FINANCING CLEAN ENERGY OXFORD UNIVERSITY

Catherine Bremmer

Head of Sustainable Finance Solutions May 2015

2 AGENDA

› Why financing Clean Energy is important to ANZ

› Growing global and local opportunity for Financing Clean Energy:

› Large-scale renewables

› Distributed Generation

› Energy Efficiency

› Largest market growth forecast for Asia:

› Renewables and Distributed Generation: ~$1.1*Tr USD in 2020;

› Energy Efficiency: ~Global energy market of $1.4* Tr USD in 2020;

› ANZ’s Clean Energy experience and lessons for financing Solar PV

› Case Studies

* IEA estimates of market size, although still small part of global energy market ** ANZ’s total exposure to renewables across PSF, RL and SL business units is ~$1.38bn at March 2013

3 ANZ’S OWN ENVIRONMENTAL TARGETS AND PERFORMANCE TO-DATE

Environmental footprint reduction targets › Greenhouse Gas, energy, travel, GHG, waste

and water Retrofit results › Reductions ranging from 5% - 25% in offices,

retail branches and data centres. › Staff prefer working in our retrofitted, flexible

workspaces.

Renewables › Remote sites › Large commercial offices › Retail branches › Data centres

Most sustainable bank globally for the sixth time in 7 years by the Dow Jones Sustainability Index. Key has been ANZ’s commitment to measuring and reducing its environmental footprint.

4 CHALLENGES AHEAD: LARGE-SCALE RENEWABLES – REGULATORY UNCERTAINTY?

LGCs

17th Feb RET Review

announcement

RET Review consultation and options

Independents announce

support of RET

5 CHALLENGES AHEAD: SMALL-SCALE SOLAR - DIFFERENT DRIVERS?

STCs

6 AUSTRALIAN SMALL-SCALE SOLAR PV GROWTH HAS ACCELERATED SINCE 2010 DRIVEN BY UNDERLYING ECONOMICS

› Small-scale: Falling PV prices and rising electricity price levels: payback 2-4 years

› STC / RET Review regulatory impacts? › Grid connection / Tariff impacts? › Installed capacity ~3 GW › Forecast growth to >7 GW by 2017. › Investment to 2017 is estimated at $7.3bn

› Emerging market dynamics makes finance options for roof-top solar devices more attractive: PPAs, leases, loans

› Growth to-date driven by residential › Growth in future driven by commercial › Off-grid market into mine sites to reduce

diesel fuel costs (mine life/offtake credit) › Securitiation - Secondary market?

PV INSTALLED CAPACITY FORECASTS SOLAR PANEL PAYBACK PERIOD FORECASTS

Source: SunWiz-SBS Solar Forecast 2012 - 2017

ROOFTOP SOLAR OPPORTUNITY

Payback period 2.5-4.5 years

$5-7bn investment

required

7 FINANCING SOLAR PV REQUIRES A RANGE OF FINANCE TYPES – RANGING FROM SMALL-SCALE TO LARGE SCALE PROJECTS

ANZ’s role in supporting Clean Energy / Solar PV customers: ANZ’s product capabilities and our super-regional reach enables customers to successfully develop renewable energy and distributed generation projects.

ANZ’s finance products cover Structured Asset Finance, Trade and Supply Chain, Foreign exchange & Environmental markets

› Advisory: Advisor into establishment of structures for Solar PV and Distributed Generation assets (equity and debt)

› Project Finance: for large-scale installations of distributed generation

› Structured Export Finance: very long term debt, provided in conjunction with Export Credit Agencies

› Structured leases and receivables finance: equipment backed lease (operating or finance), e.g. repayments linked to energy savings, security on asset being financed or against payment stream for services being offered

› Environmental Upgrade Finance: environmental council charge on land for property upgrades in Melbourne and NSW

› Markets & Securitisation: Trading and bundling of Solar finance receivables

› Co-finance with Government programs: e.g. ARENA, CEFC

8 SOLAR PV AND RENEWABLES FINANCE: WHAT IS REQUIRED?

ANZ Corporate Advisory, Project and Export Finance works across all the stages of the project life cycle to deliver successful projects

Commercialisation

Site Selection & Suitability Assessment

Contractual Arrangement

Divestment /Refinance

Process

Technological Solution

Construction & Funding

• Bankable technical solution: › Track record › Interaction with grid › Independent testing › Certification

• Bankability of contract structures:

› Offtake structures

› EPC/O&M arrangements

› Risk allocation

• Suite of project documents (O&M, AMA, Transmission Agreement, Retail licence?)

• Syndication with banks and sponsors – senior debt, sub debt and export credit

• Relationships with equity developers

• Optimal funding structures, e.g. timing of equity investment, tax considerations and efficient release of cash

9 ANZ ADVISORY: RANGE OF ROLES – ON THE DEVELOPMENT AND SELL SIDES

ANZ Corporate Advisory is a recognised leader and multiple award winner in structuring and executing project finance advisory mandates and has a successful track record in the renewables sector, mostly recently having advised Malakoff on its acquisition of Meridian’s 50% interest in the Macarthur Wind farm.

ANZ understands that each project will have different Advisory requirements

ANZ advised General Electric in relation to the 113MW Boco Rock Wind Farm development asset, the site farm is located in southern New South Wales (2013)

ANZ advised Hydro Tasmania on the divestment of 75% in Studland Bay and Bluff Point Wind Farms to Guohua Energy Investment Corporation, a wholly owned subsidiary of China’s Shenhua Coal Group (2012)

ANZ advised Malakoff Energy (Malaysian Power Company) on its 50% acquisition from Meridian Energy for the 420MW Macarthur Wind Farm in Victoria (2013)

ANZ advised Hydro Tasmania on the proposed divestment of an interest in the 168MW Musselroe Wind Farm, under construction, located in Tasmania (2013)

ANZ successfully advised Energy Australia on the proposed divestment of its majority interest in the 111MW operating Waterloo Wind Farm in South Australia (2013)

10 STRUCTURED EXPORT FINANCE: LONG TERM DEBT, PROVIDED WITH EXPORT CREDIT AGENCIES, REDUCES REFINANCE RISK AND INCREASES CERTAINTY EQUITY RETURNS

Australia

EFIC

Austria

OeKB

Germany

Euler Hermes

Italy

SACE

China

Sinosure/Chexim

Japan

JBIC/NEXI

Denmark

EKF

Finland

Finnvera

Sweden

EKN

Norway

GIEK

Belgium

Delcredere Ducroire

France

COFACE

UK

UK Export Finance (ECGD)

CANADA

EDC

USA

US EXIM

Korea

K-sure/KEXIM

Netherlands

Atradius DSB

ANZ ECA Relationship

ANZ ECA Team Location

New Zealand

NZ ECO

ANZ enjoys excellent relationships with all major ECAs with a dedicated team of ECA professionals around the globe

Switzerland

SERV

11 ANZ’S SIGNIFICANT BREADTH AND DEPTH OF CLEAN ENERGY EXPERIENCE

Hallett 4 Wind Farm

Mandated Lead Arranger, Sole Provider of Working Capital Facility, Facility Agent and Security Trustee

December 2013

AUD 362,800,000

Refinancing for the 132.3MW Hallett 4 Wind Farm

AUD 386,000,000

Finance for Meridian’s interest in the 420 MW Macarthur Wind Farm

Meridian Wind Macarthur Mandated Lead Arranger,

Underwriter, Bookrunner, ECA Arranger, Facility Agent

Security Trustee September 2011

AUD 478,000,000

Construction and Term Facilities for the 206MW Collgar Wind Farm

Collgar Wind Farm Financing Mandated Lead Arranger ECA Arranger and Agent

Facility Agent and Security Trustee

March 2010

AUD147,000,000

Construction and Term Facilities for the 55MW Mumbida Wind Farm

Mumbida Wind Farm Financing Lead Arranger, Sole Provider of Bank

Guarantee Facility, Facility Agent and Security Trustee

May 2011

AUD 338,000,000

Term Facility for the 192MW Waubra Wind Farm in Victoria, Australia

Waubra Wind Farm Mandated Lead Arranger and

Documentation Bank

February 2010

Waterloo Wind Farm Joint Lead Arranger

Facility Agent & Security Trustee

July 2009

AUD190,000,000

Construction and Term Facility for 111MW Waterloo Wind Farm in

South Australia.

Hallett 5 Wind Farm

Mandated Lead Arranger

May 2012

AUD 134,500,000

Funding for acquisition of Hallett 5 wind farm

Hallett 2 Wind Farm

Mandated Lead Arranger

May 2013

AUD 86,400,000

Refinancing for the 71.4MW Hallett 2 Wind Farm

Mandated Lead Arranger, Account Bank, Facility Agent and Security Trustee, ECA Agent, Escrow Agent

June 2013

AUD 528,000,000

Refinancing of the Macarthur Wind Farm Term Facilities

AUD179,000,000

Construction and operation of the 106.8MW Taralga Wind Farm in NSW

Taralga Wind Farm Mandated Lead Arranger,

ECA Arranger, Account bank, Facility Agent and Security Trustee

August 2013

AUD251,400,000

Construction and Term Facilities for the 113.2MW Boco Rock Wind Farm

Boco Rock Wind Farm Mandated Lead Arranger, Account Bank, Facility Agent and Security

Trustee

June 2013

AUD45,400,000

Construction and operation of the 20.0MW Royalla Solar Farm in ACT

Royalla Solar Farm

Mandated Lead Arranger

August 2013

Bald Hill Wind Farm

Mandated Lead Arranger, Sole Provider of Bank Guarantee Facility, Facility Agent and Security Trustee

October 2013

AUD 198,200,000

Construction and operation of the 106.6MW Bald Hill Wind Farm

AUD 294,600,000

Refinancing for the 206MW Collgar Wind Farm

Collgar Wind Farm Mandated Lead Arranger, Sole

Provider of Bonding Facility, ECA Agent, Facility Agent and Security

Trustee

November 2013

Hallett 4 Wind Farm

Mandated Lead Arranger, Sole Provider of Working Capital Facility, Facility Agent and Security Trustee

October 2009

AUD 362,000,000

Construction and Term Facility for the 132.3MW Hallett 4 Wind Farm

12 ANZ ADVISORY CASE STUDY: WOOLNORTH, HYDRO TASMANIA

› ANZ successfully advised Hydro Tasmania on its divestment of a 75% interest in its Woolnorth Wind Farm assets

› Consisted of the 65MW Bluff Point Wind Farm and the 75MW Studland Bay Wind Farm

ANZ ADVISORY ROLE

AUD 282,000,000

Advisor to Hydro Tasmania on its 75% divestment of the

Woolnorth Wind Farm Hydro Tasmania Financial Advisor

February 2012

We received over 16 indicative bids for the Woolnorth Assets and achieved a successful outcome for Hydro Tasmania

› Developed a transaction structure › Effective sale process with strong interest amongst global industry

players, trade buyers and infrastructure / renewable energy investors › Implemented an unwritten stapled debt package › Development of an off take agreement › Developed a transaction structure for the successful bidder exclusively

period to negotiate participation in development › Effective decision making and corporate governance › Coordinated a full due diligence process › Conduction financial modelling and analysis

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ANZ Mandated Lead Arranger, Sole Underwriter, ECA Arranger › Largest wind farm under construction in the

Southern Hemisphere › First sale of Vestas’ V112 wind turbines › First successful underwrite of a greenfield

Project Financing since the GFC in 2008

Project Outline › Macarthur Wind

Farm at 420MW consists of 140 x Vestas V112 3.0MW turbines.

› Unincorporated joint venture between AGL Energy Ltd and Meridian Energy Ltd.

Innovative Financial Solution Key Players: › AGL Energy and Meridian Energy as sponsors › EKF (the Danish Export Credit Agency) as guarantor › ANZ mandated to coordinate ECA and to structure debt finance

Clean Energy Finance Considerations:

› Financier with technical and industry knowledge enabled wind turbines uniquely suites to the wind conditions to be used

› ECA involvement reduced refinancing risk by provided 18yr long term financing

› Establishment of a facility with materially consistent terms to the sponsor’s other senior unsecured debt

Asia-Pacific Renewable Deal of the

Year

EXPORT FINANCE CASE STUDY: MACARTHUR WIND FARM

AUD 586,000,000

Financing of Vestas turbines for the Macarthur Wind Farm, Australia

Mandated Lead Arranger Sole

Underwriter, ECA Arranger

June 2011

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ANZ Mandated Lead Arranger

› Australia’s first non-recourse financing of utility-scale solar

› Royalla Solar Farm will be the largest PV solar facility in Australia

Project Outline › 20MW photovoltaic

solar plant to be constructed in Royalla, ACT

› FRV secured a 20 year Feed-in Tariff

› Construct under a fixed price, fixed term EPC contract

› Financial Close: August 2013

Innovative Financial Solution Key Players: › Sponsored by Fotowatio Renewable Ventures (“FRV”) › ACT Govt: integral to making Canberra, Australia’s solar capital › ANZ mandated to structure a non-recourse debt financing

Clean Energy Finance Considerations:

› Assisting Equity to finalise terms of the feed-in tariff with Government

› Demonstrating experience and strength in renewables and Project Finance conventions and expectations

› Structuring Finance to meet equity and Government’s key economic drivers, whilst providing an optimal balance of loan covenants

AUD45,400,000

Construction and operation of the 20.0MW Royalla

Solar Farm in ACT

Royalla Solar Farm Mandated Lead Arranger

August 2013

ANZ PROJECT FINANCE CASE STUDY: ROYALLA SOLAR FARM

15 WHAT’S NEXT FOR SOLAR PV FINANCE?

ANZ’s role in supporting Clean Energy / Solar PV customers: ANZ’s product capabilities and our super-regional reach enables customers to successfully develop renewable energy and distributed generation projects.

ANZ’s finance products cover Structured Asset Finance, Trade and Supply Chain, Foreign exchange & Environmental markets

› Advisory: Advisor into establishment of structures for Solar PV and Distributed Generation assets (equity and debt)

› Project Finance: for large-scale installations of distributed generation

› Structured Export Finance: very long term debt, provided in conjunction with Export Credit Agencies

› Structured leases and receivables finance: equipment backed lease (operating or

finance), e.g. repayments linked to energy savings, security on asset being financed or against payment stream for services being offered

› Environmental Upgrade Finance: environmental council charge on land for property upgrades in Melbourne and NSW

› Markets & Securitisation: Trading and bundling of Solar finance receivables

› Co-finance with Government programs: e.g. ARENA, CEFC

16 IMPORTANT NOTICE

This document, together with any information communicated by ANZ in any presentation or discussion relating to this document, (collectively, “information”) is confidential, and has been prepared and communicated by ANZ on condition that it is for the exclusive information and use of the recipient qualifying as a ‘wholesale client’ and authorised by ANZ (“you”), for the purpose of providing you with introductory background information only. No information may be used or relied on by any other person, or for any other purpose, without ANZ’s prior written consent. The information may not be reproduced, disclosed to any person or referred to in any document, by any person for any purpose (except to the extent required by law or a regulatory authority). The information, including any opinions and proposals, is subject to various assumptions and qualifications (the appropriateness of which are subject to significant uncertainties and contingencies, all of which are outside the control of ANZ). Any forecast, estimate, projection or other prospective opinion in the information (“projection”) may be based on information and assumptions supplied to ANZ by a third party, reflects the author’s judgment on the date of this document and is subject to change without notice (but without any duty to provide you with updates); it is provided on the understanding that assumptions, on which projections are based, may not be realised and that unanticipated events and circumstances may occur. To the greatest extent permitted by non-excludible law, ANZ, its related bodies corporate, and their officers, employees and agents (“ANZ Parties”): a. make no representation or warranty, express or implied, as to the accuracy, currency, reliability, suitability for your needs or completeness of the information; and b. disclaim liability for (and the information is provided on condition that all ANZ Parties are released from) any claim, loss, damage, cost or expense, whether direct, indirect, consequential or otherwise, arising (whether in negligence or otherwise) out of or in connection with the information, any reliance on it or any omissions from it. The information does not constitute, and under no circumstances is to be taken as, financial advice or an offer of (or invitation to make an offer for) advisory, financial, underwriting or other services, or other securities, products or facilities. ANZ and its related entities (“ANZ Group”) transact as principal, and on behalf of clients, a diverse range of services and products to and with clientele and market participants globally. ANZ Group may (including on an undisclosed basis) transact with or have an interest in any person, thing or matter referred to in the information, and may receive related benefits. Such persons may include your customers, competitors, suppliers, investors, counterparties and agents. You should not assume that ANZ Group transacts with you on an exclusive basis; where lawful, ANZ Group may also act as principal or for other clients in competition with you. © Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) (“ANZ”). ANZ holds Australian financial services licence no. 234527.

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