ITA-SOLne-090928-P0

The information contained in this document belongs to Value Partners S.p.A and to the recipient of the document. The information is strictly linked to the oral comments which were made at its presentation, and may only be used by attendees of that presentation. Unauthorized copying, disclosure or distribution of the material in this document is strictly forbidden and may be unlawful.

������������������ �������������������������������������

Milan, 28 September 2009

1

ITA-SOLne-090928-P1

��������������������������������������������������������������������

Finance & realizePlan Authorize

•Assessment of possible areas of intervention and priorities setting: -New generation capacity

-Improvement of system efficiency (existing plants, interconnectors,…)

-Improvement of energy efficiency

•Definition of incentive/ penalty schemes

•Definition of national/regional energy plans

•Screening/ approval of projects-Approval at national/local level (Title V devolution)

-“Conferenza deiservizi”

-VIA/VAS procedures

-Regional Administrative Court rulings (TAR)

•Financing of approved projects-Project finance schemes

-Special Purpose Vehicles

-Infrastructural Funds

•Realization of projects-Build-Start-up-Operate & Transfer

Objectives

• Definition of long-term objectives for the Country, e.g.:-System security-Energy costs-Share of renewable generation

-Emission reduction-Consumption reduction (“energy efficiency”)

-…

Focus of EU Directive (20-20-20)

2

ITA-SOLne-090928-P2

������������������������������������� ������������

20% renewable generation 20% emission reduction 20% energy efficiency

•5% of 340 TWh •~600 Mio tons CO2/y • Italy today: ~170 Mio TEPToday

Source: GSE, 2007 Energy Report, AEEG, Bocconi IEFE, RIE Bologna, Value Partners Estimates

2020

PossibleLevers

Italy targets at 2020

•17% of 470 TWh(European target 20%)

•-20% to reach ~500 Mio tons/y

•-13% for sectors not covered by EU Emission Trading Scheme (ETS)

•-20%: -34 Mio TEP

•Incentives to renewable sources:. Solar. Wind. Biomass. …

•Zero emission generation: nuclear?

•CCS: Carbon Capture & Storage

•New transport technologies (new modal transport, hybrid cars, mass transport, …)

•Building efficiency certificates

•Process efficiency

•Co/ Tri generation

•…

3

ITA-SOLne-090928-P3

������������������������� ������������!������������ ������������������ ������

• Which are the interventions on the generation mix required to balance cost/environmental objectives?

• Which interventions on infrastructures (particularly on the grid) are needed to optimize system efficiency in the new scenario?

• Which types of incentive systems are more appropriate to promote the evolution towards the desired scenario?

• Which initiatives should be taken to ensure that incentives contribute to the development of national industries?

1

2

3

4

FOR DISCUSSION

4

ITA-SOLne-090928-P4

����������������������"��������� ��������������������!�������������������������������������������

55% 55%

14% 14%

31%

13% 7%

4%

30%

13%12%

9%5% 12% 5%

21%

Italy, 2007 Italy, 2020(projected)

EU27, 2007

Gas

Coal

Oil

Hydro

Renewables*• Further push on renewables (in

progress)

• Increase of gas supply through the introduction of new LNG terminals

• Selective introduction of nuclearplants?

• Further development of “clean coal”?

• Increase of electricity importsfrom neighbouring countries through new interconnections?

• …* Wind, solar, bio-mass, waste,…Source: SAFE, Value Partners analysis

ESTIMATES

Hydro + renewablesNuclearFossil fuels

Generation mix Italy vs. EU27, Percentage of production

Possible future developments

1

Italian CCGT efficiency higher than OECD avg. (51% vs. 45%)

5

ITA-SOLne-090928-P5

• Strong price differentialsbetween Italy and neighbouring countries (France, Austria, CEE, …) but international links still limited

• June 2008: new UCTE planenvisions several new lines with France, Switzerland, Austria, Slovenia, Croatia and Tunisia

• Congestions among different areas do not allow the most efficient plants to operate and result in price differentials

• South and Islands are generally disadvantaged

• Congestions bound to increase with new plants if no measures taken

����� ������������������������������������� ��������������������������������������������� �� ���

Source: SAFE; UCTE; Value Partners analysis

Increase of international connections

Removal of internal bottlenecks

• Change of paradigm: from few large-size plants to distributed generation

• Development of domestic systems (solar, micro-turbines,…) which need to exchange energy with the grid in both directions

Criticalsections

Development of “Smart Grids”

2

6

ITA-SOLne-090928-P6

~30

~5

~60

~40

~100

Estimated incentives 2000-2010 (total)

~2

Estimated cost to reach 2020 targets

#������������������������������������������������� !�����������������������������������

• Conto Energia (80 Mln € in ‘08)

• CIP6 (~5 Bln € in ’07)

• Green certificates• Tax exemptions

New generationcapacity

Improvement of system efficiency

Improvement of energy efficiency

• Trans EU networks• Green book on

interconnections• …

• White certificates market

• 55% tax reduction on energy saving investments

• …

Billion Euros

Source:GSE, 2007 Energy Report, AEEG, Bocconi IEFE, RIE Bologna, Value Partners Estimates

Possible areas of intervention

Examples

Need to re-balance the incentive schemes:

. Carry on the effort on generation, focusing it on “real” renewables

. Invest in network efficiency and security of supply

. Strongly promote energy efficiency on end users and not only on distributors

3

7

ITA-SOLne-090928-P7

$%����������& ������������������������������������������������������������ '

Source: Politecnico di Milano, Solar Energy Report 2008; Value Partners analysis

Old incentive schemesThanks to "Conto Energia"

MW

New "Conto Energia"

Existing photovoltaic plants Expected evolution

2003 2004 2005 2006 2007 2008

~30

~300

~32 ~40 ~50~40~10 ~80

~40~120

~260

~40

2009E 2010E 2011E 2012E

~500

~800

~1.400

~2.000

“Conto Energia”

•Feed-in tariff to re-launch development of photovoltaic generation introduced in July 2005

•The tariff rewards production, is granted for 20 years and is about 0,4 €/kWh produced with a 2% reduction per year

•Rates increase with level of architectural integration and varies with power installed In 2011 the 1.200 MW, cap of the existing

"Conto Energia“ will be reached

4

8

ITA-SOLne-090928-P8

' �����!������������������������ ���������� ����������� �����������������������������������������

Silicon & Wafer producers

Cells & Modules producers

Components/control systems producers

EPC/Distributors Installers

Presence ofItaliancompanies

TypicalEBITDA ~50% ~18% ~15% ~10% ~20%

Italian companiesForeign companies

Italian companies

Foreign companies with subsidiary in Italy

50-60% 30% 10%% on totalinvestments

Source: Politecnico di Milano, Solar Energy Report 2008, Press clippings

EXAMPLE: PHOTOVOLTAIC

4

98%

2%

22%

40% 38% 52%25%

23% 26%

74%

9

ITA-SOLne-090928-P9

������������������� ����������������������������������������������������������������������

Initiatives taken so far Open issues Further improvements needed

• “Autorizzazione Unica”

• “Conferenza dei servizi”

• Regional Energy Plans (PEAR)

• VIA procedure for larger plants

• DIA procedure for smaller plants in some Regions

• Different implementation by Regions• Often an “on-top” procedure• +20-25% extra costs and +10-15% extra time with respect to EU standards

• Authorization doesn’t mean realization (minorities can rely on TAR and State Counsel suspension)

• Different application by Regions

• Lack of national guidelines

• Separate procedures for plant and feed-in-point connection (especially if expropriation is needed)

• Implement homogeneously in all Regions making it really the “only” authorization needed

• Sanctions to plaintiffs in case of unjustified/ unproven legal actions

• Create PEAR in all the regions, using the same guidelines

• Create a “VIA - AutorizzazioneUnica” valid for all plants

• Parallel procedure for plant + connection

10

ITA-SOLne-090928-P10

������������������������������������������������������������������������������ ���������������

•Public institutions and private investors with limited experience in infrastructural investments

•Limited use of “innovative” financial instruments (e.g. bonds for financial investors, asset backed securities)

•Credit market crunch increasing caution from lenders and investors

• Institutional investors interested mostly in “brown field” equity investments

•Complexity, uncertainty of times and unclear authorization procedures strongly influence investors’ interest

Italian context

•The Italian context “as-is” is not able to mobilize the size of investments which is needed to support the evolution of the system

•As a result, many projects already approved/ ”quasi approved” fail to start because of lack of capitals

•To fill the infrastructural gap, Italy needs a strong evolution in terms of financial culture of the institutions operating in the market

Implications on funding of energy projects

11

ITA-SOLne-090928-P11

���$(���������& �������� )

• New energy plan:-Nuclear-Renewables

• New infrastructure plan:-Energy corridors-Gas hubs-Smart grids

• New incentive schemes-Renewables-System efficiency-Energy efficiency

• New industrial policy-Promotion of R&D on new technologies

-Promotion of national industrial chains

• More agile authorization procedures for generation and grid connection

• Improved cooperation between central and local authorities-Reduction of local veto power, particularly for strategic investments

-Introduction of local benefits linked to investment realization

• Central monitoring of project implementation timesand analysis of critical cases

• Extension of new project financing schemes-SPV involving utilities-SPV promoted by financial companies

-Securitization schemes to create new financial products

• Involvement of other financial subjects:-PE funds-Infrastructural funds-“Fondazioni”-…

• System security• Energy cost reduction• Renewable energy• Emission reduction• Energy efficiency

FOR DISCUSSION

• Optimal resource allocation

• National industry creation

• R&D

Finance & realizePlan AuthorizeObjectives

12

ITA-SOLne-090928-P12

%������

valuepartners.com

LondonGreencoat HouseFrancis StreetSW1P 1DH - London UKTel. +44 (0) 20 7630 1400

RomeVia di Porta Pinciana 100187 RomeItalyTel. +39 06 697 6481

MilanVia Vespri Siciliani, 920146 MilanItalyTel. +39 02 485 481

Singapore7 Temasek BoulevardSuntec Tower One #26-04038987SingaporeTel. +65 6820 3388

Hong Kong1806 Vicwood Plaza199 Des Voeux Road Central Sheung Wan Hong KongTel. + 852 2103 1000

BeijingTower A, Suite 1702, Vantone CentreJia 6 Chaoyangmenwai AvenueChaoyang District100020 BeijingPeople’s Republic of China Tel. +86 10 5907 0616

Mumbai8°floor, C blockDevchand House, Shiv Sagar EstateDr. Annie Besant RoadWorli, Mumbai 400 018 IndiaTel. +91 22 6611 9700

ShanghaiFortune Gate office building, Unit 02, 25/F1701 Beijing Rd (W)200040People’s Republic of China Tel. +86 21 6132 4230

Rio de JaneiroRua da Candelária 6010ºandar CentroRio de Janeiro – RJ BrazilCEP 20091-020Tel. +55 21 2213 9191

Buenos AiresAlicia Moreau de Justo 550 4 PisoC1107AAL Buenos AiresArgentinaTel. +54 11 4314 4222

São Paulo Rua Padre João Manuel 7551°e 2°andares – cjs. 11, 12 e 21Cerqueria Cesar São Paulo BrazilCEP 01411 - 001Tel. +55 11 306 809 99

IstanbulSunplazaDereboyu Sk. No:24 Maslak34398 Istanbul Turkey Tel. +90 212 276 98 86

DubaiBusiness Central TowersSuite 1304 AP.O. Box 503025 - DMC 9Sheikh Zayed RoadDubai, U.A.E.Tel +971 4 4335628

MunichMaximilianstrasse 35a80539 Munich Germany Tel. +49 (0) 89 24218 445

Energy experts worldwide

Ruggero JennaDirectorSingapore officeruggero.jenna@valuepartners.com

Enrico LanzavecchiaDirectorShanghai officeenrico.lanzavecchia@valuepartners.com

Alessandro LeonaSenior Engagement ManagerMilan officealessadro.leona@valuepartners.com

Alberto CalvoSenior Engagement ManagerMilan officealberto.calvo@valuepartners.com

Andrea PappalardoFinance SpecialistMilan officeandrea.pappalardo@valuepartners.com

Marco VenneriEngagement ManagerSingapore officemarco.venneri@valuepartners.com