Armstrong South East Asia Clean Energy Fund LP

Solar Energy South East Asia

Financing Small Power Projects

26th November 2014

Fund Executive Summary

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Armstrong Fund

Fund Size $164 m

Investors: IFC, AMC, EIB, DEG, FMO, Proparco, Asian Corporate, Unigestion & Obviam

Clean energy assets, using commercially proven technologyInvestment Size – US$ 5 – 25 million

Expansion capital - at least 90% investment in post-permitting projectsMajority control by investor syndicate - minority only if influential

SE Asian renewable energy & resource efficiency

Growing energy demand in SE Asia • Increasing need for clean & sustainable energy •Opportunity for greater resource efficiency • Region underserved by private capital •

Armstrong Fund established to meet this clear market opportunity

Fund Overview Investors

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Solar SE Asia Investment Activity

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Country Reasons for Delay in 2013/14 What Has Changed in 2014

Thailand

Policy: No issuance of FiT allocation for solar

• New FiT rate agreed (Aug 2014)• Approval committee formed for FiT allocation

Development: Rooftop hosts waiting for proof of concept

• Announced plans for significant PPA issuance.• Agreements being signed / tender processes

starting.

Philippines

Policy: Limited solar allocation, “First Come First Served” rule and funding mechanism for FiT not established

• FiT-ALL Fund & implementing regulations near finalization

• Announcement that Solar FiT quota to be increased to 450MW; formal increase and applicable tariff rate expected to be issued soon

Development: Off-takers slow to execute bilateral PPAs pending proof of concept

• First bilateral solar PV project with Socoteco I due to commence construction shortly

Indonesia Policy: Proposed increase to hydro FiT rate• New FiT rate and new implementation rules issued• Standard PPA to be issued to further streamline

process

� Increasing cost competitiveness & key policy commitments in Thailand and the Philippines now underpinning a base for strong growth inSoutheast Asia.

Solar Policy & Growth

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Source: Thailand Dept. of Alt. Energy (DEDE), Indonesia Ministry of Energy, Philippines Dept. of Energy and AAM estimates.

� Policy implementation …slow but progressing;

� Energy security concerns & cost competitiveness driving sharp rise in announced PPA issuance over next 12 months;

� Government sponsored FiT rates reflecting move to unsubsidized energy – Thailand (Fixed 17.6c /kWh 20 yrs), Philippines (~Fixed 20c/kWh 20 yrs);

� Grid parity allowing expansion into higher potential bilateral DG and industrial/commercial rooftop segments (13.0c/kWh + PPI);

Solar Tariffs & Competitiveness

� General power prices in all SEA markets forecast to rise >> CPI reflecting increasing cost of fuel mix (LNG & diesel) and need to reduce subsidies.

� Reductions in system costs and costs of financing continue.

� Solar PV power now possible @ $0.13/kWh (20% reduction YoY) driving growth at all scales – both public & private.

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Source: AAM estimates.

Sector Focused Funds Offer:

�Development funding;

�Contracted equity funding against clear milestones supports developer with flexible & responsive financing;

�Specialized financial & execution support.

Sector Focused Funds Seek:

�Experience + initial pipeline with clear entry and exit terms;

�Alignment & compatibility;

�Opportunity to build execution capacity and capability. Financial

ClosureFeasibility

Confirmed

PPA

Approval

• EPC

• Debt

• Legal

• Surveys

• Engineering

• Equity

financing

• Permits

• Licenses

• Site ID

• TeamR

isk / W

AC

C

Entry point

for Sector

Focused

Investors

More typical

entry point

for Investors

Financing Solar Matching Needs

For Investors

�Price competitiveness – move to growth potential of unsubsidized opportunities;

�Market maturing – increased knowledge of risks & opportunities;

�Price discovery shortening development timelines.

For Developers

�Financing increasingly flexible & available;

� Opportunity to build capacity – platform.

Combined

�Positive feedback of scale - lower costs, lower risks, lower financing costs, lower tariffs, increased demand.

Financing Solar Summary

Q&A

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