Wind Power Romania

Enel Green Power

Wind Power RomaniaCase Studies from Developments in Romania

Building a Wind Farm in Romania, from Inception to Connection

Carlo Pignoloni, General Manager, Enel Green Power Romania Bucharest 19th January 2011

19th January 2011 - Conference Wind - Bucharest

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EGP GROUPHighlights

EBITDA up by 6% to 966€m

Production up by 10% to 15.8TWh

Best-in-class net income up by 17% to 352€m

Net installed capacity up by 26% to approximately 5.9GW

Strong cash-flow generation with FFO exceeding 730€m


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EGP GROUPResults – operational highlights

9M 2009 9M 2010

14.415.8

+10%

9M 2009 9M 2010

4,6695,884 +26%

Net installed capacity (MW) Net production (TWh)


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2.504 2.538

1.3862.472

728

742132

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9M 2009 9M 2010

EGP GROUPNet Installed capacity(MW)

+1,215 MW (+26%)

+23%

+2%

By technology By geography

OtherWindGeothermalHydro

4,669

5,884

2.736

2.145

788

2.951

1.145

788

9M 2009 9M 2010

Iberia & Latin AmericaNorth America

Italy & Europe

4,669

5,884

+1,215 MW (+26%)

+5%

+21%


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8,5 8,2

1,8 3,2

3,83,9

0,40,2

9M 2009 9M 2010

EGP GROUPNet Production(TWh)

+79%

+2%

By technology By geography

OtherWindGeothermalHydro

14.415.8

9,3

4,5

1,9

9,4

3,3

1,7

9M 2009 9M 2010

Iberia & Latin AmericaNorth America

Italy & Europe

+1%

+12%

-4%

+33%

High and stable load factor at 44%

+10% +10%

14.415.8


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9M 2009 9M 20109M 2009 9M 2010 9M 2009 9M 2010

Revenues(1) EBITDA Group net income

1,363

1,581

915 966

301352

+16%

+6%

+17%

1. Including effect of hedging activities relating to commodity risk management

EGP GROUPResults – financial highlights9M 2009 – 9M 2010 (€m)

+22.3%+22.1%Group net income margin on total revenues


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EGP presence

Operating 5,884 MW

Enel Green Power

Pipeline 30.4 GW

Operating 788 MW

North America

Pipeline 8.3 GW

Operating 2,145 MW

Iberia and Latin America

Pipeline 15.8 GW

Operating 2,951 MW

Italy and Europe

Pipeline 6.1 GW

EGP GROUPActual 2010 – Footprint 9M


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EGP Group

Business Development

Engineering, Procurement & Construction

Operations & Maintenance

• Business Development to optimize pipeline management with the goal of ensuring the best CapEx allocation and maximizing return on investment

• Engineering and Construction to manage projects portfolio according to time, costs and quality targets and optimize technological competences and capabilities

• Procurement to maximize synergies at global level

Clear focus on the value chain

Operational Excellence

• Divisional competence center for O&M practices and performance control and for the definition of related policies and processes

• Monitor and control divisional O&M practices and performance• Analyze best practices and define policies and actions to improve

O&M performance• Business Areas to benefit from integrated approach

The operational model as a lever for value creation


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SC

OU

TIN

G

ProjectsValuation

Pipeline Management

ProjectsExecution

• Market knowledge• Standardization• Clear evaluation criteria

• Pipeline planning and control

• Permitting management• Local stakeholders

management

• Safety• Competences optimization• Project management

Focus on pipeline flow

I Phase II Phase III Phase

EGP GroupBest in class in pipeline management


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EGP Romania

Entity:

Enel Green Power Romania represents the evolution of an existing development company (Blue Line Impex), fully focused, as Enel Green Power Group’s arm, on the Romanian renewable energy market.

Background:

2007: - Acquisition of 100% of Blue Line shares with 244 MW wind project pipeline located in Dobrogea Region.

2009: - Blue Line becomes EGP Romania.

- Achievement of the first Building Permit and the construction start of the first wind farm.

2010: - First EGP wind farms in operation.

- Achievement of the Building Permit for all 244 MW.

Rationale:

Strategic: consolidate the Enel’s leadership in the Romanian market, becoming one of the biggest players in renewable energy;

Technical: the quality of the resource – wind, hydro, biomass – is among the best in Europe; Economical: good investment returns based on regulatory framework – approved but not yet implemented


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Organization and HR: In 2008: 2 employees End of 2011: around 40 employees

EGP Romania

3 Offices:

Bucharest Tulcea Constanta


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DOBROGEA Region

Operational 34 MW

Under Construction 140 MW

Ready to built 70 MW

Call Option 272 MW

Other opportunities: 210 MW

BANAT Region

Ready to built : 48 MW

TOTAL 774 MW

EGP RomaniaStatus of the EGP Romania Wind PipelineSummary


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Romania

EGP Romania Status of the EGP Romania Wind PipelineOperational

AGIGHIOL - 34 MW

1. Technology: WIND

2. Installed capacity: 34 MW (GAMESA G87 - 2.0 MW @ 100m x 17 WTG)

3. Operational: since December 2010

4. Location: Valea Nucarilor Municipality, Tulcea County, Dobrogea Region

AGIGHIOL – 34 MW


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SALBATICA 1

CORUGEA

SALBATICA 2

Project name

The Advanced Projects pipeline is composed by 4 wind farms for an overall installed capacity of 482 MW,

of which 210 MW will be operational by the end of 2011.

Call Option

SALBATICA1

SALBATICA2

Call Option

70 MW

70 MW

70 MW

272 MW

CORUGEA

TOT. 482 MW

EGP RomaniaStatus of the EGP Romania Wind PipelineAdvanced Projects


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Building a Wind Farm in Romania, from Inception to Connection:

• Permitting

• Construction

• Trading

EGP Romania Case study


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EGP Romania Case study: Permitting

Permitting path

Based on our experience, the time needed for achieving the Building Permit of the Wind Farm takes between 1.5 years and 2.5 years.

Securing the land rights: Private lands:

Type of contracts: - Sales Purchase Contract

- Servitude Contract Problem: - Fragmentation

- Confusion regarding land ownership – faulty retrocession

- Cadastral documentation wrong or missing

- Regulation regarding cadastral documentation is constantly modifying. Solution: - The existence of a well documented and updated Ground Book

Public lands:

Type of contracts: - Concession Contract

- Join Venture Contract (Asociere in Participatiune) Problem: - Unclear statement of the law regarding the right of land usage title

- The law is not applied in its own purpose

- Lack of transparency for the Joint Venture Contract


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Grid connection permit:

Problem: The grid is overbooked with projects that are not going to be operational. Solution: The existence of a structured system of capacity booking based on financial

guaranties.

Building permit:

Fact: The WTG tower to be considered as a construction Problem: - Longer period of time to obtain the building permit

- Much higher cost for the authorization taxes.



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Environmental and Urbanism permits:

Problem: - Due to the authorities lack of experience and the haziness of the law, the plans are often considered as projects, reason for which we confront with a duplication of the procedures.

- The existing law is not well adapted to the renewable energy sector

- The law is not applied in its own purpose, therefore we don’t have a unitary application of it inside the EU

- The approval of the PUZ (Zonal Urban Plan) for small areas

Solution: - The PUZ should be kept inside the city hall’s property instead of the developer’s property.



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Permitting during construction:

Inconsistencies between authorized permitted documents and various cadastral authorities at the level of deeds and land titles ( plots alignment and borders of National Cadastre Office different than permitted authorizations).

Environmental severe constraints related to wildlife presence.

Logistic:

Logistic Management of manpower and material resources critical for keeping the site progressing through a limited space availability.

Long supply routes for raw materials (reinforcing bars, concrete, sand, crushed stone) urging the Contractors to pile up stocks within the restricted space.

Cooperation and close partnership with local regulators and agencies for overweight cargo : Road authority, highway police patrol, City Hall transportation department.

EGP Romania Case study: Construction


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Project Management:

Strong need for an Overall Designer to oversee the work packages integration “ as one”: turbines, BOP, Electrical Systems, Power evacuation, Grid Integration

TSO and Distribution Company follow up from the Project Initiating all the way down to the power injection day to keep them abreast with Project objective

Design and Engineering streamline through local entities for drawings naturalization before execution

Significant number of local authorities with strong input requirements affecting the design and execution

EGP Romania Case study: Construction


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EGP Romania Case study: Trading

• Price hedging as far as wholesale market sales

• Evaluation about imbalances penalties

• Price and volume hedging as far as green certificate sales

• Business plan can be effectively performed only on the basis of powerful trading market model as regards both green certificate and brown energy

• Hedging risk is ran by the investor all over plant life

Foreshadow return are significantly challenged by market rules


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Q&A

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Wind Power Romania

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