financing* for a total of EUR 20 bn committed
Framework inspired by Green Bond Principles (“GBPs”) published by the International Capital Markets Association (ICMA)
Information related to Green Bonds: https://www.iberdrola.com/shareholders-investors/investors/fixed-income/information-related-to-green-bonds
*As of December 2019, includes sustainable credit lines 117 INTEREST RATE RISK MANAGEMENT
Low refinancing risk in fixed debt as we have more than 4.5 € Bn in forwards
Debt structure
BRL 10.3% BRL 10.5% Floating Floating USD USD 35% 34% 27.1% 29.7% GBP GBP 16.9% 17.3% Fixed * Fixed * 65% EUR 66% EUR 45.7% 42.5%
FY 2018 FY 2019
* Including forward interest rate derivatives (December 2019: EUR 4,551 million; December 18: EUR 4,642 million), fixed-rate debt would increase to 77.6% (December 2019) and 78.2% (December 2018).
Data as of December 2019 118 FX RISK MANAGEMENT: STRUCTURAL
Structural FX hedge is taken by having the debt in the same currency and similar % as the funds from operations
Minimize FFO / Net Debt ratio volatility
Debt range
R 13.5% 10-16% 2.0% 1-3% M 20.5% 17-23%
25.0% 22-28%
39.0% 30-50%
FFO 2020–2022 Average Debt
119 FX RISK MANAGEMENT: YEARLY
FX risk in the Profit & Loss account is minimized through derivatives
Hedging Net Income FX exposure in currencies Target other than Euro
Net Income by currency
1% 2% MXN 6% 8% 10% BRL Maximum risk 24% 25% allowed: 25% GBP ~5.0% of average USD 27% 27% Net Income 24% EUR
43% 39% 39%
2018 2020 2022
120 FINANCING POLICY
Financial needs have a comfortable maturity profile with an average life of debt of 6 years
Maturity debt profile* as of December 2019 (€ M) 18,900
4,676 4,320 4,012 3,816 3,661
2020 2021 2022 2023 2024 2025+
* Adjusted gross debt excluding credit lines; commercial paper falls due after 2025. 2023 includes USD 400 million with a 1+1-year extension option
121 CREDIT METRICS
December 2019 December 2018
Adjusted Leverage 44.1% 43.7%
Adjusted Funds from Operations (FFO)**/Adjusted Net Financial Debt* 21.5% 21.5%
Adjusted Retained Cash Flow (RCF)***/ Adjusted Net Financial Debt* 20.0% 20.2%
Adjusted Net Financial Debt* / Adjusted EBITDA**** 3.71x 3.65x
Note: Under IFRS 16, 2019 credit metrics include operating leases as debt
(*) Adjusted by the effect of potential accumulator derivatives over treasury stock (EUR 602.0 million at 31/12/2019 and EUR 50.0 million at 31/12/2018) (**) Adjusted FFO = Net profit + Minority results + Dep. and amort. Charges and prov. - Profit of companies consolidated using the equity method - Net non-recurring results - Financial prov. capitalisation + Dividends of companies consolidated using the equity method - Other effects Adjusted by “Exit Plan” (EUR 51.8 million at 31/12/2019 and EUR 0 million at 31/12/2018) (***) Adjusted RCF = Adjusted FFO - Cash dividends - Hybrid issue interest Adjusted by “Exit Plan” (EUR 51.8 million at 31/12/2019 and EUR 0 million at 31/12/2018) (****) Adjusted by “Exit Plan” (EUR 67.1 million at 31/12/2019 and EUR 0 million at 31/12/2018)
122 CREDIT RATINGS
Moody 's Standard and Poor 's Fitch Ibca Rating Outlook Date Rating Outlook Date Rating Outlook Date Iberdrola S.A. Baa1 Stable November 2019 BBB+ Stable January 2020 BBB+ Stable May 2019 Iberdrola Finance Ireland Ltd.(*) Baa1 Stable November 2019 BBB+ Stable January 2020 BBB+ Stable May 2019 Iberdrola Finanzas S.A.U.(*) Baa1 Stable November 2019 BBB+ Stable January 2020 BBB+ Stable May 2019 Iberdrola International B.V.(*) Baa1 Stable November 2019 BBB+ Stable January 2020 BBB+ Stable May 2019 Avangrid Baa1 Stable December 2019 BBB+ Stable August 2019 BBB+ Stable May 2019 CMP A2 Stable October 2019 A Stable August 2019 BBB+ Stable May 2019 NYSEG A3 Stable July 2019 A- Stable August 2019 BBB+ Stable May 2019 RG&E A3 Stable July 2019 A- Stable August 2019 BBB+ Stable May 2019 UI Baa1 Stable September 2019 A- Stable August 2019 A- Stable May 2019 CNG A3 Positive October 2019 A- Stable August 2019 A- Stable May 2019 SCG A3 Stable September 2019 A- Stable August 2019 A- Stable May 2019 BGC A3 Stable October 2019 A- Stable August 2019 A- Stable May 2019 Scottish Power Ltd Baa1 Stable April 2019 BBB+ Stable April 2019 BBB+ Stable March 2018 Scottish Power UK Plc Baa1 Stable April 2019 BBB+ Stable April 2019 BBB+ Stable March 2018 Scottish Power Energy Networks Holdings Ltd BBB+ Stable April 2019 SP Transmission Ltd Baa1 Stable April 2019 BBB+ Stable April 2019 SP Manweb plc Baa1 Stable April 2019 BBB+ Stable April 2019 SP Distribution plc Baa1 Stable April 2019 BBB+ Stable April 2019 ScottishPower Energy Management Ltd. Baa1 Stable April 2019 BBB+ Stable April 2019 ScottishPower Energy Retail Ltd. Baa1 Stable April 2019 BBB+ Stable April 2019 ScottishPower Renewables (WODS) Limited Baa1 Stable April 2019 Neoenergía BB- Positive Dec 2019 Elektro BB- Positive Dec 2019 Coelba BB- Positive Dec 2019 Celpe BB- Positive Dec 2019 Cosern BB- Positive Dec 2019 Neoenergía (national scale) brAAA Positive Dec 2019 Coelba (national scale) brAAA Positive Dec 2019 Celpe (national scale) brAAA Positive Dec 2019 Cosern (national scale) brAAA Positive Dec 2019 Elektro (national scale) brAAA Positive Dec 2019
(*) Guaranteed by Iberdrola S.A. Note: data as of March 2020, including latest reviews 123 AGENDA
1. Iberdrola Today (page 5)
2. Networks (page 15)
3. Renewables (page 42)
4. Generation & Retail (page 87)
5. Financing (page 112)
6. ESG (page 124)
124 SUSTAINABLE MANAGEMENT POLICY
Energy Sustainability Business Sustainability
Competitiveness Security in energy Environment Creation of value Social Dimension supply
• Energy supply at the • Local and renewable • Sustainable use of natural • Business profit • Universal access best possible price primary energy sources resources • Corporate promotion • Technology with low • Reliability and • Efficient production and government, Risk • Strict respect of human operational and availability of energy efficient use of energy management, codes of rights maintenance costs supply • Emission reduction conduct and • Improvement of the • Diversified mix of • High quality service • Biodiversity protection compliance standard of living of the generation • Promotion of energy • Waste and water • Relationships with people in the areas efficiency management clients where the Group • Leading and guiding develops its activity company of the supply • Qualified and committed chain workforce
Main Focus: SDGs 7 and 13 (Long-term incentive plan linked to them) Direct Contribution: SDGs 6, 9, 15 and 17
Link to our Sustainability report :https://www.iberdrola.com/wcorp/gc/prod/en_US/corporativos/docs/gsm20_IA_SustainabilityReport19.pdf 125 KEY NON FINANCIAL INDICATORS: ENVIRONMENTAL
Δ Δ
Environmental performance 2018 2019 annual average 2018-2019 (%) 2015-19 (%)
Own emission free installed capacity1(%) 77.0 76.8 2.5 (0.2)
Own emission free output1 (%) 73.8 72.6 1.5 (1.6)
1 Own specific CO2 emissions (t/GWh) 112 110 (12.2) (1.8)
Fuel consumption (M Tep) 10,505 17,018 (2.7) 62.0
Environmental investments (€M) 2,132.6 3,711.7 38.3 74.0
Environmental expenses (€M) 549.7 705.9 1.1 27.4
Energy produced under certified environmental management systems (%) 80.0 83.4 (0.2) 4.3
Water use/overall production (m3/GWh) 604 583 2.3 (3.5)
Direct emissions of CO2. Scope 1 (kt) 13,328 12,928 (10.3) (3.0)
Indirect emissions of CO2. Scope 2 (kt) 2,544 2,154 22.3 (15.3)
CO2 avoided due to efficiency initiatives (kt) 19,485 22,920 4.4 17.6
SO2 emissions (t/GWh) 0.023 0.011 (45.5) (52.2)
NOx emissions (t/GWh) 0.085 0.3262 9.1 283.5
Meeting its climate-related objectives, Iberdrola will be carbon neutral in Europe by 2030
(1) Calculated on own production (2) Change in method for calculating NOx emissions in Mexico
Link to our Integrated report: https://www.iberdrola.com/wcorp/gc/prod/en_US/corporativos/docs/gsm20_IA_IntegratedReport20.pdf 126 KEY NON FINANCIAL INDICATORS: SOCIAL
Δ Δ Social performance 2018 2019 annual average 2018-2019 (%) 2015-19 (%) Consumers (millions)1 33.6 34.0 0.7 1.2 Electric power 29.5 29.8 0.8 1.0 Spain 10.1 10.1 (0.5) (0.2) United Kingdom 3.0 2.8 (3.9) (6.3) United States 2.3 2.3 0.7 0.4 Brazil 13.8 14.0 1.8 1.8 IEI 0.3 0.6 -- 100 Gas 4.1 4.2 0.0 0.0 Spain 1.0 1.0 3.9 1.9 United Kingdom 2.0 1.9 (3.7) (6.0) United States 1.0 1.0 0.5 3.0 IEI 0.1 0.2 -- 233.3 Number of employees 34,078 35,374 3.4 3.8 Permanent contracts (%) 99.0 99.1 0.2 0.1 Employees with collective bargaining agreement (%) 78.9 78.7 0.7 (0.3) Employee turnover 10.7 6.6 (1.4) (38.1) Diversity (men/women) 77/23 77/23 -- -- Injury rate (IR) 1.4 1.3 (1.3) (2.9) Hours of training (millions of hours) 1.6 1.8 15.9 11.9 Hours of training per employee (h) 45.2 54.9 4.5 21.3 Funds for social development (€M) 243.1 92.4 19.0 (62.0) Contributions to society (€M) 53.5 52.3 8.3 (2.2) Rural electrification programmes (€M) 189.6 40.1 49.6 (78.9) Investments in R&D&i (€M) 267 280 8.8 5.0 General procurement (€M billed) 7,753 8,716 14.4 12.4 Procurement from local suppliers (%) 85 89 1.2 4.7
(1) Consumers: for electric power, total number of customers is used where there are areas of electricity distribution and retailing, supply points are used for the other areas. For gas: total number of gas customers is used, except for the United States, where total number of supply points is used.
127 KEY NON FINANCIAL INDICATORS: SOCIAL
Direct tax contribution of Eur 8,156 M…
Taxes paid to public % Tax contribution Own taxes(1) Taxes collected(3) Total treasury € millions ratio(2)
Spain 1,500 50.5 2,029 3,529
United Kingdom 357 34.3 282 639
United States 665 50.6 298 963
Brazil 177 25.4 2,393 2,570
Mexico 221 33.4 37 258
Other countries 21 11.4 176 197
Total 2,941 42.8 5,215 8,156
… adding up to an annual tax contribution of over EUR 14 bn4
(1) Includes Corporation taxes, Social Security payable by company, charges and non-deductible VAT (2) Ratio between tax paid and profit before taxes and charges in each country (3) Includes Social Security payable by worker, VAT and withheld income tax (4) Includes direct, indirect and induced tax contribution 128 IBERDROLA IMPACTS ON SDG
Main Focus
Iberdrolas´s direct contribution
Indirect Contribution to other SDG
Iberdrola and the SDG: https://www.iberdrola.com/sustainability/committed-sustainable-development-goals 129 IBERDROLA CONTRIBUTION TO SDG 7: AFFORDABLE AND CLEAN ENERGY
Energy: key driver for human development - transversal across all SDG
1. Ensure access to affordable, reliable, sustainable and clean energy for all
2. Substantially increase the percentage of renewable energy in the mix
3. Double the improvement rate of energy efficiency worldwide
Iberdrola's contribution
“Electricity for all” Global leader on wind energy Energy efficiency 7,000,000 Beneficiaries 65.9 M Tons CO2 avoided in the last 3 years
17,752 MW
7,098 MW
16 M 2030: Goal presented in SE4ALL 2007 2019
Iberdrola and the affordable and clean energy: https://www.iberdrola.com/top-stories/iberdrola-shares-with-you/affordable-and-clean-energy ELECTRICITY FOR ALL PROGRAMME: https://www.iberdrola.com/press-room/news/detail/iberdrola-sets-goal-of-4-million-beneficiaries-in-electricity-for-all-programme-by-2020-6270058920150522130 IBERDROLA CONTRIBUTION TO SDG 13: CLIMATE ACTION
Energy sector is key for CO2 emissions reduction. Generation technologies with low CO2 emissions
DECARBONIZATION= ELECTRIFICATION
185 Intensity of CO2 CO2 intensity emissions under 50% 58% lower 131 136 of Sustainable than the 112 110 Development European Scenario for Electric electric Utilities (IEA) sector intensity by 2030. average in 2018
carbon neutral by 2050 Coal: Capacity 1.6% of the total. Production: 0.23%; revenues: less than 1% of the Group's total revenues in 2019 Nuclear: Capacity 6.1% of the total. Production: 15.6%; revenues: less than 5% of the Group's total revenues in 2019
Link to our Policy against Climate Change: https://www.iberdrola.com/wcorp/gc/prod/en_US/corporativos/docs/policy_against_climate_change.pdf 131 TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES
IBERDROLA • April 2017: Signed the statement of support SUPPORTING the FSB Task Force • September 2017: Commitment to implement the on Climate -related recommendations of the Task Force on Climate- Financial Disclosures related Financial Disclosures (TCFD)
Governance Strategy Risk Management Metrics and targets
Since 2009 Iberdrola has been Climate risk management is in Identifying, assessing and setting its objectives aligned Climate Change Policy update: the center of the company managing climate risk with climate change reduction - All carbon emission Strategy, taking advantage from integrated into global risk Key indicators focused on reduction targets. accumulated experience in processes, including corporate climate-related preformance has - Climate Change and its risk leading the carbon transition: and business functions. always been part of the included in the decission renewable energy, smart Opportunities arising are Company’s public information making processes. networks, storage and greater than the risks: in the Sustainability and - International Climate Change digitalization. - Increasing demand because position and partnerships. extreme temperatures events. integrated reports. Some examples are: Risk Policies update: 2050 Carbon neutrality strategy - Decreasing technology costs. - GHG emissions per Scope 1, - Investment policy. support. - Smart networks key - Bussiness policies instrument for electrification. 2 & 3. - Emission intensity. to include phisical and Four climate scenario analysis: - Easy capital allocation for - Emission reduction targets. transition climate risk into - Transition: STEPS and SDS carbon transition. - Energy use. decisi n making processes (IEA). - New products and services to - Installed capacity. Board of Directors specific - Physical: RCP 8.5 and RCP clients. - Corporate generation mix. Committe for this issue since 4.5 (IPCC). - Heat and transport - Water use. the year 2010. The group is perfectly electrification. - R&D investment. Social Dividend positioned to take advantage of Risks catalogue: physical and - Capex in low carbon Long Term Incentive plan. the opportunity . transition examples in S Report. products and services. 132 IBERDROLA CONTRIBUTION TO SDG 17: PARTNERSHIPS FOR THE GOALS
IBERDROLA is adhering or takes part in programs or projects, both internationally and in the countries in which it operates.
Partnership Green Growth Platform World Business Council For Sustainable Development (WBCSD) EV100 (The Climate Group) World Energy Council The Prince of Wales's Corporate Leaders Group UN Global Compact Moving for Climate Now REDS, Red Espa ola de Desarrollo Sostenible Comunidad por el Clima Bruegel European Round Table of Industrialists (ERT) AELEC World Bank - Carbon Pricing Leadership Coalition European Climate Foundation SE4ALL Alianza Shire Reforming Energy Vision (REV) The Partnership on Climate Resilinence Centro Clima–Centro de Estudos Integrados sobre Meio Ambiente e Mudanças Climáticas (COPPE/UFRJ) 133 IBERDROLA CONTRIBUTION TO SUSTAINABLE MOBILITY
IBERDROLA reinforces its strategy through its Sustainable Mobility Plan started up in 2016, thanks to the development of policies and concrete actions to 'mobilize' all the players involved: administration, companies, car manufacturers, etc.
Electrification of the Mobility as a solution:
690 +100
The Smart Mobility Plan: 3,700 Electric vehicle charging points instaled until 2019; The plan envisages the deployment of nearly 150,000 electric vehicle charging points by 2025.
Green Float: Iberdrola will electrify its entire vehicle fleet in Spain and the United Kingdom (3,500 electric vehicles) and provide charging facilities for its staff by 2030.
Sustainable Mobility Plan: https://www.iberdrola.com/sustainability/sustainable-energy-business-model/sustainable-mobility-plan 134 DIVERSITY – GAP
Iberdrola’s defence of salary equality in the last two decades and its commitment to the reduction of the salary gap is seen in the segmentation of average remuneration1 by age groups and gender
Remuneration men/Remuneration women (Remuneration men – Remuneration women) / Remuneration men
100.9 0.9
2019 2018 2017 97.3
95.1 -2.8
2019 2018 2017 -5.2
Total Male/Female diversity: 77/23
1. Average remuneration (base salary plus variable) 135 SUSTAINABILITY: INDICES
Presence of Iberdrola in Indices and Rankings of Sustainability, Reputation and Corporate Governance Index/Ranking Situation Dow Jones Sustainability World Index 2019 Selected in the utility sector. Iberdrola member in all editions Sustainability Yearbook ROBECOSAM 2019 Classified as "Silver Class” in the electricity sector. MSCI Global Sustainability Index Series Iberdrola selected AAA CDP Climate Change 2019 A- CDP Supplier Engagement Leader 2019 Iberdrola Selected Global 100 Iberdrola Selected Sustainalytics Iberdrola among the highest rated utilities ISS-oekom Iberdrola selected as Prime FTSE4Good Selected for 10 years Bloomberg Equality Index 2019 Iberdrola selected Euronext Vigeo Eiris index: World 120, Eurozone 120 & Europe 120 Iberdrola selected Ecovadis Iberdrola as one of the companies with the best performance 2019 World's Most Ethical Company Iberdrola selected. Only Spanish utility ECPI Iberdrola selected in several Sustainability Indices Iberdrola selected in STOXX Global ESG Leaders and in several STOXX Sustainability indices EcoAct Iberdrola first Spanish company and first utility in the ranking Influence Map Iberdrola selected mercoEmpresas: Leader among Spanish utilities: energy, gas, and water MERCO 2019 industry
Valuation of Iberdrola in the main sustainability indexes: https://www.iberdrola.com/sustainability/sustainable-energy-business-model/indexes-data-sustainability 136 IBERDROLA CONTRIBUTION TO THE COMMUNITY
Iberdrola has selected the London Benchmarking Group (LBG) model to measure and assess business contributions to the community due to its wide international recognition 3% 1% 6% Mexico IEI Contribution by SDG Brazil 2% 3% 2% SDG 9 10% 1% US SDG 10 SDG 15 1% 42% SDG 16 SDG 14 Spain 3% 4% SDG 1 € 52 million 4% SDG 8 39% SDG 17 25% UK 5% SDG 11 SDG 7
16% 7% 16% Energy Sustainability SDG 13 € 52 million 18% Other SDG 4
6% 10% Arts and Culture 11% SDG 5 Socioeconomic Development 15% SDG 3 € 52 million 20% 31% Education and Cooperation Training And Solidarity
LBG website: https://www.lbg.es/es/home LBG Assurance Statement IBERDROLA:https://www.iberdrola.com/wcorp/gc/prod/en_US/corporativos/docs/LBGStatement19.pdf 137 FOUNDATIONS
Iberdrola Foundations* represent Iberdrola’s commitment to the economic and social development of the countries in which it does business
Programmes 2019
Contribution by region Contribution by programme 6% 13% 13% Mexico and Brazil Institutional collaboration Training and research
62% 9% Spain 21% Climate change US €€ 10.29.2 mi milliollion n € 9.2 million 35% 11% Solidarity and 30% UK cooperation Art and culture
A new Master Plan has been prepared for the 2018- 2021 period, in order to contribute to sustainable development
*ScottishPower Foundation, Avangrid Foundation, Fundaci n Iberdrola México, Instituto Neoenergia and Fundaci n Iberdrola Espa a Link to our Integrated report: https://www.iberdrola.com/wcorp/gc/prod/en_US/corporativos/docs/gsm20_IA_IntegratedReport20.pdf 138 CORPORATE AND GOVERNANCE STRUCTURE
Structure that enables global integration of the businesses (Networks, Generation & Retail and Renewables) and is geared to maximising operational efficiency by implementing best practices
Board of Directors
Chairman Advisory Committees and CEO Audit and Risk Supervision Committee + Management Executive Appointments Committee team Committee Remuneration Committee
Sustainable Development Committee
Sub-holding companies
Iberdrola Iberdrola Espa a ScottishPower Avangrid 1 Neoenergia2 Iberdrola Mexico Energía Internacional
Business parent companies
(1) Company listed on the New York Stock Exchange (2) Company listed on the Novo Mercado BOVESPA (Brazil) 139 CORPORATE AND GOVERNANCE STRUCTURE
Board of Directors of Iberdrola Type of Directors • Executive: 2 • Independent external: 10 • Other external directors: 2
Independence and diversity of the Board of Directors Independent directors out of total non-executive directors (83%) Gender diversity. 50% of external directors are women Chairs of Advisory Committees 50% women and 50% men
140