MAN Ferrostaal / Solar Millennium / RWE / SWM / RheinEnergie- Speech given by Dr. Rainer Kistner, Director Solar Power of MAN Ferrostaal Posted: 12-07-2009 , 05:22 GMT We are delighted that you have followed the invitation of Stadtwerke M�nchen and that you have taken an interest in our topic.Up until two days ago, Ferrostaal was the majority shareholder in Andasol 3, having taken the project over from our technology partner, Solar Millennium. And we are happy to have additional partners on board: RWE, Stadtwerke M�nchen and RheinEnergie.The approach we have taken with Andasol 3 � realising large-scale industrial projects in association with other partners � is the implementation of our business model. We develop plant engineering and construction projects, implement them together with our partners � Solar Millennium, in this case � while also making a financial investment in these projects. Typically, this is something we do with several partners.We have been following this business model for nearly 20 years, primarily in the petrochemical sector. This is how we have grown into the world's largest producer of methanol together with our partners. We have had outstanding results with this model.The major advantage of this approach extends to all of the partners involved: not only are profits fairly distributed to all of the partners when things go well, but the risks are also shared when difficulties arise. The financial sector as our financing partners views this model very positively and is also interested in an intelligent distribution of opportunities and risks.Under this business model, we are at once project developer, EPC-Contractor and co-owner of a plant. We monitor a plant over its entire lifecycle and place a premium on high quality � much higher, in fact than comparable plant engineering and construction firms, who say goodbye to a project once it has been delivered. For us, every day of down time would impact negatively on our balance sheet.A few months ago, we built and delivered a refinery in Chile using this pattern. For our underlying financing model, we were honoured with the award �Latin American Deal of the year� by the magazine Project Finance International.In our view, this approach will prove to be of great significance for the newly developing solar industry. Solar thermal plants call for high levels of initial investment that can quickly become too large for a single partner acting alone. As soon as they are amortized, solar thermal plants are a delight to all parties involved; after all, �sunlight� as a fuel is free, and the maintenance costs for solar thermal plants are decidedly low. So it pays off to invest in solar thermal plants if you are prepared to take a long-term approach.We at Ferrostaal are also investing in solar thermal energy. Not just as an investor in Andasol 3, but also by setting up a new business unit within our company. We believe that this will pay off because the development in the solar industry has now reached a point where a need arises for general contractors such as Ferrostaal to become involved.The technology suppliers are out there. Some of them, such as Solar Millennium, are now successfully past the start-up stage, have grown to a respectable size, and have become important market players. The underlying technology has developed to a point at which commercial applications are feasible. Parabolic trough power plants are now bankable. Nor is there any shortage of customers and buyers for solar-generated electricity. Today�s event is a clear demonstration of this.What we need now are general contractors with comprehensive capabilities, companies that can develop and manage overall projects, and that can work with their partners to ensure the financing and purchase of the electricity generated.Ferrostaal is just such a general contractor. Our plant construction activities place a clear focus on sustainability: our objective is to take a large-scale industrial approach to building plants for solar-generated electricity and biofuels. We entered these sectors two years ago and have been working on developing projects of our own ever since. Our focus in this regard is on Southern Europe, the MENA region, the USA and on Brazil in the biofuels area. We are delighted to be able to report success after just two years as projects of this nature have very long development period.We have three investments in the solar area: the largest is our joint venture with Solar Millennium. We have a second investment in the Solar Power Group, which is developing solarthermal Fresnel technology using flat mirrors. We have a third holding in Solitem, which develops cooling energy using small solar parabolic trough collectors.As a general contractor for large-scale industrial projects, Ferrostaal is one of just a handful of companies who have the structures required to implement ecological projects on an industrial scale. The reason companies such as ours are so rare is that there are only a few independent industrial service providers with our level of flexibility in the application of technologies.Our principal shareholder � IPIC � is fully committed to our activities in the solar business and has a considerable interest in investing here as well. This is no surprise as Abu Dhabi is not just rich in oil and natural gas but also in sunshine. Moreover, they take a long-term approach in Abu Dhabi. The fact that Abu Dhabi will serve as the headquarters of the IRENA � the International Renewable Energy Agency � is part of this long-term thinking.Of all the technologies provided by our solar partners, the parabolic-trough technology is the furthest-developed. It has been operating reliably under commercial conditions in the USA for many years now. Last week, Andasol 1 became the first solar thermal power plant developed by Solar Millennium to be inaugurated in Spain. This technology has now become accepted in banking circles. This is a factor which benefits our project as well.Solar Millennium and Ferrostaal are ideal partners for the development and construction of solar thermal power plants: for many years, Solar Millennium has concentrated its efforts on developing this technology to the point of marketability, as well as on developing specific power-plant projects. As a provider of industrial services, and as a plant engineering and construction company, Ferrostaal lends joint projects the necessary critical mass. This also includes financial engineering and the entire range of engineering, procurement and construction services involved in power-plant construction.As a builder of power plants, Ferrostaal is in high demand, particularly if the projects are structured in a way that makes them somewhat more demanding. We currently have three power plants under construction, with an order volume of EUR 1.5 billion. Individualization plays a major role in all three projects � with our work tailored to the individual needs of our clients. Accordingly, we take project management just as seriously. No other company in German plant engineering and construction has as many certified project managers as Ferrostaal.Working together with Solar Millennium, we are active in Southern Europe, the USA and the MENA region. This is something we do out of our conviction that both sustainability and security of supply are vital to energy generation: we have to invest now if we wish to avoid the costly kinds of future repairs required as a result of high levels of CO2 emissions. Preventing or - at least mitigating - climate catastrophe costs a fraction of what it would cost to offset its impacts. This assumption can be given the status of certainty since the publication of Nicholas Stern�s Review on the Economics of Climate Change in October 2006.We believe that this insight will win out, and that renewable energies will experience strong growth in future. This is an assessment that is shared by the leading institutions in the field � from DLR (Deutsches Zentrum f�r Luft- und Raumfahrt or German Aerospace Center) to the International Energy Agency. That solar thermal energy will experience strong growth is also safe to assume. The only areas of difference to be found concern the rates of growth that the various institutions anticipate.Between now and the year 2020, we expect growth by a factor of between four and eight in relation to the situation today. We at Ferrostaal wish to gain an early foothold in this market. Our objective is to achieve a leading position in the CSP (Concentrating Solar Power) market. This event which we have all attended today gives me every reason to hope that this objective is a realistic one.Thank you very much for your attention
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