Accelerating the Integration of Renewables

Lorenzo Stocchino

August 31, 2010

GE Power & Water

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Agenda

1. Introduction- GE Energy

2. GE’s Renewable Portfolio

3. Developing Renewables- (Wind example)

4. GE GDSI

5. GDSI Case Study

• South Africa

• Best practice

6. Q&A

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• Power & Water• Energy Services• Oil & Gas

• Aviation• Enterprise Solutions• Healthcare• Transportation

• Aviation Financial Services• Commercial Finance• Energy Financial Services• GE Money• Treasury

• Cable • Film• International• Network• Sports & Olympics

• 4 businesses operating in more than 100 countries … 130+ years • Over 320,000 employees worldwide • 2009 revenue $157B, earnings $11,2B

• 4 businesses operating in more than 100 countries … 130+ years • Over 320,000 employees worldwide • 2009 revenue $157B, earnings $11,2B

GE’s portfolio

EnergyInfrastructure

Technology Infrastructure

GECapital

NBCUniversal

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GE Power & Water portfolio

Diverse technologies totaling $21 billion revenue in ‘09

Biogas

Water

Gas Turbines Steam

Nuclear Cleaner Coal

Wind

SolarRenewable Energy

Renewables – building on power generation technology & expertise

© 2010 General Electric Company.

4

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Renewable Energy Portfolio

1.5MW Series 2.5MW Series Solar

• Capacity factor leadership

• 98% availability

• Thin film technology

• Inverters & utility scale systems

Services

• Performance upgrades

• Asset life management

Grid Integration Leadership

$1.5B invested in technology

Offshore

• Reliable direct-drive

• Increased output & rotor dimension

© 2009 General Electric Company.

Plant Optimization System Wide Monitoring and Control

• Expanding MMW reach

• Advanced load controls

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Wind

GE’s renewable portfolio

GE Company Proprietary

• Leading N. American wind turbine supplier

• World’s most reliable …98% availability

• 13,500+ 1.5MW installed globally

Biogas

• Power range: 0.25 MW-4 MW

• Fuel flexibility: Biogas or a variety of renewable alternative gases

Solar

• Thin film technology• Grid friendly Inverters• Utility scale solutions

Opportunity for diversification

Geothermal

• Power Range 5-70MW

• >8000MW in 22 Countries

Renewable Energyin

Africa

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A snap shot…

Ø Legislation (FITs & REN targets)

Ø Partnerships

Ø Access to financing

Ø Streamlined permitting

Ø Grid Access

Ø Large & diverse resource

Ø Powering Off Grid

Ø Cleaner environment

Ø Alternative land use

Ø Improved market access

Ø Infrastructure

Ø Capital

Ø Development experience

Challenges…

Opportunities... Enablers…

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How do we get from here;

TO

To here ?

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a project that is sustainable• environmentally & socially

• technically

• economically – for energy buyer (COE)– for investor (ROE / IRR)

• financially– lenders (DSCR)

Sustainability = risk management

By developing;

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Developers need to bring together:

IPP Wind Plant

Utility

Lenders

Land owner

Planners

Loanagmt

O&Magmt

PPA

EPC

Landagmt

Bldprmt

Developer/Investor

Invstagmt

Operator

WTG, BOPvendors Key party

Keyagmt

Carbon developer

ERPA

ERPA – Emission reduction purchase Agreement

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Wind power project life time risk profile

High

turbine risk

wind risk

PPA risk

Customer

GE

Shared

Development Construction Debt Period 12 years

construction risk

development risk

Ris

k P

rofi

le (

p)

Mo

ney

at

risk

(U

S$)

Declining

Low

WTG warranty

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Development risk can sometimes be shared

Medium high

turbine risk

wind risk

PPA risk

Customer

GE

Shared

Development Construction Debt Period 12 years

construction risk

development risk

Ris

k P

rofi

le (

p)

Mo

ney

at

risk

(U

S$)

Declining

Low

WTG warranty

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Risk management

What can GE offer?• In selected cases, GE participates in the development consortium with;

– financial support– technical expertise

– grid studies– wind resource assessment

– carbon monetisation

• GE can structure a deal to best fit the needs of the customer/partner

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Global Development & Strategic Initiatives

StrategicAnalysis &

Support

JointVenturing

New ProductLaunches

ProjectFinancing

DealStructuring

ProjectDevelopment

SiteAcquisition

GDSI

CMC Sales

EHSMarketing

GDSI are part of a wider team

Finance Legal

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ü Technical Expertise- Access to world class technical support group and research center

üGE Relationship- Leveraging GE capabilities for the benefit of our customers –enhanced relationship with GE

ü People- 40 people globally with expertise in development, deal structuring, and finance

ü Access to partners- Strongrelationships with project developers and utilities

ü Knowledge- Project development expertise to support key projects

ü Products- Diverse energy solutions: thermal, wind, solar PV, Jenbacher engines

GDSI Value

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GDSI roles

Specific examples include:

• Project feasibility studies• Economic modeling • Permitting• Regulatory initiatives • Community relations• Transmission studies • Land resources • Financial start-up support • Facilitating/arranging debt & equity placement• Carbon monetization• Project sell down

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Development Construction Operation

2-5 years

Greenfield development

• Project definition

• Feasibility studies (technical, economic, financial)

• Site selection & acquisition

• Permitting & licensing

Core development

• Commercial structuring

• Contract negotiation§ Grid connect§ Fuel supply§ Power off-take§ EPC

• Financial structuring & credit evaluation

Financial structuring

• Financial engineering

• Debt & equity arrangement

• Develop or co-develop opportunistically

• Development financing

• MIP and GIP Funds

• Minority investment in international developers with a strong deal pipeline

Post COD

• Ownership & asset management

Finance1-2 years 20+ years

GDSI

GE Energy Financial Services

Project Development Timeline

GE Capital Markets

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Typical GDSI Model

ERPA – Emission reduction purchase Agreement

ProjectInitiation

FinancialClose

ConstructionStart

Fully developedProject

COD

Development Phase Construction Phase O&M Phase

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Typical GDSI Model

ERPA – Emission reduction purchase Agreement

ProjectInitiation

FinancialClose

ConstructionStart

Fully developedProject

COD

Development Phase Construction Phase O&M Phase

GDSI

GDSIExit/GDSIExit

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Typical GDSI Model

ERPA – Emission reduction purchase Agreement

ProjectInitiation

FinancialClose

ConstructionStart

Fully developedProject

COD

Development Phase Construction Phase O&M Phase

GDSI

GDSIPartiallyExit

GDSIExit

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• Sale Agreement– Assigning asset (Land, PPA, Grid) in

exchange for a lump sum payment

• Developer Option Agreement– Limited development support– Success fee upon exercise of option

• Joint Development Agreement (JDA)– Detailed contract outlining roles

& responsibilities, decision making, etc– GE equity stake

Complex

Simple

GE can structure a deal to best fit the needs of the customer/partner:

Structure flexibility to meet customer needs

Potential Deal Structures

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South Africa … A case study

June 08GDSI Africa PoleLeader appointed

2010REN Policy improvementsdebate with stakeholders … target 4Q 10

3Q 20111y wind data

Market Overview Drivers for GE participation

• SA is new market identified as GDSI target

• SA generates 2/3 of Africa’s electricity

• Installed capacity of 45GW, mostly coal

• Increasing gap between supply and demand … 2GW/y for next 20y

1. High CO2 footprint2. High energy demand growth3. Short term risk of supply interruption … 2011 -

20134. GE halo effect / Skin in the game5. Technical knowledge and Funding

March 2009FIT approved

2008REN Policy debate

June 091st partner on-board

May 09GTZ workshopCape Town

Nov 09GE Dev DayAdd’l JDAs in negotiation Aug 2010

Strong GDSI pipelineunder development

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GDSI

When a piece is missing…

• Finance

• Expertise§ development§ technical § project finance§ carbon monetization

• Name credibility

• Project site

• Global perspective network

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Project Development Experience

Selective examples

ofGDSI

projects

Project Country Plant Type MWsArklow Ireland 7x3.6MW Offshore wind 25Gunfleet Sands UK 30x3.6MW Offshore wind 108Cefn Croes UK 39x1.5MW Onshore wind 59Tappaghan UK 13x1.5MW Onshore wind 20Griffin UK 61x2.5, 8x1.5MW Onshore wind 165Ally France 26x1.5MW Onshore wind 39Cham de Cham Longe France 12x1.5MW Onshore wind 18La Navica & Dehesica Spain 29 x 1.5MW Onshore wind 59Baglan Bay UK 109H Gas CC 500 Atlantic US 107FA Gas CC 250Westbrook US 207FA Gas CC 520Dell US 207FA Gas CC 520McAdams US 207FA Gas CC 520Towantic US 207FA Gas CC 520Samalayuca Mexico 3x107FA Gas CC 700Uch Pakistan 309E Gas CC 560Paiton Indonesia 2x660 ST Pulverized Coal 1320

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Investment & partnership:

GE to Government (PPP):

üNew project development with GDSI

üStrategic partnerships: EPC s, Developers,

Distributors, VARs, Installers

üEmployment: training and skills transfer

üDirect business with power utilities: Wind, Solar,

Waste 2 Power, Geothermal

ü Advisor role on technology and funding

üSupply Chain: promote local content

üAfter sales Service: Repairs and Maintenance

Thank You

George NjengaGeorge.njenga@ge.com

Tel +254 20 2726222

Johannes Cilliersjohannes.cilliers@ge.com

Lorenzo StocchinoLorenzo.stocchino@ge.com