1. European Offshore Wind, Stockholm, 15 September 2009 Jérôme Guillet Financing offshore wind farms: what can be done – the Belwind exemple

2. 22 Offshore wind finance Present and future trends Offshore wind was hit especially hard by the crisis Underlying risks are increasingly well understood Belwind is providing a welcome precedent

3. 33 Offshore wind finance Present and future trends 2006: Q7 Dexia Joint Arranger 2007: C-Power Dexia Sole Arranger 2009: Belwind Dexia Joint Arranger

4. 44 Dexia is a market leader …with a wide geographic diversification Dexia has the most diversified wind portfolio of any bank in the sector, spanning 15 countries on 5 continents

5. 55 Dexia leads the way in offshore wind A 100% market share Q7 inauguration, June 2008

6. 66 Dexia leads the way in offshore wind A 100% market share Above: August 2008 Left: May 2009

7. 77 The crisis has hit offshore wind especially hard … and at the worst possible moment A nascent sector, with few precedents Banks re-focusing on select clients, countries and sectors Risk aversion leading to abandoning less understood sectors Few banks have a precedent to use for internal approval Large deals needed with no syndication market Multi-hundred million euro/sterling transactions contemplated Club deals are rather impractical when 10+ banks needed Universe of commercial banks is limited, so competition for those banks active in the sector is strong

8. 88 Banks with experience of offshore limited recourse finance are still relatively rare Dexia ArrangerLenderAdvisorOngoing Mandate Rabobank ArrangerLenderAdvisorOngoing Mandate BNP Paribas / Fortis ArrangerLenderOngoing Mandate ASN BankArrangerLender BoTM LenderAdvisorOngoing Mandate HSH LenderAdvisorOngoing Mandate SocGen LenderAdvisorOngoing Mandate NIBC LenderOngoing Mandate KBC Lender Unicredit / HVBAdvisorOngoing Mandate KfW-IPEX AdvisorOngoing Mandate RBC Advisor Nord LBAdvisorOngoing Mandate LBBWAdvisorOngoing Mandate

9. 99 Underlying risks …are well understood Regulatory risk Workable framework in most countries with offshore resource Strong political support Clear message the offshore is vital for energy policy, climate policy and, today, jobs policies. Price & volume risk No price risk in countries with feed-in tariffs (largest markets) Green certificate mechanisms or ROCs provide a significant fraction or price-risk-free revenues in several countries Residual merchant risk can be accepted in some markets (UK, Benelux) under prudent assumptions and with appropriate hedging mechanisms

10. 10 Underlying risks …are understood Construction management and coordination Two industries not used to working together Projects are more complex than onshore and require management and planning skills absent in the wind industry Projects very large compared to size of sponsors (other than utilities) and manufacturers Weather uncertainty creates additional risk Nothing that cannot be solved by engineers!

11. 11 Underlying risks …are understood Long term O&M Combination of miore aggressive environment, higher loads and much more challenging access to turbines Experience & track record is building up Procedures & industrial base are being established Redundancy and preventative maintenance can help with the issue of weather-related lack of access to turbines Conservative planning and budgets add to cost

12. 12 The offshore wind check list (or – what you need to worry about before you talk to the banks) Who’s providing the vessels & cranes to build the wind farm? Who’s providing the vessels & cranes to operate the wind farm? What’s the name of the vessels? What’s the name of substitute vessels you could use? Who’s paying for the vessel & cranes if there’s bad weather? How long is the Defect Liability Period? When does it start? What’s the availability guarantee like? What are the exclusions? What are the caps on liability? How long do you need to get the cable? The transformer station? Are interfaces defined in the same way in the various contracts? Who’s coordinating the construction? Did he negotiate the contracts? Does he know them by heart? Does he understand how and why the bankers care about these things? And, the most important… Has the client already thought about these questions?

13. 13 What can be done? Belwind!

14. 14 Belwind: a brief history Project concession to Econcern in April 2006 Explicit choice to work with people and firms that did the earlier offshore deals Long term, multi-project framework with the contractors Banks involved since April 2008 EIB involved in discussions long before crisis A transaction planned well in advance

15. 15 Belwind debt the main terms

16. 16 3 offshore wind deals the regulatory framework Q7C-PowerBelwind CountryNetherlandsBelgium Regulatory support - investment Accelerated depreciation (150% of investment) Grid Subsidy (EUR 25M) Grid Subsidy (EUR 25M) Regulatory support - production Green certificates 97 EUR/MWh (10 years) Green Certificates 107 EUR/MWh (20 years) Green Certificates 107 EUR/MWh (20 years) Electricity salesMarket

17. 17 3 offshore wind deals the technology and contracts Q7C-PowerBelwind Size120 MW30 MW165 MW TurbineVestas V80Repower 5MVestas V90 Distance from shore23 km27 km46 km Water depth19-24m15-24m15-37m Net P50 capacity factor39.4%43.4% (6 turbines) 37.2% BOP ContractorVan OordDEME / FabricomVan Oord Number of contracts232 OperatorVestasRepowerVestas Initial O&M Contract5 years + 510 years5 years + 5

18. 18 3 offshore wind deals the debt amounts Q7C-PowerBelwind Base Case Budget383 M153 M619 M (in MEUR/MW)3.2005.1003.750 Mezzanine, Subsidies & early generation 145 M 38% 32 M 21% 89 M 14% Senior Debt (base)188 M95 M426 M (as a % of base investment)49%62%70% Contingent Budget Contingent debt Contingent equity 60M 30 M (50%) 30 M 16 M 11 M (70%) 5 M 80M 56 M (70%) 24 M Sponsor Equity50 M26 M104 M (as a % of base case)13%17%

19. 19 3 offshore wind deals the debt terms Q7C-PowerBelwind Debt Sizing1.35 DSCR @p90 1.30 DSCR @p90 1.50 DSCR @p50 Debt:Equity limit50:5070:30 Maturity11y16.5y Margins (commercial)125-225pb110-190bp300-350bp “ Commercial ” debt148 M / 218 M116 M / 116 M120 M / 482 M as % of senior debt68%100%25% IFI / ECAEKFEKF & EIB Arranging period03/2005 – 10/200606/2006 – 05/200704/2008 – 07/2009 Syndication3 banks tbd

20. 20 3-way negotiations are key Don’t negotiate the turbines without the banks! The turbine manufacturers welcome bank involvement in contract negotiations, and all parties benefit.

21. 21 Belwind: some lessons It IS a precedent. That’s good per se for bankers Framework to take construction risk (and punchlist to be taken into account) stabilised The EIB and EKF agreed to take risk pari passu with commercial banks, and validated the existing structure, making it a market standard Bankruptcy is not an obstacle! The financial crisis is not an obstacle! How it is a useful precedent

22. 22 What will get done several projects are expected to be financed in the next 12 months Boreas/Centrica (BoTM financial advisor, Dexia technical bank) Up to GBP 400 M in bank debt Commercial bank club deal Merwind/Blackstone (Dexia and KfW financial advisors) Up to EUR 800M in bank debt undisclosed (Dexia as Arranger) Around EUR 150M in bank debt C-Power 2 (Dexia as Agent of phase 1) Up to EUR 700M in bank debt

23. 23 2006: Q7 Dexia Joint Arranger 2007: C-Power Dexia Sole Arranger 2009: Belwind Dexia Joint Arranger Bewlind: some lessons (focus on the right thing on the picture)

24. 24 European Offshore Wind, Stockholm, 15 September 2009 Jérôme Guillet Financing offshore wind farms: what can be done – the Belwind exemple