european energy and nordic power partners presentation 2014 · presentation 2014 res...

European Energy and

Nordic Power Partners

Presentation 2014

200 kW, Johannesburg, South Africa

www.nordicpp.com Presentation 2014

Our development activities

Introduction to the European Energy Group

European Energy

European Energy A/S was founded in 2004 by Knud Erik

Andersen and Mikael Dystrup Pedersen. The Company is a

privately owned Danish company operating in the renewable

energy sector

Since 2004 until 30.9.2014 we have developed, constructed

or invested in:

56 onshore wind farms

19 solar farms

corresponding to a total investment of EUR 680M and

520 MW capacity

Equity has increased sharply over the last 10 years

Equity 2004: EUR 4M

Equity 2013: EUR 53M

Equity 2014E: EUR 59M

Operating asset portfolio:

Total capacity (partially owned): 364 MW

Owned by EE: 124 MW

Assets managed by EE: 404 MW

Extensive project pipeline exceeding 2,700 MW

Approx. 1,200 MW of the pipeline relates to near-shore

wind projects

Equity growth

4M

52M

59M

-

10.000

20.000

30.000

40.000

50.000

60.000

70.000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E

Equity

520 MW

680 EURM

0

100

200

300

400

500

600

700

800

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

MW EURM


Business model

DEVELOP

FINANCE

CONSTRUCT

Partial

sale of

turn-key

project

Sale of

electricity

ASSET

MANAGEMENT

European Energy’s business model is based on:

• sale of turn-key projects primarily developed by the use of in-house competencies

• sale of electricity generated by the renewable energy power plants and

• asset management of wind and solar farms


4

Business Model

• Construct project

financing via various

ownership models

• Construct renewable

energy plants

• B2B power sales to

utility companies via

power purchase

agreements

• Administration of

power plant

operations

• Partial sell-off to third

parties, usually 50% -

80% of the assets

European Energy & Nordic Power Partners holistic value chain approach

Traditional focus

1 - 6 months 1 - 6 months 20 - 30 years

Politics / law

making Financing Farm

Project

development

Power sales

Partial sell-off

• Ensuring sound

judicial surroundings

for investments

• Designate

geographical areas

for renewable energy

Cooperation with

partners on:

• Land lease and

power purchase

agreements

• Turbines / Modules

• Operations

agreements

• Production estimates

by independent

verifiers

• Wind / solar studies

10 - 30 months

The business model extends the financial investment case with deep know-how in renewable energy project development,

construction, operation, and key local insight in buyers of projects. Continuous risk-evaluation activities are carried out

throughout the whole development period, particularly in the initial market access and initial project assessment stages.

Ongoing

P

h

a

s

e

s

D

e

t

a

i

l

s

Time

Frame

Risk

Mgmt.

Financing through non-

recourse loans

Full service O&M

against operative risk

Guaranteed tariffs or

PPAs

Project-specific risk

assessment

Preliminary country-

specific study


Corporate structure and ownership

Board of directors Corporate structure

Knud Erik Andersen, CEO and founder

Education: Master of Science from DTU

Experience: Founder European Energy A/S in 2004. Co-

founder and CEO of Inside Technology A/S which was sold to

Kontron AG in 2003

Jens-Peter Zink, Executive VP

Education: Cand.merc.aud (accountant) from Copenhagen

Business School

Experience: Joined European Energy in 2005. Prior to joining

European Energy Jens-Peter worked ten years for KPMG

Denmark in various positions including Manager M&A

Mikael Dystrup Pedersen, CTO, Chairman and founder

Education: Master of Science in Electrical Engineering, DTU

Experience: Joined European Energy in 2004. Prior to joining

European Energy Mikael worked for Sentic A/S (CTO Wind

Turbine Controller) and Inside Technology (CTO Box Products

Inside). Mikael is also co-founder of Inside Technology A/S

and Xytel Systems A/S European Energy A/S is the parent company of the group

European Energy A/S owns several subsidiaries that in turn own

additional subsidiaries/associates

In addition, European Energy A/S owns several subsidiaries and

associates directly

European Energy A/S

Illustrative overview

European Energy A/S is fully owned by the board of directors


Climate change has increased public awareness about

RES and strengthened support for expanded capacity

In line with the growth in population and increased global

wealth, electricity consumption is assumed to increase

significantly - Global energy demand is expected to grow by one third by 2035

Populations, notably in Europe, are critical towards nuclear

power production

Pension savers preoccupied with socially responsible

management of savings

Air pollution around major cities in China forces the

Chinese government to stimulate renewable investments

Market drivers – PEST analysis

Many governments wish to reduce dependency on

fragile states, eastern European countries wish to

reduce dependency on Russia

The recent nuclear accident in Japan has increased

political will to phase out nuclear power

Focus on job creation from new business segments

based on renewable energy

On the other hand

Governments are phasing out/reducing the levels of

subsidy for Renewable Energy Sources (“RES”)

Prices of CO2 quotas have been low due to lack of

political will

Overall implication

Long-term interest rates have been pushed down and

investors seek yield - While government bonds yield 2-3%, renewable energy

projects yield 5-6%

- Operational infrastructure alternative to high yield bonds can

provide inflation protection

Institutional investments in European renewable energy

projects have increased since 2008

Institutional investors are increasingly focused on

developing products appropriate for renewables, which

is assumed to ease project financing in the future

further

Overall implication

The reduction of

subsidy levels

reduces RES

investment

activity on the

short- and

medium term

New types of

investors with

appetite for RES

increases liquidity

and improves

financing

opportunity which

increase RES

investment

activity

Population

growth will

increase the

demand for

electricity, but not

necessarily RES.

Therefore no

direct positive

influence on RES

investment

activity

Decreasing

hardware prices

makes RES

increasingly

attractive as

sources of

electricity. This

influences RES

activity levels

positively

Electricity production from “tried and tested” technology

has become increasingly competitive throughout the

past 5-7 years

Some RES are expected to reach grid parity – i.e.

marginal production price becomes competitive with

fossil fuelled electricity production within the next 3-5

years

The competitiveness from onshore wind leads to an

expected CAGR of 10% till 2030 with a global installed

capacity of 1.6 TW

Overcapacity among hardware producers is driving

down prices

Phasing out conventional (old) power plants increases

demand for new sources of electricity

Overall implication Overall implication

Economic trends

Technological trends

Political trends

Social trends


Technological development reduces subsidy dependence

Wind Solar

New investments will be fuelled by increasingly competitive investment costs –

30% and 40% reduction for onshore and offshore wind between 2012 and 2030

Analysts at Bloomberg and MAKE consult expect onshore wind turbines to reach

“grid parity” within the next 2-4 years

Price per installed capacity has decreased and efficiency increased

In some developing countries we already experience “diesel parity” from solar

PV electricity production

0

20

40

60

80

100

120

1990 1995 2000 2005 2010 2015 2020

Fossil fuel Renewable energy

Cost of energy (EUR/MWh)

Subsidy

element

Sources: Bloomberg New Energy Finance, GTM Research

MWh/MW Investment cost (EUR/MW) Investment cost (EUR/MW)

- 2 4

1998

2001

2004

2007

2012

2014

Grid

parity

0,80

0,90

1,00

1,10

1,20

1,30

1,40

1,50

2009 2010 2011 2012 2013 2014

EU

R /

W

Wind

0

1

2

3

4

5

6

2008 2009 2010 2011 2012 2013 2014

EU

R /

Wp

Year

Solar


RES competitiveness in 2014

“The wholesale price for Futures is about EUR

0,04/kWh. This price mainly covers the short-term

operating costs of the power plants, but not the

investment costs. The full cost of a new coal-or gas-fired

power plant will be 7 to 11 eurocents / kWh.”

Sigmar Gabriel, Vice-Chancellor and Federal Minister of Economics and

Energy of Germany, January 17 2014

“The government will guarantee the nuclear

powerplant´a price of up to 92.50* pounds per

megawatt-hour of electricity for 35 years, more than

twice the current market rate, EDF and the British

government said on Monday”

Reuters, October 21 2013

Knud-Erik Andersen, CEO, European Energy, January 2014

* Corresponding to EUR 112.57 MWh (0,.125/kWh)

Prices for electricity by source (eurocent/kWh)

7

11,25

3,9

11

0,67

0

2

4

6

8

10

12

German fossil fuel basedelectricity production

UK nuclear 35-year PPA Denmark market + subsidy(25 yr. annual avg.)

“Onshore wind turbines in Denmark receive market price

(EUR 0,039/kWh) and a subsidy corresponding to EUR

0,0067/kWh per year if evenly distributed over the

lifetime of a turbine (25 years)”

http://uk.reuters.com/article/2013/10/21/uk-britain-nuclear-hinkley-idUKBRE99J03X20131021


R

R

R R R

R R

R Solar PV projects in the EE

pipeline

Wind projects in the EE

pipeline

R R R R R R

Diversified pipeline onshore and near-shore > 2,700 MW

Wind projects

Total wind power 180

Solar PV projects

Total Solar PV 25

Total wind power and PV ~205

Wind projects

Total onshore wind capacity ~1,066

Total near-shore wind capacity ~1,200

TOTAL WIND CAPACITY ~2,266

Solar PV projects

Total Solar PV capacity 275

Total wind and SolarPV capcity ~2,541

Excluding the NPP pipeline (not to be disclosed)

http://europeanenergy.dk/en/home.html


Danish near-shore project development – focus on the coastlines

Near-shore wind farms

(Jutland), Denmark

JAMMERBUGT NORD

JAMMERBUGTEN

HANSTHOLM ØST

In 2012, EE applied to the

Danish Energy Agency

under the ”open door”

legislation in order to get

permission to investigate

the business potential in 5

near shore locations in

Denmark

The total potential volume

of near-shore projects in

Denmark exceeds 1,200

MW

In 2013 the Danish

Energy Agency published

the tender process for six

near shore wind farms

EE has secured the best

locations with superior

wind resources in Omø

South and Jammerland

Bay

The two projects

represent a potential of

560+ MW new capacity

and a total construction

investment in the excess

of 1.2 billion euro.

JUTLAND

ZEALAND

Near-shore Wind farms (Zealand), Denmark

OMØ SOUTH

• 320 MW Capacity

• Orbicon selected as EIA

sub-contractor

• Geo-physic survey completed

• EIA report finalized in Q1 2015

JAMMERLAND BAY • 240 MW Capacity

• Orbicon A/S selected as EIA

sub-contractor

• Geo-physic survey completed

• EIA report finalized in Q2 2015


Nordic Power Partners

OECD DAC Countries - countries and territories eligible to

receive official development assistance (ODA) – NPP focus

Joint Venture between European

Energy and the Danish Climate

Investment Fund

The value proposition is to

develop wind and solar

photovoltaic projects from green

field until ready-to-build stage

Geographical scope is emerging

markets and developing countries

The projects are developed

through the successful business

model of European Energy and

by utilizing IFU’s vast experience

in investments in such countries


Climate change has increased public awareness about

RES and strengthened support for expanded capacity

In line with the growth in population and increased global

wealth, electricity consumption is assumed to increase

significantly - Global energy demand is expected to grow by one third by 2035

Air pollution around major cities in China forces the

Chinese government to stimulate renewable investments

Emerging markets often have more focus on development

than the visible impact of turbines or solarparks

On the other hand

Corruption

PEST analysis – Emerging Markets – all up from low level

Many emerging markets are suffering from the

consequences of lack of electricity

The cost of lacking or unstable electricity supply is

many times higher than RE generation cost.

Fast electrical expansion is only possible with Diesel or

with RE, of which RE is cheaper. In many countries RE

is even cheaper than the existing generation capacity

Distributed energy ensures energy and employment

outside the cities and serves as regional development

engine

On the other hand

Corruption and lack of government

Unstable political environment

Overall implication Long-term interest rates have been pushed down and

investors seek yield

Institutional investments in European renewable energy

projects have increased since 2008

Increased investments in emerging markets

Institutional investors are increasingly focused on

developing products appropriate for renewables, which

is assumed to ease project financing in the future

further

On the other hand

Unstable political environment

Closed markets

Overall implication

Lack of Energy.

RE is the

cheapest

technology for

quick fixes

Corruption and

unstable political

is not good for

long term

investment

New types of

investors with

appetite for RES

increases liquidity

and improves

financing

opportunity which

increase RES

investment

activity

Population

growth will

increase the

demand for

electricity, but not

necessarily RES.

Therefore no

direct positive

influence on RES

investment

activity

Decreasing

hardware prices

makes RES

increasingly

attractive as

sources of

electricity. This

influences RES

activity levels

positively

Electricity production from “tried and tested” technology

has become increasingly competitive throughout the

past 5-7 years

Some RES are expected to reach grid parity – i.e.

marginal production price becomes competitive with

fossil fuelled electricity production within the next 3-5

years

The competitiveness from onshore wind leads to an

expected CAGR of 10% till 2030 with a global installed

capacity of 1.6 TW

Overcapacity among hardware producers is driving

down prices

Phasing out conventional (old) power plants increases

demand for new sources of electricity

Overall implication Overall implication

Economic trends

Technological trends

Political trends

Social trends

www.nordicpp.com Presentation 2014 Presentation 2010

Why is EE and IFU/DCIF a good match?

European Energy

Long term project development

track record

Operational experience

Financing track record

Strong Engineering background

Deep technical insight in PV and

Wind

Legal experience

International network within RE

IFU & DCIF

International track record

Local offices

Danish State ownership

Financial strength

International network with

governments

Experience with public donor

financing institutions

Focus on investments in already

developed projects


NPP Achievements

The first two solar PV projects on the Maldives are

solely awaiting administrative permits

The development of a 82 MW wind project in Jordan

has progressed

The development pipeline exceeds 200 MW

Construction of the first two projects on the Maldives

will be initiated

Further expansion of the pipeline on the Maldives

First three quarters of 2014

Expectations for the rest of 2014 / beginning of 2015

Thank You for Your attention!

Nordic Power Partners P/S

Gyngemose Parkvej 50

2860 Søborg

Denmark

Tel.: +45 88 70 82 16

Fax: +45 88 70 82 15

www.nordicpowerpartners.com

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