The Rise of the Portfolio Investor:Acquisition Strategies in a Seller’s Market

9 May 2007Milan

IPP Utilities Institutional Investor

Historical

• Expand beyond local market

• Project based opportunity

• “Clean” pressure

• Scale - generation assets

• Fund rationale – growth or annuity

• Established markets & industry

Growth Drivers

• Evolve from successful local developer

• Not on my grid • Too risky

Outlook

• Buy projects and restructure

• Higher price for lower risk

• Reaching growth targets – buy and partner

• Leverage balance sheet

• Opportunity driven

• Leverage skills

• Buy packaged assets

• Quick decisions

• Absorb at home – acquire abroad

• Slow but steady

• Partner to build pipeline

• Chunky growth

The Rise of the Portfolio InvestorParticipants – Market Approach

The Rise of the Portfolio InvestorTop 20 European Owners (MW)

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IPP’s Utilities Institutional

2005 Installed

2006 Added

• Account for 31% (15.2GW) of total base (45.5GW)

• Added 41% (3.1 GW) of total new (7.5 GW)

• Utilities added 1,700 MW - IPP’s just over 1,000MW

Top 20 Asset Owners

The Rise of the Portfolio InvestorIPP’s

Historical

Growth Drivers

Outlook

• EHN, CESA, GREP Pipeline, CDV, outbid for Pacific Hydro

• Europe (ES/IT/FR/DE/GR/HU) – 2,300, NA – 35, Asia 30,

• Diversified energy

• Consolidate at home and move abroad via acquisition

• Vertical business

• Leverage experience from home market - UK, Hungary, Greece, Italy, Poland

• Offshore – Spain, France

• Target additional 5,000 MW next 4 years – NA/CN

• Turbines & Endesa

• Growth from transmission business - Elecnor

• Spain – 330, Brazil - 140

• Continue to build on existing business

• Cautious Expansion

• Offshore in Spain with Endesa

• Expanding into Solar and Biofuels

The Rise of the Portfolio InvestorUtility

Historical

Growth Drivers

Outlook

The Rise of the Portfolio InvestorUtility

Historical

Growth Drivers

Outlook

• Hidro Cantabrico, DESA/Nuon Horizon

• Europe (PT/ES/ FR) – 1100, US 560 MW

• Acquire developers with pipeline and assets

• Diversify portfolio

• High growth markets

• Execute on acquisitions

• 2,200MW new wind capacity in France, Italy, UK and Poland by 2010

• Over 1,000 in US

• Local development into umbrella- Add EnXco

• Europe (FR/PT/DE/GR/IT/UK) – 385, NA - 300

• Partnerships - own less than 50% of participated

• EnXco – over 1,200 mw experience – maintain ownership of pipeline

• Continue partnerships and local project acquisition ie Italy (2 operating farms)

• EnXco – 200 – 300 MW per year

• Target over 3,000 MW by 2011

The Rise of the Portfolio InvestorInstitutional Investor

Historical

Growth Drivers

Outlook

• Enersis, Gamesa portfolio, German projects, Superior

• Europe (ES/PT/DE/FR/IT) 806, NA – 450, Asia - 170

• Mix of IPP and Financial engineering

• Development partnerships, acquisition and refinancing

• Agreements with Plambeck, Ostwind, Renerco and Nordex – for France and Germany

• Will continue to draw on Gamesa in US – will look for new projects acquisition

• Purchase UPC assets in Italy - IVPC, German projects

• Europe (IT/DE,IR) 620

• Financial engineering

• >€1bn Refinance 680 MW

• Content with current portfolio – build out from existing acquisitions

• Additional acquisitions in stable markets

Trinergy

Date Investor Target CompanyMW Developed by

Target Company byAcquisition Date

MW Pipeline of Target Company at

Acquisition Date (est.)Pipeline Geographic Focus Purchase Price

Dec. 2005 Airtricity RGI None 1,000 Texas, New Mexico, Colorado N/A

May 2006 Iberdrola Community Energy 32 2,000 Northeast, Mid-Atlantic $30 million

Aug. 2006 BP Alternative Energy Greenlight Energy 150 6,500 Colorado, Illinois, Kansas, North Dakota, other $98 million

Sept. 2006 Enel TradeWind Energy None 1,000 Kansas, Missouri, Illinois Est. < $10 million(equity stake)

Oct. 2006 Airtricity Gale Force Energy None 4,000 National N/A

Oct. 2006 Iberdrola MREC 80 1,700 Iowa, Wisconsin $38 million

Dec. 2006 BP AlternativeEnergy Orion Energy 491 6,000 National N/A

Mar. 2007 EDP Horizon Wind Energy 1,044 9,000+ National $2.9 billion

Apr. 2007 Iberdrola ScottishPower ~2,006 (PPM Energy) 9,000+ (PPM Energy) National ~$23 billion

Apr. 2007 Iberdrola CPV Wind None 3,500 Southwest, Midwest, Mid-Atlantic N/A

Renewable Generation Inc.

Greenlight Energy

Community Energy

MREC Partners

Total Pipeline Acquired> 43,000 MW (est.)

The Rise of the Portfolio InvestorEuropean Wind Investment in US

The Rise of the Portfolio InvestorTrends

• Hot markets – Italy (19 cents / Kwh), UK – ROCs, France – pent up pipeline, Eastern Europe – local heroes, US – its big and I can play, Offshore - scale

• Entire industry becoming more consistent – more investors willing to participate (long way from the doctors & dentists, sandal wearing, backpack toting explorers with hand held anemometers …)

– New Entrants – GE finance / Theolia, Novera (Germany, France), Allianz

– Small locals – no longer able to fund turbines 10-20% down 18 months in advance of delivery.

– Land grab - Not much real greenfield left in next few years – realizing identified projects

• Large players acting in similar manner - Scale definitely brings synergies – balance risk (permitting, support schemes, access to turbines, diversity of supply …..

• Speed to secure project pipelines offset by turbine lead times benefits those that can build a diversified development portfolio