Session vii e bradley

Energy Transition and New Energy Opportunities Global Interdependence Center Philadelphia, PA

Eric Bradley, Senior Vice President November 5, 2015

Presentation Topics  Introduction to ENGIE

 North American Energy Transition

 Our response to the energy transition

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Engie Overview

(1) At 100% as of 12/31/14

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North American Business Positioned to Adapt to the Energy Transition (1/2) Power and Natural Gas 

Own and/or operates power, cogeneration, steam, and chilled-water facilities representing a capacity of about 13,000 MW of electricity generation, 3.4 million pounds per hour of steam, and 37,000 tons of chilled water

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A renewable portfolio consisting of 32 wind, solar, hydro, and biomass assets, with a capacity of close to 1,000 MW — Average CO2 emissions of 0.52 tons/MWh in 2014 ; U.S. average is 0.58 tons /MWh — Through our natural gas plants and renewable operations, ENGIE’s average emissions were 0.44 tons /MWh in 2014

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One of the largest non-residential retail energy suppliers in the U.S., offering grid electricity to over 60,000 accounts with an estimated peak load totaling nearly 10,000 MW

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Power supplier to nearly 50% of Fortune 100 companies

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An LNG business in New England that serves nearly every gas utility and key power producer in New England; operates busiest LNG truck loading operation in the world, helping utility customers stockpile supplies.

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North American Business Positioned to Adapt to the Energy Transition (2/2) Services 

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Ecova: Total Energy and Sustainability Management 

Founded in 1996, and purchased by ENGIE in 2014

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Over 700 commercial and industrial clients; nearly 50 utility and energy efficiency organization clients

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Processes nearly $20B in energy and resource expenditures

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Saved $1.6 billion for C&I clients in past two years

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ENERGY STAR award winner ten years in a row

Cofely: facilities management 

Operations & Maintenance of Technical Installations

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Energy & Environmental Management

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Integrated Facility Management

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Mechanical construction (HVAC, plumbing, controls)

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Over 25 Million sq. feet of buildings under management

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Powerful Forces Are Shaping the North American Market Implications • Re-orientation of gas flows across North America, and new pricing mechanisms

Shale gas

• New uses for gas; new investment in gas-intensive manufacturing • $1+ trillion investment in supporting infrastructure

• US EPA rules & low cost gas enabling acceleration of coal/oil plant closures

Energy policy

• Energy Efficiency and subsidized renewables as a tool for compliance • Wholesale power markets in transition – policy adjustments are needed

• Distributed generation based on natural gas; distributed solar PV; batteries

Disruptive technology / digitalization

• More integrated, 2-way grid • The empowered consumer, serving as both producer and consumer • Smarter use of energy through diagnostics and automation • Mobile engagement, and higher consumer expectations, will drive service quality, ease of use, and personal customization

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Shale: Driving the Shift towards Lower Carbon Generation Dispatch cost – gas vs. coal (Texas)*

U.S. CO2 emissions from the power sector (1998-2015)

$60 $/MWh

million metric tons

$30/ton CO2

$50 $40

$30/ton CO2

$30

$4 gas

$20

$3 gas

$2.25 coal

$10 $0 Generation

CO2 emissions

Natural Gas CCGT

Coal plant (PRB)

• Monthly power sector CO2 emissions reached a 27-year low in April 2015

+

• Decline in coal-based generation driven primarily by decline in gas costs since 2008 • CO2 emissions from coal plant 2.5 times higher than CCGT; with $30/ton CO2 price a coal plant is further disadvantaged by $18/MWh

* 7 heat rate natural gas CCGT; 10 heat rate coal plant Source: EIA; ENGIE analysis

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Energy Policy: Renewables Opportunity Could Be Significant under the Clean Power Plan Estimated Change in Generation Capacity, 2015-2030 Coal retirements

New renewables 249

-104

U.S. Total

• Directional assessment: assumes mass-based compliance, with no leakage and no crossstate trading

GW

California

Northwest/Rockies

• Other estimates result in similar opportunity for renewables, with estimates from 160 GW to 270 GW over the 15 year period

Southwest ERCOT SPP MISO/MRO FRCC

• Full coal retirements from 2012 to 2030 could amount to ~110 GW (~35% of the fleet as of 2010)

SERC

PJM New York New England -40

-20

Source: EPA, SNL data, ENGIE analysis

0

20

40

60

80

100

Note: Capacity factors assumed: coal 60%, renewables: 25%

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Technology: Advanced CCGTs and Utility- scale Solar Compete for Lower-carbon Future Texas Example Economics

Required price for solar PV* $/MWh

$/MWh 5

$60

30 20 10 $45-$50

4

$50

$48

Natural gas sensitivity ($/mmBtu)

$40

$30

$20

CO2 sensitivity ($/ton)

$3 gas

H-frame CCGT new build (onpeak price)

Utility scale solar in West Texas

Source: IHS

• CCGT new build and utility scale solar not directly comparable as solar needs additional off-peak and firming support

• Various forecast project utility-scale parity (no subsidies) between 2020 and 2030 depending on region

• However, moderately higher gas prices plus a reasonable cost for carbon should make solar a competitive source of energy for the periods it operates

• U.S. Southwest is attractive now; absent ITC, equivalent carbon pricing would have to be ~$30/ton in 2017 declining to ~$15/ton by end of decade

* Southwest solar power prices based on solar resources in Phoenix, Arizona; prices shown are based on solar projects using c-Si technology.

Source: ENGIE analysis; IHS

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Technology: New Lighting and Other Efficiency Gains Could Have Significant Impact on Energy Growth Efficiency gains – Commercial (2011-2040)

Residential consumption change (2011-2040)

• Federal lighting standards are driving out incandescent bulbs, with LED lighting quickly gaining traction • Lighting alone represents ~640 TWh of consumption (nearly 20% of US electricity) with full LED lighting penetration resulting in ~375 TWh reduction in consumption • Load growth could be reduced 0.6 pct points p.a. through 2020, due to LED adoption alone

Source: UBS, EIA, IHS, GSENA analysis

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Technology: Bundling Energy Efficiency plus Distributed Solar for Consumers and Businesses

Rooftop Solar PV High Efficiency HVAC High Efficiency Insulation • LED Lighting • Smart Thermostat 60W incandescent >

Rooftop Solar PV 18 SEER HVAC

Spray Foam

6W LED (540 lumens)

• ~3,000 kWh annual demand reduction

• ~300 kWh demand reduction

• < 4 year simple payback

• Federal minimum for TX available in the market is 14 SEER

• < 2 year simple payback

• 1,000 kWh demand reduction with 18 SEER single unit compared to 14 SEER single unit (with 3 tons of cooling)

Programmable thermostat

• ~8 year simple payback

• ~5,300 kWh annual generation capability for a 4kW DC unit • $600 / year bill reduction vs. $10,000 CAPEX including 30% ITC • ~16 year simple payback

• ~800 kWh demand reduction

• < 1 year simple payback

New business models are emerging that incorporate non-intrusive load monitoring/analysis plus financing innovations to offer customized ‘architected’ solutions for customers 11

At the Group level, a Lower Carbon Future Is One of Our Key Objectives Environmental, Social and Societal Responsibility: Main Targets

Recent decisions: â&#x20AC;˘ To stop all new coal-based power projects â&#x20AC;˘ Commitment to develop 100% of new power projects with low-carbon or zero-carbon technologies

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Within North America, We Are Evolving with a New Strategic Focus Opportunities in Energy Transition Context • Predictive energy management and diagnostics

Engie examples Mobile commerce

Rooftop solar

• Distributed power solutions (e.g., solar, CHP)

Retail Energy and Services

• Price responsive demand; peak demand reduction • Energy efficiency programs

Energy services

Energy consulting

• Electric vehicles

• Contracted power and Combined Heat and Power

Generation

Industrial CHP

Contracted renewables

• Utility scale and community solar • Grid services • Off-grid, remote and transport solutions

Gas

LNG distribution

• CNG (fuel stations, mobile pipelines)

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New Service Offerings to Optimize, Reduce and ‘Green’ Energy Consumption for C&I Customers

Measurement and management

+ Energy analytics and engagement

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Online tools to remotely manage and benchmark multiple client locations (“see more, save more, sustain more”)

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$807 million in cost savings for clients, 12.9 million t CO2e reduction in in 2014; 105 million energy efficient light bulbs distributed

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Acquired October 2015; ‘Big data’ + analytics approach to perform virtual energy assessments on commercial buildings, automate energy audits and track efficiency projects

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Analyzed more than 3 billion sq. ft. office space, identifying 6 TWh of annual energy savings (6% additional reduction potential in Boston*)

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Conventional and renewable energy products, supplied from the grid

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Economic demand response; demand charge management (VRewards program to reduce peak energy consumption)

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Solar PV for C&I customers; Community solar

+ Energy supply and optimization

* From the Building Genome Project for Boston. Boston renowned for EE efforts, ranking #1 in 2013 City Energy Efficiency Scorecard Source: Ecova, Retroficiency, ENGIE

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Re-orienting Our Power Generation Activities

Combined Heat and Power (for reliability and energy efficiency)

Coal plant adjustments

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Engie already an owner and operator of 1.4 GW cogeneration facilities in North America; expanding presence in Mexico

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Focus has been predominantly to industrial users, but broader opportunities to serve commercial customers, critical facilities and cities/territories

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Value proposition is compelling for customer: T&D savings, long-term price certainty, reliability and resiliency

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Energy efficiency benefits are attractive– 25% primary energy savings vs separate heat and power

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Over 80 GW installed; 40+ GW economically attractive opportunity

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Mount Tom, MA: retired coal plant under evaluation for other uses, including a solar farm to serve the local community

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Natural Gas in New England and Beyond for Heating and Mobility 

In addition to selling LNG into the New England gas grid, Engie’s import terminal in Everett, MA includes, — Truck-loading operation to fill LNG trailers for transport to customers in the region

Lower CO2 for transportation 2.2 2.1 8%

2.0

— A tractor filling station to fuel LNG trucks.

Road transport ~30% of Co2 emissions

kg CO2 per mile, Well-to-Wheel

1.9 1.8

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Customers include fuel logistics players, LDCs and commercial clients (e.g., greenhouses) Low oil prices challenge the LNG vehicle transportation business model near-term, but long term opportunities, particularly for LNG in marine and remote/off-grid applications are attractive.

1.7 1.6 LNG/ Diesel blend

LNG SI*

Diesel

Lower CO2 in heating Ton CO2 per 100 MW consumption 80.0 60.0 64% 40.0 20.0

0.0 Gas furnace

* Spark Ignition engine Source: EIA; IHS CERA; AGA, ENGIE analysis

Oil furnace

Electric furnace

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Thank you