Investment Opportunities in the Renewable Energy Sector in Cyprus

Nicos S. KyriakidesPartner – Head of Financial Advisory ServicesHamburg, March 2012

The EU 20-20-20 Initiative - Energy Challenges in Europe

Rising energy prices and increasing

dependence on energy imports jeopardise

Europe’s security and competitiveness.

Key decisions have to be taken to reduce

drastically Europe’s emissions and fight

climate change.

The EU is working to reduce the effects of climate change and establish a common

energy policy. Source: European Commission

The energy challenge is one of the greatest tests faced by Europe today.

The EU 20-20-20 Initiative - TargetsThe EU Heads of State and Government set a series of demanding climate and energy targets to be met by 2020, known as the "20-20-20" targets. These are the following:

A reduction in EU greenhouse gas emissions of at least 20% below 1990 levels

20% of EU energy consumption to come from renewable resources

A 20% reduction in primary energy use compared with projected levels, to be achieved by improving energy efficiency.

Source: European Commission

The EU 20-20-20 Initiative - StrategyEnergy Strategy for Europe represents a strategy for competitive, sustainable and secure energy with the following 5 priorities:

Empowering Consumers & achieving

the highest level of safety and security

Achieving an energy efficient Europe

Building a pan-

European integrated

energy market

Extending EU leadership in

energy technology &

innovation

Source: European Commission

Strengthening the external dimension

of the energy market

Cyprus Energy Policy – Main ObjectivesAs part of the EU 20-20-20 initiative, Cyprus is committed to achieve the following mainobjectives:

Ensure security of energy supply;Foster Healthy Competition in the Energy Sector and contribution of the energy

sector to the productivity and competitiveness of the national economy;Environmental protection and sustainable development.

Clean Energy

Adequate Energy

Cost EffectiveEnergy

Secure Energy

Source: Cyprus Institute of Energy, Energy Service - MCIT

Cyprus Energy Policy – Main Priorities

Source: Cyprus Institute of Energy, Energy Service - MCIT

Maximizing the efficient use of domestic renewable energy resources

Saving energy both in primary form and in energy end-use form

Promote RES in electricity and heat generation

Replace oil as a fuel for transportation with biofuels

Promote efficient electricity and heat co-generation in industries

Adopt investments in RES based on the criterion of the overall net benefitMaking efficient use of energy by putting into place mechanisms that give incentives to users

Efficiently develop RES stations based on physical planning

Increase “energy awareness”

Limit bureaucracy and simplify all licensing procedures

Cyprus Energy Policy – Promoted RES TechnologiesSolar Energy

Solar thermal systems Photovoltaic grid connected and stand alone systems

Wind EnergyWind turbines for water pumpingWind turbines for electricity generation

BiomassEnergy generation from manure / organic animalwaste treatment

Small hydro Only small mills up to 30KW rated power

Source: Cyprus Institute of Energy, Energy Service - MCIT

Cyprus Energy Policy – Financial Support to RES Projects

A Special Fund has been created aiming at support of RES and Energy Saving investments in Cyprus. The revenues of this fund are coming from the consumers paying an additional tax. (levy currently at 0,50 eurocents per kwh)

Implementation of a programme with a view to encouraging RES Utilisation.

Provides financial incentives (capital or/and operational aid) in the promotion of Renewable Energy Sources.

2% of Gross Income (wind, biomass, CSP)

Subsidy (feed in tariff)Electricity levy

Electricity

Cash Flow

Source: Cyprus Institute of Energy, Energy Service - MCIT

Cyprus Energy Policy – Targets

Phase A(2009-2013)

Phase B(up to 2020)

Renewable Energy Technology

Installed Capacity

Tariff Installed Capacity

Tariff

Wind Energy 165MW €0,166/KWh 300MW TBD

Photovoltaic 25MW €0,31/ KWh 192MW TBD

Solar Thermal 25MW €0,26/ KWh 75MW TBD

Biomass 8MW €0,135/KWh 17MW TBD

Source: Cyprus Energy Regulatory Authority

Cyprus Energy Policy – Targets

0

2

4

6

8

10

12

14

16

2011-2012 2013-2014 2015-2016 2017-2018 2020

4%

7%

9%

12%

16%

%

Source: Cyprus Energy Regulatory Authority

RES as a percentage of the Total Energy Production

Existing Projects

133,5 MW10 MW

8 MW 151,5 MW

0

20

40

60

80

100

120

140

160

Wind Photovoltaic Biomass Total

Installed Capacity in MW

Source: Electricity Authority of Cyprus

RES Projects in Cyprus – Installed Capacity

Existing Projects

Wind Farms• 82MW Wind Farm at Orites• 20MW Wind Farm at Ayia Anna• 34,5MW Wind Farm at Tersefanou

Photovoltaic• A series of small size Projects ranging between

7KW (Residential) and 150KW (Commercial), with a total installed capacity of 10MW.

Biomass• A series of small/ medium size Projects ranging

between 250 - 500KW, with a total installed capacity of 8MW.

Source: Cyprus Energy Regulatory Authority

Opportunities – Fully Licenced Projects

Opportunities

25MW Tower Based

Concentrated Solar Thermal Power

Station at Alassa, Limassol

Summary of Findings

10.8MW Onshore Wind Farm at Ayia

Anna, Larnaca

10.8MW Onshore Wind Farm Project at Koshi, Larnaca

50MW PV PowerTender Competition

Commercial PV Projects of up to 10MW

Capacity

To be announced shortly

Opportunities – NER 300 Funding

300 million allowances in the New Entrants’ Reserve of the European Emissions Trading

Scheme for subsidising installations of innovative

renewable energy technology and carbon capture and

storage (CCS).

The ‘NER300’ funding is intended to accelerate the deployment of low carbon energy across Europe and

support the EU’s medium and long-term climate goals

All 27 Member States are encouraged to submit

proposals so that they can benefit from the funding

available and support the development of CCS and

innovative renewables projects.

‘NER300’ is a financing instrument managed jointly by

the European Commission, European Investment Bank

and Member States

Source: European Commission

Opportunities – NER 300 Funding Cyprus Projects

Source: Ministry of Agriculture of Cyprus

Number of Project

Proposalssubmitted

to the EIB underthe NER 300

Funding Programme

50MW EACyconsolar Plant Cyprus

30MW Concentrated Photovoltaic Park

54MW Floating offshore wind farm

Helios Power Project (50MW)

50MW Concentrated Solar Thermal power plant with thermal storage (Molten Salt)

25MW Stirling Engine Park

50MW Concentrated Solar Thermal Park (Graphite)

20MW Concentrator Photovoltaic Power Plant

© 2012 Deloitte LimitedAll rights reserved.

Deloitte Limited is the Cyprus member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.com/cy/about for a detailed description of the legal structure of DTTL.

Thank You !

© 2012 Deloitte LimitedAll rights reserved.

Deloitte Limited is the Cyprus member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.com/cy/about for a detailed description of the legal structure of DTTL.

For more information you may contact:

Nicos S. KyriakidesPartner ‐ Head of Financial Advisory Services& Partner in Charge of Limassol Office

Deloitte LtdTel:  + 357 25 868686Fax:  + 357 25 868600Mob :  + 357 99 611827Email: nkyriakides@deloitte.comWeb:  www.deloitte.com/cy

Maximos Plaza, Tower 1, 3rd Floor213, Arch. Makariou III Ave.CY‐3105 Limassol, CyprusP.O.Box 58466, CY‐3734 Limassol, Cyprus