K DEVELOPMENT CONSTRUCTION JSC

INVESTMENT PROJECT

44 MMWW PHOTOVOLTAIC POWERPLANT IN LOM

LLEEGGAALL WWAARRNNIINNGG

This presentation contains forward-looking statements,

that are based on management's belief, assumptions,

current expectations, estimates and projections about the

industry, the economy, and the Company itself. Words

like "anticipates," "believes," "confident," "estimates,"

"expects," "forecast," "likely," "plans," "projects," and

"should," and variations of such words and similar

expressions identify forward-looking statements. These

statements do not guarantee future performance and

involve certain risks, uncertainties, and assumptions that

are difficult to predict with regard to timing, expense,

likelihood and degree of occurrence. Therefore, actual

results and outcomes may materially differ from what is

expressed or forecasted. Furthermore, the Company

undertakes no obligation to update, amend, or clarify

forward-looking statements, whether as a result of new

information, future events, or otherwise.

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This proposal is for setting up a 4 MW capacity photovoltaic solar

power plant based on polycrystalline technology.

This environmentally friendly project will be supported by the

Bulgarian Government. The target for Bulgaria, as proposed by the

European Community, is that by 2020 16% of the gross final

consumption of energy in the country should come from Renewable

Energy Sources (RES). Furthermore the national targets are even

higher in terms of percentage of RES fed into the grid i.e. net of the

energy consumed by the producers. In this regard the Cabinet issues

annually Regulations setting PV energy prices based on the

estimations of the State Committee of Energy and Water Regulation.

These prices are the main incentive for the local solar energy

producers together with the State-guaranteed 25-years contract for

the PV energy buyout.

This document is prepared in order to illustrate the main features of

the project and introduce it to a possible potential co investor. The

aim is to report the key issues as well as to illustrate what has

already been done from the Bulgarian partner and main investor K

Development Ltd.

Once the project is completed there's an option to expand it for

further 15MW. In this regard K Development Ltd had purchased

adjacent plots of land (24ha+19,4ha) to secure further the project

growth.

KK DDEEVVEELLOOPPMMEENNTT CCOONNSSTTRRUUCCTTIIOONN JJSSCC

K Development Construction JSC develops Investment Energy

projects on the EU territory.

In 2008th

the Main Contractor K Development Ltd obtained First

Category Certificate released by the Bulgarian Construction Camber

in accordance to the Bulgarian Construction Act. This Certificate

licenses the company to execute all kinds of construction work - civil,

road, electricity, public utilities networks etc. with unlimited scope

regarding the volumes. The Certificate is based on the completed

projects during the years, the heavy machinery park of the company,

but most of all on our professional staff covering all construction areas.

The scope of K Development Ltd activities include:

•Assessment and preliminary development of investment projects

•Projects design, engineering and management.

•Construction upon turn-key completion.

•Supervision, consultancy and property management.

VVAALLUUUUEE DDRRIIVVEERRSS

WHY BULGARIA?

� Competitive taxation system. Corporate tax - 10%;

� EU membership since Jan 2007. Currency board system

(BGN is pegged to EUR at rate of 1.95583)

� Europe's lowest operational costs (average salary less than 350€)

� National Energy strategy till 2020: (16% RES from total

consumption in 2020)

� Feed in tariffs

WHY THIS PROJECT?

� Solid Investor - a leading and reputable Bulgarian Bank.

� The project is in an advanced phase, this will save time and

administrative burden.

� Already acquired an own slot into the central NEK (National

Electricity Company) collector.

� Option to develop further 15MW.

WWHHEERREE

The site lies in a favourable position, in fact there is an easy access to the road and

railways, this is a great plus during the construction phase when large amount of

equipment and materials will be transported to the site. Nearby there is also a

National Electricity Company (NEK) collector station.

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The average values of Solar radiation in the town of Lom:

� Global Horizontal Radiation-1370 kWh/m2

� Global Radiation on an optimal tilt plane - 1520 kWh/m2

� Effective Radiation on an optimal tilt plane taking into account the overshadow –

1470 kWh/m2

Source: ENERGY EFFICIENCY AGENCY, Bugaria

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� The project is developed on a total area of 10ha in the region of Lom.

� The solar panels will generate a peak of 763 MWh in July and an

average power of 517 MWh respectively. The months with the least

produce are December and January – respectively 224 and 270 MWh.

� The expected average annual production is 5176 MWh

� There are no losses of power on the external utility cable

(proportional to its length) due to the fact the energy sold is measured

and paid on the site borders by the local power supplier CEZ.

� The 4MW project is completed and there is an option to expand it

with further 15MW. This will considerably reduce the clearances time

for the next stages. Also some cost savings will occur due to the already

executed external utility infrastructure.

� K Development Construction JSC purchased a slot inside a nearby

National Electricity Company (NEK) collector station, this will secure

the opportunity to contract the energy buy-up directly with the NEK

instead of contracting with the local supplier CEZ if the project is

expanded up to 15 MW .

Power capacity kW 4000

Manufacturer modules Yingli solar, CSUN

Model

Polycrystalline - YL 230 P-29b

CEEG 240

Manufacturer inverter SMA AG

Model inverter STP 15000 TL-10

Exp. Losses combined % 20.0

Electricity exported to grid MWh 5176

Electricity export rate

2011 €/MWh 357,45

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� 17022 modules of 230 Wp each

� 260 inverters

� 5176 MWh annual output

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To do:

Further 15 MW Optional

Completed:

Q1 2011 Site completion. Putting into operation

Q4 2010 Site execution

Q3 2010 Commencing site landscaping and fencing

Q2 2010 Final Contract with CEZ for the energy buy-out

Q1 2010 Completing the technical design of the site

Q4 2009 Construction permit

Q4 2009 Signed Preliminary Contract with CEZ

Q3 2009 Signed preliminary contract with NEC. Obtained

clearance permission from the National Electricity

Company (NEC)

Q3 2009 Public utilities clearances

Q2 2009 Town planning design

Q2 2009 Greenfield

Q1 2009 Research and analysis

Research & analyses

1.) Climate – fogs, hails, temperature extremes, rainfalls, soils 2.) Geology, hydro-geology and geo-morphological

reports 3. ) Infrastructure analysis 4.) Economical analysis 5. ) Technological analysis 6.) Organizational analysis 7.)

Technical research

(Q1 2009)

Green field

1.) Land accumulation

2. ) Preliminary Design

3. ) Town-planning Permission

4.) Site-planning permission

(Q2 2009)

Town-planning design

Public utilities clearances

1. ) Water supply and sewerage

departments

2. ) Fire department

3.) Ecology department etc.

(Q3 2009)

Documentation for NEK, clearances

1.) Electro-technical design for connection with

NEK network 2.) Analyses : voltage level;

connection point; risk equipment; reserve power

source; power production schedule; energy balance;

main equipment info.

Preliminary Contract with the local distributor CEZ

CEZ takes the obligation to buy

from power in the volume up to

4 MW.

(Q4 2009)

Construction permit

Research & analyses

1.) Climate – fogs, hails, temperature extremes, rainfalls, soils 2.) Geology, hydro-geology and geo-morphological

reports 3. ) Infrastructure analysis 4.) Economical analysis 5. ) Technological analysis 6.) Organizational analysis 7.)

Technical research

Green field

1.) Land accumulation

2. ) Preliminary Design

3. ) Town-planning Permission

4.) Site-planning permission

(Q2 2009)

Town-planning design

Public utilities clearances

1. ) Water supply and sewerage

departments

2. ) Fire department

3.) Ecology department etc.

(Q3 2009)

Preliminary Contract with the local distributor CEZ

CEZ takes the obligation to buy

from power in the volume up to

4 MW.

(Q4 2009)

Construction permit

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Before commencing the technical design was performed diligent market research to establish reputable suppliers

offering good value for money. Completing the technical design of the site.

(Q1 2010)

(Q2,Q3 2010)

Site execution

(Q4 2010)

Putting into operation

72-hours trial works.

Site completion.

(Q1 2011)

Commencing of landscaping and fencing.

Final Contract with CEZ for the energy buy-out;

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Partners

Solar and Internal Electrical Installations Designer : Greentech

Solution Engineering Sofia

Legal Adviser : Arnaudov & Associates, Sofia

Referent Bank : Bulgarian Development Bank, Sofia

Auditors: Audit - Stoyanova Ltd, Sofia

Designer of Architecture, Constructions, Water Supply, Sewerage, Safety : Rangelov Consult Ltd

External Electrical (utility) Connection: Elmontproject Ltd, Montana

Tender Procedures and Contracting: K Development Ltd, Sofia

Independent Construction Supervisor: Interconsult Ltd, Montana

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In accordance to the Bulgarian Renewable and Alternative Energy

Sources and Biofuels Act (Act Prom. SG. 49/19.06.2007, additional SG.

98/14.11.2008, effective as from 14.11.2008):

� The RES energy is subject of mandatory buy-up by the National

Electricity Company (directly, in case of 5MW or more or trough the local

electricity distributor in case of less than 5MW installations);

� The sale of energy is based on contracts with a duration of 25 years. For

all new power plants producing electricity from RES with the exception of

water power plants over 10 MW The energy sale period starts with the

beginning of the electricity production, but not later than 31 December

2015.

The Power generation from RES is encouraged with regard of the

following issues:

� In order to determine the equal effort of initial investment costs the

feed-in tariffs take into account the characteristics of the various RES and

the various technologies for electricity generation;

The State committee sets up preferential prices for purchasing energy

generated through the use of RES (feed-in tariffs).

� The State takes the obligation to provide to the producers of electric

power generated from RES at least equivalent effect of preferential

treatment (in respect of their income per unit of electric power) in case of

change of the current incentive mechanism.

� The State guarantees a mandatory joining of utilities generating

electricity from RES and biofuels into the national grid;

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Investments Stimulation Law

According to the Investments Stimulation Law, the State reduces

administrative burdens for the RES energy producers and takes the

obligation to provide the joining infrastructure for Projects at least

meeting the minimal amounts of investment required for the particular

region.

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Each year and not later than 31 March, the State Energy and Water

Regulatory Committee (SEWRC) determines the preferential prices

(feed-in tariffs) for buy-up of electricity generated from RES, except

for the electricity generated by hydroelectric power plants with

installed capacity exceeding 10 MW.

The preferential price of electricity generated from RES is

determine as follow:

A) 80% of the average sale price for end suppliers for the preceding

calendar year plus

B) An addition determined by the SEWRC depending on the type of

the primary energy source and the financial burden of the investment.

The addition for the next calendar year has to be not less than 95

percent of the addition for the current year.

80% of average

sale price for end

suppliers during

previous year

Subsidy

Not less than

95% of

previous year

Preferential

price

(feed-in tariff)

Preferential prices on

which the producers

sell the electricity to

public power utility

companies

Subsid.

Price

2010

Mwh

Euro

80%

from the

average

sell price

Additional

incentive

according to

Art.21, Par.2

from the Law

Preferential

prices for the

year 2011

A B A+B

6

Photovoltaic module

power plants

over 5 kWp

372,37 38,78 318,67 357,75

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((SSCCEEWWRR)) №№ СС--44//3311..0033..22001111

The Power generation from RES is encouraged with regard of:

• the characteristics of the various RES and the various technologies for

electricity generation;

• providing equal preferential treatment to the producers of electric power

(in respect of their income per unit of electricity produced) in case of change

in the mechanisms promoting the energy generated from RES

• mandatory inclusion of utilities generating electricity from RES and

biofuels into the national grid;

• setting up preferential prices for purchasing energy generated through the

use of RES

• reducing administrative burdens for the producers of energy from RES

and on construction of relevant facilities.

www.kdevelopment.biz; kdevelopment@kdevelopment.biz