E.

ON‘s generation activities

December 2009
Long term trends in power generation

Power generation at E.ON

2
Future strategy must be compatible with Energy Trilemma

y National governments need to

ensure security of energy supplies
Security and diversified fuel mix
of supply

Asset
y Decarbonization of portfolio y Electricity market
electricity sector is structure must deliver best
clear mega-trend Climate Affordability value to consumers
concerns of energy

Necessity for a global compromise is becoming more and more imminent 3

Significant replacement requirements
Development of EU27 power supply (excl. replacements)

5000

4000 y Large Combustion Plant Directive (LCPD) will

mean up to 50 GW of plant needs to be
3000 replaced
2000 y New renewables will need 90+% fossil backing

1000

0
Power demand growth is important, but
2016
2012

2014

2026
2010

2018

2022

2024
2020

2028

2030
2008

replacement plant requirements have much

Hydro Renewables Gas/oil greater impact on the equilibrium of a market
Lignite Hard Coal Nuclear

Long term fundamentals will prevail: more than 50% of Europe's

generation has to be replaced by 2030 4
Need for investments

Globally International Energy Agency view on global power

investment needs:
y $550 bn per year investment needed in Generation between
2010-2030 under the IEA’s 450 ppm target (2˚C rise in global
temperatures)

Europe
y EU power plant investment will run at a level of up to €60bn
per year, to replace existing capacity and to decarbonise the
generation system
*Based on VGB target of 475GW of new capacity needed out to 2020, with average Capex of ~€1300/kW
(Lyon conference September 2009)

Real challenge is to create the incentives that necessary investments are made 5
Need for capital intensive technologies to reduce CO2

Cost comparison (new build, €/kW) Highlights of available technologies

y Hightech technologies needed to tackle climate

4000
5000
change: nuclear, coal + CCS, wind, solar
3500 y Higher capex and lower fuel cost than today's
default technologies (CCGT and coal)
3000
y Only large well capitalized entities manage new
2500
Nuclear and coal + CCS build
2000
y Coal + CCS looks very promising but still needs to
1500
be proven on a large scale
1000

500

CCGT Coal Coal+CCS Nuclear Wind CSP

offshore

Range of technologies can deliver decarbonisation, security of supply and affordability 6

Reliable investment framework for hightech investment
after 2012 needed
Investments are needed
y EU has set itself binding
CO2 targets for 2020
y 50% of EU27 capacity has
to be replaced until 2030
y Many MS1 such as UK
have gone further and put
binding targets incl. a
specific fuel mix into
national law
1. Member state
E.ON expects attractive conditions to be put in place irrespective of source
System has to deliver sustai-
nable investment signals
y ETS provides only partial
support due to lack of
time horizon beyond 2020
y A system with a high
share of Renewables leads
to high mark-up needs for
other generation capacity
y If Governments do not
favour the least cost
option somebody has to
pay
Sources of Incentives
y Post COP 15 global CO2
agreement established
and strong LT carbon
framework put in place
y EU moves forth with
progressive targets,
installs strong carbon
regime
y MSs1 will put in place
separate support regimes
(eg. low carbon obligation,
capacity market etc.)
7
Impacts of the economic crisis in the new investment cycle
Development of remaining capacity*
Short-term:

Economic crisis has New build signals

y Economic downturn has dramatically increased
reduced demand seen ~2015 capacity margins
30%
Medium- to long-term:
Lax

25% y Level of tightness for remaining capacity in all

20% core markets after 2015
15%
y UK remains market, where we see greatest
need for new investment due to LCPD closures
10%
and closure of aging nuclear
y
Tight

5%
German development depends heavily on
0% nuclear phase out; Dena study identifies
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 16 GW of needed additional capacity by 2020
UK Nordic Germany y For Nordic energy balance is far more relevant
Source: E.ON data, own modelling results than the capacity balance
*Margin against peak load

Development of capacity margin indicates tight markets after 2015 8

Positive long term outlook, but short term uncertainty

y Pace of decarbonisation is only going to increase, creating

Long term

opportunities for energy sector

Bullish
y Low-carbon investments necessary through plant replacement cycles
(eg LCPD), renewables, e-mobility
Short term

y Global recession has “stolen” 3-4 years of demand

y Increasing efficiency targets will dampen demand growth Uncertainty
y Uncertainty around environmental phase outs (LCPD and nuclear)

E.ON addresses long term and short term developments by formulating scenarios 9
Long term trends in Power Generation

Power generation at E.ON

10
Generation within the E.ON Group – Adj. EBIT contribution

Generation activities are the largest contributor to

E.ON’s results

10

8
Other
48% Other
€4.8 bn
€4.8 bn
6
in € bn

E.ON Group
Adj. EBIT FY 2008
€9.9 bn Outside Central Europe
4 30%1
€1.5 bn
Generation
52%
€5.1 bn
2
70%1 Central Europe
€3.6 bn

1. % of countries outside of Central Europe will increase in future years as Spain

and Italy have been only consolidated since July 2008

Generation accounts for over 50% of the Group’s adjusted EBIT 11

Status quo of our generation portfolio
Portfolio mix

RWE E.ON
(224 TWh) (361 TWh) y 2nd largest producer in EU
(45.2GW) (74.4GW)
y Portfolio is well diversified across technologies
14% 7%
22%
2% 1% 28%
and geographies
24%
y Over 30% is CO2 free
y Growth focus in renewables and nuclear will
61% 40%
further balance portfolio
EDF Enel y CO2 emissions in line with peers and ahead of
(611 TWh) (253 TWh)
(126.7GW) (83.6GW)
direct competitor RWE
*Coal+Gas
8% 4%
20%
25% 31%

13%
72% 27%

Coal Gas Nuclear Hydro Renewables

Technological diversification is expected to bring additional value post 2012 12

Strategic approach for generation portfolio

Selective approach for EU, Non-EU and Renewables

Future development of E.ON‘s European portfolio

Financial contribution from European new builds

13
 Selective approach for EU, Non-EU and Renewables
Conventional generation Renewables

Core European Business “From Boutique to Industrial”

y Functional pan-European y Global footprint but

management of assets Functional highly selective in
Global
y Portfoilo robust under Management markets
approach
various scenarios of the y Value through
economic development centralisation of
57 GW
procurement and GW ~10
Beyond Europe finance installed
y Decentralised teams
y Decentralised manage- catering for very ~4
2.6
ment of US and Russian Selective different global
businesses Strategy markets
y Diversification away 2009 2010 2015
from EU market 16 GW Global capacity. 2009 actual, 2010 and 2015 forecast

exposure

Generation strategy dependent on respective market and technology 14

Selective approach for EU, Non-EU and Renewables
Price correlation among NW European exchanges

Ø 2007: 0.74
y Markets are slowly becoming physically better
0.80 0.78 0.75 0.76
0.73 + 0.42 connected, large volume of planned
0.62
0.41
0.44
Ø 2002: 0.32
interconnection projects
0.31
0.34
0.24 0.20
y Power price convergence progressing at far
EEX/ EEX/ EEX/ Powernext/Powernext/ APX NL/
more rapid rate
Powernext APX NL APX UK APX NL APX UK APX UK
y Harmonization of trading arrangements and
Major interconnection capacity additions market coupling incentives will drive further
since 2005 in UCTE convergence, especially in Eastern European
markets
L new line/cable – capacity enhancement
L
C C new component – capacity optimization
y Markets still have national regulatory
C
C dimension
L C
L
y E.ON’s portfolio advantage from being a pan-EU
L

C
L
L player diversifies national regulatory risk

-
–

Market convergence on course, E.ON seizes value from pan-EU business approach 15
Future development of E.ON‘s European portfolio –
efficient portfolio construction
Markowitz Bullet Model

Efficient frontier

y Just as fund managers do, E.ON uses Markowitz

Expected return

Tangency portfolio

Individual assets theory to build an efficient power plant

portfolio
y E.ON has an advantage in building an efficient
Risk free rate
Best possible CML
portfolio due to geographical spread of options
available and in-depth knowledge of project
Standard deviation
risk and rewards
E.ON practical approach - illustrative
y All projects are analysed based on their risk and
reward contribution to the overall E.ON
portfolio
Nuclear dominated portfolios
Value

Coal + CCS dominated portfolios By building up an efficient portfolio of assets

E.ON can diversify away unsystematic risk
Gas dominated portfolios

Risk

E.ON portfolio as a whole delivers >100bp above WACC, not every individual asset 16
Future development of E.ON‘s European portfolio – E.ON
positions itself for the future using detailed scenarios
Unabated Growth
y India and China combat climate constraints
arguing additional burdens for economies
y EU gets increasingly disillusioned with intl.
efforts and turns to climate change adaptation
y Economy rebounds as trust in doing business-
as-usual is restored quickly
y Global run on fossil fuels ensues
Slow Recovery
y Recession has hit the world economy at its core
y Low levels of investment, preference for low
capital costs technologies
y Weak growth spawns weak ST climate
agreement
y Discovery of new gas reserves – world muddles
through, with moderate fossil fuel prices
Green World
y Climate change mitigation takes centre stage
y Robust GDP growth
y Quick onset of peak oil and high commodity
prices
y Governments stimulate markets to deliver
technological innovation
y Trust helps implement solutions with high
capital costs
Climate Concerns
y Climate change mitigation viewed as key
y Moderate economic growth due to
international conflicts
y Affordable fossil fuel makes agreement on LT
carbon targets more difficult
y More conflicts attributed to effects of climate
change
17
Future development of E.ON‘s European portfolio –
Different winning technologies in different scenarios
Coal CCGT Nuclear Renewables

Unabated Growth ++ o + o

Slow Recovery - ++ o +

Climate Concerns
--/+1 + + +

Green World - -/++1 - ++ ++

1. With CCS

E.ON combines clear position on carbon reduction with scenario work 18

 Future development of E.ON‘s European portfolio – new
builds
Name Type Capacity (MW)1 Start-up date
1 Irsching 4 CCGT 540 2011
Irsching 52 CCGT 430 2009
2 Datteln 4 Coal 1,100 2011
3 Malzenice CCGT 430 2010/11
4 Gönyü 1 CCGT 430 2011
5 Scandale2 CCGT 415 2009/10
6 Grain CCGT 1,275 2010
7 Maasvlakte 3 Coal 1,100 2013
8 Emile Huchet CCGT 860 2010
9 Algeciras CCGT 820 2010
10
10 Malmö Gas 440 Online 2009
7 11 Livorno Ferraris2 CCGT 600 Online 2008
6 2
12 Escatron CCGT 800 Online 2008
1 3
8 4
Under construction
11
Online
12
5 1. Gross capacity pro rata E.ON‘s interest
2. Irsching 5: 50% of 860 MW
9 Scandale: 50% of 830 MW
Livorno Ferraris 75% of 800 MW 19
 Future development of E.ON‘s European portfolio – major
upgrades
Name Type Capacity Implementation
(MW)1 date
1 Ratcliffe Coal 2,000 2013
2 Oskarshamn Nuclear 430 2012
3 Maasvlakte 1&2 Coal 1060 2012
4 Terni Hydro 550 2010
5 Los Barrios Coal 480 2009

y All overhaul measures deliver exceptionally high

2
IRR
y Good economics caused by different drivers of
1 profitability:
3

y Extension of plant lifetime

y Improvement of plant efficiency
Major upgrade projects y Upgrade of plant capacity

1. Gross capacity pro rata E.ON‘s interest

5
20
Future development of E.ON‘s European portfolio
Coal η out Coal η in
37% 46%
GW
Portfolio Stability
60 59.2
57.8
1.0 4.0 y E.ON portfolio development targets stability in
4.9
turbulent times
55
y Slow down in new build due to demand
reduction caused by economic crises

56.8 9.6
y But quality and efficiency of portfolio
50
7.3 improving as old inefficient assets go out and
new state or the art assets come in
y Fits with Perform To Win focusing on
improvement of existing assets
0
Existing Asset LCPD closures New build Expected
capacity 2008* disposals capacity
Conventional Renewables 2015
1. Asset disposal contains A2A carve out, 4800 MW disposal, Statkraft deal
2. 2.5 GW not yet under construction / not yet defined
3. Assumed that existing plant that reaches techniclal end of life is life extended

Focused on investment discipline 21

Future development of E.ON‘s European portfolio
E.ON targeting portfolio Stability

GW 60.8 60.8
57.8 58.3 60.1 59.5 59.1
1.0 0.7 54.9
y Capacity declines in 2009 due
5.0
7.2 0.7 to forced asset disposals
5.3
4.2 2.6 y Capacity rebounds between
2009-2011 as new build pipeline
13.8 18.6 comes online
y Portfolio remains stable 2011-15
as effect of LCPD closures
19.7 counteracted by new builds
15.9
y Reduction in CO2 exposure as
renewables grows and old coal
11.1 11.1
is phased out
2008 2009 2010 2011 2012 2013 2014 2015

Renewables Hydro Gas Nuclear

Other Oil Hard Coal

Focused on investment discipline 22

Financial contribution from European new builds
Estimation of the contribution of the new built
capacities1 to the Group‘s EBIT/EBITDA (€bn2) in 2015
€1.8 bn y Total estimated Adj. EBIT contribution stemming
1,8
Conventional
from 15 bn capital employed in new builds in 2015 is
€1.2 bn 0,7
1,4
approx. € 1.2 bn
Renewables
1 0,5 y This would overcompensate the effect on Adj. EBIT
0,6 1,1 from the structural changes (Statkraft; 5GW)
0,2
0,7 (~ - € 0.7 bn) as well as the EBIT reduction from the
phase out of other plants
-0,2 A dditio nal EB IT, new A dditio nal EB ITDA , new
build build
ROCE development over the lifetime, illustrative
y In early years ROCE is often lower than WACC
16 0 %
1200

14 0 %

12 0 %
1000
ROCE
y Over lifetime we expect our investments IRR to beat
10 0 %
800
Capital employed WACC by at least 100bp
80%
600 EBIT
60%

400
40%

200
20%

0%
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1. Capacity commissioned between 2009-2015
2. Adj. EBIT approximation highly dependend on CO2 regime

New build program delivering roughly € 1.8 bn Adj. EBITDA in 2015 23

Operational execution
Detailed quantitative analysis of key profitability Seven key profitability drivers
drivers conducted
Strategic robust portfolio approach
y Comprehensive quantitative analysis was done 1 Markowitz efficient portfolio
to derive optimal way to deliver at least 100 bp
above WACC Optimal power plant sourcing strategy
2
Procuring & building, right way at right time
Pushing technology
3
The most critical sub processes on value creation in E.ON’s power generation
business were identified Push the technical boundaries whilst keeping
plant flexible
Value Impact of Sub Processes (Potential NPV Deviation in % of Average NPV)

Strategy & Project Project Fuel Supply & Plant Plant

Screening Development Execution Handling Operations Maintenance
Value
Impact
60%

Superior site selection and site access

Screen, prioritize
Understand bus.
50%
proposed projects Relative impact of sub processes on overall process
context and planteffectiveness was identified

4
Sub Processes
High Impact

Analyze market
40% regions/Plan overall
Deliver project

Identifying and having access to good sites

portfolio
Value Impact of Sub Processes (Potential NPV Deviation in % of Average NPV)
Assess technical
Improvement and
requirements
30% optimization
Plan project, Control project
procurement, financials
and eco
Strategy & system Project
Cross-project Project Fuel Supply
Commercial operation & Understand bus.
Plant Plant
20%
Sub Processes
Lower Impact

management context and plant

Screening Development Execution
Improvement and Handling Operations
Develop strategy and Maintenance
Evaluate location, optimization
Support commissioning plan/ Improvement and
10% define authorization
Define requirements for excellence
strategy
Execute maintenance/
• 30% Analyze market • 20% Evaluate • 30%Control • 30% Define • 50% Understand • 30% Understand

Effective commissioning
site/ Define trading
opportunities Control and review
0% regions location, define project requirements
Procurement bus. context and bus. context and
Sub processes

• 30% Plan overall authorization • 40% Deliver for site plant 6 plant
portfolio
• 40% Screen,
prioritize proposed
projects
strategy
• 40% Assess
technical
requirements
• 40% Plan project,
project
• 10% Support
commissioning
• 20% Cross-
project
• 30% Define
trading
opportunities
• 40%
Improvement
• 20% Commercial
operation
• 30%
Improvement
and excellence
• 20% Develop
strategy and plan
• 10% Execute
maintenance
• 10% Control and
5 Best in class commissioning of plant
procurement, management and • 0% Procurement review
Value impact
financials and eco
over a plant’s lifetime differs
optimization
per process • 20% Improvement
system and excellence
• 10% Procurement
Value Impact of Processes (Potential NPV Deviation in % of Average NPV)
70%
41% 43%
Excellent processes in place
29%
25%
6
Right processes and organisation delivery setup
NPV Opportunity 14%

NPV Risk -16%

-33%
-42% -40%

-94%
-60%

7 Successful strategy for the fleet operation

Managing the EU fleet for optimal performance
Strategy& Project Project Fuel Supply& Plant Plant
Screening Development Execution Handling Operations Maintenance

24
 2 Optimal power plant sourcing strategy

Growth period Overheated market Market consolidation Next growth period

200
CCGT Oct-08 value
Coal
163 Overall long term upwards trend
160
146
Price index (100 = July 20051)

120

Datteln, coal 1100 MW, Grain, CCGT 1275 MW

80
start of convoy sourcing
Maasvlakte Malmö, CCGT 440 MW Gönyü, CCGT 430 MW
Malzenice, CCGT 430 MW
40 Livorno, CCGT 800 MW
Irsching 4, CCGT 540 MW Irsching 5, CCGT 430 MW

0
Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Date of procurement
(qualitative scale)
y Beginning increase of y Dramatic escalation. Prices y Consolidation of prices due
Power Plant fossil power plant prices do not reflect economic to decrease in commodity
Market outlook prices and demand

y Majority of new build y Review and postponement y Uncommitted projects to

E.ON sourcing
projects locked in before of project pipeline be re-tendered to take
strategy
all time high advantage of lower capex 1) Historical data,
Source: CERA

E.ON sourcing strategy supports investing at attractive price levels 25

 3 Pushing technology
Expertise in development of technology is combined with trading view of monetizing assets

Old coal „off the shelf“ Hard Coal E.ON 1100MW plants
(495MW) (800MW)
Efficency 35-40% 45% 47%
Ramp rate +/- 9-10MW/min +/- 24MW/min +/- 26MW/min

Min capacity Approx. 30% 25% 25%

Max capacity 106% 103% 103%
Start up time time up Cold (turbine only) : 9h Cold (turbine only) : 10 h Cold (turbine only) : 3,5 h
to base load Warm (turbine only): 2h Warm (turbine only): 3 h Warm (turbine only): 1,8 h
Hot (turbine only): < 1h Hot (turbine only): 110 min Hot (turbine only): 25 min
Efficeny figures assume direct cooling

Investing in highly efficient plant whilst maintaining flexibility to capture the highest prices 26
 4 Superior site selection and site access

Value drivers Generic plant E.ON Examples Added value

(standard new entrant)

Maasvlakte 3, Grain, Malmö, y E.ON has access to

Direct cooling 8 9 Irshing, Gönyü, Algeciras attractive brown-field
sites suitable to ~125
Maasvlakte 3 - Cape size GW of conventional new
Fuel logistics Various 9 shipping build
y Being site owner helps
CHP component 8 9 Grain, Malmö smooth consenting
process
Standard Maasvlakte3-unconjested zone
Grid connection charge
9 Grain - low locational charge
y A good site contributes
circa 10%1 to NPV of
Minimum project
All coal plants TUV Certified
CCS Readiness
Standards
9
Maasvlakte 3, Datteln

1. Based on CCGT

E.ON Land Bank means we have access to the best sites and we employ
the best site selection techniques 27
 5 Effective commissioning

Example: CCGT commissioning support

Monthly availability Spanish CCGT Escatron

y Technical experts advice in commissioning and

% operations of new installed CCGT in Spain
100
y Collaboration from the CCGT fleet provides
faster & cheaper commissioning of new build
80
plants

60 Planned overhaul y Technical experts advice in commissioning and

operations of new installed Flue Gas
Desulphurisation (FGD)
40

Commissioning Turbine failure;

20
date Begin of E.ON support

0
Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Los Barrios, Spain Puente Nuevo, Spain

Groupwide experience enables us to perform world class commissioning across the EU 28

6 Excellent processes in place
Best in class processes
Measure Example value added

CAPEX forecast Supports timing of investments

Procurement Realization of scale effects by central procurement

Claim management Strengthening of legal position

Group-wide standards to control risks in all project

Risk management
phases

One organization for fossil plant construction Efficient use of scarce resources

One engineering organization Standardization, clear responsibilities

Ad-hoc/Case by case support by E.ON top mgmt Support of administrative processes ensuring timeline

Optimal delivery setup

After concentration on cross-market new build of fossil power plant scope is now extended across
technologies (e.g. nuclear)

E.ON has developed the right tools and setup to add value 29
 7 New industrial logic to fleet management

Traditional MU/ COC approach Progression to Fleet Management Centre approach

Example for steam plant

E.ON steam plants E.ON steam plants

MU Nordic Steam Fleet Management
Center

MU UK
One Steam Fleet
Management Center

MU CE
MU Spain
MU Italy

Past: national generation organizations New functional empowerment of generation

y Focus on local markets and local potential y Strong European fleet mind set
y Selected international synergies y Focus on European market
y Focus on international networks and y Fleet management centers for all technologies
knowledge management (CCGT, hydro, nuclear)

Functional empowerment unleashes full potential of E.ON’s generation business 30

 7 Benchmarking – fossil fleet
Power plant benchmarking across the Group
y E.ON’s continuous improvement process is
focused on the following:
11. y Benchmarking
High Best performer y Plant improvement plans
average
22. y Peer reviews
y Pan EU portfolio delivers a variety of
Performance level

Average fleet
performance* benchmarking opportunities
y Involvement of Endesa plants confirmed pan-
EU approach, by bringing new best practice
into the Group
y Every power plant has a continuous
Low improvement plan
High Specific O&M costs Low
y External benchmarking confirmed:
1 E.ON has the best performing plant
2 E.ON’s low cost plants are inline with the best
performing average

Pan EU approach gives rise to unique benchmarking opportunities 31

 7 Benchmarking – nuclear fleet

Availability/output of peers’ nuclear fleets

y E.ON is already a top performing nuclear

100%
operator
95% Iberdrola E.ON Exelon
Electrabel
90%
90% y E.ON will operate its nuclear fleet in a
Fortum RWE functional Pan-EU centralized manner
Availability

85%
EDF
80%
Vattenfall
y Competitors only operate national fleets
75%
y Strive to increase performance further
70%
British Energy
65% y Nuclear competencies mean E.ON is well
7GW
60% placed to deliver and efficiently operate new
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 65 66 build plants
Capacity, GW

Bubbles size represents generation output

E.ON strives to be the leading Europe wide nuclear fleet operator 32

 7 Operational improvements

Example: E.ON Climate & Renewables

Availability increase O&M cost reduction

Scale of projects and
SCADA1 Return Improvements
harmonized WTG2 use
Direct positive impact on
Optimized spare part concept Spare part pooling
financial returns through
CMS3 and predictive
leverage effects on:
Widen O&M contracts
maintenance y Costs
Access to critical equipment Optimized share of 3rd party y Revenues
and tools O&M
Proper and complete
O&M framework agreement
documentation

2011 target availability 98% 2011 target O&M cost reduction 10%
1: Supervisory Control And Data Acquisition
2: Wind Turbine Generator
3: Condition Monitoring System

Group-wide operational standards enable EC&R to leverage

on significant performance drivers 33
Value-creative portfolio

Project level
Value drivers

Strategy Power
Project Power plant
robust portfolio Site selection marketing
execution operation
approach (EET)

20% 10% 20% 40% 10%

Portfilio delivers at least 100 bps above WACC

34
This presentation may contain forward-looking statements based on current assumptions and forecasts made
by E.ON Group management and other information currently available to E.ON. Various known and unknown
risks, uncertainties and other factors could lead to material differences between the actual future results,
financial situation, development or performance of the company and the estimates given here. E.ON AG does
not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to
conform them to future events or developments.

35