1. Financing of wind power developments within the context of market based support mechanisms and related political risks Presentation at EWEC 2006, Athen Finance & Insurance Session Inger-Anne Blindheim – GreenStream Network AS

2. Agenda Introduction to GreenStream Network The Swedish – Norwegian elcertificate market Case study: Austevoll Wind AS – 21 MW Conclusions

3. GreenStream Network Largest independent company within consulting and trade of CO 2 and green certificates in Northern Europe Annual trading volume of above 10 TWh green certificates Key competence: –Calculate and demonstrate green values –Analyse and optimize trading strategies for green values (certificates, CERs and EU allowances) –CDM/ JI project: PIN, PDD, registration and ERPAS or portfolio management of CERs –Development and financing of renewable energy projects – in co-operation with the owners and technical advisors For most windpower projects, green values are the key to profitability and financing Owned by the management (60%) and HSH Nordbank /HSH Gudme Investment Bank Annual turnover 2005: 1,8 million Euro – credit rating AAA 20 employes – offices in Norway, Sweden, Finland, Germany, France, Estonia and Lithuania Environmental Finance: Best Broker of the year 2004 and 2005 – trade of green certificates in Europe ex-UK

4. Outline of the Swedish-Nowegian elcertificate market (1/2) The Swedish elcertificate market started up in May 2003 Original target operation of a joint Swedish-Norwegian elcertificate market from January 1, 2006 - postponed to January 1, 2007......... Proposed to last up to 2030 Purpose: –release large scale investments in renewable energy, –decreased fossile fuel production; and –improved power balance

5. Outline of the Swedish-Nowegian elcertificate market (2/2) 15 years elcertificate production period per project Each power consumer (except energy intensive industry) obliged to consume a certain quota of renewable energy through elcertificates Increasing elcertificate quota level combined with penalty fee for non-compliance Elcertificates can be freely traded in the market: spot, futures, forwards Elcertificates can be accumulated and saved Technology neutral?

6. Time-schedule for the elcertificate market OctJanDecFebMarAprNovJuneMay Norway 20052006 15/02 (?)Lawproposal toparliament 20/06 (?)Approval 01/11–01/12possiblepublicreview andadditionallawmodification 17/3lawproposalto theparliament March-Junelawproposal attheenergycomittee 20/06Approval Sweden 20052006 JunJanDecNovOctFebMarAprMay Clarifylawprinciplesin coordinationwithNorway Clarifylawprinciplesin coordinationwithSweden Feb-Junelawproposal attheEnergycomittee OctJanDecFebMarAprNovJuneMay Norway 20052006 15/02 (?)Lawproposal toparliament 20/06 (?)Approval 01/11–01/12possiblepublicreview andadditionallawmodification 17/3lawproposalto theparliament March-Junelawproposal attheenergycomittee 20/06Approval Sweden 20052006 JunJanDecNovOctFebMarAprMay Clarifylawprinciplesin coordinationwithNorway Clarifylawprinciplesin coordinationwithSweden Feb-Junelawproposal attheEnergycomittee OctJanDecFebMarAprNovJuneMay Norway 20052006 15/02 (?)Lawproposal toparliament 20/06 (?)Approval 01/11–01/12possiblepublicreview andadditionallawmodification 17/3lawproposalto theparliament March-Junelawproposal attheenergycomittee 20/06Approval Sweden 20052006 JunJanDecNovOctFebMarAprMay Clarifylawprinciplesin coordinationwithNorway OctJanDecFebMarAprNovJuneMay Norway 20052006 15/02 (?)Lawproposal toparliament 20/06 (?)Approval 01/11–01/12possiblepublicreview andadditionallawmodification 17/3lawproposalto theparliament March-Junelawproposal attheenergycomittee 20/06Approval Sweden 20052006 JunJanDecNovOctFebMarAprMay OctJanDecFebMarAprNovJuneMay Norway 20052006 15/02 (?)Lawproposal toparliament 20/06 (?)Approval OctJanDecFebMarAprNovJuneMay Norway 20052006 15/02 (?)Lawproposal toparliament 20/06 (?)Approval OctJanDecFebMarAprNovJuneMay Norway 20052006 15/02 (?)Lawproposal toparliament 20/06 (?)Approval OctJanDecFebMarAprNovJuneMayOctJanDecFebMarAprNovJuneMay Norway 20052006 15/02 (?)Lawproposal toparliament 20/06 (?)Approval Norway 20052006 Norway 2005200620052006 15/02 (?)Lawproposal toparliament 20/06 (?)Approval 01/11–01/12possiblepublicreview andadditionallawmodification 17/3lawproposalto theparliament March-Junelawproposal attheenergycomittee 20/06Approval Sweden 20052006 JunJanDecNovOctFebMarAprMay 01/11–01/12possiblepublicreview andadditionallawmodification 17/3lawproposalto theparliament March-Junelawproposal attheenergycomittee 20/06Approval Sweden 20052006 JunJanDecNovOctFebMarAprMay 01/11–01/12possiblepublicreview andadditionallawmodification 17/3lawproposalto theparliament March-Junelawproposal attheEnergyCommittee 20/06Approval Sweden 20052006 JunJanDecNovOctFebMarAprMay Sweden 20052006 Sweden 2005200620052006 JunJanDecNovOctFebMarAprMay Clarifylawprinciplesin coordinationwithNorway Clarifylawprinciplesin coordinationwithNorway Clarifylawprinciplesin coordinationwithSweden Feb-Junelawproposal attheEnergyCommittee

7. Risk of market based incentives Political risk Price risk Hedging premiums

8. Price development – Nord-Pool over 30 days

9. Price development – power and elcertificate market SEK/MWh

10. Austevoll Vind AS – 21 MW, Norway Austevoll Vind AS

11. Austevoll Vind AS – Norway 3 small projects, total 21 MW located within a distance of 15 km Some of the best wind-parks in Norway: –Stable wind-speed of 7,9 to 8,3 m/s –Close to existing grid –Low infrastructure costs –Grid connection confirmed –Power deficit in the surrounding area –Mild weather-conditions and no icing –Increasing power prices –Elcertificates could contribute to approx. 40% increased income on top of the power prices –Internal rate of return on equity > 24%

12. Austevoll Vind AS – Norway Comparison elcertificate vs. investment support regime

13. Conclusions Properly adapted market based incentives with high ambition level for renewable energy may result in: –The most cost-efficient projects with lowest marginal cost will be developed first –Only the best projects will be developed –Higher return on investment for investors at the current maximum investent support level in the EU – 25 % –Renewable energy projects more competitive to fossile and nuclear power –In a market based power system, the elcertificate market will result in investments in new capacity, reducing the pressure for increased power prices for the consumers Price risk for market mechanisms may be handled through risk hedging, but the project owner looses part of the upside in return of safe sleep Political risk must be minimalized through: –Efficient political processes –A clear legal framework ensuring a predicable, long term market (minimum 20 years horizon) –Cross-border systems – one government can not change the market system itself Investment support regimes are subject to annual budget allocations, –Investments in the range of 10 – 15 TWh required to improve the Norwegian power balance will be a heavy burden on the annual budgets –Lead time for project development is 4 – 7 years. Will investors build up a sufficient project pipeline under an uncertain investment support scheme subject to annual government approvals?

14. Thank you for your attention! GreenStream Network Ltd. www.greenstream.net firstname.lastname@greenstream.net Erottajankatu 1Stureplan 4 CLysaker Torg 8Zur Bülte 12 FIN-00130 HelsinkiS-11435 StockholmN-1366 Lysaker33739 Bielefeld FinlandSwedenNorwayGermany Tel. +358 40 840 8000 Tel. +46 70 618 8003Tel. +47 6752 1131Tel. +49 173 601 0380 Fax +358 9 278 2600Fax +46 8 463 1010Fax +47 6752 1199Fax +49 521 8750 580 Please contact us: Project financeInger-Anne Blindheim Mob: + 47 480 39 511 Proj. fin./certificates/pol. riskArne JakobsenMob: + 47 920 89 032 Green certificates EuropeThomas MüllerMob: + 49 521 8750 484 CDM/JI Tommi TynjäläMob: + 358 40 840 8003 Trade of EU allowancesJussi NykänenMob: + 358 40 840 8001