Windkraft Onshore

THINK ACT BEYOND MAINSTREAM January 2016

Onshore wind power Playing the game by new rules in a mature market 2 THINK ACT Onshore wind power AT A GLANCE EUROPE'S KEY THE BIG MARKETS FOR ONSHORE WIND POWER 3 P. 8/9 3 different groups of countries figure on Europe's wind power map: climbers, growth leaders and saturated markets. Where the greatest potential remains is revealed in our analysis on page 7 150,000,000,000 euros is the sum that must be invested in the medium term to develop and expand key nodes in the European power grids. But expansion is stagnating, even though new transmission capacity – especially to ramp up wind power – is urgently needed. page 10 45% lower operating costs can be realized by wind farm operators on average, according to Roland Berger's exclusive study of wind farms. Our six levers to improve profitability focus on maintenance, land lease agreements, repairs, insurance, project management and the cost of capital. page 13 THINK ACT 3 Onshore wind power A fresh wind is blowing from Brussels. New rules will soon govern the wind power market.

Worldwide, installed wind power generation capacity ture technologies make the breakthrough. Such cut- has increased by a factor of 50 over the past 20 years. backs will affect the wind power industry, whose oper- Attractive government subsidies, mature system tech- ator models – for all the differences that exist around nology and declining costs relative to fossil fuels have Europe – have often been designed to maximize earn- made wind power a competitive option on many Euro- ings from feed-in tariffs. pean markets. Wind power has acquired a solid share Statutory regulation is only one of the challenges of the European energy mix: Onshore wind power has the industry will face in the years ahead, however. Less gone mainstream. And the downside? The political state support can be expected to drive down profits and wind is turning. thus put wind farm operators under greater cost pres- The European Commission is putting increasing sure. At the same time, rapid wind farm growth is pressure on member states to enforce the directives for reaching its limits: Very few sites with good wind expo- greater market orientation and fewer subsidies to pro- sure are still available in many European markets. And mote renewable energy that were ratified back in 2014. in any case, citizens' action groups and local govern- A pilot phase will continue until the end of 2016. After ments regularly oppose ever larger wind parks. It fol- that, licenses for new wind farms should be granted lows that the permit procedure for new farms and for based on tendering procedures, so only the most at- repowering (the necessary replacement of smaller, ag- tractively priced bids will win. The EU Commission ing systems with the latest generation of far larger also wants to see market-oriented feed-in tariffs take wind turbines) could well become a genuine source of over from fixed compensation. In other words, inves- risk for each and every project. tors and future wind farm operators will have to work We also believe that bottlenecks in both financing on the assumption of significant regulatory restric- and the expansion of the European grid infrastructure tions and fiercer competitive pressure. While it re- are being grossly underestimated. Without either, elec- mains to be seen how rigorously member states will tricity will never find its way from windy regions to the actually implement the EU's directives/guidelines, end consumer. many countries are already reviewing their national The list of challenges is clearly a long one. Nonethe- support programs. The UK, for instance, has an- less, onshore wind power still has the potential to ac- nounced plans to slash public support for onshore quire a considerably larger share of the European ener- wind power as early as April 2016 regardless of the EU's gy mix than it occupies today. If that is to happen, all considerations, because it now wants to help less ma- market players must take action. Now. 4 THINK ACT Onshore wind power A mature business model. Onshore wind power will become established as a competitive element of Europe's power supply landscape.

Of the various renewable energy sources, onshore Costs are not the only area in which onshore wind pow- wind power currently leads the way in terms of the er is in the lead. For years, the industry has also shown levelized cost of electricity, which dropped by a third itself to be an engine of capital investment and job cre- between 2010 and 2014. Modern turbines and drive ation. Between 2002 and 2007, the number of people systems are efficient. Aerodynamic rotor blades are employed directly in the onshore wind power industry large and lightweight. Whole wind farms can be re- rose by 125% – an average of 33 new jobs a day across motely controlled to optimize wind yields as a func- Europe. At the start of this decade, nearly 150,000 peo- tion of the wind load. Even without government sup- ple worked in Europe's onshore wind power industry. port, that makes onshore wind power from favorable By the end of the decade, that number will have nearly locations cheaper than electricity from coal-fired or doubled to 290,000. nuclear power plants. By contrast, offshore wind pow- The amounts invested are similarly impressive. Ev- er is expensive, mainly because of the expense of in- ery year from 2000 to 2010, between three and twelve salling turbines out at sea. Solar power and electricity billion euros were channeled into onshore wind power generated from biomass are likewise at a cost disad- – figures that are set to increase in the future. Between vantage. Hydropower has reached its natural limits: 2015 and 2030, the market anticipates an annual in- The cost is low, but there is little room to further investment total of 15 billion euros, which works out at a crease its usage. Given this situation, onshore wind cumulative figure of roughly 230 billion euros. power will remain the most important source of re- By 2030, onshore wind will probably generate 13% newable energy in Europe. A The benefits? Capital of Europe's electricity – up from just 6% in 2012. In the investment, employment, lower emissions and ener- same period, coal's share is likely to be cut in half from gy security. 29% to 15%. In Germany alone, power generated from THINK ACT 5 Onshore wind power

A COMPETITIVE WIND POWER

Harnessing onshore wind is one of the most competitive ways to generate electricity from renewable energy in Europe. Around the globe, the levelized cost of electricity from new plants was down by a third between 2010 and 2014. Only hydropower is cheaper on this score. By contrast, power generated from offshore wind will remain more expensive than onshore wind. However, cost are likely to come down significantly – increasing its competitiveness towards other technologies such as biomass or nuclear energy. In this context our offshore-wind study from 2013 has pointed out that a target of 100 USD per MWh till 2020 could actually be possible.

Levelized cost of electricity from renewable energy 179 and conventional power plants [USD per MWh]

149 145

99 93 82

Hydropower Onshore Coal Nuclear Solar PV Biomass Offshore wind energy wind

Source: Energy Intelligence 2014 6 THINK ACT Onshore wind power

wind energy should double by 2030. If the political will To enable further and more detailed analysis, Roland is there, many coal-fired power plants can be taken off Berger awarded points for the attractiveness of the the grid, so less coal and gas will need to be imported key markets in Europe. We rated energy markets from Russia and Norway. In other words, wind power based on several criteria: energy consumption, is significantly reducing our dependence on fossil fu- growth in energy consumption, dependence on im- els, and hence our dependence on imports from other ports, fossil fuel reserves, electricity prices and public countries. subsidy instruments. We then rated wind power mar- Especially in this context, but also in the interests of kets based on the technology environment, wind protecting the environment, we welcome the news that speeds, theoretical capacity potential and actual in- global installed capacity is increasing. Between 2000 stalled capacity. The resultant scores reflect the het- and 2012, it rose by more than 23% per annum. Three erogeneous nature of markets. C years ago, wind power already accounted for more than The markets were evaluated relative to each other. 2.5% of the world's power generation. 140,000 wind tur- Quantification was translated into a Likert scale from bines are already in existence, and our analysis shows 1 to 3. The ratings clearly identify France, Germany, Po- that 120,000 new or repowered ones will be on the grid land, the UK, Italy and the Scandinavian countries as by 2020. The growth rates anticipated for installed ca- key markets. On the other hand, many young markets pacity are enormous, not only in Europe (+55%), China are less attractive – due partly to lower volumes, but (+106%) and North America (+53%). India (+101%) and partly also to relatively unfavorable local conditions. above all Latin America (+296%) are taking huge strides At present, Germany, France and Sweden are the forward to catch up, albeit from a low level. In 2013, the markets with the lowest risk, but only deliver a low re- EU-28 (33%) accounted for the largest share of installed turn on capital invested. Strict conditions for the grant- capacity in the world. By 2020, however, China will have ing of subsidies are one reason. Another is growing overtaken the EU as the biggest single market for on- competition among investors. Alongside project devel- shore wind power. opers and energy companies, large funds and finan- Despite all this activity, not all markets are equally ciers with substantially lower yield expectations are attractive. They vary in terms of maturity and stage of increasingly playing an active role. This is especially development. Moreover, relative maturity determines true of France and Germany. not only potential growth but also local business op- In the UK, intractable administrative processes and portunities. Mature markets, for example, have a a London-centric focus can hold up transactions that shortage of suitable sites and place heavy demands on nevertheless remain promising. In Sweden, high price marketing/feed-in. On the other hand, young markets risks are a danger and the country's expansion targets tend to be driven more by low-cost project develop- for wind power have nearly been met. Turkey is to ments. Essentially, distinctions can be drawn between some extent a closed market, with complex processes the following groups: surrounding connection to the power grid. Norway and Poland appear to present attractive long-term po- 1. CLIMBERS: This group has considerable market tential, although regulatory uncertainty poses a threat growth potential, but is subject to a number of im- in the medium term. ponderables. Norway, Poland and Turkey are among the countries in this category. 2. GROWTH LEADERS: These countries are still ex- periencing modest growth. The increase in installed capacity is slowing down from year to year, but market conditions can be estimated reliably. Germany, France and the Netherlands are three examples. 3. SATURATED MARKETS: These markets have reached saturation point. Little or no new installed capacity will be added in countries such as Denmark and the UK in the future. B THINK ACT 7 Onshore wind power

B MARKET SATURATION AND GROWTH POTENTIAL Three different types of European onshore markets [expected annual installation capacity, in MW]

Flattening growth Austria

France Netherlands

Strong growth Portugal Belgium Declining potential GROWTH growth LEADERS Italy Germany

6,150 Romania Sweden 5,775

4,735 Turkey Finland CLIMBERS SATURATED 3,245 MARKETS 2,850 Greece Ireland

1,875 1,700 1,525 Poland UK 830

Norway 2016 2020 2024 2016 2020 2024 2016 2020 2024 Denmark Expected cumulative new installations by market type [MW]

Market saturation

Source: MAKE Global Energy Outlook Database 8 THINK ACT Onshore wind power

C HOW ATTRACTIVE ARE Installed capacity in 2013

Selected key markets in EUROPE'S MARKETS Europe

Energy market findings 3.0 Germany

Spain

Poland

Norway

Sweden 2.0 Greece

Albania Bulgaria

Switzerland Romania Austria

Hungary Kosovo

Czech Republic Latvia Lithuania

1.0 Slovakia Croatia Montenegro Malta

0.0 0.0 1.6 1.8 2.0

Source: Roland Berger scoring model THINK ACT 9 Onshore wind power

France, Germany, Poland, the UK, the Nordic countries and Turkey are key markets

HIGH France DEGREE OF ATTRACTIVE- NESS

Italy UK

Turkey

Estonia

Slovenia Serbia Bosnia-Herzegovina Macedonia

2.2 2.4 2.6 2.8 Wind power market findings 10 THINK ACT Onshore wind power Smart investments. More money is needed to add transmission capacity and create more intelligent power grids: Only then will Europe hit its climate targets. Yet many expansion projects are faltering.

Demand runs into the billions. European grid operators other sources of renewable energy. To put that into per- estimate that they would have to invest 150 billion euros spective: This figure is more than Belgium's total annual to complete the most important stages of expansion in electricity output. the European power grid. The European Network of Europe's power grid suffers from a number of serious Transmission System Operators for Electricity (ENTSO-E) bottlenecks that create what are effectively "electricity has identified 120 projects to link onshore wind power peninsulas". Fluctuations in power generation caused by effectively to existing power grids. The political goals set the use of renewable energy are exposing these bottle- by the EU are ambitious: 40% lower greenhouse gas necks with increasing regularity. The sun doesn't always emissions and 27% of energy consumption to be sup- shine everywhere, nor does the wind blow with constant plied by renewable energy by 2030. That, however, can force. Apart from the challenge of temporary lulls, this only work if the grids are up to the task; and they will in can also trigger power generation spikes of as much as 50 future have to deliver as much as an extra 100 Terawatt to 70 Gigawatts. To absorb such spikes and ensure that hours of electricity to consumers from wind turbines and densely populated regions receive a reliable supply of THINK ACT 11 Onshore wind power

D E

GRID EXPANSION IN EUROPE CAPITAL SPENDING AND R&D Wobbly schedules Europe is lagging behind

Investments in smart grids Annual funding for "smart 5% up to 2012 grid" research and Canceled [EUR bn] development investments [EUR bn] 12% 39% Commissioning Investments 5.1 on schedule 4.9

12% Rescheduled 3.9 investments

2.9

32% Delayed investments 1.3

0.6 0.4 0.2 32% of all projects are currently delayed. 12% are being rescheduled or are about to be commissioned. 5% are to be canceled altogether. 39% – two out of every five projects, USA China EU South USA China EU South in other words – are on schedule. Korea Korea

Source: Joint Research Centre 2011, Zpryme 2011, Source: ENTSO-E 2014 Bloomberg New Energy Finance 2013

power, the UK alone would have to increase its grid ca- growing significance of renewable energy sources, pacity by a factor of two or three between now and 2030. whose output is subject to fluctuations. Smart grids can The Baltic countries would likewise have to triple their do more than simply carry electricity: They exchange transmission capacity, while the Iberian Peninsula would data between producers and consumers, as well as fea- need a ten-fold increase. Nor is Italy's power supply se- turing control technology that allows power grids to be cure, although reliable figures about the extent to which operated more flexibly and efficiently. This is vital, be- its grid system is undersized are not available. cause decentralized power generation means that power There is thus a very real danger that grid develop- generation can only be forecast at short notice, leaving ment may not be able to keep pace with dynamic grids vulnerable to disruptions. To master this chal- growth in renewable energy, especially wind power. lenge, investment is needed in many areas – above all in This in turn puts the EU's ambitious expansion goals smart metering and billing systems, but also in auto- at risk and is a source of major uncertainty for future mated power transmission and distribution, in house- investors in wind power. In some countries, there is hold applications and, of course, in energy storage. quite simply a lack of acceptance for grid expansion Yet the EU is as reluctant to act as the need for funds projects. At times, tortuous and protracted permit is widespread. The US in particular is leaving Europe be- procedures also put the brake on urgently needed ex- hind in terms of investment planning, but so too is Chi- pansions. D na. When it comes to funding research and develop- Aside from the need to add more grid capacity, smart ment for smart grids, even South Korea spends grids are the solution of choice to accommodate the substantially more money than the EU. E 12 THINK ACT Onshore wind power

Best practice MAKING THE MOST OF ALTERNATIVE ENERGY SOURCES Three examples highlight how smart grids can be built successfully.

SINGAPORE SMART ENERGY SYSTEM Singapore's power grid is one of the most reliable in the world. Constant measurements and automated power transmission and NETHERLANDS distribution are the reasons why. One aspect POWERMATCHING CITY, is an extensive two-way system to control and acquire data from the many nodes that HOOGKERK are spread around the grid. The Dutch are showcasing solutions to synchronize the demand for and production of power in a model project that involves residential buildings and a series of advanced technologies, such as combined heat and power systems. Integrated components like washing machines operate when the price of electricity drops, helping to shift demand to off-peak periods. DENMARK WIND POWER SHARING Some regions have too much wind power while others have too little. To manage both power generation and its grid proactively, Denmark integrates daily forecasts in its grid operations. Both its AC and high-voltage direct current (HVDC) installations are also connected to those of neighboring countries. The practice of buffering surplus wind power in electric vehicle batteries is currently being piloted. THINK ACT 13 Onshore wind power Room for improvement. Our benchmark study shows that many wind farms could be operated much more efficiently.

Savings can be realized on both technical and com - clear guidance in what is otherwise a very cluttered mercial operating costs. Roland Berger conducted a and confusing market. study of onshore wind farms in 2015. Despite its fo - Some of a wind farm's cost factors – its age, loca- cus on Germany, current developments in the mar- tion and wind conditions, for instance – are obviously ketplace mean that the findings of this brand-new beyond the operator's influence. However, knowing study can readily be applied to other European mar- this makes it all the more important to raise efficien- kets too. cy wherever something can be done; and our bench- Our study reveals the opportunities that wind farm mark study shows that improvements are possible in operators should exploit to improve their earnings. If very many cases. Even among wind farms of compara- they do so, the 477 onshore wind farms currently in- ble age and size, the best-in-class operating and capi- stalled in Germany could boost their profits by more tal cost figures are well below the average for the rest than 300 million euros. Existing cost-cutting possibili- of the field. The implication is that there is plenty of ties must be realized consistently, especially with re- room for improvement. F gard to operating costs and the cost of capital. The po- Let us first look at operating costs. On average tential is substantial in both areas: Roland Berger's throughout the industry, they break down into two wind farm benchmark shows that operating costs thirds technical and one third commercial operating could be slashed by 45% on average if rigorous use is costs. The levers identified by the benchmark study made of all cost-cutting options. target the six most important cost factors. The first Our wind farm benchmark lets owners and opera- five are maintenance, provisions for repairs, land tors compare the cost efficiency of their wind farms lease costs, insurance and project management. The with that of more than 40 other German onshore wind sixth is financing. farms. With little effort, we can estimate a wind farm's specific cost-cutting potential on the basis of the most 1. MAINTENANCE: Maintenance costs are by far the big- important maintenance, project management and fi- gest single cost block for every wind farm operator. Op- nancing indicators. We thus give wind farm operators timization thus offers sizable potential cost savings. Es- 14 THINK ACT Onshore wind power

pecially in the case of new and planned farms, it is often fers and/or renegotiating contracts. It may even be pos- possible to negotiate warranty services and mainte- sible to cancel some insurance where service providers nance agreements with the manufacturers. Before 2011, assume operating risks (see repairs and maintenance). manufacturers used to provide two to five-year warranties. Since 2012, five to 15-year warranties have become 5. PROJECT MANAGEMENT: External service provid- more common. The price pressure on OEM mainte- ers offer to handle both technical and commercial nance agreements increased as well. This circumstance project management. Comparing bids from different alone puts two useful tools in the hands of wind farm providers can drive costs down sharply if some or all operators: One is the chance to extend the manufactur- aspects of wind farm management are outsourced. er's warranty in return for a long-term maintenance agreement with the OEM. The other alternative is to 6. COST OF CAPITAL: Interest on financing arrange- switch to a manufacturer-independent service provider ments has been in more or less constant decline since and cash in on what can be much more attractive prices. the financial crisis in 2007. Wind farm operators are Bids must naturally be compared, and both the scope of therefore well advised to take advantage of low interest services and the contractual terms must be negotiated rates and, in some cases, lower risk premiums. It is aggressively. worth restructuring financing arrangements agreed in or before the first half of 2011. At the same time, it 2. LAND LEASE COSTS: This item covers access routes makes sense to examine whether low-cost government to the wind turbines, power lines and/or transformer development loans could be used. stations, for example. Flexible land lease payments linked to wind yields – either real yields or feed-in tar- In the long term, the pressure to improve cost efficien- iffs – are the best option. Conversely, traditional fixed cy will probably change the wind farm operator land- land lease fees place a disproportionate burden on scape. Unlike in the early days of wind power, when earnings when the wind drops for any length of time. wind farms were frequently set up and run by active One alternative would be to examine the option of buy- citizens or cooperatives, the industry will continue to ing the land in question. become increasingly professional. Investment funds and niche investors have long since discovered wind 3. REPAIRS: While provisions totaling 1% of annual power. These institutional investors have deep enough feed-in tariffs are customary, a few wind farms work pockets to put up the sometimes considerable sums with figures of 15% to 17%. These provisions can be needed to repower aging installations. At the same reversed (and distributed) if operators sign service time, they pay closer attention to cost efficiency in the agreements in which the service provider's availability technical and commercial operation of wind turbines. guarantee covers any necessary maintenance and re- 50% of all newly built wind farms worldwide are al- pairs. If that is not sufficient to transfer risk to the ser- ready operated by financial investors. Emanating from vice provider, it is also possible to combine mechanical the US and Asia, this trend is likely to gain an even failure insurance with business interruption insurance. stronger foothold on the European markets too. On The nature and intensity of maintenance should be the other hand, conventional energy companies will aligned with the age of the turbines. Our market re- probably have a hard time coping with large-scale in- search shows that preventive maintenance based on vestments in wind power in the future. They often lack digital data makes more commercial sense than ad the capital and technical expertise needed to deliver hoc repairs that lead to unpredictable outages. highly efficient operations.

4. INSURANCE: Today's insurance premiums are calcu- lated on the basis of relatively reliable outage and dam- age data. Actual risks are often lower than those as- sumed by insurers in earlier forecasts. The cost of insuring new turbines has declined accordingly. It is certainly worthwhile looking around for alternative of- THINK ACT 15 Onshore wind power

F SELECTED AREAS OF POTENTIAL SAVINGS Wind farm operators can significantly reduce their operating costs Added potential from repowering and the optimization of existing wind parks

-50% -70% -40% -20% PROJECT PROVISIONS FOR MAINTENANCE FINANCING MANAGEMENT REPAIRS Renegotiation of agreements Outsourcing to Handled via insurance Review of specialized service Preventive maintenance providers maintenance concepts INSURANCE Comparison of insurers, LAND LEASE renegotiation COSTS Yield-linked land lease fees 16 THINK ACT Onshore wind power Exit government support, enter innovation. What the European market needs most are greater incentives for cutting- edge technology.

The increasing competitiveness of onshore wind pow- from Denmark and Nordex from Germany – have er is the primary reason why price and volume-linked scaled back their R&D spending. This is happening subsidies are likely to be phased out. Another issue is even though the solar industry teaches us an impor- that Germany, for example, has had rather mixed ex- tant lesson: The ability to adapt and above all to inno- perience regarding cost efficiency in the solar indus- vate is critical in a world of global competition. G try. No one wants to make the same mistakes twice. Smarter incentives are also needed for political rea- Between 2000 and 2008, wind power cost between 11 sons. Scientific studies have shown us that feed-in tar- and 20 billion euros with installed capacity totaling iffs deliver the best results in terms of developing and 24 Gigawatts, while solar power cost 35 billion euros disseminating technologies. On the downside, feed-in with installed capacity of 5.3 Gigawatts. Having cor- tariffs also tends to cast certain technology lines in nered 20% of the global market by 2007, the German concrete. Faced with such a "technology lock-in", it be- solar industry saw its share shrink to 6% in just five comes all the more difficult for innovative technology years. Why? Essentially because of growing competi- lines and substitutes to gain access to the market. tive pressure from China, South Korea and the US. Korean company LG filed 192 patents in 2007 alone, against only 75 filed by Germany's Solarworld. This experience is now affecting developments in the wind power industry, as both research and development (R&D) and innovation were clearly neglected when subsidies were plentiful. Recently, even big-name players in the European wind power sector – Vestas THINK ACT 17 Onshore wind power

G GOVERNMENT SUPPORT INSTEAD OF RESEARCH?

When government support was available in abundance, R&D and innovation were in short supply in the European wind power industry. Big-name companies such as Vestas from Denmark and Nordex from Germany have recently scaled back their R&D spending. How- ever, wind power needs to learn a lesson from the solar power industry, which ultimately bowed to growing cost pressure from China, South Korea and the US: Innovation is the only way for Europe's wind power industry to win the competitive battle.

R&D budgets at leading European wind turbine manufacturers [% of sales] 6.9 6.7

4.2 4.0

3.4 3.1

2.3 2.3 2.0

Gamesa Vestas Nordex

2011 2012 2013 Source: MAKE Market Report, 2014 18 THINK ACT Onshore wind power Wind in its sails. Europe can still do a brisk business with onshore wind power. Key players have everything they need to chart a successful course.

The key market players now need to set clear priorities lies in their technology and innovation leadership. in order to exploit – and even increase – the tremen- These strengths must be reinforced, drawing on smart, dous potential afforded by wind power. data-driven services in the value chain and appropriate Investors and operators must further intensify their government subsidies. dialog surrounding new wind farms with stakeholders Service providers can counter growing cost pressure such as residents and local governments. This is one of with a full spectrum of services, including mainte- the most vital preconditions if the imminent need for nance, wind farm optimization and efficient resource repowering – replacing old wind farms with larger and planning. Established providers can benefit from a more efficient installations – is to be realized in the market that is still growing. years ahead. Additionally, operators should already be Lastly, governments and regulatory authorities must pulling every technical and commercial string they can create incentives to stimulate investment in decentralized to improve the efficiency of their wind farms. It is grid structures. Efficient permit procedures are essential worthwhile teaming up with service providers to ex- if onshore wind power is to continue to grow. The days of plore new business models. large-scale subsidies for wind power are over. More than OEMs must optimize their portfolios in such a way ever before, it is therefore important for Europe to en- that the technology works efficiently even when wind courage innovation – in manufacturing, in grids and in loads are low. In many markets, the best wind sites are operational practice. There is still more than enough already taken. However, the strength of Europe's OEMs wind in the sails of the mature onshore markets. THINK ACT 19 Onshore wind power ABOUT US Roland Berger, founded in 1967, is the only leading global consultancy of German heritage and European origin. With 2,400 employees working from 36 countries, we have successful operations in all major international markets. Our 50 offices are located in the key global business hubs. The consultancy is an independent partnership owned exclusively by 220 Partners.