RES as a Growth Tool

1. RES as a Growth Tool • By George Kofinakos • Country Advisor > StormHarbour UK • CEO > Enolia Premium Capital Luxemburg • Vice Chairman > Enolia Energy

2. Contents RES Globally RES in Greece Growth Barriers in Greece Overview of Policy Instruments for RES Action Plan & De-Risking Conclusion

3. RES Globally

4. Global Warming World Average No data 0 93.9 tonnes CO2e per capita Industrialised Nations Average Source: World Resources Institute.; DB research Today’s atmospheric CO2 concentrations are higher than they have been for at least 900,000 years • Climate change is one of the greatest environmental, social and economic challenges the planet is facing • Global warming is evident from increases in global average air and ocean temperatures, widespread melting of snow and ice and rising global mean sea level • Concentration of CO2 in the atmosphere has increased by 30% from pre-industrial levels Concentration in 2008: 385 ppm Global CO2 emissions map

5. The Fight Against Climate Change

6. Who is Responsible for Global Warming?

7. Why is an active RES Policy valid Globally? This is a summary of some of the most important arguments for an active renewable energy promotion policy, valid for all countries, though to varying degrees: The current level of renewable energy in most countries is even lower than would be economically efficient at today's market prices. As newcomers, renewable energy technologies (RET) face a series of market barriers Many analysts are convinced that the long-term resource scarcity fossil energy faces is still not entirely priced-in. If current prices of fossil fuels reflected their scarcity correctly, RET would become more competitive The prices of fossil fuels are highly volatile due to short-term changes and incidences in the world's energy markets. Renewables are generally local energies and, as such, provide diversification of the energy mix with a security premium. It is widely agreed that renewables should have a higher share for energy security reasons in the energy portfolio, particularly in oil and gas importing countries The use of fossil fuels is, to varying degrees, damaging to thehuman health and the local environment. The reduction of these impacts by technical means increases the cost of fossil fuel use. Negative environmental effects (externalities) must be internalized, i.e. reflected in the energy price. All this improves the competitive position of renewable energy technologies Renewable energy technologies offer prospects for a dynamic industrial policy. In industrialized economies plagued by unemployment and reduced growth perspectives, as well as in some developing countries, RET have proven to be an option of developing industries with a future The deployment of RET in rural areas in developing countries offers opportunities for the use of local natural resources, employment, and ultimately institutional capacity.

8. Sources of Emission Free Electricity

9. Nuclear Power is expensive in the Long Run...

10. ….the Solution is Solar

11. Overview of Renewables in Europe Renewable energy > 30 % Renewable energy > 20 % Renewable energy > 10 % Renewable energy > 5 % Renewable energy < 5 % • EU is developing a framework for the promotion of renewable energy sources for electricity generation; renewables are set to increase their contribution, reaching 20% of energy consumption by 2020 • Such an ambitious target requires firm political support with regulation being the strongest tool towards meeting the objective • Each of the member-state governments has agreedto a target rate of renewable energy production and established feed-in tariffs or quota obligations as well as tradable certificates • A feed-in tariff is a regulated purchase price of electricity passed through to the consumer. Electricity utilities are obliged to buy renewable electricity through Power Purchase Agreements (PPAs) of 10 to 25 years • A Green Certificate is a tradable commodity proving that certain amount of electricity is generated from renewable sources and can be traded separately from the energy produced

12. Sector Themes and Trends Worldwide Energy Consumption • Demand for electricity is growing faster than total energy production, hence many countries are expected to run supply deficits over the next decade; the trend applies predominantly to developing countries where electricity consumption is growing at a higher rate. • Electricity generation in Greece, Turkey, Romania and Bulgaria is expected to increase by c.40% over the next 10 years (from 380 TWh in 2008 to c.530 TWh in 2018): • Such an increase will entail significant generation capacity to be added to the system; Renewable energy has strong political support and will contribute to this increase. Worldwide Renewables Investment • Europe has traditionally been on the forefront of renewables with notable success stories, including: • Germany • Denmark • Spain • Europe has policies in place and is committed to continue leading the sector. • Energy security, fossil fuel prices and environmental issues are the critical challenges for the global energy industry. Annual worldwide clean technology investment is expected to reach $450bn by 2012 and $600bn by 2020

14. RES in Greece

15. The Five Pillars of Greek Economy

16. Global and Local Energy Mix Global Energy Mix Greece’s Energy Mix • 0.2% • 27% • 10.6% • 20%

17. The Greek Electricity Chain

18. Licencing Procedure for RES Projects Investor Applications are submitted in the 1st 10 days of even months Installation License issued by MEECC or Regional General Secretary Application for Installation License Relevant Authorities Central Level MEECC Regional Level Regional DDP RAE (Techno-economic evaluation/ Compatibility with the National RES framework/ Capacity Availability) Investor HTSO(1) Authorities & County Council Preliminary Connection Terms Final Connection Terms ETA SEA /DRP Production License MEECC Notification Submit EIA Study Intervention approval Forest Department Investor Application for intervention in forest area Installation Protocol & Building Permit HTSO(2) Application for final Connection terms MAA:Ministry of Agricultural Affairs SEA:Special Environmental Authority MEECC:Ministry of Environment, Energy and Climate Change RAE : Regulatory Authority of Energy HTSO:Hellenic Transmission System Operator DDP : Direction of Development and Planning DRP :Direction of Regional Planning EIA : Environmental Impact Assessment ETA : Environmental Terms Approval

19. (as of September 2011) • RES Licence Evolution in Greece

20. Installed RES Capacity in Greece

21. Growth Barriers in Greece

22. Quick assessment of the Greek Energy market The assessment of the current state of Greece's energy sector is rather devastating ("high energy consumption, low fuel efficiency, low labor and capital productivity and an expensive energy mix characterize the Greek energy sector"). Consequently, the sector should be turned around to offer significant potential. Action should be taken in the form of the following steps: • Improving energy efficiency - streamline energy consumption mainly in buildings and transportation (adjustment and increased specificity of relevant standards; effective incentive schemes; parametric and progressive electricity pricing) • Boosting productivity- revisit regulatory framework; consider 'price and cap' system; fuel efficiency of plants; labour and capital productivity • Optimizing energy mix- develop National Energy Strategy • Increasing 'extroversion' and sector impact- leverage up on geographical position of Greece (hub for gas?); involvement of Greek players in regional infrastructure and power generation projects

23. Growth barriers in Greece:the Usual Suspects • Investments in scale discouraged fragmentation and small scale of business across sectors - over regulation of markets and professions - complex and restrictive licensing and operating processes - lack of integrated and systemic zoning and real estate planning - highly complex and volatile tax framework • Large and inefficient public sector large, expensive public sector with low quality outputs - lack of mechanism to inject market -sourced management and technical talent • Rigid and narrow use of human resources low rates in youth and female employment - binding and inflexible collective agreements - disconnection between market and education • Cumbersome legal and judicial system overabundance of laws sometimes conflicting - heavy administrative burden in courts, resulting to long lead times • Widespread informality extensive tax evasion - substantial wealth from the black economy

24. Overviewof Policy Instruments for RES

25. Fiscal Incentives investment tax credits production tax credits reductions in sales, energy, carbon, excise, VAT annual income tax credit based on the amount invested or the amount of electricity generated reduction in taxes on the purchase (or production) of renewable energy technologies • Focus on cost reductions and improvement of the relative competitiveness of RE Technologies in given markets capital grants - third-party finance - investment tax credits - property tax exemptions - production tax credits - sales tax rebates - exercise tax exemptions • Capital subsidy, grant or rebate one-time payments by the government to cover a percentage of the capital cost of an investment • Tax incentives • Energy production payment direct payment from the government per unit of renewable energy produced

26. Public Financing • awards contracts for • construction • operation • fixed quantities of renewable capacity assists funding distribution for • implementation • infrastructure development Public Investment, Loans, Grants Public Competitive Bidding

27. Regulatory Policies Institutional Development Transportation Fuel Electricity Generation Price-guaranteeing regulatory policies Market share-ensuring regulatory policies

28. Action Plan & De-Risking

29. Corrective Action Plan (I) Launch awareness campaigns on energy efficiency benefits, costs of buildings and transportation Create a Stock-Exchange RIC for RES or establish a Local Fund specialized in RES with Government Guarantees Exploit Renewable Energy Hubs all over Greece with existent licenses and supportive framework ready to be constructed by Investors Revisit incentives for retrofits (e.g. tax rebates instead of subsidies) Accelerate the implementation of financially viable island interconnections to reduce costs and emissions Investigate the viability to locally manufacture renewable energy parts and equipment Create Supportive Policy and Institutional Frameworks Promote Private Sector Involvement Level the Playing Field

30. Corrective Action Plan (II) Nurture Micro-Enterprise Build Projects Around Local Needs and Capacities Use structural funds and framework programmes better Increase use of funds from the European Investment Bank and other public finance institutions Improve access to Risk Capital Coordinate Community and National funding and other forms of support Upgrade Smart Grid Support Helios Project as a strategic investment Interconnect Universities with RES business to provide technical resources Prioritize high local renewable investors

31. Most RES technologies have high risk and long-term return • De-risking Renewable Energy Risk is a key parameter in explaining the difficulties of RES technology and projects when accessing capital due to the specific risk/return ratio for RES projects. To reduce financing risks, access to low-cost finance should be increased through an extended use of –sometime innovative- measures. The mitigated risk scenarios in these cases indicate that the annual consumer expenditures can be reduced by 50%.

32. Indicative Risk Mitigation Mechanism

33. Reduction of cost of Capital Reducing the cost of capital will result in lower consumer expenditures and an accelerated uptake of RES. The main approach is to reduce risk at all stages in the project lifecycle, via: Ensuring a long-term commitment towards renewable energy Removing deployment barriers Sharing risk via improved financial instruments e.g. government loan guarantees and/or project participation

34. Increasing public finance participation in projects (PPP) The benefits of a pro-active and participating government are manifold and have a significant impact on the access to capital and its costs: • Government participation can provide a significant amount of capital in either equity, (subordinated) debt, or mezzanine finance form • Cost of capital would be significantly reduced by bringing down the regulatory risk • Project financing would be achieved more easily and at a lower cost the percentage of project initiatives to be actually realized would increase - this would strengthen the confidence of the market • Windfall profits would be avoided or reduced via government participation, part of these profits flow back to the treasury • Supporting policies could be developed through the better insight obtained of the challenges and barriers the market is facing, the government could develop a policy e.g. for mobilizing the industry supply chain • A state-owned entity can be a safeguard for ensuring a stable renewable energy policy

35. Increase the Accessto low-cost finance • Stability, transparency and coordination The appropriateness of financial instruments is highly dependent on technology or the project’s development stage. Current perceptions indicate that access to finance can be enhanced by innovative public-private approaches for equity provision to technology developers, and on guarantee mechanisms for project developers • Multiplier effect Some innovative instruments such as guarantees or mezzanine funds can have a significant multiplier effect as they contribute to cover technical and political risks (certainty for investors). From the perspective of debt and equity providers, there are no one-size-fits-all solutions, but rather a mix of instruments that will be appropriate to specific levels of maturity of technologies or projects, and to various country-specific contexts

36. Conclusion Greece clearly has the potential (Solar, Wind, Water) of becoming the Saudi Arabia for Renewables in Europe. To achieve this goal, it only needs Political Commitment and a National Strategy

37. This documentation is provided on an individual basis and is strictly confidential; it should not be distributed, published or reproduced, in whole or in part and may not be considered as a public offer. The contents of this document are strictly indicative and for discussion purposes only. Under no circumstances does it represent an offer of sale or a request of subscription and does not constitute the sole base on which the investment decision is made. The only record between the parties is the final documentation, issued or signed for subscription to the investment. Although the information contained in the documentation comes from sources that ENOLIA INVESTMENT PARTNERS Sàrl considers reliable, ENOLIA INVESTMENT PARTNERS Sàrl does not guarantee expressly or implicitly, nor does it accept any responsibility for the exhaustiveness, reliability or exactitude of the information provided in this document. Each interested investor shall be responsible for carrying out his own examination and consulting, if necessary, his own legal advisors in order to evaluate, in respect to his personal situation, the appropriateness of an investment in the ENOLIA PREMIUM CAPITAL SIF, S.C.A. (“the Fund”). The investor’s attention is drawn to the fact that the tax treatment that will be applied to investment in the Fund depends on his particular circumstances and may change. Therefore it is recommended that each investor consult with his tax advisor. An investment in the Fund is subject to having read and understood the Offering Document of the Fund which describes in detail the rights and obligations of each investor; this is available on request from the head office of ENOLIA INVESTMENT PARTNERS Sàrl. Investment in the Fund is not being advised by the official Luxembourg Authorities and these authorities have neither approved nor confirmed the information contained in this document. More specially, the attention of potential investors is drawn to the risks associated with this investment, which are detailed in the Offering Document and it is strongly recommended that each potential investor consult this Document. Past yields of similar investments are no indication of future returns on investments that the Fund will carry out, as past performance is no guarantee of future results. Some legal, tax, or regulatory changes may occur during the life of the Fund, and may have an unfavourable effect on the performance of the Fund. The investment in the shares of the Fund is not publicly traded and no secondary market exists. The Fund’s success will depend on the skills and competence of the ENOLIA INVESTMENT PARTNERS team, particularly on its ability to identify, select and acquire suitable assets, but future market conditions could also be a determining factor. There is no guarantee that the Fund s targeted returns will be achieved. Hence, potential investor must form his own on the risks of this investment opportunity prior to taking the decision to invest in the Fund. • Disclaimer