Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Financing of Renewables: Considerations and Outlook Presentation to: FINSOL Workshop Albuquerque, NM

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Conditions are Right for Growth Wind –Market $1.3 billion in 1996 –Small group of competitors; no one dominant player –Costs generally competitive with fuel based power –New generation needed and planned worldwide –Environmental/regulatory factors generally favorable Solar –Market $1 billion in 1997 –Small group of vertically integrated manufacturers; no one dominant player –Remote markets expanding; cost approaching breakeven with retail grid electricity –High degree of public support

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Considerations In general, renewables are capital intensive Applications and market diversity drive financing strategy diversity Keys to economic attractiveness: –First and life cycle costs –Revenues and avoided costs –Financing costs Cost and revenue risks drive financing costs

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Principal Elements of Wind Project Financing Wind resource Power purchase agreement Interconnect agreement Transmission rights Real estate rights Environmental studies Construction and operating permits Construction contract Wind turbine supply contract Wind turbine warranty Project owner Equity Financing Debt financing - construction and term Operations and maintenance contract Predictable legal, regulatory and political environment

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Applications (and Avoided Cost) Diversity Grid-Tied Applications –Central Power (high voltage AC) –Local Grid Support (medium voltage AC) –Grid Supplement at Point of Use (low voltage AC) Grid-Independent Applications –Rural Electrification (low voltage DC and AC) Home Power, Village Power, Water Pumping –Industrial Applications (low voltage DC) Telecommunications, Monitoring Stations

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Market Diversity Drivers Extent and nature of market regulation Subsidies and barriers Maturity/stability of national/regional/local economy and banking/credit infrastructure Local costs, taxes and fees

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Wind Project Financing Financing generally available; need competitive terms Financing structures vary significantly from country to country Caveat vendor; warranty terms need to converge on conventional technology Bonds/Guarantees - usage increasing

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Comparison of Wind Project Financing Structures U.S. U.K.Greece Debt 50% 75% 20% Equity 50% 10% 40% Grant 0% 15% 40% 100%100%100%

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Financing Strategies

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Cost and Revenue Risks Market related –Equipment prices and long term power prices –Tax policy –Currency valuation Technology related –System performance –Component quality Resource related

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Rooftop PV Economic Sensitivities

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Renewables Outlook Near term: –Continued hardware cost reduction based on technology improvements, volume and experience –Evolution toward “best” financing strategy for rural electrification Long term: –Continued high growth rates –Major contribution to future energy supply

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Breakeven PV System Costs for Market Entry

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Renewable Energy Targets and Growth Rates

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Wind Industry - Growth Worldwide Source: BTM Consult

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar PV Capacity and Investment Requirements through 2025

Presented by: Gerald W. Braun, Director Business Development June 17, 1998 A Business Unit of Amoco/Enron Solar Conclusions –Market Transformation and Eco-Investment Scenarios Are Underway Which Support Renewables –Intermittent Renewables Play a Primary Role in All Scenarios –Major Capital Investment is Required, e.g. $1 Trillion for PV by 2025 –Many Financing Strategies Needed –Risk Management is Key to Successful Strategy