Hungary The investor’s view on Hungary’s wind energy ambitions

1. HungaryThe investor’s view on Hungary’s wind energy ambitions Budapest, 5 July 2011 Adrián Muriel Carrasco (Country Manager, Gamesa Energy Romania)

2. Index • Short Notes on Gamesa • What does an Investor look for? • What he/she is finding in Hungary: Focus • Summary Global technology, everlasting energy

3. GAMESA CORPORACIÓN TECNOLÓGICA Wind Farms Development, Construction and Sale Wind Turbines Manufacturing and Installation Energy Solutions Gamesa: Integrated Technology and Manufacturing know-how Building & Construction WTG Manu-facturing & Design Wind Farm development Customer: Wind Power Plant Maintenance Service Operations WTG components Manufactu-ring & Design Gamesa Technological Global Leader Global technology, everlasting energy

4. Gamesa Technological Global Leader • More than 15 years of experience in technological sector and wind industry • Listed company, member of the Ibex-35 index • Worldwide leader in the design, manufacture, installation and maintenance of Wind Turbine Generators (WTG) • 21,000 MW installed (HUN: 182 MW) • 13,600 MW under maintenance • Global presence: • 30 manufacturing centers in Europe, USA, China, India and Brazil • 24 sales offices in 8 regions • Global benchmark in wind farm development business: 4,100 MW promoted + portfolio of more than 22,600 MW (HUN: 0 MW) Global technology, everlasting energy

5. What does an Investor look for? R + G + R • Resource • Grid • Regulation(Status, Support Scheme) ► Let’s see now what the investor is finding in Hungary Global technology, everlasting energy

6. Grid Issues • The grid connection is good (CENTREL system) since it act as a transit country. • High transmission and distribution losses, estimated to be around 9%.  Global technology, everlasting energy

7. Wind Resource • Main information sources • 3Tier Model • Windatlas made by Hungarian Meteorological Service • Analysis at 80 m height • In general, wind resource in Hungary is low-medium (~5-6 m/s). • The best areas are at the Northeast of Budapest and, specially, in the Northwestern part of the country. • In the Northeastern part of Budapest are The Mátra Mountains with some points around 6 m/s. • In the northwestern part of the Danube river are the Bakony Mountains with mean values around 7 m/s and in the Austrian border mean values around 6.5 m/s are reached. • The prevailing wind blows from NW. • Evaluation In the best places (Northwest): 2.300 – 2.800 NEH (G90 78m) • Interesting areas: • The northwestern part of the country, specially: the Bakony Mountains and the Austrian border. • Some points in the Mátra Mountains. • Limitations: • Protected areas. • Low temperatures in winter.  Global technology, everlasting energy

8. Wind Resource Global technology, everlasting energy

9. Electricity Mix • Hungary has a installed capacity of 9140 MW (2008, +126 MW that year). Hungary imports part of the electricity, which is creating supplying and management of the system problems. • The mix is mainly based on fossil fuels and nuclear power. • Demand forecast: around 6 GW of new capacity will be needed in the future in order to satisfy the growing demand and to compensate obsolete capacity (estimated at 4,5 GW)  opportunity Source: MVM activity Report 2009 Source: MVM activity Report 2009 Global technology, everlasting energy

10. Wind power status and forecast • Wind power installed capacity at the end of 2010: 323 MW (+94 in 2010) according to BTM 2011. • There is a maximum limit of installed capacity is established by the Government through tenders. Until 2009 was 330 MW. In September 2009 it was increased with 410 additional MW but the tender was cancelled in mid 2010. At the moment is not expected installation of new capacity. • Target: Directive 77/2001 established of 3,6% of the electricity consumption generated from renewable sources in 2010. New Directive 2009/28/EC specifies that the proportion of the utilisation of renewable energy sources within total energy consumption has to attain 13% by 2020. • Yearly Installed capacity forecast (MW): !  Global technology, everlasting energy

11. Wind power support mechanism • The Hungarian Parliament approved the new Act on Electricity in 2007, which came into effect in 2008. Aimed at setting up an efficient internal electricity market, promoting energy efficiency and energy conservation. • In addition, the Act seeks to encourage the development of renewable sources of energy as well as cogeneration, by establishing purchasing obligations and introducing feed-in tariffs. The feed-in tariffs were introduced on the 1st January 2003 and electricity suppliers are obliged to purchase from producers utilising renewable energy sources, with an installed capacity of more than 100kW. • The support systems consists on a fixed tariff which duration depends on the project return of the project (decided case by case). According to the Hungarian Wind Association 1/3 of the projects get the prime during 10 years; 1/3 during 15 years (maximum) and the 1/3 resting during a period between 10 and 15 years. Uncertainty about the sale of electricity when the prime support period finalizes.   Tariff for requests before November 2008 Tariff for requests after Nov. 2008 Source: HEO, 2010 Global technology, everlasting energy

12. Additional issues   • Other supports: • Structural EU funds • EKD from Hungarian Government (>10MM€ I, >25 jobs) • Fiscal Deductions (>75 jobs) • Kyoto Protocol signatory • -6% 1990 emmissions • No JI projects approved • In 2007 the Edict 389/2007 was released and penalizes the imbalances in the production. In Nov 2008 these costs were reduced but still are a barrier for the development of wind power projects. Also, Wind farm developers have to assume all the grid costs. • Medium country risk (A4) according to COFACE ranking. • A foreign investor has to face exchange rate risk Global technology, everlasting energy

13. Summary • Grid OK • Resource OK • Regulation +/- • Electricity Mix OK • Tender System X • Feed-In Tariff Choice OK • Feed-In Tariff Durations X Global technology, everlasting energy

14. Global technology, everlasting energy Köszönöm !!