Technical Due Diligence Renewable Energy We build with Passion!

Technical Due Diligence

Renewable Energy

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When investing in or developing major energy projects, you need to understand and mitigate all technical risks before you decide to commit.

The technical due diligence report can help you understand the technical feasibility of your project with a full technical risk review. Main sectors of interest:PhotovoltaicWindBiogas and BiomassGeothermalHydroelectric

Technical Due Diligence for Renewable Energy Projects

We build with Passion!

Technical Due Diligence for Renewable Energy Projects

We build with Passion!

The Technical Due Diligence can definitely help you:

Understand and mitigate a variety of technical and socio-environmental risks before you commit your valuable time and resources to the projectIdentify technical risks that could compromise your project’s profitability and bankabilityEnsure that the technical feasibility of the project makes for a sound investmentEnsure that all factors have been accounted for in the development process

Technical Due Diligence for Renewable Energy Projects

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Legal Frame for Renewables – National Regulatory

Law no. 220/2008 regarding the promotion of renewable energy sources, successively amended and supplemented by:

Government Ordinance no. 29/2010 Government Emergency Ordinance no. 88/2011

Law no. 134/2012 for the approval of GEO 8011, amending and adjusting law 220/2008 8/2

Law no. 123/2012 regarding electricity and gas Government Emergency Ordinance no. 57/2013 published in the Romanian

Official Gazette no. 335 dated 7 June 2013 which will enter into force on 1 July 2013 (“GEO 57”)

Technical Due Diligence for Renewable Energy Projects

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Incentive Scheme – Number of Green Certificates

On 4 June 2013, however, the Romanian Government approved by way of an Emergency Ordinance new measures applicable to the RES sector as of 1 July 2013. The new measures (described herein) aim at discouraging future investments in the renewables sector, but they are also impacting operational investments, thus breaching investors’ legitimate expectations. Temporary suspension of the number of GCs granted to certain technologies: Starting with 1 July 2013, the issuance of a certain number of GCs will be deferred, as follows: new hydro-power plants (below or at 10 MW): 1 GC deferred;wind: 1 GC deferred;photovoltaic: 2 GCs deferred. The deferred GCs shall be recovered starting with March 2017 for new hydro-power plants and solar, and with January 2018 for wind. The recovery of the deferred GCs will be done in steps, according to a methodology to be adopted by the regulator.

Technical Due Diligence for Renewable Energy Projects

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THE PROJECT

The Sponsor The developer of the Project

The Bank The project submitted for funding or re-funding

The technical advisor - understand the technical feasibility of your project with a full technical risk review

Our Area of Expertise on Renewable Energy Projects

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The Due Diligence analysis is carried out taking into account all the relevant factors that might influence the project, and providing any practical suggestions to render the relevant Project bankable, according to the applicable Scope of Work.

Normally, two phases are identified:

Pre-closing Phase: Due-Diligences are based on documentation provided by means of a comprehensive checklist and on-site surveys for site feasibility assessment. Due-Diligence activity includes site assessment, design review (including quality check of proposed components), authorization check, productibility/cash flow calculations, contract analysis (EPC, O&M)

Post-closing Phase: Construction Monitoring Reports, including supervision of work management construction and Acceptance Tests; Operation & Maintenance monitoring to assure the design performance

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Our Area of Expertise on Renewable Energy Projects

• Changes in Legislation• Projects over the installed capacity

Legal risk-

Regulatory

• Off–take contracts • Dispatching risk

Market risk

• Permitting process• Limited grid capacity

Development risk

• Prices predictability [energy and green certificates]• Green certificate price

Revenue risk

Main issues with impact on projects’ bankability

Operational risk

• Inexperienced local operators• Few international players with limited track record on local market

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Our Area of Expertise on Renewable Energy Projects

Main issues with impact on projects’ bankability

Risks- checks to be done Conclusions Observations

Authorizations The permitting procedure appears to have been followed correctly and in partnership with the local authorities.

Documentation was made available.

Location/Land The location has good access and good connection to the grid

Location has good potential

Components type The components are to be considered of adequate quality and performance for the design of the project.

Project was developed in partnership with the local authorities.

Connection The connection is a sound and accessible one.

The connection solution is a sound and accessible one.

Electrical and power estimate The outcome of the power data assessment is aligned with expectation, on the basis of the design documentation

No major investment is required to connect the project.

Scheduling The project appears to be technically, economically and financially feasible.

Project scheduling was streamlined. A legal due diligence could confirm inaccuracies.

On a documental basis, no critical issues that could affect the construction of the plant have been identified.

Our Experience – Due Diligence Reports for Romanian Banks and Investors

Project: Wind Farm 27,5 MW Nalbant, Tulcea County, RomaniaStatus: Ready to build Reports: Preliminary Due Diligence Report and Independent Engineer Report

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Project: 4 Hydro Plants Boia, RomaniaStatus: Ready to build Reports: Preliminary Due Diligence Report and Independent Engineer Report

Our Experience – Due Diligence Reports for Romanian Banks and Investors

Project: Wind Farm 27,5 MW Nalbant, Tulcea County Romania

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WTG Type Power Diam. Hub V average Gross Prod. Wake Losses Tec. Losses Energy Yield (AEP) Full load h CapacityNr. (MW) (m) (m) (m/s) (MWh/y) (%) (%) (MWh/y) FactorT1 GE2.75 2.75 103 98.5 6.94 8 645 3.94 8.0 7 613 2 768 0.32T2 GE2.75 2.75 103 98.5 7.02 8 804 5.84 8.0 7 586 2 759 0.31T3 GE2.75 2.75 103 98.5 7.46 9 683 4.41 8.0 8 481 3 084 0.35T5 GE2.75 2.75 103 98.5 7.33 9 302 7.25 8.0 7 884 2 867 0.33T7 GE2.75 2.75 103 98.5 6.74 8 063 9.31 8.0 6 667 2 424 0.28

Project 13.75 7.10 44 497 6.15 8.00 38 231 2 780 0.32

Contact

DELIA RAUCESCU

[email protected] +40 737 012 55525A Emanoil Porumbaru Street3rd floorBucharest, Romania www.optimpm.com