1. New Financing of Wind Energy Projects – Slide 1 EWEA – EWEC 2007, Milan, 9 th May 2007 New Wind Finance Initiatives from EIB Christopher Knowles Energy & Environment, Structured Finance and Advisory European Investment Bank

2. New Financing of Wind Energy Projects – Slide 2 European Wind Energy Conference Milan, 9th May 2007 CONTENTS  EIB & Energy Financing  Policy Background  EIB’s Loan Products  Working with Financial Intermediaries  Case Study I  Case Study II  Case Study III  Case Study IV

3. New Financing of Wind Energy Projects – Slide 3 European Wind Energy Conference Milan, 9th May 2007 THE EUROPEAN INVESTMENT BANK The European Union’s financing institution...  Created by the Treaty of Rome in 1958, to provide long-term finance for projects implementing the EU’s policies.  Subscribed capital: EUR 164.8bn  EIB shareholders: 27 Member States of the European Union.  EIB’s annual lending (2006): EUR 45.8bn.  Annual lending to the energy sector (2006): EUR 4.1 billion

4. New Financing of Wind Energy Projects – Slide 4 European Wind Energy Conference Milan, 9th May 2007 Renewable Energy Financing in 2006 amounted to EUR524m (32% of EIB’s financing of Electricity Generation projects) EIB’S ENERGY FINANCING IN 2006

5. New Financing of Wind Energy Projects – Slide 5 European Wind Energy Conference Milan, 9th May 2007 Wind Energy projects accounted for 70% of EIB’s Renewable Energy Financing in 2006 EIB’S RENEWABLE ENERGY FINANCING IN 2006

6. New Financing of Wind Energy Projects – Slide 6 European Wind Energy Conference Milan, 9th May 2007 EU Commitment: 20% reduction of GHG emissions by 2020 compared to 1990 EU target: Renewable Energy to account for 20% of EU energy mix by 2020 (up from less than 7% in 2005) Diversification of energy sources in order to secure energy supply Combating pollution and energy dependence: Energy accounts for 80% of greenhouse gas emissions in the EU (European Environment Agency) EU POLICY CONTEXT

7. New Financing of Wind Energy Projects – Slide 7 European Wind Energy Conference Milan, 9th May 2007 RE to account for at least 50% of EIB’s lending for Electricity Generation Wind likely to continue to be the main focus for RE lending Annual Target of EUR 6-800m for RE projects EIB’S TARGETS FOR RENEWABLE ENERGY

8. New Financing of Wind Energy Projects – Slide 8 European Wind Energy Conference Milan, 9th May 2007 Equity/Investment Funds Carbon Finance: Multilateral Carbon Credit Fund - MCCF Carbon Fund for Europe – IBRD EIB – KfW Carbon Finance programme Post 2012 (coming soon) Debt EIB’S Menu

9. New Financing of Wind Energy Projects – Slide 9 European Wind Energy Conference Milan, 9th May 2007 Corporate Loans and Project Finance Loan term up to economic life of the assets Loan amount generally up to 50% of eligible project costs Senior and subordinated loans EIB’S LOAN PRODUCTS General Terms: Under the Climate Change Finance Facility (CCFF), EIB can finance up to 75% of eligible project costs Sub-investment grade loans fall under Structured Facility Finance (SFF): higher risk margin and loan amount capped at 200m EUR

10. New Financing of Wind Energy Projects – Slide 10 European Wind Energy Conference Milan, 9th May 2007 Corporate Loans and Project Finance Project could consist of single or multiple sites Direct Investment Loans EIB’S LOAN PRODUCTS (2) Comprehensive loan appraisal justified by project size Large-Scale Projects (typically > 50m EUR investment cost): Where EIB takes full project risk, loan may fall under SFF => EIB loan amount capped at 200m EUR (maximum amount could be lower depending on riskiness of project)

11. New Financing of Wind Energy Projects – Slide 11 European Wind Energy Conference Milan, 9th May 2007 Traditionally, intermediaries were financial entities and => no project risk for EIB. No longer so. Programme or Framework loan to corporate or intermediary EIB’S LOAN PRODUCTS (3) EIB willing to provide loan facilities to developers for bundling small-scale projects Small-to-Medium Scale Projects (typically < 50m EUR investment cost): EIB Strategy: Increase exposure to small-to-medium scale wind energy projects through intermediated loans on a risk- sharing basis and facilities for developers.

12. New Financing of Wind Energy Projects – Slide 12 European Wind Energy Conference Milan, 9th May 2007 Multi-scheme facilities for small-scale wind projects Project risk assumed by intermediaries OR EIB shares project risk WORKING WITH FINANCIAL INTERMEDIARIES EIB will agree streamlined appraisal process with intermediaries => expertise of intermediary in the wind sector is key in case of EIB risk

13. New Financing of Wind Energy Projects – Slide 13 European Wind Energy Conference Milan, 9th May 2007 CASE STUDY I: LARGE PROJECT FINANCE  240MW onshore windfarm project in 5 sites  Off-take agreement with TSO  Total project cost = 390m EUR  20 year project  Debt:Equity = 90:10  EIB loan: 170m EUR project finance loan secured on project’s assets and revenues  Pari passu with other senior lenders  Loan Term: 18 years

14. New Financing of Wind Energy Projects – Slide 14 European Wind Energy Conference Milan, 9th May 2007 CASE STUDY II: INTERMEDIATED FRAMEWORK FACILITY  Framework loan to finance renewable energy projects, mainly wind energy, in large WE country  Loan intermediated by specialised subsidiary of major bank  Total Facility Amount: 300m EUR  EIB loan amount: 100m EUR  Loan Term: 15 years  Projects financed by EIB must meet preset criteria => streamlined appraisal process

15. New Financing of Wind Energy Projects – Slide 15 European Wind Energy Conference Milan, 9th May 2007 CASE STUDY III: LARGE CORPORATE FINANCE  Corporate loan to a major Western European electricity producer to finance 3-year investment programme in wind energy  Total Programme Cost = 1.1bn EUR  EIB loan amount: 450m EUR  2 Tranches:  Tranche A: 350m EUR 10 year tenor, corporate risk  Tranche B: 100m EUR 15 year tenor, bank guaranteed

16. New Financing of Wind Energy Projects – Slide 16 European Wind Energy Conference Milan, 9th May 2007 CASE STUDY IV: RISK SHARING FRAMEWORK FACILITY  Framework loan to finance on-shore wind on a Pan-EU basis  Co-financing arrangement with a leading PF Bank active in RE  Total Facility Amount: 200m EUR; provided equally  Individual loan tenors of 15 years  EIB assuming full project risk, with pricing benefits for individual projects being financed  Co-financier acts as Facility Agent  Projects financed by EIB must meet preset criteria  Co-financier responsible for identifying eligible projects  Streamlined project appraisal process 

17. New Financing of Wind Energy Projects – Slide 17 European Wind Energy Conference Milan, 9th May 2007 http://www.eib.org Address: 100, boulevard Konrad Adenauer, L-2950 Luxembourg Contact: Chris Knowles Tel: 00.352.4379 7306 Fax: 00.352.4379 7292 e-mail: c.knowles@eib.org