For Independent Power Producers

www.alescorms.com For Independent Power Producers Many insurance demands, one insurance specialist

Insurance is but one part of the puzzle for IPPs but it is an aspect that can derail critical negotiations.

01 One vision, one project, one specialist Alesco is a specialist insurance broker dedicated to the power and energy sector. Our independent power producers (IPP) team has unrivalled expertise and our success has been built on a simple but effective approach we offer complete continuity through the lifecycle of a project. From the earliest stage of development through to full commercial operation, you can expect 24/7 support and you won t be passed from call to call as you seek answers to vital questions. You will have one point of contact on hand to back your project and create a programme that will provide protection and assurance for all parties as well as the right balance between risk and reward. You have a vision. We have the know-how. Together, we ll help your project succeed.

02 About Alesco The optimal insurance programmes for IPPs are the result of detailed work during the contractual negotiations and development phase. This is where we specialise, adding value before, during and after the placement of cover so that owners reap the benefit of a coherent and cost-effective insurance product Bob Lock, Partner, Alesco ONE SPECIALIST WHERE EXPERIENCE COUNTS Alesco Risk Management Services Ltd (Alesco) is a specialist insurance broker and risk consultant dedicated to the power and energy industry. Based in London, with dedicated service teams in Africa, Asia, Europe and The Americas, Alesco are one of the fastest growing energy insurance specialists in the world. Our handpicked teams not only have deep sector experience but work tirelessly for our clients across the spectrum of risk and insurance matters. Our extensive knowledge of the IPP model means that we are on hand to deliver the optimum outcome across every aspect of a project s lifecycle, from risk pricing through to settling the most complex of losses. We are not content to have a history of achievement as we recognise that what matters is securing continuing success for clients. It is why we remain at the forefront of developments in the global energy insurance markets, whether working with conventional or renewable power, in established or emerging markets. We won t lose sight of what it takes to meet and manage the challenges ahead. ONE TEAM THAT DELIVERS.

03 The Alesco experience You know that the journey from identifying a power generation opportunity to witnessing it in operation is a long and demanding one. At Alesco, we understand what it takes to assist you every step of the way Henry Croft-Baker Partner, Alesco Experience has taught us that each project is unique and that there will be stumbling blocks ahead. But we know how to clear the road. From pre-feasibility to construction, commissioning, testing and on to full commercial operation, projects of scale and ambition attract complex demands, we have a track record of solving problems which guarantees insurance will not prevent your project from crossing the line. Owners, sponsors, lenders, contractors, governments, offtakers there are competing demands placed on clients and we understand what it takes to deliver and manage contractual negotiations. That commitment extends far beyond financial close. The technical and financial knowledge that we accumulate during development and construction phases means that we re able to add value once your project is fully operational, when annual service and placement strategies become essential and through to the end of a concession. We are the one advocate you will need to keep your plans on track. HERE TO SUPPORT YOUR BEST INTERESTS.

04 Services/Technology POWER GENERATION The introduction of new technology and new sources of power generation including renewable energy has made the power and utility sector a more specialised field of insurance, requiring expertise in both Underwriting and broking that goes significantly beyond the mere placement of risk. Our Power Generation team has extensive international experience within the sector. Advising on particularly complex areas, such as the potential impact on revenue of contractual obligations, is our speciality. RENEWABLE ENERGY Alesco s team has successfully placed multi-faceted, multi-line insurance and reinsurance programmes (in both operational and construction phases) for clients engaged in every form of renewable energy generation and transmission across the globe. CLIENTS Conventional Energy In the field of conventional power (gas/diesel/coal), our clients include: State and national utilities Non-recourse financed power generation companies Independent Power Producers Investors Lenders Developers Owners Operators Contractors Electricity distribution companies Renewable Energy We have clients in all sectors of renewable energy from standalone sites to global multinationals including: Modern Gas-Fired Technology Wind Biomass and waste to energy Hydro, Reservoir and Run-of-River Solar PV and Solar thermal Bio-ethanol Geothermal Overhead Transmission and Distribution Networks Desalination

05 We don t outsource any claims service as we want to make sure that we deliver the best possible service for each and every claim presented by our clients, regardless of size Ken Kavanagh Partner, Alesco CLASSES OF INSURANCE We work to provide insurance solutions for both the Conventional and Renewable power generation sectors and, as can be expected, that includes all aspects that can impact on the development, construction and operation of plants. In a dynamic and often volatile world however, we also make sure that our clients can secure protection from the unpredictable the weather, war, terrorism or political upheaval. From Weather Hedging Derivatives to Political Risks, Alesco offer a single focus that will take into account all the myriad factors that can impact on your prospects. CLAIMS MANAGEMENT As our clients engage in ventures of high hazard and which involve assets of high value, it is no surprise that claims handling is of paramount importance. After all, claims collection is the test of a good product and the rationale for its purchase. It is why Alesco is one of the few brokers that do not outsource any part of the claims service. Our in-house claims and account servicing teams have extensive experience and are adept at managing catastrophic events, large single event losses and technically complex claims. It is another aspect of our belief that to be effective, a service plan cannot be piecemeal, but should encompass all our clients needs. IPP projects have a complex and technical insurance requirement which is why one specialist, capable of taking care of all aspects, counts when it truly matters. ALL HANDLED UNDER ONE ROOF.

06 One specialist with a full scope of services The services we provide address the many issues that arise from project conception and ultimately through to the expiry of the concession. It is often the case that clients require a fully outsourced service and so we act as their risk and insurance team. PRE-CONSTRUCTION Draft insurance clauses for incorporation into all the relevant project agreements including Concession Agreement, EPC Contract, O&M Contract, Power Purchase Agreement and Loan Agreement Negotiation of insurance terms with project parties, especially contractors and lenders, and their advisers Performance of due diligence on executed agreements Evaluation of exposures faced by the project to facilitate programme design Review of sums insured with particular note of the extent to which import duties into the project territory may have been waived for the initial consignments Understand revenue streams and identify exposure to contractual penalties (in particular under the PPA and Fuel Supply Agreement) Review of exposure to liability to neighbouring properties and or businesses Evaluate exposure to threats of war and/or terrorism in territory Design and agree scope of the appropriate insurance programme accommodating both the risk profile review described above and the insurance requirements of the project agreements Review local insurance issues relevant to the local territory, including compulsory insurances, local insurance premium tax levels, any mandatory use of local insurers as well as providing indicative insurance costings for incorporation into the project s financial model Prepare full underwriting submission as the basis of negotiation with prospective underwriters.

07 Our aim is to provide the highest standards of service to clients by ensuring that their assets and liabilities are fully protected under the most favourable terms negotiable Hugo Gibbs Partner, Alesco AT FINANCIAL CLOSE Negotiate optimum insurance programme in accordance with broking strategy described in the section that follows Present and agree final insurance programme with the project company Present and agree final insurance programme with contractors, lenders and any other interested parties Adhere to any procedural requirements set out in the project agreements, including provision of a Broker s Letter of Undertaking, Acknowledgments of Assignment from insurers, market reports, evidence of insurance, confirmation of receipt of premiums and any other documentation required under the project agreement. THROUGHOUT THE CONCESSION Provide continuing advice and support to the project company Negotiate any extensions required to the contract period Present and agree renewal terms with the project company Maintain dialogue with shareholders Secure agreement from lenders and O&M contractors to renewal terms and any alterations in scope of cover Provide documentation in accordance with procedures stipulated in the project agreements Provide 24-hour claims response service Represent the project company in securing equitable settlement of any claims arising during construction or operation.

08 Securing the right outcome One way to measure success Words only go so far and what matters is delivering the right outcome. Here are some examples of how and where our expertise proved vital. WEST AFRICA Issue Towards the end of March 2011, the political climate in Ivory Coast was at its most volatile. Rebel forces under Alassane Ouattara had spread south to the economic capital Abidjan and during the turmoil, a power plant recently purchased by our client was surrounded by uninvited militia of unknown loyalty. The incumbent insurers of the power plant s War on Land and Terrorism policy imposed a 500% premium increase for the imminent renewal. Outcome Asked if we could assist in improving the terms, we collated all available security information from the plant and from external sources, convinced an alternative panel of underwriters that the plant s isolated location coupled with its fundamental importance to the country s economy minimised its exposure to threat, and as a result restricted the premium increase to 20%. MIDDLE EAST Issue A leading power company was midway through an expansion project from construction to full commercial operation. It needed a seamless transition to a full suite of annual insurances as well as the assurance that the project finance programme was adequately designed, fully compliant and acceptable to the lenders advisers. Outcome We undertook a full review of all project agreements ensuring that our bespoke programme design was fully compliant. By carrying out an extensive re-marketing of the entire programme, aided by detailed technical analysis into all areas of the project, we were able to explain the project in detail to insurers and highlight positive risk factors. This maximised competition and leverage and resulted in a significant premium saving that even outperformed the benchmark target agreed with our client. AUSTRALASIA Issue An aging coal-fired power station had little insurance support from an underinsured programme with very limited covers. The panel of insurers did not reflect best-in-class providers of power generator experience and the costs for the risk transfer were completely disproportionate to the cover received. The management team was also concerned that their product was not lender compliant. Outcome We were tasked with reviewing the risk and corresponding insurances and quickly grasped that the client was not receiving fair value or appropriate cover and that insurers were not being challenged. Once explanations were provided to the buyer, with the help of a broker of record mandate, we approached alternative lead markets which better understood the risk, and we secured double the level of monetary limit previously purchased. The cover was far broader for both plant and perils and it was secured at a substantial decrease: 40% below the client s cost expectations.

09 SOUTH AMERICA Issue Under the terms of a Power Purchase Agreement (PPA) with an electricity authority, a heavy fuel oil thermoelectric power plant company was required to buy insurance with protection for purchasing replacement power. The PPA was originally signed without an insurance adviser, leaving this clause and its potential impact unaddressed. Outcome We successfully placed the policy that included Additional Increased Costs of Working for the purchase of replacement power. It is often very difficult to obtain this type of coverage for countries that have a high volatility in spot prices but we were able to do so by demonstrating historical averages of spot prices and capping the price per megawatt hour. As well as mitigating replacement power purchase volatility our client was then compliant with the terms of the PPA. How we helped: We collated all available security information from the plant and from external sources, convinced an alternative panel of underwriters that the plant s isolated location coupled with its fundamental importance to the country s economy minimised its exposure to threat, and as a result restricted the premium increase to 20%. WEST AFRICA Issue A company that owns and operates power generation stations was planning the installation of containerised power generation in West Africa but the plant was no longer covered by the Original Equipment Manufacturer s warranty. Outcome We worked closely with the client to thoroughly research and understand the risk, while utilising our strong relationships within the specialist power markets. Our team then successfully secured full LEG 3 (DE5) coverage for all defective design and workmanship for a full 12 months following commencement of operations. The policy offered a viable alternative to the manufacturer s warranty and met the requirements of our client plus the national utility company. This transferred a risk that would otherwise have been prohibitively expensive. EUROPE Issue A leading European power company was moving from a largely self-insured (uninsured) position as a state business to a commercial market programme that would support a stock market listing. It was required to implement an enterprise-wide risk management programme for the benefit of shareholders and corporate capital investors. Any new programme would also need to have the flexibility to cope with overseas acquisitions and a significant project finance programme. Outcome Obtaining traditional underwriting information on a ground up basis would be difficult as the risk had been uninsured for many years. The solution was to use a captive insurance company to retain the primary layer of risk and to purchase additional protection/reinsurance from the industry mutual OIL (Oil Insurance Limited) that would include business insurance on selected assets considered essential to the group s cash flow.

10 YOUR IPP TEAM Our team members are handpicked for their sector specialism but also because they demonstrate unstinting commitment when supporting their clients to achieve the right outcome. Bob Lock LEADERSHIP Bob Lock Partner Bob Lock has more than 30 years experience in the insurance industry, the majority in client advocacy roles. He specialises in the IPP sector and has represented many of the world s leading power generation companies on their development, construction and operational insurance requirements. Bob has lived and worked in the energy-rich Middle East and has worked for clients on first of a kind IPPs in Africa, Asia and the Middle East. Bob was previously at Aon before joining Alesco to develop our presence in the power generation sector, bringing his client skills, industry relationships and detailed understanding of the power generation industry to the Alesco team. Tel: +44 (0)20 7204 1824 E: bob_lock@alescorms.com Henry Croft-Baker Henry Croft-Baker Partner Henry Croft-Baker joined the insurance industry nearly 40 years ago and during that time has worked with US and European sponsors supporting the development of projects from South America to Asia. Henry s experience and cross-class knowledge has contributed to the successful close of independent power projects constituting tens of thousands of MW of which a significant proportion is in Africa. Tel: +44 (0)20 7204 6191 E: henry_croft-baker@alescorms.com Hugo Gibbs Partner Hugo Gibbs has over twenty years experience in the Insurance Industry and has specialised in the delivery of placement solutions for the power sector since 1992; first with the regulated utility market and then since the late 90 s in the international IPP sector handling projects across the globe. Hugo Gibbs Hugo takes a cradle to grave approach in bringing developers closer to the ultimate risk takers in the Reinsurance markets, both locally and internationally. His specialty is in harnessing complex reinsurance solutions to meet the ever increasing need of the power sector to transfer risk. Previously at Marsh and then as a founding partner in Oxygen, Hugo has joined Alesco to deepen our market penetration and extend our business development in the sector. Tel: +44 (0)20 7204 8336 E: hugo_gibbs@alescorms.com

11 The IPP team at Alesco is one of the most deeply resourced in the City Simon Matson, Managing Partner, Alesco Alison Baker Associate Acknowledged by her peers as an expert in the construction and engineering insurance market, Alison has represented owners anddevelopers on power projects in Europe, Africa and Asia, ensuring compliance with complex nonrecourse finance requirements for traditional and renewable energy projects. Having previously worked at Aon and Marsh in power, civil construction, annual contractors programmes and undertaking due diligence reviews on behalf of lenders, Alison brings a significant talent and more than30 years industry experience to Alesco s power team. Tel: +44 (0)1439 770136 E: alison_baker@alescorms.com Andrew Crichton Associate Andrew Crichton has been with Alesco for 4 years and in that time has focused on power, and more recently on projects in Africa. Andrew provides the team technical support, with a focus on IPPs, in the daily managing of the insurance program design, market negotiations and delivery of a specific insurance product. Tel: +44 (0)20 7204 1810 E: andrew_crichton@alescorms.com Glyn Davies Partner Glyn has many years experience working on major energy risks and is well placed to service the conventional and renewable power sectors anywhere in the world from construction phase through to fully operational requirements. During his career Glyn has placed particular emphasis on complex, multiasset location programmes. Tel: +44 (0)20 7204 8558 E: glyn_davies@alescorms.com Ken Kavanagh Partner Ken is a claims specialist and is an integrated member of the servicing team, bringing extensive experience of a wide range of claims management emanating from the power generation sector. With more than 27 years in the industry his experience in the management of claims includes catastrophic events, large single event losses, and technically complex claims. Tel: +44 (0)20 7204 1810 E: ken_kavanagh@alescorms.com

As your partner, Alesco will not accept a standard insurance market product, we will design a solution for your needs. Simon Matson Managing Partner, Alesco

Alesco Risk Management Services 133 Houndsditch London EC3A 7AH Tel: +44 (0)20 7204 6037 Tel: +44 (0)20 3178 8221 www.alescorms.com Alesco Risk Management Services Limited is an appointed representative of Arthur J. Gallagher (UK) Limited which is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AW. Registered in England and Wales. Company Number: 1193013. www.alescorms.com