Presentation July 2012

Direct drive / gearless,

natural airflow cooled Permanent Magnet Generator (PMG),

Full Converter

30 years of experience // Lessons learned // Technology simplicity // High efficiency

Agenda
Date

: July 2012.

______________________________________________________________
1. History & Introduction Lagerwey Wind B.V. (LW)
2. Status Quo of LW & Current focus

3. In house manufacturing at LW
4. Sales Focus
5. USPs technology and product

6. Wind sector development trend awareness

7. Additional expertise
8. Items to discuss

Advantage through experience

1. Historie & introduction of Lagerwey Wind B.V.

2012

20 kW

80 kW

250 kW

750 kW

1500 kW

60 units

600 units

300 units

200 units

20 units

15 years gearbox technology

2000 kW

2 units
250 planned

2600 kW

2 units
januari 2012

17 years direct drive technology

Advantage through experience

L93-2.6MW @ 90m hub height installation Lelystad, NL, January 2012

Lagerwey Group BV
holding structure
(100% privately owned)
Head Office Barneveld, NL

Lagerwey

Test turbine production, Wekerom, NL

Group

Lagerwey Wind BV
Design and engineering
Licensing, IP owner

Lagerwey
Systems BV
Production & sales

Lagerwey
Service BV
Service & Maintenance

Management:
Lagerwey is managed by the 4 owners who
jointly have a total wind experience of 100 year.
Advantage through experience

2. Status Quo of LW & current focus

Products:
L82- 2.0MW

Prototype installed end 2009 in D

Licensed to Reliance India (250 units planned),

L93- 2.5/2.6MW

Prototype (2 units) installed in January 2011, in NL

Production start Lagerwey: 2H-2012

L100-2.5MW

Prototype foreseen for end-2012

Product in pipeline:
L120+, 3 MW+

Detail engineering starts in 2012, prototype 2H 2013

Current focus:
Direct sales of LW-sales team to target countries* / joining dedicated customers
License sales
Raising capital to fulfill growth perspectives for expansion of production and sales in target
countries*
*: countries in NW - Europe

Advantage through experience

Lagerwey Goals

Become the best, not the biggest!

Make customers feel like partners, ensuring a good and
durable relation!

Supply superior wind turbine technology to strategic partners with a strong focus
on durability and reliability
Expand product line with bigger rotor sizes, with focus on low and medium speed
wind sites (IEC II, IEC III)

Expand production capacity of Lagerwey Systems

Create limited amount of regional production licenses

Serve the world market with local multiple production hubs

Advantage through experience

3. In house manufacturing at LW

Advantage through experience

3. In house manufacturing at LW

Pictures in house Hub, Controller and Nacelle production

Pictures in house generator - production

Advantage through experience

4. Sales focus Lagerwey Systems B.V. 2012/2013

Turbine sales with LW sales team:

Netherlands & Belgium

U.K. & Ireland

Scandinavia & Finland

Austria

License sales:
Focus on big industrials or larger project developers present in a market with
large potential and with a strategic geographical location

Advantage through experience

5. USPs technology and product

Cross cut of nacelle, generator and hub:

Already competitive based on a small

scale of economy
No active cooling system on the generator,
just passive air flow cooling

Robust, reliable, low number of parts, easy

to control
Relatively easy to transport, relatively easy
to erect and install

Low Top Head Mass of 107t and low

critical hoisting weight of 50t

L93-2.6/2.5MW & L100-2.5MW

High level of in house production

possible (complete in house production
of generator, main bearing construction
and controller, only standard available(
key) components are sourced multiple)
enabling sufficient profit and increasing
supply control

Advantage through experience

General disadvantages of Direct drive PMG and our answer to that:

Disadvantage

Our answer

Larger diameter of generator

Only 4,2m for the L93-2.6MW

Higher THM (Top Head Mass)

49t generator weight, less than 110t THM

Expensive Permanent Magnets

Intelligent sourcing, optimizing magnet

configuration and shadow design available

Complex generator assembly

True, but with advanced production technology

well doable and cost effective. Besides that
production is a single challenge ones and the
geno will last long

Demagnetisation at high temperature

Natural air flow cooling, no active cooling

system which might not work!

Advanced cooling system required

See former item

Full power conversion more expensive

Full power conversion is a necessity more and more

any way, this in order to be able to meet grid
requirements
Advantage through experience

6. Wind sector development trend awareness

Cost price reduction trend in the wind sector:

The Sales prices of wind turbines at supply ++ bases is expected to be at a level of 700.000
/ MW (supply ++) within 5 years from now, the operational costs are expected to decrease
significantly as well, in total resulting in 70% of the current cost price of wind energy.

Advantage through experience

7. Additional expertise
Transport, erection / turn key supply:

Service & Maintenance (all inclusive long term service packages):

Durable and controlled technical operational costs & high availability standards
Advantage through experience

Items to discuss:
1.

Content of technology transfer

2.

How does Lagerwey maintain continuity?

3.

Can LW retain its advanced technology?

4.

Anticipation on competition from China

5.

Production facilities and tooling

6.

Education & knowledge transfer

7.

Competitiveness

8.

Service & maintenance

9.

Blade production

10. License structure

1. Content of technology transfer

The scope of supply under the License Agreement comprises, amongst other (but is not
limited to):

Sales- and production rights in the Territory of the

L93-2.5 / L93-2.6MW at 80 and 90m tower

Optional: L100-2.5MW at 80 and 98 m tower

The rights to take out Service & Maintenance for the sold turbines

Supply of

The technology transfer / education and documentation enabling the Licensee to

Assemble & partly produce,
Maintain,
And sell the wind turbines

Specific tools enabling local production (separate order)

Support with the (basic support included)

Setup of the production facilities and tooling

Supply chain setup

Remark: LW will durably supply the Turbine controller components (hard- and software) and
generator to the Licensee

2. How does Lagerwey maintain continuity?

LW is a debt free company with a highly valued asset by means of the IP and
production technology of the State-of-the-Art wind turbine types which create a new
standard in the industry, enabling LW to meet the future requirements for cost price
reduction.
With other words: LW offers a unique and very attractive business case to future
partners!
Having this said, LW foresees good opportunities for organic growth. In addition: It
sees ways to harvest the opportunities in some developing markets with large
potential, such as Turkey and therefore it is striving to find Licensees.
The sales opportunities with the L93 and L100 platform are excellent in combination
with the significantly lower technical operational costs (in relation to the Full Service
Agreement offered)
Lagerwey has in house all expertise, capital and know-how to engineer the next
platform(s), such as the L120+ - 3MW+, and to engineer and execute the entire
production process for such, finally resulting in a cost effective, durable and reliable
product.

3. Can LW retain its advanced technology?

Key element always is cost effectiveness!
Lagerwey has learned from experience in the past that awareness regarding cost
effectiveness is crucial, saying that besides being a technology driver one has to
anticipate every day on price performance level.
LWs goal was and is to offer Direct Drive wind turbines to the market for a competitive
price (related to CAPEX), knowing that the long term (10 year+) full technical
operational costs will be significantly lower then with geared turbines, the final result
will be a significantly lower cost price per kWh over the lifetime and a longer life time!
LWs knowledge & expertise in the field of generators (especially PMG) and drive train
construction is huge, the team is decisively, fast, flexible, very dedicated and not
political driven (to be explained) and the length of experience goes back for over 30
years in the wind sector as a wind turbine designer, produces and supplier and goes
back over 17 years in direct drive technology.

Lagerweys motto has always been and will be:

Pushing cutting edge technology!

4. Anticipation on competition from China?

First note: Not to underestimate the Chinese.
The Chinese bought cheap licenses of dated products which did not become so successful in EU and
US. At the same time they have / had to go through a learning curve and their own government invited
them to install bad quality products because the incentives were linked to an installed turbine not to a
working one!

Goldwind, Sinovel and some other bigger and more serious players have experienced their lacking
performance (poor quality products and services) as a result of the learning curve and dated designs.
Now they enter the global market they have to perform better and we see two development processes:
They invest themselves (enabling financing of the projects) and strive for BOT solutions
They increase their prices because they also have to ensure quality

The general advantage of the Chinese is: Cheap labor (due to lower social costs and other HSE rules
mainly) and access to some cheaper crude materials. Labor costs represent only about 5% of the total
turbine costs, transport costs represent about the same. Notice that for example towers and blades
contain a higher level of labor and therefore could be sourced from low labor countries, crucial is quality
control.
The general advantage of the EU-players is: Image (!), bankability, expertise, more sophisticated
knowledge and quality awareness. In general Europe is at least half a decade ahead of China related to
wind turbine technology and that is a lead which cannot so easily be taken over.
Statement: Only cutting edge EU technology can compete with China

5. Local production facilities and tooling

Assembly- and production plant suitable for 100-150 turbines annually (single shift):
1.

Equipped with internal cranes to a max. of 25t

2.

Excellent working conditions regarding heating, light, humidity

3.

With a good (flat, hard) work floor

4.

With sufficient internal logistical options

Dimensions, Indoor:
Assembly nacelles + hub:

3600sqm, height hall 8m, 7m crane hook, capacity 2 x 25t:

Storage indoor:
Nacelle & hub:

1500sqm, height hall 7m, 6m crane hook, capacity 1 x 15t

Storage outdoor: 4500sqm (approx.)

Tooling: There is only a limited number of specific tools necessary to enable local assembly / production.

6. Education & knowledge transfer

Within 2 months time:
A team of highly skilled engineers of the Licensee can be made ready to assemble nacelles and hubs
independently at the local production facility

LW will educate License s engineers on the job and theoretical

In the Netherlands (Theory, assembly & production in Wekerom)

At the local facility by means of support of the start up of the local activities

Note:

LW has recently fulfilled its obligations reflecting the above towards Reliance ADA in India

7. Competitiveness
The most relevant USP of LW is: Already competitive based on small scale of economy!
This means that we experience that we have a healthy sales - margin (much better than the current
established players!!!) on our product while still being competitive. The reason why LW is able to produce the
L93 and L100 for a relatively low cost price is:

Less components, lower weight

Less processes to handle: For example no active generator cooling system

In house production of

The generator

The main bearing construction

The controller

Intelligent product & production technology resulting in more simplicity in both the product itself as well as the production
steps to be taken

Note: For any investor in LW and for any potential Licensee this shows an attractive business case because:
One can ramp up production slowly and is not forced to start at large scale of economy directly
One can count on upside potential thinking about reduction of costs as a result of economy of scale

Full Service Costs:

Due to the simplicity (absence of gearbox amongst others) of the product and more simple supply chain and less
stock components needed, LW can offer a FSA for a price which is significantly lower than that of the competition,
saving at least about 200k during the first 15 years of operation, possibly resulting in a multiple of that!

8. Service & Maintenance

LW is able to maintain its fleet for significantly lower costs than that of the competition
with its conventional machines!
LW expects lucrative business in the area of Service & Maintenance while following the trend of reducing cost
prices (as indicated earlier in this presentation) meaning that LW calculates with approx. 75% of the current
common market prices for a FSA*.

* : FSA means Full Service Agreement, which includes:

All labor and all parts to be exchanged (LW being owner of the replaced part and repairing / overhauling it)

All costs related to storage, transport and importing of parts as well as necessary equipment such as cranes

All wear and tear

Availability warranty on the individual turbine (common is 95%) or wind farm (common is 97%)

Machine breakdown- and business interruption insurance

LW experiences (like the competition does) that end users / customers are no longer interested in service
agreements without a complete package, that is why we only focus on the FSA, anticipating on the market.

LW emphasizes the importance of a strong and dedicated to the LW-fleet local service organization.

LW s SCC (Service Coordination Center) will manage the local service units, surveillance and supply chain

Huge strength of the LW machine is the ability to diagnose and remedy failures ahead and from distance

The above describes the approach of Lagerwey itself, the Licensee is responsible for its own service setup.

9. Blade production
LW s vertical integration level in this stage is already quite high as it produces the entire
drive train in house (generator + main bearing construction) and collects the pitch- and yaw
system drives and bearings from reputable suppliers. Currently LW procures its blades from LM
Wind Power, the largest independent and most experienced rotor blade supplier.
The majority of the established players have a lower in house production level.
As soon as one has a bottom line of at least 80 units annually one should consider own production of
blades, it makes you less dependent of external blade suppliers and allows you to optimize the blades
for specific features.
LW has possibilities to supply a blade license for the production of the blade of the L93 and L100, such
process could be done step by step:

1: Multiple sourcing from LM Wind Power and at least one other reputable manufacturer of blades

2. Using LWs own blade design, produced by a reputable independent manufacturer

3. Start up production of your own blades based on your own design (obtained during former step)

Key success factors: Focus on automation of blade production AND focus on use of alternative materials

10. License Structure

LW will durably produce and supply to the Licensee the Controller and Generator

The scope of the licensee in the territory:

1.

Sales

2.

Assembly of hub and nacelles

3.

Sourcing of components for production / assembly and for Service & Maintenance

4.

Service & Maintenance

5.

Blade production setup (optional)

Cooperation between LW and the licensee:

Supply of controller and generator by LW to Licensee

Sourcing of components

Service support by LW to Licensee

Internal sales of completed nacelles and hubs, components etc (optimizing the joint production capacity)

Blade production / internal sales of blades

Remark:
-

LW will sell to Licensee the generator and controller for internal transfer prices ensuring a good business
case for the License and ensuring the best possible performance of the LW-wind turbines

LW will always consider a local generator production setup in the Territory of the Licensee and LW is willing
to allow the Licensee to be able to invest in such jointly with LW, LW having majority shares.