2008 ANNUAL REPORT Contents 2 Global Wind Energy Portfolio 38 BBW Management Team 4 Company Highlights 40 Corporate Structure 6 Financial Highlights 42 Corporate Governance Statement 8 Chairman’s Report 58 Directors’ Report 12 Chief Executive Officer’s Report 76 Auditors’ Independence Declaration 16 Market Overview 78 Financial Statements 20 Portfolio Summary 82 Notes to Financial 22 Australia Statements 24 France 149 Directors’ Declaration 26 Germany 150 Independent Audit Report 28 Portugal 152 Additional Investor 30 Spain Information 32 United States 157 Glossary 34 Commitment to Sustainability 161 Corporate Directory 36 BBW Boards 1 Global Wind Energy Portfolio GERMANY Total Capacity 120.5MW Capacity Factor 25% Bocholt-Liedern Kaarst Calau Langwedel Coswig Leddin Eifel Sonnenberg Eschweiler Wachtendonk Hiddestorf PORTUGAL Total Capacity 335.3MW Capacity Factor 28% Enersis Portfolio comprises2: Achada Lousã I Arcela Lousã II Bigorne Malhadas Borninhos Malhadizes Cabeço Alto Meroicinha Candeeiros Na Sra da Vitória Chão Falcão I Pampilhosa Chão Falcão II Rabaçal Chão Falcão III São Cristóvão I Chiqueiro São Macário Degracias Sao Mamede USA Freita I Serra de Bornes Total Capacity1,3 1138.9MW Igreja Nova Serra de Escusa Capacity Factor 37% Jarmeleira S. de Todo o Mundo Lagoa Funda Vila Lobos Allegheny Ridge 1 Leomil Allegheny Ridge 2 Lomba da Seixa I Aragonne Mesa Lomba da Seixa II Bear Creek Blue Canyon Buena Vista Caprock Cedar Creek SPAIN FRANCE Combine Hills AUSTRALIA Crescent Ridge Total Capacity 420.7MW Total Capacity 52.0MW GSG Capacity Factor 27% Capacity Factor 26% Total Capacity 460.9MW Jersey Atlantic Capacity Factor 36% Kumeyaay Carrascal I La Plata Fruges 1 & 2 comprise: Mendota Carrascal II La Muela Norte Chemin Vert Alinta Sweetwater 1 Cerradilla I Monte Seixo Fond du Moulin Capital Sweetwater 2 Cerradilla II Serra da Loba Le Marquay Lake Bonney 1 Sweetwater 3 Conjuro Sierra del Trigo Les Trentes Lake Bonney 2 Sweetwater 4 El Redondal Serra do Cando Mont Félix Sweetwater 5 El Sardon Valdeconejos Sôle de Bellevue 2008 Divestments 1 Represents BBW’s % ownership of Class B Member Units. BBW owns 100% of Class B Member Units of a 95% interest in Aragonne Mesa. 2 BBW owns a 50% interest in the Enersis Portfolio of wind farms. 3 Includes Allegheny Ridge 2 (70MW) which is yet to be acquired. 2 49% US 20% Australia 14% Spain 11% Portugal 4% Germany 2% France 49% US 22% US – South 20% Australia 9% US – Central 49% US 14% Spain 6% US – Mid West 20% Australia 11% Portugal 7% US – North East 14% Spain 4% Germany 4% US – South West 11% Portugal 2% France 1% US – North West 14%4% SpainGermany 11%2% PortugalFrance 4% Germany 2% France 9% South Australia 6% New South Wales 5% Western Australia 57% PPA GERMANY 22% Fixed Tariff REGULATORY REGIME WIND RESOURCE Total Capacity 120.5MW 22% US – South 21% Market Capacity Factor 25% 9% US – Central 49% US 22% US – South 6% US – Mid West Bocholt-Liedern Kaarst 20% Australia 9% US – Central Calau Langwedel 7% US – North East 14% Spain 6% US – Mid West Coswig Leddin 4% US – South West 11% Portugal 7% US – North East Eifel Sonnenberg 1% US – North West 4% Germany 4% US – South West Eschweiler Wachtendonk 14% Spain Hiddestorf 2% France 1% US – North West 11% Portugal 14% Spain 4% Germany 11% Portugal 2% France 4% Germany 9% South Australia 2% France PORTUGAL 6% New South Wales 9% South Australia 5% Western Australia Total Capacity 335.3MW 6% New South Wales Capacity Factor 28% 5% Western Australia Enersis Portfolio comprises2: Achada Lousã I REVENUE ASSURANCE EQUIPMENT AND SERVICE Arcela Lousã II Bigorne Malhadas Borninhos Malhadizes 57% PPA 28% Gamesa Cabeço Alto Meroicinha 22% Fixed Tariff 25% Vestas 57% PPA Candeeiros Na Sra da Vitória 21% Market 19% Mitsubishi 22% Fixed Tariff Chão Falcão I Pampilhosa 10% GE Chão Falcão II Rabaçal 22% US – South 21% Market 6% Nordex Chão Falcão III São Cristóvão I 9% US – Central Chiqueiro São Macário 6% Suzlon 6% US – Mid West Degracias Sao Mamede 4% Siemens USA 7% US – North East Freita I Serra de Bornes 2% Enercon Total Capacity1,3 1138.9MW Igreja Nova Serra de Escusa 4% US – South West Capacity Factor 37% Jarmeleira S. de Todo o Mundo 1% US – North West Lagoa Funda Vila Lobos 14% Spain Leomil Note: The Spanish tariff is assumed to be 56% Market, 44% Fixed Allegheny Ridge 1 11% Portugal Allegheny Ridge 2 Lomba da Seixa I (based on expectations for current year). Aragonne Mesa Lomba da Seixa II 4% Germany Bear Creek 2% France Blue Canyon 9% South Australia Buena Vista 6% New South Wales Caprock 5% Western Australia Cedar Creek SPAIN FRANCE Combine Hills AUSTRALIA Crescent Ridge Total Capacity 420.7MW Total Capacity 52.0MW GSG Capacity Factor 27% Capacity Factor 26% Total Capacity 460.9MW Jersey Atlantic Capacity Factor 36% Kumeyaay Carrascal I La Plata Fruges 1 & 2 comprise: 28% Gamesa Mendota Carrascal II La Muela Norte Chemin Vert Alinta 25% Vestas Sweetwater 1 Cerradilla I Monte Seixo Fond du Moulin Capital 57% PPA 28% Gamesa 19% Mitsubishi Sweetwater 2 Cerradilla II Serra da Loba Le Marquay Lake Bonney 1 22% Fixed Tariff 25% Vestas Sweetwater 3 Conjuro Sierra del Trigo Les Trentes Lake Bonney 210% GE 21% Market 19% Mitsubishi Sweetwater 4 El Redondal Serra do Cando Mont Félix 6% Nordex 10% GE Sweetwater 5 El Sardon Valdeconejos Sôle de Bellevue 6% Suzlon 6% Nordex 4% Siemens 6% Suzlon 2% Enercon 4% Siemens 2% Enercon 28% Gamesa 3 25% Vestas 19% Mitsubishi 10% GE 6% Nordex 6% Suzlon 4% Siemens 2% Enercon Company Highlights 2005 2006 2007 OCTOBER 2005 FEBRUARY 2006 JANUARY 2007 Babcock & Brown Wind Partners BBW completes the acquisition BBW acquires the Kaarst I wind is admitted onto the Official of Eifel wind farm located in farm (10MW) located in Germany, List of the Australian Securities Germany (35MW) representing the first wind farm Exchange (ASX Code: BBW) Financial close of an additional acquired under the terms of the with an application price of 1.5MW at Eifel was completed in Plambeck Framework Agreement $1.40 per Stapled Security, and March 2007 An additional 2MW (Kaarst II) was an initial market capitalisation acquired in May 2008 of approximately $692 million MARCH 2006 FEBRUARY 2007 DECEMBER 2005 BBW agrees to acquire Fruges 1 wind farms under construction BBW receives securityholder BBW acquires Class B located in France (22MW) approval for the acquisition of membership interests in BBW enters into a German Class B membership interests in Sweetwater 1 & 2, Caprock, the US06 Portfolio (335.2MW) Blue Canyon and Combine Framework Agreement with Hills wind farms located in the Plambeck Neue Energien AG MARCH 2007 US, collectively known as the US03/04 portfolio (186MW) MAY 2006 BBW acquires the initial three BBW completes $118.6 million wind farms of the US06 Portfolio capital raising at a price of $1.60 including Buena Vista (38MW), per stapled security Aragonne Mesa (85.5MW) and Mendota wind farms (51.7MW) JUNE 2006 BBW forms part of the Babcock BBW commences construction & Brown and Singapore Power of the Lake Bonney 2 wind farm International Pte Ltd Consortium located in South Australia (159MW) bidding for the issued share capital of Alinta Finalised the purchase of the Fruges 1 wind farms (22MW) APRIL 2007 BBW increases its ownership of Miles George appointed as the Class B membership interests in permanent Chief Executive Officer the US03/04 portfolio BBW instructs Alinta to sell Wattle JULY 2006 Point wind farm in exchange for net proceeds of $201.5 million BBW acquires Class B membership interests in the Sweetwater 3 BBW completes $156.8 million (67.5MW) and Kumeyaay (50MW) institutional placement at a price wind farms located in the US of $1.80 per Stapled Security DECEMBER 2006 MAY 2007 BBW achieves practical completion BBW completes €1.03 billion for the Alinta wind farm, located in refinancing of its global wind Western Australia (89.1MW) farm portfolio BBW acquires Fruges 2 wind farms BBW acquires the Monte Seixo under construction located in (35MW) and Serra do Cando France (30MW) (29.2MW) wind farms located in Spain BBW acquires Class B membership interest in Bear Creek and Jersey Atlantic wind farms (16.6MW), located in the US Ownership represents equity interest. For the US wind farms this is on the basis of active ownership as 4 represented by the percentage ownership of Class B Member interest. 2008 JULY 2007 DECEMBER 2007 FEBRUARY 2008 BBW completes second stage BBW completes the acquisition BBW announces a strategic financial closing for the US06 of a 50% interest in the Enersis initiative to unlock portfolio value portfolio with the acquisition of portfolio of wind farms (257MW) of its European wind energy Allegheny Ridge 1 (80MW) and located in Portugal portfolio GSG (80MW) wind farms BBW acquires the Hiddestorf, MARCH 2008 BBW acquires a 70% interest in Langwedel and Leddin wind the Conjuro wind farms (11.9MW) farms (33MW) located in BBW receives commitments in located in Spain. The remaining Germany excess of €430 million in relation to the syndication process for 30% interest (5.1MW) was BBW achieves financial closing additional corporate facilities acquired in August 2007 with for Sweetwater 4 & 5 wind farms a total of (17MW) (170.3MW) as part of the US07 Deutsche Bank AG and portfolio acquisition J.P. Morgan plc appointed as AUGUST 2007 Joint Sale Advisers in relation BBW acquires Capital wind farm Syndication of BBW’s €1.03 to the strategic initiative (132.3MW) under construction billion global corporate facility located in Australia successfully completed JULY 2008 BBW acquires the Carrascal BBW acquires