Development & Financing of PV Power Plants & Key Issues in the Off-Grid/ Hybrid Sector

1. Development & Financing of PV Power Plants & Key Issues in the Off-Grid/ Hybrid Sector

2. Conergyat a glance Financing of PV Systems & Issues in Hybrid Systems A B

3. A Conergy has a wide experience in all downstream sales channels; diversified sales approach is key to balance risks Conergy‘s downstream business B2B PROJECTS Indirect sale to wholesale EPC (Engineering / procurement / construction of PV installations) PD, Financing, EPC (Development / financing / EPC of large PV power plants) SALES CHANNELS Direct sale to installers and sollateurs RESIDENTIAL COMMERCIAL (roof-top) INDUSTRIAL (free-field) Small 50 ~ 200 kWp 1) Large > ~ 200 kWp 1) > ~ 500 kWp 1) < 50 kWp 1) MARKET SEGMENTS 1) Indicative dimensions Source: Conergy

4. A Conergy has a longstanding experience in Asia and Middle East Overview of markets in APAC served by Conergy APAC & Middle East markets REMARKS • Presence in Asia Pacific and Middle East markets since 2005 • Teams with global experience and local knowledge • Regional Headquarters in Singapore serving surrounding markets – regional engineering center of excellence • Offices in Australia, India, UAE, Thailand • Strategic partners in Thailand, Indonesia, Malaysia, the Philippines and Saudi-Arabia • Market entry in Japan currently in execution – own entity expected in H1/2013 Singapore Middle East Countries with own CGY-entity Countries with EPC business driven by Singapore Source: Conergy

5. A Conergy offers high-quality solar systems and an all-round carefree service package for all sales channels from a single source Conergy‘s solution portfolio SYSTEM COMPETENCE • Based on more than 14 years of solar experience and its in-depth expertise as a former system manufacturer .... • .... Conergy integrates high-quality components and comprehensive services to all-round carefree solar system solutions • .... Conergy’s sales force has the expertise in all components, such as modules, inverters, mounting systems, cables and electrical parts • .... Conergy has the competence to ensure its high quality standards by strict quality management along the entire value chain HIGH YIELD DURABLE SECURE SIMPLE Source: Conergy

6. In general, Conergy operates in a proven consortium approach with selected strategic partners A Consortium Member Local Partner Engineering Procurement General role in project Engineering Procurement Construction PROJECT ENGINEERING PROJECT MANAGEMENT • Overall conceptual design • Overall mechanical and electrical design • Main components supply • Commissioning support • Warranties • Local civil design • Local mechanical design • Local electrical design • Local components supply • Installation • Commissioning • O&M Tasks Conergy – Local Partner Consortium

7. Conergyat a glance Financing of PV Systems & Issues in Hybrid Systems A B

8. PV Projects have the advantage to be comparable to financial products as they are straight forward on a technological perspective Main characteristics of PV projects • Reliable • Technology is simple and passive • Maintenance is light • Module life time 25 years • Predictable • Sunlight is stable through the years • Energy yield are predictable and Regular • Output directly linked to quality of modules / inverters • O&M costs are stable • Safe • Returns are known well in advance • Economical reality does not vary too much from simulations

9. Through the eyes of Finance a project is Risk Management Overview of project development framework FINANCE ENVIRONMENT “Framework” PLAYERS “human factor” Project development • Mitigate the risks of a project by • Proper project documentation • Scenario Analysis • EPC Guarantees • Social Need • Political framework • Geological conditions • Promoters • Technology suppliers • Investors • Banks PROJECT Land + Rights TECHNOLOGY “Know-how” • Yield check • Technical feasibility • Technical/site risks

10. Each partner in a project has a different goal.. Project stakeholders and their goals Sweat equity/Development Margin (15%) EPC contractor Equity Investor Project Promoter Money lender One shot profits Dividends (15%) Annual returns EACH ACTOR HAS A DIFFERENT EXIT STRATEGY IN MIND Project Loan Interests (6 to 10%) Annual returns EPC Margin (10 to 15%) One shot profits

11. Typical Finance Cycle of commercial PV Systems • Short term equity investors with • Equity IRR expectations around 14% : • Development banks (label+equity) • Hedge/Innovation funds (equity) • Industrial partners (exit strategy offer) Equity Partner search Promoters + Initial Investors Joint Venture development (SSA, SHA) x Financial close Exit by sector IPO Cash bring as Equity Injection into New/future project pipeline Project construction • Exit by trade sale to long term equity investors • with lower IRR expectations (8 to 10%) : • Utilities • Pension funds Preferred exit option

12. For an investor a bad project is a project showing him shadow areas and risks with no answers, no mitigations … Overview Project risks TECHNOLOGY RISK PROJECT INTERNAL RISKS • Potential delays in EPC • Previous References project implementation (Shareholders/EPC) in the country • Degradation factor of modules (generation) over the years • Efficiency of components (Modules Inverters) • Guarantees on performance/yields • O& M issues • PPAS Capacity of local institutions to honor PPAs • PPAs duration and renegotiation risk • Land lease risks • Political stability and energy framework • Project geological location • Project administrative environment • Clear shareholding structure of SPV with clear leadership Clear ownership rights • One Majority shareholder mastering with track record • Clear exit strategies ENVIRONMENT RISK PARTNERSHIP RISK

13. For an investor a bad project is a project showing him shadow areas and risks with no answers, no mitigations … Overview Project risks TECHNOLOGY RISK PROJECT INTERNAL RISKS • Potential delays in EPC • Previous References project implementation (Shareholders/EPC) in the country • Degradation factor of modules (generation) over the years • Efficiency of components (Modules Inverters) • Guarantees on performance/yields • O& M issues • PPAS Capacity of local institutions to honor PPAs • PPAs duration and renegotiation risk • Land lease risks • Clear shareholding structure of SPV with clear leadership Clear ownership rights • One Majority shareholder mastering with track record • Clear exit strategies • Political stability and energy framework • Project geological location • Project administrative environment ENVIRONMENT RISK PARTNERSHIP RISK

14. Overall private sector investments have the opportunity to bring efficiency and competition to the Off-Grid/ Hybrid Sector Key points of concern for private investors Some of the concerns can be addressed by the Government while education play a key role and can be driven by the private sector A No sovereign guarantees to counter bankability issue B Often remote access raises questions on O&M C Difficulties to pool projects in order to attract equity D Smaller systems difficult to debt-finance E Wider span in quality/ reliability compared to PV PP F Lack of education on RE in Off-grid markets

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