1

Federal Ministry of Power Nigerian Renewable Energy Private Equity Seminar

Abuja 13th March 2014

Introduction to Vestas

03.2014 - kbh

Introducing your speaker

Knud Bjarne Hansen

• With Vestas Wind Systems A/S - 24 years

• Position: SVP – Special Assignments

• Educational background as Marine Engineer

• Experiences within wind:

• Project Management

• Field Operation and Service

• Technology Transfer

• Manufacturing and Logistics

• Global Corporations

• Business Development’s

• Etc

• Relation to Nigeria:

• Have back in time (1970’es and 1980’es

spend quite some time in Nigeria

• Henshaw Private Equity and Apfoss

3

Content

• Vestas today

• The case for wind

• Wind for Prosperity

Board of DirectorsBert Nordberg, Chairman

Born: 23 March 1956

Nationality: Swedish

Resident: Sweden

Position: President & CEO, Sony Mobile

Communications (Sweden)

Carsten Bjerg

Born: 12 November 1959

Nationality: Danish

Resident: Denmark

Position: CEO and Group President of Grundfos

Management A/S (Denmark)

Eija Pitkânen

Born: 23 April 1961

Nationality: Finnish

Resident: Finland

Position: Vice President, Head of Corporate

Responsibility, Telia Sonera (Sweden)

Håkan Eriksson

Born: 8 April 1961

Nationality: Swedish

Resident: Australia

Position: Head of Ericsson Australia, New Zealand

and Fiji (Australia)

Jørgen Huno Rasmussen

Born: 25 June 1952

Nationality: Danish

Resident: Denmark

Position: President and CEO, FLSmidth & Co. A/S

(Denmark)

Jørn Ankær Thomsen

Born: 17 May 1945

Nationality: Danish

Resident: Denmark

Position: Attorney at Law and partner, Gorrissen

Federspiel (Denmark)

Kim Hvid Thomsen**

Born: 8 August 1963

Nationality: Danish

Resident. Denmark

Position: Industry technician and Senior Shop

Steward, Vestas Manufacturing A/S (Denmark)

Kurt Anker Nielsen

Born: 8 August 1945

Nationality: Danish

Resident: Denmark

Position: Director

Knud Bjarne Hansen*

Born: 26 March 1952

Nationality: Danish

Resident. Denmark

Position: Senior Vice President, Vestas Wind

Systems A/S (Denmark)

Lars Josefsson, Deputy Chairman

Born: 31 May 1953

Nationality: Swedish

Resident: Sweden

Position: Independent consultant

Michael Abildgaard Lisbjerg**

Born: 17 September 1974

Nationality: Danish

Resident: Denmark

Position: Skilled worker - Production & Shop

Steward, Vestas Manufacturing A/S (Denmark)

Sussie Dvinge Agerbo*

Born: 5 November 1970

Nationality: Danish

Resident: Denmark

Position: Management Assistant, Vestas Wind

Systems A/S (Denmark)

*) Elected by company employees

**) Elected by Group employees

Vestas today

4

5

We have more than 50,000 turbines in 73 countries

worldwide spanning six continents = 58+ GW capacity50.000

We monitor almost 25,000 turbines, or 46,000 MW, day

and night and the data is used for efficient service

planning and pre-emptive maintenance25.000

We employ around 16,000 people worldwide from 85

nationalities and have more than 30 years of experience

with wind energy

15.500

Vestas in brief

Vestas revenue at the end of 2013 was EUR 6.1 billion€ 6.1b

*Source: BTM Consult, 2012

6

1898:Blacksmith H.S.

Hansen arrives in Lem

1945:VEstjysk STaalteknik

A/S becomes VESTAS

1979:

First turbine after

agricultural vehicles, etc.

1987:

Vestas

Wind Systems A/S

2014:

Profitable Growth for Vestas

& V164 prototype

2004:

Merger: NEG

Micon & Vestas

2010:

Wind. It means

the world to us.

Our journey

2012:

50 Gigawatt

milestone.

2013:

Anders Runevad named

CEO & joint venture with MHI

1991:

Turbine no. 1000

We are a truly global organisation

Global headquarters

Sales & Service

Production

ResearchVestas Wind Turbines in Africa:

• Morocco

• Egypt

• Cap Verde Islands

• South Africa

The building blocks of the Vestas strategyA strengthened global leadership position for the long term

8 Turnaround successfully completed – Time for Profitable Growth

Mid-term (3-

5 years)Reduce levelised cost of energy

Improve operational excellence

Governance, leadership and culture

Grow profitably in mature &

emerging marketsCapture full potential of the

service business

Best-in-class margins | Strongest brand in industry

Vision: To be the undisputed global wind energy leader

Bringing wind on par with oil and gas | Market leader in volume

Vestas major key differentiatorsLargest installed base, world-class products, global reach and a strong brand

Full year 2013, outlook for 2014 and strategic update

• World-class product portfolio: geographical fit and

reach, siting flexibility, best-in-class quality.

• Largest global installed base, providing significant

service business potential.

• Very strong and competitive product offering. • 2013 order intake of 6 GW from 37 countries.

Vestas

~60

2nd largest

WTG supplier

~40

+50%

0

1

2

3

4

5

Dec

2009

Dec

2010

Dec

2013

Dec

2012

Dec

2011

Total installed base (GW) Lost production factor

Latest product launches Global reach in sales, installation and manufacturing

9

Low

wind

Medium

wind

High

wind

2 MW

platform

3 MW

platform

V110-2.0 MW V100-2.0 MW

V112-3.3 MW

V117-3.3 MW

V105-3.3 MW

V112-3.3 MW

V117-3.3 MW

V126-3.3 MW

IR input to corporate presentation10

Order backlog: Wind turbines and serviceCombined backlog of EUR 13.5bn

Wind turbines:

EUR

6.8bn

Service:

EUR

6.7bn

Power Plant SolutionsComprehensive suite of services and solutions for the entire value chain

11

Industry leading track record in installations & turbine development

12

Vestas’ track record of turbine evolution over more than 30 years is unmatched in the wind industry

8.000

Saving 60 million tons of CO2 every year

58 GW wind turbines installed

Joint

Venture*

Joint venture between Vestas and MHIA strong joint venture to address the expected growth in the offshore segment

• Lower and more flexible capex set-up at Vestas.

• Strong parent positions combined in one offering.

• A strong company for the future offshore market.

Net Debt/EBITDA

-1.82x

-0.05x

-0.29x

0.78x

1.79x

-2.0x

-1.5x

-1.0x

-0.5x

0.0x

0.5x

1.0x

1.5x

2.0x

-800

-600

-400

-200

0

200

400

600

800

2007 2008 2009 2010 2011

Net debt Net-debt to EBITDA (RHS)

xxxxxxxThe case for wind

14

15

• Decrease of average

WTG prices

• Average capacity factor

increased

• Scale of recent LCoE

decreases

Key take-away’sHistoric evolution of LCoE in $/MWh (nominal; excluding subsidies)

Historic evolutionDeclining onshore wind LCoE reductions

Sources: BNEF, Q3 2013 Wind Market Outlook, 09/2013; BNEF, Levelised cost of electricity update: Q2 2013, 05/2013; BNEF, Closing

the gap: grid parity for onshore wind, 11/2011

8082

87

93

80

68

6462

54

49

7675

5855

80

 40

 45

 50

 55

 60

 65

 70

 75

 80

 85

 90

 95

2009 2010 2011 2012 2013

-2,2%

-5,4%

-6,6%

-0,4%

Coal

CCGT

Onshore wind

16

• Modest annual LCoE

decrease expected until

2020 (-1.8%)

• Vestas’ target of an

annual LCoE reduction

by 3%

Key take-away’sForecasted evolution of LCoE in $/MWh (2012 dollars; real; excluding subsidies)

Future LCoE trendsVestas’ LCoE reduction target more ambitious than analyst expectations

Sources: BNEF, Q3 2013 Wind Market Outlook, 09/2013

Note: Use of real LCoE to ensure visibility of CAPEX, OPEX and financing cost reduction over time

 40

 50

 60

 70

 80

 90

 100

 110

 120

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

-25%

-13%

-26%

-13%

Onshore wind LCOE at 35% capacity factor

Onshore wind LCOE at 25% capacity factor

Water savings Energy payback

Wind is the most resource efficient source of energyVestas life cycle assessment

A V112-3.0 MW wind plant has an

energy payback of seven months

which means that over the full life

cycle it will return 30 times more

energy back to society than it

consumed.

• Source: GaBi databases, 2006. Note: water-use refers to net water input over the life cycle of the turbine and does not refer to a water footprint (as being currently developed

under the standards ISO 14046).

• ** for medium wind conditions

0

500

1000

1500

2000

2500

V112-3.0 MW Gas (global) Coal (global)

~30

350- 2250

350- 2000

g water per kWh

Throughout its full life cycle wind

power uses around 1% to 8% of

water needed for gas or coal

electricity generating technologies

per kWh generated.

WIND FOR

PROSPERITY

19

What is Wind for Prosperity? A ground-breaking concept to

bring scalable wind energy to poor, rural communities

Deploying proven technology

Deploying factory refurbished proven

wind energy technology where it can

make a positive impact

Awareness to drive growth

Raising global awareness and

engagement in Wind for Prosperity

through sharing the good stories

Going beyond the donor model

Scalable business model with fair

returns for suppliers and investors and

competitive energy price

Business driven prosperity

Provide access to

electricity for

>1M people in three

years based on wind

energy to drive

substantial prosperity

acceleration

The Opportunity The Ambition The Solution

BILLIONLIVING WITHOUT

RELIABLE ACCESS

TO ELECTRICITY

ELECTRICITY IS NEEDED FOR RURAL

COMMUNITIES TO PROSPER

MANY REMOTE AND POOR

AREAS HAVE VAST UNTAPPED

WIND

RESOURCES

OUTSIDE PERSPECTIVE

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What is Wind for Prosperity? New business model that bundles

cutting edge services to deliver multiple commercial benefits VESTAS PERSPECTIVE

New Business Model to

drive several commercial

benefits

• Investor/donor funded

• For-Profit Commercial

Engagement for Vestas

• Targeted towards Vestas’

frontier markets

• Marketed towards all

stakeholders, managed to

maximize benefits at profit

Site Hunt/Designed basis for site

design and applied with minimal

wind measurement data;

technology exposed in a unique

setting (e.g. windforprosperity.com)

Market making vehicle to open up

new frontier markets and growth

segments (island, mining,

refurbished turbines)

Wind-for-Prosperity is a self-sustainable commercial business model – the benefits are self-funded

A distinct source of

differentiation towards customers

with aging fleet and interest in

emerging markets

A platform to test and market

cutting edge service offerings:

SiteHunt/SiteDesign, refurbished

turbines (on and off-site), etc

Unique global marketing

campaign platform to position

Vestas for future growth markets

(frontier/off-grid)

Factory refurbished turbines

delivered through service

organization, laying the ground for

tapping into an attractive profit pool

while taking offering an attractive

path for aging fleet

Internal grid integration

expertize applied to improve

wind-diesel offering and

partnerships with integration

partners explored (applicable also

to islands and mining segments)

Cutting edge Vestas services Multiple commercial benefits

21

What is Wind for Prosperity? There are three commercial

delivery models for Vestas

WfP IPP model via private funds1 Donor-funded WfP projects2 Customer-driven WfP projects3

• Local IPP established to sell

electricity to distributor on PPA

• 5-10 communities minimum to

achieve scale

• Proximity to Vestas service hub

required

• Donor funded projects in

severely challenged conditions

(e.g. Afghanistan, etc)

• Limited service setup possible in

non-commercial approach

Ap

pro

ac

hV

es

tas R

ole

Ex

am

ple

• Joint-development role, but no

cash investments required

• EPC role often an investor

requirement unless reliable

partner can be found (Masdar)

• Turbines, wind studies and

service on commercial terms

• Wind for Prosperity

Kenya

• IPP with Frontier IM

for 13 locations (2

phases)

• Vestas supplies wind studies,

refurbished turbines and

training on commercial terms

• Vestas does not take EPC role

and limited development role

• WfP projects sold to or

deployed in collaboration with

customers

• Possible customer roles

include investment, turbine

supply, development role, etc

• Vestas’ role to vary depending

on customer requirements

• Vestas supplies wind studies,

refurbished turbines and

service on commercial terms

(or as part of larger deal)

• Enel deploys a WfP

project in conjunction

with Vestas projects

in emerging markets

• Enel acts as WfP

developer

• Masdar Special

Projects operate a

pipeline of donor

projects

• Several opportunities

under review

22

What progress have we made to date? The program is

transitioning from proof-of-concept to launch and execution

Jan 2012 Jun 2012 Jan 2013 Jun 2013 Jan 2014

IA/SHA with Frontier IM

on development of 13

sites in Kenya

Global WfP Launch in

New York with partners

Masdar Econet and

Carbon War Room

Board Approval

for WfP Initiative

ExMan Approval for

IA with Frontier IM

for Kenya

Concept developed,

business model ready and

IM developed

2014

Targets

Deliver proof-of-concept in

Kenya (minimum 1 site

commissioned)

Successful branding

campaigns around major

milestones (e.g.

commissioning)

Next 2-3 countries ”opened”

(JDA/IA level commitment) and

development in progress

JDA with Frontier IM on

development of 13 sites in

Kenya

Concept development Launch & ExecutionProof-of-concept

MoUs signed with

Carbon War Room and

Econet Wireless

Global WfP Deployment

Agreement with Masdar

23

How far are we down the road in Kenya? PPA and financial

close expected in 1H 2014 – first turbines installed 2H 2014

Concession for 13 sites in the government’s rural

electrification program

Sites (population estimate)

Ministry of Energy

• Approves of model and

approach

• Grants licenses

Local agencies

• Investigates and

researches sites

• Community

development

Local collaboration model involving developers, operators and local

authorities

KPLC***

• Handles power

distribution,

connections,

metering

REA***

• Plans and funds

construction of

"mini grid" for

distribution

Local developers

• Identify wind sites

• Apply for permits

• Conduct environmental and

social impact studies

Other local stakeholders

• Transport

• Construction

• Security

Local IPP

• Deploys and

services power

solutions

• Local staff

Lokichog

io(17'700)

Kakuma**(80‘000)

North

Horr* (8'400)

Baragoi*(8'000)

Mandera(57‘700)

Elwak(24‘400)

Wajir(16‘800)

Dadaab* (5‘700)

Liboi** (11'000)

Hulugho* (20‘800)

Kiunga* (3‘300)

Faza

Island* (4‘200)

* New off-grid station planned or under implementation by REA

** Additional off-grid stations as per rural electrification master plan

*** REA is Rural Electrification Agency, KPLC is Kenya Power and Light Company

Source: Kenya MoE list of off-grid stations; Vestas Analysis

24

What does a WfP Community look like? Typical community

size of 5,000 to 20,000 inhabitants

Population geography

• 8.000-10.000 in main village

• Region with nearby villages

~50.000

• Northern Kenya, desert area, dusty

and windy

Livelihood and income

• Livestock (cattle, sheep, goats and

camels)

• Small shops, accommodation

facilities, tailoring, hairdressing and

public sector employment

• 3 operational NGOs

Potential of electricity

• Water pumping and irrigation

• Fodder production

• Skin and hide processing

Example: North Horr, Northern Kenya

25

Ethiopia (63m)Nigeria (62m)

Kenya (30m)Haiti (5m)

12%0% 16%4% 20%

Eritrea (3m)

28%24%8%

India (271m)

Pakistan (50m)

0.2

0.0

0.8

0.6

0.4

Madagascar (13m)

Sri Lanka (4m)

Tanzania (32m)

Afghanistan (19m)

Senegal (5m)

South Africa (8m)

Zimbabwe (7m)

Uganda (27m)

Zambia (8m)

Philippines (13m)

Cambodia (10m)

Human

Development

Index

(HDI)

Wind potential

(Per cent of surface area an average wind speed higher than 7 m/s)

# inhabitants in rural areas

without access to electricity

World

average

Least

developed

countries

average

The Wind-for-Prosperity Map with selection of 20 illustrative countries

Notes: Other applicable criteria for final country selection include: energy regulatory policies, rural electrification strategy, ease of doing business etc.

Source: United Nations Development Programme; IEO World Energy Outlook; World Bank; Vestas analysis

Where will we go next? A number of countries being explored

with core partners

HDI:

Achievement

of basic

dimensions

of human

development

– a long and

healthy life,

knowledge

and a decent

standards

of living

Thank you for

your attention.

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