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Consolidation in offshore wind Max Ter Linden, RBS New Energy Technologies Group

Consolidation in offshore wind Max Ter Linden, RBS New Energy Technologies Group. EWEA Offshore, Stockholm, September 2009. Dewind. China Wind Power. Vestas. CWP. USD 50m. HKD 600m. EUR 817m. 600 MW wind project. Advisor on sale to Daewoo Shipping. ABB equity raising.

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Consolidation in offshore wind Max Ter Linden, RBS New Energy Technologies Group

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  1. Consolidation in offshore windMax Ter Linden, RBS New Energy Technologies Group EWEA Offshore, Stockholm, September 2009

  2. Dewind China Wind Power Vestas CWP USD 50m HKD 600m EUR 817m 600 MW wind project Advisor on sale to Daewoo Shipping ABB equity raising ABB equity raising Advisor on sale to CEZ 2009 2009 2009 2008 USA China Denmark Romania Masdar Ecotecnia Suzlon Bonus EUR 120m EUR 350m EUR 1.3b Undisclosed Advisor on WinWinD investment Advisor on sale to Alstom Advisor on Repower acquisition Advisor on sale to Siemens 2008 2007 2007 2004 Finland Spain Germany Denmark RBS (ABN AMRO) is a leading investment bank in in wind power

  3. The economics of offshore wind vis-à-vis alternatives Source: RBS analysis

  4. The financial crisis is affecting the renewables sector less than utilities -11.2% -33.0% -56.5% Source: Factset

  5. The value drivers for offshore wind are challenging today… • Cost of EUR 2500- 3500 per kW • Limited competition equipment and service suppliers • Electricity demand down 5-10% • Generally weak electricity prices today at EUR 40-50 per MWh • Good support schemes in Germany, UK and Belgium • EUR 10-15 per ton today • Kyoto scheme ends in 2012 • New scheme in Copenhagen uncertain • Project finance market down 50% • Utilities reconsidering Capex plans • Performance bonds difficult to procure • Governments and TSOs developing schemes • Schemes differ significantly and national focus • Uncertainty in UK and in Germany after 2015 Capex Tariff Low carbon prices Limited availability of funding Grid uncertainty

  6. …resulting in four key offshore wind M&A trends • Balance sheet is key for equipment suppliers • Capital for manufacturing and working capital • Procurement of performance bonds • Funding difficult for large projects despite scale advantage • Teaming up for projects, medium-sized utilities can also be friends • Turbine makers less keen on backward integration • If you can’t get a competitive EPC, do it yourself and provide a wrap • Buy a boat if you don’t like the rental business • Go PMG or direct drive • Alternatively something different with standard components Big is beautiful Small is beautiful Outsmart your supply chain Technology itch

  7. Turbine supply Installation services Project development Construction and operation Component manufacturing Horizontal consolidation in offshore is accelerating… • Ramp up in manufacturing and working capital • Investors primarily from LLCCs • For large projects utilities team up or seek financial co-investors • e.g. Statoil Hydro - Statkraft or Masdar into London Array (EON / Dong) • Turbine manufacturers acquiring specialized offshore players • e.g. GE-Scanwind, XEMC - Darwind • Contractors stepping up wind effort as infra and oil & gas slow down • Developers team up with utilities • E.G. PNE - DONG, UK third round

  8. Turbine supply Installation services Project development Construction and operation Component manufacturing …while vertical integration is coming back • Component makers to integrate forward into turbine supply • e.g. Alstom, Areva, Dongfang • Utilities becoming involved earlier in project development buying distressed projects and developing these further • Utilities less keen on buying developers • Companies looking for OEM positions • e.g. Ship maker DSME- Dewind • Developers integrating backward into turbine making • e.g. BARD • Utilities integrating backwards into EPC business and installation, possibly turbines • e.g. Dong – A2Sea

  9. Thank youContact details:max.ter.linden@rbs.com+31 20 628 1249

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