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Embracing the Energy Transition: Urbanization, Electrification, and Digitalization

Explore Enel's innovative approach to the evolving energy sector, focusing on urbanization, decarbonization, and electrification trends. Learn about renewable capacity growth, electric vehicles, and digitalization's impact.

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Embracing the Energy Transition: Urbanization, Electrification, and Digitalization

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  1. Luca Emilio Agrò Head of Insurance Sourcing and Management AFC – Finance & Insurance

  2. Enel is OPEN POWER What’syour Power?

  3. The contextwherewe operate

  4. The contextwherewe operateThe evolution of the energysector Urbanization Decarbonization Electrification Demand growth By 2050,6.3 billion peoplewill live in cities Over 175 GW Renewable capacity added in 2017 Electric vehicle sales will reach 1.5 million in 2018 In 2040 Electricity demand will grow globally by more than half compared to today’s level The energy sector is experimenting a deep transformation, Digitalization will change the sector paradigm Source: United Nations 2014; BNEF 2018 and WEO 2017

  5. The contextwherewe operateIn the next few years 10 out of 12 most populated cities will be in non-OECD areas Urbanization and industrial revolutionwillmove the centre of the world Forcesas industrial and urbanrevolution Beijing Circle areas proportional to population in - Tokyo 1950 1990 2015 2030 Delhi Shanghai Dhaka Cairo Karachi Mexico City Mumbai Largest megacities by 2030 Lagos City Tokyo Delhi Shanghai Mumbai Beijing Dhaka Karachi Cairo Lagos Mexico City Sao Paulo Kinshasa Pop (mln) 37,2 36,1 30,7 27,8 27,7 27,4 24,8 24,5 24,2 23,9 23,4 20,0 Kinshasa 60% 54% 43% 30% Sao Paulo Buenos Aires 1950 1990 2015 2030 Urban population as % of total Source: United Nations

  6. The contextwherewe operateImportant shift toward Asia Pacific countries in terms of economic growth GDP as % of World GDP Enel core countries* Asia Pacific Africa Rest of world 54% 41% 40% 35% 32% 23% 22% 21% 20% 5% 3% 3% 2008 2017 2050 *Enel core countries group excludes India Source: Oxford Economics model

  7. Whowe are

  8. We are a leader in the new energy world 1st network operator1 73 mn end users 43.4 GW capacity2 World’slargest private player2 in renewables 46.4 GW capacity3 6.2 GW demandresponse Largestretailcustomerbase worldwide1 70.4mncustomers4 • By number of customers. Publicly owned operators not included • By installed capacity. Includes managed capacity for 4.2 GW • Itincludesnuclear • Includes customers of free and regulated power and gas markets

  9. Our business model is well diversified and provides long term visibility North & Central America Italy Iberia Rest of Europe 0.7 €bn 7.1 €bn 0.5 €bn 3.6 €bn 2018 Group EBITDA1 South America Africa, Asia & Oceania 16.2 €bn 0.1 €bn 4.4 €bn • As of 2018. Breakdown excludes -0.2 €bn from holding and services • Presence with operating assets or through Enel X

  10. Sustainable, profitable, digitalized and customer centric 2015 2018 Renewables focus 41% 46% Owned RES capacity/Total capacity % Decarbonization CO2 Footprint Specific Co2 emissions kg/kWheq 0.409 0.356 End Users mn 61 73 Customer centricity Retail customers Mn customers in the free market 17 22 New businesses GrossmarginEnel X €bn n.a. 0.5 Digital impact % of digitalinvestments on total n.a. 19% Group simplification Group net income/total net income 64% 70% Value creation • Cash flow generation FFO – gross capex €bn 1.8 2.6 Shareholderreturn DPS €/sh 0.16 0.28

  11. Our strategy delivered growth while improving our financial strength • Averagecapex(€bn) • Net income(€bn) EBITDA (€bn) • FFO/Net Debt Net Debt (€bn) 37.5 41.1 +41% +8% +18% +200bps Rating1 BBB BBB+ • Standard & Poor’s

  12. Strong commitment to our SDGs targets Target 20201 Engaginglocalcommunities(mn beneficiaries) 2018E1 High-quality, inclusive and fair education 0.9 0.8 Access to affordable and clean energy mainly in Africa, Asia and Latin America 2.22 3.0 Employment and sustainable and inclusive economic growth 1.8 3.0 Climatechange 2018E 2020 Reduction of CO2 specific emissions (kg/kWheq) 0.39 <0.35 Cumulated figures since 2015 In the whole Group perimeter, 4.9 mnbeneficiarieswerereached

  13. Commitment to all 17 SDG 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Public commitment

  14. Integrated model captures opportunities from energy transition Griddevelopment & automation Growth in renewablecapacity Full speedrenewablestowards a full decarbonizedprofitable mix Foster digital networks as key infrastructure in the energy transition Urbanization Electrification Digitalization Decarbonization Innovation boost Customers +4 mn ENERGY TRANSITION Urban infrastructure e-Mobility Lead citiestransformationthroughinfrastructures and platforms Push mobility electrification to capture future value

  15. Asset development supports our growth ambitions Total gross capex by business and by nature1 2019-21 • Assetdevelopment by business1 2019-21 27.5 €bn 27.5 €bn 16.5 €bn • Includes 1.6 €bn BSO capex

  16. Renewables are the driving force of growth • Assetdevelopment capex1 2019-21 • Additionalcapacity by geography Higher investments to build 11.6 GW additional capacity Focus on markets with integrated presence & on developed countries 10.6 €bn ~11.6 GW2 Value creation through decarbonization & integration with retail portfolio By technology Maximization of portfolio returns • 70% • 28% South America Italy North & C. America Africa, Asia & Oceania Rest of Europe Iberia • Includes 1.6 €bn BSO capex • Of which 1.8 GW related to BSO and 0.8GW related to JVs.

  17. Networks’ investments tailored to maximize asset base value • Grosscapex 2019-21 by nature & by geography Restructuring of Eletropaulo Completion of Goias turnaround Resiliency and flexibility in Italy and Spain 11.1 €bn 11.1 €bn Digitalization to promote efficiencies and improve service quality 2021 RAB ~45 €bn: ~30% South America, ~70% Europe

  18. Enel X capital allocation addresses customers’ needs • Grosscapex 2019-21 by nature & by geography Smart lighting and fiber optics for cities Electric mobility in Italy, Spain, US and Romania 1.1 €bn 1.1 €bn Demand response and storage solutions for C&I customers Energy efficiency solutions

  19. Digitalization fuels economic benefits and satisfies customers needs Asset • Keyhighlights • 2019-21 DigitalizationCapex • Cumulatedeconomic benefits (€bn) ~4 €bnfor networks digitalization Customer Advanced automation of construction and O&M of renewableassets 5.4 €bn Increasedflexibility and automationfor thermal generation plants People Processautomation and increasedoffering to customers Asset Customers People

  20. Sustainable, profitable, digitalized and customer centric 2015 2018 2021 Renewables focus Owned RES capacity/Total capacity % 41% 46% 55% CO2 Footprint Specific Co2 emissions kg/kWh 0.409 0.356 0.345 End Users mn 61 73 75 Retail customers Mn customers in the free market 17 22 36 New businesses GrossmarginEnel X €bn n.a. 0.5 0.9 2.5 Digital impact CumulatedEBITDA 2019-21 (€bn) n.a. Group simplification Group net income/total net income 64% 70% 71% ~1.7x • Cash flow generation FFO – gross capex €bn 1.8 2.6 4.4

  21. Improving credit metrics Long term credit rating • Credit metrics Rating Outlook Standard & Poors BBB+ Stable Moody’s Baa2 Stable Fitch A- Stable Net debt/EBITDA FFO/Net debt

  22. Enel Group strategic vision: Sustainability is Value

  23. Road to a Sustainable Business Model • Enel Group strategic vision: “shapers and leaders” of the energy transition Sustainability Value =

  24. Road to a Sustainable Business Model Linking the Purpose and Profit to create value for stakeholders 2019 Letter to CEOs “ We have no intention of telling companieswhat their purpose should be – that is the role of your management team and your board of directors. Rather, we seek to understand how a company’s purpose informs its strategy and culture to underpin sustainable financial performance The largestAsset Management in the World, 6$Tn Asset under Management1 Larry Fink Chairman and CEO of Blackrock, “ 1. Blackrock 4Q 2018 earnings Source: https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter

  25. Road to a Sustainable Business Model ESG investorsattraction and retention Evolution of ESG Funds in Enel’s Share Capital Δ 26.1% Δ 59.3% Δ 77.9% Outstanding position in the main ESG ratings, indices and rankings Increasing ESG investors attraction in the last 5 years Source: Sustainability Planning and Performance Management % Free Float % Share Capital ESG Funds

  26. Enel is positioned among the leading utilities on the main ESG ratings Main ESG Ratings & Indices ESG rater MSCI ESG Universal Indices MSCI ESG Focus Indices Stock Market Indices in which Enel is included 78/100 AA ESG risk 25/100 (2) 85/100 Climate: A- Water: B- (3) 4.7/5 67/100 PRIME (B-) (1) Results as of December 2018 for all except for CDP (January 2019) and Reprisk (April 2019) (1) The scoring methodology of MSCI ranges from AAA to CCC (2) Reprisk measures the ESG risk, the lower the score the higher the performance. They do not elaborate a stock market index (3) The scoring methodology of CDP ranges from A to F. They do not elaborate a stock market index

  27. Enel Green Bond

  28. Application of Green Bond principles Evaluation & selection Use of proceeds Renewable Energy Projects Transmission, Distribution and Smart Grid Projects Innovative Infrastructural Projects Green Bond committeeestablished with cross functional team Oversight of GBF1implementation & allocationprocess Innovation boost Reporting Management of proceeds Annually and until maturity of the Green Bonds issued Reporting available through website and Sustainability report Financingthrough Enel Finance International Green Bond Framework

  29. Enel at the forefront of green bonds Enel Green Bond vs. growing orderbooks Price Spread Green Bond vs. Generic Bond Green Bond (€M) Generic Bond (bps) Green Bond (bps) - - - ~10bps 2017 2018 2019 2017 2018 2019 Fixed-Income markets are not properly pricing in the value of ESG strategies: the logic of use of proceeds is an obstacle to the recognition of ESG value 3x 4,2x 2,3x Oversubscription

  30. Overview on Green Bonds issuedin the last 3 years Enel’s 2019 long €1.00bn 6-year Enel’s 2018 long €1.25bn 8-year Enel’s 2017 long €1.25bn 7-year Enel Finance International NV Issuer Enel Finance International NV Enel Finance International NV Enel SpA Enel SpA Enel SpA Guarantor Senior Unsecured Senior Unsecured Senior Unsecured Ranking Baa2/BBB+/BBB+ (stable/stable/stable) Baa2/BBB/BBB+ (positive/stable/stable) Baa2/BBB+/BBB+ (stable/stable/stable) Ratings Long 6-yr Tenor Long 7-yr Long 8-yr EUR 1.00B EUR 1.25B EUR 1.25B Size ~EUR 4,2B (~4.2x) ~EUR 3.4B (~3,0x) ~EUR 2.5B (~2,0x) Book 21 January 2019 16 January 2017 16 January 2018 Settlement 21 July 2025 16 September 2024 16 September 2026 Maturity MS + 155-160 bps MS + 85 bps area MS + 65 bps area IPTs to MS MS + 135 bps MS + 70 bps MS + 47 bps Reoffer Spread 1.500% 1.000% 1.125% Coupon 1.736% 1.137% 1.225% ReofferYield 98.565% 99.001% 99.184% Reoffer Price Bookrunners Banca IMI, BofAML, CA, Citi, DB, HSBC, JPM, Mizuho, Natixis, SMBC, UniCredit Akros, BIMI, BAML, CACIB, Caixa, Commerz, CS, ING, JPM, Medio, Raiffeisen, SG, UBI, UniCredit Banca IMI, BNPP, CA, HSBC, ING, JPM, Medio, Natixis, SMBC, SG, UBI, UniCredit Financing or refinancing of eligible green projects Use of proceeds Financing or refinancing of eligible green projects Financing or refinancing of eligible green projects Allocation 62% 71% 76% 30% 24% 29% 21% 26% 21% 17% 16% 16% 24% 15% 12% 14% 11% 6% 9% 6% 9% 6% 8% 5% 6% 7% 6% 9% 5% 2% 5% 3% 1% 5% 4% 6% 6% 2% 2% Other Banks Iberia Switz Iberia Italy Switz Other Other Sov Other Iberia Italy Other France France Ins & PF Ins & PF France Fund Man Fund Man Benelux Nordics Fund Man Nordics Italy CB & OI Banks BeNeLux Ger & Aus Ins & PF UK & Ire UK & Ire Nordics Banks BeNeLux Ger & Aus UK & Ire Ger & Aus

  31. Sustainable finance market overview so far1 Sustainable debt issuance by year, $bn equivalent 248.3 198.9 111.6 2 64.6 57.2 40.2 Despite the evident growing path, it is estimated that the green bonds, social bonds and sustainability bonds market accounts for less than 2 per cent of global fixed income issuance 14.8 13.5 5.1 Source: BloombergNEF, Rise of Sustainability-Linked Loans Aided by ‘Principles’, March 21, 2019 March, 2019

  32. «AsIs» and «To Be» approach to sustainablefinance Standard approach AsIs Enel approach To Be Sustainableactivitiesseparated from the business model and financed by ad hoc financialtools A comprehensivesustainable business model that can leverage on traditional and sustainablefinancesynergy Finance to support a sustainable business model, switching from a productperspective to a business model perspective Industrial Business Model Traditional Finance Sustainable Business Model Traditional Finance Sustainable Business Model (assessed by Rating Agencies) Finance SustainableActivities Sustainable Finance Sustainable Finance Current market approach to sustainableactivitiesfinancingstilldraws the line betweentraditionalfinance and sustainablefinance. Instead, ourviewisthatfinancehas to support a «per se» sustainable business model

  33. Set-up of a new cross-functional Team to boostsustainablefinance • Participate in key global sustainable finance initiatives promoted by the relevant organization/associations (e.g. Global Compact, ICMA) collaborating also with other corporations in order to share information, best practices and technical expertise; • Analyze market developments on sustainable finance matters in US and Europe (mainly UN Global Compact and European Commission) and deploy Green Bond initiatives; • Develop internal initiatives and processes, boosting also on digitalization opportunities, to be ready to target market opportunities related to Green Business and in general to Sustainable Finance. A new cross-functional Team Mission Capital Markets Sustainable Finance cross-functional Team Investor Relations Sustainability

  34. Insurance in Enel

  35. Enel’sorganization Global Infrastructure & Networks Global Renewable Energies Global Thermal Generation Global Trading • Global • e-Solutions Italy Iberia • Customers • Local stakeholders • Regulation • Revenues • Cash flow • EBITDA • Best practicesimplementation • Efficiencies in capex & opex • Capital allocation • EBITDA Rest of Europe South America North & Central America Africa, Asia and Australia

  36. Insurance Department’sorganization INSURANCE CAPTIVE Enel Insurance NV RiskAssessment and Insurance Strategy Insurance Sourcing and Management Insurance Global Infrastructure & Networks Insurance Global Thermal Generation Insurance Global Trading Insurance Enel X Insurance Global Renewable Energies Insurance Argentina Insurance Brasil Insurance Russia Insurance Central America Insurance Colombia Insurance Chile Insurance Iberia Insurance Italy Insurance North America Insurance Peru Insurance Romania Insurance Rest of Europe Insurance Africa, Asia and Australia

  37. Insurance Activities Insurance in Countries / Regions Insurance in Global Business Lines Insurance in Holding • to support Holding Insurance in risk assessment activities carrying out the Loss Prevention Program • to perform, according to Holding guidelines, insurance advisory activities for relevant stakeholders • to collect and consolidate the insurance needs, liaising with relevant P&C unit for budgeting topics • to negotiate and acquire LOCAL insurance policies, then ensuring the daily management • to manage ordinary claims • risk assessment for the insurable risks • Loss Prevention Program • definition of coverage strategies and insurance programs design • insurance data gathering and IT needs • Enel Insurance NV strategy setting • negotiation and acquisition of GLOBAL insurance contracts and related services • management of insurance programs • management of Group relationships with brokers, insurance and reinsurance companies • advise on the interpretation of the insurance contracts • management of the major claims and coordination of Region, Country and Global Business Lines about all the other claims. • support to Holding Insurance in the relevant risk assessment activities and for the Loss Prevention Program • definition of the insurance needs at Global Business Line level, liaising with relevant P&C unit for budgeting topics • performing, according to Holding guidelines, insurance advisory activity related to business development projects and extraordinary operations • monitoring of claims management and handling of the relevant claims • as for Insurance Enel X, to support the relevant Global Product Line for the structuring and offering of any insurance related product to their customers or partners

  38. Local Policies vs Global Programs • main LOCAL Insurance Policies • Nuclear (Spain) • specific Property and Liability policies • Real estate • Vehicles • Credit • Surety • Personal Acccidents and Professional Desease • Life • Professional Liability • Drones • others • GLOBAL Insurance Programs • Property Damages + Business Interruption + Terrorism • General Liability + Environmental Liability • Directors and Officers Liability • Charter’s Liability and Marine/Cargo/Transports • Erection Risks • Employee Benefit • Travel and Expat • Cyber Risks FrontalannualPremiums (net of taxes) about 200 M € 20% 80% Renewables Business Interruption Non renewablesassets Property Group totalinsuredvalue: 212,6 B € Renewablesassets Non Renewables Business Interruption

  39. Insurance activities in details • RiskAssessment and Insurance Strategy • Insurance Sourcing and Management • 1. Risk assessment for the insurable risks • 2. Loss Prevention Program • 3. Definition of coverage strategies and insurance programs design • 4. Insurance data gathering and IT needs • 5. Enel Insurance NV strategy setting • 6. Negotiation and acquisition of global insurance contracts and related services • 7. Management of insurance programs • 8. Management of Group relationships with brokers, insurance and reinsurance companies • 9. Advises on the insurance contracts • 10. Management of the major claims and coordination of Region, Country and Global Business Lines about all the other claims

  40. Captive Enel Insurance N.V. - A 20 years history 2018 2006 2000 2011 2016 Enel Insurance N.V. Compostilla S.A. Enel.Re Limited Enel Insurance N.V. Enel Insurance N.V. Compostilla S.A. Endesa S.A. Enel Investment Holding Endesa S.A. 258 M€ equity 3 M€ equity Enel Investment Holding 12 M€ equity Enel S.p.A.

  41. Captive Enel Insurance N.V. - Organizational structure Mr. G. Frea (Chairman) Mr. C.P. de Jonge (Independent) Ms. J. Homan (Independent) Mr. P. Kabel (Independent) Mr. R. Melandri (Chairman) Mr. A. Nervini Mr. L.E. Agro' Mr. F. Lato Supervisory Board Management Board Compliance Officer Internal Audit Strategy, ICT & Actuarial Mr. R. Melandri Sourcing & Claims Management Mr. L.E. Agro’ Administration, Finance, Control and Organization Mr. A. Nervini Risk Management & Compliance Mr. F. Lato

  42. Captive Enel Insurance N.V. - Regulatoryframework Achievementof an efficient SII implementationwith the creationof a SII compliant system of governance. Approachaddressingall the aspects of SII articles in the view of the DNB supervision isthe mostchallengingobjective of the Captivefor the time being. SII REGIME Pillar III Pillar I Pillar II • Valuation • SCR / MCR • OwnFunds Quantitative INSURANCE SERVICES Complexity RISK MANAGEMENT • Disclosure • Reporting • ORSA • RiskGovernance • ProcessControl • Standard Formula • InternalRiskModel CAPITAL MANAGEMENT CORPORATE MANAGEMENT Qualitative ACTUARIAL SERVICES Time GOVERNANCE AND COMPLIANCE LEGAL AND REGULATORY To operate a captive effectively and fullycompliant, a wide and comprehensivevariety of disciplines and specialtiesisnowrequired far from the past.

  43. Captive Enel Insurance N.V. - Main Results M € RATING A- 2017 2016 2018 BALANCE SHEET 563.7 Investments 571.7 543.9 “A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” to Enel Insurance N.V. The outlook remains stable. The ratings reflect Enel Insurance’s good risk-adjusted capitalisation, as well as its robust, albeit volatile, performance record, which has been highly reliant on investment income. The ratings also reflect the captive’s importance within Enel Group’s risk management framework. Net Technical Provisions 383.7 380.6 342.6 Equity 251.8 269.9 257.8 114.3 Gross Premiums 115.4 128.8* PROFIT AND LOSS 98.5 99.6 98.1 Net Earned Premiums (7.9) 65.0** 8.6 Net Profit (Loss) No Parent Company Guarantees 184% 199% Solvency Ratio 208% SCR (*) Different structure of reinsurance and retrocession for the Global Property Program (**) Net Profit 2016 includes a net Premium price of 28.0m for the sale of Compostillasplusaround 30m of releasing of best estimate margin in the Claims provisions

  44. Captive Enel Insurance N.V. - Insurance Businesses • Licensed by the DNB in 2012 for the following classes of business: • Accident insurance (1) • Health insurance (2) • Goods-in-transit insurance (7) • Fire and natural forces insurance (8) • Other property damage insurance (9) • General liability insurance (13) • Surety (15) • Pecuniary loss insurance (16) Enel Insurance N.V. currently provides reinsurance cover in respect of PD/BI, General and Product Liability, Environmental Liability, Personal Accident and Marine for the companies of Enel Group in M € 2018 Total Net Earned Premiums 98.1 Total Written Premiums 114

  45. Conclusions

  46. Enel hasbecome leader financially and industriallyspeaking Enel established a new historic record on 21 May 2019, reaching its highest ever market capitalisation since going public. Foremost European utility in terms of market value at 58.7 billion euros. Worldwide, Enel ranks second only to the American NextEra Energy. Enel Open Company EBITDA € Bn Group Net Income € Bn Renewable InstalledCapacity GW TransportedElectricity (TWh) Retail Customers Mn 16,2 4,7 43 485,4 70 2018 Data

  47. Let's work sustainably together. How?

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