OFFERING MEMORANDUM Global Offering of up to ... - Nordex

The US provides federal support for operating wind turbines by providing tax credits — so-called
Production Tax Credit. This credit amounts to approximately E0.161 per kWh generated from renewable
energy. The US regime of granting tax benefits is scheduled to continue until the end of 2001. The
Company expects this to be extended. At an individual state level, the US also supports the expansion
of generating electricity using wind energy as part of a so-called Renewable Portfolio System (RPS),
and promotes such generation by stipulating a legally fixed proportion of electricity that must be
generated from renewable sources.
A similar system is also implemented in Denmark and the UK, among others. In these cases Energy
suppliers can elect to either generate electricity from renewable sources directly, or to fulfill this
commitment by purchasing so-called green certificates from wind farm operators. These green
certificates need to be freely tradable, in order to encourage a market for trading in certificates.
However, establishing and maintaining such a trading system can run into problems when it comes to
practical implementation. For example, Denmark has postponed introducing green certificates until
January 2002, and has stipulated a fixed price of 1.3 Eurocents per kWh of electricity supply
(approximately E0.013) until such time.
Promotion of renewable energy in developing countries
In developing countries, electricity generation from renewable energy sources is promoted in part by
national development aid programs from industrial nations, which either fully or partially finance wind
farm projects in developing countries or which grant interest-free or low-interest loans for specific
purposes. In addition to national programs, the World Bank and international development aid
institutions also fund programs. An additional method of advancing electricity generation from
renewable energy in developing countries is granting state guarantees to safeguard the delivery of
wind turbines. During the fiscal year 1999/2000 approximately 20% of all wind turbines sold by the
Nordex Group were supplied under development aid programs.
Legal Requirements for Constructing and Operating Wind Turbines
The current legal framework does not permit wind turbines to be erected in all locations with sufficient
wind conditions.
In order to erect a wind turbine in Germany, a turbine must initially comply with construction, planning
and building regulations, and must comply with the provisions of the Baugesetzbuch (BauGB – Federal
Building Code), the Baunutzungsverordnung (BauNVO – Federal Land Utilization Ordinance) and the
relevant state building regulations. In addition, the erection of a turbine must also meet the
requirements imposed by the Bundesimmissionsschutzgesetz (BimSchG – German Pollution Control
Act) and regulations relating to the preservation of nature and the environment. Whether or not these
regulations are fulfilled depends on the individual case. However, according to Section 35 paragraph 1
no. 6 of the BauGB, wind turbines are granted special privileges, which means that they comply with
the law on planning building projects even if they are erected outside an area subject to construction
planning law, where they would otherwise generally not be approved. Approval can, for example, be
withheld because of side effects caused by wind turbines, such as increased noise levels. The maximum
permissible noise levels are set out in the Technische Anleitung zum Schutz gegen Lärm (Technical
Instructions on Noise Abatement). Maximum levels of permissible shadow cast by the wind turbines are
also imposed. In future, an environmental audit will have to be carried out in certain circumstances,
prior to the construction of wind farms (See ‘‘Risk Factors — Legal Risk — General Legal Environment
and Suitable Sites’’).
Specifications imposed by building law and other public law legal requirements for constructing and
operating wind turbines also exist in many other European and Non-European countries.
In Spain, for example, the entitlement to build wind turbines is regulated differently in different
regions. In most of the Spanish federal states (autonomías) a legal framework for the construction of
wind farms is now in place. Requirements imposed by pollution control legislation generally play a
lesser role in the approval process, as the population density in most coastal regions is lower in
comparison to Germany. Environmental studies and special permission are required for the
31