Turbine Supply Agreements 30 October 2012 GIZ Workshop

Turbine Supply Agreements 30 October 2012, GIZ Workshop, Ho Chi Minh City, Vietnam

Contents 1. GL Garrad Hassan 2. Site Conditions & Turbine Suitability 3. Track Record, Quality & Turbine ‘Bankability’ 4. Summary

Local understanding forms a global perspective GL Garrad Hassan: 1, 000+ staff, 44 locations, 26 countries Vancouver Ottawa Portland San Diego Montreal Peterborough Austin Heerenveen Sint Maarten Kaiser-Wilhelm Koog Glasgow Copenhagen London Hinnerup Oldenburg Slough Hamburg Bristol Warsaw Cork Paris Imola Lisbon Barcelo na Zarago za Madrid Izmir Cairo Beijing Seoul Tokyo Shanghai Mumbai Bangkok Bangalore Singapore Querétaro Newcastle Porto Alegre Wellington Santiago Cape Town Part of the GL Group: renewables, oil & gas, maritime Melbourne

GL Garrad Hassan Capabilities • The world’s largest renewable energy consultancy. It offers independent technical and engineering services, products, and training courses to the onshore and offshore wind, wave, tidal and solar sectors. • Has been supporting investors in wind farms for over two decades. The detailed technical understanding of its experts provides a solid basis for informing intelligent decisions, regardless of the scale of the project or investment, or the lifecycle stage. • Has worked with almost every major manufacturer. It has led the market for manufacturer services for many years and is continuously developing its industry standard turbine design software.

Wind: Experience Matters Energy Assessment • analysing 20, 000 MW of new projects per year • 25% of all projects worldwide • 70% of UK installed capacity • 75% of Irish installed capacity Operational Assessment • 15% of the world’s installed capacity Short-term forecasting • over 20% of the world’s operational capacity Measurements • power curve measurements on 500+ turbines • load measurements on 100+ turbines • founding member of MEASNET • first ever load measurements on offshore wind farm Due Diligence • over 25% of the world’s project financed Products / software solutions wind farms • Industry standard wind turbine design software - Bladed • world’s largest wind farm portfolio acquisition • Bladed used to design world’s largest turbine • world’s first wind energy bond deal • world‘s largest independent SCADA Independent Engineer supplier – 6, 000 MW • 45% of US wind farms Offshore Wind • The world’s five largest wind farm • project management of world’s largest financings offshore wind farm - Thanet • The first project financed offshore wind farm

Contents 1. GL Garrad Hassan 2. Site Conditions & Turbine Suitability 3. Track Record, Quality & Turbine ‘Bankability’ 4. Summary

Environmental Criteria • The following site-specific environmental criteria should be considered when assessing turbine suitability: Annual average air density Max. temperature Min. temperature Lightning Risk Altitude a. s. l. Terrain class Maximum slope Corrosion class Dust risk Seismic class Annual mean wind speed at hub height (max. ) Extreme 50 -year wind speed 3 second gust Average turbulence intensity at hub height Turbine spacing kg/m 3 C C strikes/km 2/yr M Simple/complex deg. m/s % (@ 15 m/s) Rotor Diameters

IEC Classification • Site specific characteristics should be compared to turbine class limits as defined in IEC 61400, as follows:

Certification Process • Certification is used to give a standard measure of quality and is undertaken by recognised international classification bodies, including GL Renewables Certification. • For wind projects, the certification process confirms conformity with design standards according to ‘IEC 61400’ part 1 – safety systems. • Statement of Compliance for the A / B / C Design Assessment.

Certification Process • Additional requirements exist in order to obtain Type Certification in accordance with IEC WT 01.

Certified Turbines • A detailed list of certifications and references for wind turbines, offshore projects, condition monitoring systems / monitoring bodies, electrical components, foundations, gearboxes, grid code compliance, rotor blades, and towers can be from the GL Renewables Certification website. • http: //www. gl-group. com/en/certification/renewables/List. Of. Certifications. php

Other Considerations • When considering turbine suitability, consideration needs to be given to other factors including: • power curve and energy production (!!!) • planning compliance and development constraints. • electricity grid reliability and connection requirements. • site access, transportation and storage. • availability of installation and maintenance equipment (eg. cranes). • anticipated operating temperatures. • tropical storm activity.

Contents 1. GL Garrad Hassan 2. Site Conditions & Turbine Suitability 3. Track Record, Quality & Turbine ‘Bankability’’ 4. Summary

DEVELOPMENT PHASE (0. 5 to several years) CONSTRUCTION PHASE (12 to 18 months) OPERATIONAL PHASE (20 to 25 years) CONCLUSION DISCONNECTION TAKE OVER FINACIAL CLOSE SITE DISCOVERY Wind Farm Project Cashflow DECOMISSIONING PHASE (3 to 4 months) CASH FLOW MEDIUM RISK & MEDIUM RETURN MEDIUM RISK & LOW INVESTMENT MEDIUM RISK & HIGH RETURN HIGH RISK & HIGH INVESTMENT BREAK EVEN (loan repaid) LOW RISK & LOW RETURN

Wind Farm Investment Risks • What are some of the key investment risks in a wind farm project? Risk Energy Measurement and Analysis Operating Performance Technology Cost Overrun Delay Credit Risk Regulation Insurance Financial Country Risks Example Deviation from base case due to uncertainty or error in the measurement and/or analysis? Deviation from the base case due to machine breakdown or other reason to shut down turbines or the wind farm? Is it reliable and how much will it cost to operate? Will there be an additional funding requirement for additional equipment or will the contracts claim for additional costs? Will the revenues start in time to pay the first loan repayment? What is the risk of bankruptcy of a counterparty Is there a risk of change in green energy support pricing or grid regulation? Will it be available and at what price? Is there a risk of interest rate and foreign exchanges? Political instability or regulation change. Also climate risks.

Basic Feasibility Model - 6 months - 5 months - 2 - 1 months month Detailed Banking Initial Banking Model, audit & tax Energy Assessment Initial Proposal Term Sheet Due Diligence (legal, technical, insurance) Credit Approval Syndication FINACIAL CLOSE Wind Farm Project Financing Timeline +18 months + X years Construction Draw Down Operational Repayments Due Diligence Monitoring Final Acceptance Final Payment

Turbine Pricing Global wind turbine price index by delivery date: Japan Australia United States China Source: Bloomberg New Energy Finance / International Renewable Energy Agency

Turbine Technological Risk TURBINE DESIGN KEY CONSIDERATIONS Effecting power output: • Optimum Hub Height • Optimum Blade diameter • Proven Installation record • Proven Availability record • Proven component reliability • Proven power & thrust curve • Proven climate / icing control • Correct IEC class, type certified

Key Technical Considerations • The key technical considerations for turbine selection include: • What is the Gearbox reliability? • What is the Generator reliability? • How much Capital cost is involved? • How much are the long term O&M costs? • What quality assurances are there?

Local Content List of existing and proposed wind turbine manufacturing facilities in Vietnam: Source: Make Consulting

A Proven Turbine Model? • For a genuine evolution from a smaller turbine GL GH may consider that the turbine may be considered proven if the following conditions are met: • Capable of performing the contractual and commercial obligations. • Certification is current (and valid) – design, type (and class – I, II, III & S). • There are 100 turbines in operation. • At least one turbine with more than 10, 000 hours of operation. • A fleet with in excess of 50, 000 cumulative hours. • Greater than 95 % average availability of the fleet. • Availability of independent test reports (unless a commodity).

Contents 1. GL Garrad Hassan 2. Site Conditions & Turbine Suitability 3. Track Record, Quality & Turbine ‘Bankability’ 4. Summary

Summary • Demonstrate suitability for site - certification and site comparison. • Include certification requirements in specification. • Make sure that the designed turbine will be delivered as per specification. • Ensure independent test reports unless a “commodity”. • Choose a turbine with maximum track record. • Specify environmental, performance and reliability requirements. • Use the IEC standards as far as possible. • Ensure local / national compliance.

Thank-you! Daniel Astbury – Senior Engineer, Business Development Manager – Thailand daniel. astbury@gl-garradhassan. com