O u t l i n e

1. Greece: Legal and economic framework for photovoltaics Dr. Yannis Kelemenis and Tom Kyriakopoulos

2. O u t l i n e • Profile of Kelemenis & Co. • Size and dynamics of the Greek PV market • Incentives and feed-in tariffs • Licensing and grid access • Connection to the grid and Operator Agreements • Corporate Environment • Tax Environment

3. Firm Profile • Kelemenis & Co. is an Athens-based law firm providing quality legal services in the key corporate and commercial areas. The firm advises a varied client base that includes corporations, governments, large institutions and high-net-worth individuals. The firm draws on a team of lawyers with excellent academic qualifications from world-class universities (e.g. Oxford, Harvard, Heidelberg). Kelemenis & Co. has built a reputation for acting on complex, high volume cross-border transactions and disputes for a range of corporate and financial institution clients. The firm's track record spreads across an array of sectors including energy, infrastructure, hotels, leisure, real estate, retail and technology. Although Greece has been the focal point of the firm's activities, the firm has been active in Southeast and Eastern Europe where it advises local governments on legal approximation with the EU acquis communautaire and international investors on their cross-border ventures.Kelemenis & Co. enjoys excellent rankings in all leading international legal directories and is a recommended law firm in all key practice areas. The firm is regularly invited to contribute the Greece chapter to commercial law handbooks published by highly regarded international publishers. Kelemenis & Co. is a member of several professional associations and chambers. It is a sustaining member of both the British Hellenic and the Greek American Chambers of Commerce. The firm is the Greece member of Multilaw, a leading global law network consisting of more than 65 law firms worldwide and over 6,000 lawyers in over 150 commercial centres. Being part of the Multilaw network ensures an instant global reach for clients who require multi-jurisdictional legal advice. • Indicative Energy Clients: Endesa, Veolia, General Electric, Statkraft, Energy Community Secretariat (Vienna), World Bank, Greek Regulatory Authority for Energy (RAE), Greek Centre for Renewable Energy Sources (CRES) • Well-regarded ... able to advise on complex issues ... received high plaudits due to the outstanding cross-border practice..."PLC Which Lawyer 2007 • "A practice which has shown promise since its inception... The practice impressed the market..."IFLR1000 2008 • "...advised on some of the biggest deals in the Greek market of the past year"World Tax 2008 • "Clients ... praise the firm's 'deep knowledge and expertise within different industries and jurisdictions', and Anglo-American style of service."Legal 500 2007

4. The Energy Practice • The Practice • The firm has built a strong reputation for its energy practice not only in Greece but in the wider region of southeast Europe. The practice, which is headed by name partner Dr. Kelemenis, is well-versed into both transactional and regulatory work. It has advised, inter alia, the regulators of Greece (RAE) and FYR Macedonia (ERC) and the governments of Romania, Moldova, FYR Macedonia and Albania. The firm has also been advising several energy undertakings in Greece and in southeast Europe and provides a one-stop shop service in any of the countries that make part of the Regional Energy Market of Southeast Europe. Scope of Work • Energy Regulation • Energy Infrastructure/PFI/PPP Projects • Energy Acquisitions and Disposals • Energy Finance • Energy Disputes The Team The practice is supported by a team of lawyers with excellent academic qualifications from world-class universities and often draws upon a pool of economists, analysts, engineers and senior consultants to ensure the comprehensive management of its assignments. The firm is regularly invited to contribute chapters to leading international publications on energy. It is the author, inter alia, of the Greece chapter for the loose-leaf "Energy Law and Regulation in the EU" (Sweet & Maxwell), the leading energy law publication in Europe; and of the chapters on Oil and Electricity Regulation in the “Getting the Deal Through Series” published by the International Bar Association and the Global Competition Review. The Key People Dr. Yannis Kelemenis Tom Kyriakopoulos Manya Tsoumita, LL.M. (Humboldt) Iro Stamataki, LL.M (Heidelberg)

5. Greek PV Market : What was envisaged in 2006 • Introduction of Statute 3468/2006 on the production of electricity from renewable energy sources • By 31.12.2008 the total licensed capacity was envisaged to come up to 350 MW for the interconnected system and to 140 MW for the non-interconnected islands • 3. By 31.12.2009the total licensed capacity was envisaged to come up to 450 MW for the interconnected system and to 180 MW for the non-interconnected islands

6. The Greek PV Market : Investors’ interest for production license

7. Application for granting Electricity Production License (RAE) Preliminary Environmental Assessment and Evaluation RAE forwards the Preliminary Report on Environmental Impact to the Authority that is responsible for environmental licensing Electricity Production License RAE / Ministry of Development Determination of the connection terms to the System or the Grid (The offer) (DESMIE / DEI) Environmental Terms Approval Intervention or Concession Approval (Secretary General of the Region / Local Forest Authority) Installation License (Secretary General of the Region / Dept. of Planning & Development) Contract for the connection with the System and the Grid (DESMIE / DEI) Power Purchase Agreement (DESMIE / DEI) Operation License (Secretary General of the Region / Dept. of Planning & Development) THE 3-STEP LICENSING PROCEDURE · Production License / Exemption from obligation to obtain a production license · Connection terms/ · Environmental terms approval · Installation license (for power stations over 150Kwp · Contracts for Connection and Purchase · Operation License (for power stations over 150 Kwp

8. The current feed-in tariffs • aMSPn-1 = Average Marginal System Price during the previous year, i.e. n-1 • NB. Feed-in tariffs are readjusted every year by a percentage of 25% of the consumer price index of the preceding year, as this index is defined by the Bank of Greece. If the price (after having been readjusted according to the above) is lower than the average Marginal System Price, as determined in the preceding year and increased by 40%, it will be the latter pricing that will be applied, i.e. the average Marginal System Price as determined in the preceding year increased by 40%.

9. Key Regulatory Issues for Investors • Greenfield ventures vs acquisition of existing projects • Regulatory impediments • Licensing stumbling blocks • Planning and construction difficulties and timelines • Terms and cost of connection • Standard Terms of Operator Agreements (e.g. duration, risk allocation etc) • What has been learnt since the inception of the market in 2007

10. Key Tax Issues for Investors (1) Preferred Entry and Tax Free Exit Strategy Financing with limited direct and indirect tax implications in Greece New Thin Capitalization Rules that may affect financing Issues related to deductibility of costs and depreciation Tax Losses and generating steady upstream revenue flows VAT refund on the acquisition of equipment Incentives for energy companies

11. Key Tax Issues for Investors (2) 1. Preferred Entry and Tax Free Exit Strategy • Green field venture vs Acquisition • Foreign non Greek Company used as Holding Company of the Project 2. Financing with limited direct and indirect tax implications in Greece • Stamp Duty on shareholder loans and ways around it • Withholding Tax on Interest payments and ways around it • The use of Corporate Bonds as a tax efficient tool • The use of Bank Loans

12. Key Tax Issues for Investors (3) 3. New Thin Capitalization Rules that may affect financing • 3:1 Thin capitalization Rules • Debt : Equity Ratio limitations • Possible solutions to the debt : equity ratio limitations 4. Issues related to deductibility of costs and depreciation • Principles applicable to deductibility of expenses • New Transfer Pricing Rules • Depreciation and amortization • Management Fees paid abroad

13. Key Tax Issues for Investors (4) 5. Tax Losses and generating steady upstream revenue flows • Tax losses carried forward • How to generate upstream revenue flows to satisfy shareholder returns 6. VAT Refund on the acquisition of equipment • VAT on leasing of equipment • VAT on acquisition of equipment

14. Key Tax Issues for Investors (5) • 7. Incentives for energy companies(Category 1 Investment) • Investments for the production of electricity from soft energies, in particular wind power, hydroelectric power, geothermal power and biomass qualify as aided investments under Greek incentive legislation 3299/2004, irrespective of the installed power for the joint production of electricity and heat. • Investments for the production of electricity from solar power, with the exception of investments in photovolatic systems investments with a capacity exceeding 2 MW, also qualify as aided investments under Greek incentive legislation 3299/2004. • Tax incentive in the form of income tax exemption is granted according to the following table: • The incentive percentages are increased for small and medium sized companies as follows: • For medium size enterprises an additional 10% up to €15m. • For small size enterprises an additional 20% up to €10m.

15. Key Tax Issues for Investors (6) • 7. Incentives for energy companies(Zones)

16. Key Tax Issues for Investors (7) 7. Incentives for energy companies-The tax exemption works as follows: • The incentive involves exemption from payment of income tax on non distributed gains for the first 10 years following completion of the investment, through the creation of a tax free reserve. • The amount recorded in the tax free reserve is calculated based on the net profits declared in the income tax return after deducting (i) profit exempt from income tax, (ii) statutory reserve and (iii) actually distributed profits. • When the investment is acquired through leasing, the tax free reserve is calculated on the basis of the lease payments on the condition that the ownership of the equipment will be transferred to the company • The tax free reserve of the tax relief must appear in separate accounts in the accounting books of the company • According to a recent amendment to the Incentive Law, the amount of tax relief must be equal to the amount the company would have received in the event of a cash grant.

17. Dr. Yannis Kelemenis • Dr. Kelemenis is the managing partner of Kelemenis & Co. He obtained his LL.B from the University of Athens and his M.Phil and D.Phil degrees from Oxford University. He went up to Oxford on a Rhodes Scholarship awarded by the John Cecil Rhodes Trust of Oxford University. Dr. Kelemenis' expertise lies primarily in corporate and commercial matters, corporate fraud, and litigation. In terms of sectoral expertise, he has been heavily involved in energy and natural resources. He has been repeatedly selected by the EU Commission and the World Bank to advise on the legal approximation of Eastern European transition economies with the EU acquis communautaire. In so doing, he has advisednearly all governements of Southeast Europe. Dr. Kelemenis is a recommended lawyer for M&A, corporate & commercial work, energy, and litigation in all leading international legal directories (e.g. PLC Handbooks, European Legal Experts, Legal 500, Chambers & Partners, IFLR). PLC Which Lawyer 2008 describes him as a “prolific and respected deal-focused corporate advisor with acknowledged advisory experience in deals involving the energy industry”, whereas Legal 500 2008 as “a versatile business lawyer who can inspire colleagues and clients alike”. Dr. Kelemenis is authorized to appear before the Supreme Court of Greece. Dr. Kelemenis has authored several articles and chapters in edited volumes including the Greece chapter for Sweet & Maxwell’s leading loose-leaf publication “Energy Law and Regulation in the EU”, as well as the Greece chapter on both Electricity and Oil Regulation for the “Getting the Deal Through Series”; on renewable energy for the "Renewable Energy Finance Yearbook 2007/2008" published by Euromoney; on M&A for the "European M&A 2007/2008” published by the Global Competition Review; and on dispute resolution for ICGL’s "Litigation & Dispute Resolution 2008" and PLC’s “Dispute Resolution Handbook 2008/09”. He was recently commissioned by Oxford University Press to write the Greece chapter for the Digest of Commercial Laws of the World.

18. Tom Kyriakopoulos • Being both an experienced lawyer and a management consultant (he also holds an MBA) with a post graduate degree in tax, Mr. Kyriakopoulos combines the qualities required for investors looking for legal consultants with comprehensive legal, regulatory and tax knowledge with a business acumen. • Head of the firm’s tax practice. He provides a comprehensive range of tax consulting work with respect to almost all forms of direct and indirect taxation, including the application and interpretation of double tax treaties. He is widely experienced in advising international clients on formulating tax efficient structures and cross border transactions in connection with all forms of commercial agreements and enterprises. He has long standing experience in assisting in all facets of share purchase agreements and business transfer deals and side agreements and supporting documentation, reviewing the tax structure of such deals, consulting on the tax issues related to the acquisition of a business and undertaking full and limited scope tax and legal due diligence work. In the energy sector, he has contributed and carried out a number of energy projects. To name a few, he was involved in an energy EU funded project in former Yugoslav Republic of Macedonia, with respect to the development of the Energy Regulatory Commission. In Greece, he concluded a project for the Greek Centre for Renewable Energy Sources in mapping the legal and tax problems to be addressed for the introduction of legislation regarding Energy Services Companies, Energy Service Contracting and Third Party Financing. He has undertaken on behalf of the Energy Community Secretariat a multi-jurisdictional legal, regulatory and tax study in 13 legal orders for the establishment and operation of the South East Europe Coordinated Auction Office. • His recent publications include the Greece chapter on Project Finance in the “Getting the Deal Through” series published by the IBA and the Global Competition Review, the chapter “Greece: The Current State of the Law” in the Euromoney Project Finance Yearbook 2007/2008, the Greece chapter on “Mergers and Acquisitions 2008/2009” published by ICLG and the Greece chapter on “Corporate Taxation” in the PLC’s “Corporate Tax Handbook 2008/2009”.

19. THANK YOU