1. STEM Project Renewable Energy Is it the right decision for your business? October 1 st 2013

2. Agenda  Introduction  The risk finance journey  Resource  Grid  Planning  Finance  Technology considerations & information sources  Summary

3. STRATEGYSUSTAINABILITYSAVINGS Chemical energy (gas, oil, biomass etc): Can be burned to produce electricity or heat Can be transported and stored easily Electricity: Can use it for anything Easy to transport in a wire, hard to store Low grade heat: Can only use it for heat Not very transportable, possible to store Introduction - Energy

4. STRATEGYSUSTAINABILITYSAVINGS Max Fordham Consulting Engineers Impact on energy Cost Free? Dull Interesting Bolt-on Perception Integrated Design Expensive Cheap Energy Management Energy Efficiency Cheap Renewables Expensive Renewables Fuel Cells etc Introduction - Technology Perception

5. STRATEGYSUSTAINABILITYSAVINGS Carbon Trust Introduction - Carbon Abatement

6. STRATEGYSUSTAINABILITYSAVINGS Verifiable Resource Planning Permission Grid Connection Construction Operation Revenue RISK RETURN Fundable or saleable project The Risk Finance Journey

7. STRATEGYSUSTAINABILITYSAVINGS  Wind – wind speed (@10m @ hub height)  Hydro – hydrology, hydraulic head, abstraction  Biomass – feedstock security and quality  Anaerobic Digestion - feedstock security and quality  Solar – insolation and shading Banks and funders will want to know… Available resource and incentive thresholds… Resource, Resource, Resource

8. STRATEGYSUSTAINABILITYSAVINGS  Scale – 11kV or 33kV  Nearest connection  Who else is on the line  Who else is in the queue  Distance to substation  Likely connection costs  Elapsed time to connection agreement Grid

9. STRATEGYSUSTAINABILITYSAVINGS Substation 11 kV 33kV 11kV £70k £150k £4m £ ??? £500k £120k Grid

10. STRATEGYSUSTAINABILITYSAVINGS  PPS 18 in NI  DOE RE Planning Statistics  Scale of project  Impacts - EIA  Ecology  Agents and consultants  Costs Planning

11. STRATEGYSUSTAINABILITYSAVINGS  Business Case  USP  Financial Models - RETScreen?  Funders – perceived risk, redundancy  funding for some RE projects is very challenging due to risk perception Finance

12. STRATEGYSUSTAINABILITYSAVINGS Republic of Ireland -Renewable Energy Feed-in-Tariff (REFIT) Northern Ireland -Renewable Obligation Certificates -Renewable Heating Incentive (RHI) Policy creep Great Britain -Feed In Tariffs – Degression! -ROCS -Contracts for difference incoming -Renewable Heating Incentive (RHI) Timing! Incentives

13. STRATEGYSUSTAINABILITYSAVINGS There have been three separate schemes known as REFIT 1(2006) REFIT 2(2012) and REFIT 3(2012) REFIT 1 officially launched on 1st May 2006. The fixed price tariffs can be seen below: -Wind (Large scale) >5MW: 5.7 cent/kWh -Wind (Small scale) <5MW: 5.9 cent/kWh -Biomass landfill gas: 7.0 cent/kWh -Hydro & other Biomass: 7.2 cent/kWh In 2009 additional Categories (other than Hydro, wind & biomass) were added to the established 2006 REFIT. The reference prices for the additional technologies were as follows: -Anaerobic Digestion: €0.12/kWh -High Efficiency CHP: €0.12/kWh (only for High Efficiency) -Ocean Energy: €0.22/kWh -Offshore Wind: €0.14/kWh ROI – Renewable Energy Feed in Tariff (REFIT)

14. STRATEGYSUSTAINABILITYSAVINGS Officially launched in March 2012 Incentives are given to the generators of selected renewable technologies which have been commissioned between 01/01/2010 - 31/12/2015. Available for 4,000MW of onshore wind, hydro & landfill gas. The reference price for each technology is shown below: -Onshore Wind (>5MW): €66.35/MWh -Onshore Wind (<5MW): €68.68/MWh -Hydro (<5MW): €83.49/MWh -Biomass (Landfill gas): €81.49/MWh The support for any particular project cannot exceed 15 years and may not extend beyond 31/12/2030 REFIT 2 is not payable for electricity generation consumed onsite REFIT 2

15. STRATEGYSUSTAINABILITYSAVINGS Officially opened in February 2012 Incentives are given to the generators of selected renewable technologies which have been commissioned between 01/01/2010 - 31/12/2015 Available for 310MW of anaerobic digestion, biomass CHP & biomass combustion Technology limits to the incentives under REFIT 3 are; 50MW for AD (including CHP), 100MW for Biomass CHP and 160 MW for Biomass Combustion. The reference price for each technology is shown below: -AD CHP (K500kW): €0.15/kWh -AD CHP (>500kW): €0.13/kWh -AD Non CHP (K500kW): €0.11/kWh -AD Non CHP (>500kW): €0.10/kWh -Biomass CHP (K500kW): €0.14/kWh -Biomass CHP (>500kW): €0.12/kWh Biomass Combustion Technologies (non CHP) which use energy crops will get 9.5cent/kWh and all other biomass will get 8.5cent/kWh. REFIT 3

16. STRATEGYSUSTAINABILITYSAVINGS The main support mechanism for renewable energy generation in the UK First introduced in GB in April 2002 Adopted by Northern Ireland in April 2005 as the NIRO. Prior to 1st April 2009 all renewable electricity generation technologies received 1 ROC/MWH generated However, banding of the RO was introduced in April 2009 to allow different levels of support for different technologies depending on their stage of development and their costs, with reviews of banding levels set to be undertaken every four years. Certificates can then be sold to electricity suppliers who are legally required to purchase ROCs to show that a specified quantity of electricity supplied can be accounted for by generation of renewables. NI Renewables Obligation (NIRO)

17. STRATEGYSUSTAINABILITYSAVINGS Sample of ROC/MWh Levels from 1 st May 2013 DETI, 2013

18. STRATEGYSUSTAINABILITYSAVINGS Sample ROC levels – 1 st May 2013

19. STRATEGYSUSTAINABILITYSAVINGS In May 2012 the Renewable Heat Premium Payment scheme was launched as an interim scheme to the RHI Phase 1 of the RHI was Launched in NI in November 2012 with a budget of £25 million up to 2015 Phase 1 concerns Non-domestic installations of renewable heat Phase 2 (Domestic installations) launched in Autumn 2013 The technologies that are to be covered under phase 1 of the RHI are: -solid biomass and solid biomass contained in municipal waste (including CHP) -ground and water source heat pumps, -geothermal (including CHP) - solar thermal (at capacities of less than 200 kWth) -biogas combustion (except from landfill gas but including CHP; at capacities of less than 200 kWth) -biomethane injection. NI Renewable Heating Incentive (RHI)

20. STRATEGYSUSTAINABILITYSAVINGS NI RHI Tariffs

21. STRATEGYSUSTAINABILITYSAVINGS Technologies CTG011 www.carbontrust.co. uk/publications http://www.seai.ie/Publication s/Renewables_Publications_/

22. STRATEGYSUSTAINABILITYSAVINGS Technologies - Wind Considerations: Scale Noise Flicker Visual Impact Ecology Transportation Grid connection

23. STRATEGYSUSTAINABILITYSAVINGS Technologies - Wind

24. STRATEGYSUSTAINABILITYSAVINGS Considerations: High head low flow Low head high flow Turbine type Ecology Civil costs Resource Technologies - Hydro

25. STRATEGYSUSTAINABILITYSAVINGS Carbon trust images Considerations: PV or Thermal Insolation Shading Roof structure Matching demand Cleaning Guarantees Technologies - Solar

26. STRATEGYSUSTAINABILITYSAVINGS Solar thermalPhotovoltaic Technologies - Solar

27. STRATEGYSUSTAINABILITYSAVINGS Technologies - Biomass Considerations: Size Pellet or chip or other Water, Steam, Gasification Fuel supply Contract terms WID

28. STRATEGYSUSTAINABILITYSAVINGS Technologies - Biomass

29. STRATEGYSUSTAINABILITYSAVINGS Technologies – Anaerobic Digestion Considerations: Advanced All revenue streams Blend of feedstock Feedstock security Long term commitment Operation and maintenance Grid

30. STRATEGYSUSTAINABILITYSAVINGS Technologies – Anaerobic Digestion

31. STRATEGYSUSTAINABILITYSAVINGS Prioritise the business case for all your options Exhaust all more cost effective alternatives Identify, verify and secure your resource Identify the most cost effective technology Produce project finance model Minimise your risk finance journey Get planning permission and any other consents Get a grid connection Secure equipment guarantees and maintenance costs for the lifetime of the project Summary

32. STRATEGYSUSTAINABILITYSAVINGS Facilities and Energy Management Ltd 250 Ravenhill Road Belfast BT6 8GJ T: +44 (0) 8456 891 257 M: +44 (0) 7513 994 936 F: +44 (0) 2890 466509 E: david@fandem.co.uk W: www.fandem.co.uk Thank you for listening