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Executive Summary

129 MW (99+30) Wind Farm Project

Project Overview

The Project consists of building and operating a 129 MW wind power facility (divided in two wind parks of 99 and 30 MW each located in the same area) located in Dumesti and Romanesti villages at 22 km nord-west of the city Iasi on a favourable site in the North-East part of Romania (Moldova).

Feasibility study and the technical project performed by Institute of Power Engineering – the most experienced company in Romania;

Wind study performed by DEWI Gmbh – Deutsches Windenergie – Institut, Germany;

The electrical infrastructure works will be performed by Electrical Engineering Company ELCOMEX IEA

The civil works and roads – will be performed by STRABAG and VIAROM

The electrical equipments will be delivered by ALSTOM GRID, GE, SIEMENS and ELECTROTEL Alexandria

Equipment Following to wind park layout the project will use wind turbines generators (WTG) Vestas V112 3.0 MW. A binding firm offer has been received from Vestas under the following terms:

43 items VESTAS wind turbine generators V112 3.075 MW with a steel tower of a hub height of 119m.

Transportation, installation, commissioning and testing of Wind Turbines and the SCADA equipment.

A 15 year service and maintenance agreement (AOM 4000) with an annual base price: 75,000.00 EUR per Wind Turbine per year for a period of 10 years

Quotation net price per WTG (without VAT): 3,000,000 EUR

Grid Connection

All 43 turbines are to be connected through 220 km of underground 30 kV lines (LES) to a new 110/30kV park transformer substation. From the park substation, the connection to the main station is to be made with an underground 110kV line (LES) of 14 km. The project is planned to use an existing transformer FAI station of 220/110 kV located near the site (14 km from the park) to output the energy into the grid. The capacity is booked for this project through grid connection contract with the National Grid Operator (Transelectrica). Inside the existing main FAI station a 220/110 kV cell has to be installed.

Access roads County roads and additional roads are already present in the area and allow access to all project locations.

Land

The project is developed on an area of around 2,300 hectares agricultural land. However, the project is using only around 237 hectares of land divided as follows:

194 hectares secured with superficies rights with Local Council while 32.28 hectares secured with superficies rights with private owners for turbines, technical platforms, foundations, park transformer substation;

24.5 hectares secured by Decisions of Local Council for underground 30kV and 110kV cable lines (LES).

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Wind data

A Site related Wind Potential Analysis and Energy Assessment has been performed by:

DEWI Gmbh – Deutsches Windenergie – Institut, Germany in April 2012 and Dec 2012

Vestas in January 2013 The calculations were made on basis of wind data collected from two wind masts at site at the height of 40 m, during 23 months respectively at 80 m during 15.5 months. The long- term correlation with the data of the metrological station Iasi-LT resulted in an average long-term wind speed varying at the turbine positions between 6.2 m/s and 7.4 m/s at a hub height of 119 m.

WTG Vestas V112 Nr. of WTG 43 Hub height (m) 119 m Average Hub Height Wind Speed 6.7 – 7.2 m/s Overall Uncertainty in Energy Yield 15 %

Probability of

exceedance

GWh/ annum

Full load equiv. hours /annum/MW

Net Capacity factor (%)

DEWI VESTAS DEWI VESTAS DEWI VESTAS Net Annual

Energy Output

P50 352.5 400.6 2.732 3.106 31.2 35.4 P75 316.8 362.4 2.456 2.810 28.1 32.0 P90 284.7 328.0 2.207 2.543 25.3 29.0

Permitting Status

Urban planning certificate – obtained

Zonal Urban Plan – obtained

Topographical studies – completed

Geological study – completed

Environmental approval – positive

Grid Connection permit – obtained 2011

Grid Connection contract – obtained Feb 2012

Construction permit for the 110/30 kV internal park substation and underground 110kV line for connection the substation with the FAI station 220/110 kV – obtained Aug 2012

Construction permit for electric cell 110 KV in FAI station – obtained Aug 2012

Construction permit for the park and underground interconnection 30 KV line (LES) – obtained Sep 2012

ANRE set up authorisation – is to be obtained after financing sources are secured – estimated Oct 2013

Project Schedule

Financing arrangements – Q3 2013

Construction works starting date - Q4 2013

Turbines delivered to site – Q4 2013 – Q1 2014

Wind farm operation starting date – Q1 2014 (for 30 MW) and Q2 (for 99 MW)

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Financial Highlights

EUR th

Total CAPEX 170,000

Development costs 1,290

Turbine cost (including transport and installation) 129,000

Substation + cables 12,000

Foundations 9,000

Roads 7,000

Other costs 11,710 CAPEX/MW installed 1,318 Financing scheme: 100% 170,000

Equity (cash contribution) 15% 25,500 Amortized long term loan 85% 144,500

Profitability ratios Probability of Internal Rate of Return (%) Leverage 85%

Net Annual Energy Output

exceedance Equity Project

DEWI VESTAS DEWI VESTAS

P50 35.0 47.4 13.6 16.2

P75 25.7 37.7 11.6 14.1

P90 17.9 28.6 9.7 12.2

Profitability ratios Probability of Net Present Value (EUR th) Leverage 85%

Net Annual Energy Output

exceedance Equity Project

DEWI VESTAS DEWI VESTAS

P50 39.124 61.862 98.706 140.010

P75 21.945 43.953 69.180 107.310

P90 6.273 27.421 41.759 78.478 Note: the a/m ratios include a reduced support scheme announced by ANRE as follows: 1,5 GCs till 2017 and 0,75 GCs starting with 2018;

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Renewable Energy

Romanian Market

Overview

The European Commission promoted the so-called Third Legislative Package, the so-called “20/20/20 Package”,

that foresees that the share of RES in the total final energy consumption of the EU in year 2020 should be 20%. This

burden is distributed among member states according to various criteria that include the available potential and the

GDP per capita. The target for Romania has been agreed at 24%.

In the context of the accession of Romania to EU, decisions have been taken to encourage the exploitation

of internal E-RES in order to reduce imports and improving security of energy supply in compliance

with environmental rules. The strategy to exploit E-RES adopted the types of energy sources and the potential of

RES in Romania:

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Renewable energy source Annual energy potential Energy economic

equivalent

Application

Solar Energy

Thermal 60∙106 Gj 1433 Thermal energy

Photovoltaic 1200 GWh 103 Electricity

Wind Energy 23000 GWh 1973 Electricity

Hydro energy, out of which: 40000 GWh 3440 Electricity

Under 10 MW 6000 GWh 516 Electricity

Biomass 318∙106 GJ 7597 Thermal energy

Geothermal energy 7∙106 GJ 167 Thermal energy

Source NREAP

As an EU Member State, Romania has assumed (since the pre-accession negotiations phase) some commitments in terms of share of electricity from Renewable Energy Sources(RES) in the overall generation mix. The Romanian Government has fixed its own targets. Romania has adopted a support scheme for electricity from RES based on mandatory quotas and green certificates, unlike many European countries that have chosen to implement a feed-in tariff system.

Overview of primary support for RES-E in EU-27

Source: ECOFYS

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The Romanian Government has defined its action plan and additional incentive schemes in the field of electricity, heating and cooling, that are taken into account when defining the final energy consumption in the National Action Plan for Promotion of Renewable Energies (NREAP), submitted to the European Commission in June 2010. A synthetic table with the Romanian renewable energy targets is detailed below:

Romania Renewable Energy targets

Overall energy (electrical, heat &

cooling and transportation)

Electrical energy including large

hydro

Electrical energy excluding large hydro

24% 38% 20%

Calculated as total energy from

renewable sources (including heat,

electricity and transportation)

divided by the total final gross

energy consumption.

This percentage is legally binding to EU, as per the EU Directive (2009/28/EC) incorporated also in the NREAP submitted by Romania in 2010.

The total energy covers: electricity, heat and transportation (fuel).

The high level of RES in heating an cooling comes from quantification of wood burnt by households for heating.

Calculated as electrical energy from renewable sources (including large hydro capacities of over 10 MW each) divided by the final gross electricity consumption.

The target is national as (law 220/2008), set-up in order to achieve the EU target.

Calculated as electrical energy from

renewable sources (excluding large

hydro capacities of over 10 MW each)

divided by the final gross electricity

consumption.

The target is national (law 220/2008), setup in order to achieve the EU target.

In October 2008, the Romanian Parliament adopted the Law 220/2008, on establishment of the system for promotion of power generation from renewable energy sources. The Law 220/2008, as amended and supplemented by Law 139/2010 and later by EO 88/2011 as approved with amendments by Law 134/2012 subsequently republished, provides for a quota obligation system (i.e., the obligation of the supplier to acquire and hold a specified number of GCs) coupled with tradable GCs within a pre-established price band. Law 220 also sets the duration while the support scheme shall apply, including trial periods, upon accreditation by ANRE, provided that RES technologies are commissioned, respectively the refurbishments are made by the end of 2016, as follows:

• 15 years, for E-RES out of wind, solar, geothermal energy, biomass, bioliquids biogas, gas from waste, hydro energy produced in units with installed power of 10 MW or less;

• 10 years, for E-RES produced in hydro power units with installed capacity of 10 MW or less, refurbished; • 3 years, for E-RES produced in hydro power units with installed capacity of 10 MW or less, not refurbished.

The number of GCs for 1 MWh produced, as well as the level of proitability stipulated by Law 220 are presented for each E-RES category in the table below:

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RES GC number IRR

(%)

Overcompensation

level

with an installed

capacity up to 10 MW 3, for new plants

commissioned after 1

January 2004;

2, for refurbished plants;

0.5, commissioned before

1 January 2004

10,2 for new plants;

10,3 for refurbished

plants;

17,7 other

11,22 for new plants;

11,33 for refurbished

plants;

19,47 other

Wind 2 until 2017

1 after 2017

10.9 new plants

9.19 other

11,99 new plants;

10,109 other;

Solar 6 11,5 12,65

Geothermal 2 no indication no indication

Biomass 2 11,8 12,98

Bio-liquids 2 no indication no indication

Biogas 2 no indication no indication

Gas from waste 1 no indication no indication

Gas from waste water

treatment

1 11,8 12,98

Following to overcompensation report made by ANRE (Romanian Authority for Electricity), for the projects that are to be

commissioned after 01 01 2014 the support scheme is reduced to 3 GCs for PV, 2 GCs for small hydro and 1,5 GCs for wind

(until 2017) and 0,75 GCs starting with 2018. The Government decision is expected to be issued till the end of the year.

Green Certificates Market

Producers of RES-Electricity sell the GCs to electricity suppliers that have the obligation to purchase every year a number of GCs equal to the quota obligation set for the respective year multiplied by the amount of electricity supplied to final customers annually.

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\ The value of the green certificates traded on the market has been preserved within a band with a minimum trading value of EUR 27 and a maximum trading value of EUR 55 per green certificate indexed with the EU 27 average inflation rate recorded in December of the previous year by the National Energy Regulatory Agency. The failure of any electricity supplier to fulfill the annual quota obligations requires payment of an equivalent value of those GCs which were not purchased at a premium of EUR 110 for each un-purchased certificate.

The producers and suppliers of RES-Electricity may trade GCs on two different trading platforms which function in parallel to the electricity market being regulated and supervised by OPCOM:

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on the centralized green certificates market – is meant to develop the GCs market as a competitive, transparent and

non-discriminatory trading environment; the certificates are traded at a fixed price which is the closing price of the GC Centralized Market (in Romanian “pretul de inchidere al pietei centralizate de certificate verzi”) determined on the basis of the respective offers to buy and to sell submitted on the GC Centralized Market in that respective month.

on the green certificates bilateral contracts market - represents the sum of all executed bilateral contracts and the

price is freely negotiated by the parties (within the mandatory trading value range) Finally, the Law 220/2008 provides for GCs to be traded not only on the internal market but also on the European GCs market. This trading market is only open for the Romanian GCs if and when the national targets set forth for each calendar year have been met. Currently, the GCs market in Romania has not managed to achieve the indices set forth by the national strategy in this field and therefore the GCs remain to be traded only within Romania.

Permitting Procedure in Romania –General Overview In terms of E-RES energy EU states can be divided into four groups: developed markets, growing markets,

emerging markets and unexploited markets. Romania is in the emerging markets group, i.e. the group of markets

where the E-RES energy sector is in a preliminary phase of development, but where significant progress is being

made. Differences in the level of development of the E-RES energy sector are reflected in the different problems

encountered by investors.

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Romanian E-RES market statistics

As per the table detailed below at the end of 2012 the level of the E-RES quota acchieved in Romania was of

5,74% vs a mandatory quota of 12%. For the end of 2013 it is expected to raise up to 10,5% but still under the

mandatory quota of 14%. In the following years (2014-2020) the effective levels of the annual E-RES quotas are

estimated to be below the level of mandatory annual quotas as direct effect of the limitation of new E-RES

capacities to the levels establised through National Alocation Plan for Renewable Energy. This fact will have direct

impact over the price of the Green Certificates since they will be traded close to maximum level on the entire

period (EUR 55/GC + eurozone inflation).

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Renewable energy country attractiveness indices (ARI) Romania has preserved in the last year an honorable 13th place in the ARI at February 2013 being ahead of many

countries, such as Austria (33th ), Scandinavian countries, Poland, South Korea (etc.)

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Source: E&Y

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Each of these indexes consider on a weighted basis, the following

Source: E&Y