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Financing Wind Energy in CEE. Grzegorz Zielinski, EBRD EWEC 2010 Warsaw , 21 April 20 10. Agenda. What is EBRD? EBRD Financing Capabilities Financing Terms and Due Diligence Recent RE deals in CEE More on Current Pricing and Off-takes Contacts. 1. What is EBRD?.

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Financing Wind Energy in CEE


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    1. Financing Wind Energy in CEE Grzegorz Zielinski, EBRD EWEC 2010 Warsaw, 21 April 2010

    2. Agenda • What is EBRD? • EBRD Financing Capabilities • Financing Terms and Due Diligence • Recent RE deals in CEE • More on Current Pricing and Off-takes • Contacts

    3. 1. What is EBRD?

    4. What is the EBRD? • AAA-rated international financial institution, promotes transition to market economies countries from central Europe to central Asia • Owned by 61 countries and two inter-governmental institutions • Asset base: approx. 2,500 transactions worth €50 bn signed through 2009 • Capital base: €20 bn dedicated exclusively to the region

    5. EBRD: Regional Leader • A network of 33 offices in 30 countries

    6. Strong commitment to the region

    7. EBRD: Foundations of Operations • Apply sound banking principles to all projects • We do not subsidize • Advance the transition to a full market economy • Priority to promote private sector involvement and market expansion • Support, but not replace, private investor: additionality • Act as a catalyst for higher and riskier involvement of financiers • Achieve environmentally sound and sustainable development

    8. 2. EBRD Financing Capabilities

    9. EBRD Facilities Equity Loans • Project finance loan • Corporate loan with specified use of proceeds • Hard/local currency • Medium and long tenors (up to 15 years) • Floating/fixed rates • Carbon finance • Common stock or preferred • Quasi-equity

    10. EBRD: Country Specific Value Added • Regional expertise means key structuring skills • Good relationship with Governments, regulators • EBRD positioning as a neutral party • Mitigation of political and regulatory risks • Access to policy dialogue • Strong local presence • Catalyst to access additional equity, debt and trade finance • Risk sharing through equity participation • Flexible deal structures

    11. 3. Financing Terms and Due Diligence

    12. EBRD Debt Financing Key Terms and Conditions: Tenor - 10-15 years Margin - benchmarked to market Fixed rate possible Secured on Project Assets Quality off-take EBRD can directly finance up to 35% of total project costs (additional funds mobilised through syndication) For project finance loans, at least 30% of total project costs to be contributed by sponsor equity Portfolio financing

    13. EBRD Equity Financing Key Features: EBRD equity stake typically at around 20-25% (meaningful, but minority) Investment trough capital increase Invest in Funds to address smaller projects or larger stakes Exit through IPO, trade sale or put/call agreement Key Requirements: • Nomination of at least one director to the Board but not actively engaged in management • Shareholders agreement • Share subscription agreement

    14. Wind Farm Due Diligence Requirements • Feasibility Study • EPC / O&M Arrangements • Grid Connection • Wind Study Technical • Financial Model • Offtake Arrangements • Sponsor Information and Experience Financial • ESIA • Stakeholder Engagement • EU+ Environment / Social • Project Permits/Licenses • Sponsor Information • Renewable Energy Legislation Legal Market • Price Projections • Supply/Demand Balance

    15. CEE: current status • Poland – many local and international developers, matured GC market, 2017 question • Hungary – tight market limited by terms of operating licenses, 2nd tender still o/s • Slovakia – not much success • Baltics – good potential with several small and mid size projects now under construction • Croatia – government supportive, 12-year feed-in tariff, some local and International activity • Bulgaria – attractive market, supportive government, re-thinking regulatory approach and several large projects • Romania – large market, large deals • Ukraine – very large potential, renewable energy framework approved in October 2008, but good secondary legislation still pending

    16. CEE : In practice • Some legislative gaps:e.g. Estonia has set low feed in tariff caps, but is revising its position • Licensing issues:e.g. Hungary wanted to limit amount of wind energy to enter market so trimmed down size and economics of qualifying projects making some uneconomic • Long term contracts:e.g. Polish disco’s in oligopolistic market for long term green certificate offtakes “Many developers, many financiers, increasing number of constructed projects”

    17. 4. Recent RE deals in CEE

    18. EBRD: Wind Farms Financed Debt Project Sponsor EBRD Investment Equity • St. Nikola 156 MW • Suvorovo 60 MW • EUR 70 mln • EUR 60 mln • AES • Grupo Enhol Bulgaria Estonia • Raisner OU 130 MW • EUR 0.9 mln • Iberdrola Renovables Hungary • Wind farm portfolio • EUR 50 mln • Iberdrola Renovables • Global RPI • Iberdrola Renovables • Tychowo 50 MW • Wind farm portfolio • EUR 30 mln (in PLN) • EUR 75 mln (in PLN) Poland Turkey • Rotor 135 MW • EUR 45 mln • Zorlu Enerji • Enercap RE Fund • FreEnergy • EUR 25 mln • EUR 19 mln • Various • Nelja Energia Regional

    19. EBRD: Recent RE deals • Saint Nicholas Wind Farm – Bulgaria (October 2008) • Construction and operation of a 156MW wind farm in the Kavarna region • Financing: EUR 90 million of long-term debt • Sponsor: AES GEO Energy Ltd • Iberdrola Estonia Wind – Estonia (November 2008) • Development of the 150MW Lüganuse Windfarm project located approximately 120 km east of Tallinn, and close to the Baltic Sea shore • Financing: EBRD provided EUR 900,000 of development equity • Tychowo Wind Farm – Poland (April 2009) • Construction and operation of a 50MW wind farm in Northern Poland • Financing: long-term debt financing of PLN 126 million • Sponsor: RP Global of Spain • Rotor Wind Farm – Turkey (May 2009) • Construction and operation of a 135 MW project in Southern Turkey • Financing: EUR 45 million of long-term debt • Sponsor: Zorlu Elektrik Uretim A.S.(Zorlu Enerji)

    20. EBRD: Recent RE deals • FreEnergy – Estonia (June 2009) • Equity investment in the portfolio of 15 wind farm projects located across the Baltic States. • Financing: EUR 18.8 million equity • Co-investor: founders and initial investors in FreEnergy • Suvorovo Wind Farm – Bulgaria (January 2010) • Construction of a 60 MW wind farm – second largest after St Nikola project • Total debt finance: EUR 71 million senior debt provided by EBRD, BSTDB and UniCredit with a 15 year tenor (A loan) and 12.5 year tenor (B loan) • Total project cost EUR 108 million, Enhol Group provided 31% as equity • Iberdrola Equity – Poland and Hungary (February 2010) • EUR 125 million acquisition of 25% equity stake in Iberdrola’s Polish and Hungarian wind farm portfolio Seven more wind farm projects to be financed in the next 6 months

    21. 5. More on Current Pricing and Off-takes

    22. Long Term Debt … at what price?

    23. Off-takes • In Poland and Romania • Long-term and fixed-price - covering both, electricity and GC • Semi merchant - e.g. mid-term GC/electricity off-takes, higher revenues vs. lower leverage • Fully merchant - very few in EU15 and North America, hopefully one day in CEE (full CO2 pricing in place) • Other CEE countries with feed-in tariff • Merchant tail

    24. 6. Contact details

    25. How to contact us Grzegorz Zielinski Senior Banker, Renewable Energy & CEE Coordinator +48225205700 zielinsg@ebrd.com WFC, E. Plater 53, 00-113 Warsaw, Poland www.ebrd.com www.ebrdrenewables.com

    26. Thank You