Investment Opportunity in Romania ROM ENERGY

September 2009

Romania Investment Opportunity

26-02-2014
ROM ENERGY 2009 - Confidential. All Rights Reserved. 1

Investment Case
Opportunity to acquire a total capacity of 164 MW of Wind Farm Projects, benefiting from First-Mover Advantage in a business with proven track record in other EU markets and yet almost untouched in Romania
Mature project of 44MW, with Solid permitting process and located in a region with favorable wind conditions Additional pipeline of 120MW in different stages of development Additional potential projects identified, ready to start development First mover advantage Excellent growth platform for the Romanian market -> know how acquired on local market and regulations, will enhance the development of further wind projects Romania ended 2008 with an installed capacity of just 10 MW Key world players are entering the market Very attractive valuation at this early stage Romania is a fast-growing early stage wind energy market, considered to have the highest wind energy potential in the region Favourable and solid legal framework 38% of total national electricity consumption to be produced from RES by 2020 Wind Energy producers benefit from 2 Green certificates per 1MWh until 2015 Strong market growth Potential Demand for electricity will continue to increase in the future driven by: (i) demographics/ population growth (ii) strong economic growth and (iii) urbanization Price of electricity will continue to be driven by the strong investments required for Romania to accomplish EU targets (in terms of RES)
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Business Uniqueness

in one of the most attractive and promising EU wind energy markets

ROM ENERGY 2009 - Confidential. All Rights Reserved.

Investment Case
Present Investment opportunity comprises the acquisition of 158MW of Projects in Pipeline

44MW Tier I
1 Wind Farm project, located in the Oltenia region, already holding the urban zoning certificate, and with completed EIA, Aeronautical study and preliminary connection solution study. Building permit will be requested after Investor decision on Wind Turbines*

120 MW of Pipeline Projects

4 wind farms, located in the eastern region of the country, undergoing the development procedure: 1. Securing land (through superficies agreements, rents 2000-4000 eur per WTG, payable yearly after wind farm begins operation) 2. Joint venture agreement negotiation with municipalities (in cases where public land is necessary, for which 1.5% of the income generated by electricity sales of WTGs installed there is due to the municipality) 3. Preparation of all studies required by relevant authorities, in view of obtaining connection and building authorizations 4. The remaining development and licensing process can be handled by ROM ENERGY staff

*Note: Licensing process was developed using Vestas V90 2.0MW reference turbines

ROM ENERGY 2009 - Confidential. All Rights Reserved.

Agenda
. . .
Wind Projects Overview

Romania Country Snapshot

ROM ENERGY Overview

ROM ENERGY 2009 - Confidential. All Rights Reserved.

Agenda
. . .
Wind Projects Overview

Romania Country Snapshot

ROM ENERGY Overview

ROM ENERGY 2009 - Confidential. All Rights Reserved.

Wind Projects Overview

Present Investment opportunity comprise the acquisition of 164 MW of Projects in Pipeline

List of Projects Tier I Project

Project #
1

Projects Location Map

Name Oltenia I

Capacity 44 MW
4

P01

transilvania nord

moldova

Projects in Pipeline (120 MW)

banat

transilvania sud muntenia nord

5

Project #
2 3 4 5

Name
Moldova I Dobrogea I Moldova II Dobrogea II

Capacity
34 MW 36 MW 20 MW 30 MW
oltenia muntenia sud
1

P02 P03 P04 P05

dobrogea

ROM ENERGY 2009 - Confidential. All Rights Reserved.

Agenda
.
Wind Projects Overview

a. Tier I Project
b. Projects in Pipeline

Romania Country Snapshot

ROM ENERGY Overview

ROM ENERGY 2009 - Confidential. All Rights Reserved.

Project Oltenia I - Snapshot

Key Features
Capacity Production Forecast 44MW 2.500h/P90 100 m hub (full load equivalent production hours per year, afer wake losses, safety cut, grid losses, own consumption and availability for a 2MW reference turbine) 100% secured Tenancy agreements (signed for a period of 49 years) Terms: 3.200/WTG Installed Dense distribution network adjacent A.T.R 13.09.2011

Location
Project Oltenia I (Located in TELEORMAN province) Site located on a rolling hills landscape, 90 meters above sea level, with no trees between WTGs, and at a safe distance from neighbouring forests No relevant bird habitats, or major environmental constraints, according to Environmental Agency Accessibility: National Road and other local farming accesses Potential area of expansion already under development

Land

Grid Connection

Permitting

Zoning Certificate issued Completed: EIA, aeronautical permit, sitting permit from operator, removal from agricultural circuit and land use change To do: grid impact assessment Building Permit estimated date: 2st semester 2012 Permits granted on the basis of 22 x Vestas V90 2.0 MW turbines (max 100m hub height and rotor diameter 95 m) HZ-93 rotor diameter 93 m may be changed according to investor requirements
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Other Features

ROM ENERGY 2009 - Confidential. All Rights Reserved.

Project Oltenia I - Layout

Wind farm polygon Site Picture

3D simulation according to optimized layout considered in energy production study

ROM ENERGY 2009 - Confidential. All Rights Reserved.

Project Oltenia I Production and Wind Resource Assessment

Measurement data from a metmast commissioned on April 2009, with 2 anemometers at 15m and 40m height, is available ROM ENERGY SEACA has performed studies based on this data to produce annual production estimates Results obtained up to the present moment: Mean wind speed of 5.65 m/s avg at 40m height Production estimation of 2.800 full load hours per year for the Vestas V90 2.0 MW reference turbine, based on the WaSP calculation model Good correspondence between local measurements and mesoscale simulation based on NCEP/NCAR Reanalysis data set, allowing for lower uncertainty in long-term resource prediction

Note: Study based on the wind resource assessment of 8 months since April 2009, combined with a virtual wind data series obtained by mesoscale simulation from the NCEP/NCAR Reanalysis data set. Study based on Vestas V90 reference turbines, with 100m hub height Wind monitored using 40m measurement mast equipped with two anemometers (40m, 15m) and wind vane

ROM ENERGY 2009 - Confidential. All Rights Reserved.

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Project Oltena I Licensing process

Throughout the licensing process of its own pipeline, ROM ENERGY has acquired an extensive expertise in the development of wind farms in Romania which ensures solid permitting procedures for project Oltenia I
Licensing Process Current Status Main Issues / Comments
Project was developed based on Vestas V90 turbines. Equipment can be changed in order to apply for final building permit
No major obstacles to adjust permits to other technology Expected duration until start of construction: 1 year Environmental Decision EIA. View expressed by the environmental authority. Distances from sites of biodiversity . Next Steps On 09/13/2011 A.T.R release. Corridor acquisition of 110 KV Network. The purchase agreement. concluded between ROM ENERGY SEACA and CEZ DISTRIBUTION. Technical project approval (building + connection) Apply for environmental permit Apply for ATR Apply for Building permit Turbines RFP + selection and signing of the delivery contract

Zoning

Valid local zoning plan Land destined for wind farm projects and all necessary infrastructure, certified by Zoning Certificate on April 2011, valid for 24 months.

Connection Agreement

Building Permit

Due to the pace of technology developments regard production of energy from renewable sources WTG brand will be chosen by the investor.

Construction works selection of subcontractors Close PPA (green certificates)

ROM ENERGY 2009 - Confidential. All Rights Reserved.

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Agenda
.
Wind Projects Overview

a. Ready-to-Build Project
b. Projects in Pipeline

Romania Country Snapshot

ROM ENERGY Overview

ROM ENERGY 2009 - Confidential. All Rights Reserved.

12

Projects in Pipeline - Main features

2 3

Oltenia I (44MW)

Dobrogea I (36MW)

Site Features

Project was developed based on 22 Vestas V90 turbines Agreements signed Since 23.04.2009 Avg 40m = 5.65m/s 2.800 hpc (Based on Internal studies)
4

Project was developed based on 18 Vestas V90 turbines Agreements being signed Estimated to be completed by April 2012 Measurements from to April 2009 to November 2011 Avg 50m = 5.65 m/s 2.900 hpc (Based on Internal studies)

Land

Wind Measurement Production Forecast

Moldova II (20MW)

Dobrogea II (30MW)

Site Features Land Wind Measurement

Project was developed based on 10 Nordex N90 turbines Agreements being signed Estimated to be completed by April 2010 Mesoscale assessment underway 2.600 hpc (Based on Internal studies)

Project was developed based on 15 Vestas V90 turbines Agreements being signed Estimated to be completed by August 2010 Mesoscale assessment underway 2.600 hpc (Based on Internal studies)
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Production Forecast

ROM ENERGY 2009 - Confidential. All Rights Reserved.

Agenda
. . .
Wind Projects Overview

Romania Country Snapshot

ROM ENERGY Overview

ROM ENERGY 2009 - Confidential. All Rights Reserved.

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Romania Country Overview

Macroeconomic Overview
Domestic consumption and investment have fueled strong GDP growth in recent years, although leading current account imbalances Inflation rose last years, driven by strong consumer demand, high wage growth, rising energy costs Last quarter of 2008 the country began to feel the effects of the global crises. In 2009 the economy is expected to suffer a contraction in real GDP of 4%, as domestic demand slumps Romania Expects to adopt the euro by 2014.
Population Capital Area Currency Official Language Inflation rate GDP GDP per capita

Key Indicators
22.2 million (July 2009est.) Bucharest 238.0 thousand sq km Romanian leu Romanian 7.8% (2008 est.) US$ 271,2 bn US$ $12,200

Key Milestones

Source: CIA worldbook, ROM ENERGY 2009 - Confidential. All Rights Reserved. 15

Romania Country Overview

Economic prospects
Expected long term economic growth, above EU average, after recovery in 2010. Recovery pace and strength will reflect the restoration and broadening of the economic reforms agenda initiated before EU accession Under the IMF-led multilateral financing package, the government will have to rein in budget spending and begin the long-overdue task of reforming the budget system to improve long-term fiscal sustainability current-account deficit is expected to narrow sharply in 2009-10 as a percentage of GDP. Coverage of the deficit by foreign direct investment will decline from recent high levels Macroeconomic key Indicators forecast (2009-2013)
Key Indicators Real GDP Growth (%) Consumer Price Inflation (av; %) General Government budget balance (% of GDP) Current Account Balance (% of GDP) Comercial Bank Lending Rate (End-Period; %) Exchange rate Lei: US$ (av) Exchange rate Lei: (av)
Source: EIU

2008 E 7.1 7.8 -4.8 -12.4 17.5 2.52 3.68

2009 F -4.0 5.1 -4.8 -7.2 17.0 3.10 4.21

2010 F 1.5 3.3 -3.7 -6.4 14.0 3.04 4.21

2011 F 4.2 3.2 -2.9 -6.6 10.0 3.00 4.25

2012 F 4.3 3.1 -2.3 -6.9 8.0 2.92 4.23

2013 F 5.1 2.8 -1.8 -7.2 6.5 2.88 4.23

ROM ENERGY 2009 - Confidential. All Rights Reserved.

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Romania Energy Industry

Romanias energy sector ranks among the oldest in the world, being the first country to produce oil commercially, and among the first to generate electricity commercially; Romania has important oil and gas reserves and significant quantities of lignite Total electricity production reached about 64TWh in 2008 Thermal generation comprises over half of the electricity produced in Romania with coal as the dominant fuel Nuclear has been increasing its weight -> 2nd 700 MW unit of Nuclearelectrica at Cernavoda started operations in September 2007. Additional reactors totaling 1.440 MW are planed to be operational by 2015 RES As part of the EU and the Kyoto Protocol, Romania has an annual carbon allowance for electricity producers. Nonetheless, Romania utilities do not incur net costs for carbon Total electricity consumption in Romania in 2006 was 53 TWh, the third largest in Central Europe after Poland and Czech Republic
Source: Transelectrica ROM ENERGY 2009 - Confidential. All Rights Reserved.

Electricity production Installed Capacity 2008 (MW) Total = 20.280 MW

wind 8 0% nuclear 1.413 7%

coal 7.472 37%

hydro 6.377 31%

hydrocarbons 5.110 25%

Electricity production sources 2008 (GWh) Total = 64.772 GWh

wind 11 0% nuclear 11223 17%

coal 27531 43%

hydro 17105 26%

hydrocarbons 8902 14%

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Romania Transmission Grid

Transmission Grid main features
Romania has an extensive power transmission grid of about 600.000 Km length and a total transformer capacity of about 172.000 MVA Transelectrica is the Romanian state owned power transmission company. The company started its privatization process through an IPO in 2006 and is currently listed in Bucharest Stock Exchange; Several regional distribution grids are operated by International Market Players (E.ON, CEZ and ENEL) Current access to the grid is regulated Romania has 14 tariff zones. Transmission tariffs contain both generation and a load component Future grid developments include the construction of several transmission lines with neighboring countries (Ukrania, Hungary and Turkey)
Source: Transelectrica

Transmission Grid Map

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Romania Wind Energy Sector

Romanian wind energy industry has a strong growth potential
Favorable regions in Romania Romania is considered to have the highest wind energy potential in the region Excellent wind conditions for an on shore site Large areas with wind speeds over 11m/s Low installed capacity: 10 MW (as of Dec 08) Currently, wind energy represents less than 1% of Romanias energy production sources According to recent data published by ISPE(1) concerning wind energy: ISPE has performed studies for a total capacity of 18.000 MW Of which 8.000MW have received the approval for the grid connection assessment study More than 3.000MW have been given technical connection approval from Transelectrica More than 800MW have already grid connection contract According to RWEA potential for wind energy in Romania has been estimated to be around 14.000 MW
(1) (2) ROM ENERGY 2009 - Confidential. All Rights Reserved. Institutul de Studii i Proiectri Energetice Theoretical wind power generating capacity potential according to GD 1069/2007 Energy strategy of Romania for 2007-2020 has been estimated to be 23 TWh Source; RWEA

(Wind Resource Assessment)

Moldova region (Project Moldova I location)

Dobrogea region (e.g. Constana, Tulcea)

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Romania Wind Energy Sector

Romania is far behind EU average in terms of installed power. Wind energy density is one of the lowest in Europe as well
Wind powers share of national electricity demand
Denmark Spain Portugal Ireland Germany EU-27 Greece Netherlands Austria Estonia UK Italy Sweden France Luxembourg Lithuania Latvia Belgium Bulgaria Hungary Czech Poland Finland Slovakia Romania Slovenia Mal ta Cyprus
21,30% 11,80% 9,30% 8,40% 7,00%
3,80% 3,70% 3,40% 3,30% 1,80% 1,80% 1,70%

Installed wind capacity, kW/1000 inhabitants

Denmark Spain Germany Portugal Ireland Austria EU-27 Netherlands Sweden Greece Luxembourg Italy Estonia UK France Belgium Finland Lithuania Latvia Czech Bulgaria Poland Hungary Slovakia Romania Slovenia Malta Cyprus
579 367 270 203 193
120 116 107 88 78 71 47

1,30% 1,20% 1,10% 1,10% 0,90% 0,70% 0,50% 0,40% 0,40% 0,40% 0,30% 0,00% 0,00% 0,00% 0,00% 0,00%

Source: EWEA (2007)

45 40 40 28 21 15 12 11 10 7 6 1 0 0 0 0

Source: EWEA (2007)

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Romania Wind Energy Sector

Although, current immaterial installed capacity, main industry players have already shown their interest to invest in Romania Competitive landscape
International Utilities / Large players
CEZ has two large projects Fantanele & Cogealac of about 600MW located in Dobrogea region (will be the largest onshore wind farm in Europe) Enel has plans to build several wind farms with total capacity of 1,400 MW Iberdrola acquired in 2008 about 50 wind farm projects of 1.600 MW for US$450 million EDP Renovaveis has a pipeline of about 297 MW The swiss conglomerate, Cofra Group, plans to invest US$ 1,65bn in 2 wind farms (700 MW in Dobrogea + 400 MW in Neamt and Suceava) Other players include E.ON, Verbund

Regional / Local Companies

Electrica and Green Energy, have plans to build 600 MW with total investments of about US$800 million Blue Investment will invest US$84 million in a 35MW wind farm in Baia, Tulcea County Hungarian company, Sinus Holding, will build five wind farms of 700 MW in the Northern Moldavia Region with a capital investment of US$800 million

Other Players
Blackstone Group plans to invest US$1,4 billion in a 500 MW off-shore wind farm located in the Constanta Country Region of the Black Sea Other renewable players including several local and international developers

ROM ENERGY 2009 - Confidential. All Rights Reserved.

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Romania Wind Energy Sector

Favourable Regulatory Framework
Legal framework related to RES General provisions for promotion of renewable energy sources (Energy Law 13/2007) Energy strategy of Romania for 2007 - 2020 Romania has transposed the Directive 2001/77/EC (European Unions rules to comply with Kyoto targets of reducing greenhouse gases) into its own legislation (GD no. 443/2003 with modification of GD no.958 / 2005 current RES framework). National Action Plan to be submitted by June 2010 Electricity share produced from RES should represent 38% of total national electricity consumption by 2020 The share of energy produced from RES in gross national energy consumption should reach 24% in 2020
Souce: Ministry of Economy

In 2008 the Romanian Parliament reinforced the tradable green certificate (TGC) support scheme as an incentive to develop renewable electricity generation (Law 220/2008)
Law 220/2008 has also extended the validity of quota obligation from 2,74% in 2007 up to 16,8% by 2020 ANRE, the Romanian electricity market regulator, has proposed a new decree which extends Renewable legislation beyond 2012, and improves on the terms of the current Renewable regime

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Romania Wind Energy Sector

Favourable Regulatory Framework Pricing Conditions
Price components (Wholesale + Green Certificates): 1. Brown Energy price (wholesale price): Renewable electricity is sold at the market electricity price through bilateral agreements or on day ahead market 2. Green certificates (GC): 1MWh of renewable energy from an existing facility metered and verified by certifying agency The law sets out the price range per GC (indexed to Euro): 27- 55 (previous range 24 - 42) 2 GC/MWh until 2015 and 1 GC from 2016 onwards Green Certificates are freely negotiated between utilities and RES generators

Investment Aid / Structural Funds

Structural funds are an important mechanism to fund the development of Wind Projects SOP Increase of Economic Competitiveness Priority Axis 4 -> Improvement of energy efficiency and sustainable development of the energy sector Main features investments in upgrading, rehabilitation and building new power and heating production capacities by valorisation of renewable energy resources: wind, hydro (in small scale hydro capacities), biomass, biofuels, solar, geothermal, and other. Financial allocation (2007-2013) 260 million (220 million from EU and 40 million from National Contribution) Maximum value of financing (% from eligible expenditures): 70% /60%/ 50% for small/ medium/ large companies respectively (60%/50%/40% if located in Bucharest area) Total project value: min 100.000 (355.000 lei) and max. 50.000.000 with a max. financing from EU funds of 20.000.000 (71.000.000 lei)

Utilities are legally obliged to provide a certain minimum share of energy produced from RES in their total yearly sale
Utilities can choose between generating its own RES energy or buying from another generator to meet the RES requirement Non-compliant must pay a penalty 84/MWh for 20082012 (63/MWh for 20052007)

GC Market will be extended to other countries after 2010 (selling GC to other countries will be possible under conditions defined by ANRE and if national quotas are fulfilled)
Wind Farms operators can negotiate PPAs with extended maturities
ROM ENERGY 2009 - Confidential. All Rights Reserved.

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Agenda
. . .
Wind Projects Overview

Romania Country Snapshot

ROM ENERGY Overview

ROM ENERGY 2009 - Confidential. All Rights Reserved.

24

ROM ENERGY Project Development Methodology

Over the past years, ROM ENERGY SEACA has been improving its project development methodology in order to ensure the adequate strength of its pipeline
Pre-Development Project Development
Permitting (zoning, environmental, building, etc.) Procurement (e.g Turbines) , Power sale, Project Finance Wind measurement / Production Assessment

Construction and operation

Construction Secure Grid connection

Pipeline assessment / sites selection

Prospecting

Land Agreements

Selection of key geographies Rigorous pipeline classification (several levels) according to an extensive criteria list Sites are visited by an ROM ENERGY specialist

Well defined process for pipeline progression (priorities and investments based on clear rules and criteria) Development approach adapted to country specificities Process managed by local team in coordination with centralized core competences (e.g. Technical, Financial, etc.) Studies conducted by the most credible institutes / consultants Wind resource assessed on a regular basis for at least 2 years. Internal assessment is cross checked with external experts studies Strong and comprehensive due diligence performed throughout the licensing process by the major and most credible law firms in each country

ROM ENERGY 2009 - Confidential. All Rights Reserved.

Operation
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Contacts

ROM ENERGY SEACA Manu Marian Tel 004.0743.04.18.18 Fax 004.0243.27.33.88 Email: energy_wind00@yahoo.com

ROM ENERGY 2009 - Confidential. All Rights Reserved.

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