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Geothermal Energy – An International overview: Alterra Power Corp./Magma Energy Italia

Fausto Batini

Siena, December 3, 2012

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Content

Company profile

Basic concepts on geothermal energy

Geothermal Energy Market

Geothermal regulatory framework

Magma Energy Italia projects

Conclusions


Forward-Looking Information

This Presentation contains certain “forward-looking information” within the meaning of Canadian securities laws, which may include, but is not limited to, statements with respect to future events or future performance, management’s expectations regarding Alterra’s production capacity, results of operations, cash flows, revenues and requirements for capital, future demand for and prices of electricity, and Alterra’s business prospects and opportunities. These statements reflect the current views of Alterra with respect to future events and are necessarily based upon a number of assumptions and estimates that, while considered reasonable by Alterra, are inherently subject to significant business, economic, political and social uncertainties and contingencies. Many factors, both known and unknown, could cause Alterra’s actual results, performance or achievements to be materially different from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements contained in this presentation, and Alterra has made assumptions based on or related to many of these factors. Such factors include, without limitation: fluctuations in currency markets (particularly with respect to the Icelandic krona, the U.S. dollar and Canadian dollar); risks related to the technological and operational nature of Alterra’s business; changes in national or regional governments, legislation, regulation, permitting or taxation; political or economic developments in Canada, the United States, Iceland or other countries where Alterra may carry on business; risks and hazards associated with the business of renewable energy generation; risks relating to the creditworthiness and financial condition of suppliers and other parties which Alterra will deal with; inadequate insurance or inability to obtain insurance to cover these risks and hazards; employee relations; relationships with and claims by local communities and First Nations; availability and costs of equipment and labour; litigation; the success and timely completion of planned expansion and development programs; the growth rate in net electricity consumption; support and demand for renewable energy; government initiatives to support the development of renewable energy generation; the reliability of technical data and capital expenditure estimates; and availability of capital to fund development and expansion programs. Forward-looking information and statements are also based upon the assumption that none of the identified risk factors that could cause actual results to differ materially from the forward-looking information and statements will occur. Although Alterra has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated, described or intended. There can be no assurance that the forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, prospective investors should not place undue reliance on forward-looking information. Other than as required by applicable securities laws, Alterra does not assume any obligation to update or revise such forward-looking information to reflect new events or circumstances.


Who we are

Magma Energy Italia s.r.l. A wholly owned subsidiary of Alterra Power Corp.

to develop geothermal projects in Italy

Headquartered in Siena with Italian staff supported by Alterra Power Corp. international experts

Investments are entirely financed by Alterra Power Corp

Two exploration leases in Tuscany: Mensano 215 km² Roccastrada 272 km²

TSX : AXY www.alterrapower.ca Page | 5 G L O B A L G E O T H E R M A L P E R S P E C T I V E DECEMBER 2012


Managed Owned

Wind 144 MW 51%

Hydro 235 MW 40%

Geothermal 187 MW 69%

Alterra Power

Alterra’s mission: to be a leading global renewable energy company through…

Continued excellence in production and safety as premier asset operator / manager

Successful origination and development of new utility-scale projects

Opportunistic acquisitions of other renewable power projects and development assets

Alterra assets today:

Alterra totals:

Managed: 567 MW Owned: 298 MW Managed Assets: 1.5 $ Billion Alterra Revenue: 110 $MM Alterra EBITDA: 55 $MM 2015E EBITDA: 105 $MM (a)

(a) Reflects 66.6% of HS Orka and 100% of Soda Lake assets.


Assets and Pipeline

Globally diversified across technology types and renewable power markets

Wind and hydro: primarily concentrated in North America

Geothermal: located in overlap of resource and strong markets / power demand

Power Plant Capacity Technology

Operating (2012) Gross AXY Share

Reykjanes 1 + 2 100 MW 67 MW Geothermal

Svartsengi 72 MW 48 MW Geothermal

Soda Lake 16 MW 16 MW Geothermal

East Toba & Montrose

235 MW 94 MW Hydro

Dokie 1 144 MW 73 MW Wind

Total Capacity 567 MW 298 MW

Annual Net Generation

1,425 GWh

Planned (2016)

ABW Solar 50 MW 5 MW Solar

Upper Toba 124 MW 62 MW Hydro

Reykjanes 3 + 4 80 MW 54 MW Geothermal

Dokie 2 156 MW 80 MW Wind

Mariposa 50 MW 25 MW Geothermal

Eldvörp 50 MW 34 MW Geothermal

BC, Chile, Peru, Italy 200 MW 200 MW Geothermal

Planned Total 710 MW 460 MW

Total Capacity 1,277 MW 758 MW


Shareholders

Alterra Power Corp listed in Toronto stock exchange under the symbol AXY

The Alterra largest shareholder is Sitka Foundation, a Canadian non-profit foundation whose mission is to promote biodiversity and conservation of the environment

www.sitkafoundation.org

Governance

Alterra Power Corp and all its affiliates are committed to maintain the highest standards of business conduct and ethics, as well as full compliance with all applicable laws and regulations of the countries in which they operate

ALTERRA POWER CORP – Shareholders and Governance

http://www.sitkafoundation.org/






Content

Company profile





Conclusions


THE GEOTHERMAL ENGINE

Geothermal Resources and Technologies

Heat

Fractures Fluid

Source: Geothermal Education Office (GEO)

Essential factors for a good geothermal reservoir

http://geothermal.marin.org/GEOpresentation/sld004.htm


Geothermal system

Heat source Depth 5-10 km T > 600- 700 ° C

Meteoric water

Hot fluid

Production

wells

Caprock

Thickness 500 – 1500 m

Impervious rocks

Reservoir

Porous – fractured rocks

Tickness 500 – 1500 m

T = 150 – 300 °C

Reinjection

well

Power plant

Steam

gathering

system Drilling rig


Resource classification and production technology

Reservoir Temperature Reservoir Fluid

Common Use Technology commonly chosen

High Temperature >150 oC

Water or Steam

Power Generation

Direct Use

Dry steam Flash Steam Dual flash Binary Cycle Heat Exchangers

Intermediate Temperature

90-150oC

Water Power Generation

Direct Use

Binary Cycle Heat Exchangers

Low Temperature <90oC

Water Direct Use Heat Exchangers Direct Fluid Heat Pumps


Geothermal Plants for Energy Production

Dry steam plants

Binary Cycle

“No Air Emission”

Two-phase fluid systems


Direct use of geothermal resources


There are several ongoing R&D Projects: European Project : “EGS Pilot Plant” in Soultz-sous-Forêts (France), operating since 1985. At present an Electric Genetating Plant (1,5MWe) with geothermal resource of 200°C. Other projects in Europe (Austria, Germany) Australia: several projects ongoing USA_DOE is financing several projects

The Enhanced Geothermal Systems, allthough still experimantal, represent a great development opportunity for geothermal energy in the medium-long period.

New frontiers: EGS (Enhanced Geothermal Systems)

Norway _ feasibility study of a 5 MW Binary Plant


New frontiers: Supercritical Fluids and Magmatic Systems

A Supercritical Fluid is made of very high temperature and pressure so that it acts as a liquid as well as a gas.

Temperature and Pressure required to reach the supercritical state depend on fluid features. Water

reaches supercritical state when its pressure and its temperature go beyond respectivery 218.3 atm and

374.1°C.

Traditional Geothermal Wells

Supercritical Wells

Temperature 235 °C 430-550 °C

Pressure 30 bar 230-260 bar

Volume Fluid 0.67 m3/s 0.67 m3/s

Electric Power Circa 5 MWe Circa 50 MWe

A Pilot Project has started in Iceland to verify feasibility of finding and employing supercritical fluids

(Iceland Deep Drilling Project).


Content

Company profile





Conclusions


Geothermal Energy – Worldwide production

COUNTRY INSTALLED GENERATING

CAPACITY 2010 (MW)

USA 3093 PHILIPPINES 1904 INDONESIA 1197

MEXICO 958 ITALY 843

NEW ZEALAND 628 ICELAND 575

JAPAN 536 EL SALVADOR 204

KENYA 167 COSTA RICA 166 NICARAGUA 88

RUSSIA 82 TURKEY 82

PAPUA NEW GUINEA 56 GUATEMALA 52

PORTUGAL 29 CHINA 24

FRANCE 16 ETHIOPIA 7.3

GERMANY 6.6 AUSTRIA 1.4

AUSTRALIA 1.1 THAILAND 0.3

CANADA 0 PERU 0 CHILE 0

TOTAL 10716.7

Source: Geothermal Power Generation in the World 2005 - 2010 Update Report by Ruggero Bertani Source: IGA International Geothermal Association - June 2011

Established industry and proven technology

Biggest current producers: Chevron, PNOC-EDC, CEE, ENEL, Calpine, Alterra, Ormat, PLN-Pertamina.

Capacity has been steadily growing

World production capacity now nearly 11,000 megawatts (“MW”)

ALTERRA Presence


2/3 of the total installed capacity are for dry steam and single flash units

Binary units are increasing, but with a lower value of capacity per unit.

29%

37%

25%

8% 1%

Single Flash

Binary/Combined Cycle/Hybrid

Dry Steam

Double Flash

Back Pressure

Source: IGA 2008

The geothermal industry worldwide


Geothermal energy in Italy

Net Electric Power 772 MW

Net Genetating Power 5520 GWh

Distributed Heat 235 Tcal

CO2 avoided 3,4 Mt

TEP avoided 1.13 TEP

2011

Status and Development Scenarios


0

400

800

1200

1600

0

40

80

120

160

1990 2000 2010 2020 2030 2040 2050

Ele

ctr

icit

y p

rod

uc

tio

n (

TW

h/y

)

Ca

pa

cit

y (G

W)

GW TWh/yr

In 2050

Over 8.3% of electric power generation

17% of worldwide needs

39 countries fully powered with geothermal energy

Worldwide Development Scenarios


Temperature at 5 km depth

CONFIDENTIAL

1.5 GWe ONLY harnessed today, mainly Italy and Iceland 80 - 100 GWe geothermal resource potential stored up to 6 km depth for electric energy genertion

European Development Scenarios


Electric Power

1200 - 1500 MW at 2020

Direct Use:

6.000 MW at 2020

(UGI estimates)

Italian Development Scenarios

Situation after D.Lgs 22/2010 Onshore Exploration Permits No. 23 Offshore Exploration Permits No. 1 Onshore Exploitation Concessions No. 11 About 11.000 km2 total

Resource Permit Holders: COGEME DER ENEL GREEN POWER EXERGIA TOSCANA EUROBIULDING GEOENERGY GEOTERMICA GEOTERMICA AB GESTO ITALIA MAGMA ENERGY ITALIA POWER FIELD SORGENIA GEOTHERMAL

Source MISE


Italian Electricity Market - Targets

Not Binding Target Binding Target

Europe 2010 Europe 2020 Italy 2020

Energy Consumption from Renewable Energy

Energy Consumption from Renewable Energy in the transportation sector

26,4% Energy Consumption from Renewable

Energy in the Electricity sector 18,7%

10% 5,75% 10%

17% 12% 20%

Energy Consumption from Renewable Energy in the Heating and Cooling sector

9,5%

4,8%

10,1%

Italy 2010

17,1%

% OUTCOME

% TARGET

22%

(Direttiva 2001/77/CE)


Italian Electricity Market – Overview up to now and Future Perspective

PUN is the National Single Price - (Source GME)

€/MWh

year


Souce GSE

Sustainability and Integration in the Energy Market

FER Prudiction - Technology


EXPLORATION DRILLING POWER PLANT CONSTRUCTION

OPERATION

Environmental impact assessment, mitigation and monitoring

Development of a geothermal project

5 - 7 years > 30 years


Why Geothermal Energy ? Because….

Alterra’s Power Plant in Reykjanes, Iceland

Geothermal Wind Solar Biomass Run-of-River Scrubbed

Coal

Base Load

No Fuel Cost Exposure

No GHG Emission

REC Eligible

Low Cost Generation

GEOTHERMAL HAS A UNIQUE COMBINATION OF BENEFITS RELATIVE TO COMPETING SOURCES

Geothermal power can be produced reliably and constantly (“base load”); it is not intermittent or unpredictable.

The generating process is clean - there are very low to none:

Nitrous Oxides

Sulphur Oxides

Particulates

CO2

Has a small environmental footprint

Doesn’t take up much land

Is a renewable energy - no fuel cost and continually replenished

Low Technological Risk - plants in operation for over 100 years


0

100,000,000

200,000,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Year 1 Year 2 Year 3 Year 4 Year 5

Co

st

Geothermal project schedule

Equity Finance Debt Finance

EXPLORATION PROJECT DEVELOPMENT

100%

50%


Renewable Sources: Performance comparison

Against higher investment costs than other renewables, geothermal energy guarantees a continuous production throughout the year with a capacity factor next

to 100%. 10 Geothermal MW correspond to 40-50 Wind MW


Geothermal Energy – Most Cost-Effective Power Source

A low cost source of power on a long term basis


Italian Feed-in Tariff: D.M. 06/07/2012


Power (Mw) Plant life Base Tariff

P≤1 20 y 135 €/MWh

1<P≤20 25 y 99 €/MWh

P>20 25 y 85 €/MWh

Pilot plant (5MW) 25 y 200 €/MWh *

Increments: a) 30 €/MWh - total reinjection and no air

emission b) 30 €/MWh - first plant of 10MW within

areas of new exploitation lease where it didn’t exist plants

c) 15 €/MWh - higt enthalpy plant that break down at least 95% of the level of hydrogen sulfide and mercury present in the production fluid

*For Tmax of 151 °C and 1,5% of gas concentration the Base Tariff is = 200€ Otherwise the Tariff is = 200€ - (Tx – 151 °C) x 0,75 The tariff can not be combined with the increment of points (a) and (c)

Italian Feed-in Tariff: D.M. 06/07/2012

Geothermal


European Feed-in Tariff in Geothermal Energy – 2012 overview

€/MWh


Mayor European Renewable Energy Producers

TOTAL 8452 4253,4 1841 7324,7 7280 4438,5 31882 17976 2423


Mayor Italian Renewable Energy Producers

TOTAL 861,4 1865 7609 593 91 716,4 30 1553,3 541,3 216

INST

ALL

ED M

W


Content

Company profile





Conclusions


Current legislation:

D.M. 06-07-2012 – Incentives for production of electricity from renewable energies D.G.R. 12-06-2012 n. 49 – Criteria and conditions for the exclusion from EIA and

Subject Verification according to art. 43 of L.R. 10/2010 D.Lgs. 03-03-2011 n. 28 – Implementation of 2009/28/CE law for promoting the

employment of renewable energies D.Lgs. 11-09-2010 n. 22 – Research and exploitation of geothermal resources

updating law. L.R. 12-02-2010 n. 10 and Attachment D with changes to L.R. 6/2012 2011/92/UE

Law – Procedures of Strategic Environment Assessment (V.A.S.), E.I.A. D.Lgs. 03-04-2006 n. 152 – Environmental regulations D.P.R. 18-04-1994 n. 485 – Exploration and Exploitation permits release procedures R.D. 29-07-1927 n. 1443 – Exploration and Exploitation permits release procedures

Laws and rules


30 years 90 or 150 or 270 days 2 years 4 years

APPLICATION FOR EXPLORATION

PERMIT AWARDING AND E.I.A.

EXPLORATION LEASE DURATION

EXTENSION EXPLORATION

LEASE

APPLICATION FOR EXPLOITATION

CONCESSION AND E.I.A.

EXPLOITATION CONCESSION

Geothermal Project Duration

240 days


Laws and Processes for Geothermal leases acquisitions

D.Lgs 22/2010 Exploration for, and production of, geothermal resources for energy purposes are considered in the public (national community) interest and public utility (usefulness) Exploration leases: Exclusive exploration permits will be issued to competent operators having appropriate technical and economic capacity. The work program is proposed by the company. Max. 300 km2 each – Max. 1000 km2 for each region (each company) – Max. 5000 km2 for Whole Italian Territory Annual fee: € 339.12 /sq km + bank guarantee for environmental recovery Criteria of selection in the event of competing applications (within 60 days): a. the interest, merits, and new exploration objectives; b. the understanding of geological and structural specifications of the request; c. the completeness and rationality of the proposed exploration program; d. how the work is carried out (safety, protecting the environment); e. expertise and experience.


Application of competitive proposal

4 years + 2 (ext.)

Exploration lease: application and awarding procedure

90 (min.) or 150 or 270 days

Environmental Impact Valutation

APPLICATION - Work program

- Technical report - Environmental report

- Geothermal experience & skills - Maps

- Balance sheets To: Region, Energy dept.

ENVIRONMENTAL

APPLICATION

- Technical report

- Environmental report

- Geothermal

experience & skills

- Maps To: Region, Environment dept.

Cc: Municipalities – Provinces

– Authorities (archeological,

landscapes, environmental)

Evaluation of application Comparison with

competitors, if any

Exploration lease

Execution of explorations Phase 2 :

drilling & test

Execution of explorations Phase 1 : surface exploration -

assets excluded from the process of subjection

NO

GO

30 years + 30 (renew.)

Exploitation lease

60 days

ENVIRONMENTAL

APPLICATION

- Technical report

- Environmental report

- Geothermal experience

& skills

- Maps To: Region, Environment dept.

Cc: Municipalities – Provinces –

Authorities (archeological,

landscapes, environmental)

Environmental Impact Evalutation

90 (min.) or 150 or 270 days


D.Lgs. 22/2010 Exploitation lease: Follows the recognitions of geothermal resources. The company founding the resource during the exploration is entitled to apply for the exploitation permit (even partial) within six months. Unnecessarily spent that period, the concession may be required in competition from other operators. The concession may be granted for a period of thirty years, renewable. Completeness and efficient program of work proposed for the management of geothermal reservoirs, especially with regard to long-term sustainability Annual fee: € 678,22 / km2 + bank guarantee for environmental recovery

Laws and Processes for Geothermal leases acquisitions


Exploitation lease: application and awarding procedure

Communication by the owner of the

exploration permit of discovery of

geothermal fluids to the competent

authority (Region)

Pubblication on the BURT, on the BUIG and on the

Authority web site

Submitting the application for exploitation lease to the competent authority

60 days

If the exploitation lease does not cover the entire area of the original research permit, other operators may request concession areas covering part or the entire surface remaining, after the expiry of the exploration lease

Application submitted in due time

If the documentation is not filed within the deadline, the concession may be required in COMPETITION

30 years + 30 (renw.)

Exploitation lease

Unique process with the approval of the work program, the geothermal project and the environmental impact assessment

90 (min.) or 150 or 270 days

Selection of the competent authority based on the following parameters: -Completeness and rationality -Modalities for carrying out work program -Guarantees

60 days


Authorization and Awarding procedure

Subjects involved Public Authorities: •Ministry for Economic Development •Tuscany Region •3 Provinces (Siena, Grosseto, Pisa) •3 Superintendence bodies of environmental and architectural heritage (Siena, Grosseto, Pisa) •11 Municipalities (Volterra, Casole, Colle Val d’Elsa, San Gimignano, Castelnuovo Val di Cecina, Radicondoli, Roccastrada, Massa Marittima, Civitella, Grosseto) •Military and police authorities Private Subjects: •Landowners (about 480) •Environmental associations


Content

Company profile Alterra Power Corp. / Magma Energy Italy





Conclusions


Mensano

Roccastrada

• Area: 272 km2

• Awarded: October 2011 • Start: February 2012 • Expiry: October 2015

• Area: 215 km2 • Awarded: June 2011 • Start: September 2011 • Expiry: June 2015

Exploration Leases


Exploration Lease - Activity


Sustainable environment development:

low visual impact, no air emission, total reinjection

A better way of doing geothermal energy


Sustainable development

Environmental sustainability :

Social responsibility:

Communication Transparency Consultation

No air emission Low visual impact

Total reinjection of fluid into the geothermal reservoir

No groundwater interference

Resource sustainability:


5 MW GEO = 40000 MWh/year – operation estimated in about 8000 h/year 1 MW PV = 1500 MWh/ year - operation estimated in about 1500 h/year

Footprint of a 5 MW geothermal plant vs 1MW PV plant


Exploration

Development

Power Plant construction

Production

Architecture

Earth Sciences

Engineering

Physics

Economy

Law

Chemistry

External Relation

Employment opportunities

Many expertises required in developing geothermal projects

10 post graduateed already employed by Magma in Siena office


Integrated use of geothermal resources

Geothermal energy as an opportunity for sustainable development for the whole region

Greenhouses

District heating

Provide hot water for spas

Electricity generation, possibly at a lower cost

Agriculture

Geothermal-solar cooperation


Content

Company profile Alterra Power Corp. / Magma Energy Italy





Conclusions


Base load reliability > 90% - unaffected by weather and climate change

No fuel supply cost after the start of the project

Financially competitive now compared with other energy options

Low environmental impact

Classifies for renewable energy incentives in most jurisdictions

Geothermal plants do not burn fuel or produce smoke, only water vapour

Geothermal plants can operate successfully in sensitive environments

Conclusions

GEOTHERMAL ENERGY CAN SECURE RENEWABLE ENERGY BECAUSE :


Drivers

Great number of areas with an interesting geothermal potential

High energy demand growing within the next years

Base load capacity, renewable and domestic energy

Employment opportunity

Hurdles

Technologic challanges for deep seated resourses

Exploration risk in “green field” projects

High development cost (Drilling logistics, transmission line, road)

Environmental - adverse impacts in some areas – Social Acceptance

Regulatory / market / political risks

Drivers & hurdles for geothermal development


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Phone: 0039 0577 281093 Mail: [email protected]

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