D. Latimer_Bell Pirie OTEC developer - Hawaii National Marine ...

Photo: Cabangan, Zambales coast lineCabangan 10 MW OTEC Pilot PlantZambales, PhilippinesLourdesiree LatimerBell Pirie Power Corp. (PHL)Energy Island Bell Pirie Ltd. (UK)Project developer/owner of proposed 10 MW Cabangan CC-OTECwith five (5) prime OTEC field sites in the Philippines

Technology-neutral>>>Secure government service contract• Resource assessment• Feasibility studyMust register withSecurities & Exchange Commission• Max 40% foreignSecure permits and licenses• Grid impact study• Local government unit endorsement• Environmental Compliance CertificateSecure Power Purchase Agreement• Feed-in-tariff rate eligibilitycertificateSecure financial closing• Set up SPV (max 40% foreign)• EPC Contract• Loan agreement• Shareholders’ agreement• O&M Contract

Large market opportunity – > GWs OTEC potentialHighly dependent on imported fossil fuels – oil and coal10 MW competitive with dieselGovernment incentives and support for OTECBuoyant debt and equity marketFirst mover experience – geothermal and onshore wind in AsiaAbundant practical resource

s>>>-Months showing prices above OTEC’s P17.65: Jun 12 – May 13MAY 2013APR 2013MAR 2013 DEC 2012OTEC P17.65NOV 2012OCT 2012SEP 2012OTEC P17.65JUL 2012JUN 2012AUG 2012OTEC P17.65In 10Ten (10 )out of 12 months, WESM had price spikes higher than OTEC’s FIT rate of P17.65

Renewable Energy Act No. 9513FISCAL:7 years income tax free10% corporate tax after 7 yearsZero VAT – sale of powerNON-FISCAL:Feed in tariff (FIT)- Fixed price 20 yearsRenewable Portfolio Standard (RPS)- Priority purchase and despatchDuty free import of machineries,equipment and materialsChallenge: Fair and reasonable tariff per kWh.Page 6

Zambales, PhilippinesSource: Nihous & Vega, Oct 2011blue jagged line is daily forecastsblack smooth line is monthly averages

Sell powerEPCContractSpecial Purpose Vehicle(max 40% Foreign)REPA*(max 100% Foreign)Project finance 70/30TECHNOLOGYPROVIDERGuarantees performanceand availabilityPOWER PRODUCERReceive revenueOFFTAKERNational GridCorporation of thePhilippines (NGCP)* Renewable Energy Purchase Agreementthru Republic Act 9513Page 8

Ideal technology providers are those who can/are:1. Sign an EPC contract2. Bankable - with strong balance sheet3. Become shareholder in the SPV – maximum 40% foreign4. Provide availability and performance guarantee5. Willing to share key risks: technology and EDC (Engineering, Design, &Construction)6. Provide acceptable long-term O&M service agreement