No.1 Irish law firm(11th consecutive year)PLC WHICH LAWYER? YEARBOOK 2010

Irish Law Firm of the Year 2009(3rd consecutive year)FINANCIAL TIMES / MERGERMARKET 2009

Irish Law Firm of the Year 2010(2nd win in 4 years)INTERNATIONAL FINANCIAL LAW REVIEW AWARDS 2010

Client Service Award (one of only two firms in Europe)CHAMBERS EUROPE AWARDS 2009

21 May 2010

Renewables and Green FinanceGreen Expo – Croke Park

Garrett Monaghan, Partner

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Ireland’s leading law firm

Award for Excellence in Client ServiceCHAMBERS EUROPE AWARDS 2009

Topped the PLC Which Lawyer? survey of Irish law firms for the tenth consecutive year in 2009PLC WHICH LAWYER? 2009

Irish Tax Firm of the Year THE INTERNATIONAL TAX REVIEW, 2010, 2007 AND 2005

Irish Law Firm of the Year 2007, 2008 and 2009FINANCIAL TIMES / MERGERMARKET

Irish Law Firm of the Year 2007 and 2010INTERNATIONAL FINANCIAL LAW REVIEW

Mould Breaking Initiative and Best HR InitiativeMPF 2008 EUROPEAN PRACTICE MANAGEMENT AWARDS

No. 1 Irish Legal Advisor, by value and volume, to M&AMERGERMARKET IRISH LEAGUE TABLES 2006, 2007 AND 2008

Top Ranked Irish law firm in the Infrastructure Journal League Tables for legal advisors for both transactions closed and mandates wonInfrastructure Journal 2009

Best Managed Firm and Best Corporate CitizenMANAGING PARTNERS’ FORUM EUROPEAN PRACTICE MANAGEMENT AWARDS 2007

European Law Firm of the YearLEGAL BUSINESS 2006

Top ranked Irish law firm named in the 2008 Financial Times 50 Report, which ranks Europe’s top 50 private practice law firms on innovation in business practice, staff development, structures and contribution to the communityFT 50 REPORT, 2008

Selected major awards

As reflected in the following major awards, we are consistently recognised as Ireland’s leading law firm by domestic and international commentators:

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• Renewables financing: Current and Future Projects?

• Green Finance: What is it?

• Green Finance: Universal Applicability

• Carbon Markets

• Typical Renewable Energy Project Financing Structure

• Green Rights

• Project Pre-Requisites

• Renewable Energy Support Mechanisms

• Irish Domestic Offset scheme

• Closing thoughts

Topics

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• Established: Onshore wind

Hydro

Waste to Energy

• Emerging:

Offshore wind

Solar

Biomass / CHP

Tidal / wave

Carbon Capture and Storage

Electric vehicles

• Project financing – opportunties for Ireland:

Expansion of Irish Companies Capital to fund large scale build-out projects overseas or in Ireland

Monetising of carbon credits?

Real Economy benefits Develop and prime the supply chain from Ireland

Research and Development

Manufacturer

Corporate Headquarters

Intellectual Property

Renewables Financing: Current and Future Projects?

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• Capital Investment, Banking, Treasury and Insurance Businesses which support the development and promotion of a low carbon economy. This includes:

Renewable Energy Generation

Energy efficiency measures

Management and trading of carbon credits

Financing and optimising environmental aspects of waste, water and weather

Development of climate change insurance products

• Renewables financing is a sub set of Green Finance

• Private Equity purchasing and running utilities

• PPP infrastructure financing beginning to incorporate Green Finance Dublin Waste to Energy PPP (67MW renewable generator)

School Bundles 2 PPP (solar and wind generator specifications)

UK Hospital PFI Projects (Carbon Reduction Commitment costs)

Green Finance: What is it?

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Green Finance: Universal Applicability

• Green Finance – Carbon Key Global Economic Driver Renewable Energy Targets Carbon tax Voluntary v’s compliance Cap and trade Domestic offsets Climage Change Bill

• Green Finance – General Project Finance

(renewables and increasingly PPP and other sectors) Vendor / Equipment Finance

(e.g. smart meters, microgeneration) General / Retail Finance

(e.g. Walmart model, retrofit houses, geothermal)

• Green Finance – Specific Carbon credits / emissions trading Treasury functions Forestry Aviation Green Procurement Green IFSC

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Carbon Markets

• Global carbon abatement costs Financing flows: €65–100 billion required in developing countries

Carbon finance: developed nations buy ‘offset’ credits from developing nations

Public finance: developed nations contribute cash to a global fund, or establish bilateral relationship with developing countries

• Compliance Market Kyoto “flexible mechanisms”

EU ETS / JI / CDM

Phase III EU ETS: Carbon Cap 2013 onwards

• Voluntary Market No longer the poor relation?

Multiple players in a fragmented market

No composite standard

• Emergence of a “cross-over credit” Green IFSC proposals

International Carbon Standard

Dublin International Voluntary Offset Registry (DIVOR)

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Typical Renewable Energy Financing Structure

Shareholders’ Agreement

Shareholders’ Agreement

Loan Agreement& Security Package

Loan Agreement& Security Package

Operation & Maintenance

Contract

Operation & Maintenance

Contract

OperatorOperator

Turbine Supply Contract

Turbine Supply Contract

SponsorsSponsors FundersFunders

Power Purchase Agreement

Power Purchase Agreement

OfftakerOfftaker

Construction Contract

Construction Contract

Turbine / Equipment

Supplier

Turbine / Equipment

Supplier

Civil Works Contractor

Civil Works Contractor

Project CompanyProject Company

“Green Rights”“Green Rights”

REFITREFITDCENRDCENR

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Green Rights

• Increasing importance as a possible revenue stream

Rights, instruments, certificates, grants of financial aid or relief from any governmental authority in connection or otherwise associated with the generation of electrical production and which have a value

Any rights established as part of or associated with any green credit or green certificate regime or other scheme

Any credits for renewable energy that could or do qualify for application toward compliance with any local, national or international renewable energy, portfolio, standard, mandate or objective

• Examples:

Renewable Energy Guarantees of Origin (REGOs)

Renewable Energy Obligation Certificates (ROCs - UK)

Levy Exemption Certificates (LECs – UK)

Domestic Offsets and Voluntary Credits?

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Funding Pre-Requisites

• Cornerstones of project finance Sponsor strength – financial and technical

Project economics – security of cashflows

Quality of offtake arrangements

Consents

Construction and technology

Robust contractual arrangements

• Green Finance is no less demanding Certainty of carbon revenues

Legal robustness of relevant credit

Ability to take security over carbon credit

Fungibility

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Renewable Energy Support Mechanisms

• Previous programmes: Alternative Energy Requirements (AER) I to VI (began 1993)

• Current programme: Renewable Energy Feed in Tariff (REFIT) to support construction of 1,450MW of generation from 2006 – 2010

• Compatability with other EU energy markets – market based or subsidy?

• Supports plant powered by biomass, hydropower, or wind

• Proposals to extend REFIT to qualifying ocean energy technologies, biomass anaerobic digestion and high efficiency combined heat and power

• European State Aid Clearance

• Generators are paid the PPA strike price by Suppliers

• REFIT is made up of three constituentsPayments for every kWh contracted under a qualifying PPA Technology premiumMarket price equalisation compensation

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Irish Domestic Offset Scheme

• Proposed Climate Change Bill 2010

• Voluntary cap and trade scheme in Ireland covering non EU-ETS participants

• UK Carbon Reduction Commitment

• Methodology is critical

• Compatibility with ICS / global carbon markets

• Reduction in Co2 Emissions leading to Voluntary Credit

• Likely Irish sectors include:transportagricultureresidential

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Closing Thoughts

• Carbon and Project Finance are converging

• Large scale commitment to grid, energy storage and ancillary infrastructure

• Shareholder and investor pressure for cost efficiencies more influential than sustainability “branding”

• Markets will drive low-carbon model irrespective of attempts to develop a long term successor to Kyoto or EU ETS

• Pressure on EU markets to harmonise renewable support systems

• No excuse for carbon illiteracy or complacency!

• Ireland can adopt specific technologies and financial enablers to stimulate economic growth and become a global hub for Green Finance

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