1.1) (3 points) Looking at the graph above, can you think of the reason why the power station has been forced to shut down?

1.2) (3 points) Would a long-term sales (at the prevailing market price in 2012) agreement have solved the problem? Why?

1.3) (3 points) Can you identify one measure the project could have taken to avoid this situation (5 points)?

1.4) (3 points) Why would lenders to a biomass energy plant insist on a long-term input-supply contract (a supply contract)?

1.5) (3 points) Who are the sponsors of the SPV?

Q1 (53p=15 points). In the year 2006, an SPV (Moon for Power Generation (MPG)), built a power plant that utilizes biofuels to produce energy, serving 60,000 households. SPG had to stop operations and close the plant in 2012 , as it was no longer financially feasible due to prevailing market conditions. Below is a graph showing development of electricity prices in the past years. The SPG was formed by a bank (called the Z Bank) and a construction company (called AAA Contractors). SPG signed a concession agreement with the government of a country (called BBB). The SPV borrowed money from CCC bank