May/June 2009
Editor:
Maria Cull maria.cull@klgates.com
+44.(0)20.7360.8185
Our Cleantech Practice encompasses
60 lawyers across three continents.
We draw on the firm's strengths in the fields of equity capital markets, mergers and acquisitions, venture capital, private equity, renewable energy, intellectual property, patents, project finance and environmental and real estate law. This broad and deep legal experience enables us to meet the needs of all our clients in the clean technology and alternative energy sector.
K&L Gates is a global law firm with lawyers in 33 offices located in North
America, Europe, Asia and the Middle
East, and represents numerous
GLOBAL 500, FORTUNE 100, and
FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and public sector entities.
For more information, visit www.klgates.com.
From the Editor:
Welcome to the first edition of the European Cleantech Resource which will bring you news and views about the latest developments affecting the cleantech industry.
As a global firm advising clients from startups to established players in the cleantech arena, we understand the importance of having an international perspective on policy and legislative developments which are currently shaping the industry at an ever increasing pace. To that end, this first edition of European
Cleantech Resource links to a timely article in our sister publication, California
Cleantech Resource, which discusses how to access funds available to the cleantech industry via the renewable energy provisions of the US Stimulus
Package.
Our Eurocentric contributions come from Tom Sibert in London and Christian
Hullmann in Berlin. Tom talks about the new EU Renewable Energy Directive which will help usher in second generation biofuels, while Christian discusses new
German regulations which guarantee electricity prices for renewable electricity fed into the grid.
Our global focus means we work with each other across States and Continents to help clients shape policy and grow their business. Each edition of this newsletter will also let you know what we are up to and how you can participate. In the coming months we will be hosting a panel discussion in our Portland, Oregon office to address funding options for cleantech business through the US Stimulus
Package. Philip Morgan, from our London Office, will be speaking at a conference in Milan and will be discussing investment opportunities for funds in the renewables sector.
Finally, Maria Cull from our London office and Ann Sherman from Portland will be presenting at a conference in Washington DC where they will explore how tribal nations can fund and develop renewable energy resources on tribal lands and benefit from carbon trading. Full details of these events are set out on page 6.
Our Cleantech Practice is broad and the following contributions give you a brief glimpse into some of the areas on which we are focusing at the moment. We look forward to sharing our experiences with you over the coming months and years and introducing you to other members of our Practice.

Cleantech Resource: European Edition
Legally Speaking
The question of sustainability has become increasingly important in the development of new biofuel feedstocks, as producers seek to allay the concerns raised by the scientific community regarding the wider impact of biofuel production on global food prices and on the environment generally.
These concerns have also started to feed through to the legislation in this area and this is particularly evident in the latest Directive from the European Union in relation to the use of energy from renewable sources.
On 6 April 2009, as part of a wider climateenergy legislative package, the European
Council adopted the Directive on the Promotion of the Use of Energy from Renewable Sources, which builds on earlier legislation from 2003.
The Directive includes obligations on member states to increase the share of the energy they use from renewable sources consistent with the
EU-wide target of 20% of gross energy consumption by 2020 and, in order to achieve this, each of the EU member states will be set a mandatory target share of renewable energy, ranging from 10% for Malta to 49% for Sweden and with countries such as the UK, Germany and France at 15%, 18% and 23% respectively.
Importantly, in relation to biofuels, the
Directive states that in order for biofuels to be taken into account for the purposes of calculating the achievement of these targets by individual member states, and also to be eligible for financial support, they must fulfil certain
'sustainability criteria'.
Broadly speaking, these criteria are:
• minimum greenhouse gas emission savings of 35%, increasing to 50% in 2017 and
60% after 2017;
• not to be made from raw material obtained from land with high biodiversity value, such as primary forest and natural grassland;
• not to be made from raw material obtained from land with high carbon stock, such as wetlands and continuously forested areas;
• not to be made from raw material obtained from peatland.
The challenging nature of the renewables targets set by the Directive ensures that member states will need to take significant steps to encourage the use of biofuels that satisfy the sustainability criteria. This has important implications for the biofuel manufacture and feedstock industry, as biofuels and feedstocks that fail to satisfy the criteria will not only miss out on the financial incentives that will be given to compliant producers, but are also likely to face a shrinking market for their non-compliant products within the EU.
The effect of the Directive will also not be limited to producers within the EU, as in order to contribute towards targets and qualify for incentives all feedstocks used in the EU will have to meet the sustainability criteria regardless of their country of origin.
This important Directive provides a roadmap for EU regulation of biofuels until at least 2020 and understanding its impact will be crucial for both producers and investors in assessing the ability of companies to operate in this key market in the future.
Being "green" has never been more profitable.
Under the German Renewable Energy Sources
Act (Erneuerbare-Energien-Gesetz - EEG), which came into force on 1 January 2009, producers of electricity from certain renewable energy sources are entitled to a guaranteed price for electricity fed into the grid. Almost all eligible renewable sources have a guaranteed price higher than the market price and the grid system operator must accept all offers of electricity. The opportunities are clear: guaranteed prices will create certainty for qualifying technologies which in turn will facilitate investment and growth in these sectors of the renewable energy industry. This is good news for both green electricity producers and investors. However, the new provisions are complex and need to be mastered before investments are made.
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Cleantech Resource: European Edition
The EEG aims to increase the share of renewables in the market from its current figure of 16% to at least 30% by 2020. Therefore, all technologies aimed at generating electricity from renewable sources are being promoted.
However, capacity, location or materials used may result in certain power plants being excluded from the scheme.
Which technologies are subject to the EEG?
The definition of renewable energy sources is challenging in any jurisdiction and there are always questions over certain sources that have non-carbon related environmental impacts, such as nuclear energy. The EEG includes the following renewable energy sources:
• wind;
• biomass (including biogas);
• solar;
• geothermal energy;
• hydropower (including wave power, tidal power and salt gradient and flow energy);
• landfill gas;
• sewage treatment gas;
• mine gas; and
• biodegradable household waste and industrial waste.
There are complex provisions which limit the technologies eligible for support under the EEG and care must be taken when investing to ensure that the chosen technology will qualify.
For example, run-of-river hydropower installations are only eligible if they comply with detailed siting requirements and do not have an adverse impact on the ecological status of their location. The impact on ecological status will be determined under the detailed provisions of the European Water Framework
Directive, and each site will be considered on its individual merits. It would be unwise to invest in such projects without a clear understanding of the Water Framework
Directive.
The eligibility of wind energy is also subject to limitations. Installations providing an insufficient yield will not be supported and there are no guaranteed prices for installations with a capacity of more than 50 kilowatts if the installation operator is unable to provide evidence that the installation delivers at least
60% of the reference yield at the planned location. Again, careful consideration will need to be given to the EEG before investments are made and the appropriate due diligence will need to be undertaken.
The geographic location of solar power is a factor which will determine whether it benefits from guaranteed prices under the EEG.
Installations will need to satisfy strict provisions aimed at limiting development in ecologically sensitive areas protected under zoning laws. Legal advice from lawyers conversant in such disciplines is recommended before investments are made.
How long will the guaranteed price last?
Prices for most green energy sources are guaranteed for a period of 20 years from the date electricity is first fed into the grid. Only hydroelectric power installations with a capacity in excess of 5 megawatts have a shorter guaranteed period of 15 years.
What is the amount of the guaranteed price?
The EEG stipulates a guaranteed minimum price which must be paid by the grid system operator. The price differs for each energy source. A number of considerations are taken into account including the degree of market penetration. The more established technologies such as wind power command a price which is closer to market prices while newer and developing technologies, such as solar, attract a higher price to promote improvements in technology. Calculation of the price is further complicated by differentiation not only between new and modernised installations but also between several levels of output while taking into account the facility's overall capacity.
The following tables give an overview of the price structures under the EEG:
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Cleantech Resource: European Edition
Output
New Power
Installations with a maximum capacity of 5 MW
Modernised Power
Installations with a maximum capacity of 5 MW
Power Installations with a capacity over 5 MW
Up to 500 kW of output
Output between 500 kW - 2 MW
Output between 500 kW - 5 MW
Output between 2 - 5 MW
Output between 500 kW - 10 MW
Output between 10 MW - 20 MW
Output between 20 MW - 50 MW
12.67 Cents / kWh 11.67 Cents / kWh 7.29 Cents / kWh
8.65 Cents / kWh
8.65 Cents / kWh
7.65 Cents / kWh 8.65 Cents / kWh
6.32 Cents / kWh
5,80 Cents / kWh
4.34 Cents / kWh
3.50 Cents / kWh Output over 50 MW
Output
Landfill Gas
Installations
Sewage Gas
Installations
Mine Gas
Installations
Up to 500 kW of output
Up to 1 MW of output
9.00 Cents / kWh 7.11 Cents / kWh
7.16 Cents / kWh
Output between 500 kW - 5 MW 6.16 Cents / kWh 6.16 Cents / kWh
5.16 Cents / kWh
4.16 Cents / kWh
Output between 1 MW - 5 MW
Output over 5 MW
Output
Installations attached to or on the top of buildings
Up to 30 kW of output 43.01 Cent / kWh
Output between 30 kW - 100 kW 40.91 Cent / kWh
Output over 1 MW
Output between 100 kW - 1 MW 39.58 Cent / kWh
33.00 Cent / kWh
Freestanding Installations
31.94 Cent / kWh
31.94 Cent / kWh
31.94 Cent / kWh
31.94 Cent / kWh
May/June 2009 4

Cleantech Resource: European Edition
First 5 Years after Installation
Onshore Installation
9.20 Cents / kWh
First 12 Years after Installation
After 5 Years
After 12 Years
Output
Up to 150 kW of output
Output between 150 kW - 500 kW
Output between 500 kW - 5 MW
Output between 5 - 20 MW
Output
Up to 10 MW of output
Output over 10 MW
5.02 Cents / kWh
Offshore Installations
13.00 Cents / kWh (for installations erected prior 1
January 2016 compensation will be 15.00 Cents / KWh)
3.50 Cents / kWh
Basic fees
11.67 Cents / kWh
9.18 Cents / kWh
8.25 Cents / kWh
7.79 Cents / kWh
Basic fees
16.00 Cents / kWh
10.50 Cents / kWh
May/June 2009 5

Cleantech Resource: European Edition
Conferences and Events
Thursday 28 May 2009
Studio Legale Bird & Bird
Via Montenapoleone 10
Milan
Italy
Presenters: Philip J. Morgan, Kay A. Gordon
Sponsors: Studio Legal Bird & Bird and
K&L Gates LLP
K&L Gates and Studio Legale Bird &Bird are hosting a workshop on investment opportunities for funds in the sectors of infrastructure and renewable energies. The workshop will also deal with the main legal implications when investing in such sectors.
Financing Your Cleantech Business: Federal and State Incentives
Wednesday 3 June 2009
University of Oregon
White Stag Building
70 NW Couch Street
Portland, OR
Presenters: Kevin D. Burnett, Fred M.
Greguras, Dirk Michels, Scott C. Nelson,
Charles H. Purcell
Sponsors: ONAMI, University of Oregon, and
Oregon BEST
K&L Gates has assembled a panel of speakers who have not only helped cleantech companies access government and traditional funding, but also helped make that money work best in the long term.
The panellists will address:
• the range of funding options for clean technology project finance;
• how to successfully and efficiently access funding from the Stimulus Package; and
• legal and regulatory risks and their impact on future revenue, project feasibility and financeability.
Thursday 9 and Friday 10 July 2009
Hilton Washington Embassy Row Hotel
Washington, DC
K&L Gates' Maria Cull (London) and Ann L
Sherman (Portland) are presenting at the Third
Annual Tribal Energy Development Conference which aims to bring tribal, political and government agencies together with the leading energy developers on tribal lands to explore new sources of funds, programs and legislation for making tribal energy projects a success.
Ann will be talking about funding projects while Maria will be talking about carbon trading and the opportunities open to tribal nations.
To register online for any of the above events, please go to www.klgates.com/events
May/June 2009 6

Cleantech Resource: European Edition
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K&L Gates is a global law firm with lawyers in 33 offices located in North America, Europe, Asia and the Middle East, and represents numerous GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and public sector entities. For more information, visit www.klgates.com.
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