QUALIFICATIONS REQUIREMENTS FOR INVESTORS TO PARTICIPATE IN FEED-IN TARIFF SCHEME

Ministry of Electricity and Renewable Energy Egyptian Electricity Holding Company Egyptian Electricity Transmission Company QUALIFICATIONS REQUIREMENTS FOR INVESTORS TO PARTICIPATE IN FEED-IN TARIFF SCHEME Nov. 4 th, 2014

REQUIREMENTS FOR QUALIFICATIONS REQUESTED FROM INVESTORS FOR ELEGIBILITY TO PARTICIPATE IN FEED-IN TARIFF SCHEME I. INTRODUCTION: The Government of Egypt (GoE) represented by the Ministry of Electricity and Renewable Energy (MoERE) has adopted a Feed-in Tariff (FiT) scheme for both solar and wind energy as an effective investment that supports deployment of Renewable Energy (RE) in Egypt. According to this scheme, the electricity transmission company (EETC) and distribution companies (DCs) are committed to purchase the produced electricity from RE power plants at the prices announced by the Cabinet of Ministers. Based on this scheme the GoE will not subsidize the purchased energy from renewable energy producers. The cost bared by the government will be transferred to consumers. The Egyptian Electricity Regulatory Agency (EgyptERA) has set the required regulations and procedures for executing the Renewable Energy Feed- in Tariff (RE FiT) projects. The MoERE aims to support investment in RE through FiT by setting a target of 4300 MW in the first regulatory period. This includes 300 MW of PV projects below 500 kw, 2000 MW for projects starting from 500 kw up to 50 MW, 2000 MW from wind energy with project capacities ranging from 20 MW up to 50 MW per project. The new tariff will be only applied to the projects that will be contracted after the issuance of the new tariff. The first regulatory period ends when either achieving the set targets or after two (2) years, which is first. Moreover, GoE shall set the regulations for the allocation of state owned lands through a usufruct agreement that lasts for period equals to the life time of the project according to FiT regulation in this respect. All RE projects shall have priority of dispatch and the EETC & DCs shall sign a (take or pay) Power Purchase Agreement (PPA) with the investors for a period of twenty (20) years in case of wind projects and twenty-five (25) years in case of PV projects. In this context, EgyptERA has developed RE regulations for RE FiT projects, including the procedures of projects execution using a one-stop-shop technique. The one-stop-shop, presented by the Central Unit for RE FiT Projects located at MOERE premises, 12 th floor at Abbasia, Cairo, aims to facilitate the procedural steps for starting a project. This unit shall be responsible for qualifying investors according to their previous experience, organizational and financial structures as a pre-requisite before going on with the other procedures. II. PURPOSE: This document aims to set the criteria for qualifying investors applying for the RE FiT projects with capacities from 500 kw and above. The investor can apply for qualification for one (1) time regardless the number of projects he wants to establish such that each project should not be more than 50 MW. Investors shall be qualified according to the criteria mentioned in Attachment (1). The investor is considered to be qualified if he receives 650 points or more, by that he will be eligible to continue with the other procedures. Otherwise, he will be informed by the reasons for being unqualified and he can re-apply afterwards. Page 2

III. NOTES TO INVESTORS 1. Date and Address of Submitting the Required Documents Investors shall submit their required documents in three(3) original hard copies to the address of the Central Unit for Feed-in Tariff and one (1) soft copy to the following email address. Address: Central Unit of Feed-in Tariff, 12th floor, EETC premises, Abbasia, Cairo Tel: 022618458 Fax: 022618458 e-mail address: fitunit@moee.cloud.gov.eg 2. Language The qualification documents shall be written in Arabic or English. Any documents submitted in other languages shall include an official translation to Arabic or English. 3. Required Documents Investors shall submit documents according to the following order: a. Title Page: The title page shall be titled as follows: QUALIFYING INVESTORS FOR FEED-IN TARIFF PROJECTS IN EGYPT The title page should include the following data: For the Investor and for each of the Consortium Members (if any) Name of Company: Type of Company:(shareholding/special purpose/joint venture ) Company`s Main Activity: Issued Capital: Paid Capital: Commercial Registration Number : Address: Company s official Website: Telephone: Fax: E-mail: Contact Person Name: Title: Telephone: Fax: e-mail: Page 3

If the investor is a Consortium, then: a) The Consortium s name should be stated on the title page and all the attachments, b) The title page must be signed by an authorized representative from each of the consortium members, and c) All the documents required for the purpose of this qualification process are requested from each of the consortium members b. Introduction: The investor shall provide: Description of the company/consortium including a description of the leading company and the other member companies, the particular area of the anticipated responsibility of each member as well as the proposed RE FiT projects Feed-In tariff program projects, In case of committed Consortium, as well as each of the consortium s members, shall submit Letters of Intent, In case of uncommitted Consortium, the consortium shall identify their potential subcontractors and their specified jobs, and Brief description of the RE FiT projects, the Consortium intend to have within the first regulatory period. The description includes, but not limited to, the following information: Technology: Installed Capacity: Number of Units: Net Energy Generated: Expected Commercial Operation Date: Any other information: c. Approach and Understanding: The investor shall provide: Detailed description and approach for the development of each project the investor intend to have in the FiT program (site measurements/development plan / project time schedule /organisation chart / team profile /work plan/profile of participating organisations,.etc), Description for the investor s understanding for the necessary steps/approvals / requirements/land acquisition/mitigation of associated risks and other procedures and regulations that are needed to develop RE FiT projects, Method of financing the RE FiT projects; and Plan for the construction, operation and maintenance of the intended projects. d. Qualifications and Experience The investor should provide their last five (5) year accomplished projects (not limited to the RE projects), by filling in the forms in Exhibits A.1, A.2, A.3, and A.4, using its own letterhead and signed by the authorized representatives. Those projects that have been accomplished in Egypt, in particular for the electricity sector either RE or not shall be presented in a separate form. Page 4

Information related to the company s history, type of business, profile, organisation, manpower, major achievements, and future business plans and objectives must be included in Exhibit A.1. Experience related to projects completed during the last five years must be included in Exhibit A.2 Experience related to projects in progress must be included in Exhibit A.3. Experience related to IPP projects which have been completed, on-going or cancelled may be included in Exhibit A.4. e. Organizational Framework, Human Resources and Financial Resources The investor shall describe in details, the organizational structure, the available human resources and financial resources. Human Resources The investor shall provide an overall description of the available human resources, including the size of the company, the breakdown by personnel discipline, the additional resources; they may have the organizational chart and the applied governance. Financial Resources The investor shall submit the following: The audited financial statements over the last three (3) years, which should demonstrate their financial capability to secure the necessary finance for the project. For projects more than 20 MW, the credit rating for long-term unsecured debt by an international credit agency (S&P, Moody`s, DBRS), if available, will be a value added. f. Additional Information Any additional relevant information which further demonstrates the capabilities of the responding investor may be submitted under this section. Extensive information which is judged to be unappreciable and not related may be counterproductive. IV. EVALUATION CRITERIA The evaluation will be based on a 1000 points scoring system for the requested information. A minimum score of 650 points is mandatory to be qualified. The general points and the points assigned to each section of this document are shown Attachment (1). Page 5

ATTACHEMENT (1) EVALUATION CRITERIA This evaluation will be based on a 1000 point scoring system for the requested information. The general points and the points assigned to each section of the Requirements For Qualification (RFQ) are as follows: a. General Format and Completeness 50 Points Points will be awarded to documents that follow item 3 Notes to Investors. b. Title Page 0 Points No points will be awarded directly to the title page. However, the completeness of the title page will be assessed in awarding points for General Format and Completeness. c. Introduction 50 Points Points for the introduction will be awarded based on the clarity of the investor s description of the consortium, the responsibilities of each consortium member, and clarity of the investor s description of the role of the intended subcontracting companies. The combined responsibility of the investor and subcontracting companies must cover the major tasks and jobs of RE projects developments. Points will also be awarded if the investor provides clear and defined description of the projects he intends to establish. d. Project Understanding 200 Points Points will be awarded based on to what extent the investor understands the procedure of executing RE FiT project, in particular the RE projects in Egypt. e. Qualifications and Experience 300 Points Points will be awarded based on the following: The previous experience of the Developer (consortium members and major subcontractors) in projects management, development, financing, procurement, construction and commercial and local condition (not limited to RE projects). Completing projects with the same or more capital cost and the knowledge of local environment as the projects he intends to participate with in the Feed-In Tariff scheme (not limited to RE projects). All references will be checked, experience of each member of the investor's consortium shall be submitted using the forms in Exhibits A1, A2, A3 and A4. In case of not including a contact person details, who can authoritatively discuss the status of stated projects and the performance of the companies, in the submitted documents, these projects will be excluded from the company/consortium experience. f. Resources Human Resources 150 Points Points will be awarded according to the completeness of the company s organization charts provided by the investor (each consortium member and major subcontractor), and on assessment of the investor s capability to provide the necessary human resources to successfully complete the company`s responsibilities to complete the RE FiT projects intended to, as well as projects that the investor (consortium members) may obtain. Page 6

This assessment will be based on the organization chart, number of relevant employees in each part of the company, the general experience and qualifications of the company, the ability of contracting, managing these contracts and managing projects of the same investment size for the intended RE FiT projects. Financial Resources 250 Points Points will be awarded based on the ability of the investor (consortium members) to make the financial closure for the intended RE FiT projects, as follows: The participation share of the investor in the RE FiT projects completed in the previous five (5) years and on-going (not limited to RE projects). The analysis of the last three (3) years financial statements (financial ratios). Those companies that have negative working capital (more current liabilities than current assets) will be unqualified. The creditability rating form any international entity (e.g..s&p, Moody`s, DBRS). Letters from banks and financial institutions confirming the capability of the company to finance the proposed RE FiT projects and the intent of these institutions to finance these projects. g. Additional Information 0 Points No points are directly awarded to the additional information section. Any information provided in this section will be considered as a supplementary information for other sections. Page 7

EXHIBIT A.1 Project Name: Name of Consortium: Legal Name of Company: Address: Phone Number: Fax: E-mail: Company s Description and History: Company`s Major Accomplishments Company s Business Plan: Use as many sheets as needed. Signature Page 8

Projects Completed EXHIBIT A2 Consortium s Name: Firm s Name: NO Project Name Location Brief Project Description Name of client & contact person; Address, Phone Number & E-Mail. Total Project Value in US$/EGP Description of Firm`s Scope of Work value of Firm`s Contract in US$/EGP Sources of finance of Firm`s Contract Date of firm`s Contract Start Date of Contract Completion and Acceptance of Work 1. 2. 3. 4. 5. Use as many sheets as needed. Signature 9

EXHIBIT A.3 Projects in Progress Consortium s Name: Firm s Name: NO Project Name Location Brief Project Description Name of client & contact person; Address, Phone Number & E-Mail. Total Project/ Value in US$/EGP Description of Firm`s Scope of Work value of firm`s Contract in US$/EGP Sources of finance of Firm`s Contract Date of firm`s Contract Start Expected Date of Contract Completion 1. 2. 3. 4. Use as many sheets as needed. Signature 10

EXHIBIT A.4 IPP Projects (Investors Intend to Participate in the Equity Only) Consortium s Name: Firm s Name: NO Project Name Location Brief Project Description Name of client & contact person; Address, Phone Number & E-Mail. Total Project/ Cost in US$/EGP Description of Firm`s Scope of Work Sources Of Funds for (Equity& Debt) State Value and source Firm`s Share In Equity Project Start Date Project Status Reasons for cancelling or delaying the project 1. 2. 3. 4. Use as many sheets as needed. Signature 11

Egyptian Electric Utility for Consumer Protection and Regulatory Agency Renewable Energy Feed-in Tariff Projects Regulations Oct. 2014 EgyptERA s crew has prepared this document so as to answer all the questions related to the renewbales supporting scheme generally, and the feed-in tariff specifically

Egyptian Electric Utility and Consumer Protection Regulatory Agency جهاز تنظيم مرفق الكهرباء وحماية المستهلك INTRODUCTION Egypt faces a major challenge in providing a sufficient amount of electrical from its primary energy resources, especially oil and natural gas that contributes to 95% of the total energy resources needed for generating electricity in Egypt. Studies show that, even though Egypt possesses a reserve of primary energy resources; Egypt will face a deficit to cover its demand from these resources due to rapid utilization and increase of extraction costs. Expectations indicate that retaining balance between oil and natural gas production and their usage within three (3) years can be achieved after overcoming the economic challenges facing the oil and natural gas sector. However, according to the Egyptian energy strategy for 2030 and its update to 2035, it is expected that Egypt will be a net importer of oil and natural gas within ten (10) years from the start of the third decade of this century. This situation represents an additional challenge for the Egyptian economy which will become more vulnerable to the price fluctuations in the international energy markets, which can t be predicted or controlled. In addition, this will lead to Egypt s loss of foreign currency and the decrease in the competitiveness of the national economy. Therefore, there has to be diversification of the energy resources to maximize the benefits of using local resources which are characterized by continuous and stable prices such as investing in generation electricity from renewable resources that are rich in Egypt. Moreover, on Sept. the 17 th, the Cabinet of Ministers approved in its session no. 11 the issuance of feed-in tariffs for electricity projects produced from renewable energy resources (PV - Wind). A total target is to authorize 4300 MW to be achieved over the first period of applying the feed-in tariffs. This target includes 300 MW for small PV installations below 500 kw, 2000 MW for large size PV installations, which range between 500 kw up to 50 MW and the remaining 2000 MW is from wind energy installations with projects capacities ranging from 20 MW up to 50 MW. The value of the tariff will be revisited as either the target is achieved or the two years regulatory period is elapsed, which happens first. 1

Egyptian Electric Utility and Consumer Protection Regulatory Agency جهاز تنظيم مرفق الكهرباء وحماية المستهلك The electricity transmission company (EETC) or distribution companies are committed to purchase the produced electricity from RE power plants at the prices announced by the Cabinet of Ministers through Power Purchase Agreements (PPA) for 25 years for the PV projects, and 20 years for the wind projects. Accordingly, the Egyptian Electricity Utility and Consumer Protection Regulatory Authority (EgyptERA) has set the required regulations and procedures for executing the Renewable Energy Feed-in Tariff (RE - FiT) projects which includes: - Procedures for execution of RE FiT projects up to 500 kw of PV Installations - Procedures for execution of RE FiT projects more than 500 kw 2

Egyptian Electric Utility and Consumer Protection Regulatory Agency جهاز تنظيم مرفق الكهرباء وحماية المستهلك Feed-in Tariffs for Renewable Energy Projects First: PV Projects Feed-in Tariffs: PV Power Plant Installed Capacity Corresponding Feed-in Tariff Residential 84.4 P.T./kWh Installed Capacity 200 kw 90.1 P.T./kWh 200 kw Installed Capacity < 500 kw 97.3 P.T./kWh 500 kw Installed Capacity < 20 MW 13.6 $.Cent/kWh 20 MW Installed Capacity 50 MW 14.34 $.Cent/kWh - The PV projects feed-in tariff has a flat rate during the entire 25 years contractual period. - The PV projects feed-in tariff, for installed capacities more than 500 kw, is being paid with Egyptian pounds according to the following equation: PV Projects Feed-in Tariff (L.E.) =[15% of Feed-in Tariff ($.Cent) X 7.15 (L.E.)] + [85% of Feed-in Tariff ($.Cent) X exchange rate on the bill issuance day, as stated in the contract] - The upper limit for the total contractual PV installed capacities are: a) 300 MW for projects with installed capacities up to 500 kw, and b) 2000 MW for projects with installed capacities from 500 kw and up to 50 MW. 3

Egyptian Electric Utility and Consumer Protection Regulatory Agency جهاز تنظيم مرفق الكهرباء وحماية المستهلك Second: Wind Projects Feed-in Tariffs: Full Operating Hours (FOH) 2500 Feed-in Tariff for the 1 st tariff segment (5-year period) ($.Cent/kWh) Feed-in Tariff for the 2 nd tariff segment (15-year period) ($.Cent/kWh) 11.48 2600 10.56 2700 9.71 11.48 2800 8.93 2900 8.19 3000 7.51 3100 8.93 3200 8.33 3300 7.76 3400 7.23 3500 6.73 9.57 3600 6.26 3700 5.81 3800 5.39 3900 4.98 4000 4.60 - The wind projects feed-in tariff has a segment tariff structure (5-year and 15-year periods) for a total of 20-year contractual period. - The wind projects feed-in tariff is being paid in Egyptian pounds according to the following equation: Wind Feed-in Tariff (L.E.) =[30% of Feed-in Tariff ($.Cent) X 7.15 (L.E.)] + [70% of Feed-in Tariff ($.Cent) X exchange rate on the bill issuance day, as stated in the contract] - If the value of the FOH lies in between 2 of the above FOHs, approximation is made to the nearest larger value in the same table. 4

Egyptian Electric Utility and Consumer Protection Regulatory Agency جهاز تنظيم مرفق الكهرباء وحماية المستهلك - The upper limit for the total contractual wind installed capacity is 2000 MW. What are the Facilities Provided by the Government for the Supporting Schemes? 1. Setting the necessary regulations for public land allocation for projects, which are in need for this, through usufruct rights covering the Power Purchase Agreement (PPA) lifetime. 2. The grid, either transmission or distribution depending on the case, is committed to offer priority on dispatch for renewable energy, and offers PPA based on take or pay. 3. Issuing the necessary sovereign guarantees for projects above 20 MW. 4. Provision of concessions from Ministry of Finance through soft loans: 4% interest rate for residential projects and up to 200 kw and 8% interest rate for projects ranging between 200 kw and 500 kw. 5. Forcing the Supreme Council of Energy decisions to inject investments of 2 Billion Egyptian Pounds for establishing transmission and distribution grids. How to Apply for the Feed-in Tariff Mechanism? Concerning the PV projects that are below 500 kw, the applications are to be handled to the department of renewable energy and energy efficiency in each distribution company. However, for the PV projects that are greater than 500 kw and Wind projects, applications are to be handled to the Central Unit for Feed-in Tariff located at EETC s headquarters. 5

Egyptian Electric Utility and Consumer Protection Regulatory Agency جهاز تنظيم مرفق الكهرباء وحماية المستهلك Applicants have to attach the necessary documents according to the types of projects which are available in the above mentioned locations and at the following websites: www.egyptera.org www.egelec.com www.eetc.net.eg www.nrea.gov.eg Egyptian Electric Utility for Consumer Protection and Regulatory Agency (EgyptERA) Egyptian Electricity Holding Company (EEHC) Egyptian Electricity Transmission Company (EETC) New and Renewable Energy Authority (NREA) 6

Egyptian Electric Utility and Consumer Protection Regulatory Agency جهاز تنظيم مرفق الكهرباء وحماية المستهلك Procedures for Establishing RE projects under the FiT Program First: Procedures for Establishing PV project under a FiT Program for Installed Capacities less than 500 kw: A. The PV-System Integrator(s) (PV-SIs) should seek Certification from New and Renewable Energy Authority (NREA) in order to be allowed to work in the field of installing, operating and maintaining on-grid PV projects (Annex 1). B. Projects with such small capacity, according to NREA s requirements, are exempted from obtaining generation license from EgyptERA. C. Project Execution: 1. The investor chooses one of the certified PV-SIs. 2. The PV-SI carries out the necessary studies and prepares the project s technical file (Annex 2) to be submitted to the Department of Energy Efficiency & Renewable Energy in the concerned distribution company (Annex 3). 3. Within two (2) weeks from the date of receiving the application, the distribution company shall study connecting the project to the distribution network and carry out the necessary measurements to assume compliance with the relevant distribution and PV installation low voltage codes. The PV-SI shall complete the project within six (6) months from getting the approval from the distribution company. 4. The distribution company shall sign a connection contract and a PPA according to the current FiT with the investor. 5. The distribution company shall check the computability of the project installation with the submitted and approved technical file. The distribution company shall connect the project to the distribution network and install a meter after paying the required fee according to Annex 3. Finally, the distribution company shall ensure the operation s soundness open a bank account for the investor with five (5) working days from the date of completion the project. 7

Egyptian Electric Utility and Consumer Protection Regulatory Agency جهاز تنظيم مرفق الكهرباء وحماية المستهلك Procedures for Establishing PV project under the FiT Program for Installed Capacities less than 500 kw Investor Choosing a Certified PV-SI PV-SI PV-SI Project file to Distribution Company Distribution Company Distribution Company Studies, measurements & compliance with technical Codes PV-SI Distribution Company Signing Connection and FiT Contracts Investor Relative Entities Processes 8

Egyptian Electric Utility and Consumer Protection Regulatory Agency جهاز تنظيم مرفق الكهرباء وحماية المستهلك Second: Procedures for Establishing a RE project under the FiT Program for Installed Capacities more than 500 kw A. Evaluation 1. The investor addresses The Central Unit for Feed-in Tariff Projects (Annex 4) to acquire an Evaluation Application for establishing either a PV project with installed capacity more than 500 kw or a wind project of at least 20 MW, according to the Qualification Requirements for Renewable Energy Investors wishing to Participate in the Feed-in Tariff Program (Annex 5). 2. The Central Unit evaluates and answers the investors inquiries one (1) month from the date of receipt of the application, according to the requirements and the evaluation mechanism stated in Annex 5. B. Land Acquisition for the Project 1. The investor, who wants to acquire state-owned land for his/her project, has to address The Central Unit for Feed-in Tariff Projects. This unit studies the investor s request and facilitates his/her land acquisition for the project. 2. The authority that provides the land signs a usufruct agreement with the investor. C. Establishment of the Project Company 1. The investor establishes the Project Company in accordance to law (8) for year 1997, that governs the guarantees and incentives of investments. 2. The investor shall conduct the technical and financial feasibility studies for the project. 9

Egyptian Electric Utility and Consumer Protection Regulatory Agency جهاز تنظيم مرفق الكهرباء وحماية المستهلك D. Temporary Generation License The Project Company acquires a temporary generation license for one (1) year that can be renewed only once from EgyptERA according to the license requirements. However, the license can be renewed for a third year if the investor provides logical reasons to EgyptERA s committee. In the meanwhile, the Project Company will fulfill the following requirements: 1. All measurements, technical studies, and required permits. 2. Raising the capital of the Project Company to the level of equity share according to technical and financial feasibility studies. 3. Agreement on financial closure E. Permanent Generation License and Final Signing of the Contracts After the completion of all requirements mentioned in D, a permanent generation license is obtained, and consequently, the Project Company signs the contracts with relevant authorities and PPA under the current FiT program. F. Construction The power plant must be built within eighteen (18) months from the obtained temporary generation license date. G. Commissioning and Commercial Operation The commissioning and commercial operation shall be completed. 11

Egyptian Electric Utility and Consumer Protection Regulatory Agency جهاز تنظيم مرفق الكهرباء وحماية المستهلك Procedures for Establishing a RE project under the FiT Program for Installed Capacities more than 500 kw Central Unit for FiT Evaluation Investor Authority availing Land Investor Project Company Establishment General Authority for Investment Temporary License EgyptERA Completion of Studies Relevant Authorities Project Company Financial Closure Relevant Authorities Permanent License EgyptERA Final Signatures Relevant Authorities Relative Entities Construction Relevant Authorities Processes Commissioning and Commercial Operation 11

Egyptian Electric Utility and Consumer Protection Regulatory Agency جهاز تنظيم مرفق الكهرباء وحماية المستهلك 12