Germany, Spain, Denmark European wind energy leaders. Examples of rational use of energy resources, to face a challenging future

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1 Germany, Spain, Denmark European wind energy leaders Examples of rational use of energy resources, to face a challenging future PWEA CONFERENCE 22 May 2012 Warsaw, Poland Roberto Pierantoni Head of Wind Development 1

2 Agenda 1 Greentech at a glance 2 Spanish Market 3 Danish Market 4 German Market 5 Strategies and best practices 2

3 Greentech at a glance Company overview Greentech is an energy company developing, constructing and operating renewable energy projects within a range of different technologies and business areas: wind power, solar power, hydroelectric, biomass and biogas, water and sludge treatment. The Greentech portfolio is located throughout Italy, Spain, Denmark, Poland and Germany, with a next future development also in the Balkans These markets differ in the respective maturities of their renewable energy industries, providing Greentech with a properly balanced geographical Presence and attractive business mix 290 MW Gross installed capacity WIND Installed capacity: 250 MW (194 MW net) Countries: Denmark, Italy, Spain, Poland, Germany SOLAR Installed capacity: 40 MW (35 MW net) Countries: Italy, Spain 770 MW Future pipeline CONSTRUCTION PIPELINE Capacity: 90 MW (74 MW net) Countries: Italy, Poland MEDIUM-LONG TERM PIPELINE Capacity: 681 MW Countries: Poland, Italy, Norway, Montenegro 5 Countries Wind farms in operation Operating Solar PV Plants Wind plants under construction 3

4 Greentech at a glance - Investment Summary BALANCED GEOGRAPHICAL, TECHNOLOGICAL AND BUSINESS MIX ATTRACTIVE GROWTH OPPORTUNITIES VALUE CREATION POTENTIAL STRONG FINANCIAL PROFILE Balanced mix of mature (Denmark, Germany and Spain), attractive (Italy) and high-growth potential markets (Poland, Norway, Montenegro) 290 MW of gross installed capacity diversified by technology Production of drinkable water treatment plants and sludge treatment plants Approx. 770 MW of future pipeline, complementary in locations, technology and development phase Of which about 90 MW (internally developed) expected to be operative by 2012 Strong industrial relationships with Électricité de France (EDF) and Polska Grupa Energetyczna (PGE) for identification of new opportunities Value creation from Operational improvement Acquisition of new underpriced assets/consolidation of complementary companies Development/construction activities 59m of current cash and liquidity position, ensuring a competitive advantage in securing third party financing for growth opportunities Long-dated relationships with major banking and financial groups STRONG CORE SHAREHOLDER BASE MANAGEMENT TEAM WITH PROVEN TRACK RECORD Rottapharm-Madaus Intesa Sanpaolo S.p.A. Pirelli Group GWM Group Company aiming at expanding free float and liquidity in share trading in the medium term Well known and highly respected new management team with solid reputation Experienced professionals with multi-year track record in the industry 4

5 Greentech at a glance - Wind operating plants Monte Grighine Italy Power: 98.9 MW Type of turbine: Nordex Start of operation: July 2010 Ownership: 50% Minerva Messina Italy Power: 48.3 MW Type of turbine: Nordex Start of operation: July 2010 Ownership: 100% Oppelstrup Denmark Power: 7.5 MW Type of turbine: NEG. Micon Start of operation: August 2001 Ownership: 100% Conesa Spain Power: 28.0 MW Type of turbine: Gamesa Start of operation: September 2009 Ownership: 100% 5

6 Greentech at a glance - Solar PV operating plants La Carlota Cordoba, Spain Power: 9.8 MW Installation type: Fixed-tilt Start of operation: September 2008 Ownership: 50.03% Fotocampillos Malaga, Spain Power: 2.1 MW Installation type: Fixed-tilt Start of operation: May 2008 Ownership: 100% Montetosto Lazio, Italy Power: 8.7 MW Installation type: Fixed-tilt Start of operation: March 2011 Ownership: 100% Nardò Caputo Apulia, Italy Power: 9.8 MW Installation type: Fixed-tilt Start of operation: April 2011 Ownership: 100% 6

7 Spain Wind market Market overview Total installed capacity MW, able to provide about 16% of national net power consumption (42TWh). Year 2011 experienced only a modest growth of MW, due to economic recession and risk of change in law. INSTALLED CAPACITY - SPAIN MW Per year Cumulative Source: EPIA

8 Spain Wind market Regulatory framework ROYAL DECREE LAW 661/2007 Royal Decree 661/2007 established the incentives for all new wind power projects installed before end In 2011 average total remuneration for wind energy was 87 /MWh, versus 50 /MWh as average energy market price. SPANISH NATIONAL RENEWABLE ENERGY PLAN (PER) After a long debate between Spanish Government and Wind Power Sector, it was decided that by 2020 wind power would become the most important power technology in terms of installed capacity, with MW on-shore and 750MW off-shore, that means it would meet 19,5% of national electricity demand. ROYAL DECREE LAW 1/2012- temporary moratorium The new royal decree law has temporary suspended the economic incentives for new installations of electric power from cogeneration, renewable energy sources and waste. The rule is not retroactive, it does not apply to existing installations or to wind power installations scheduled to be connected to the grid up to the end of Firm commitment to renewable energy The Government maintains its firm commitment to renewable energy as an essential part of the "mix" of energy in Spain. In 2011, 93 % of the installed power was from renewable sources and all renewables sources facilities combined covered 33% of electricity demand, making Spain one of the most advanced countries in this regard. The pay system is currently temporary paralyzed, being not compatible with the current situation of economic crisis and falling demand. To resolve this impasse, a new renewable remuneration framework that promotes an efficient allocation of resources is necessary. 8

9 Denmark Wind market Market overview Total installed capacity: approx MW, 178 MW connected in Denmark is the pioneer in the wind energy field and has the highest penetration of wind power in electricity consumption, around 28%. INSTALLED CAPACITY - DENMARK MW 4500,0 4000,0 3500, ,0 2500,0 2000,0 Per year Cumulative 1500,0 1000,0 500,0 0, , Source: EWEA

10 Denmark Wind market Regulatory framework In March 2012, Danish Parliament agreed on a new ambitious energy plan: within 2050 the 100% of domestic energy consumption will be provided by renewable energy within 2020 the 50% of domestic energy consumption will be provided by wind energy only. The agreement, operative from , is outlining the framework for the climate and energy policy until It applies following changes to the settlement of wind: It refers to the turbines connected to the grid after and is not retroactive Surcharge (incentive) is kept at DKK 0.25/kWh, and applies to a number of full-load hours calculated on the basis of an algorithm that weights turbine power (30%) and the area swept by the rotor (70%). The supplement may be decreased, to cap at DKK 0.58 /kwh the sum of market price and surcharge. 10

11 Germany Wind market Market overview Total installed capacity MW, able to provide about 8% of the country s net electricity consumption (48TWh). In 2011, German wind market recovered from the financial end economic crisis. Compared to 2010, annual German wind market grew by 30%, with 2.086MW of new installation (of which 108 off-shore). In 2012, further 2.200MW are planned to be installed (of which 200 off-shore). INSTALLED CAPACITY - GERMANY MW Largest market MW Per year Cumulative Source: EWEA

12 Germany Wind market Regulatory framework RENEWABLE ENERGY SOURCES ACT (EEG) 2012 The revision to EEG follows the decision to quit nuclear power by 2022 and further expand the role of renewable energy in the electricity sector. The revised act sets a minimum requirements of not less than 35% of renewable energy in electricity supply by 2020 and not less than 80% by 2050, versus 20% obtained from renewable sources in Tariffs are kept at about 89 /MWh for on-shore for minimum 5 years, versus 49 /MWh as average market price. Bonuses of about 5 /MWh are set for turbines with advanced technological capacities and for repowering, envisaging repowering would play a fundamental role in the next future with perspective to double the capacity and triple the energy onshore. Grid optimization and expansion together with increase of turbines height and distance limits are considered essential to promote further development. In 2012, the annual digression rate for new onshore wind turbines was increased from 1% to 1,5%. 12

13 EU MARKET OVERVIEW ANNUAL WIND POWER INSTALLATION IN EU GW 4,4 4 3,2 3,2 5,9 5,5 5,8 6,2 7,6 8,5 8,3 10,5 9,6 9,6 Annual wind power installations in the EU have increased steadily over the past 17 years from 814 MW in 1996 to 9,616 MW in 2011, an average annual growth rate of 15.6%. 2 0,8 1 1,3 1, Source: EWEA DENMARK, GERMANY, SPAIN S SHARE OF EU WIND POWER MARKET 100% 90% 80% 70% 60% Rest of Europe 50% 2,7 3,8 5,2 DE, ES, DK 40% 4,3 4,1 30% 3,6 5,2 3,8 20% 3,4 4,7 3,4 3,3 10% 0% In 2000, the annual wind power installations of the three pioneering countries Denmark, Germany and Spain represented 85% of all EU wind capacity additions. In 2011, this share has decreased to 34%. Wind power is increasingly being installed across Europe. 13

14 Summing up The sector has grown over the time thanks to the capacity of the policy makers to direct and clearly define future trends of the market. This creates a general efficiency in the allocation of financial resources for both: governments, which can progressively reduce their incentives and lead the way to a competitive market scenario also benefitting neighboring countries, and investors which can program the allocation of funds by better assessing their risk-return profile. Denmark, Germany and Spain, by cutting their incentive schemes progressively are showing everyone involved in the industry that the assimilation of renewable to tradition resources, especially in terms of cost efficiency, is just around the corner. From the second figure on the page 9 we can observe the growing contribution of countries other than the Big 3. This tendency is escalating. Having this speech at this conference in Poland I would like to express an opinion that Poland is the country of choice in this part of Europe and together with Romania and Turkey can soon create the fore-front of wind business on our continent. 14

15 Greentech approach to a rational use of energy resources As already said it is clear that incentives are going to be reduced for new plants, not only in the three countries we have briefly analyzed, but all over Europe. And incentives retroactive cut could happen, as it is envisaged to happen in Italy where, according to a new decree under discussion, tariffs are going to be reduced by 30% for new wind farms, in operation after 31 December 2012, and there is going to be a retroactive cut of 13% for plants already in operation before such date. Greentech approach a rational use of energy resources and to face such situations considers necessarily a careful investment planning and a meticulous approach to asset operation and maintenance through a dedicate continuous monitoring system. INVESTMENT PLANNING Investment cost reduction through a proper site selection, minimizing distance from connection points and avoiding morphological complexity. Accurate and certified energy and production assessments, based on long term measurements on site. Careful selection of suppliers of turbines and electromechanical equipment, to maximize performances and minimize energy losses. Risk shearing, through joint venture with local partners. Moderate financial leverage, to minimize exposure. ASSET OPERATION AND MAINTENANCE Profit shearing with O&M provider, in case of availability and production above guaranteed levels. Continuous monitoring of asset performances, through a dedicated control center, that in our experience is an effective way to maximize availability and production. 15

16 Monitoring System Description Proprietary platform Centralized system Management for all corporate asset Features Analysis and management of real time and historical data Analysis and management of real time alerts Performance analysis and system availability Custom technical and financial reports Benefits Reduced response time after a failure Direct control O&M contractor Improved performance and availability 16

17 Greentech remote control room 17

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