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Investment Opportunity in Romania

September 2009

ROM ENERGY

Romania Investment Opportunity

26-02-2014

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• Mature project of 44MW, with Solid permitting process and located in a region with

favorable wind conditions• Additional pipeline of 120MW in different stages of development

• Additional potential projects identified, ready to start development

• First mover advantage

• Excellent growth platform for the Romanian market -> know how acquired on local

market and regulations, will enhance the development of further wind projects

• Romania ended 2008 with an installed capacity of just 10 MW

• Key world players are entering the market

• Very attractive valuation at this early stage

• Romania is a fast-growing early stage wind energy market, considered to have the highest

wind energy potential in the region

• Favourable and solid legal framework

• 38% of total national electricity consumption to be produced from RES by 2020

• Wind Energy producers benefit from 2 Green certificates per 1MWh until 2015

• Strong market growth Potential

• Demand for electricity will continue to increase in the future driven by: (i)

demographics/ population growth (ii) strong economic growth and (iii) urbanization

• Price of electricity will continue to be driven by the strong investments required for

Romania to accomplish EU targets (in terms of RES)

Opportunity to acquire a total capacity of 164 MW of Wind Farm Projects, benefiting from First-Mover

Advantage in a business with proven track record in other EU markets and yet almost untouched in Romania

•…in one of the

most

attractive and

promising EUwind energy

markets

Investment Case

•Business

Uniqueness…

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Present Investment opportunity comprises the acquisition of 158MW of Projects in Pipeline

Investment Case

44MW “Tier I”

1 Wind Farm project, located in the Oltenia

region, already holding the urban zoning

certificate, and with completed EIA,

Aeronautical study and preliminary connection

solution study.

Building permit will be requested after Investor

decision on Wind Turbines*

*Note: Licensing process was developed using Vestas

V90 2.0MW reference turbines

120 MW of Pipeline Projects

4 wind farms, located in the eastern region of

the country, undergoing the development

procedure:

1. Securing land (through superficies

agreements, rents 2000-4000 eur per

WTG, payable yearly after wind farm

begins operation)2. Joint venture agreement negotiation

with municipalities (in cases where

public land is necessary, for which 1.5%

of the income generated by electricity

sales of WTGs installed there is due to

the municipality)

3. Preparation of all studies required by

relevant authorities, in view of

obtaining connection and buildingauthorizations

4. The remaining development and

licensing process can be handled by

ROM ENERGY staff

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Agenda

Wind Projects Overview

Romania – Country Snapshot

ROM ENERGY Overview

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Agenda



ROM ENERGY Overview

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Tier I Project

Projects’ Location Map

Project # Name Capacity

P02 Moldova I 34 MW

P03 Dobrogea I 36 MW

P04 Moldova II 20 MW

P05 Dobrogea II 30 MW

Present Investment opportunity comprise the acquisition of 164 MW of Projects in Pipeline

Project # Name Capacity

P01 Oltenia I 44 MW

Projects in Pipeline (120 MW)

oltenia

banat

dobrogea

moldovatransilvania

nord

transilvania

sud

muntenia

nord

muntenia

sud

1

2

3

4

5

2

List of Projects

4

5

3

1

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Agenda


a. Tier I Project

b. Projects in Pipeline


ROM ENERGY Overview

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Project Oltenia I - Snapshot

Capacity • 44MW

Production

Forecast

• 2.500h/P90 100 m hub (full load equivalent

production hours per year, afer wake losses, safety

cut, grid losses, own consumption and availability

for a 2MW reference turbine)

Land

• 100% secured

• Tenancy agreements (signed for a period of 49

years)

• Terms: €3.200/WTG Installed

Grid

Connection

• Dense distribution network adjacent• A.T.R 13.09.2011

Permitting

• Zoning Certificate issued

• Completed: EIA, aeronautical permit, sitting permit

from operator, removal from agricultural circuit

and land use change

• To do: grid impact assessment• Building Permit estimated date: 2st semester 2012

Other

Features

• Permits granted on the basis of 22 x Vestas V90

2.0 MW turbines (max 100m hub height and rotor

diameter 95 m) HZ-93 rotor diameter 93 m – may

be changed according to investor requirements

Key Features Location

Project Oltenia I (Located in TELEORMAN province)

• Site located on a rolling hills landscape, 90 meters above sea

level, with no trees between WTGs, and at a safe distance

from neighbouring forests

• No relevant bird habitats, or major environmental constraints,

according to Environmental Agency

• Accessibility: National Road and other local farming accesses

• Potential area of expansion already under development

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Project Oltenia I - Layout

3D simulation according

to optimized layout

considered in energy

production study

Wind farm polygon

Site Picture

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Project Oltenia I – Production and Wind Resource Assessment

• Measurement data from a metmast commissioned on

April 2009, with 2 anemometers at 15m and 40m

height, is available

•

ROM ENERGY SEACA has performed studies based onthis data to produce annual production estimates

• Results obtained up to the present moment:

• Mean wind speed of 5.65 m/s avg at 40m height

• Production estimation of 2.800 full load hours

per year for the Vestas V90 2.0 MW reference

turbine, based on the WaSP calculation model

• Good correspondence between localmeasurements and mesoscale simulation based

on NCEP/NCAR Reanalysis data set, allowing for

lower uncertainty in long-term resource

prediction

Note:

• Study based on the wind resource assessment of 8 months since April 2009,

combined with a virtual wind data series obtained by mesoscale simulation

from the NCEP/NCAR Reanalysis data set.

• Study based on Vestas V90 reference turbines, with 100m hub height

• Wind monitored using 40m measurement mast equipped with two

anemometers (40m, 15m) and wind vane

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Throughout the licensing process of its own pipeline, ROM ENERGY has acquired an extensive expertise in the

development of wind farms in Romania which ensures solid permitting procedures for project Oltenia I

Project Oltena I – Licensing process

• Valid local zoning plan

• Land destined for wind farm projects and all necessary

infrastructure, certified by Zoning Certificate on April 2011,

valid for 24 months.

Zoning

• EIA. View expressed by the environmental authority.

Distances from sites of biodiversity .

Environmental

Decision

• On 09/13/2011 A.T.R release. Corridor acquisition of 110

KV Network. The purchase agreement. concluded

between ROM ENERGY SEACA and CEZDISTRIBUTION.

Connection

Agreement

• Due to the pace of technology developments regard

production of energy from renewable sources WTGbrand will be chosen by the investor.

Building

Permit

• Project was developed based on Vestas V90 turbines.

Equipment can be changed in order to apply for final

building permit

• No major obstacles to adjust permits to other

technology

• Expected duration until start of construction: 1 year

• Next Steps

– Technical project approval (building +

connection)

– Apply for environmental permit

– Apply for ATR

– Apply for Building permit

– Turbines – RFP + selection and signing of the

delivery contract

– Construction works – selection of

subcontractors

– Close PPA (green certificates)

Licensing Process – Current Status Main Issues / Comments

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Agenda


a. Ready-to-Build Project

b. Projects in Pipeline


ROM ENERGY Overview

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Dobrogea I (36MW)

Site Features• Project was developed based on 22 Vestas V90

turbines

• Project was developed based on 18 Vestas V90

turbines

Land • Agreements signed• Agreements being signed

• Estimated to be completed by April 2012

Wind

Measurement

• Since 23.04.2009

• Avg 40m = 5.65m/s

• Measurements from to April 2009 to November 2011

• Avg 50m = 5.65 m/s

Production

Forecast• 2.800 hpc (Based on Internal studies) • 2.900 hpc (Based on Internal studies)

Projects in Pipeline - Main features

Oltenia I (44MW)

2 3

Dobrogea II (30MW)

Site Features• Project was developed based on 10 Nordex N90

turbines

• Project was developed based on 15 Vestas V90

turbines

Land

• Agreements being signed

• Estimated to be completed by April 2010

• Agreements being signed

• Estimated to be completed by August 2010

Wind

Measurement• Mesoscale assessment underway • Mesoscale assessment underway

Production

Forecast• 2.600 hpc (Based on Internal studies) • 2.600 hpc (Based on Internal studies)

Moldova II (20MW)

4 5

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Agenda



ROM ENERGY Overview

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R i C O i

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Romania – Country Overview

Population 22.2 million (July 2009est.)

Capital Bucharest

Area 238.0 thousand sq km

Currency Romanian leu

Official Language Romanian

Inflation rate 7.8% (2008 est.)

GDP US$ 271,2 bn

GDP per capita US$ $12,200

Source: CIA worldbook,

• Domestic consumption and investment have fueled strong GDP growth in recent

years, although leading current account imbalances

• Inflation rose last years, driven by strong consumer demand, high wage growth,

rising energy costs

• Last quarter of 2008 the country began to feel the effects of the global crises. In

2009 the economy is expected to suffer a contraction in real GDP of 4%, as

domestic demand slumps

• Romania Expects to adopt the euro by 2014.

Key Milestones

Macroeconomic Overview Key Indicators

R i C t O i

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Romania – Country Overview

• Expected long term economic growth, above EU average, after recovery in 2010. Recovery pace and strength will

reflect the restoration and broadening of the economic reforms agenda initiated before EU accession

• Under the IMF-led multilateral financing package, the government will have to rein in budget spending and beginthe long-overdue task of reforming the budget system to improve long-term fiscal sustainability

• current-account deficit is expected to narrow sharply in 2009-10 as a percentage of GDP. Coverage of the deficit

by foreign direct investment will decline from recent high levels

Key Indicators 2008 E 2009 F 2010 F 2011 F 2012 F 2013 F

Real GDP Growth (%) 7.1 -4.0 1.5 4.2 4.3 5.1

Consumer Price Inflation (av; %) 7.8 5.1 3.3 3.2 3.1 2.8

General Government budget balance (% of GDP) -4.8 -4.8 -3.7 -2.9 -2.3 -1.8

Current Account Balance (% of GDP) -12.4 -7.2 -6.4 -6.6 -6.9 -7.2

Comercial Bank Lending Rate (End-Period; %) 17.5 17.0 14.0 10.0 8.0 6.5Exchange rate Lei: US$ (av) 2.52 3.10 3.04 3.00 2.92 2.88

Exchange rate Lei: € (av) 3.68 4.21 4.21 4.25 4.23 4.23

Source: EIU

Economic prospects

Macroeconomic key Indicators forecast (2009-2013)

Romania Energy Industry

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Romania – Energy Industry

• Romania’s energy sector ranks among the oldest in the

world, being the first country to produce oil commercially,

and among the first to generate electricity commercially;

• Romania has important oil and gas reserves and significantquantities of lignite

• Total electricity production reached about 64TWh in 2008

– Thermal generation comprises over half of the

electricity produced in Romania with coal as the

dominant fuel

– Nuclear has been increasing its weight -> 2nd 700 MWunit of Nuclearelectrica at Cernavoda started

operations in September 2007. Additional reactors

totaling 1.440 MW are planed to be operational by

2015

– RES As part of the EU and the Kyoto Protocol, Romania

has an annual carbon allowance for electricity

producers. Nonetheless, Romania utilities do not incur

net costs for carbon

• Total electricity consumption in Romania in 2006 was 53

TWh, the third largest in Central Europe after Poland and

Czech Republic

wind

8

0%

nuclear

1.413

7%

hydro

6.377

31%

hydrocarbons

5.110

25%

coal

7.47237%

Electricity production Installed Capacity – 2008 (MW)

Total = 20.280 MW

Source: Transelectrica

wind

11

0%nuclear

11223

17%

hydro

17105

26%

hydrocarbons

8902

14%

coal

27531

43%

Electricity production sources – 2008 (GWh)

Total = 64.772 GWh

Romania Transmission Grid

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Romania – Transmission Grid

• Romania has an extensive power transmission

grid of about 600.000 Km length and a total

transformer capacity of about 172.000 MVA

• Transelectrica is the Romanian state owned

power transmission company. The company

started its privatization process through an

IPO in 2006 and is currently listed in Bucharest

Stock Exchange;

• Several regional distribution grids are

operated by International Market Players

(E.ON, CEZ and ENEL)

• Current access to the grid is regulated

• Romania has 14 tariff zones. Transmission

tariffs contain both generation and a load

component

• Future grid developments include the

construction of several transmission lines with

neighboring countries (Ukrania, Hungary and

Turkey)

Transmission Grid main features

Transmission Grid Map

Source: Transelectrica

Romania – Wind Energy Sector

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Source; RWEA

Romanian wind energy industry has a strong growth potential

• Romania is considered to have the highest wind energy

potential in the region

– Excellent wind conditions for an on shore site – Large areas with wind speeds over 11m/s

– Low installed capacity: 10 MW (as of Dec 08)

– Currently, wind energy represents less than 1% of

Romania’s energy production sources

• According to recent data published by ISPE (1) concerning

wind energy:

– ISPE has performed studies for a total capacity of

18.000 MW

– Of which 8.000MW have received the approval for

the grid connection assessment study

– More than 3.000MW have been given technical

connection approval from Transelectrica

– More than 800MW have already grid connectioncontract

• According to RWEA potential for wind energy in Romania

has been estimated to be around 14.000 MW

Moldova region

(Project Moldova I

location)

Dobrogea regio

(e.g. Constança, Tulce

Favorable regions in Romania

(Wind Resource Assessment)

(1) Institutul de Studii şi Proiectări Energetice

(2) Theoretical wind power generating capacity potential according to GD 1069/2007

Energy strategy of Romania for 2007-2020 has been estimated to be 23 TWh


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Romania is far behind EU average in terms of installed power. Wind energy density is one of the lowest in

Europe as well

0,00%

0,00%

0,00%

0,00%

0,00%

0,30%0,40%

0,40%

0,40%

0,50%

0,70%

0,90%

1,10%

1,10%

1,20%

1,30%

1,70%1,80%

1,80%

3,30%

3,40%

3,70%

3,80%

7,00%

8,40%

9,30%

11,80%

21,30%

Cyprus

Mal ta

Slovenia

Romania

Slovakia

FinlandPoland

Czech

Hungary

Bulgaria

Belgium

Latvia

Lithuania

Luxembourg

France

Sweden

ItalyUK

Estonia

Austria

Netherlands

Greece

EU-27

Germany

Ireland

Portugal

Spain

Denmark

0

0

0

0

1

67

10

11

12

15

21

28

40

40

45

47

71

78

88

107

116

120

193

203

270

367

579

Cyprus

Malta

Slovenia

Romania

Slovakia

HungaryPoland

Bulgaria

Czech…

Latvia

Lithuania

Finland

Belgium

France

UK

Estonia

ItalyLuxembourg

Greece

Sweden

Netherlands

EU-27

Austria

Ireland

Portugal

Germany

Spain

Denmark

Installed wind capacity, kW/1000 inhabitantsWind power’s share of national electricity demand

Source: EWEA (2007) Source: EWEA (2007)


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Romania Wind Energy Sector

Competitive landscape

Although, current immaterial installed capacity, main industry players have already shown their interest to

invest in Romania

International Utilities / Large players Regional / Local Companies Other Players

• CEZ has two large projects Fantanele &

Cogealac of about 600MW located in

Dobrogea region (will be the largest on-

shore wind farm in Europe)

• Enel has plans to build several wind farms

with total capacity of 1,400 MW

• Iberdrola acquired in 2008 about 50 wind

farm projects of 1.600 MW for

US$450 million

• EDP Renovaveis has a pipeline of about

297 MW

• The swiss conglomerate, Cofra Group,

plans to invest US$ 1,65bn in 2 wind

farms (700 MW in Dobrogea + 400 MW in

Neamt and Suceava)

• Other players include E.ON, Verbund

• Electrica and Green Energy, have plans to

build 600 MW with total investments of

about US$800 million

• Blue Investment will invest US$84 million

in a 35MW wind farm in Baia, Tulcea

County

• Hungarian company, Sinus Holding, will

build five wind farms of 700 MW in the

Northern Moldavia Region with a capital

investment of US$800 million

• Blackstone Group plans to invest

US$1,4 billion in a 500 MW off-shore

wind farm located in the Constanta

Country Region of the Black Sea

• Other renewable players including

several local and international developers


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• General provisions for promotion of renewableenergy sources (Energy Law 13/2007)

• Romania has transposed the Directive 2001/77/EC

(European Unions rules to comply with Kyoto targets

of reducing greenhouse gases) into its own legislation

(GD no. 443/2003 with modification of GD no.958 /

2005 – current RES framework).

• In 2008 the Romanian Parliament reinforced the

tradable green certificate (TGC) support scheme as an

incentive to develop renewable electricity generation

(Law 220/2008)

• Law 220/2008 has also extended the validity of quota

obligation from 2,74% in 2007 up to 16,8% by 2020

• ANRE, the Romanian electricity market regulator, has

proposed a new decree which extends Renewable

legislation beyond 2012, and improves on the terms

of the current Renewable regime

Favourable Regulatory Framework

• National Action Plan to be submitted by June

2010

• Electricity share produced from RES should

represent 38% of total national electricityconsumption by 2020

• The share of energy produced from RES in gross

national energy consumption should reach 24%

in 2020

Energy strategy of Romania for 2007 - 2020

Legal framework related to RES

Souce: Ministry of Economy


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Price components (Wholesale + Green Certificates):

1. Brown Energy price (wholesale price): Renewable electricity issold at the market electricity price through bilateral agreements

or on day ahead market

2. Green certificates (GC): 1MWh of renewable energy from an

existing facility metered and verified by certifying agency

– The law sets out the price range per GC (indexed to Euro):

€27- €55 (previous range €24 - €42)

– 2 GC/MWh until 2015 and 1 GC from 2016 onwards

– Green Certificates are freely negotiated between utilitiesand RES generators

– Utilities are legally obliged to provide a certain minimum

share of energy produced from RES in their total yearly sale

– Utilities can choose between generating its own RES energy

or buying from another generator to meet the RES

requirement

– Non-compliant must pay a penalty €84/MWh for 2008 –2012

(€63/MWh for 2005 –2007)

– GC Market will be extended to other countries after 2010

(selling GC to other countries will be possible under

conditions defined by ANRE and if national quotas are

fulfilled)

Wind Farms operators can negotiate PPAs with extended maturities

Favourable Regulatory Framework

• Structural funds are an important mechanism to fund the

development of Wind Projects• SOP Increase of Economic Competitiveness

– Priority Axis 4 -> Improvement of energy efficiency and

sustainable development of the energy sector

• Main features

– investments in upgrading, rehabilitation and building new

power and heating production capacities by valorisation of

renewable energy resources: wind, hydro (in small scale

hydro capacities), biomass, biofuels, solar, geothermal, and

other.

– Financial allocation (2007-2013) €260 million

(€220 million from EU and €40 million from National

Contribution)

– Maximum value of financing (% from eligible expenditures):

70% /60%/ 50% for small/ medium/ large companies

respectively (60%/50%/40% if located in Bucharest area)

– Total project value: min €100.000 (355.000 lei) and max.

€50.000.000 with a max. financing from EU funds of

€20.000.000 (71.000.000 lei)

Pricing Conditions Investment Aid / Structural Funds

Agenda

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Agenda



ROM ENERGY Overview

.

.

.

ROM ENERGY – Project Development Methodology

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j p gy

Over the past years, ROM ENERGY SEACA has been improving its project development methodology in order to

ensure the adequate strength of its pipeline

• Selection of keygeographies

• Rigorous pipeline

classification

(several levels)

according to an

extensive criteria

list

• Sites are visited by

an ROM ENERGY

specialist

P r o s p e c t i n g

P i p e l i n e

a s s e s s m e n t /

s i t e s s e l e c t i o n

W i n d

m e a s u r e m e n t

/ P r o d u c t i o n

A s s e s s m e n t

P e r m i t t i n g

( z o n i n g ,

e n v i r o n m e n t a l ,

b u i l d i n g ,

e t c . )

S e c u r e G r i d

c o n n e c t i o n

P r o c u r e m e n t

( e . g

T u r b i n e s ) ,

P o w e r s a l e

,

P r o j e c t

F i n a n c e

L a n d

A g r e e m e n t s

Pre-Development Project Development

C o n s t r u c t i o n

O p e r a t i o n

Construction

and operation

• Well defined process for pipeline progression (priorities andinvestments based on clear rules and criteria)

• Development approach adapted to country specificities

• Process managed by local team in coordination with centralized

core competences (e.g. Technical, Financial, etc.)

• Studies conducted by the most credible institutes / consultants

• Wind resource assessed on a regular basis for at least 2 years.

Internal assessment is cross checked with external experts studies

• Strong and comprehensive due diligence performed throughout

the licensing process by the major and most credible law firms in

each country

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Contacts

ROM ENERGY SEACA

Manu Marian

Tel 004.0743.04.18.18

Fax 004.0243.27.33.88

Email:

[email protected]

teaser_04062010

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