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MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS AND THE CEO

Dear stakeholders,

In the current uncertain environment, EDP Renováveis’ strategy is proving to be an effective approach. In 2010, we made the right decisions to face and prepare for a demanding environment while maintaining our leadership position in the renewable sector.

One of the main drivers of our strategy is the ability to adjust to an increasingly complex world. the actions taken in 2010 clearly demonstrate this reality. Flexibility, opportunity and optimal execution are the “name of the game” in order to control risks and maximize profitability.

In the context of slow economic growth, volatile financial markets, increasing sovereign risk and regulatory pressure throughout the world, anticipation and flexibility were absolutely key to maintain an appropriate equilibrium of our three strategic pillars and keep our leadership position in the sector. early in 2010, EDP Renováveis led the industry when it announced a reduction in pace of growth and, at the beginning of the 4th quarter, announced a further slowdown, anticipating a deterioration of market conditions and lack of Federal support towards renewables in the U.S. market.

Growth – Our operational results show a very strong performance. In 2010, we installed 1.1 GW of clean, CO2 free energy capacity worldwide, reaching a total of 6.7 GW installed capacity.

Profitability – Our EBITDA grew more than 30% and our Cash Flow from operating activities grew more than 45%. Our net profits stood at 80 million euros. However, our capital structure was maintained at adequate levels, with financial debt representing no more than 25.5% of total assets. We have also continued to improve efficiency levels. Availability of the operational portfolio improved significantly in 2010, reaching 97%, while the average load factor of our portfolio stood at a strong 29%, maintaining a premium vs. the sector in our main markets.

Risk profile – Strong focus on managing risk exposure is a priority. In 2010, we signed more than 1.1 GW of Power Purchase Agreements (“PPA”) worldwide. In the U.S. we closed up to 841 MW, the largest amount achieved by any of the operators in that market. Currently, 88% of our operational portfolio has limited exposure to short term price volatility through a combination of hedges, feed-in tariff, regulated floor prices or long-term PPAs.

We have prepared for the future. At the end of 2010, we have 649 MW of capacity under construction and a worldwide pipeline of more than 31 GW in 11 countries. In the UK, we were awarded 1.3 GW of off-shore capacity. In solar, we have 450 MW of projects in pipeline and are analysing opportunities both in new technologies and new markets. these provide additional opportunities and flexibility to continue ensuring a profitable growth for the company.

The changing world has also impacted the way stakeholders perceive the companies’ results. today, beyond economical performance, sustainability and social responsibility are also key to long term profitability.

EDP Renováveis leads the way in these domains. this is why we actively engage with society and all of our partners. Since the early stages of our activity, we promote an open and healthy dialogue with all parties involved in our activities. In all geographies in which we are present, jobs are being created, local communities are being supported and infrastructures are being developed or improved. this is the way to truly make a difference.

EDP Renováveis contributes decisively for EDP Group’s global leadership position in what concerns sustainability - 100% of the generation we produce is renewable. the 14.4tWh produced in 2010 avoided the emission of 7.3 million tons of Co2 into the atmosphere.

2011 is set to be a challenging year as well. the european financial and political situation is under scrutiny. In the U.S., the obama administration will start the second half of its mandate after a first half where environmental policies were not particularly successful.

However, positive signs came from the un Climate Change Conference in Cancun as the world still believes that immediate actions are required to manage the risks of global warming and energy independence continues to be a key theme in policy making.

Renewable energy has an undisputable role to support this vision and to contribute to a sustainable development.

We strongly believe that a balanced mix including the various renewable sources, favouring those in a more mature technological stage and a sensible introduction of new renewable technologies to the market are key to ensure the long-term sustainability of the sector.

Furthermore, the sector has the responsibility to adjust the wrongful perception regarding its role and contribution to the society. renewables are a decisive part of the solution. they contribute for economic growth, job creation as well as more competitive, cleaner and safer societies. EDP Renováveis in particular is in the forefront of this effort. the example of the successful outcome achieved for transitory remuneration of Wind Farms in Spain clearly demonstrates that the Sector and EDP Renováveis are both part of the solution.

This is why we believe EDP Renováveis is on the right path, with the right strategy, given the flexibility provided by the choices taken in the past to adapt to different future scenarios. Simultaneously, we will continue to reinforce our corporate culture, consolidate the organization and its processes, develop our people and partner with all our stakeholders to continue the successful path.

To execute our strategy, we counted on the work and dedication of all our 822 employees. they are key to our success. this is why we more than doubled our investment in training and developed new benefits that go far beyond legal requirements, with a strong focus on promoting work/life balance. We have also launched our own Corporate university, which will promote career development and knowledge sharing inside the company.

Finally a word to our shareholders to thank them for their support and confidence: EDP Renováveis is a company which aims to combine the principles of environmental sustainability with financial and business acumen. In our yet short existence, we have managed to progress on the path we originally chose, combining loyalty to our principles with prosperous progress.

To all our stakeholders, thank you.

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