The document provides a strategic analysis of renewable energies, emphasizing their growing importance in global electricity markets despite their current minimal contribution to primary energy consumption. It discusses the transition from a centralized to a decentralized energy model, highlighting market trends, technological advancements, and investment opportunities within the renewable sector. Furthermore, it outlines the risks and value drivers influencing the energy landscape, ultimately advocating for a consumer-centric approach and the exploration of various investment strategies.

1. green capital
advisors
Renewable Energies: a key player
in future energy solutions
Strategic analysis, trends and potential investment areas
July 2012 1

2. green capital
AVISO LEGAL advisors
Ni Green Capital Advisors, S.L., ni ninguna otra persona, representante o sociedad de su Grupo, garantizan la exactitud, veracidad o carácter completo de la información
contenida en el presente documento ni no asumen ninguna obligación de actualizar, completar, interpretar o aclarar dicha información ni de entregar ninguna otra
información.
La Información tiene carácter estrictamente privado y confidencial. 2

3. green capital
AGENDA FOR TODAY advisors
1. Renewable Energies in Today’s Broader Energy Context: a
Basket Case or Future Mainstream?
2. What’s in Electricity? An Introduction to the New Ecosystem
3. Back to Basics. Competing with the Establishment.
Technology + Market size = Competitiveness
4. Value and Risk. Key Drivers along the Business Chain.
5. Investing in a New Energy World. Where and how to put
Capital at Work (…and at What Risk)?
6. How Can We Help to Make Things Happen…?
3

4. 1. Renewable Energies in Today’s Broader green capital
advisors
Energy Context
Renewable Energies are already an important part of electricity markets
worldwide. Their weight is set to increase dramatically in the next decade
However, in terms of renewable energies contribution to final primary energy
consuption, the industry still accounts for less than 2%
TACC = 26% TACC = 38%
% of domestic electricity demand (2010/11e)
Wind: 6.3% Solar: 2.0% Wind: 1.5% Solar: 0.1%
Wind: 2.0% Solar: 0.1% Wind: 3.0% Solar: 0.1%
4
Wind: 15.6% Solar: 3.7%

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2. What’s in Electricity? Production vs Consumption advisors
Electricity Electricity
Demand Supply
Balance (sic)
of Power
Is this an optimized sector structure ? For whom…?
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6. green capital
2. What’s in Electricity? An introduction to the New advisors
Ecosystem
Meet the “Bipolar Electricity Consumer”: sophisticated and technology
hungry but “tied” to its electric distribution & supply companies…
From a…
Supply, engineering
...to a & regulation driven
Demand, marketing & business
competition driven
business • Does not know which company is
serving him
… but on the other hand he knows
and cares modern kitchen • Does not know monthly
appliances, TV sets, laptops, consumption or contracted power
tablets,etc… • Does not know the price of power
or supply availability
... And he knows perfectly what he
has, why he bought it (its value) at
which price and to whom
… although as we will see some things are starting to move:
Customer Service to become the main driver of energy markets
6

7. 3. Back to Basics. Competing with the Establishment green capital
advisors
… to Tomorrow’s Vision
Spanish Government Tomorrow’s Vision (as of 2011) on competitiveness of
renewable energies … still a long-term goal?
Source: IDAE/Ministry of Industry, Commerce and Tourism (2011). Study
made with support from Boston Consulting Group
... let’s have a closer look to reality…
7

8. 3. Back to Basics. Competing with the Establishment. green capital
advisors
From Today’s Facts…
Electricity prices going up despite sharp fall in … and together with tecnological evolution,
consumption due to higher oil prices and nuclear enabling renewables to deliver their “value
“risks”… proposition”
EPIA estim. 250
Domestic consumer price (€/MWh) +5% CAGR €/MWh
Annual system deficit
150 1422011-20e
€ 17,9 – 36,0/MWh
Interest on total system
+58% 125 IVA € 30,50/MWh deficit
130 (CAGR: +12%) 200 € 4,8 – 9,6/MWh
Impuesto Especial
115 Electricidad
110 Potencia/alquiler cont. € 7,86/MWh
93 € 14,69/MWh
90
90 150
70
2.007 2.008 2.009 2.010 2.011 100
Average wholesale price (€/MWh)
70 64,4
TUR
€ 146,87/MWh
50
60
+27% 49,9 Spain’s final household consumer
50 (CAGR: +6%) electicity price (€/MWh)
0
39,4
40 37,0 37,0 PV systems cost evolution and Market size
driven economies of scale
30 7,00 30
2.007 2.008 2.009 2.010 2.011 6,00 25
Volume (TWh) 5,00
250 20
222 -18% 4,00
225 201 (CAGR:-6%) 15
195 3,00
193
200 182 2,00
10
175 1,00 5
150 0,00 0
2.007 2.008 2.009 2.010 2.011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011e
Sources: EPIA ,ASIF, Green Capital Advisors Price (€/Wp) Global Prod. (MW)
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9. 3. Back to Basics. Competing with the Establishment green capital
advisors
… to Tomorrow’s Vision
The official vision is already old (and biased): Market speed is surpassing initial
predictions both for consumer electricity prices (up) and grid parity (earlier)
PV systems competitiveness as an alternative to large centralized grid supply is
already a reality in Germany… (and even more inSpain!!)
€/MWh PV systems costs vs Consumer Electricity price
TUR (1H2012)
14,2 c€/KWh Adjusted TUR
IDAE/MITYC
New German FiT <10kW
195 €/MWh (June 2012)
Source: IDAE/Ministry of Industry, Commerce and Tourism (2011). Study
made with support from Boston Consulting Group
Note: TUR concept does not include VAT or electricity tax, nor fixed grid connection cost or 9

10. 3. Back to Basics. Competing with the Establishment green capital
advisors
Renewables as Keystone in the Energy Puzzle
Renewable Energies*, born under the prevailing B2B centralized supply-side model of
the electricity industry (Utility World) are the main driver pushing in the transformation
of electricity in a B2C / C2C decentralized, customer oriented business model
Yesterday Today Tomorrow
Electricity Electricity
Sector Sector
Renewable
Renewable Energies*
Energies*
“Transformation of
“A small world Renewable Energy Supply & Management
by its own Energies* Customer Centered Service ”
rules”
“Growth and integration in the
larger Utility playing field”
* Includes all Efficiency & Energy management business areas 10

11. 4. Value and Risk. Key Drivers along the green capital
advisors
Business Chain.
The traditional vision … (from actual 2009 analysis)
MANUFACTURING
DEVELOPMENT OPERATION
AND CONSTRUCTION
Need for financial LOW HIGH VERY HIGH
(<€ 0.1 mil/MW) (€ 0.7-4.0 mil/MW) (€ 1.3-6.0 mil/MW)
resources
MEDIUM SHORT to MEDIUM LONG
Investment (6-24 months WC (20-30 years)
(3-5 years)
period vs factories, R&D)
MEDIUM / HIGH MEDIUM MEDIUM / LOW
Risk profile (Regulatory / (Construction / manufacturer risk) (Technological / regulatory /
development risk) market risk)
• Identification of locations • Technology & industrial • Margin and income
Success factors • Speed, flexibility organization management
• Relations with the Public • Client relationship • O&M management
Administrations • EPCs management
LARGE NUMBER OF PLAYERS VERY SMALL NUMBER OF PLAYERS SMALL NUMBER OF PLAYERS
Market / • Important Electricity companies • Important manufacturers • Important Electricity companies
Competition (IBE, END, UNF, EDP, Acciona, …) (Gamesa, Vestas, GE, Alstom …) (IBE, END, UNF, EDP, Acciona, …)
• Medium/small-sized developers • Important EPC contractors • Medium-sized operators
11

12. 4. Value and Risk. Key Drivers along the green capital
advisors
Business Chain.
Traditional vision was of wind as the overwhelmingly competitive renewable
energy source to serve (within its limitations) large centralized systems
The traditional vision of different renewable energies
technologies … (from actual 2009 analysis)
Wind Offshore Solar CSP Solar PV Biofuel
Farms Wind Farms Plants Plants Plants
Need for financial MEDIUM HIGH VERY HIGH HIGH HIGH
Resources (€/MW) 1.3-1.4 2.7-3.0 5.5-6.5 3.0-4.0* € 45-60 mil/plant
Technological risk LOW MEDIUM HIGH MEDIUM LOW
Regulatory risk LOW MEDIUM/HIGH VERY HIGH VERY HIGH HIGH
(premium €/MWh**) 25-30 ~ 120 ~ 220 ~ 220-270 5.8% Quota (2010)
Technology evolution / Low (plants)
Limited / Slow / Slow / Low High / High
Competition among High (fuels) /
Low Unexisting Medium
Manufacturers
* Expected to be at € 2.5-2.7 in 2010 and €1.5-2.0 in 2012 The Status Quo
** Based on €50 / MWh market price Challenger 12

13. 4. Value and Risk. The forward vision (2012…) green capital
advisors
Moving from “a business” to “an environment”
From the old days …to Smart Household/Business …to individual & collective
of intensive Networks and Appliances Transportation Systems
“light & power”… “negative use of power”… & Smart Cities
Utilities rule (…2008): Utilities vs Renewables (2008-2018?): Consumers rule (2018…):
Renewables as a nice Who will lead in addressing Consumer Adapting Renewables & “negative
feature of the system needs (not just energy ones…)? energy” paradigm to manage both
supply & demand
• Centralized supply grid: • System’s progressive supply • System’s supply to become mostly
renewables as a regulated decentralization: renewables as decentralized: renewables fully
system investment competitive energy source integrated: generation seeks to
• No customer (just users & • Technology brings competition and optimize consumption
accounts to be supplied) lowers barriers (still high from • Retail & business market with strong
• Artificial, limited competition regulatory standpoint) competition: few barriers to entry
with high entry barriers • Customer approach generally limited • Customer is king (again, finally)
• No externality costs to medium/large businesses • Majority of the externality costs are
• Increased weight of externalities accounted for
13

14. 5. Investing in a New Energy World. Where and how green capital
advisors
to put Capital at Work (…and at What Risk)?
Where can we sensibly put capital at work…?
High Disruptive
Risk 0 Why A…? or B…? or C…?
Technologies
Developed Countries Developing C.
High
/Med New Energy Distributed &
Risk 1 Markets “Negative Additional
Consumer & Energy” Energy Needs
Development Oriented
R
I
S
Financial Buy Large but Restructure & Sell (by
K Diminishing Parts) to Specialized
2 Restructuring of
Shares of Integrated Operators and New
L
E
“OldWorld” co. Generation,T&D assets Entrants
V
E
L
Operational
Buy Sell
3 Optimization of Optimize
Inneficiency Efficiency
Low Existing Assets
risk
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15. green capital
6. How Can We Help to Make Things Happen…? advisors
Specialized Energy & Renewables know-how & “hands-on” execution
MARKET TRENDS TRANSACTION BUSINESS STRATEGY
& INTELLIGENCE SUPPORT DESIGN & EXECUTION
Market views and analysis:
Highly Specialized Strategic plans & reviews
- Value chain & business Opportunity Identification Add-on opportunities
models
and pre-screening
- Regulation
- Technology Board & Executive team
- Strategic positioning & support
Competition
- Financing & investors views Initial Conversations
-…
Analysis, Indicative
Offers & Due
Diligence
Final Bids &
Negotiation
Operating plans & reviews
 Periodic reports on trends in key
markets; ad hoc specific reports Portfolio companies
Closing
 Investors & Fundraising optimization & restructuring
presentations 15

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6. How Can We Help to Make Things Happen…? advisors
Building Long-Term Value
Focus
Teamwork
Commitment
16

17. green capital
advisors
José Espinosa
Managing Partner
jespinosa@greencapitaladvisors.es