R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Framework of reference and Perspectives for Wind Energy in Spain Hugo Lucas IDAE – International Department

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Table of Contents 1. Current Situation of Wind Energy in Spain. 2. Technological Aspects. 3. Main Wind Energy Legislation in Spain. 4. Spanish Renewable Energy Plan (PER) 2005 – Wind Energy Area.

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Current Situation of Wind Energy in Spain

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference 22,245 15,095 3,125 2,725 2,455 2,390 2,150 1,745 4,565 TOTAL EU-27 (ENDING 2007) 56,495 MW Source: EWEA and IDAE Provisional Data Wind energy capacity (MW) in the European Union (EU-27) - 31/12/2007

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Development of Wind Energy in Spain (MW) TOTAL SPAIN (ENDING 2007) 15,095 MW Source: IDAE Provisional Data ACUMULATED CAPACITY YEARLY INSTALLED CAPACITY IN OPEARATION ACUMULATED IN OPERATION 0,41,20,81,52,70, ACUMULATED 0,41,62,43,96,67,

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Yearly investment in the wind energy sector in Spain Source: IDAE Provisional Data 3,900

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Average Cost 890 EURO/kW inst. Source: IDAE Average Cost ,170 €/kW inst. Estimated value for 2007 Evolution of cost per kW of installed capacity (in nominal terms)

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Technological Aspects

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference 96 % of installed capacity in 2007 were supplied by manufacturers established in Spain: Spanish technology (67 %): GAMESA, ECOTECNIA ( * ), ACCIONA WP Foreign technology (29 %): VESTAS, G. ELECTRIC, NORDEX, ENERCON Transfer technology (4 %): NAVANTIA-SIEMENS Average WT power rating  kW Average size of wind farm  27 MW TOTAL: 3,374 MW ( * ) ECOTÈCNIA was acquired last year 2007 by the French company ALSTOM. Technological aspects. Market share by manufacturers in Spain (2007)

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference TOTAL: 15,095 MW Accumulated installed capacity (MW) per technology (31-Dec-2007) Source: IDAE Provisional Data

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Source: BTM Consult – March 2008 Worldwide market share in 2007

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Wind turbines manufacturers (Spain) Manufacturer Accumulated capacity in Spain, ending 2006 Commercial Wind Turbines Plants in Spain (wind turbines assembly) GAMESA EÓLICA6,947 MW (59.2%) G /2000 G /850 G 128 /4.5 (2008) 6 (Navarra -2-, Soria, La Coruña, Zaragoza, Valladolid) ECOTÉCNIA957 MW (8.2%) Ecot /1670 Ecot. 100 /3000 (2008) 2 (La Coruña, Navarra) ACCIONA WP730 MW (6.2%) AW /1500 AW 1xx /3000 (2009) 2 (Navarra, Castellón) M TORRES25 MW (0.2%) TWT /1650 TWT 92 /2.5 (2009) 1 (Soria) NAVANTIA - SIEMENS469 MW (4.0%)Navantia-Siemens 1.31 (La Coruña) EOZEN - VENSYS0Eozen-Vensys /15001 (Granada) VESTAS1,470 MW (12.5%) V 90 /3000 V /2000 V 120 /4.5 2 (Lugo, León) G. ELECTRIC785 MW (6.7%) GEWE 1.5 sl GEWE 2.5 (2009) 1 (Toledo)

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Existence of significant wind resources. Stable regulatory framework for electricity generated (Feed-in tariffs system; reasonable return on investment). Regional support: planning, simple administrative procedures. Technological maturity. Creation of a strong industrial sector. Large scale production brings costs reduction (construction, operation and maintenance). Key elements for wind energy success in Spain

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Main Wind Energy Legislation in Spain

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference FRAMEWORK OF REFERENCE IN THE EUROPEAN UNION (EU-27) “Renewable Energy in Europe Road Map” -COM(2006) 848 final- RES: 20 % of primary energy consumption. [Proposal for a Directive “on the promotion of the use of energy from renewable sources”. Brussels, –COM(2008) 19 final-] “ WHITE PAPER ” (December 1997): Contribution from Renewable Energy Sources of 12 % relative to primary energy consumption. Directive 2001/77/EC: Contribution of 21 % relative to the annual electricity consumption. (Spain: 29.4 %) RES – Overall target by 2010 New targets by 2020

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Main legislation at national level - Spanish Electric Power Act 54/1997 (dated November 27 th ). - Royal Decree 661/2007, on Special Regime. (Order ITC/3860/2007, electricity tariffs year 2008) Regional level - Administrative Procedures. REGULATORY FRAMEWORK OF REFERENCE IN SPAIN

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference LEARNING BY DOING  RD 2366/1994 Feed-In Tariff  RD 2818/1998 Feed-In Tariff  RD 436/2004 Feed-In Tariff Premium  RD 661/2007 Feed-In Tariff Premium Small capacity facilities. Revision of the tariffs and technologies. Increase maximum capacity. Revision of the tariffs and technologies. Windfall profits in the market option. Insufficient development of biomass and cogeneration. Cap & Floor.

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference RD 661/2007. MOTIVATIONS The modification of the economic and legal framework regulating the special scheme in force so far (RD 436/2004) became necessary for several reasons:  The growth undergone by the special scheme in the last years has pointed to the need to regulate some technical aspects to contribute to the increase of these technologies, safeguarding the system’s security and guaranteeing its supply quality, as well as the restrictions to the production.  The economic scheme established in the Royal Decree 436/2004 of 12th March, because of the behaviour undergone by the market prices where some variables not considered earlier have become more remarkable, made necessary to modify the payment system.  New targets for installed capacity are established in compliance with the objectives in the Renewable Energies Plan and the Energy Saving and Efficiency Strategy for Spain” (E4), to which the retribution scheme set out in this Royal Decree shall apply.

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference RD 661/2007. SCOPE OF APPLICATION Category a): Producers using cogeneration or other ways of electricity production from waste energy. Category b): Installations using any of the non-consumable renewable energies, biomass or any kind of biofuel as primary energy, whenever their titleholder does not carry out production activities under the ordinary scheme. Category c): Power plants that use waste with energy recovery not stated in category b) as primary energy.

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference RD 661/2007. MAIN CHARACTERISTICS Objective:- Legal and economic scheme for the Special Regime. - Consolidate the regulatory framework, giving stability and predictability to the system. Characteristics:- Feed-in tariff system. - Guaranteed along the life-time of RES installations. - Adapted to the development of each renewable area. Methodology:- Two alternative options for the remuneration of kWh: 1. Regulated price: Independent of capacity and year of commissioning. 2. Open sale in the market: ‘Pool’ price + Premium + Complements. Upper and lower limits for the sum (‘pool’+premium)

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference RD 661/2007. MARKET OPTION When producers decide to participate in the market, the obtained premium will vary according to the market price (‘pool’) set up on an hourly basis. Premium + ‘Pool’ Premium ‘Pool’ 73,66 Top limit Premium of reference Bottom limit (€/MWh) 87,79 (€/MWh) 43,39 30,27 57,5287,

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference RD 661/2007. OTHER ASPECTS Other relevant aspects: Wind farms are obliged to remain connected to the network in case of sudden voltage drop, contributing in this way to its stability. Installations have to present a financial guarantee to be allowed to connect to the grid (20 €/kW). Costs of deviation: The real cost of deviation will be passed on also to the installations with regulated tariff. In 2008, a new Renewable Energies Plan for the period will be drawn up.

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference UPDATING AND REVISION OF TARIFFS, PREMIUMS AND SUPPLEMENTS The amounts of tariffs, premiums, supplements and cap & floor limits will be annually updated having the consumer price index (CPI) as a reference minus 0.25 until the 31st of December 2012 and minus 0.5 since then. During 2010, in view of the result of the follow-up reports on the extent of fulfilment of the Renewable Energies Plan (PER) , the review of tariffs, premiums, supplements and cap & floor limits will take place, bearing in mind the costs associated with each of these technologies, the extent of participation in the special scheme in the meeting of the demand and its effect on the technical and economical system, always guaranteeing reasonable profitability rates with reference to the price of money on the capital market. Every four years and from then on, a new revision will be done maintaining the above criteria.

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Spanish Renewable Energy Plan (PER 2005 – 2010). Wind Energy Area

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Approved by the Council of Ministers on 26 th of August Targets of PER In 2010, RES will represent: – 12.1% of total energy consumption, – 30.3% of electricity production, In addition, biofuels will represent 5.83% of diesel and petrol consumption in the transport sector. Estimated investment for this period: 23, M€. In general, individual targets for each technology have been increased. Decisive role of wind energy. THE RENEWABLE ENERGY PLAN (PER)

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference THE RENEWABLE ENERGY PLAN (PER)

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference RENEWABLE ENERGY PLAN (2005 – 2010) PARAMETERSALL RENEWABLE AREAS Public support 8, million € Investment 23, million € Total Energy Production 10,480,526 toe Jobs Created 94,925 Jobs Avoided Emissions as compared to NG Combined Cycle Period : 76,983,254 tons CO 2 THE RENEWABLE ENERGY PLAN (PER)

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Overall target (year 2010) 20,155 MW Generated electricity (2010) 45,511 GWh/year Related investment ( )11,756 million € NO subsidies to investment. Emissions avoided (year 2010)16,930,092 t CO 2 Estimation of job creation ( ): - Design and Construction34,680 jobs - Operation and Maintenance3,113 jobs RENEWABLE ENERGY PLAN (WIND ENERGY AREA). SUMMARY

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Proposed Measures: Development of transport grid. Updating and improvement of the regulatory procedures regarding grid access and operating conditions. Establishment of a single operation centre for the Special Regime. Improvement of wind generators behaviour, regarding network. PER : MAIN MEASURES IN WIND ENERGY AREA

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference SUMMARY  Target for wind energy in Spain: 20,155 MW (year 2010). Next year, starting new Renewable Energy Plan for  Third position world-wide, with 14,600 MW commissioned (ending 2007).  Spanish technologists among the ten largest manufacturers.  Stable legal framework: Feed-in Tariffs System, with premium price recognising environmental benefits.

R E N E W A B L E E N E R G Y I N S P A I N Kingston, 23 rd June 2008 World Wind Energy Conference Thank you