Bruce Levy North America Regional Director

1
Bruce LevyNorth America Regional Director
International Power
2
International Power - overview

• A leading independent global power plant
  developer and operator
• with expertise in closely linked businesses such
  as desalination and energy retail
• Our objective is to deliver growth in shareholder
  value through
• investment in power generation and closely
  related businesses
• ensuring a balanced international portfolio in
  terms of markets, fuel, contract type and
  technology
• We create value by
• the efficient operation, financing, and trading
  of our power generation fleet
• maintaining the highest levels of safety and
  environmental performance

3
An international portfolio
Gross capacity in operation 32,949MWNet capacity
in operation 21,239MWNet capacity under
construction 1,028MW
4
A portfolio approach

• Risk mitigation across regions, fuel type, and
  technology
• Balance of merchant and long-term contracted
  assets
• Stable financial performance from long-term
  contracted assets overlaid by merchant market
  returns
• In-depth regional market knowledge
• Knowledge/skill share across portfolio

5
Portfolio breakdown
Net MW byGeography ()
H1 2009 PFO by Geography()
As at 10 August 2009
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International Power key strengths

• Regional knowledge and expertise
• access to growth opportunities across all regions
• Key skills
• development and commercial structuring of new
  projects
• project finance
• MA
• management of EPC contracts
• trading
• operations and maintenance
• partnering
• Rigorous capital allocation
• Investment Committee process
• only the best projects succeed
• flexibility to deploy capital within the
  portfolio where we see the best returns
• financial discipline

7
Capital structure - overview

• Very secure capital structure
• strong liquidity at parent as at 30 June 2009
  corporate cash of 368m and free cash flow of
  326m
• proceeds from assets sales will further
  strengthen corporate liquidity
• low debt at parent level
• 88 of total debt non-recourse at asset level
• Project finance still available for high-quality
  sponsors and projects
• similar tenors for long-term contracted assets,
  debt term matches PPA length
• shorter tenors for merchant assets
• club deals instead of syndication
• higher margins
• lower base rates means similar all-in costs
• Successful agreement of revolving credit facility
• US780m in place to October 2012
• 19 banks participated

8
Refinancings

• SEA Gas (Australia)
• A425m refinancing signed on 28 October 2009, to
  run to October 2012
• Hazelwood (Australia)
• A445m tranche due in February 2010
• in discussions with lenders
• linked to outcome of Carbon Pollution Reduction
  Scheme (CPRS)
• US CCGT Fleet
• US769m due in July
• in discussions with lenders
• evaluating variety of options
• Strong corporate liquidity gives IPR leverage in
  negotiations with lenders
• Experienced teams in place across the Group and
  strong relationship with banking group
• No refinancings in 2011

9
US gas market outlook

• Natural gas sets marginal price of power much of
  the time in Texas and New England
• Power prices are set by less efficient plant than
  IPR US fleet, therefore gas price is the primary
  driver to power price in the short-term

US Gas Price Movements

• Current View
• shale gas production - likely to influence
  forward gas prices
• market fundamentals remain in over supply with
  storage at capacity
• gas prices remain subject to production levels,
  weather load
• Trend
• early 2008 gas and oil markets strong, new
  supplies brought on line
• mid 2008 recession impacts, gas demand/price
  fall
• demand stabilized small rally due to cold start
  to winter in the Northeast
• Supply
• rig count reacted to lower prices with 60 drop
  in drilling
• supply has begun to reduce slowly
• new exploration focus in on shale gas supply

• Demand
• gas demand down, particularly industrial, due to
  recession
• gas demand for electricity generation stable
• at lower gas prices CCGTs in some regions
  displace coal adding to gas demand

10

Texas

• Markets affected by gas prices, economic downturn
  and weather conditions
• Pricing environment
• spot prices higher than forward prices, however
  little sign of improved pricing in 2010
• Long-term fundamentals remain strong
• even with overall demand reduction, peak demand
  reached record levels in June
• some cancellation of new-build (primarily wind)
  and little evidence of planned new-build

11

New England

• Lower peak demand
• low temperatures and record rainfall
• economic downturn
• ISO-New England capacity payments currently over
  50 of 2009 revenue
• mitigates effect of mild weather and reduced peak
  demand
• auction for 2012/2013 cleared at minimum price of
  US2.95/kW-month with 4,487MW of excess supply
• Increasing dependence on potentially unreliable
  demand response and imports
• in 2011 reserve margin only 17 without demand
  response and imports

Full Year
(1)
New England
2008
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PJM

• Primary revenue source is capacity payments
• Pricing levels set through 2013
• 2010/2011 174/MW-day
• 2011/2012 110/MW-day
• 2012/2013 16/MW-day
• 2.5 holdback for demand response
• price separation within region
• new capacity resources included 5,700MW of demand
  response
• low prices do not encourage new-build
• Anticipate changes to be introduced prior to the
  2013/14 auction (May 2010)
• various changes supported by generators,
  utilities and PJM
• First Energy joining PJM market
• will tighten supply/demand balance in western
  region
• beneficial to IPR

13
AIM PowerGen acquisition

• Portfolio of wind assets in Canada
• 40MW in operation in Ontario
• 40MW under construction in Ontario (Harrow)
• COD expected H1 2010
• advanced development pipeline throughout Canada
  of 1,200MW
• Ontario Feed-In Tariff programme introduced in
  October 2009
• 20-year feed-in tariff of C0.135/kWh
• streamlined approval process and interconnection
  priority
• supports Ontarios goal of eliminating coal-fired
  generation by 2014
• C82 million of non-recourse project finance
  raised for Harrow
• 20-year term with fixed interest rate
• Gain strong local management team with 15
  employees
• supplemented by IPR global expertise
• strong platform to organically grow the business

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US CO2 cap and trade legislation

• House of Representatives Waxman Markey Bill
• 17 reduction of 2005 greenhouse gas emissions by
  2050
• allowances for 90 of generation industrys CO2
  emissions
• provides specific protection for merchant coal
• Senate two separate bills proposed
• Bingaman Murkowski Bill
• no cap and trade provisions
• targets 15 of US demand from renewables
• Kerry Boxer bill
• 20 reduction of 2005 greenhouse gas emissions by
  2050
• similar allocation formulae as Waxman Markey but
  overall amount yet to be determined
• Senate must agree one bill, then negotiate final
  bill with House
• Legislation unlikely to be passed prior to 2010
• Impact on IPR fleet
• minimal impact on efficient gas-fired assets
• Coleto Creek coal-fired asset expected to receive
  allowances

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Europe - UK market update

• Market affected by reduced demand and low gas
  prices
• Looking forward
• 12,200MW of thermal retirement by 2016
• 5,600MW of nuclear retirement by 2017
• system not as volatile as 2008 however ageing
  fleet creates potential for short-term pricing
  volatility
• IPR balanced and flexible portfolio
  well-positioned to optimise returns
• Saltend excellent performance/beneficial gas
  contract
• strongly contracted for 2010
• Deeside flexibility to capture price
  volatility, strong performer in a low gas price
  environment
• Rugeley
• FGD operational June 2009, now has improved
  operating flexibility
• 80 forward contracted for 2010 at a dirty spread
  of 27/MWh
• First Hydro unlikely to repeat strong H2 2008
  performance, well-positioned for any unplanned
  short-term volatility

16
Europe - Czech business

• Agreed to sell Czech business to JT Group for
  net cash proceeds of some 590m
• unsolicited offer
• Attractive price represents excellent shareholder
  value
• High performing asset, but risk profile includes
• security and pricing of long-term coal supply
• less beneficial CO2 allowances in Phase III of
  the EU Emissions Trading Scheme
• significant capital expenditure to comply with
  environmental regulations
• declining market for district heating
• limited growth potential

17
Australia market update

• Significant improvement in results across the
  portfolio
• improved availability
• higher prices
• price spikes from extreme weather events
• Small increase in reserve margin
• reduced demand forecast in 2010
• no material change on supply side
• Some reduction in forward prices
• mild winter
• increased trading activity following CPRS delay,
  but still below historic levels
• Hazelwood 30 forward contracted for 2010

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Australia - CPRS

• Changes to proposed CPRS announced by Government
  in May
• implementation delayed by one year to 1 July 2011
• price of carbon will be fixed at A10/tonne for
  first year
• Outstanding issues
• number of emission permits made available with no
  charge
• transition period - currently five years
• CO2 reduction target by 2020
• IPR very actively engaged
• Next steps
• defeated in Senate vote in August due to
  opposition from Liberals and Greens
• Liberal opposition pushing for emissions trading
  scheme that includes improved compensation for
  generators
• increased allocation of free permits
• longer transition period
• legislation scheduled for second debate in Senate
  in November
• double dissolution of Parliament if defeated a
  second time

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History of successful growth

• Operational capacity more than doubled since 2000
• Experienced development and financing teams in
  place in each of our five regions

2000
8.3
North America
2001
8.9
2002
10.5
Europe
10.6
2003
Middle East
15.3
2004
Australia
15.9
2005
18.5
2006
Asia
18.8
2007
21.3
2008
25
20
15
10
5
0
International Powers Net GW

In 2007, IPR sold its interest in Malakoff and
signed an agreement with Mitsui to align its
percentage holdings in its UK subsidiary power
stations. This resulted in the net sale of 935MW
(net) during the year.
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Growth opportunities

• IPR continues to actively pursue wide range of
  growth opportunities
• long-term contracted greenfield projects
• renewables - acquisitions and organic growth
• expansion of existing assets
• merchant assets in key markets
• North America
• Canada - organic growth of renewables portfolio
  on back of AIM PowerGen acquisition
• US - new legislation creates incentives for
  investment in renewables
• option to expand Coleto, subject to clarity on
  carbon and off-take
• Middle East
• bid submitted - Tarfaya 300MW wind in Morocco
• in near-term bids expected in Oman, Saudi Arabia,
  Morocco, Tunisia and Abu Dhabi
• region still expects growth of 50GW of power and
  2,000MIGD of water in medium-term
• potential new markets - northern and southern
  Africa

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Growth opportunities

• Asia
• Paiton 3 expected to close shortly
• economies still experiencing strong growth
• potential new markets - Vietnam, Philippines
• Europe
• continue organic growth of renewables portfolio
• seek out opportunities for long-term contracted
  assets
• potential to increase existing capacity (UK,
  Portugal)
• Australia
• New South Wales privatisation
• clarity on CPRS required before further
  investment decisions can be made

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Financial summary
PFO (m)
Free cash flow (m)
1,050m
904m
653m
773m
513m
456m
536m
285m
222m
104m
2004
2005
2006
2007
2008
2004
2005
2006
2007
2008
Earnings per share (pence)
Dividendper share (pence)
12.15p
32.4p
10.16p
27.1p
22.4p
7.9p
14.6p
4.5p
8.6p
2.5p
2004
2005
2006
2004
2005
2006
2007
2007
2008
2008
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Summary

• Leading global power plant developer and operator
• deep experience across most technologies
• high quality asset portfolio
• International portfolio approach continues to
  deliver significant benefits
• balance of merchant and long-term contracted
  assets
• excellent access to growth opportunities
• Fundamentals in our markets remain attractive
• Proven track record of delivering growth and
  value
• underpinned by strong capital structure
• good liquidity with 368m cash at corporate at
  half year
• strong free cash flow generation