Private Equity’s Perspective On ASEANRenewable Energy

LIM, Yong LeeManaging DirectorMizuho Asia Partners Pte. Ltd.

Biomass Asia Conference 2013

20th May 2013

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Renewables Provide 82% of New US Electrical GeneratingCapacity in 1Q2013

Renewable energy (“RE”) sources (i.e., biomass, geothermal, solar,water, wind) accounted for 82% of all new domestic electricalgenerating capacity installed in the first three months of 2013 for atotal of 1,546 MW.

The balance (340 MW) came from natural gas. Coal, nuclearpower, and oil have provided no new generating capacity thus farthis year.

Renewable sources now account for nearly 16% of total installedU.S. operating generating capacity. This is more than nuclear(9.15%) and oil (3.54%) combined.

The path towards a zero-coal, zero-nuclear future becomes clearer.Source: Federal Energy Regulatory Commission & US Energy Information Administration.

Headline News

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What The Future Holds For Renewables Bloomberg New Energy Finance Renewables will account for between 69% and 74% of new power

capacity added between 2012 and 2030 worldwide. Driven by further improvements in the cost-competitiveness of wind

and solar technologies and an increase in the roll-out of non-intermittent clean energy sources like hydro, geothermal andbiomass.

International Energy Agency 57% of power capacity added globally between 2012 and 2030 will be

from renewable resources (including large hydro). ENTSO-E Europe's share of generation capacity using renewable sources will

rise to at least 40% by 2020, exceeding capacity fueled by coal,natural gas and oil. It will reach 50% by 2030.

We are beyond the tipping point towards a cleaner energy future.

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Natural Disasters Shape Public Opinion Gallup Poll: 58% of Americans are worried

about global warming (55% in 2012 and51% in 2011).

2010 Pentagon Primary PanningDocument: “Climate change, energysecurity, and economic stability areinextricably linked”.

HSBC: “Peak Planet” scenario - globalcarbon budget from 2000 to 2050 will beconsumed well before 2030. There isclearly growing awareness of the severityof climate change impacts, because it isalready being felt, and a growing publicopinion that is supportive of action.

We are beyond the tipping point towardsa cleaner energy future.

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Renewables Attracting Investment Funds

Renewables fund managers are looking to new emerging marketsto tap expanding economies and accelerating power demand.

While Asia’s biggest emerging nations for clean energy are Chinaand India, others such as South Korea, Thailand and Philippinesare starting to attract more investments.

More emerging countries are establishing regulatory frameworksto support clean energy and are also now stepping up measures tocurb carbon output.

A growing consensus that to address climate change and energysecurity, we must move towards renewable energy in electricitysupply and eventually to provide renewable energy to offset fossilfuels in transportation and heating.

Even Warren Buffet’s Berkshire Hathaway has invested heavilyinto renewables via Mid American Renewables LLC.

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Biomass In Electricity Generation

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IEA : World Energy Mix 2020-2035

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IEA : Generating Cost By RE Technology Type

Will ASEAN Be A PartOf The CleanerEnergy Future?

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Can ASEAN Attract Funds For Renewables?

Pace of industrialization and urbanization in ASEAN countries areaccelerating. Energy demand is increasing. Motor vehicles population is rising. More solid waste and waste water are being generated. Greater consumption of meat and diary driven by higher

incomes and purchasing power. Increasing demand for energy will underpin a stronger and

buoyant energy market and energy price (if left to market forces). More agricultural & animal wastes will be generated by increased

production of food crops, industrial crops and livestock. Supportive policies are in place in the form of FIT schemes and tax

incentives to promote and accelerate growth of renewable andclean energy.

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The Case For Investing In ASEAN Renewables

GDP growth rate of 5.2% per annum from 2007 to 2030. Energy consumption in ASEAN will grow at an average annual rate

of 4.4% from 375 MTOE in 2007 to 1,018 MTOE by 2030. Electricity will see the highest growth rate at 6.4% per annum. The rapid growth of electricity demand will drive increasing use of

coal. To lessen the environmental impact of coal use by having a more

balanced mix in electricity generation by (a) utilizing cleaner coaltechnologies (including co-firing) and (b) accelerating thedevelopment of clean and renewable energy.

ASEAN will continue to be heavily dependent on oil. ASEAN hasbecome a net importer of oil and net imports will further increasein the future in view of stagnating or declining oil production andrapidly increasing demand.

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ASEAN Energy Mix

ASEAN’s energy mix isvery dependent onfossil fuels especiallyoil and gas.

ASEAN’s electricitygenerating sector isheavily dependent onnatural gas andincreasingly coal.

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ASEAN Has Abundant Biomass Resources

ASEAN has abundant biomass and animal waste resources forrenewable energy development. Palm oil : Indonesia & Malaysia are the No. 1 & 2 producers in

the world. Coconut : Indonesia and Philippines are the No. 1 & 2 producers

in the world. Rice : Indonesia, Vietnam, Thailand, Myanmar, Philippines and

Cambodia are the top 10 producers in the world. Chicken : Indonesia, Malaysia, Thailand & Vietnam are top 20

producers in the world. Pig : Vietnam, Thailand and Philippines are top 10 producers in

the world. Cattle : Indonesia and Myanmar are major producers. Thailand

and Vietnam also has a sizeable cattle rearing industry.

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Formulate policies to promote the utilization of renewables. FIT schemes. Provide incentives (including tax incentives) to encourage

further development of renewable energy. Gradually remove subsidies to fossil fuel energy.

Challenges: Reliability of supply and quality. Long term contracts with captive off-take. Cheap feedstock. Logistical nightmare especially with palm biomass.

• Collection.• Transport.• Storage.

Providing Conducive Environment

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ASEAN Has Solid Foundation For Biomass RE

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ASEAN FIT Scheme & Electricity Tariff

Avg ElectricityTariff (UScents/kWh)

Biomass FITSchemeTariff (UScents/kWh)

Singapore 20 N.A.Philippines 12 16Vietnam 11 N.A.Thailand 11 Adder 1 to 1.7

12 for MSWMalaysia 9 10

0.5% annualdegression

Indonesia 8 10

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Potential Sector For Investment

Biogas from animal wastes: Chicken. Pigs. Cattle.

Biomass from agricultural wastes: Palm EFB and POME. Rice husk. Coconut. Power Generation.

• Mother & Daughter mills concept for palm oil mills. Pellet production from palm EFB, rice husk and coconut shells.

MSW waste (power generation & pellet production).

Biomass is biological carbon based material derived from living, or recentlyliving organisms applicable to both animal and vegetable derived material

The carbon used to construct biomass is absorbed from the atmosphere ascarbon dioxide (CO2) by plant life, using energy from the sun. Plants maysubsequently be eaten by animals / human and thus converted into animalbiomass / human waste.If not eaten it is generally either broken down by bacteria or burned. Then it willreleases the carbon back to the atmosphere, mainly as either carbon dioxide (CO2)or methane (CH4) These processes have happened for as long as there have beenplants on Earth and is part of what is known as the carbon cycle.

Two main technology options to make biomass as RE i.e. release energydirectly in form of heat or electricity :

Thermal (Combustion / gasification)use of biomass direct or pallets / briquette

Chicken waste

Plant waste

Biochemical (Anaerobic Digestion)use of bacteria

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Why Biomass/Biogas As Renewable Energy?

POULTRY WASTES

MONITORING POND

SECONDARY/TERTIARYWASTEWATERTREATMENTFACILITIES

Anaerobic technology is well proven

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Biochemical Technology

A form of project financing, wherein a private entity receives a concession from the owner to finance,design, construct and operate the facility in exchange for an offtake purchase agreement to guaranteethe purchase and payment of the products or services. At the end of the concession period, thefacility is given back to the owner for free.

ProjectCompany:Sure AgroVenture

ProjectCompany:Sure AgroVenture

OfftakePurchaser (EMC

& Owner)

OfftakePurchaser (EMC

& Owner)

Operation &Maintenance(O&M) Co(STOVER)

Operation &Maintenance(O&M) Co(STOVER)

Engineering Construction& Procurement (EPC) Co

(ANAERGIA)

Engineering Construction& Procurement (EPC) Co

(ANAERGIA)

Lenders(Leasing Co /

Bank)

Lenders(Leasing Co /

Bank)

Investor( Simfoni

SURE Global)

Investor( Simfoni

SURE Global)

OWNER :XXXXX

(supply land /feedstock for free)

OWNER :XXXXX

(supply land /feedstock for free)

BOT Concession Agreement for 12 years

Offtake Purchase Agreement

O&M AgreementEPC Agreement with Performance Bond

Lending Agreement

Shareholders Agreement

After end of 12 years,the plant will be givenback to the owner(NO FEEDSTOCK RISK)

Legislated to buy fromRE producers below 10MW at open market rate.(NO OFFTAKE RISK)

5 plus 5 years O&M contract@ US$400,000 per year byAnaergia / Stover(REDUCE RISK OFOPERATION FAILURE)

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Business Model: Singapore BOT Concession

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Business Model: Singapore BOT ConcessionSingapore Concession - BOT for Hi-Tech

Chicken Layer Farm

Attractive Concession Terms 12-year concession Free use of land Free feedstock Permission to take in other waste to

collect tipping fees

Attractive RE terms Legislated offtake by Energy Market

Company Pte Ltd (80%) 20% power sold back to Owner Good tariff rate at US$0.16/kWh (per

kilowatt hour)

A new 14.7 hectare farm in Lim Chu Kanghas 500,000 chicken currently and plans toincrease to 1,000,000 in response toSingapore Government’s effort to increaselocal production of eggs from 23% to 30%.

However, to expand, farm needs to properlytreat the chicken waste and to achieve zerodischarge.

Daily volume manure to treat:80 tons & will increase to 130 tons

Daily volume manure to treat:80 tons & will increase to 130 tons

Designed by US leadingtechnology provider Anaergia withover 1,600 installations worldwide

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Business Model: Philippines BOT ConcessionMost of the 5 concessions are with leading MNCs in Philippines, namely Pepsi and SanMiguel and San Miguel’s contractors.75% of the projects are completed pending additional funding to complete with cash flowcoming in from 3 to 6 months.

ProjectCompany:

SimfoniSure

Philippines

ProjectCompany:

SimfoniSure

Philippines

OfftakePurchaser

(Phil NationalGrid & Owner)

OfftakePurchaser

(Phil NationalGrid & Owner)

Operation &Maintenance

(O&M) bySimfoni SurePhilippines

Operation &Maintenance

(O&M) bySimfoni SurePhilippines

EngineeringConstruction &

Procurement (EPC) CoSURE Inc

EngineeringConstruction &

Procurement (EPC) CoSURE Inc

LendersMGL & BPI

LendersMGL & BPI

Investor(Simfoni Sure

Global)

Investor(Simfoni Sure

Global)

OWNERs :(Pepsi, San

Miguel & SanMiguel’s

contractors)

OWNERs :(Pepsi, San

Miguel & SanMiguel’s

contractors)

Offtake Purchase Agreement

EPC Contract (already completed)

Lending Agreement

Shareholders Agreement

Land – free useFeedstock (Biogas) : free wasteFeedstock (Biomass) : purchase /site with abundance of feedstock(NO / LOW FEEDSTOCK RISK)

Purchase agreementwith National GridCaptive buyback byowners(NO OFFTAKE RISK)

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Business Model: Philippines BOT Concession

A TOTAL OF 5 CONCESSIONS FOR GENERATION AND SUPPLY OF POWER USINGBIOMASS FROM RICE HUSK AND BIOGAS FROM PIG / CATTLE MANURE

SUREPEP Inc: Rice Husk 1.25 MW Biomass Project for Pepsi Bottling Plant1st of the 11 plants under “Pepsi Power Play” of converting diesel power to biomassto reduce energy cost and ensure energy security. Already been selected to doanother 2 plants of 2MW each in Cagayan de Oro and San Fernando.

SURE Vietnam Joint Stock Company: Pig Waste-to-Energy 2 MW Project for SanMiguel Purefoods Vietnam4,400 swine waste using Anaerobic Digestion in glass fused steel tanks producing 2MW of electricity to overcome power shortage.

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Business Model: Philippines BOT Concession

SURE Eco Energy Philippines, Inc : Pig Waste-to-Energy 3.4 MW Project for San MiguelContractorsa) Sumilao Hog Farm of Monterey Corp. in Sumilao, Bukidnonb) Silangan Swine Farm, Inc. in San Jose, Lipa City andc) Holiday Hills Stock & Breeding Farm Corp. in San Pedro, Laguna.

Treating over 10,000 sow level’s waste in three farms producing 3.4 MW of power sellingto the grid using anaerobic digestion in glass fused steel tanks.

SURE, Inc Amigo Excel : Pig Waste to Energy 1.6 MW Project for Amigo and Excel FarmsExcel / Amigo Farms are large-scaled pig farms with 30,060 and 20,150 heads respectivelyand use of anaerobic digestion to produce 1.6 MW of power.

SURE, Inc : Cattle Waste-to-Energy 1 MW Project for D’Meter Cattle Farm and SlaughterHouseCattle Dung, Slaughter House Waste, Other Green Waste using anaerobic digestion withepoxy coated steel tanks. Located in San Simon, Pampanga.

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Business Model: Philippines BOOT Concession

La Suerte (as per IFC website)Summary of Proposed InvestmentProject number : 30985Company name : SURE BioenergyCountry : PhilippinesSector1 : Bio-Mass - Renewable Energy GenerationEnvironmental category : B – LimitedDepartment : Reg Ind, Infra & Nat Res, ASIAStatus : Pending SigningProject DescriptionThe Project is a greenfield 5MW rice husk biomass power plant located in Isabela, Northern Luzondeveloped by Solutions Using Renewable Energy (“SURE”) for La Suerte Rice Mill (“LSRM”) under a10-year Build-Own-Operate-Transfer (“BOOT”) scheme. The Project will supply the electricity toLSRM, who is faced with inadequate and high cost of electricity mostly supplied with diesel fuel anddisposal of increasing rice husks. To address these challenges, LSRM (with help of SURE as BOTcontractor which will transfer the facility to LSRM after 10 years), decided to proceed with thisbiomass power plant project.

The present status: Total MW – 7 MW from 150 tons of rice huskInvestment – US$ 23 mIFC funding – US$ 15 m

Equity Needed – US$ 8 m

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Business Model: Supplying Biomass Pellets

Biomass fromagricultural wastes: Palm EFB. Rice husk. Coconut shells.

MSW Biomass. Pellets used for co-firing

in coal power plants. Export market. Local market.

Pellets

Thank You

Terima Kasih

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