EWEC Athens Opportunities in Outsourcing O&M 01 March 2006

Page 2EWEC 2006-O&M Outsourcing Opportunities-TA-01 March 2006 Heard in the Field Addressable Market Agenda

Page 3EWEC 2006-O&M Outsourcing Opportunities-TA-01 March 2006 Emerging Opportunities for Outsourcing O&M Key Messages from the Market Companies are not entirely satisfied with vendor service during initial 5 years … Companies are looking for … … more transparency in O&M with explanations and shared analysis of problems … component level warranties, direct supply of replacements without vendor “markup” … consistent preventive repairs and improvements, better (low wind times etc) and more predictable scheduling i.e for major overhauls defined times Many companies considering increasing role in O&M after initial period Many companies believe they can get better performance from the park if do it themselves Heard From the Field

Page 4EWEC 2006-O&M Outsourcing Opportunities-TA-01 March 2006 Emerging Opportunities for Outsourcing O&M O&M Costs Years in Service Repairs and Maintenance Costs per MW by years in service (1 MW or greater) Source: ISET, Hahn Wind Study 2005 Subset of data showing 1 MW or greater machines in Germany Some US Comparisons: -Annual 30% utilization -Replacement Parts: €5,700 MW (parts only) -Large Repairs: €10,500 MW -Small Repairs: €15,800 MW Euro / MW / year Comments

Page 5EWEC 2006-O&M Outsourcing Opportunities-TA-01 March 2006 Emerging Opportunities for Outsourcing O&M What breaks? Electrics and Electronic most common point of failure – every 2 years Rotor Blade - approximately every 5 years and down for 6 days Gearbox and Generators – not often but down time of 8 days. Without a replacement a gearbox can take 8 to 10 weeks to repair Source: ISET, Hahn Wind Study 2005 Comments

Page 6EWEC 2006-O&M Outsourcing Opportunities-TA-01 March 2006 Emerging Opportunities for Outsourcing O&M Two points of view Vendors Owners / Operators ComponentsDevelopers Currently - future O&M cost models based on Vendor / independent engineer inputs Perception of overcharging for consumables More experienced companies have proprietary models and consider them competitive advantage Driving focus is on maximizing output - minimizing cost of ownership Predictability, Transparency Competitive offerings post warranty Balancing cost of turbine with profit from after sales – where are the profit pools Warranty and performance requirements – vs penalties and reputation Business model – in house vs outsource -Time to return components to OEM -Park or machine or component level -Proprietary Components or design Risk management, profit pools

Page 7EWEC 2006-O&M Outsourcing Opportunities-TA-01 March 2006 Emerging Opportunities for Outsourcing O&M Market Forces Years 1 to 2/5 reflect risk premium especially with new machines Vendors extending service 15 yr, 12 yr –Service is either it is profitable by itself or recovers discounted cost at time of sale –Allows management of problems and reduces exposure to bigger systemic failures Vendors reviewing in-source vs out- source options from manufacturing Global market overextending Vendor O&M capabilities ? Smaller developers do not have resources to do own O&M Increasing size and resources of developer / owners – have scale to support O&M, acquiring skills New groups of owners – financial based hold for a few years and then sell. Want vendor to maintain ….but what about after they sell … OwnersVendors

Page 8EWEC 2006-O&M Outsourcing Opportunities-TA-01 March 2006 Heard in the Field Addressable Market Agenda

Page 9EWEC 2006-O&M Outsourcing Opportunities-TA-01 March 2006 Emerging Opportunities for Outsourcing O&M Addressable Market Based on turbines which became operational starting in 2000 Based on expiration of Standard WOMA Includes Turbines which may have longer term Service agreement MW AssumptionsAddressable Market for Outsource O&M - EU Over 27,600 MW of addressable market between now and 2010 in EU countries

Page 10EWEC 2006-O&M Outsourcing Opportunities-TA-01 March 2006 Emerging Opportunities for Outsourcing O&M Market Opportunity – Post Warranty Vendors Owners / Operators Components OEM or ? O&M Companies Cheaper cost of ownership Options for 3rd party refurbishment Wider range of parts supply Component level warranty Competition for Independent service companies focused on improved output and lowering cost Owner Benefits

Page 11EWEC 2006-O&M Outsourcing Opportunities-TA-01 March 2006 Emerging Opportunities for Outsourcing O&M Market Opportunity – Post Warranty Vendors Owners / Operators Components OEM or ? O&M Companies Approved by insurance Trained teams Performance incentives Management of consumables SCADA / Condition monitoring integration Develop local supply chain for majority of components – spare parts and inventory management Establish “Component X Vendor Certified” where required Key Success Factors

Page 12EWEC 2006-O&M Outsourcing Opportunities-TA-01 March 2006 Emerging Opportunities for Outsourcing O&M Taking it One step further … Third party owns blades Leases directly to turbine owner Leasing company … Independent blade mfg, Vendor owned Leasing company, O&M company… Why do owners of parks have to own the blades ( airlines do not own engines..) ? Save 15-20% on capital costs Shift to 20 yr operating expense ( tax benefit..) Provide O&M, Blade cleaning, repair / replacement / improvement, Improve performance What ?Benefits Component Lease Asset Owner