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The Turkish American Chamber of Commerce & Industry and the Manhattan Chamber of Commerce

Renewable Energy: Opportunities and Challenges in Turkey & US

“Wind Energy- OpportunitiesChallenges and Projects in Turkey ”

Rubicon Cleantech

Serhat Devecioglu

May 20, 2009

Confidential Material- Copyright by Rubicon Cleantech

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Introduction

• Serhat Devecioglu

– Rubicon Cleantech - Founder

– BA Business Administration

– Member of Business Development Team Bilyap

– Turkiye Is Bankasi A.S. Board of Inspectors

– Finansbank A.S. Treasury Operations Group Head

• Serkan Oskay

– Rubicon Cleantech - Founder

– BS Mechanical Engineering, MBA

– VP of Business Development Bilyap

– Technology Commercialization experience in IT and telecom, Lucent Digital Radio

– Project Management and Funding experience for global projects

• Aysin Kurkcuoglu BS Mathematics and MA Marketing

• Baris Samir BS. Mechanical Engineering, MBA

• Sertac Orcun BS Civil Engineer and Computer Engineer

• Emre Bilgin BS Mechanical Engineer and MBA

• BILYAP Heat Exchangers – Heavy Industry Boilers, Strategic Partner


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Wind Energy is increasingly becoming vital for sustainable growth of world economy

Following drivers are behind the wider application of wind energy generation in EU and USA

• Increase in crude oil prices in 2008 (+$140/barrel) due to:

– Higher demand from China and India

– Political uncertainty in Middle East, Caucasus and CIS countries (former Soviet Union)

• Increased demand for alternative energy sources due to environmental awareness

• Eagerness to find new sources for energy cost savings

• Improved efficiency and reduced prices of wind energy


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Worldwide Wind Energy Development – Brief Outlook I


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Worldwide Wind Energy Development – Brief Outlook II


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Wind Energy Generation (2006) - Select Countries

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Average Installed Turbine Size


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Europe Wind Energy Overview - 2007

• Accounting for 8285 MW of installation, nearly 42% of the global total

• Germany and Spain continue to remain largest markets accounting for over half of the capacity installed

• Other significant growths in 2007 : France 888 MW, Italy 603 MW,Portugal 434 MW and the UK 427 MW

• Turkey nearly tripled its total installed capacity going from 76 MW to 225 MW in 2007

• Turkey reached 450 MW total installed capacity base currently !


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Drivers behind the proliferation of clean technologies in Turkey

• EU accession process of Turkey

– Turkey’s new cleantech legislation to increase integration with EU

– Turkey’s signature in Kyoto Protocol in 2009

• New financial resources promoting cleantech in Turkey

– New funding from EU and other global institutions to establish cleantech industry

– Increased foreign direct investments and their preferences for clean technologies

• Urgent need for new energy sources in Turkey because of high oil & natural gas dependent economy (48%)

• Reduced need for regulatory support due to increased cost effectiveness of cleantech

• Society’s increased awareness about environmental issues


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Turkey’s Wind Energy Potential – Average Wind Speed at 328 feet


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Turkey’s Wind Energy Potential – Capacity Factor at 164 feet

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Wind Energy Investment Opportunity in Turkey

• Based on REPA (Turkish Wind Energy Potential Atlas) 2007 there has been stated high efficient areas with 8,5 m/s wind speed and a potential of 5000 MW in addition to efficient areas with 7,0 m/s wind speed and a potential of 40000 MW.

• Any wind farm invesment with just medium level capacity factor* is offering a serious investment opportunity with 25% IRR and an untapped market of 8 - 10,000MW

• Wind power investments offer significant advantages over regular power investments where the investors have to bear the FX risk created by power sales in local currency and their investments in euro or USD. State’s power price in eurocent is hedging the FX risk for investors whereas the long-term purchase guarantee by the state is providing an opportunity to tap long-term credits for renewable projects.

• Parallel investments in both wind farms and their components’ production (Wind towers, wind turbines etc. ) optimize ROI and offer the opportunity of market domination throughout the neighbor countries besides Turkey.


*Capacity factor is one element in measuring the productivity of a wind turbine or any other power production

facility. It compares the plant's actual production over a given period of time with the amount of power the plant

would have produced if it had run at full capacity for the same amount of time.

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Law on Utilization of Renewable Energy Resources for the Purpose of Generating Electrical Energy - 1

Law No. 5346

Ratification Date: 10.05.2005

Enactment Date: 18.05.2005.

SECTION THREE

The Implementation of Procedures and Principles in the Electrical Energy Generation from Renewable Energy Resources

Principles of Implementation

Article 6−−−−

c) Until the end of 2011, the applicable price for the electrical energy to be purchased in pursuance with this law within each calendar year shall be the Turkish average wholesale electricity price in the previous year determined by EMRA. The Council of Ministers is entitled to raise this price up to 20 % at the beginning of each year. The current applicable price must be between 5 to 5,5 Euro Cents/kWh however licensed renewable energy generating companies are permitted to utilize prices over the 5,5 Euro Cents/kWh limit when they find better bids on the market.

Turkish average wholesale electricity price for 2008 is 12,82 Ykr/kWh (which is equal to 6 Euro Cents/kWh)

Nu : 1893/2 Date : 24.12.2008 Energy Market Regulatory Authority


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Law on Utilization of Renewable Energy Resources for the Purpose of Generating Electrical Energy - 2

Implementations related to Acquisition of Land

Article 8−−−− In case of utilization of all sorts of property which is under the possession of Forestry or Treasury or under the sovereignty of the State for the purpose of generating electrical energy from the renewable energy resources in the scope of this Law, these territories are permitted on the basis of its sale price, rented, given right of access or usage permission by Ministry of Environment and Forestry or Ministry of Finance. Fifty percent deduction shall be implemented for permission, rent, right of access and usage permission in the investment period. ORKOY and forestation special allowance revenue shall not be charged in forested land.


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Challenges in Turkey

• For the investors new to Turkish business environment it is hard to decide where to begin

• Only giants like BP establish their own country departments and apply directly for permits & licenses

• The biggest challenges are getting permits & licenses and connecting to the grid – Rubicon’s advantage is its strategic partner BILYAP with 19 years experience in Turkish energy sector !

• We suggest to buy already issued licenses – Because of the challenge above we provide wind license acquisition service

• We also provide project management service via our solution partner for the next steps


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Financing I – Rubicon’s sources through Turkey’s leading investment bank

INSTITUTION LOAN NAME LOAN TARGET LOAN AMOUNT LOAN AMOUNT (USD)

WORLD

BANK

Renewable

Energy

Loan

Provide finance for

renewable energy

generation projects $150,000,000 $150,000,000

EUROPEAN

INVESTMENT

BANK

SME LoanProvide finance for investment projects

carried out by SMEs in fixed capital, energy

and environment € 100,000,000 $136,000,000

COUNCIL OF

EUROPEAN

DEVELOPMENT

BANK

SME Loan Provide finance for investment projects

carried out by SMEs in fixed capital, energy

and environment € 100,000,000 $136,000,000

FRENCH

DEVELOPMENT

AGENCY

Environment

Loan

Provide finance for investment projects in

electricity generation through renewable

sources, energy productivity, Natural gas

delivery and prevention of industrial

pollution € 50,000,000 $68,000,000

EUROPEAN

INVESTMENT BANK

Environment and

Renewable

Energy Loan

Provide finance for investment projects in

electricity generation through renewable

sources, energy productivity, Natural gas

delivery and prevention of industrial

pollution € 150,000,000 $204,000,000

TOTAL OUTSTANDING LOANS ($) $694,000,000


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• 3 Renewable Energy Investment Funds from EU

• 1 Renewable Energy Investment Fund from Dubai

• 1 Renewable Energy Investment Fund from Kuwait

• Private Equity Groups

• Strategic and Angel Investors

Financing II – Rubicon’s sources through its international relations


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Rubicon Cleantech Projects & Services for Wind

• Wind license acquisition service to global investors

– For license acquisitions, Rubicon Cleantech is offering one contact point for all operational supports including legal and technical due diligence, pricing, negotiations and deal closure for a current portfolio with bankable wind measurements.

• Wind Tower Production

– Wind tower makes up 30% of the total turbine cost. Assuming that half of

– The total wind potential in Turkey would be realized within next decade,

– We can point out to a wind tower market of $1.5 billion.

– Today only a insignificant portion of wind tower demand is addressed by local production whereas a large portion of tower demand is covered with imports from European and Asian vendors.

– Together with tower machining equipment vendors, we prepared the feasibility and lay out of a production facility with an annual capacity of 100 towers. Currently, we are in negotiations with local equipment vendors capable of manufacturing similar load bearing components with high reliability.


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Q & A’sThank you,

Rubicon Cleantech TeamIstanbul, Turkey + 90 212.573.41.95 (O)

+ 90 533.488.04.80 (C)+ 90 212.267.16.76 (Fax)

New York, USA + 1 646.755.32.91 (O)+ 1 646.275.40.85 (C)+ 1 888.816.07.22 (Fax)

[email protected]

www.rubiconct.com


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