Local Content in the Offshore Wind Supply Chain

How to facilitate localization and experience from other countries

THE GROUP

International engineering & consulting company

Offshore

Wind Energy & Grid Connection

08/2015

FICHTNER worldwide

1st Wind project: 1987

5 locations: Stuttgart GER Hamburg GER Genua Italy Istanbul Turkey Stockport UK

> 400 wind projects

WIND (ONSHORE and OFFSHORE)

Established in 1922 and family-owned ever since

29 subsidiaries and affiliated companies in over 50 countries

1500 employees of whom more than 500 are based in Germany

285 m€ turnover in 2015

GROUP

FICHTNER is an international, independent provider of engineering and consultancy services

Areas of services of FICHTNER

• Broad range of services combined within one company

Energy Environment Water & Infrastructure Consulting & IT

Due Dilligence

Electrical engineering

Grid Connection

Energy Yield

Design / Certification

Geotechnical Engineering

Installation / Logistics

Operation & Maintenance

Project Management

WTG technology

Offshore Wind

Energy economics

Conventional power plants

Renewables

District heating

Energy transmission and distribution

I&C and power system technology

Smart grids

Electric mobility

Energy management

Oil & gas

Environmental studies & management

Environmental information systems

Permit management and strategy

Environmental protection technologies

Soil and water protection

Air pollution control

Emissions trading

Waste management

Total water management

Drinking water supply and sanitation

Seawater desalination

Integrated infrastructure concepts

Site development

Traffic, transportation and civil engineering

Mining and mineral economics

Strategies

Transactions

Arbitration

Organization

Processes

Privatizations

Project management

Financial modeling

Infrastructure management

IT consultancy and services

Geo-solutions

History and Experience First wind power project in 1987

Five locations with wind power expertise:

Fichtner’s Head Office in Stuttgart

Fichtner Water and Wind in Hamburg

Fichtner office in Istanbul (Turkey)

Fichtner UK in Stockport (UK)

Fichtner Italy in Genoa (Italy)

More than 60 key experts in the fields of on- and offshore wind energy from market

analysis, energy yield assessment, project development, procurement, construction,

commissioning, financing until operation and maintenance

All relevant software licenses WindPRO/WAsP, WindSim, AutoCAD, CARD, ArcGIS, Power

Factory DigSilent, PSS/E

In total, Fichtner was involved in more than 400 wind power projects (>39 GW)

> 40 offshore projects,

> 80 owner’s engineering and 180 lender’s engineering projects,

> 130 yield assessments and 80 studies in connection with wind power.

5

• Wind Power Competence Centers in Germany (Stuttgart, Hamburg), Italy, UK and Turkey

• Nearly 400 projects with a capacity of more than 34.4 GW, among others:

• > 70 owner’s engineering projects, >170 lenders engineering and DD projects

• > 70 feasibility studies in connection with wind power, > 90 yield assessments

6

Fichtner Wind Power Experience

Experience - Overview

Fichtner Services as Owner‘s Engineer(费希特纳业主工程师服务内容)

Project Phases （项目阶段）

Feasibility Study

(可行性研究)

Conceptual Engineering (概念工程)

Commis- sioning

and Testing Phase

（调试阶段）

Construction Phase

（施工阶段）

Call for Tenders

(招标要求)

Negotiations and Award of Contract

（合同谈判与授予）

Permitting Phase（允许阶段）

Operation （运行阶段）

Project Idea

（项目的想法）

Planning Decision

（规划决策）

Preliminary Investment

Decision （初步投资决策）

Contract Award to EPC,NTP, Partial Permit

合同授予的EPC，NTP，部分许可证

Check on Completion

（检查完成）

Provisional Takeover

（临时接管）

Collection, Review and Analysis of

Available Data

（收集、检查和分析可用数

据） Preliminary

Design

（初步设计）

Compilation of Permit

Application

（许可证申请汇编）

Specifications, Invitation to

Tender （招标）

Site Supervision / Construction Management （现场监督/施工管理）

Design Review （设计审查）

Monitoring Commis-sioning

（调试）

Project Management / Project Control （项目管理/项目控制）

Evaluation of Tenders,

Negotiations （评标谈判） Basic

Engineering （基础工程）

Fichtner‘s Services (in case of multiple lots)（费希特纳的服务）

Receipt of Tenders

（接收投标书）

Assistance during Permit Approval

Procedure

（许可证批准程序中的协助）

Check of Documen-tation （检查文献）

Handling of Punch

List Items （费用清单）

Optimization

Measures （优化措施）

Procurement Support as Owner‘s Engineer or Transaction Advisor

• Services:

– Definition of a procurement strategy, EPC vs. multi-lot contracting, definition of lots

– Market screening and benchmarking

– Drawing-up of contractual documents

– Active coordination of interfaces

– Compiling of pre-qualification and tender documents

– Competitive bidding process according to international procurement standards

– Tendering assistance, clarifications

– Technical and commercial evaluation of bids

– Contract / contractual deviations review

– Assistance with negotiations

– Assistance with award of contracts

For developers and owners Fichtner ensures an efficient, transparent and fact based procurement and decision process.

Owner‘s Engineering – Design Review & Site Supervision

For developers and owners Fichtner ensures the component and construction quality and the cost and time efficient execution.

Design Review Services:

• Review of detailed design submitted by Contractors

in accordance with applicable laws and standards as

well as the contractual basis.

• Interface coordination between several lots.

Site Supervision Services:

• Coordination and management of contractors

• Quality assurance

• Factory acceptance tests

• Construction monitoring during erection and

commissioning

• HES monitoring

• Claim management

• Attendance of commissioning tests and

independent inspections

• Progress reports and final reports

• Testing and completion certificate procedure

Market Screenings, Studies & Transaction Support

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For institutions, developers and owners Fichtner provides market insight and intelligence for a better overview and investment decisions.

Services:

• Overview of geographical markets

• Overview market players and their shares,

capabilities strengths and weaknesses (e.g.

developers, EPCs, WTG suppliers, O&M service

providers)

• Contact to developers, screening for potential

transactions

• Direct personnel support in transactions

• Overview and benchmarking of project costs, cost

developments

• Cost reduction potential

• Tariff studies and tariff mechanisms

• Financial models and assumptions

• Calculation of Levelized Costs of Electricity (LCoE)

• Technology analyses

• WTG lifetime assumptions

• Hybridization of Wind, PV and Diesel generation

Due Diligence & Lender‘s Engineering

Services:

– Review of the energy yield assessment, measurement

data and underlying assumptions

– Evaluation of technical concept and layout

– Review of the suitability of the wind turbines

– Review of contracts / project agreements including mainly:

EPC-Contract, grid connection agreement, PPA, O&M,

technical and administrative operation

– Review of interfaces and related risk management

– Assessment of project structure

– Evaluation of the HSE and QC/QA concept

– Review of permits and licenses

– Assessment of time schedule and construction program

– Review of the financial model and/or input data and project

sensitivities

– Risk analysis, mitigation measures, risk management

– Regular progress monitoring

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For investors and lenders Fichtner reviews and assesses the suitability, robustness and involved risks of a potential investment or acquisition .

Grid connection from

Offshore Wind Farms to the EHV Grid

Client: TenneT TSO GmbH

Year: Since 2010

Description:

TenneT TSO GmbH, is obliged, under the EnWG

Energy Resources Policy Act, to connect the

offshore wind farms in planning and under

construction in the North Sea off the German

coast and in the adjacent exclusive economic

zone. TenneT is currently working on grid

connection projects in the wind farm clusters of

BorWin, DolWin, HelWin and SylWin.

Services:

Connection to the German 380 kV grid

380 kV HVAC cables to converter station

AC/DC converter station

± 320 kV, ± 300 kV and ± 250 kV HVDC

cabling within North Sea

Offshore platform

155 kV HVAC cables from platform to

connection points

Local Content in a nut shell

Definition of local content: Local content requirements (LCRs) are policy measures that require developers/manufacturers to procure/produce a certain share of their values (components, services, etc.) locally.

Motivation for LCR: Governments tend to protect local infant industries, create employment, support technology transfer or generate other (socio, environmental) benefits.

Facilitation of local content

A path to local content (1/4)

1) Long term planning security and sufficient market size are needed

• Developer and producer require stable renewable targets, a sufficient project pipeline and a robust regulatory framework in order to manage the risk of their local investments.

• Therefore the criteria for the fulfillment of the local content shares need to be clearly defined and shall not vary over the planning period.

A path to local content (2/4)

2. LCR rates shall be carefully determined

• The required share of local content needs to be carefully established when implementing LCRs.

• If the share is too high, LCRs will hinder project developers and OEM to invest, as local components could be difficult to procure (or too expensive).

A path to local content (3/4)

3. Governments should liaise with the wind energy industry in the preparation of the LC scheme

• It is essential that governments cooperate with local and international project developers and component manufacturers when preparing their LCR scheme.

• The international offshore wind energy industry can give valuable information, which components and services could realistically be sourced locally.

A path to local content (4/4)

4. Stepwise introduction of LCR in order to prepare and secure the local capacities

• Governments shall conduct in-depth studies on the potential of local businesses along the value chain (development, production, installation, operation) of offshore wind farms.

• Limits in local content shall be acknowledged.

Fichtner case studies

Project management for a manufacturer of offshore foundation structures

• For a new international production facility for offshore foundation structures Fichtner rendered following services as Project Manager: – Project management and procurement – Set up of manufacturing organization and teams – Optimization of internal logistics and fabrication work

flows – Negotiations and claim management – Provision of fabrications documents – Cost and production controlling incl. reporting

Project management for implementation of a new steel tower production

• Fichtner supported a well known OEM at the implementation of a new hub height steel tower. The project included – planning of time line – Milestones monitoring – budget – resources.

• Mandatory was the close coordination with all related departments as procurement, logistics, O&M service, installation, certification and sales.

• The implementation was concluded with the realization of a prototype.

Tender support for a manufacturer of offshore foundation

• Fichtner support an offshore foundation manufacturer through out the complete tender process. This comprises the overall management of tenders, including: – Preparation of quotations

– Set up of calculations and relevant tools

– Negotiations with potential clients

– Provision of fabrication documents

– Preparation of KPIs

Thank You!

Karl Peter Schleich

karl-peter.schleich@fichtner.de

Office Manila

Mobile: +63 916 303 9855

Fichtner GmbH & Co. KG

www.fichtner.de