International Electric Power

Project Phoenix Waste-to-Energy Project

Haiti

AND

IEP-Morgan Stanley

Caribbean Renewable Energy Investment Initiative

PLATTS JANUARY 2013

Project Phoenix • Earthquake Effects • Mutual Goals • Current Conditions in Haiti’s Waste and Energy Sectors • Project Phoenix Solution • Major Benefits • Lessons learned

IEP and Morgan Stanley Caribbean Initiative • Caribbean Overview • $1 Billion Investment Capital • Situational Assessment • Offer and Conditions

Topics

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• On January 12th, 2010 Haiti experienced a catastrophic magnitude 7.0 earthquake with its epicenter 16 miles west of Port-au-Prince.

• Over 50 aftershocks measuring 4.5 in magnitude or greater were recorded in the following weeks.

• Resulting in more than $7.8 billion in damage, or 120% of the country’s GDP.

• 250,000 residences and 30,000 commercial buildings were either destroyed or severely damaged.

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People Affected by the Earthquake

Deaths 300,000

Injuries 300,000

Left Homeless 1,000,000+

Project Phoenix Earthquake Effects

Produce cost effective and efficient electricity Effectively use the indigenous fuels of the country Provide clean and sanitary conditions to promote economic and social growth Implement Project Phoenix over 2 years PPV between IEP and GOH - MSA and PPA signed on March 31, 2012

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Project Phoenix Mutual Goals

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• Haiti is short at least 500 MW • 235 MW of installed capacity, but

only 110 MW available • Average tariffs of $0.34 per kWh • 90% derived from oil-fired plants

10% from one hydro facility • 100-200 MW planned over next 5 years • Unconnected T&D system; captures

only 25-35% of usage fees • Over use small generators due to lack of

dependable dispatch • EDH runs at a significant annual deficit • Sovereign guarantees not available

Project Phoenix Current Conditions in Energy

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• Approximately 2,000 tons of MSW produced daily in greater Port-au-Prince

• Approximately 1,000 tons collected daily – SMCRS – 600 -700 tons – Private Collectors – 300-400 tons

• Truitier Landfill is unlined and unregulated; supporting 700 families

• Storm events fill canals, waterways and discharge into the sea

• Uncollected waste contributes to spread of disease

• SMCRS is under capitalized and fraught with maintenance issues; over 1,000 employees have tested positive for tuberculosis and other respiratory illness

Project Phoenix Current Conditions in Waste

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Lignite Mining and Transportation – Lignite from the Central Plateau is used as a supplemental fuel, creating a new industry.

Waste Collection and Processing – Robust collection and processing of MSW uses the latest technology and leaves neighborhoods clean of refuse, reducing infections and disease.

Energy Generation – State-of-the-art WTE technology generates electricity in a safe, environmentally-friendly manner at costs well below fossil fuel plants in Haiti.

Project Phoenix Solution

X Design was revised to remove lignite and operate with 100% MSW. Output was reduced from 50MW to 30MW

• Monte Carlo analysis performed on the most current and reputable waste characterization studies – support a plant size of 16 -55 MW depending on the fuel composition.

• Variables include: • Waste quantities generated daily • Inclusion of plastic as fuel • Moisture content • Plant design and efficiency

Project Phoenix Understanding Waste as a Fuel Source

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Project Phoenix Integrated WTE Solution

• $250 Million • 30MW WTE Integrated Facility • 15KM north of Port-au-Prince on 400 acres • Expandable as population grows • 120 waste collection vehicles, 5 transfer

stations and 15,000 bins and containers • 4 processing lines able to sort 100% of MSW

removing varying degrees of recyclables • 60 acre landfill for ash and hazardous material • Organics pre-treated to improve boiler

performance • Plastics can be used as fuel or recycled to

produce value-add products • Can be modified for sanitary sludge and tires • Comprehensive Environmental Controls • Seawater Cooling

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• 1,600 direct jobs • PPA price - $0.17/kWh • Reduces dependency on oil imports • Reduces carbon footprint • Creates other revenue sources for GOH

– Recyclables – Cement additives – Purified water

• Significantly funds waste system • Cleans streets to encourage investment • Reduces air and water borne pathogens • Facilitates closure of unregulated landfill • Over $50 Million annual revenues/savings for the GOH • Demonstrates ability to attract private capital

Project Phoenix Major Benefits

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• Multinational Organizations: – Heavily influence investment decisions – Prefer competition even on privately funded projects – Have a strong say - but rarely provide leadership – Takes time to build trust with private sector – Expect you to be aligned to their plans

• Government of Haiti: – Highly motivated to find solutions – Working hard to dispel “business as usual” legacy – Cannot act unilaterally without multilateral concurrence – Does not have the capacity (resources) to evaluate complex transactions

• Private Investor: – Build consensus - but make sure you have a counterparty lead – Assure you have a motivated lead financial partner – Be patient, collaborative, transparent, and have sufficient development resources

Project Phoenix Lessons Learned

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IEP-Morgan Stanley Caribbean Renewable Energy

Investment Initiative

• Two Energy Categories: – Gas Producers – Trinidad and Tobago – Oil Importers – the rest!

• Two Political Categories: – Independent Entities – former Spanish, French and English colonies – Sovereign Entities - American, Dutch and French

• Energy Costs: – High due to reliance on imported oil

• Renewables: – Windward Island – excellent wind capacity – Leeward Islands – excellent solar capacity – All have varying capacity for biomass, waste-to-energy and small hydro

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IEP–Morgan Stanley Joint Proposal: Caribbean Overview

IEP–Morgan Stanley Joint Proposal: Caribbean Overview

COUNTRY• Exsiting Generation

EXISTING AND POTENTIAL GENERATION IN THE CARRIBBEAN

Sola

r

Win

d

Biom

ass

WTE

Coal

Gas

Oil Hydr

o

Geot

herm

al

COUNTRY• Exsiting Generation

1 Anguilla •2 Antigua and Barbuda • •3 Aruba •4 Bahamas • •5 Barbados • • •6 British Virgin Islands •7 Cayman Islands •8 Cuba • • • • • •9 Dominica • •

10 Dominican Republic • • • • • • •11 Grenada •12 Guadeloupe • •13 Haiti • •14 Jamaica • • • •15 Martinique • • • •16 Montserrat •17 Puerto Rico • • • •18 St. Kitts and Nevis •19 St. Lucia •20 St. Vincent and the Grenadines • •21 Trinidad and Tobago • •22 Turks and Caicos •23 US Virgin Islands •

IEP–Morgan Stanley Joint Proposal: $1 Billion Investment Capital

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• IEP and Morgan Stanley have teamed to promote $1 Billion in energy sector investment in Caribbean.

• Projects will consider host country power needs, natural resources, political landscape, and available credit.

• IEP will vet the project to determine the best technology fit and implementation strategy.

• PPV’s will be encouraged when appropriate.

$1Billion Project

Execution

Political & Credit Risk

Availability of

Financing

Natural Resources

& Technology

Viability

Energy Deficit

Current $/kWh Price

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Suitable Technologies • Coal • Gas (CNG) - Combined and Simple Cycle

• Thermal Gas or Oil • Waste-to-Energy (WTE) - Incineration or Biogas

• Geothermal • Small Hydro • Solar - PV

• Wind - Large and Small Turbines

Currently Unavailable • Nuclear, LNG, and Large Hydro

Countries Evaluated • Haiti • Dominican Republic • St. Lucia • Cayman Islands • Bahamas • St. Kitts & Nevis • Bonaire

Key Organizations • CARICOM • CREDP • CARILEC • OECS

IEP–Morgan Stanley Joint Proposal: Situational Assessment

Ashley

Financing Access to capital pool - $ 1 billion Able to finance 100% of project costs Access to global capital markets Access to credit enhancement programs

and instruments

Value Optimization Speed of execution and closing Financing and tax structuring to improve

returns Accurate revenue projections and stability

through hedging and low-cost financing High-quality, low-cost EPC contracting

Operational Efficiency Experienced low-cost generator Effective use of local resources

Conditions Project size 2 to 25MW

Ability to obtain by December 31, 2013:

1) Signed PPA for 20 years at a fixed off-take price of electricity:

Wind US$ 0.16 to 0.20 / kWh Solar US$ 0.20 to 0.24 / kWh WTE US$ 0.15 to 0.25 / kWh Small hydro US$ 0.16 to 0.26 / kWh Geothermal US$ 0.15 to 0.30 / kWh

2) Land control rights and documents

3) Resource availability study

4) Environmental Impact Assessment

5) Interconnection study

IEP–Morgan Stanley Joint Proposal: Offer and Conditions

INTERNATIONAL ELECTRIC POWER LLC

CONTACT INFORMATION

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603 Stanwix Street (P): +1-412-567-1491 Gateway Two, Suite 1825 (F): +1-412-567-1501 Pittsburgh, PA 15222, USA (E): info@iepwr.com (W): www.iepwr.com