1 EWEA Offshore Wind 2009 Stockholm, September Forecasted Installations vs. Supply Chain

2 MAKE Consulting is an advisory company specialized in the renewable energy market with particular focus on intelligence and strategy for the wind energy market. MAKE Consulting employs a team of professional and independent advisors with documented experience from the international wind energy industry providing an in-house detailed market intelligence which we make every effort to translate into a product that provides the players with a competitive advantage. MAKE Consulting is based in Aarhus/Denmark and has offices in Chicago/USA and Tianjin/P. R. China. MAKE Consulting A/S, Speaker: o Thomas Karst. o Masters in Chemical Engineering o 10 years experience in wind energy from NEG Micon, Vestas and MAKE Consulting. MAKE Consulting A/S

3 Content 2.Offshore Market Drivers and Constraints 3.Key Suppliers Development – WTG’s 1.Offshore and Onshore WTG Installations 5.Conclusion 4.Key Suppliers Development – Vessels

4 Content 2.Offshore Market Drivers and Constraints 3.Key Suppliers Development – WTG’s 1.Offshore and Onshore WTG Installations 5.Conclusion 4.Key Suppliers Development – Vessels

5 Offshore installations and market share for and estimate for WTG Installations From 2010 Offshore will grow steadily at a CAGR of more than >25%

6 Content 2.Offshore Market Drivers and Constraints 3.Key Suppliers Development – WTG’s 1.Offshore and Onshore WTG Installations 5.Conclusion 4.Key Suppliers Development – Vessels

7 Global power demand increases by 2.5 % annually General increase in power demand USD 70+/barrel Increasing price of fossil fuels National protection against energy supply instability Energy independence Kyoto, EU’s 20/20/20, etc. etc. Renewable energy demand Driven by policies and global macroeconomics Macro Drivers 2. Offshore Market Drivers and Constraints

8 Not a competitive investment compared to other energy investments e.g. onshore IRR Profit at risk due to medium to high investment risk Risk Long term capital intensive engagement with a dubious revenue stream Steady Revenue Market demand towards competitive renewable energy Compliance Driven by making money Business Drivers 2. Offshore Market Drivers and Constraints

9 Players naturally prefer engaging in the low risk onshore market Onshore vs. offshore Mean time between failure is too short WTG’s Inadequate number and size to handle future 5+MW WTGs as well as 25+m water depth Installation vessels Inadequate infrastructure, too few and too expensive Port facilities Yet a technical challenge Offshore cabling Insufficient capacity to evacuate and transport power Grid connections Constrained by multiple unresolved risks Infrastructure/Technical Constraints 2. Offshore Market Drivers and Constraints

10 Players naturally prefer engaging in the low risk onshore market Onshore vs. offshore Mean time between failure is too short WTG’s Inadequate number and size to handle future 5+MW WTGs as well as 25+m water depth Installation vessels Inadequate infrastructure, too few and too expensive Port facilities Yet a technical challenge Offshore cabling Insufficient capacity to evacuate and transport power Grid connections Constrained by multiple unresolved issues and risks Infrastructure/Technical Constraints 2. Offshore Market Drivers and Constraints

11 Business Drivers Policy Drivers Business Constraints Tech- nology... And there are alternatives Risks are high Feasibility is dubious A lot of political will and intention Supplier’s position Limited allocation of investments to offshore WTG development focus is onshore Risk involvement is a minimum Small to medium sized manufacturers stay entirely onshore Investors’ Position Competitive pricing onshore Well known operational history onshore Onshore risk allocation defined and insurable Still new onshore frontiers to invest into Profitability for all players is questionable Present Position for Investors and Suppliers 2. Offshore Market Drivers and Constraints

12... And there are alternatives Risks are managed Feasibility is acceptable A lot of political will and intention Supplier’s position Risk is defined for all suppliers and accounted for Profit is protected Investments will be accordingly Investors’ Position Power price has to be adequate to finance the project during its life time Life time risk is defined and accounted for Revenue and return is protected Investments will be accordingly Profitability for all players is a requirement Necessary Future Position Investors and Suppliers 2. Offshore Market Drivers and Constraints Business Drivers Policy Drivers Business Constraints Tech- nology

13 Content 2.Offshore Market Drivers and Constraints 3.Key Suppliers Development – WTG’s 1.Offshore and Onshore WTG Installations 5.Conclusion 4.Key Suppliers Development – Vessels

14 Key Drivers – Supply Demand for WTGs, both onshore and offshore 3. WTGs Supply of WTGs Cost levels for commodities used in WTG manufacturing Earnings potential vs. total offshore project investment

15 Key Drivers – Demand The offshore segment has competed with the onshore segment for WTG supply. WTG manufacturers prioritize onshore segment due to comparatively lower risk. Global wind power market growth between 2004 and 2008 is of a CAGR of 35%. Current level of offshore installations of MW per year is insignificant compared to onshore at +25,000 MW. Source: MAKE Consulting 3. WTGs Low dedication of WTG capacity to offshore. The demand of the onshore segment. The limited size of the offshore segment High risk in Offshore

16 Key Drivers – Demand Onshore market to grow by a CAGR of ~14% towards 2017 Offshore market to grow by a CAGR of >25% segment towards 2017 Offshore market estimated to account for ~7% of the global market by Offshore will primarily take place in Europe and account for ~18% of this market by 2017 Source: MAKE Consulting 3. WTGs More capacity will be allocated to offshore. The offshore segment will become more attractive to WTG manufacturers.

17 Key Drivers – Supply Until present only two WTG manufacturers, Vestas and Siemens dominating the offshore market. WTG manufacturers e.g. GE and Enercon have tested equipment offshore, but have refrained from participation due to the risk combined with abundant onshore opportunities. E.g. Areva Multibrid, and BARD target the offshore segment,but have not yet run a proven series of offshore WTG. Only REpower’s 5MW WTG, is running a dedicated offshore WTG. Source: MAKE Consulting 3. WTGs Supply Few WTG manufacturers have entered the offshore segment No dedicated offshore products are yet commercially available

18 Key Drivers – Supply First purpose-designed offshore WTGs currently REpower, Areva-Multibrid and BARD. Following GE’s acquisition of Scanwind, and XCME’s acquisition of Darwind, both are expected to enter the offshore segment and start offering offshore WTGs from late Acciona is bidding on the UK Round III with their 3 MW WTG Others e.g. Gamesa have announced their ambitions to enter the segment, but prototype WTGs will be years under way. Source: MAKE Consulting 3. WTGs Supply More WTG manufacturers are expected to enter the offshore segment with dedicated products

19 Content 2.Offshore Market Drivers and Constraints 3.Key Suppliers Development – WTG’s 1.Offshore and Onshore WTG Installations 5.Conclusion 4.Key Suppliers Development – Vessels

20 Key drivers for specialised vessels Demand for offshore vessels in general and for wind in particular 4.Vessels Availability of general offshore vessels Cost levels for commodities used in vessel manufacturing and operation Earnings potential in long term offshore market vs. alternative offshore market e.g. Oil & Gas

21 Key Drivers - Demand 4. Vessels Projects will generally be placed in deeper waters and/or farther from shore. To maximise output, projects are designed with large WTGs which are heavier to transport and require larger vessels/cranes to install. As a result of the above, foundations will also be heavier. This development adds to the requirements for installation vessels which must be able to install larger equipment in harsher conditions. Project vessel demand There will be a demand for larger and advanced vessels to service the offshore wind industry

22 Key Drivers - Supply 4. Vessels Vessels capable of installing WTGs and foundations are a likely bottleneck of the future. The focus on securing vessel supply has recently been underlined by DONGs acquisition of offshore installation company, A2SEA. Most vessels can be used for installation of both foundations and WTGs. Time consumption when installing foundations is slightly higher than for WTG installation. Hence, the demand for foundation vessels will be higher than for WTG vessels. Present available vessel: Do not meet the demand in terms of lifting capability and working depth To few vessels are available

23 Key Drivers - Supply 4. Vessels Future vessels for installation of WTGs and foundations will have significantly increased crane capacity to satisfy the heavy +5MW installations planned. The 50m working depth seems to be a challenge to exceed. Most future vessels can be used for installation of both foundations and WTGs however a specialisation is expected. Other important features are operation capability at wave heights above 1.5 meters and at wind speed above 10m/s. Future vessel: Lift far heavier loads Work at 50m depths or more Carry far more in pay load Stay longer out on site Stand the environmental conditions

24 Content 2.Offshore Market Drivers and Constraints 3.Key Suppliers Development – WTG’s 1.Offshore and Onshore WTG Installations 5.Conclusion 4.Key Suppliers Development – Vessels

25 Global power demand increases by 2.5 % annually General increase in power demand USD 70+/barrel Increasing price of fossil fuels National protection against energy supply instability Energy independence Kyoto, EU’s 20/20/20, etc. etc. Renewable energy demand Driven by policies and global macroeconomics Future Macro Drivers 5. Conclusion

26 Players naturally prefer engaging in the low risk on-shore market. Onshore vs. offshore Mean time between failure is too short WTG’s Inadequate number and size to handle future +5MW WTGs as well as + 25m water depth Installation vessels Inadequate infrastructure, too few and too expensive Port facilities Yet a technical challenge Offshore cabling Insufficient capacity to evacuate and transport power Grid connections Investment in technology and facilities will lessen the constraints Future Infrastructure/Technical Constraints Conclusion

27 Not a competitive investment compared to other energy investments e.g. On-shore IRR Profit at risk due to medium to high investment risk Risk Long term capital intensive engagement with a dubious revenue stream Steady Revenue Market demand towards competitive renewable energy Compliance Learning curve, technology and demand will drive feasibility And facilitate the expected +40% CAGR the coming years Future Business Drivers 5. Offshore Market Drivers and Constraints

28... And there are alternatives Risks are managed Feasibility is acceptable A lot of political will and intention Supplier’s position Risk is defined for all suppliers and accounted for Profit is protected Investments will be accordingly Investors’ Position Power price has to be adequate to finance the project during its life time Life time risk is defined and accounted for Revenue and return is protected Investments will be accordingly Learning curve is steep Profitability for all players is a potential reality Future Position for Investors and Suppliers 5. Conclusions Business Drivers Policy Drivers Business Constraints Tech- nology

29 Thank you!

MAKE Consulting Aarhus, Denmark (Head Office) Chicago, IL, USA Tianjin, P. R. China 30 Copyright © 2009 MAKE Consulting A/S. All rights reserved. Reproduction or distribution of this report in any form without prior written permission is strictly forbidden. Violation of the above restrictions will be subject to legal action under the Danish Arbitration Act. The information herein is taken from sources considered reliable, but its accuracy and completeness are not warranted, nor are the opinions, analyses and forecasts on which they are based. MAKE Consulting A/S cannot be held liable for any errors in this report, neither can MAKE Consulting A/S be held liable for any financial loss or damage caused by the use of information presented in this report.