Alternus Energy : Capital Markets Day Presentation

Capital Markets Day Presentation

Alternus Energy & Clean Earth Corp

Date: Monday 17 October 2022

Presenters:

Aaron Ratner, CEO Clean Earth Corp

Bill Sadlier, CEO, Altnua

Harold Von Hayden, Head of Renewables, Arctic Securities

Josephy Duey, CFO, Alternus Energy

Vincent Browne, Chairman & Group CEO, Alternus Energy

Speaker 1 Harold Von Hayden

Hello. Depending on where you are in the world, I am wishing you a good morning, good afternoon, or good evening. My name is Harold Von Hayden and I'm Head of Renewables at Arctic securities and it is with particular pride that we are hosting the capital markets update for Alternus Energy. After the presentations we will have a Q and A session and the listeners can post their questions online using the window on the right hand side. So without further ado, I am happy to hand the word over to Vincent Brown, CEO of Alternus Energy.

Speaker 2 - Vincent Browne

Good morning and thank you Harold, and good afternoon or good evening indeed to where you may be in the world and listening from today. For those of you who don't know me, I'm Vincent Browne, Chairman and Group CEO here at Alternus Energy. I firstly want to thank you all for taking the time to join us today and allow us to introduce the company to you. And also to provide an update on business activities for those who are more familiar with the business. I would like to extend a very warm welcome to our existing shareholders, team members and other stakeholders who have helped the company get to this point in what has been a very exciting period for us. I suppose the big news for Alternus in the last week has been the announcement of our business combination agreement with Clean Earth Acquisitions Corp. And so perhaps that is where we should start. After that then we'd like to take you through what this means for Alternus, focuses and how we bring the company forward from there. So, with that in mind, let me introduce Aaron Ratner, the CEO of Clean Earth, to say a few words on this exciting new chapter in the Alternus journey. Aaron?

Speaker 3 - Aaron Ratner

Thank you Vincent, and good morning and good afternoon everyone. I'm Aaron Ratner, the CEO of Clean Earth Acquisitions Corp. Since 2012, I've focused my career on climate and the energy transition. I've been an institutional investor in both venture capital and infrastructure finance. I've participated in developing sustainable infrastructure projects across biofuels, sustainable protein, anaerobic digesters,

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renewable natural gas, carbon capture and hydrogen. And I'm a startup founder in the climate tech space. All of these experiences have afforded me the opportunity to participate in the climate economy across a wide variety of strategies and sectors. And I believe what we have put together here is something very special. We're here today to discuss our proposed combination with Alternus Energy, a rapidly growing transatlantic renewable power developer and producer. The goal of the presentation is to articulate the value of what we believe is one of the most exciting risk-adjusted opportunities for US investors seeking exposure to the European and American energy transition, both of which represent multidecade, multi- trillion dollar markets. Today, the European continent is in a secular energy crisis with no clear end in sight. Winter is approaching and very little has been accomplished this year by way of building sustainable renewable dependable, baseload energy assets.

In fact, the energy crisis is driving us backwards towards burning more fossil fuels particularly coal and natural gas. Here in the United States, the passing of the Inflation Reduction Act and the hard work of the Department of Energy's Loan Program Office is accelerating deployment of capital into the renewable energy sector. However, we all know we have to go faster. Clean Earth and Alternus have structured this transaction with three important criteria in mind. First, to provide a catalytic event for Alternus and its existing shareholders by transitioning the company's listings onto the Nasdaq which will enable access to more efficient and sizable capital markets. Second, deliver to our Clean Earth investors an EBITDA positive, low technology risk, rapidly growing, well run company that is exceptionally well positioned in multidecade, multi-trillion dollar markets. And third to deliver to retail investors an entry point valuation with substantial upside based on conservative set of assumptions and third party analysis most notably, evaluation based only on a pipeline of existing owned and contracted projects. Now, I'd like to say a little bit about the team at Clean Earth. We went to Market and held our IPO in February of this year with 22 professionals on the team, including a 14 member advisory board.

Everyone involved brought unique climate and energy industry experience to our objective. Our advisory board encompasses individuals with expertise in renewables oil and gas, maritime, software, agriculture, technology, climate fintech and other relevant sectors. We cast a very wide net and we believe we have come away with a unique opportunity. Our Executive Chairman, Nicholas Parker has been a pioneer in the sustainability space for decades. In fact, he coined the term clean tech over 20 years ago. Our sponsors together underwrote $35 million of the initial public offering and our team will bring substantial industry experience to support this well positioned, long-term growth opportunity. Candice Beaumont from our board of directors, Nicholas Parker and I will be joining the board of Alternus post-merger. Now, about our merger partner. Alternus is an emerging leader in the development, construction and operation of utility scale C&I solar power plants. Today, the company is operational in eight countries across Europe, and Alternus recently established a US presence headquartered outside of Charlotte, North Carolina. After several years of building its platform, the company is poised to rapidly accelerate the growth of megawatts under operation and megawatts from the forward pipeline. Now, let's touch on the highlights of the transaction. It is worth reiterating that the valuation of this transaction is based on owned and contracted solar pipeline, it does not reflect future solar project development and acquisitions, or expansion into additional renewable energy technologies such as storage, wind and hydrogen. Clean Earth proposes to merge with Alternus first quarter of next year with a pro forma enterprise value of $992,000,000 and an equity value of $550,000,000. This implies an enterprise value of 21 times 2023, EBITDA of $33 million. Pursuant to this announcement, the executive team of the combined entity

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anticipates raising debt capital to fuel growth in Europe and the United States. It is also worth highlighting Clean Earth's origination and due diligence process. Since our IPO, we have evaluated over 150 potential merger candidates, many of whom came through long standing relationships with one or more of our team.

After we executed our letter of intent with Alternus, we brought in a leading analytics firm to provide an independent fairness opinion. We engaged a leading global audit and accounting firm to conduct financial due diligence on Alternus, their projections and quality of earnings. We engaged international and local council to perform legal due diligence on the business. After all that, we came away convinced that we have found a uniquely compelling opportunity for Nasdaq investors to participate in the European American energy transition. With that, I'll now turn it over to Vincent Browne, Alternus CEO.

Speaker 2 Vincent Browne

Well, thank you very much Aaron, and indeed, we're very much looking forward to the collaboration going forward to scale a leading clean energy company together. So now let's turn our attention to Alternus itself. Firstly, we would like to take you through the business strategy, outline our successful business model and ongoing execution of delivery that enables Alternus to scale into this world leading energy company we want to create. We'll also share some details and updates on our projects and provide an update on the ongoing debt facility discussions which we believe will be truly transformative for the company when completed. However, before we get started, I would like to remind you that statements we make during this call contain forward looking statements and are subject to risks and uncertainties. Statements we make during this call that are not statements of historical facts constitute forward looking statements. These include statements that refer to expectations, projections or characterizations of future events, including financial projections, the anticipated benefits of the proposed transaction, or future market conditions. The statements we make are based on Alternus management's current expectation or beliefs and are subject to risks, uncertainties and other factors described in the slides.

Accordingly, actual future results could differ materially from those expressed in such forward looking statements. So please review the disclaimers included in the investor presentation. In connection with the proposed transaction, Clean Earth Acquisitions Corp. intends to file with the Securities and Exchange Commission in the US, a proxy statement and what's called a Form 14A with respect to a Clean Earth Acquisitions Corp. Stockholder meeting to vote on the proposed transaction. The proxy statement will contain important information about the proposed transaction and related matters. So we would ask you to look for that and peruse that as it's available. So with that said, let me introduce you to Alternus Energy. I don't believe I need to tell anybody here today that we're currently operating during a paradigm shift in the energy sector. The picture on the left is instantly recognizables as a coal or gas fired power station. The picture on the right is one of the many large-scale solar parks that are replacing these power stations and is an autonomous energy solar park in the Netherlands. They are similar, in that both provides the energy to power our economies. The coal plant is powered by burning expensive coal and it releases emissions to pollute our atmosphere.

The solar park just needs sunlight to operate and of course releases no emissions. The only drawback for solar being that it operates during daylight hours only. But evolution of battery technology is working to

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address this issue and we'll solve that, we believe, going forward. Another key difference and probably more important is how financial institutions view them. The fossil fuel plant, for example, is generally understood to be a long life asset and it does not need long term contracted revenues to secure its financing. As lenders understand it, it simply sells the energy it creates to the grid and that income that it receives is stable and long term. Solar, however, in Europe anyway, is not currently viewed the same way. It has, in the most recent past at least, been perceived as a 15 to 20 year revenue stream from these projects.

In my opinion, this is based primarily on how solar was structured when Europe was trying to seed the industry, which worked very well and has in fact delivered the position we have now, where solar is commercially viable at market rates. It is this dynamic that is also fueling the rapid growth we are seeing across Europe in conjunction with the huge regulatory support being introduced by the EU. Therefore, I strongly argue that solar should also now be perceived as a long life asset, given the fact its energy production, once installed, typically spans 35 plus years. As the world continues its irreversible shift towards renewables, perhaps it will become more accepted that the energy these kind of parks create is sold as produced to the electricity grid also, and so will become more flexible in lending terms. For today, however, solar still requires long term contracted revenues, mostly at prices below the rates available if we were selling the energy directly in the market, and this is in order to get the lowest cost debt. Why? The world needs renewables now more than ever. Then why do renewables require additional supports in order to receive the same level of funding at the same costs?

This is a fundamental premise that underpins what we do here at Alternus and how we approach our acquisition and funding strategies. By this we mean better matching the abundance of available debt for these projects within the life of these projects, and using the cashflow released from that process to fund faster growth without requiring additional equity issuances each time. This approach, we believe, separates us from our other market players. On to the next slide. So what does Alternus do? Alternus is an independent clean energy producer. You may also hear the term IPP, or independent power producer, to describe companies like ours, but we want to focus on the clean nature of our power. So Alternus develops, installs and operates utility scale solar parks across Europe and the U.S. as long term owners. This is an important distinction, because as a long term owner we focus on ensuring that the parks we own are designed for the most efficient operations and built to last, if you will, and not flip to funds that require shorter term IR hurdles, as an example. So this approach, we believe, makes us more attractive to our developer partners in-country who want a partner that has a repeat nature and one that's obviously also more flexible in the approach and more in tune with the realities of project development than funds or larger participants typically are.

In addition, we believe this also makes it very attractive to both banks and local governments who prefer long-term focused market participants, as it prevents them from having to deal with multiple owners over time. We believe that this focus has become a key benefit for Alternus, when competing projects may be chasing the same grid connections, for example. So if we look at where we are today versus where we were, I believe you will understand what we mean when we say 'ongoing execution record'. When I took over what is now Alternus at the beginning of 2017, we had two parks in Romania and a total of 6 MWs operating with about 1 million Euros a year in revenues. The company at that time had a very challenging regulatory envirnonment and investment history. Today we have over 40 operating parks, a total of 168

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MWs in operation and circa 30 million in recurring annual revenues, which reflects over $400 million or more in future lifetime revenues from these parks, of which 172,000,000 is contracted for the next ten years or so. These lifetime revenues are based on current energy production levels across the operating parks for the expected operational lifetime of each.

This is multiplied by the contracted energy rates under existing contracts that we have in place today. We've got eight years of weighted average contract life remaining on these and the expected spot market rates to be paid for energy as provided to us by leading expert future price commercial advisors who tell us where the market is expected to be. So we now have operations in eight countries. This is a slight correction to the deck we published last week as we are now expanding to the US. We have operating projects in five countries and 649 projects under development which we own today, all set to come on stream and bring further predictable revenues to our growing portfolio in the next few years. More on that a bit later on. Our ongoing execution record seems to deliver approximately six times revenue growth in just two years, which in turn has created the predictable recurring revenues that I mentioned. Over the long term, this pace of growth is expected to continue in the next three years, as you can see from the chart on the right side. About 60% of this growth is already owned or contracted today and is driven by some of our development projects reaching production in the period and also by current contracted acquisitions completing as we expect.

So, in order to better understand how this high rate of growth is possible, we can see it in the 1.5 gigawatts of owned contracted solar assets we have in place today, which is augmented by a further circa 800 MW of exclusive rights to acquire certain projects in a well diversified portfolio as you can see on the right. I might point out that what we mean by owned development projects is the total amount of projects that we own in our own local SPVs. It's not anticipated that all of these projects will achieve operational status. Please also see page 28 of this presentation and again we may cover that a bit later on. Contracted means that binding contracts or share purchase agreements (SPAs) have been signed. Closing of the transaction therefore is subject to the projects achieving the conditions precedent in order to complete the acquisition and or suitable financing. And lastly, exclusive rights means letters of intent or term sheets that have been executed with sellers confirming the price and the terms, and granting exclusivity to Alternus to complete due diligence, and the completion then of binding contracts. So, all in all, I believe there's a very robust contracted growth trajectory that we continue to execute on to support our ambitious growth plans.

I trust this has given you a good overview of who we are, what we do and how we are executing. So with that, this might be a good time to take you through what we believe are some of the key reasons why Alternus represents a great investment opportunity, and why now? Well, Alternus is already a strong operating business today, as we've shown already, built from humble beginnings and it has shown a clear ability to execute and is primed to realize exceptional growth in the next few years. This is driven by cash generative projects of over $30 million annually today at over 80% EBITDA margins and forecasted to reach over 200 million by the end of year 2025 from contracted and owned projects of 1.4 gigawatts. Our purpose built business model is delivering both immediate and lasting shareholder value from our proven project acquisition and development platform and a determined focus on LCOE as a key project decision point for us to determine that all projects pursued will be profitable from conception to end of life, which

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