• Alessandro Bragantini

• Chief Operating Officer

• Building Energy S.p.A.

• Italy

Kathu 81 MWp Solar Farm

Kathu, Northern Cape, South Africa

BUILDING ENERGY IS A GLOBAL INTEGRATED INDEPENDENT POWER PRODUCER. OUR MISSION IS TO BE A LEADER IN THE CREATION OF RENEWABLE ENERGY, DELIVERING VERTICALLY INTEGRATED SOLUTIONS, THROUGHOUT OUR EXPANDED VALUE CHAIN, INTO COMMERCIAL AND UTILITY SCALE POWER PLANTS WORLDWIDE.

Contents

RSA Regulatory Framework

Financial Arrangement

Technical Solutions and Considerations

“The biggest barriers to developing renewable energy in Africa to date are not technological, but financial”.

President Jacob Zuma of South Africa November 2011, Durban.

Global Trends – Beginning of an End? Global New Installed Capacity (GW) (Bloomberg)

Global Trends – Renewable Market

Annual Energy Outlook end 2014, forecasts the global

installed capacity of renewable energy to double from

1,566 GW (in 2012) to 3,203 GW in 2025 at an average

annual growth rate of 5.7%

Solar photovoltaic (PV) technology shall account for 33.4%

of total renewable energy capacity additions over the 2012-

2025 period. Global solar capacity is due to increase from

94 GW in 2012 to 670 GW in 2025.

Wind follows (32.7%) with hydro power at 25.3%.

Other renewable technologies will represent the remaining

8.6% of capacity additions.

Global Trends - Macroeconomics Global Economic difficulties and oil price crisis are affecting

the short term outlook for renewable energy.

Western world economic climate has impacted support

schemes, which continues to be the lifeline for certain

renewable energy installation.

Yet, technological innovation & scale economies yield a

decline in the cost of renewable energy, such to allow grid

parity achievement (LCOE) in several urban areas.

Fast deployment of renewables vs/ traditional powergen

enabled developing countries to adopt these technologies,

also as a response to rapid consumption growth.

REIPP Programme

Technologies and Allocations (Round 1 – 4)

Technology MW Allocated

in Round 1 MW Allocated

in Round 2 MW Allocated

in Round 3 MW Allocated

in Round 4

Onshore Wind 1850 1470 653,6 590

Solar PV 1450 1075 401,3 400

CSP 200 400 200 -

Biomass 12,5 47,5 60 40

Biogas 12,5 47,5 12,5 -

Landfill Gas 25 - 25 15

Small Hydro 75 60 120,7 60

Small projects with a max. capacity of 5MW

100 100 - -

Total MW 3725 3200 1473,1 1105

REIPP Programme

Technologies and Allocations (Round 4)

– Wind

• Roggeveld – 140MW

• Karusa – 140MW

• Nxuba – 139MW

• Golden Va.y – 117MW

• Oyster Bay – 140MW

– Biomass

• Ngodwana - 25MW

– Hydro

• Kruisvallei – 5MW

– Solar

• Sirius PV 1 – 75MW

• Droogfontein 2 – 75MW

• Dyason’s Klip – 75MW

• Dyason’s Kilp 2- 75MW

• Konkoonsies II – 75MW

• Aggenys – 40MW

REIPP Bid Structure

IPP procurement Programme based on 6 Bid Submission

Phases

Round 1 submission date 4 November 2011 (following bid

March 2012 and then every year in August thereafter)

Bidders must meet financial, technical and localization

qualification criteria in order to be evaluated

Bids evaluated based on price (70%) and socio-economic

development criteria (30%)

28 Preferred Bidders announced in December 2011 who

reached Financial Close in November 2012

Kathu - Financial Arrangement Business model

EPC

FINANCIAL ARRANGEMENTS

O&M

Green and Brownfield project development

activities worldwide

Engineering, Procurement & Construction

contractor for turnkey power plant solutions,

in accordance with bankability standards

and best market practices

Advisory and Arrangement for the

securement and structuring of the debt

(project finance and leasing) to finance plant

construction

Operation and maintenance of PV plants through

long term contracts (10 years – 20 years)

ASSET MANAGEMENT

Direct equity investments and asset

management of property plants, guaranteeing a

return according to the plant performance

DEVELOPMENT Greenfield

Permitting

Brownfield

Engineering Procurement

and Construction

Operations and

Maintenance

Financing and Asset

Mgmt

VALUE

CREATION

AT ALL

STAGES

OF

THE

VALUE

CHAIN

Kathu - Business Model

2

Land rights

Permits

PPA, IA, DA Grid connection/

IPP

authorization

Debt

Equity

Kathu REISA spv

Engineering

& Design

Construction (sub-contracting)

PV Panels

Inverters

Tracking

System

Operations

&

Maintenance

Performance

Guarantee

VentusaLocalDeveloper

DOE ESKOM/ NERSA

Investors

EPC O&M

Business Model

Kathu - Debt and Equity Structure Debt and Equity Structure

Kathu Solar Community Trust

Equity finance

AIIM

EQUITY: 20%

DEBT: 80%

34% 10% 28,5% 25% 2,5%

100% 90%

Key figures “Italian developer Building Energy has closed the financing for its 81MW Kathu

solar photovoltaic project in South Africa. Drawdown on the R2.9 billion debt

began on 19 November 2012, and construction on the plant is expected to be

completed within 21 months.”

Project Finance Magazine, 26 November 2012

PROJECT HIGHLIGHTS:

• 81MWP Single Axis Tracker

System

• 180GWh/annum produced

• 350 M€ Project Investment

Cost;

• Equity raised: 70 M€

• Debt: 280 M€

• 21 month construction

period

• Equity sponsors include

Macquarie, Old Mutual

BUILDING ENERGY’S ROLE:

• Lead member and sole sponsor to

Financial Close

• Developer, EPC contractor, O&M

Contractor

• Debt and Equity arranger

Technical Solution and Considerations Project Location

The facility will be installed on Portion 5 of the Farm Wincanton 472, located approximately

17km North-West of the town of Kathu in the Northern Cape Province on the following

approximate coordinates as shown below

Latitude 27,58660 S Longitude 22,93590 E.

Initial Project Site

Preliminary Layout – prego mettere quello vero finale

Technical Details

The photovoltaic modules to be installed will have 230 Wp

of peak power each.

The generating units have following data:

• N° 108 inverters of 750 kW rated power,

• N° 352.107 PV modules,

• N° 16.767 strings, each of 21 modules

Total generating power of about 81 MWp (80,985 MWp)

Economic Development Community Involvment

The Project Company has developed the Enterprise Development and Socio-Economic

Development projects, mainly in a 50km radius from the project site.

These areas include communities of , Hotazel, Kuruman, Dingleton, Kathu, Mapoteng,

Shesheng, Deben, Dibeng, Olifantshoek

Socio-Economic Development and Enterprise Development contributions has been spent on

85% black beneficiaries, across the projects.

Manpower Planned vs/ Actual Job Creation

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Manpower Histogram

Planned Quantity - workers

Actual Quantity - workers

Planned Quantity - management

Actual Quantity - managers

Planned Quantity - Cumulative

Actual Quantity - Cumulative

Lesson learnt – more and more challenges

Today’s private renewable investors execute

projects within increasingly complex environment

in the technical sector

In the financial setup

In the legislative frame

In the socioeconomic expectations

The ability to successfully execute these projects

drives, ultimately, the achievement of business

objectives

Lesson learnt- Community Involvement Trust has 2,5% shareholding in project.

The Socio-Economic Development initiatives were

undertaken by the Project Company hand in hand

with Contractor and Operator.

The project has well exceeded the threshold

requirement of 1 percent of revenue on Socio-

Economic Development initiatives.

Several types of initiatives held in health, education,

safety & security, environment, arts & culture, etc.

ALL IN ALL A VERY POSITIVE EXPERIENCE,

BOTH HUMAN AND PROFESSIONAL

Lesson learnt – technical KATHU 81 MWp – 2012

Monoaxial Tracker Tilt 0°

No. 13 masonry Electrical /

Inverter Buildings w/HVAC

Masonry control building,

wharehouse, offices

21 months construction

Several subcontractors

Substation 2 x 100%

redundant equipment

Main equipment imported

Grid code: modified after

NTP, compliant after variations

AGGENEYS 86 MWp – 2015

Monoaxial Tracker Tilt 0°

No. 24 Outdoor Inverter /

Trafo pads

Prefabricated buildings

15 months construction

Most works in direct hiring

Substation 1 x 100%

equipment

Main equipment local

manufactured

Grid code: clear and fixed

requirements from NTP

Lesson learnt – simplify and streamline

KATHU 81 MWp - 2012

16 months from preferred

bidders to NTP

No. 5 law firms involved

Contractual structure

defined after preferred

bidder status

Exchange rate risk (foreign

manufacturing)

Limited solar engineering knowledge in the market

PPA Tariff = “X”

AGGENEYS 86 MWp - 2015

Planned 8 months from

preferred bidder to NTP

No. 2 law firms involved

(transactional Lawyer)

Contractual structure

streamlined

Limited excgange rate risk

(mostly local procurement)

Well developed engineering

knowledge in the market

PPA Tariff = “1/3 of X ”

Lesson learnt – conclusions

The world we live in - and how it will change –

creates an ever increasing flow of new challenges /

opportunities

Agile leadership can create an adaptive company

internal environment and foster agile innovation

practices

Strategy in fast paced environments: It is about a

sound framework, not about a detailed plan

The mindset is the key - an agile company can create

and maintain the mindset needed to succeed

Lesson learnt – #2 takeaways

Strenght: "the ability [of a system] to withstand an

applied load without failure”.

Resilience: "the ability [of a system] to absorb energy

when it is deformed elastically, and release that energy

upon unloading”.

In a way:

#1 “Resilience is the ability to cope with changes“.

Further, especially in Renewables:

#2 “ It’s not the big that eat the small… it’s the fast

that eat the slow”. Jason Jennings