The Lava Projects

THE LAVA PROJECTS

BBA has, in co-operation with ÍSOR (Iceland GeoSurvey), set up a task force of experts in the geothermal sector with the aim of offering advisory services in drafting, implementing or amending primary and secondary legislation in the field of geothermal energy resources. There are extensive geothermal power resources in various geographical areas in the world which remain unexploited as a result of a shortfall in legal- and regulatory framework governing such exploitation. In certain cases a little push in all that is needed in order to get the system to work properly and to create value in an environmental and nature-friendly way. As a result, we have gathered the leading advisors in the Icelandic geothermal sector into one group of experts, hoping to make use of the Icelandic know-how that has accumulated over the past decades and has been used as an example of a Geothermal Success Story all around the world.

We offer expertise services such as the following: • Assessment the need to reform primary

and/or secondary legislation • Drafting of primary and/or secondary

legislation • Implementing of new legislation • Advisory on licensing for exploration,

exploitation, power production and

transmission lines • Assessment, reform and implementing of

licensing • Assessment, advisory and reform of official

monitoring • Assessment, advisory and reform of

DSO/TSO regulation • Negotiation of development agreements • Negotiation of PA´s and PPA´s • producing concise comparison studies of

different jurisdictions

We offer a unique combination of expertise in the field of legal, regulatory, scientific and technical aspects, in an attempt to pave the way for the increased harnessing of geothermal resources, in what we call “The Lava Projects”.

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WHAT WE DO BBA, along with Ă?SOR and a selected Icelandic engineering agency, is in a unique position to demonstrate and put to use our experience and understanding of the geothermal sector by advising public and private parties in implementing certain geothermal projects or by assisting in amending or implementing a framework of laws and regulations which facilitates such projects in general.

Whether the project regards regulatory framework, licensing and permitting, drilling regulations, developing energy projects, PPA´s, transmission or distribution regulations or agreements, interconnection agreements, monitoring of the energy sector or anything in between, BBA and the partnering companies can be of assistance. Furthermore, we possess substantial experience in regulating TSO and DSOs, including financial regulations, investment need in the grids, connections to the aforementioned and monitoring of the technical aspects. To the extent these do not currently exist or need to be aligned with the eventual implementation of the licensing framework, our team is both qualified and able to develop any of the above as needed.

Our approach to the services is based on our experience of geothermal projects from various angles, our insight into various jurisdictions employing licensing frameworks for harnessing of natural resources and our experience in working with and managing a highly functional licensing framework for harnessing geothermal energy for electricity production and district heating. We have also a proven track record of developing and producing a new and functional licensing network for harnessing of underground natural resources from which our services benefit.

Our services can include any of the needed assistance listed above, whether it regards writing any new bills or regulations, licenses or permits or the criteria therefore, proofing or mending of such documents, implementing the legislation, assisting in applications or fulfilling of existing legislation, negotiating or drafting agreements or any capacity building work-shops needed related to the aforementioned.

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“A highly professional outfit, BBA Legal is one of the top firms that outside investors and players look to when they wish to become involved in Iceland�

IFLR 1000

WHAT WE HAVE DONE BBA energy team has extensive and relevant experience and know-how of working in the field of geothermal energy and heating. Our team has undertaken work on behalf of various stakeholders in geothermal projects around the world. This includes working with developers, sponsors, banks, drilling companies, administrative agencies and governments, on projects in countries such as Iceland, the Philippines, Indonesia, Djibouti, Nepal, Abu Dhabi, China, Germany, USA and Ethiopia.

Working on these projects we have gained valuable insight into which components a successful environment for geothermal projects should possess. These components are first and foremost of a nature which protects the most valuable interests of governments and municipalities being the exploitation of their natural resources. Our advisory services have as a primary aim to ensure that developers, investors, financiers or contractors have a framework which enables geothermal projects to flourish and which protects the interests of both private and public stakeholders.

Furthermore, members of BBA´s energy team have a wealth of experience working on behalf of both project developers, financiers and other stakeholders in the Icelandic regulatory environment. The Icelandic regulatory framework is a highly developed, tried and tested, regulatory licensing framework for the harnessing of the geothermal resources, and is considered one of the success stories of the geothermal utilization sector worldwide.

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In 2008, on instruction by the Icelandic government, our energy team, based only on a fresh primary legislation concerning hydrocarbons, created an entirely new licensing framework for search, exploration and production of hydrocarbons. This included not only our team composing and developing the necessary secondary legislation, but also drafting of documentation which was adopted by the Ministerial cabinet, defining and documenting the tender criteria for prospective licensees, as well as the model license itself wherein areas, fees and levies, work-phases, coordination and unitization of areas, relinquishment of areas etc. were clearly defined with necessary inter-play with the primary and secondary legislation.

International players in the hydrocarbons sector have found this framework to be acceptable to commit substantial resources to developing projects within its realm and the Icelandic government has received verification that it has successfully managed to protect its interests for the utilization of this potentially important natural resource.

BBA has represented the Icelandic state and the municipality of ReykjavĂ­k (capital of Iceland) in the biggest public-private partnership projects in Iceland to date.

BBA has provided legal advice in many of the major offshore geothermal energy ventures by Icelandic companies. Our lawyers have furthermore advised Icelandic energy companies on renewable energy projects in Iceland, including regulatory and corporate advise and drafted PPA’s and PA’s, along with joint venture agreements etc.

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WHAT WE HAVE LEARNED Iceland lies on the Middle-Atlantic Ridge, where the American and Eurasian tectonic plates meet. This is the reason for which Iceland exists and also for its constant volcanic activity. At the same time this provides a range of opportunities in exploiting all the heat coming from under the plates.

In Iceland, geothermal water has been utilized since ancient times for domestic purposes such as washing and bathing as may be evidenced from place names, the Sagas, and early annals.

In the 18th century, research into this energy source began and in 1946 the Icelandic government instituted systematic and comprehensive energy research, which continues to this day.

Being an island that mostly relied on imported energy, Icelanders eagerly tried to find alternative solutions during the oil crisis in the 1970´s, in order to heat their houses. Alongside the development in household use of geothermal energy, the first geothermal power plant was built, in order to produce electricity.

In a fairly short amount of time, great developments were made in that small island in the middle of the Atlantic, making it more independent from imported energy and it´s prices. Today, 5,239 GWh of electricity are produced from geothermal energy, making it the 7th largest geothermal electricity producer in the world. At the same time, the electricity from geothermal only composes around 29% of the country´s total electricity production leaving the other 71% being made from hydro-power. In total, over 99% of the total electricity production is from renewable energy or around 18.100 GWh per year.

As a result of the early developments, a need for regulatory environment arose. As early as in the 1920´s, the Icelandic Parliament set the first legal act that impacted the sector. Shortly after, more acts were to follow, making it a fuller legal framework. Today, we have decades of experience working according to these acts and have amended them in such a way that the system fully functions, both in light of preserving state or municipal rights and possessions and at the same time encouraging the exploration and exploitation of renewable energy sources for both private companies on the one hand and state and municipally owned companies on the other.

Geothermal energy has become an important part of the Icelandic history and culture over the last century, making it´s experts, front-runners in the harnessing of the unpredictable source of geothermal energy.

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WHO WE WORK WITH BBA has entered into a co-operation with ÍSOR (Iceland GeoSurvey), in order to strengthen the services provided by the company. By doing so, we are able to ensure that our clients receive the quality of service we aim to provide, as well as the range of services required by clients in the geothermal energy sector. Our cooperation with ÍSOR ensures that our legal expertise is aligned with the aspects needed from the technical and scientific point of view. Furthermore, we co-operate with the largest engineering firms in Iceland, having decades of experience in the sector and a deep understanding of the conduct of geothermal energy in general.

BBA also works on a continuous basis with world leading law firms such as Clifford Chance, Linklaters, Baker & McKenzie, Slaughter & May, Freshfields, Eversheds, Latham & Watkins etc. and have instructed such firms on various occasions.

BBA and ÍSOR currently work with the largest engineering firms in Iceland in geothermal projects.

These agencies have all been working with Icelandic geothermal energy, district heating, transmission and distribution of heat and electricity for over 50 years.

These agencies have participated in the design of most, if not all, hydro- and geothermal power plants built in Iceland. The same agencies have also taken part in designing power plants all over the world, for example in Germany, Greenland, Norway, El Salvador, Georgia, Turkey, Philippines, Hungary, Kenya and Burkina Faso, to name a few.

The firms are especially dedicated to the development of renewable energy, energy efficiency and power transmission. They have decades of experience in the field of geothermal energy, hydroelectric power, geothermal district heating, transmission and numerous other projects. They offer a multidisciplinary approach and decades of expertise to ensure the success of every project they run with their customers.

The Icelandic engineering firms have become some of the world´s major consulting engineering companies in the field of geothermal utilization, both for production of electricity and district heating.

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ATLI BJÖRN ÞORBJÖRNSSON

BALDVIN BJÖRN HARALDSSON

Partner +354 550 0507 // +354 899 6076 // atli@bba.is

Partner +354 550 0503 // +354 8400 400 // baldvin@bba.is

Atli has 14 years extensive experience in practicing law. With an LL.M. from Bristol University in the UK and co-heading the Energy law practice of BBA with partner Baldvin Björn Haraldsson, Atli has over the past 8 years become more and more engaged by Energy related clients on projects relating to almost every aspect of the value chain for the power intensive industry. This ranges from advising corporate clients on investments into power intensive projects, acquisitions of concessions and drilling projects, building and operating power intensive metal plants and expansions thereof, Power Purchase Agreements, Take-off agreements/arrangements, district heating projects, acquisitions and sale of power generating companies to advising banks on financing of energy related projects. Through his work Atli has advised clients on projects in the Renewable Energy sector around the world. This includes geothermal electricity production and district heating projects in the Philippines, China, El Salvador and Ethiopia and of course in Iceland. As mentioned hereinabove, Atli, along with members of the BBA team, advised the Icelandic government on the structuring and implementation of the licensing framework now deployed by the Icelandic Energy Authority for the search, exploration and harnessing of hydrocarbons.

Baldvin Björn has been a member of the Icelandic Bar Association since 1994, and a member of the Paris Bar since 1998 after having obtained a DESS and a Troisieme Cycle degrees in international business law from ILERI in Paris. Baldvin Björn has actively advised clients throughout his career in Energy Law, both in the field of Renewable Energy and in Oil and Gas. In the field of Renewable Energy law, Baldvin Björn has advised Icelandic clients in their ventures in Iceland and other European countries, in the Philippines, Indonesia, Djibouti, Abu Dhabi, Ethiopia, Nepal, etc.

As concerns Oil and Gas, Baldvin Björn, along with members of the BBA team, advised the Icelandic Energy Authority on the first offering round of Oil exploration and production licenses in the so-called Dragon Area North-East of Iceland, including advice on laws and regulations on the exploration and harnessing of oil and the structuring of licenses, joint-operating agreements etc.

“A very professional firm, they are up to speed on commercial matters and always on the ball” IFLR 1000

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WHO WE ARE

HARPA PÉTURSDÓTTIR Associate +354 550 0519 // +354 840 2242 // harpa@bba.is Harpa, was a lawyer for the National Energy Authority (NEA) of Iceland for 5 years, responsible for issuing exploration, utilisation, power plant licences as well as licenses for transmission lines, monitoring of all issued licences, providing the Government with advisory services on energy matters, and drafting bills and regulation on Renewable Energy in Iceland. She also worked as manager of the Electricity regulator for the TSO and DSO´s in Iceland. Harpa has advised Governments abroad, been a speaker at Renewable Energy conferences and forums and published articles and reports on Renewable Energy. Harpa has also been a lecturer on Energy law at the Faculty of Law, Bifrost University and is a Board member for the Environmental and natural resources Research Department at the Faculty of Law, University of Iceland.

HULDA KRISTÍN MAGNÚSDÓTTIR Associate +354 550 0508 // +354 8400 408 // hulda@bba.is

BBA is a limited liability company, with offices both in Iceland and in London, UK. BBA is owned by 7 of the lawyers working for the firm. We have a total 21 lawyers who have extensive experience in dealing with complex multi-jurisdictional cases, the majority of whom have an international aspect. Our lawyers are admitted before the courts of Iceland, Paris and New York.

BBA has through the years lead many large international projects, such as cross border mergers and acquisitions, cross border financing projects, restructuring projects and advised large multinational clients such as Microsoft, Barclays, Hilton, Coca Cola, the UK Treasury, as well as many of Iceland’s largest Icelandic companies, the City of Reykjavik and the Icelandic State.

BBA has in the last 17 years been a leading law firm in Iceland in the field of mergers and acquisitions, capital markets, banking and corporate finance, energy and natural resources law, bankruptcy law, PFI projects and general corporate and commercial law on the Icelandic market. Through our service to energy related clients we have built a strong Energy Law practice, capable of providing first class services in the field. We have advised the Icelandic State and Municipal Utilities companies in both local and international energy projects and have also acted for Icelandic companies in their hydro and geothermal ventures in Europe, Africa, the Middle-East and in East-Asia.

We have, in our work, focused on maintaining our status as a leading Icelandic firm in Energy, Mergers and Acquisitions and General Corporate work, which has earned us a reputation which is confirmed in the rankings of Legal 500, IFLR 1000 and Chambers and Partners.

Hulda Kristin has in her work specialized in EU/EEA law and state aid with a particular focus on energy law. Hulda has worked primarily with regulatory issues in relation to EU/EEA law. She joined BBA in 2013 after having spent 2 years with the EU/Competition Team of the Norwegian law firm Schjødt in Brussels.

Hulda holds a Master of Law from Reykjavik University and Master of Law and Business from Bucerius Law School in Hamburg, Germany. She is qualified in Iceland in 2013. Hulda has published an article in the European State Aid Quarterly as well as contributed to the publication of various books and articles on EU law matter, including European Energy law.

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ÍSOR ICELAND GEOSURVEY Iceland GeoSurvey, ÍSOR, is a leading provider of scientific and technical expertise to the geothermal industry in Iceland and abroad. ÍSOR is an applied research institution in the fields of energy and geoscience. Whilst it is owned by the Icelandic State, it is a self-financing, non-profit organization that receives no direct government funding. Originally founded in 1945 as a part of the State Electrical Authority, ÍSOR instigated the systematic energy research which has been carried out ever since. ÍSOR and its predecessors have played a key role in this work from the start. As a direct result, over 65% of the primary energy use in Iceland at present has its source in geothermal energy. ÍSOR became an independent, non-profit governmental institute in 2003. We are proud to have a background of 70 years in the geothermal business and believe our experience and know-how are our most valuable assets. ÍSOR provides consulting services in most aspects of geothermal exploration and utilization worldwide. Our experience covers many other geoscience-related fields, including groundwater studies, marine geology and environmental monitoring. ÍSOR offers expertise in consulting and execution of the following disciplines:

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Geothermal exploration Drilling consultancy Well testing and evaluation Geothermal loggin Resource assessment Resource management Environmental impact assessments (EIA) Groundwater Engineering Offshore geoscience Geothermal training

ÍSOR cooperates internationally to promote the production of geothermal energy. We are a Member of the European Geothermal Energy Council (EGEC), of the International Partnership for Geothermal Technology (IPGT), and of the European Energy Research Alliance (EERA). We are also represented on the Board of the International Geothermal Association (IGA). ÍSOR also represents Iceland on behalf of the National Energy Authority in executing the International Energy Agency Geothermal Implementing Agreement and on energy committees under European Union framework program. Lastly we are involved in the African Rift Geothermal Development Facility project in East Africa. ÍSOR and its specialists have unparalleled expertise in most aspects of geothermal research and utilization worldwide. Among the countries involved are Kenya, Uganda, Burundi, Rwanda, Ethiopia, Eritrea, Djibouti, Russia, Hungary, Germany, Portugal (Azores), France (Guadeloupe), the Netherlands, Armenia, Turkey, USA, Indonesia, Philippines, El Salvador, Costa-Rica, Nicaragua, Chile, Argentina, Dominica, India and China. Our basic values which have guided ÍSOR’s operations are professionalism, effective work procedures, robust basic research, honesty in consultation, avoidance of conflicts of interest and a culture of decisions based on long term planning.

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“The lawyers defend our interests and are easy to communicate with, focused and solution-driven.�

Chambers Global

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“The firm has strong resources and expertise in different areas. The lawyers hold your hand quite closely throughout the process and offer good value for money.�

Chambers Global

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RECENT TRANSACTION HIGHLIGHTS Legal advisor to CNOOC in relation to securing an oil and gas exploration license on the Icelandic continental shelf.

Legal advisor to Ă?slensk vatnsorka hf. (Icelandic Hydropower) in relation to the acquisition of a power generating project from ReykjavĂ­k energy hf. and other power generating projects around Iceland.

Legal advisor to Strokkur Energy in relation to power intensive projects in Iceland, including equity structuring, financing and negotiating with off takers, power generators, as well as local and state authorities.

Legal advisor to Geysir Green Energy in relation to geothermal and hydro power projects in USA, Germany, the Philippines and China.

Legal advisor to Reykjavik Energy Invest in geothermal projects in Indonesia, Philippines, Nepal, Djibouti and Abu Dhabi.

Primary legal advisor to the Icelandic government in relation to the first licencing round for exploration and production licenses on the Icelandic continental shelf.

Legal advisor to Icelandic banks in relation to financing power intensive projects in Iceland.

Legal advisor to an Icelandic client, featuring an equity stake and construction participation in a 500MW geothermal power generating project in the Corbetti region of Ethiopia.

Legal advisor to Enex Ltd. in relation to the construction of a Binary Cycle Generating Plant in the Berlin Geothermal Field in El Salvador.

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