Kasikornbank Public Co., Ltd Bangkok, Thailand Ittiporn Intravisit Aug 19, 2016

1. Thailand’s Green Financing Model and Landscape Kasikornbank Public Co., Ltd Bangkok, Thailand Ittiporn Intravisit Aug 19, 2016

3. Green Financing Scope Supply Side Demand Side Energy Efficiency Alternative Energy (Self consumption) Renewable Energy Solar PV Farm Wind Farm Biomass Biogas

4. Energy Efficiency Financing

5. Energy Efficiency Financing Model (1/2) ESCO Bank ESCO or Suppliers Lending up to 100% Energy-saving guaranteed Consultancy Firms that offer integrated services Loan or Leasing/ Hire Purchase Customers Self-Financing Project

6. Energy Saving Guarantee Financing Model (2/2) Actual Performance Baseline Guarantee 1. Shortfall Scenario 2. Surplus Scenario ESCO will guarantee saving = 30% 100% ESCO will pay(Penalty) for the gap of 5 % 5% Bonus will be depended upon the agreement of customer and ESCOs. 5% Post Retrofit Energy Cost Post Retrofit Energy Cost Post Retrofit Energy Cost

7. 5% Free cash flow Saving Energy from EEMeasure 30%Free cash flow 25% (Loan repayment) Electricity Expense afterEnergy Efficiency (EE)Measure 70% 70% Cash Flow Profile of EE Financing Electricity expense Energy Efficiency (EE) Measure 100% Year 1 – Year 5 >5 Years onward

8. Why Energy Efficiency Financing: Banks’ perspective • Expand Product/business coverage • Low risk financing due to certainty on source of repayment and credit structure • Customer acquisition tool/ Improve customer relationship • Access to low cost funding from various sources • Promote Bank’s CSR

9. Project coverage Factory/Building Retrofit Renewable Energy US$ 85 Million Energy Saving Guaranteed Program Lighting (LED) US$ 128 Million (thru 8 banks) Ministry of Energy – Soft loan for Energy Saving Project Euro 20 Million Green Building Program by Agencies France De Development

10. Opportunities for Energy Efficiency Financing • Government Support/Other international agencies through low interest financing • Established ESCO’s infrastructure • Growing awareness of energy efficiency and renewable energy • Lower implementation and equipment cost/ faster pay back

11. Challenges of Energy Efficiency Financing • Low energy prices (Oil and electricity) • Confidence of end-users on energy efficiency investment. • Business priority/disruption • Collateral structure

12. Renewable Energy Financing

13. Kasikornbank’s Energy Financing Landscape

14. Thailand’s RE Landscape Source: Ministry of Energy

15. Participation Target MW 2017-2036 US$ million New Investment New capacity Financing Arrangement Project type Thailand’s RE Financing Outlook

16. RE Financing Project Model • Experience / Technology / Financial strength • Contract terms/ Liquidated damages • Insurance and Warranty (performance guarantee) • Independent engineer required • Contract terms • Reliable customers • Competition • Financial soundness • Relationship with communities • Experience with renewable project EPC / Supplier Main Product Offtakers Shareholder Undertaking EPC/ O&M Contract Sponsors Project Offtake Agreement Debt Financing Credit Facility Agreement Land Purchase Agreement CERs Offtakers • Profitability ratio • Leverage ratio • Debt service ability ratio Feedstock Supply / Land Site • CERs pricing stability • Terms of contracts • Credit worthiness of offtakers • Secure Feedstock (captive) • Reliable data source for optimum Energy Yield • Nearby Grid Connection • Independent engineer required

17. Key Perception of Risks and Mitigations (Example for Solar) 1/2 Mitigation Guideline Issues • Liquidated damage terms • Acceptable performance guarantee • Strong status of EPC • Fixed price, turn key construction contract • Guarantee completion date • Select experienced contractor • Balance of Plant • Panel/Inverter Synchronization • Cost Controls and Completion Construction • Technology and performance records reviews • Lab testing and Certificates • Supplier Reviews • Service/Maintenance program • Reliability and Durability • Environmental Suitability • Project Economics • Proven technology with reasonable track records • Proper Manufacturing test&warranty • Reputable Supplier • Reachable manufacturer/supplier Technology and Components • Site and Location Suitability • Climate Impact • Geographic Limitation • Historical climate/season review • On site survey and verification • Yield Analysis • Location clear of surrounding future development, flooding, shadows, smog and smoke • Technical Advisor with formulated yield analysis approach Irradiation and Production

18. Key Perception of Risks and Mitigations (2/2) Issues Mitigation Guideline • Legal counsel to review warranty, LD terms • Legal counsel to review contract enforceability under Thai Laws • Understand PPA characteristic (PPA to renew every 5 years) • Legal due diligence • Continuity of the Power Purchase Agreement • Terms and enforceability of contracts and warranty Contractual Environmental • Impact and effect to surrounding environment • Local community acceptance • Potential environment pollutions assessments • Local community communication • Social responsibility program • Technical/Environmental Advisor to perform review and study • Local road show and education • CSR program • Job creation

19. Credit Structure Enhancement • Structure: • Financial Guarantors such as, Guaranteed Bond and Standby Letter of Credit (SBLC) • Export Credit Agencies (ECA) Financing & Support through Partial Risk Guarantee • Development Banks – IFIs’ Financing & through Partial Risk Guarantee • Insurance Brokers • Back-leveraged structure through Standby Letter of Credit (SBLC) or Corporate Guarantee in case of highly acceptable credit standings to the bank (A+ Rating and above from rating agency) • Example: • IFC as a shareholder in Solar Power Co. Ltd. enhancing the more relaxing terms & conditions to the project • ADB as a lender in early stage of Solar Farm development resulting to the longest tenor of 18 years • Strong supplier’s guarantee such as life-time performance warranty reflected through improved credit acceptance

20. Opportunities for Renewable Energy Financing • Geographical suitability for certain types of energy sources e.g. Solar PV (high and stable radiance) and Biomass • Government policy direction which support investment (mostly private) in renewable energy under Power Development Plan • Participation from other agencies on credit structure enhancement • Lower implementation cost.

21. Challenges of Renewable Energy Financing • Low electricity price environment ($0.11/kwh) • Some government scheme is unclear and leave certain issues open. • The market is more competitive leaving smaller margin to investors. • High concentration on Solar PV. Other types of renewable energy (Wind, Biomass, Biogas) are still unproven or unstable.