Financing Wind

Overview

• Market

• Project promoters

• Project phases and associated finance availability

• SA context

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹2›

Global investment in Wind power in 2009

$67 billion, 56 % of RE invest

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹3›

Market overview

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Market overview

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Market overview

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Comparative market overview

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Project promoters

• Developer/Entrepreneur

• Land owner/community

• Utility

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹8›

Project promoter- Entrepreneur

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹9›

Project promoter- Community

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹10›

Project promoter - Utility

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Phases in wind investment

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹12›

Pioneer Stage

Investment

- Local manufacture – new technology

- Wind development co. (new entrants)

Venture Stage

Investment

- Established wind development co.

- Niche markets – Consultants (wind mapping, masts etc), O&M co.

Utility Stage

Investment

- Permitted wind farm

- Construction co. (towers)

Project phases

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹13›

Siting Development Authorisation Pre-construction Construction

Te

stin

g

Micro-siting

Preliminary turbine specification

Energy yield assessment

Apply forauthorisations

Site prospecting

Sign lease option agreements with landowners

Mast installation

and wind

measurement

Site surveys:

Geotechnical

Road access

Land rezoning

EIA (incl.

specialist

studies)

Civil aviation

Grid connection

Sign long-term power

purchase agreement

Sign financing

contracts

Sign turbine supply

contracts

Implement hedging

positions

Sign construction

contracts

Final turbine

specification

Selection of

suppliers

(turbines, civil

works, EPC, etc.)

Negotiation of

construction

contracts

Negotiation of the

financing contracts

Construction and

installation

offered by

turbine

manufacturer on

full turnkey

basis.

Construction

risk principally

borne by the

EPC contractor.

Turbine manufacturer

oversees first approx.

500 hours of operation

Owner takes delivery of

the wind farm by signing

memorandum of

acceptance

Operation commences

Operations &

Maintenance

O&M contracts signed with

turbine manufacturers or

3rd party service providers,

who warrant wind farm

performance and

availability

Generation license application

Power purchase agreement application

Project phases

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹14›

Siting Development Authorisation Pre-construction Construction

Te

stin

g

Micro-siting

Preliminary turbine specification

Energy yield assessment

Apply forauthorisations

Site prospecting

Sign lease option agreements with landowners

Mast installation

and wind

measurement

Site surveys:

Geotechnical

Road access

Land rezoning

EIA (incl.

specialist

studies)

Civil aviation

Grid connection

Sign long-term power

purchase agreement

Sign financing

contracts

Sign turbine supply

contracts

Implement hedging

positions

Sign construction

contracts

Final turbine

specification

Selection of

suppliers

(turbines, civil

works, EPC, etc.)

Negotiation of

construction

contracts

Negotiation of the

financing contracts

Construction and

installation

offered by

turbine

manufacturer on

full turnkey

basis.

Construction

risk principally

borne by the

EPC contractor.

Turbine manufacturer

oversees first approx.

500 hours of operation

Owner takes delivery of

the wind farm by signing

memorandum of

acceptance

Operation commences

Operations &

Maintenance

O&M contracts signed with

turbine manufacturers or

3rd party service providers,

who warrant wind farm

performance and

availability

Generation license application

Power purchase agreement application

Project phases

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹15›

Siting Development Authorisation Pre-construction Construction

Te

stin

g

Micro-siting

Preliminary turbine specification

Energy yield assessment

Apply forauthorisations

Site prospecting

Sign lease option agreements with landowners

Mast installation

and wind

measurement

Site surveys:

Geotechnical

Road access

Land rezoning

EIA (incl.

specialist

studies)

Civil aviation

Grid connection

Sign long-term power

purchase agreement

Sign financing

contracts

Sign turbine supply

contracts

Implement hedging

positions

Sign construction

contracts

Final turbine

specification

Selection of

suppliers

(turbines, civil

works, EPC, etc.)

Negotiation of

construction

contracts

Negotiation of the

financing contracts

Construction and

installation

offered by

turbine

manufacturer on

full turnkey

basis.

Construction

risk principally

borne by the

EPC contractor.

Turbine manufacturer

oversees first approx.

500 hours of operation

Owner takes delivery of

the wind farm by signing

memorandum of

acceptance

Operation commences

Operations &

Maintenance

O&M contracts signed with

turbine manufacturers or

3rd party service providers,

who warrant wind farm

performance and

availability

Generation license application

Power purchase agreement application

Project phases

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹16›

Siting Development Authorisation Pre-construction Construction

Te

stin

g

Micro-siting

Preliminary turbine specification

Energy yield assessment

Apply forauthorisations

Site prospecting

Sign lease option agreements with landowners

Mast installation

and wind

measurement

Site surveys:

Geotechnical

Road access

Land rezoning

EIA (incl.

specialist

studies)

Civil aviation

Grid connection

Sign long-term power

purchase agreement

Sign financing

contracts

Sign turbine supply

contracts

Implement hedging

positions

Sign construction

contracts

Final turbine

specification

Selection of

suppliers

(turbines, civil

works, EPC, etc.)

Negotiation of

construction

contracts

Negotiation of the

financing contracts

Construction and

installation

offered by

turbine

manufacturer on

full turnkey

basis.

Construction

risk principally

borne by the

EPC contractor.

Turbine manufacturer

oversees first approx.

500 hours of operation

Owner takes delivery of

the wind farm by signing

memorandum of

acceptance

Operation commences

Operations &

Maintenance

O&M contracts signed with

turbine manufacturers or

3rd party service providers,

who warrant wind farm

performance and

availability

Generation license application

Power purchase agreement application

Project phases

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹17›

Siting Development Authorisation Pre-construction Construction

Te

stin

g

Micro-siting

Preliminary turbine specification

Energy yield assessment

Apply forauthorisations

Site prospecting

Sign lease option agreements with landowners

Mast installation

and wind

measurement

Site surveys:

Geotechnical

Road access

Land rezoning

EIA (incl.

specialist

studies)

Civil aviation

Grid connection

Sign long-term power

purchase agreement

Sign financing

contracts

Sign turbine supply

contracts

Implement hedging

positions

Sign construction

contracts

Final turbine

specification

Selection of

suppliers

(turbines, civil

works, EPC, etc.)

Negotiation of

construction

contracts

Negotiation of the

financing contracts

Construction and

installation

offered by

turbine

manufacturer on

full turnkey

basis.

Construction

risk principally

borne by the

EPC contractor.

Turbine manufacturer

oversees first approx.

500 hours of operation

Owner takes delivery of

the wind farm by signing

memorandum of

acceptance

Operation commences

Operations &

Maintenance

O&M contracts signed with

turbine manufacturers or

3rd party service providers,

who warrant wind farm

performance and

availability

Generation license application

Power purchase agreement application

Project phases

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹18›

Siting Development Authorisation Pre-construction Construction

Te

stin

g

Micro-siting

Preliminary turbine specification

Energy yield assessment

Apply forauthorisations

Site prospecting

Sign lease option agreements with landowners

Mast installation

and wind

measurement

Site surveys:

Geotechnical

Road access

Land rezoning

EIA (incl.

specialist

studies)

Civil aviation

Grid connection

Sign long-term power

purchase agreement

Sign financing

contracts

Sign turbine supply

contracts

Implement hedging

positions

Sign construction

contracts

Final turbine

specification

Selection of

suppliers

(turbines, civil

works, EPC, etc.)

Negotiation of

construction

contracts

Negotiation of the

financing contracts

Construction and

installation

offered by

turbine

manufacturer on

full turnkey

basis.

Construction

risk principally

borne by the

EPC contractor.

Turbine manufacturer

oversees first approx.

500 hours of operation

Owner takes delivery of

the wind farm by signing

memorandum of

acceptance

Operation commences

Operations &

Maintenance

O&M contracts signed with

turbine manufacturers or

3rd party service providers,

who warrant wind farm

performance and

availability

Generation license application

Power purchase agreement application

SA Context

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹19›

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹20›

Conclusion

• Technology mature but market in SA not

• Legislative/policy uncertainty significant β

• Significant opportunity in SA

9 September, 2010 Copyright © 2009 Red Cap Investments (Pty) Ltd ‹21›