1er FUNSEAM Symposium - FCC Project Alejandro Seco - FCC ENERGY IN LATIN AMERICA A DEVELOPMENT PROGRAM

FCC ENERGY IN LATIN AMERICAA DEVELOPMENT PROGRAM

- Private and Confidential -


FCC Energy Division FCC Energy Division Corporate structure

Founded in the summer of 2008, FCC Energy Division is the Business unit responsible for promotion, development and operation of Renewable Energy assets

FCC ED operates in Spain two solar thermal plants (CSP), two photovoltaic energy plants (PV) and fourteen wind farms, reaching a total power capacity of 541.8 MW

Recently FCC ED has won public tenders: one wind farm in Galicia (48 MW) and three wind farms in Catalonia (99 MW)

Outside Spain, the company aims to attract stable partners to support to continue its international assets expansion in the Renewable Energy sector

FCC International Projects

FM Green Power Investments

FCC Group

FCC Power Generation

Wind Olivento

Solar PV Helios

CSP Guzman

CSP Enerstar

Wind Galicia

Wind Cataluña

FCC Energia

Projects’ SPVs

Since mid 2008 FCC ED has developed an asset portfolio generating +€130 M of yearly recurrent EBITDA for the next 20 years plus

Source: FCC 2

2. FCC Energy Division

FCC Energy Division (FCC ED) is the Group’s business unit responsible for Renewable Energy development and operation


MW 421.8 20 100

3

2,134Equivalent hours

1,544 2,086

900GWh/year 31 208

Description14 wind farms in Galicia, Castilla y Leon, Castilla la Mancha and Andalusia

Two plants in Andalusia

Two plants in Comunidad Valencia

and Andalusia

Wind Assets PV Assets CSP Assets

Deal origination

Asset acquisition from Babcock & Brown

Proprietary development

Proprietary development

FCC ED currently operates 541.8 MW of Renewable Energy in Spain producing annually 1.1 TWh of electricity


Source: FCC


4Source: FCC

Wind

Solar CSP

Solar PV

Characterization of current asset portfolio for a full year EBITDA ( as if 2016)

Breakdown by capacity Breakdown by annual

energy produced (Estimated)

Breakdown by annual EBITDA (Estimated)

541.8 MW 1,140 TWh €130 M

Balanced Portfolio with respect to EBITDA contribution for sun and wind technologies

Current asset portfolio is dominated by wind in terms of capacity and production, while EBITDA contribution is similar for both sun and wind



5

FCC ED operating assets compromises a portfolio of 17 projects in Spain

El Redondal

Location: LeónNº turbines: 36Installed power: 30.6 MW

La Muela Norte

Location: ZaragozaNº turbines: 35Installed power: 29.8 MW

Valdeconejos

Location: TeruelNº turbines: 38Installed power: 32.3 MW

La Plata

Location: ToledoNº turbines: 25Installed power: 21.3 MW

Ernestar Villena

Location: AlicanteInstalled power: 50 MW

La Cerradilla I

Location: AlmeríaNº turbines: 25Installed power: 50MW

El Carrascal II

Location: AlmeríaNº turbines: 25Installed power: 50 MW

La Cerradilla II

Location: AlmeríaNº turbines: 11Installed power: 22MW

El Carrascal I

Location: AlmeríaNº turbines: 14Installed power: 28 MW

Helios 1 y 2

Location: CórdobaInstalled power: 20 MW

Solúz Guzmán

Location: CórdobaInstalled power: 50 MW

El Conjuro

Location: GranadaNº turbines: 20Installed power: 17 MW

El Sardón

Location: HuelvaNº turbines: 30Installed power: 25.5 MW

Sierra Trigo

Location: JaénNº turbines: 23Installed power: 15.2 MW

Serra do Cando

Location: PontevedraNº turbines: 44Installed power: 29.2 MW

Monte Seixo

Location: PontevedraNº turbines: 53Installed power: 29.2 MW

Serra de Loba

Location: LugoNº turbines: 18Installed power: 36 MW CSP

PV Solar

Wind

3. Description of Operating Assets

Source: FCC


6

The asset-specific O&M strategies will be supported by an integrated IT map

FCC Corporate Systmes

Purchases

Eco/Fin

Market Agents

Olivento Soluz-Guzmán

DCS / SCADA

Business Applications

RT Platform / Data Adquisition

Mar

ket O

pera

tions

Sys

tme

Web Acces / Global Asset Managment/ KPI’s / Reporting

CMS

(Con

ditio

n-Ba

sed

Mon

itorin

g Sy

stem

)

Sistema Gestión Planta / Transaccional

Phisical Asset Structure

Ope

ratio

ns

Mai

tnen

ance

Envi

rom

ent

Fuel

s

3. Description of Operating Assets

Source: FCC

1

Monitoring and central adquisition of plant data

2 Information Management

3 Operations Management

4

5

6

7

Maintenance and Logistics Managment

Integration with FCC Corporate systems

Enviroment Management

Reporting and KPIs


7

Drivers Rationale Impact for FCC ED

Regulatory risk offset in Spain

Stable cash flows with regulatory

risks stripped-off

The electricity regulation approved by the government (14/09/2012), eliminates the regulation uncertainty created during the 2011 and 2012 regarding taxation of renewable sources

It levies electricity production with a tax of 6% on revenues. Additionally it cuts to some extent incentives for natural gas-fired production for CSP units. We expect that final legislation will be softer than what it has been considered in projections

Overcapacity in Spanish Power

Generation sector

Limited investment

opportunities in Spain

The Spanish electricity system has a total installed generating capacity of 100,168 MW versus a peak of demand of 44,107 MW

Spain tops rankings of capacity installed for different renewable source: Solar PV 4,300 M; Solar CSP 1,279 MW (forecasted to increase to 2,425 MW in the medium term); and wind 21,558 MW

Experience acquired in one

of the most relevant markets

Financial and technical

capabilities to leverage on

FCC ED has developed its portfolio in one of the most competitive markets of renewable energies

FCC Industrial has done full EPC for the two CSP plants and the PV plant

World class financing and technical capabilities and strong relationships with technology/equipment providers

Our First Investment Programme (2009-2012), focused in Spain, has been successfully completed and will support our next Strategic Plan

Source: FCC, CNE, Protermosolar

4. Strategic Plan 2012 – 2016 overview

8

Servicios Ciudadanos

Internationalization to diversify risks (resource, regulatory, market conditions)….

USA – Canada. Project adquisition in tramit(PPA) Latam: Peru, Chile and Colombia. Project adquisition (PPA ) Europe: Poland and United Kingdom Project adquisition (Feed in Tariff) GCC countries. Public international licitations(PPA)

Select Markets

Select Technologies Hydraulic <80MW Solar ( PV as well as CSP) Wind

Capital structure objective Development cost limited to 500.000 € for project. No additional investment until partners and debt

Maximize Project Finance without resource or limited resource

Operative structure objective

Maximize sinergies Industrial group FCC but defending our result account

This will support the competitiveness of Industrial FCC.

Management of risks of equity

Coverage risks "equity" with multilateral and bilateral Financing obtained before the beginning of construction


FUTURE PROGRAM – STRATEGIC NEEDS

FCC Power Generation 9

Greenfield development Countries with low rate of

penetration of renewable

Diversification Natural Resource

Nowadays 80 % EBITDA depends on the wind

Solar Potential- Countries high irradiation and Hydro

Geographical diversification. Balance the metheorology of the seasons

Countries in the Southern hemisphere

Regulation diversification. Limit the dependence of the governmental subsidies. Countries with electric costs

dominated by oil Contracts PPA/ market. No FIT.

Financial diversification.

Regulatory Uncertainty

Financing

Industrial Development

Resource volatility

Organization

A

B

C

D

E

Solution

Geographical diversification to markets with safety juridical or where the renewable ones are competitive without subsidy (Internationalization)

Technological diversification

To prioritize use of funds of the Group.

Partners Inverstor to 50 % for the Division.

EPC capacity not to subsidize cross businesses.

Association with technologists. Use of the balance sheet of a third party.

Geographical and technological diversification(Internationalization)

Solid and trustworthy organization in the international area.

Challenge Strategic Actions


10

Objective Rationale Target

ProfitabilityProject Equity Returns

≈15%

Current Portfolio provides a sensible floor, although it is focused on a single market (Spain) where Renewable Energy retribution is fully regulated, leaving little room for an upside in the short term

Internationalization can bring superior returns

Growth

2016 EBITDA in Spain < 50%

Total Capacity > 1GW

Spain GDP prospect is depressed for the incoming years. Spanish Power Sector offers few growth possibilities due to its overcapacity and flat demand

Green electricity demand is a fact in other markets. A combination of high growth and stable markets can provide good opportunities for our expansion

Competitiveness2016 EBITDA in FiT

dependable countries < 50%

Macro trend, led by European countries, to reduce Renewable Energy regulated tariffs

But still energy security is a priority for many countries with limited or non fossil fuels. In several high growth countries marginal electricity costs are dominated by oil and have exceptional renewable resource allowing renewable energies to be competitive without regulatory support

Our Strategic Plan 2012-2016 targets to secure the best possible risk adjusted return for our shareholders

Source: FCC

4. Strategic Plan 2012 – 2016 overview


Corporate & Business Devl.

11

DECISIONDECISIONSI DECISIONDECISION

YES

DECISIONDECISION

YES

BASIC INVESTMENT PROPOSSAL

FINAL INVESTMENT PROPOSSAL

INVESTMENT OPPORTUNITYINVESTMENT

OPPORTUNITY

DECISIONDECISION

INVESTMENT OPPORTUNITY

NO

YES

REPORT / RECOMMENDATION


DRAFT BINDING AGREEMENTS

EXECUTION BINDING

AGREEMENTS

EXECUTIONEXECUTION


Resources (Controller)

Investment & Strategy

Committe

Executive Committe /

Board of Directors END NO NO NOEND END END

Open a Budget to carry out due diligence or further analysis of the Investment Opportunity

Open a Budget to carry out the Investment and budget to finish

the deal agreements

As of now we have been working applying a rigorous Investment Opportunity Procedure

1

2 3

5. Strategic Plan details

Source: FCC


12

52,826 MW installed capacity (2011)

119,000 MW installed capacity (2026)

Sources: CFE, BP

21%

34%

0%3%

5%2%

35%

Hydro Gas Wind

Nuclear Coal Geothermal

Termoeléctrica

9%

65%

21%

3% 2%

Hydro Fossil

Wind Nuclear

Other renewable

Average weighted hourly price US$/MWh

0

20

40

60

80

100

120

140

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

US

$ /

Mw

h

2006 2007 2008 2009 2010 2011

223.0 230.0 234.0 233.0 242.0 255.0

Evolution of electricity production (TWh)

Average Prices (US $/MWh)

Mexico: the electricity generation mix is characterised by a low penetration of renewable energies rather than hydropower



13

The objective to develop a national strategy for the promotion of Renewable Energy and energy efficiency. Main measures: Ps 3,000 million to support renewable energies and clean technologies Fixed tariff for grid services Net metering framework for auto-consumption Bank of energy to store the rights due to previous production to compensate in the future

The Law for the Development of Renewable Energy and the Financing of the Energy Transition (2008)

It evaluates the incremental needs of power capacity for the period 2012-2026 in 43,992 MW 2026 target: 35% penetration of renewable energies (6.6% non-hydro Renewable Energy)

Energy policy: POISE (“Programa de Obras e Inversiones del Sector Eléctrico”)

The law establishes the requirements for the self-supply regime, whereby industrial clients can meet their electricity needs using PPAs, hence being excluded to turn to the Federal Electricity Commission (the government controlled utility that accounts for the vast majority of the generation capacity): Less than 30 MW Consumer must have ownership of the project It could be compensated productions and consumption in different time scopes Self-supply is not subjected to grid tariffsGrowth in self-supply projects is driven by high time-of-day rates applied to power sector customers with demands above 100 kW, and in particular by peak-period rates

The Public Electric Services Law of 1992 (last reform 2012)

Discounts of between 50% and 70% for electricity transmission and grid connection for Renewable Energy plants with a capacity above 500k

Resolution RES/140/2001

Mexico: the regulatory framework offers an opportunity to sign PPAs with industrial clients through the self-supply regime

Regulatory framework Scope


Source: FCC


14

Tax regulation Tax exemption for imports of equipment (tax item: 9806.00.02)

Ps 200 millions in biofuels and renewable energiesMaximum Ps 20 million per project

FONAGA Verde Fund (Mexican Federal Government)

Clean Development Mechanism

The Clean Development Mechanism (CDM) is one of the flexibility mechanisms defined in the Kyoto Protocol (IPCC, 2007) that provides for emissions reduction projects which generate Certified Emission Reduction (CERs) units which may be traded in emissions trading schemes

Mexico can host these projects Revenue from CERs is an additional revenue for Renewable Energy projects

Article 40.XII. Accelerated depreciation for investments in Renewable Energy: It allows to depreciate 100% of the investments in machinery and equipment

Ley del Impuesto sobre la Renta

Mexico: accelerated depreciation of 100% of the investment within the first year of operation



Source: FCC


00

50

100

150

200

250

abr-

91

may

-92

jun-

93

jul-9

4

ago-

95

sep-

96

oct-

97

nov-

98

dic-

99

ene-

01

feb-

02

mar

-03

abr-

04

may

-05

jun-

06

jul-0

7

ago-

08

sep-

09

oct-

10

nov-

11

US

$ /

MW

h

Average Price (US $/MWh) - SING: Node Crucero

Average Price (US $/MWh) - SING: Node Antofagasta

Average Price (US $/MWh) - SIC15

SING electricity system: 3,964 MW installed capacity (2011)

Chile: testimonial presence of wind and sun technologies with mining companies vulnerable to high peak-period rates

Sources: CNE, BP

05

101520253035404550

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

SING SIC

oct-01dic-01abr-02oct-02oct-02feb-03abr-03oct-03

47%

21%2%

10%

18%

0% 2%

0%

42%

0%

49%

3%6%

SIC electricity system: 12,365 MW installed capacity (2011)

Evolution of electricity production (TWh)

Average Prices (US $/MWh)



16


Law on Non-Conventional Renewable Energy (Law 20,257)

It establishes between 2010 and 2014 the obligation for electricity generation companies to source 5% of their electricity from Renewable Energy sources regardless of the grid system

Every MWh produced by an electricity company that has not been produced by Renewable sources is charged with a penalty fee

It translates into Renewable producers selling their ERNCs rights (Energía Renovable No Convencionales) through private agreements with electricity companies and receiving an additional income stream to the spot prices

The compulsory percentage of Renewable electricity increases by annually 0.5% from 2015 onwards

Law 19,940

It opens the spot market to Renewable Energy producers, and it establishes the right to connection to the grid systems for producers

Small producers, less than 9MW, have toll exemption for using the grid transmission system Progressive toll grid charge exemptions are set up from 9MW to 20MW

Law 20,018

It guarantees Renewable Energy producers the right to sell their energy to the electricity market at spot or nodal price

It allows Renewable Energy producers to sign long-term PPA contracts directly with distribution companies

These generators also have the right to sell to distributors up to 5% of the total energy demand for regulated clients

Clean Development Mechanism

The sale of Certified Emission Reduction (CERs) is an additional revenue for Renewable projects in Chile

Chile: the legislation for Renewable Energy is the most transparent, decisive and stable amongst Latin American countries

Amendment to Law 20.257: 2011

It states that 20% of generation should be from no-conventional renewable sources by 2020 Pending congress and senate approval


Source: FCC


17

FCC has developed an energy branch in Spain that allows for a platform to support future developments.

Internationalization is necessary to consolidate the business capacity that has been developed

Latin America, specially Mexico and Chile present at this moment an important opportunity.

Other countries like Peru, Colombia, etc… will be analysed additionally.

CONCLUSIONS5. Strategic Plan details

Source: FCC