Iceland: geothermal energy & investments

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1 Iceland American Chamber of Commerce New York, April 8, 2010 Iceland: geothermal energy & investments Árni Magnússon Íslandsbanki

2 Íslandsbanki Geothermal energy activities in the United States Geothermal Energy Team Re-entering U.S. market in 2010 Industry expertise Risk assessment crucial Partnerships regional and throughout the value chain finance & development Serving industry & financial market Need for early debt financing (Resource Verification) Syndication (Construction and project finance) Complete financial solutions Advisory CHAR Hudson Ranch Resource Verification Loan Runner-up for Sustainable Deal of the Year 2008 Íl Íslandsbanki db kiis a member of these organizations: 2

3 Íslandsbanki activities in the United States Instrumental in key deals in the U.S. until 2008 August 2008 December 2007 December 2007 $180,000,000 NGP Blue Mountain I LLC Construction Loan $348,100,000 Terra-Gen Power, LLC Senior Secured Bridge Facility $61,700,000 Coso Geothermal Power Holdings, LLC Senior Secured Bank Facility Co-Lead Arranger Sole Participating Lender Co-Lead Arranger December 2007 November 2007 July 2007 $15,000,000 Hudson Ranch Power I LLC Resource Development Loan $20,000,000 NGP Blue Mountain I LLC Resource Development Loan $20,000,000 Term Loan Facility $2,500, Working Capital Facility 3

4 Iceland energy market Geothermal a key element of the energy mix in Iceland Primary energy supply Electricity generation 250 PJ Hydro Geothermal Oil Coal Geothermal 24.50% 50 Hydro Fuel % 0.02% 02% Coal 100% 80% Oil 60% 40% Geothermal 20% Hydro 0% % of all heating from geothermal Electricity: 99.9% from renewables 4

5 Quick facts geothermal energy in Iceland Unique history, experience and outlook 01. First geothermal heating First geothermal plant % of all primary energy from geothermal 04. Installed capacity 575 MW (#7 worldwide) 05. Planned projects: 1,070 MW (#4 worldwide) 06. Potential 3,000 4,300 MW Hellisheidi geothermal plant 5

6 Utilization of geothermal energy in Iceland Unique cascaded use of geothermal energy Geothermal utilization 2008 Electricity generation 37% Fish farming 4% Snow melting 4% Swimming pools 3% Industry 2% Space heating Greenhouses 48% 2% ature empera Te 6

7 Role of energy in rebuilding economy Increasing energy demand by about 70% Energy capacity demand by planned projects to 2017 Increasing demand ty in MW in nstalled Capaci 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Current capacity Additional capacity demand ,030 3,261 3,261 2,574 2,609 2,754 3, ,173 4,438 Demand 4,440 MW Current: 2,574 MW Increased demand of 70% until 2017 Projects: Paper production Aluminum smelting Data storage 0 Silicon production N/A Carbon fibre production 7

8 Geothermal energy with key role Increasing energy demand fueled in large by geothermal resources Planned capacity by technology/ power plant projects Current capacity and planned power plant projects MW 3,000 Hydro Geothermal 2,500 2, ,500 1,000 Geothermal energy Majority of all power projects (75%) Least land use and environmental impact (master plan work) Efficiency & resources

9 Geothermal projects investment needs Strong financial demand in getting projects off the ground Investment/ financing need for geothermal development million USD 800 Total demand: 700 Equity Debt Equity: $840m Debt: $1,540m Current situation Natural resources the key element for economic growth Electricity demand Majority of power companies owned by state or municipalities Strong equity demand Projects are waiting for capital infusion 9

10 Íslandsbanki Iceland Geothermal Energy Market Report 2010 First geothermal report on Iceland Key Findings: Iceland unique in utilization of geothermal energy 62% of primary energy from geothermal 99.9% 9% of electricity it from hd hydro & geothermal Political debate on ownership/ environmental issues Energy to play majorrole in economic growth Sources: National Energy Authority, Statistics Iceland, Íslandsbanki Research Report to be published April 20th, available at: il db kii/ 10