PNE WIND AG EWEC 2010 Warsaw Theme: Finance and economics Session: Project finance

1. PNE WIND AG EWEC 2010 Warsaw Theme: Finance and economics Session: Project finance Presenter: CEO Martin Billhardt Buchholz wind farm

2. Value chain of offshore wind farms: Development of offshore wind farms

3. Approval process of offshore wind farms German Federal Maritime and Hydrographic Agency (BSH) Source: BSH, modified by PNE WIND AG

4. PNE WIND AG Offshore Private Equity Fund: the value of experienced partners • The scope of cooperation with a wind turbine supplier may include: • First step: help to organise the financing, building up a project organisation, finding sub-suppliers, supply quotes and technical input, assist with an feasibility study, manage risiks and interfaces of the project partner, support with technical details • Second step: negotiation of a Turbine Supply Agreement (TSA) and Service and Availability Agreement (SAA) • TSA: liability, warranty, waranty power curve, weather risks, scope of work, bankability issues, timeframe for completion, guarantees of the parties • SAA: cost for labour, parts and equipment, service fee, availability guarantee, liability • The scope of cooperation with an offshore project management company may include: • Project preparation • Project procurement • Contracting and contract management • Project support and organisation

5. PNE WIND AG Offshore Private Equity Fund: idea • Initiation of a Private Equity Fund with the aim to invest in permitted offshore wind farms • Exit: two years after commissioning sale to a long-term investor based on historical data • Target IRR: 14-18%

6. PNE WIND AG Offshore Private Equity Fund: scheme and example • Framework • Maturity: 5-6 years • No. of Offshore wind farms: 6 wind farms • No. of wind turbines/wind farm: 80 turbines • Capacity per wind turbine: 5 MW • Capacity held by the fund: 2.400 MW • Capital • Required investment: 3,3 Mio. EUR/MW • Total investment-volume: 7.920 Mio. EUR • Equity: 40% (3.168 Mio. EUR) • Debt: 60% (4.752 Mio. EUR)

7. PNE WIND AG Offshore Private Equity Fund: „adjustable screws“ -> risks

8. PNE WIND AG Offshore Private Equity Fund: the value • The value consists of wind, feed-in-tariffs, proven technology, experience, knowledge • During the following phases the wind is examined, the feed-in-tariffs are fixed and proven technology is chosen to manage the fund with an experienced project management team which has an in-depth project and industry knowledge • A good developer differentiates as follows to prepare the asset: • Developing the permission • Get the permission by analysis of different surveys (shipping, environment, public, general technical, geotechnical, health & safety, construction aspects) and considering the project site, wind farm layout, geophysical investigations, wind studies, turbines, foundations and the electrical design • Structuring the financing • Appoint legal, technical and insurance advisors, structring the finance, negotiate commercial contracts, develop financial model and indicative term sheet, prepare an info-memo for banks, building the final bank club, due diligence, contract negotiation, financial close

9. PNE WIND AG Offshore Private Equity Fund: the value • Managing the construction • Evaluation of potential partners concentrates on companies with a high level of experience: track record, design capabilities, financial strength, personnel and equipment capability, Health & Safety record • Servicing the wind farm technically and commercially • Technical services will be ensured mainly by a Service and Availability Agreement with the turbine supplier • Commerical issues will be organised with partners who have a long experience in this field with onshore windfarms, partly with offshore technology