The European PPP Market 29 April 2008 Hugh Blaney

1. The European PPP Market29 April 2008 Hugh Blaney

2. DISCLAIMER The information contained in this presentation is given without any liability whatsoever to Babcock & Brown Limited or any of its related entities (collectively “Babcock & Brown”) or their respective directors or officers, and is not intended to constitute legal, tax or accounting advice or opinion. No representation or warranty, expressed or implied, is made as to the accuracy, completeness or thoroughness of the content of the information. The recipient should consult with its own legal, tax or accounting advisers as to the accuracy and application of the information contained herein and should conduct its own due diligence and other enquiries in relation to such information. The information in this presentation has not been independently verified by Babcock & Brown. Babcock & Brown disclaims any responsibility for any errors or omissions in such information, including the financial calculations, projections and forecasts set forth herein. No representation or warranty is made by or on behalf of Babcock & Brown that any projection, forecast, calculation, forward-looking statement, assumption or estimate contained in this presentation should or will be achieved. Please note that, in providing this presentation, Babcock & Brown has not considered the objectives, financial position or needs of the recipient. The recipient should obtain and rely on its own professional advice from its tax, legal, accounting and other professional advisers in respect of the addressee’s objectives, financial position or needs. This presentation does not carry any right of publication. This presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by Babcock & Brown. Neither this presentation nor any of its contents may be reproduced or used for any other purpose without the prior written consent of Babcock & Brown. .

3. AGENDA • Introduction to Europe • Market Overview • Political & Legal Environment • Sector Development • B&B in Europe & Globally For further information please contact: Hugh Blaney 5 Aldermanbury Square, London, EC2V 7HR +44 20 7203 7300 hugh.blaney@babcockbrown.com

4. INTRODUCTION TO EUROPE • 48 countries – vast opportunity (€225bn annual infrastructure investment) • January 2007 EU had 494m citizens • EU 27 (+3) countries Challenges: • Language • Legal framework • Stakeholder buy-in • Forms of PPP

5. MARKET OVERVIEW Source: A Practical Guide to PPP in Europe

6. POLITICAL ENVIRONMENT • Central government sponsorship is essential for successful PPP delivery and has been achieved by specific Task Force or PPP units e.g. PPP units exist in: • It is essential that these groups have appropriate involvement and authority in the PPP process

7. DEVELOPMENT BY SECTOR

8. OVERVIEW • Taken as a whole, Europe’s PPP markets are still in their infancy • More than 50% of PPP markets still at an early stage • UK has been a clear leader • New member states are showing keen interest in PPP as they have new budgetary constraints and the need to improve infrastructure

9. UK • Up to the end of 2007 UK has signed PFI & PPP projects with a capital value of £60bn • 60 signed projects in 2007, worth £7.3bn (drop from the record £9.6bn in 2006) • Recent years have seen a rise in average deal size – £122m in 2007 • Greater focus on procurement costs, reducing the number of smaller contracts • PFI accounted for about 10-15% of public capital expenditure since 1996 • Transport – biggest PFI / PPP department accounting for £17.8bn of PPP projects (excludes Metronet Contract) • Health – projects worth £12.6bn • Defence (accommodation, marine vessels, satellites, garrisons) – projects worth over £8bn with and average size of £134m • Education – projects worth £6bn (largest sector in 2007) Source: International Financial Services, PFI in the UK & PPP in Europe

10. PPP Contracts in Europe (ex. UK) EUROPEAN PPP PROJECTS • Outside of the UK, PPP has been rising rapidly • €27bn PPP projects procured between 2001-2007 Source: International Financial Services, PFI in the UK & PPP in Europe

11. B&B IN EUROPE • B&B Approach • Active developer since 1997 • Strong local presence with a wide range of skill sets • Flexibility of approach – PPPs different risk profiles and delivery process throughout Europe • Strong relationships with local partners and clients • Long term investor • Focused approach & thorough analysis of opportunities (business case, political buy-in, delivery team)

12. B&B EUROPEAN PIPELINE Belgium Transport Education Govt. Buildings Social Housing UK Intercity Express Also: Waste Health Courts Ireland Education Courts Health Arts Custodial Germany TransAlp – Transport Also: Education, Health & Govt. Buildings Portugal Motorways Rail Health Airports Turkey Health Transport France Perpignan Theatre Sathonay Gendarmeries Prison of Sante HSL SEA Castres, Toulouse A355 Route des Vosges DDE Rail Bretagne Pays de Loire Canal Seine Nord VNF Greece Education (€326m) Courts (€100m) Health (€763m) Custodial (€198m) Italy Sassari Hospital (€160m) Mestre Proton Therapy Centre (€160m) Brescia II (€130) Grugliasco University Campus (€250) Various car park portfolios (€75m)

13. B&B AUSTRALIAN PPP PROJECTS RiverCity Motorway Orange Hospital Brisbane Link Airport Toll Road LEAP Two (defence housing) New South Wales Schools South Australian Schools Singapore Schools Reliance Rail Royal Children’s Hospital Long Bay Forensic Hospital Victoria Schools Project Royal Melbourne Showgrounds

14. B&B NORTH AMERICAN PPP PROJECTS Bridgepoint Hospital, ON • Projects in tender or at PB Alberta Schools, AB Durham Courthouse, ON Montreal Symphony, QC CHUM Hospital, QC CHUM Research Centre, QC Kelowna Vernon Hospital, BC Pennsylvania Turnpike, PA Midway Airport, IL Oakland Airport Connector, CA Fort Lauderdale I-595, FL Port of Miami Tunnel, FL

15. CONCLUSION • PPP is a global procurement solution to infrastructure investment needs • Vast opportunities for PPP in Europe (€225bn pa of shortfall) • Over 50% of European countries are at the early stages of PPP development • PPP development is robust to downturn in economic cycles • B&B is applying its global PPP experience locally in: • Strong growth prospects for the B&B / BBPP platform

16. The European Renewable Energy Market29 April 08 Guy Thackwray

17. RENEWABLES: ATTRACTIVE MARKET FUNDAMENTALS • Strong political backing: • EU targets 20% of total energy to be sourced from renewables by 2020 • Kyoto protocol ratified by the EU calls for a 20% reduction in CO2 emissions by 2020 (compared to 1990) • Demand for electricity will continue to increase in the future driven by: (i) demographics: population growth; (ii) strong economic growth in emerging markets; and (iii) urbanisation • Supportive regulation: most OECD countries have already set appropriate regulation to expand the market share of renewables within the generation mix through the following mechanisms: • Feed-in tariffs: fixed tariff or fixed premium to market price is granted to output and guaranteed over a certain period - usually fall-back to market price or lower tariff thereafter in absence of repowering • Green certificates: green producers are provided with these certificates that can be sold to polluters at a market price • Other incentives: investment grants, accelerated tax depreciation, supplement for reactive energy and repowering incentives • High oil price narrows the gap between regulated tariff and market price of electricity

18. WIND ENERGY Global cumulative wind capacity forecasts (GW) • 94GW installed wind capacity worldwide as of year-end 2007 • Wind capacity expected to grow by 25% p.a. through 2012 reflecting supportive regulation and increasing demand for electricity in general • Asia and the US forecast to outperform market growth at respective CAGRs of 31% and 37% • Germany is the most mature market with 22GW installed, while European countries such as Italy, France, Portugal and the UK offer significant growth potential • B&B well positioned worldwide CAGR 25% Source: BTM Consult Total wind capacity installed per country (MW) Source: BTM Consult

19. B&B/BBW - TOP 3 DEVELOPER IN WIND ENERGY WORLDWIDE

20. FOCUS ON WIND ENERGY • Within renewables, B&B has been focusing on wind energy : • Wind energy is one of the most economical sources of alternative energy - European average feed-in tariffs of ~ € 80/MWh vs. average West-European wholesale price of ~ € 55/MWh • Wind energy represents one third of generation new build in European OECD countries • Global wind capacity has shown a 25% CAGR since 2002 and BTM Consult expects a similar CAGR over 2008-2012 • European market is the most mature, accounting for 60% of the global capacity as shown below on the right Historical global installed wind capacity (MW) Installed wind capacity breakdown as at year-end’07 CAGR 25% Source: BTM Consult Source: BTM Consult

21. OVERVIEW OF REGULATORY REGIMES Feed-In Tariff Green certificates • Feed-in tariffs guarantee a fixed price, or a fixed remuneration in addition to the market price • Generally, this mechanism includes priority access to the grid • Utilities or transmission companies are obliged to purchase all the energy from renewable energy sources • Different alternatives • Guaranteed fixed price • Fixed guaranteed premium plus energy market price (sometimes with cap and floor) • Fixed price depending on annual production • Term of 15, 20 years or for the whole life of the asset • Utilities are legally obliged to provide a certain minimum share of energy produced from RES in their total yearly sale • Utilities can choose between generating its own RES energy or buying from another generator to meet the RES requirement • A Green Certificate represents one megawatt hour (MWh) of renewable energy from an existing facility metered and verified by certifying agency • Green Certificates are freely negotiated between utilities and RES generators Regulated renewable power price regimes Other incentives to support renewable energy European regulatory regimes • Supplement for reactive energy: providing energy during hours of voltage dips provide the producers with supplementary income from the hours produced on top of the regulated tariff • Accelerated tax depreciation: given the large investment required in turbines and construction of the wind turbines, accelerated depreciation ensures often that renewable energy producers do not have a heavy tax burden • Investment grants: in certain countries (most notably Greece), the Government pays part of the eligible investment • Repowering incentives: by reinvesting in a wind project (most notably turbines), the Government regards the project as new, and it can benefit from the often beneficial tariff available Fixed feed-in tariff Green certificate Other incentives to promote renewable energy

22. B&B/BBW ARE LEADING PLAYERS IN WIND ENERGY • With 2.9GW installed capacity as at year-end 2007, the combination of B&B and BBW is the 5th largest wind player worldwide • B&B has a development pipeline of some 17,000MW as at year-end 2007, the third largest in the world B&B/BBW pipeline as of 31/12/2007 (GW)2 B&B/BBW installed capacity as of 31/12/2007 (GW)1 1 Gross capacity 2 Gross capacity Source: Babcock & Brown Source: Babcock & Brown

23. B&B/BBW HAVE ONE OF THE MOST MATURE WIND PIPELINES… • B&B/BBW expect to add some 1,600MW p.a. on average over 2008-2016, of which 500MW in Europe • The ratio of annual incremental capacity over communicated gross pipeline is a good measure of pipeline maturity and quality Average added capacity/gross pipeline B&B/BBW prob. weighted incremental annual capacity (MW) Source: Babcock & Brown Source: Babcock & Brown

24. SOLAR POWER - A NEW AREA OF INTEREST • Significant growth potential with PV accounting for less than 1% of electricity generated from renewable sources • PV panel prices have been decreasing by 6.5% year-on-year for a number of years, making projects more competitive • B&B is looking at Photovoltaic (PV) as well as Concentrated Solar Power (CSP)

25. PV POWER PLANTS ARE IDEAL FOR INFRASTRUCTURE INVESTORS • Long term secured public subsidies: in most countries legal frameworks recognise a fixed feed-in tariff for a period of 20 or more years (400-500 €/MWh) • Capital intensive sector: PV energy plants require very high capex (~€5M/MW) and present low and predictable O&M costs • Predictable plant efficiency: yearly energy production depends only on the solar radiation at the specific site. This data is readily available for any possible location and remains very stable in time (variance max. 5%) • Low technological complexity: plants are structurally simple (arrays of panels, fixed metal structure, electric wiring, inverters) and extremely stable and reliable with a technical life of 25-30 years • High financial leverage applicable • The PV generation sector has very attractive characteristics for B&B: • - Wide resource availability • - High expected growth rates • - Continuous technology innovation and improvement of economic efficiency • - Utility type cash flow profile • - Increasing demand for renewable energy

26. THE SOLAR SECTOR IS A GREAT OPPORTUNITY FOR B&B Distinctive capabilities • Successful development in wind energy has allowed B&B to acquire all the competencies and skills necessary along the solar value chain for a successful entrance (i.e., site identification, engineering, project management, procurement and project finance) • Early mover position to secure pipeline of good sites, framework agreements with developers and cost advantages on solar panel supply • The acquisition of Enexon brought on-board the necessary specialised skills and a pipeline of opportunities • The organisation for project development and opportunity origination in place is a mix of internal development and agreements with developers

27. CONCLUSION • Political and social drivers for renewable energy will continue to increase • Increasing costs of traditional generation and potential cost of carbon make renewables increasingly attractive • Different tariff regimes and political backing will drive different levels of growth in different countries • B&B is well positioned to benefit from the growth of this market worldwide

28. DISCLAIMER The information contained in this presentation is given without any liability whatsoever to Babcock & Brown Limited or any of its related entities (collectively “Babcock & Brown”) or their respective directors or officers, and is not intended to constitute legal, tax or accounting advice or opinion. No representation or warranty, expressed or implied, is made as to the accuracy, completeness or thoroughness of the content of the information. The recipient should consult with its own legal, tax or accounting advisers as to the accuracy and application of the information contained herein and should conduct its own due diligence and other enquiries in relation to such information. The information in this presentation has not been independently verified by Babcock & Brown. Babcock & Brown disclaims any responsibility for any errors or omissions in such information, including the financial calculations, projections and forecasts set forth herein. No representation or warranty is made by or on behalf of Babcock & Brown that any projection, forecast, calculation, forward-looking statement, assumption or estimate contained in this presentation should or will be achieved. Please note that, in providing this presentation, Babcock & Brown has not considered the objectives, financial position or needs if the recipient. The recipient should obtain and rely on its own professional advice from its tax, legal, accounting and other professional advisers in respect of the addressee’s objectives, financial position or needs. This presentation does not carry any right of publication. This presentation is incomplete without reference to, and should be viewed solely in conjunction with, the oral briefing provided by Babcock & Brown. Neither this presentation nor any of its contents may be reproduced or used for any other purpose without the prior written consent of Babcock & Brown.