Investing in Wind Energy 2012

Investing in Wind Energy 2012 Austria bulgaria Germany Croatia Poland Romania Slovakia Slovenia Czech Republic hungary A study produced in cooperation with PwC Austria

Table of Contents Introduction 2 Overview 5 Austria 6 Bulgaria 9 Germany 12 Croatia 16 Poland 18 Romania 21 Slovakia 24 Slovenia 27 Czech Republic 30 Hungary 33 The authors 35 The publishers 36

02 Introduction We are pleased to present you with our latest study, Investing in Wind Energy 2012, which has been jointly prepared by Kommunalkredit Austria AG and PwC Austria. Over the past 20 years, wind energy has become a major player in the generation of electricity in Europe. Wind energy currently covers some 5.3% of electricity demand within the EU and accounts for approximately 35% of electricity generated from renewable energy sources. The European Commission has made plans to increase wind energy capacity from 84 GW per year in 2010 to 222 GW per year by 2020. This capacity increase will require annual investments of approximately EUR 20bn. This positive outlook in the near future for the wind energy sector is also en sured thanks to Directive 2009/28/EC on the promotion of the use of energy from renewable sources. The Directive provides for a 20% reduction in the level of harmful emissions by 2020, a 20% share of energy from renewable sources in the Community s gross final consumption of energy as well as a 20% reduction in terms of energy consumption made possible through enhanced energy efficiency. Alongside the various positive environment-related effects, there are also long-term economic benefits to be sustained from the wind energy industry. In 2010, 189,000 people were directly employed thanks to this industry throughout Europe. The expansion of wind power will lead to even more jobs, with the number totalling up to 462,000 by 2020.

Investing in Wind Energy 2012 03 Only 3.3% of the entire capacity generated from wind turbines within the EU is accounted for by the new EU Member States situated in Eastern Europe. Many of the countries included in the study are special in that they have sites which are particularly suitable for wind power generation purposes and therefore ideally fulfil the criteria for the expansion of wind energy. However, the development of electricity feed-in from wind power plants depends not only on the existing features of the natural landscape, but also, above all, on the prevailing legal and economic framework, tariff and subsidy systems, approval procedures, electricity feed-in conditions, transmission capacities and financing conditions. The purpose of this study is therefore to give readers an overview of the situation regarding wind power plants situated in Austria, Germany and a selection of Central and Eastern European countries. The information given is up-to-date as at 15 November 2011. We anticipate that you will recognise the value of the information provided and look forward to providing our expertise as we accompany you in your quest to develop and finance wind energy projects in the future. Dr. Christian Kummert Head of Sales Kommunalkredit Austria AG DI Michael Sponring Director, Head of the Energy Division PwC Austria

Investing in Wind Energy 2012 05 Overview The European tariff and subsidy system for electricity generated from wind power chiefly consists of two features the feed-in tariff system and the mixed system comprising the electricity price and the green certificate price. Added to this, there are also funding opportunities varying from country to country in the form of investment subsidies. The most common form of tariff setting arrangement is the feed-in tariff. The distinguishing characteristic here is a set price (price = fixed price) for wind energy, which is paid entirely by local electricity utility companies to producers of wind energy. This set price can alternatively be replaced by a fixed premium, which is paid in addition to the market price (price = fixed premium + market price). Tender and auction procedures are special types of feed-in tariff systems. This involves potential wind energy producers competing against each other in making an offer for a fixed price contract in the course of an auction held by the tendering authority. As an alternative, there are also mixed systems, whereby wind energy producers receive the price obtainable on the market in combination with the price obtainable on the market for so-called green certificates/environment certificates. These systems are regulated by quota obligations which ensure minimum wind power purchase obligations. Rules and regulations stipulate the precise amounts which (for example) an electricity dealer is obliged to purchase. The table below outlines the tariff and subsidy systems as they stand in the countries selected for the purpose of this study. Country Currency Type of tariff Tariff amount EUR cents* / kwh Duration of validity (years) Other subsidies Wind energy potential (MW) Grid Other constraints Austria Euro Feed-in 9.70 13 No 2,000 Limited Subsidy quota Bulgaria Lew Feed-in 8.78 9.64 12 Difficult 3,000 3,500 Limit 1.800 MW Politics, bureaucracy Germany Euro Feed-in 9.02 / 4.92 Min. 5 / 20 Possible 45,000 onshore 10,000 offshore Limited Available space, technology Croatia Kuna Feed-in 9.81 12 Difficult > 6,500 Critical factor Bureaucracy Poland Zloty Mixed Approx. 10.70 No inf. (ratio) Possible > 13,000 Romania Lev Mixed 9.90 15.50 (until 2017) 7.20 10.00 (until 2025) Until 2017 / 2025 Possible > 23,000 (real.** 3,500) (reduces green certificates) Slovakia Euro Feed-in 7.90 15 Possible (reduce tariff) 4.000 MW Bureaucracy in output capacity No inf. Limited Politics, bureaucracy Slovenia Euro Feed-in 8.67 9.53 15 Difficult 120 Limited Politics, public Czech Republic Koruna Feed-in (choice) 8.66 20 Possible > 2,700 (real.** 1,500) Limited Politics, public, bureaucracy Hungary Forint Feed-in (indiv.) Approx. 8.00 9.00 Individual (max.13) Difficult No inf. Limited Politics, public, bureaucracy * Currency exchange date: 15 November 2011 ** real. = realistic

06 Austria TARIFF SYSTEM In 2010 the feed-in tariff for green power generated by wind turbines was considerably increased from EUR 0.075/kWh to EUR 0.097/kWh. The new rate is valid for projects which were submitted to the Austrian processing and administration centre for green power (OeMAG) and have secured a subsidised tariff for up to 2013. Projects which have secured a subsidised tariff for up to 2015 will receive EUR 0.095/kWh. Currency: Euro (EUR) Area: 83,879 km² Population in m: 8.45 GDP in EUR bn: 312.3 GDP in EUR per capita: 36,959 Real GDP growth in %: 1.6 Inflation rate (VPI) in %: 2.2 Public financing balance as % of GDP: -3.2 Public debt in % of GDP: 73.9 Unemployment rate in %: 4.1 Source: Forecast 2012 IMF 09/2011 The feed-in tariff will be set annually by a decree issued by the Ministry of Economic Affairs. The operator is given the tariff that was applicable when making the proposal. Unless an approved wind park starts operating within 24 months, the claim to this subsidised tariff becomes invalid. The subsidy is paid for 13 years. The subsidised tariff is neither indexed nor is it adjusted during its entire duration. PERMIT PROCEDURE AT A GLANCE The average amount of time it takes for a wind park to be approved in Austria is just ten months, which ranks the procedure among the fastest within the EU. In principle, power generation plants need to be approved as such under electricity law provisions. The basis for such approval is provided by the Austrian Electricity Industry Organisation Act (EIWOG) and the implementing acts of the Austrian provinces. In Austria, the permit criteria and requirements for the construction of wind parks are within the jurisdiction of the individual provinces. In each province an application for recognition as a green power plant will have to be sent to the provincial government.

Investing in Wind Energy 2012 07 STEP 1 DEDICATION OF LAND (basic requirement for environmental impact assessment) STEP 2 ENVIRONMENTAL IMPACT ASSESSMENT (incl. construction permit) STEP 3 RECOGNITION AS GREEN POWER PLANT (requirement for OeMAG filing) STEP 4 OeMAG PURCHASING AGREEMENT (makes it possible to receive the tariff from the applicable subsidy quota) NATIONAL ACTION PLANS The Amendment to the Austrian Green Power Act 2009 stipulated new target values for 2015. The target is to build an additional 700 MW of hydroelectric capacity (350 MW of which is to be small and medium sized hydroelectric power plants), wind energy capacity amounting to 700 MW and, provided the availability of raw materials has been proven, biomass power plants with an output capacity of 100 MW. The Green Power Act sets out the target of feeding a 15% share of green electricity into the public power grid by 2015 (relative to the total output provided to consumers). Based on the above information, it may be assumed that the goal to further increase wind power capacity to 700 MW by 2015 can be reached. At the end of 2010, wind turbines with an overall capacity of some 1,011 MW were connected to the network. By 2020, wind power capacity will have been further increased by 2,000 MW in addition to the already existing 1,000 MW, with EUR 11.5m in wind subsidies currently being foreseen. LIMITATIONS/CONSTRAINTS The Green Power Act 2012, in its current form, provides for a subsidy quota restriction to 700 MW. There are only few areas left that are suitable for wind park development.

08 KOMMUNALKREDIT OUTLOOK: The current availability of subsidies in Austria supports the strong development of wind energy. The way in which tariffs are structured makes up coming projects attractive. In contrast to the German market, however, Austrian banks rarely have access to subsidised refinancing. Therefore their margins are a little higher than those in Germany. PwC AUSTRIA OUTLOOK: The National Energy Action Plan clearly shows the Austrian government s commitment to installing wind parks generating an additional 700 MW capacity by 2015. This commitment is also reflected in the feed-in tariff, which has been increased from EUR 0.078/kWh to EUR 0.097/kWh. After an almost three year pause in the construction of new wind parks, the coming years will see a massive further expansion of wind energy. However, the subsidy quotas for the coming years have already been exhausted.

Investing in Wind Energy 2012 09 Bulgaria TARIFF SYSTEM The new Renewable Energy Act, which has been in force since May 2011, is not considered to be particularly investor friendly. In future, fixed feed-in tariffs will only be granted for a limited number of projects. Moreover, there are open issues regarding the allocation of access to the grid in practice. The significant shortening of approval deadlines has increased the pressure put on project developers. The feed-in tariff to be applied is only set once construction has been completed. This means that Bulgaria has a feed-in tariff system which is dependent on the installed output and production capacity (full load hours) of each wind turbine. Accordingly, the feed-in tariff for wind power plants with up to 2,250 full load hours per annum is BGN 189/MWh (EUR 0.0964/kWh), with a BGN 172/MWh (EUR 0.0878/kWh) tariff operating for capacities exceeding 2,250 full load hours per annum. Every year, prior to 30 June, the regulator (i.e. the National Energy and Water Regulation Commission) sets the tariff for the following twelve months. In the case of wind projects, the feed-in tariff at the time of inspection and approval of the wind power plants newly connected to the grid applies. This means that up to the very last moment there will be some uncertainty as to the final feed-in remuneration. Through the new law, the period of validity of the feed-in tariff has been reduced from 15 to 12 years. At the same time, however, the regulator s option to annually reduce the feed-in tariff (max. 5% from previous year) has been withdrawn. The feed-in tariff is therefore valid for the entire twelve-year duration, which in turn makes it easier to implement project financing for this period. Furthermore, the regulator will determine the number of projects by region and voltage level so as to guarantee a higher level of grid compatibility of wind projects. In future, when submitting a project application to the grid operator, a guarantee deposit of approximately EUR 2,500/MW will have to be paid. The amount of time available for the environmental impact assessment once a positive capacity allocation has been made is to be reduced from twelve to six months, and a connection charge amounting to approximately EUR 25,500/MW (or approximately EUR 12,750/MW in the case of wind parks with a capacity of under 5 MW) will be due upon conclusion of the preliminary grid connection agreement. All in all, these changes are anything but positive for investors in wind power in Bulgaria. Currency: Lew (BGN) (EUR:BGN exchange rate stood at 1:1.96 on 15 November 2011) Area: 111,002 km² Population in m: 7.46 GDP in EUR bn: 40.9 GDP in EUR per capita: 5,485 Real GDP growth in %: 3.0 Inflation rate (VPI) in %: 2.9 Public financing balance as % of GDP: -2.2 Public debt in % of GDP: 20.5 Unemployment rate in %: 9.5 Source: Forecast 2012 IMF 09/2011

10 In principle, subsidies for wind power projects are possible. The rural development programme, for example, which is endowed with funds amounting to EUR 877m until the end of 2013, supports small wind power plants or small companies using renewable forms of energy. Moreover, favourable credit lines are also being made available by the EBRD (European Bank for Reconstruction and Development). PERMIT PROCEDURE AT A GLANCE In order to complete a wind park in Bulgaria, some 31 different approvals are needed. Besides the approval to use the land for the purpose of a wind park, 14 positive appraisals (carried out by the Ministry of Health, the Ministry of Defence and the Ministry of the Environment, just to name a few) as well as various studies with a focus on geological issues and grid compatibility will be necessary alongside the grid connection agreement, not to mention the licence which has to be issued by the regulator. NATIONAL ACTION PLAN Bulgaria has committed itself to green targets which involve achieving a 16% share of renewable energy in overall consumption by 2020 (taking 9.4% in 2005 as a starting point). The current renewable energy share amounts to approximately 10% in total energy consumption. At the same time, the National Action Plan poses the greatest restriction to investment in wind power, since it only calls for a wind power capacity of 1,256 MW by 2020 despite the fact that grid access for wind power will generally be limited to a maximum amount of 1,800 MW. This is curious in view of the excellent wind power potential that exists in Bulgaria, which would be sufficient to cover some 13.5% to 15% of the country s entire electricity demand. Based on an installed wind power capacity of 375 MW in 2010, the European Wind Energy Association (EWEA) deems 3,000 to 3,500 MW to be feasible, which would mean average annual investments of EUR 400m. The great potential is further illustrated by the scale of projects submitted with some 15,000 MW in output capacity already submitted under the old system. LIMITATIONS/CONSTRAINTS Limitations are mainly due to grid access restrictions and grid limitations under the National Action Plan. Bureaucratic hurdles in the course of the approval procedure can also lead to time delays.

Investing in Wind Energy 2012 11 KOMMUNALKREDIT OUTLOOK: As far as the Bulgarian market is concerned, long-term financing in euros is the only viable option. Despite the fact that the lev has been pegged to the euro, banks still widely hold a number of reservations due to currency risks. The equity capital requirements imposed on a typical project are between 30% and 35%. The preferred kinds of projects are those of German or Danish manufacturers in combination with export guarantees. PwC AUSTRIA OUTLOOK: The Bulgarian market is currently characterised by a huge degree of uncertainty due to the new regulatory framework now in place. The calculation scheme used for the purpose of feed-in tariffs is anything but clear. Added to this, the applicable feed-in tariff is only set once the construction phase has been completed. Moreover, the grid access approval process may result in a number of complications.

12 Germany TARIFF SYSTEM Currency: Euro (EUR) Area: 357,108 km² Population in m: 81.28 GDP in EUR bn: 2,626.8 GDP in EUR per capita: 32,319 Real GDP growth in %: 1.3 Inflation rate (VPI) in %: 1.3 Public financing balance as % of GDP: -1.1 Public debt in % of GDP: 81.9 Unemployment rate in %: 6.2 Source: Forecast 2012 IMF 09/2011 The German government has been subsidising the generation of electricity from renewable sources since the 1990s. The German Renewable Energy Act (EEG) serves as the legal basis for such activities, the last amendment having been passed by the Bundestag on 30 June 2011. In the case of offshore wind parks, this means a considerable increase in remuneration rates as well as a shift of the degression period by three years. This has been motivated by the fact that construction work takes longer on account of the special conditions at sea. Onshore wind parks, on the other hand, have seen a reduction in feedin tariffs due to the 1% to 1.5% increase in tariff degression. The following feed-in tariffs are currently valid for onshore wind turbines: Year of initial operation Initial remuneration System service bonus for new plants basic remuneration 2011 EUR 0.0902/kWh EUR 0.0049/kWh EUR 4.92/kWh 2012 EUR 0.0893/kWh EUR 0.0048/kWh EUR 4.87/kWh 2013 EUR 0.088/kWh EUR 0.0047/kWh EUR 4.80/kWh 2014 EUR 0.0866/kWh EUR 0.0047/kWh EUR 4.72/kWh 2015 EUR 0.0853/kWh EUR 4.65/kWh New facilities are granted initial remuneration as well as a system services bonus during their first five years of operation. The time period during which initial remuneration is granted can be extended, depending on the efficiency of the turbines used (which will usually be the case), the benchmark reference being the five-year production yields of a wind turbine in a comparable location. The remuneration period is extended by two months for each 0.75% that earnings fall below 150% of the reference earnings. Experience shows that depending on the technology used and the location selected the initial remuneration is paid for a period of approximately 15 to 18 years. After the end of the initial remuneration period, the basic remuneration rate will be applied. The validity of the tariff system extends over a total period of 20 years, plus the year in which the wind park became operational (i.e. up to 21 years). When it comes to repowering, i.e. the replacement of older, smaller installations with modern and more powerful ones, the initial remuneration is increased through the repowering bonus by EUR 0.05/kWh. This rate applies if the replaced wind turbines were put into operation before 1 January 2012 and if the in-

Investing in Wind Energy 2012 13 stalled output of the repowering installations amounts to at least twice the output of the replaced installations. The initial remuneration in the case of offshore wind turbines has been increased to EUR 0.15/kWh. Moreover, it is granted for a period of up to twelve years and can be extended, depending on the distance of the wind turbines from the mainland and the depth of the sea. After the end of the initial remuneration period, the basic remuneration rate of EUR 0.035/kWh applies. The 2012 amendment to the Renewable Energy Act also introduced the option of a compressed remuneration model for offshore wind power plants. For operations started up by 1 January 2018, operators can opt for an increased initial remuneration amounting to EUR 0.19/kWh for a period of eight years. A further incentive has been created for investors in offshore wind power plants: Through the Infrastructure Planning Acceleration Act, responsibility for the financing, construction and operation of the grid connection for wind turbines, installation of which commences by 31 December 2015, has been transferred to the nearest transmission network operator. Germany is planning to subsidise the first ten offshore wind parks in order to promote the development of offshore wind turbines. The purpose of these pilot projects is also to gain experience and to learn how to better deal with the risks arising in relation to offshore wind power activities. To this end, in 2011 KfW Development Bank (Kreditanstalt für Wiederaufbau, KfW) launched a special offshore wind energy programme with a total credit volume of EUR 5bn and subject to investor friendly conditions. PERMIT PROCEDURE AT A GLANCE In accordance with the German Immission Control Act (Bundes-Immissionsschutzgesetz, BImSchG), onshore wind turbines over 50 metres in height require an approval specifying that any environmental effects in relation to the turbines have been assessed and evaluated. In accordance with the German Energy Act (Energiewirtschaftsgesetz), the cable connection also requires approval. The regional conditions specific to each project, i.e. presence of residential buildings as well as landscape and fauna conservation issues, are investigated and taken into account. Depending on whether an environmental impact assessment (EIA) is required, the simplified or the formal approval procedure applies. Wind parks with more than 20 wind turbines generally require an EIA. The German legislator has also simplified the approval process for offshore wind parks. The Permanent Offshore Wind Committee (StAOWind) was established as a joint body of the federal government and the German coastal

14 states for the purpose of coordinating the various approval procedures; moreover, a maritime spatial planning regime has been introduced for the North Sea and the Baltic Sea. Until recently, offshore wind projects were only permitted to have a total of 80 wind turbines each. In the future, larger numbers of turbines might also be permitted in suitable areas. NATIONAL ACTION PLANS Wind energy will play a central role in shaping the energy mix of the future, with power generation in Germany set to become almost CO 2 free by 2050. New wind turbines with a capacity of 1,493 MW were built in 2010, taking the total capacity in Germany to 27,214 MW by the end of the year. In order to maintain the momentum of wind energy utilisation in Germany, an accelerated expansion of offshore wind energy is being promoted, in addition to the further development of suitable onshore sites and the replacement of old, small installations by modern and more powerful ones. A total of EUR 75bn is to be invested in order to increase the offshore wind output to the desired level of 25 GW by 2030. LIMITATIONS/CONSTRAINTS Germany only has a limited number of suitable areas with good grid connection. However, it may be taken for granted that this technology will remain competitive in the near future, even without the benefit of a subsidised tariff. Over the next few years, the main focus will therefore be on repowering and offshore in stallations. Whether the numerous approved offshore projects can actually be implemented in the foreseeable future is questionable. Long-term development opportunities will largely depend on the economic viability and competitiveness achieved in the field of offshore wind energy.

Investing in Wind Energy 2012 15 KOMMUNALKREDIT OUTLOOK: In Germany, the financing focus for the next few years will be on repowering and offshore projects. The substantial expansion of the financial framework by the KfW Development Bank Group greatly improved the financing options available and, thus, the terms and conditions for these projects. PwC AUSTRIA OUTLOOK: The German wind market is one of the most highly developed wind markets in Europe. Owing to this success, only a few areas remain which can still be designated for new onshore wind power plants. There is unused potential in Southern Germany, an opportunity which should be exploited in the future.

16 Croatia TARIFF SYSTEM Currency: Croatian kuna (HRK) (EUR:HRK exchange rate stood at 1:7.48 on 15 November 2011) Area: 56,594 km² Population in m: 4.42 GDP in EUR bn: 47.4 GDP in EUR per capita: 10,738 Real GDP growth in %: 1.8 Inflation rate (VPI) in %: 2.4 Public financing balance as % of GDP: -5.1 Public debt in % of GDP: 50.0 In 2011, the feed-in tariff for wind power plants with an installed output capacity of over 1 MW was set by the Croatian energy regulation authority (HERA) at HRK 0.734/kWh (EUR 0.0984/kWh as at 15 November 2011). This tariff is set annually and will be valid for a period of twelve months, provided that the wind power project is inspected and approved in the year in question. In order to be able to sell the electricity generated, power generators must first establish that they have been awarded beneficiary electricity producer status as granted by HERA. Electrical power purchasing at fixed feed-in tariffs is guaranteed by the Croatian government. As Croatia is not yet a member of the European Union, it does not currently benefit from EU funding for wind power projects from the EU s Cohesion and Structural Funds, although this is likely to change upon the country s forthcoming accession to the EU in 2013. PERMIT PROCEDURE AT A GLANCE Gaining approval in Croatia involves an extensive process. Procedural formalities in place require strict compliance with approval deadlines. STEP 1 REGISTRATION (temporary approval of energy project; Ministry of Economic Affairs; status as project developer acquired through registration in OIEKKP Register; maximum validity of 48 months; prerequisite for location approval) LOCATION APPROVAL Unemployment rate in %: 12.2 Source: Forecast 2012 IMF 09/2011 STEP 2 APPROVAL OF ENERGY PROJECT (Ministry of Economic Affairs; prerequisite for construction permit and classification as authorised energy producer) CONSTRUCTION PERMIT (Ministry of Construction; prerequisite for construction and operating permit, beginning of construction within two years) STEP 3 ACQUISITION OF STATUS AS POWER PRODUCER (through decision made by HERA, the Croatian Energy Regulator) POWER PURCHASE AGREEMENT (conclusion of Power Purchase Agreement with HROTE, the Croatian energy market provider) NATIONAL ACTION PLANS As a non-eu Member State, Croatia is not committed to any renewable energy national action plans. The Ministry for Economic Affairs, Labour and Business is responsible for matters relating to internal national action plans.

Investing in Wind Energy 2012 17 It is only since 1 July 2007 (when five regulations entered into force, in addition to the existing Energy Act) that the wind energy market has been gaining some degree of significance in Croatia. However, in spite of these regulatory developments, the wind energy market is still very much in its infancy. At the end of 2010 it supplied the grid with a total amount of 89 MW, with a further 141 wind park projects with an installed output capacity of 6,500 MW already registered. LIMITATIONS/CONSTRAINTS A major limitation is the highly time consuming (more than four-year) approval process, which comprises several steps. Moreover, the existing grid capacity is limited. At present, a maximum of 360 MW in wind power project capacity can be integrated within the existing grid, although there are indications that these capacity levels will be increased in the coming years. Further restrictions are due to the constraints of environmental legislation. Protected areas and no-build zones have been designated through spatial planning and zoning provisions. Another thing to look into before applying for approval for a particular plot of land is whether any other permits have already been issued for the land in question, as these permits enjoy priority over any new ones. KOMMUNALKREDIT OUTLOOK: The projects in the pipeline in Croatia are being implemented very slowly. Projects are essentially funded in euros whilst the feed-in tariffs are paid in Croatian kuna. This creates exchange risks which are hard to control even with higher cover ratios in place. Croatia s accession to the EU should make its market more attractive for the wind energy industry. PwC AUSTRIA OUTLOOK: The biggest hurdle is the cumbersome approval procedure. Therefore, implementation of wind energy projects within the framework of local partnerships is recommended. The potential for wind power in Croatia is considerable, although grids still continue to pose limitations.

18 Poland TARIFF SYSTEM Poland has a mixed system under which energy producers can sell the electricity produced either at a set energy price or, alternatively, on the free market at the market price. In addition to these two variants, energy producers also generate revenues through the sale of green certificates. The energy price is set annually by the Polish energy regulator (URE) on the basis of the average price of the previous calendar year and applies from 1 April of each year. Currency: Zloty (PLN) (EUR:PLN exchange rate stood at 1:4.44 on 15 November 2011) Area: 312,685 km² Population in m: 38.07 GDP in EUR bn: 394.3 GDP in EUR per capita: 10,355 Real GDP growth in %: 3.0 Inflation rate (VPI) in %: 2.8 Public financing balance as % of GDP: -3.8 Public debt in % of GDP: 56.4 Unemployment rate in %: 9.2 Source: Forecast 2012 IMF 09/2011 The current energy price is PLN 195.32/MWh (EUR 0.044/kWh as at 15 November 2011), with the price for green certificates currently amounting to approximately PLN 280/MWh (EUR 0.0631/kWh as at 15 November 2011). Therefore, on the basis of the exchange rate stated above, the best-case scenario for operators is to receive over EUR 0.1/kWh for the electricity fed in. The period of validity of the tariff system is not guaranteed; however, electricity dealers (i.e. sellers of energy to end users) have purchase obligations in relation to green certificates, which in turn leads to greater demand for green certificates. Electricity dealers have to meet a certain percentage of green certificates (socalled quotas: 10.4% in 2011, increasing to 12.9% by 2017). Alternatively, if they fail to achieve this quota, they can pay a fee to rectify the matter. If, however, the quota is not achieved and no such fee payment is made, URE will impose a penalty amounting to 130% of the fee assessment base. Producers of green electricity may trade their certificates on the stock exchange or enter into long-term Power Purchase Agreements (as a rule over ten to 15 years) with electricity dealers in order to sell the certificates together with the electricity generated. However, the prices obtained under a Power Purchase Agreement are significantly lower; at present, approximately EUR 0.1/kWh can be obtained as a total price for green certificates and energy. It is also worth taking into account that there is no lower limit for green certificates, as the prices are set on the stock exchange according to demand. The Ministry of Economic Affairs has been preparing an amendment to the Energy Act for a number of months; however as at 1 November 2011 an official proposed has not yet been tabled.

Investing in Wind Energy 2012 19 Subsidies for wind energy projects can be obtained through a number of programmes, some of which are listed below: EU Cohesion Fund running until 2013 and already virtually exhausted Regional Environmental Funds managed by the Ministry for Regional Development and, above all, designed for public bodies as well as NGOs National Fund for Environmental Protection and Water Management set up by the Ministry of Economic Affairs (subsidy guidelines: maximum project scale of 10 MW; maximum of EUR 12.5m for up to 75% of project costs; maximum of 50% in the form of an investment grant) Environmental Protection Bank provides loans on favourable conditions PERMIT PROCEDURE AT A GLANCE STEP 1 POSITIVE RESULT OF ENVIRONMENTAL IMPACT ASSESSMENT (prerequisite for environmental permit) STEP 2 GRID CONNECTION AGREEMENT (prerequisite for establishment of technical conditions for grid connection, on the basis of which the agreement is made) GRID UTILISATION AGREEMENT (utilisation only possible once connection has been made) STEP 3 CONSTRUCTION PERMIT (final permit for wind park to be built) LICENCE (issuance of the licence for the operation of a wind park by URE, the Polish energy regulator, prior to the beginning of power generation) NATIONAL ACTION PLANS The 2020 EU targets set for Poland are based on the assumption of a 15% renewable energy share (currently 7.2%). Consequently, this figure should more than double within a period of less than ten years. The energy mix largely focuses on biomass, but wind energy projects are also being promoted. The National Action Plan is based on the assumption that the wind energy sector will see a 5.6 GW output capacity increase by 2020.

20 The forecasts made in a study conducted by the Polish Wind Energy Association are somewhat more optimistic, based on the more generous assumption of an output capacity increase to 13 GW by 2020 (of which 11.5 GW onshore and 1.5 GW offshore). Given a level of approximately 1,107 MW in 2010, this means a yearly increase in the installed output capacity by an average of 1,000 MW for onshore wind energy plants and an investment volume of approximately EUR 1.5bn per annum. The European Wind Energy Association (EWEA), working on the basis of similar assumptions, considers an increase from 10.5 GW to 12.5 GW by 2020 to be realistic. Grid operators and regulatory authorities have also come up with figures of a similar magnitude. Grid connection applications have been submitted for projects with a total capacity of 15 GW, with 7 GW so far having been granted grid connection through contracts. LIMITATIONS/CONSTRAINTS Windy areas are usually Natura 2000 areas, the immediate surroundings of which are subject to strict regulations. A further phenomenon to reckon with is grid bottlenecks, though these are surmountable in many parts of the country thanks to structural reinforcements. KOMMUNALKREDIT OUTLOOK: When it comes to the Polish wind energy market, financing can be in both euros and zloty. For projects to qualify for financing, standard long-term Power Purchase Agreements and the installation of wind turbines with a good track record are required. PwC AUSTRIA OUTLOOK: The government is planning to change the current green certificate system. The new draft legislation provides for technology-specific support for renewable energy as from 2012. It is generally worth noting that, on top of the market price risk, investors in Poland are faced with the uncertainty of fluctuating certificate prices.

Investing in Wind Energy 2012 21 Romania TARIFF SYSTEM The Romanian tariff system is a mixed system with green certificates, governed by Act no. 220/2008. This legislation was approved by the European Commission in August 2011 and adopted by the Romanian Parliament and promulgated in October 2011. The current electricity price stands at approx. EUR 0.045/kWh, with two green certificates/mwh issued up to and including 2017 and one green certificate/mwh issued as from 2018 for a total of 15 years. The price of green certificates is determined by the market, although there is a set price range of between EUR 27 and EUR 55 per green certificate. As of 2011, both the lower and the upper price limit for green certificates are index-adjusted on an annual basis by ANRE, the Romanian energy regulator. The green certificates are issued by Transelectrica, the Romanian transmission grid operator, for the previous month, with ANRE checking that electricity traders fulfil their quotas. OPCOM, the Romanian power authority, publishes green certificate prices and the volumes traded on a monthly basis. The 2011 quota is 10%; it gradually increases to 20% until 2020. According to the GEO 88/2011 Amendment, ANRE is to specify the individual annual quota for each electricity trader by 1 March. This quota regulation stipulates that a certain renewable energy share is to be traded by each electricity trader. If the quota is not fulfilled, ANRE imposes a fine in the amount of EUR 110/MWh. The Romanian government has set up an environmental fund, which is managed by Administratia Fondului pentru Mediu s (AFM), an independent agency. A maximum of 50% of project costs or a maximum of EUR 7m is paid out to companies in the form of investment subsidies, provided these companies have been involved in Romanian energy generation projects for a minimum of six months. In 2010, some EUR 214m was available. Public tenders providing the details are published annually on the AFM website. Currency: Lev (RON) (EUR:RON exchange rate stood at 1:4.35 on 15 November 2011) Area: 238,391 km² Population in m: 21.34 GDP in EUR bn: 144.1 GDP in EUR per capita: 6,754 Real GDP growth in %: 3.5 Inflation rate (VPI) in %: 4.3 Public financing balance as % of GDP: -2.8 Public debt in % of GDP: 34.4 Unemployment rate in %: 4.8 Source: Forecast 2012 IMF 09/2011 In addition, an EU Structural Fund offering grants of EUR 260m is available until 2013. Project volumes must be between a minimum of EUR 100,000 and a maximum of EUR 50m. In 2010, the second tender of EUR 100m was oversubscribed twenty-fold the chances of being awarded any subsidies are therefore rather slim. According to current information, some EUR 80m is still available until 2013.

22 NATIONAL ACTION PLANS The share of gross end user consumption of energy produced from renewable sources (not including large-scale hydroelectric power plants) is to be raised from 17.8% in 2005 to 24% in 2020. In 2010, Romania already exceeded the required renewable energy share, including large-scale hydroelectric power plants, by some 2 percentage points, reaching a total of 33%. The wind energy potential is highest in Dobrucha (south-eastern region), with only 14 MW installed in 2009. By the end of 2010, 462 MW had already been connected to the grid, with some 23,000 MW being planned, whereas the grid capacity is just under 4,000 MW. EWEA, the European Wind Energy Association, considers 3,000 MW to 3,500 MW to be realistic. This corresponds to an annual average of approx. 300 MW in terms of newly installed wind parks and an investment volume of some EUR 450m to EUR 500m. LIMITATIONS/CONSTRAINTS The grid situation definitely poses the major physical limitation. From a legal perspective, the grid situation is quite satisfactory for investors, as green electricity may be fed into the grid as the preferred form of electricity. Restrictions or temporary interruptions are only permitted in the event of grid stability and security being endangered.

Investing in Wind Energy 2012 23 PERMIT PROCEDURE AT A GLANCE Environmental impact assessments (EIA) conducted by environmental authorities NO: Not required if the local environmental authorities do not expect any major effects ; permit/statement from Natura 2000 is required STEP 1 YES: Assessment is made within 45 business days (or within up to 12 months) if the local environmental authorities expect any major effects Approval of energy project (by ANRE) + construction permit (from mayor s office) REQUIREMENTS: EIA and permit for technical grid connection (by system operator; contract and payment of the fee within six months) STEP 2 REQUIREMENTS: EIA + zoning plan + urbanism certificate + technical documentation + proof of rights of disposition at project site Operating permit (issued by ANRE) Issued by ANRE within 30 days of submission of complete documentation and payment of fee STEP 3 Required upon inspection and approval of wind park and prior to the launch of commercial operations KOMMUNALKREDIT OUTLOOK: The decision to introduce a second green certificate meant a significant improvement of investment conditions in Romania. Long-term Power Purchase Agreements raise the prospects of successful financing. Furthermore, projects of German or Danish manufacturers in combination with export credit guarantees are being preferred. PwC AUSTRIA OUTLOOK: The new legislation substantially improved investment conditions. Although Romania has a high wind energy potential, grid conditions are currently the main bottleneck. An expansion by some 3 GW to 3.5 GW is to be expected by 2020.

24 Slovakia TARIFF SYSTEM Currency: Euro (EUR) Area: 49,035 km² Population in m: 5.44 GDP in EUR bn: 71.7 GDP in EUR per capita: 13,175 Real GDP growth in %: 3.3 Inflation rate (VPI) in %: 1.8 Public financing balance as % of GDP: -3.8 Public debt in % of GDP: 46.9 Unemployment rate in %: 12.3 Source: Forecast 2012 IMF 09/2011 There is a purchase obligation for renewable energy at a fixed price (feed-in tariff). This is limited, however, to wind parks up to a maximum capacity of 15 MW. The feed-in tariff combines the price for grid losses and a premium price. For wind parks with an installed output capacity of more than 15 MW, producers of renewable energy can only claim the price for grid losses. The feed-in tariff applicable at the time a wind park is put into operation remains valid for a period of 15 years. Subject to statutory provisions, the regulator (URSO) may raise the feed-in tariff during this time according to the inflation rate. The regulator may fix any feed-in tariff that has not yet been allocated for a maximum duration of three years, with a reduction of up to 10% being possible in each of the subsequent periods in which this particular tariff applies. If government investment funding is obtained, the tariff is reduced accordingly. Depending on the amount of the subsidy, the tariff may be cut by up to 16%. The energy is purchased by the respective local grid operator, who is under a legal obligation to accept the entire amount of energy generated. The feed-in tariff, as defined above, has already been published by the regulator for 2011. Since 1 July 2011 it has amounted to EUR 0.07929/kWh. Despite the fact that funding to the order of billions would be available from the EU Structural Funds, many investment projects fail to be implemented due to Slovakia s inability to provide the necessary co-financing. Wind energy projects can also be financed from the EUR 24m support programme for the Bratislava region. This programme provides funding for small and medium-sized enterprises up to a maximum of EUR 660,000 or 45% of total investment costs, if applications are submitted prior to the beginning of wind park construction. PERMIT PROCEDURE AT A GLANCE An essential threshold to be observed is the capacity limit of 1 MW. The Ministry of Economic Affairs only requires a licence for projects exceeding this limit.

Investing in Wind Energy 2012 25 STEP 1 REDEDICATION OF LAND for wind park operation (change of zoning plan, strategic environmental impact assessment, approval of regional and district zoning authorities, statements of government agencies and institutions involved; duration of three to twelve months) STEP 2 ENVIRONMENTAL IMPACT ASSESSMENT (not an approval procedure like in Austria, but rather a screening procedure that serves as a basis for the individual permits; always required for wind park projects, irrespective of size) STEP 3 STATEMENT OF DISTRIBUTION GRID OPERATOR 11 CERTIFICATION FROM MINISTRY OF ECONOMIC AFFAIRS (a positive statement from transmission grid operator SEPS is required) LICENCE (approvals for derogations from protective zones for water, electricity, highways, etc. may be a prerequisite) as well as APPLICATION FOR GRID CONNECTION (an assessment may be required) NATIONAL ACTION PLANS Starting from 6.7% in 2005, the share of renewable energy in total energy is to increase to 14% by 2020, with the government focusing on biomass and photovoltaics. As a result, wind energy projects are not strongly promoted at present and often fail because the necessary certificates are not issued by the Ministry of Economic Affairs. LIMITATIONS/CONSTRAINTS Despite the fact that grid connection is an official priority, gaining access to the grid currently poses a problem. In the course of the permit procedure, bureaucratic obstacles are to be expected.

26 KOMMUNALKREDIT OUTLOOK: The future financial viability of wind projects in Slovakia depends on the development of the legal framework. At present, both the government and the population tend to hesitate when it comes to the expansion of wind parks. Slovakia s future position on this issue remains to be seen. On the positive side, the liquidity required for the financing of projects has been available since Slovakia joined the euro zone. PwC AUSTRIA OUTLOOK: Slovakia too has a lot of catching up to do when it comes to meeting the EU targets for 2020. Public opinion on wind energy is still anything but enthusiastic. At present, biomass and photovoltaic systems are strongly preferred over wind energy. The future development of the legal framework will ultimately be a decisive factor.

Investing in Wind Energy 2012 27 Slovenia TARIFF SYSTEM The amendment to the Energy Act 2008 transposes EU regulations into national law and provides the basis for projects in the field of renewable energy. The organiser of the energy market, a company called Borzen, manages the subsidy schemes through the so-called subsidy centre or CP. CP not only manages funding procedures, but also purchases the electricity from the producers of renewable energy. Electricity from renewable energy sources is subsidised in Slovenia through feed-in remuneration as well as a premium tariff. Certain renewable energy producers ( qualified producers ) may choose between a fixed feed-in tariff and a bonus ( premium tariff ) added to the electricity price that can be obtained in the free electricity market. Wind projects with an installed output capacity of less than 5 MW may choose between a fixed feed-in tariff and a bonus. All wind projects with an installed output capacity of between 5 MW and 125 MW can only apply for the bonus. Wind power plants with a capacity of more than 125 MW are excluded from the subsidy scheme and have to sell the electricity they generate in the free market. Tariffs remain applicable for a maximum duration of 15 years. So-called reference costs serve as a basis for the ultimate determination of the feed-in tariff or the bonus. Reference costs of EUR 0.09534/kWh apply in the case of wind power plants of less than 5 MW; for plants with a capacity of more than 5 MW and less than 125 MW, the reference costs amount to EUR 0.08674/kWh. The reference costs of wind power plants correspond to the feed-in tariff. The bonus amounts to EUR 0.04338/kWh (for wind power plants with a capacity of less than 5 MW) or EUR 0.03084/kWh (for plants with a capacity of more than 5 MW and less than 125 MW). Currency: Euro (EUR) Area: 20,273 km² Population in m: 2.02 GDP in EUR bn: 38.5 GDP in EUR per capita: 19,060 Real GDP growth in %: 2.0 Inflation rate (VPI) in %: 2.1 Public financing balance as % of GDP: -4.7 Public debt in % of GDP: 47.2 Unemployment rate in %: 8.0 Source: Forecast 2012 IMF 09/2011 In Slovenia, public tenders are held for both subsidies and loans designed to promote renewable energy. In theory, grants are also available, but a system has not yet been established for wind power plants. On the one hand, funding is available from the Ministry of Economic Affairs, with the Agency for Efficiency and Renewable Energy (AURE) managing the procedures by means of regular public tenders (maximum subsidy amount: 60%). On the other hand, investment subsidies may be awarded through the Enterprise Fund of the Republic of Slovenia and the Public Agency for Technological Development.

28 PERMIT PROCEDURE AT A GLANCE STEP 1 MEETING ALL THE REQUIREMENTS, IN PARTICULAR OF BUILDING AND ENVIRONMENTAL LAWS applying to the construction of wind power plants STEP 2 AGREEMENT ON GRID ACCESS AND PHYSICAL GRID CONNECTION with the responsible grid operator STEP 3 OBTAINING THE DECLARATION FROM THE ENERGY AGENCY + SUBSIDY APPROVAL NOTIFICATION (required for agreement with CP subsidy centre) STANDARD AGREEMENT WITH CP NATIONAL ACTION PLANS The National Action Plans for the Slovenian grid provide for an expansion of wind energy capacity to approx. 120 MW by 2020. In light of the number of applications already filed, interest in building wind power plants is quite high. LIMITATIONS/CONSTRAINTS As subsidies will continue to be necessary for renewable energy, the Slovenian government does not consider this form of energy production to be feasible from a market perspective. The government s view is supported by environmental groups, the population and administrative bodies. Construction work on several wind parks had already started. However, when in October 2010 the Ministry of the Environment revoked the environmental permits it had already issued, these projects were stopped. In addition, protests on the part of the population and environmentalists resulted in the environmental permits being revoked by the administrative court. This alone caused construction work to be halted at 33 wind power plants.

Investing in Wind Energy 2012 29 KOMMUNALKREDIT OUTLOOK: Just like in Slovakia, the future financial viability of wind projects in Slovenia depends on the development of the legal framework. At the moment, both the government and the population are anything but enthusiastic about wind parks. As a result, no wind parks have been built to date as far as we know. Future developments remain uncertain. PwC AUSTRIA OUTLOOK: In general, legislation on renewable energy subsidies is well drafted. The market in the biomass and solar sectors has already shown positive developments. By contrast, the wind energy sector has not developed at all. Initial wind projects were stopped, and there is currently no wind power plant in operation. As geographical conditions are not ideal either, the development of wind energy will, from today s perspective, only be possible to a limited extent.

30 Czech Republic TARIFF SYSTEM Currency: Czech koruna (CZK) (EUR:CZK exchange rate stood at 1:25.7 on 15 November 2011) Area: 78,867 km² Population in m: 10.55 GDP in EUR bn: 164.9 GDP in EUR per capita: 15,621 Real GDP growth in %: 1.8 Inflation rate (VPI) in %: 2.0 Public financing balance as % of GDP: -3.7 Public debt in % of GDP: 43.2 Unemployment rate in %: 6.6 Source: Forecast 2012 IMF 09/2011 Current Czech regulations stipulate that operators of wind power plants can choose annually between fixed feed-in remuneration and a green bonus paid on top of the market price. The grid operator is obliged to provide preferential grid connection and to purchase the entire amount of energy generated. For 2011, the feed-in tariff amounts to CZK 2.23/kWh (EUR 0.0866/kWh as at 15 November 2011); the green bonus now stands at CZK 1.83/kWh (EUR 0.0710/kWh as at 15 November 2011).The feed-in tariff and the green bonus are set by the regulator at the end of each calendar year for the following year. In doing so, the regulator may only reduce these two remuneration types by a maximum of 5% for projects to be newly connected to the grid in the following year. An amendment to the Subsidy Act is planned for 2012, according to which feed-in remuneration will no longer be paid for renewable energy projects with an installed output capacity of more than 100 kw. Remuneration for such projects will only consist of the green bonus and the electricity market price. At the time this study was conducted, the amendment to the Act was being discussed in Parliament, with the second reading still outstanding. Both the feed-in tariff and the green bonus are index-linked in line with the industrial production index. The feed-in remuneration for wind projects remains valid for 20 years. The remuneration is to be paid by the network operator into whose area the energy is fed. The additional price, however, is passed on to the end user. Additional government subsidy schemes are generally available within the programme for the support of energy conservation measures and the utilisation of renewable energy sources. However, the quotas available through these schemes have all been used up for the time being.

Investing in Wind Energy 2012 31 PERMIT PROCEDURE AT A GLANCE STEP 1 ENVIRONMENTAL IMPACT ASSESSMENT (required beyond 0.5 MW; notification to regional administration, which will organise publication and forwarding to the other authorities involved; it may also decide that an environmental impact assessment is not required; statements are issued; the government agency responsible issues the final statement) STEP 2 ZONING (required for the construction of a wind park; approval by building authorities; only in compliance with regional zoning plan) CONSTRUCTION PERMIT (required for the construction of a wind park; issued by building authorities; construction requirements are specified in this permit) STEP 3 GRID CONNECTION (priority given to renewable energy producers, local grid provider is required to grant grid connection) LICENCE (necessary for the production of renewable energy; issued by regulator) NATIONAL ACTION PLANS In accordance with the EU Directive, the Czech Republic is obliged to increase the share of renewable energy in total energy consumption from 6.1% in 2005 to 13.5% in 2020. The Czech Wind Energy Association (CSVE) estimates the total potential to amount to 2,700 MW, with implementation of 1,500 MW considered realistic by 2020. In light of these figures, we would like to point out, however, that a mere 215 MW in terms of wind capacity was installed by 2010. The National Action Plan stipulates not only an increase in energy efficiency and in the share of nuclear power, but also calls for a higher share of renewable energy, while at the same time reducing the share of lignite and hard coal. LIMITATIONS/CONSTRAINTS At present, it is up to the government to do away with any administrative and grid impediments in the Czech Republic. Some of the wind projects that had already obtained a construction permit did not receive the necessary land-use approvals from the regional authorities. What is more, network operators often fail to comply with the principle of equal treatment when it comes to renewable energy projects. In addition, wind projects are bound to face negative attitudes on the part of the population and, above all, conservationist groups. These reactions are also reflected in media reports, which in turn have a considerable influence on the position taken by the Czech government.

32 KOMMUNALKREDIT OUTLOOK: In the Czech Republic, there are still a lot of impediments to the implementation and financing of new wind parks. At present, only a select handful of projects have been approved. Financing is available both in Euro and Koruna and market liquidity is sufficient. PwC AUSTRIA OUTLOOK: In accordance with the EU Directive, the share of renewable energy in total energy consumption is to be raised from 6.1% in 2005 to 13.5% in 2020. Wind energy might make a substantial contribution to this development, especially since geographical conditions are favourable (2,700 MW would be possible according to the CSVE). However, in order to be able to actually implement this potential, grid improvements as well as administrative facilitation will be required.

Investing in Wind Energy 2012 33 Hungary TARIFF SYSTEM The Hungarian government promotes wind energy through a system of feed-in tariffs and the obligation imposed on MAVIR, the Hungarian transmission grid operator, to purchase the entire amount of power generated. The Energy Office sets the amount and the term of validity of tariffs. At present, the tariffs for the three load periods peak load/basic load/basic low load period amount to HUF 33.35/29.84/12.18/kWh (EUR 0.106/0.095/0.039/kWh as at 15 November 2011) for wind energy projects up to 20 MW. The same tariffs apply to wind parks with an output capacity of above 20 MW and below 50 MW. In practice, licences are issued and the tariffs, including the term of validity, are set individually, depending on the location. Therefore, the tariffs stated above are only of an indicative nature. Wind parks may be granted investment subsidies within the scope of a tender held by an (environment and energy) programme called KEOP, with the amount of the subsidy depending on the location. This subsidy may finance up to 50% of eligible project costs. Currently, some EUR 125m in funds is still available until 2013. The amount is made up of 85% EU funds and 15% funds contributed by the Hungarian government. PERMIT PROCEDURE AT A GLANCE STEP 1 DEDICATION AS A WIND PARK (local administrative authorities) ENVIRONMENTAL IMPACT ASSESSMENT (Regional Inspectorate for the Environment, Nature and Water decides whether an environmental impact assessment needs to be carried out) Currency: Forint (HUF) (EUR:HUF exchange rate stood at 1:315.44 on 15 November 2011) Area: 93,028 km² Population in m: 9.98 GDP in EUR bn: 105.1 GDP in EUR per capita: 10,528 Real GDP growth in %: 1.7 Inflation rate (VPI) in %: 3.0 Public financing balance as % of GDP: -3.6 Public debt in % of GDP: 75.5 Unemployment rate in %: 11.0 Source: Forecast 2012 IMF 09/2011 STEP 2 CONSTRUCTION PERMIT (special structure issued by Hungarian Office for Trading Licences, HTLO, as a prerequisite for participation in the tendering process of the Energy Office) ENERGY OFFICE PERMIT FOR CONSTRUCTION AND OPERATION (permission to start construction) STEP 3 GRID CONNECTION AGREEMENT (with MAVIR, the Hungarian transmission grid operator) GRID UTILISATION AGREEMENT (MAVIR or other grid operator involved) OPERATOR S LICENCE (90 days after completion of construction; gives permission to start operation; issued by HTLO) Obtaining all the permits required for the construction and operation of wind parks involves about 30 different steps.

34 NATIONAL ACTION PLAN The 2010 target share of renewable energy in total energy consumption stood at 3.6%. This target was already achieved in 2007 as a result of the expansion of biomass facilities. The envisaged target share for 2020 amounts to 5.8% and is also deemed to be achievable from a current perspective. Hungary s National Action Plan until 2020 stipulates a share of renewable energy in total energy consumption of 14.65% to 16%. The renewable energy focus will continue to remain on biomass in the future. As regards other sources of renewable energy, such as wind energy, experience shows that political obstacles as well as resistance on the part of the population tend to slow down the approval procedure. LIMITATIONS/CONSTRAINTS The latest output capacity limit for wind parks was set at 740 MW. Before that, the limit had been 330 MW and the entire output capacities had already been allocated. The tender launched for the remaining 410 MW was cancelled by the new government in 2010. Therefore, it is currently not possible to build any wind parks, unless a licence was obtained within the scope of the first 330 MW phase. One of the reasons for this step taken by the government appears to be the need for grid expansion and upgrading, with grid operators being under a statutory obligation to bear the costs. KOMMUNALKREDIT OUTLOOK: Investors in the wind energy market currently face a lot of uncertainty, as there are no tenders for new licences. As regards the development of new renewable energy projects, the government s focus seems to be on biomass and geothermal systems. The expansion of wind energy is not likely to be a major factor in the future. PwC AUSTRIA OUTLOOK: The market environment for wind energy is currently rather uncertain. Good investment opportunities for wind energy might arise, given the target of raising the share of renewable energy in total energy consumption from 14% to 16% by 2020. We will have to monitor the further developments in the field of subsidies.

Investing in Wind Energy 2012 35 The authors Kommunalkredit Austria AG ENERGY & ENVIRONMENT DIVISION Lukas Stühlinger, Head of the Energy & Environment Division Sabina Basagic Elvir Ziga Contact: l.stuehlinger@kommunalkredit.at Phone: +43 1 31 6 31-0 PwC AUSTRIA Michael Sponring, Director Viktoria Gaß, Manager Contacts: michael.sponring@at.pwc.com viktoria.gass@at.pwc.com Phone: +43 1 501 88-0 In drafting this study, we were supported by: green pilot gmbh Erwin Solleder Contact: erwin.solleder@greenpilot.at Phone: +43 664 355 57 00

36 The publishers KOMMUNALKREDIT AUSTRIA AG: WE ENSURE THE SUCCESS OF SOCIAL INFRASTRUCTURE, ENERGY, ENVIRONMENTAL AND TRANSPORT PROJECTS Kommunalkredit Austria is a bank located in Vienna, specialising in public infrastructure financing and municipality-related projects. We currently have a staff of 300 employees. Our service portfolio includes the financing of infrastructure projects as well as the granting of loans and credit to institutions and utilities in the public sector. In addition, we offer consultancy services in the field of financial solutions to the public sector and infrastructure companies. Our product portfolio is rounded off by a range of investment oppor tunities and attractive treasury products. The sales sector of Kommunalkredit is subdivided into the fields of Energy & Environment, Social Infrastructure, Transport and Public Finance. The Energy & Environment sector includes energy generation projects involving renewable energy and fossil fuels, energy transmission, energy efficiency, water supply and waste water treatment as well as waste management. Kommunalkredit finances projects in Austria and supports its customers in their activities in other European countries working in close cooperation with local and international banks, environmental experts and firms. PwC AUSTRIA: BUILDING RELATIONSHIPS, CREATING VALUE PwC ranks among the leading consultancy firms in Austria and focuses on sector-specific services in the field of auditing, tax and business consultancy. PwC teams include legal experts, business experts and technical specialists as well as other professionals, such as physicists, physicians and biotechnological experts. We belong to a global community of over 168,000 people offering wide-ranging expertise and a wealth of ideas as well as one common purpose: to create winning relationships and in working together with our clients to add the value that they are looking for. Utilities, the public sector, banks as well as leading local and global companies from family run businesses to global corporations, whether renowned car producers, established chemical manufacturers or innovative technology startups have all come to appreciate our expertise.