Last update: © Lahmeyer International GmbH Portfolio Effect of Diversified Renewable Energy Sources Gaining benefits from the Portfolio Effect of diversified Renewable Energy Sources through a detailed uncertainty analysis

Last update: © Lahmeyer International GmbH Portfolio Effect of Diversified Renewable Energy Sources Gaining benefits from the Portfolio Effect of diversified Renewable Energy Sources through a detailed uncertainty analysis European Wind Energy Conference 2007 Milano 9th May 2007 Dr. Patric Kleineidam Matthias Hermann Matthias Henke Lahmeyer International - Germany

Last update: © Lahmeyer International GmbH Lahmeyer International Consulting Services Foundation/Head Office:Since 1966 / Bad Vilbel - Germany Nominal Capital:7,7 million Euro Objectives:Technical & Economic planning, consulting services Fields of Activities:Energy, Hydropower-Water Resources and Transportation Projects:140 countries: Europe, Asia, Africa, Middle and Far East,Latin America Turnover 2005:LI 83 million Euro; LI group 101 million Euro Staff 2005:LI 567; LI group: 863 Quality Management:According to DIN EN ISO 9001

Last update: © Lahmeyer International GmbH Operation and Maintenance Operation and Maintenance Construction Development Lahmeyer International Consulting Services Design... transferring knowledge from the most developed wind energy market to the client

Last update: © Lahmeyer International GmbH Projects in 140 Countries – World-wide

Last update: © Lahmeyer International GmbH Consultants are Wind Energy Pioneers, Preparing the Market for Investors and Manufactureres Financing : Financing : International development organisations, like the AfDB, KfW, GTZ, JBIC … Clients : Clients : Local governmental organisations Services : Services : Local capacity building and feasibility studies Motivation : Motivation : Becoming independent of petrol markets Examples : Examples : Zafarana (Egypt), Ethiopia, Djibouti... In Developing Markets

Last update: © Lahmeyer International GmbH Consultants are Wind Energy Pioneers, Preparing the Market for Investors and Manufactureres Financing : Financing : Private Investment is backed by incentives Clients : Clients : Local emerging developers Services : Services : Transfer of Know how to local developers, feasibility studies, negotiations with turbine suppliers, construction supervision Examples: Examples: Gangwon 98 MW, biggest private financed wind farm in Asia... Emerging Markets: < 500 MW

Last update: © Lahmeyer International GmbH Consultants are Wind Energy Pioneers, Preparing the Market for Investors and Manufactureres Clients : Banks and Investors Clients : Banks and Investors Services : Bringing credibility to projects in Services : Bringing credibility to projects in Due Diligences Due Diligences Construction Monitoring Construction Monitoring O & M – Monitoring O & M – Monitoring Portfolio effects Portfolio effects... Established Markets: > 500 MW

Last update: © Lahmeyer International GmbH Portfolio Analysis: Introduction Background Background Combination of investment assets (e.g. wind farms, PV etc.) Different Uncertainties Motivation (Why?) Motivation (Why?) Assessment of combined uncertainty Methodology (How?) Methodology (How?) Yield Energy Deviation Uncertainty Single Deviation Single Deviation Correlation between A and B Correlation between A and B

Last update: © Lahmeyer International GmbH Portfolio Analysis: Wind Ressource Assessments – Uncertainties Energy Prediction, dependent on the quality of the wind model, categories of uncertainties: Meteorological Data Meteorological Data Terrain Description Terrain Description Flow modeling Flow modeling Power Curves Power Curves Reference Turbines Reference Turbines Long Term Correlation Long Term Correlation

Last update: © Lahmeyer International GmbH Portfolio Analysis: Influence of Correlation Increasing independency  = 0.5  = 0.8 R b  = 0.17 Reduced uncertainty for combination of a and b R b  = 0.14

Last update: © Lahmeyer International GmbH Any combination leads to an expected energy yield and a new uncertainty (Portfolio effect) Portfolio Analysis: Influence of Correlation

Last update: © Lahmeyer International GmbH Example:. Totel Power: Energy Prediction: Total Uncertainty: 40 MW 100 GWh/a 15% vs. 12% Uncertainty Probability of Exceedance Energy Yield [GWh/a] 81 GWh 85 GWh 92 GWh 90 GWh P75P90

Last update: © Lahmeyer International GmbH Exemplary Experiences of LI in Wind Portfolio Assessment Capacity Country 400 MW Germany 500 MW Portugal 120 MW Greece 350 MW Germany Portfolio Effect on P90-Energy Level: between 3% and 8% higher energy yield, depending on characteristics of portfolio

Last update: © Lahmeyer International GmbH Diversified Portfolio Analysis Adaptation of Methodology Adaptation of Methodology Uncertainty Analysis per entity and technology Uncertainty Analysis per entity and technology T W = 8.19 €ct/kWh Rated power: 2 MW Turbine Start of operation: 2007 Full load hours: 2,000 Small Hydro low Correlation T PV = €ct/kWh T SH = 6.65 €ct/kWh low Correlation Rated power: 2 MW Turbine Start of operation: 2007 Rated power: 10 kW Start of operation: 2007 Roof top mounted

Last update: © Lahmeyer International GmbH Example: Portfolio Effects for Diversified Assets Portfolio 1: Adding Hydro to Wind Portfolio 1: Adding Hydro to Wind Portfolio 2: Adding PV to Wind Portfolio 2: Adding PV to Wind Range of expected influences on uncertainty Range of expected influences on uncertainty Relative Energy Yield Relative Uncertainty Yield Energy Relative Cash Yield Relative Uncertainty Yield Cash

Last update: © Lahmeyer International GmbH Including M&R Cost Effects in Uncertainty Analysis Motivation: M&R costs are uncertain Motivation: M&R costs are uncertain Methodology: Net Income Methodology: Net Income Results: Influences on uncertainties of Net Income Results: Influences on uncertainties of Net Income

Last update: © Lahmeyer International GmbH LI Maintenance and Repair Cost Model Onshore Wind Energy Turbines Influence Factors: Turbine Type Turbine Type Number of Turbines Number of Turbines Capacity per Turbine Capacity per Turbine Energy Yield Farm Energy Yield Farm Years of Operation Years of Operation Rotor Diameter Rotor Diameter CMS CMS Turbulence Intensity Turbulence Intensity Farm Efficiency Farm Efficiency Substation Substation Internal Roads Internal Roads Country Country Farm Specifics (e.g. from Site Visit) Farm Specifics (e.g. from Site Visit)

Last update: © Lahmeyer International GmbH Example: Maintenance and Repair Costs for a 40 MW Wind Farm, 2500 full-load hours. Technical lifetime: 20 years Warranty Period e.g 2 a 2007 Euros About 40%-70% of initial investments needed for M&R during lifetime (20 years).

Last update: © Lahmeyer International GmbH Example: Maintenance and Repair Costs for a 40 MW Wind Farm. Year Net Income Uncertainty [-] Assuming no uncertainty for M&R costs Dependency of M&R costs and Income, here: 0.4 ≤  ≤ 0.6 Dependency of M&R costs and Income, here: 0.4 ≤  ≤ 0.6 ●Further Influences based on a portfolio ●To be included in Cash Flow Model

Last update: © Lahmeyer International GmbH Conclusions Diversified Portfolio Analysis Wind farm portfolios assessed on energy level, benefit possible on P90-level Wind farm portfolios assessed on energy level, benefit possible on P90-level Detailed uncertainty and dependency analysis required Detailed uncertainty and dependency analysis required For diversified portfolio analysis shift to cash-level: Strong influence of Tariff on Cash Income uncertainty of a diversified portfolio For diversified portfolio analysis shift to cash-level: Strong influence of Tariff on Cash Income uncertainty of a diversified portfolio On the cash level including of M&R costs is possible Uncertainty level can change during lifetime On the cash level including of M&R costs is possible Uncertainty level can change during lifetime

Last update: © Lahmeyer International GmbH Portfolio Effect of Diversified Renewable Energy Sources Thank you very much for your Attention Visit us at booth A017