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The Rise of the Portfolio Investor : Acquisition Strategies in a Seller’s Market

The Rise of the Portfolio Investor : Acquisition Strategies in a Seller’s Market. 9 May 2007 Milan. IPP. Utilities. Institutional Investor. The Rise of the Portfolio Investor Participants – Market Approach. Evolve from successful local developer. Not on my grid. Too risky. Historical.

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The Rise of the Portfolio Investor : Acquisition Strategies in a Seller’s Market

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  1. The Rise of the Portfolio Investor:Acquisition Strategies in a Seller’s Market 9 May 2007 Milan

  2. IPP Utilities Institutional Investor The Rise of the Portfolio InvestorParticipants – Market Approach • Evolve from successful local developer • Not on my grid • Too risky Historical • Expand beyond local market • Project based opportunity • “Clean” pressure • Scale - generation assets • Fund rationale – growth or annuity • Established markets & industry Growth Drivers • Opportunity driven • Leverage skills • Reaching growth targets – buy and partner • Leverage balance sheet • Buy projects and restructure • Higher price for lower risk Outlook • Partner to build pipeline • Chunky growth • Absorb at home – acquire abroad • Slow but steady • Buy packaged assets • Quick decisions

  3. The Rise of the Portfolio InvestorTop 20 European Owners (MW) Top 20 Asset Owners • Account for 31% (15.2GW) of total base (45.5GW) • Added 41% (3.1 GW) of total new (7.5 GW) • Utilities added 1,700 MW - IPP’s just over 1,000MW 2006 Added 2005 Installed IPP’s Utilities Institutional

  4. The Rise of the Portfolio InvestorIPP’s • Growth from transmission business - Elecnor • Spain – 330, Brazil - 140 • EHN, CESA, GREP Pipeline, CDV, outbid for Pacific Hydro • Europe (ES/IT/FR/DE/GR/HU) – 2,300, NA – 35, Asia 30, Historical • Continue to build on existing business • Diversified energy • Consolidate at home and move abroad via acquisition • Vertical business Growth Drivers • Cautious Expansion • Offshore in Spain with Endesa • Expanding into Solar and Biofuels • Leverage experience from home market - UK, Hungary, Greece, Italy, Poland • Offshore – Spain, France • Target additional 5,000 MW next 4 years – NA/CN • Turbines & Endesa Outlook

  5. The Rise of the Portfolio InvestorUtility Historical Growth Drivers Outlook

  6. The Rise of the Portfolio InvestorUtility • Local development into umbrella- Add EnXco • Europe (FR/PT/DE/GR/IT/UK) – 385, NA - 300 • Hidro Cantabrico, DESA/Nuon Horizon • Europe (PT/ES/ FR) – 1100, US 560 MW Historical • Acquire developers with pipeline and assets • Diversify portfolio • High growth markets • Partnerships - own less than 50% of participated • EnXco – over 1,200 mw experience – maintain ownership of pipeline Growth Drivers • Continue partnerships and local project acquisition ie Italy (2 operating farms) • EnXco – 200 – 300 MW per year • Target over 3,000 MW by 2011 • Execute on acquisitions • 2,200MW new wind capacity in France, Italy, UK and Poland by 2010 • Over 1,000 in US Outlook

  7. The Rise of the Portfolio InvestorInstitutional Investor Trinergy • Purchase UPC assets in Italy - IVPC, German projects • Europe (IT/DE,IR) 620 • Enersis, Gamesa portfolio, German projects, Superior • Europe (ES/PT/DE/FR/IT) 806, NA – 450, Asia - 170 Historical • Financial engineering • >€1bn Refinance 680 MW • Mix of IPP and Financial engineering • Development partnerships, acquisition and refinancing Growth Drivers • Content with current portfolio – build out from existing acquisitions • Additional acquisitions in stable markets • Agreements with Plambeck, Ostwind, Renerco and Nordex – for France and Germany • Will continue to draw on Gamesa in US – will look for new projects acquisition Outlook

  8. Renewable Generation Inc. Greenlight Energy MREC Partners Total Pipeline Acquired > 43,000 MW (est.) Community Energy The Rise of the Portfolio InvestorEuropean Wind Investment in US

  9. The Rise of the Portfolio InvestorTrends • Hot markets – Italy (19 cents / Kwh), UK – ROCs, France – pent up pipeline, Eastern Europe – local heroes, US – its big and I can play, Offshore - scale • Entire industry becoming more consistent – more investors willing to participate (long way from the doctors & dentists, sandal wearing, backpack toting explorers with hand held anemometers …) • New Entrants – GE finance / Theolia, Novera (Germany, France), Allianz • Small locals – no longer able to fund turbines 10-20% down 18 months in advance of delivery. • Land grab - Not much real greenfield left in next few years – realizing identified projects • Large players acting in similar manner - Scale definitely brings synergies – balance risk (permitting, support schemes, access to turbines, diversity of supply ….. • Speed to secure project pipelines offset by turbine lead times benefits those that can build a diversified development portfolio

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