RWEI 2011 - TradeWind

Private Sector Perspectives: TradeWind Energy, LLC: 

Private Sector Perspectives: TradeWind Energy, LLC Presented to the Annual Meeting of the Southern Appalachian Wind Energy Institute & the Southern Alliance for Clean Energy Washington, D.C. October 26, 2011

Topics: 

Topics TradeWind Company Profile Recent Project Activity Focus on the Southeast Private Sector Perspectives Wind Development 101 Challenges and Opportunities

Company Profile: 

Company Profile

An Experienced Wind Developer : 

An Experienced Wind Developer Founded in 2003 and based in Kansas City, KS metro area Largest Shareholder is Enel Green Power, the US subsidiary of Enel S.p.A ., an Investment Rated Italian Utility based in Rome with $100 Billion in 2010 revenue. TradeWind Energy™ partners with utilities, cooperatives, environmental groups, municipalities and landowners in the Heartland to develop mutually beneficial utility-scale wind projects. We take great pride in our ability to deliver low-cost wind energy while maintaining an uncompromising commitment to long-term project quality. Company Profile 2009 Winner of Kansas Governor’s Energy Achievement Award Picture of Smoky Hills Wind Farm – KS © Tim Nauman Photography

An Attractive Project Portfolio : 

An Attractive Project Portfolio 250 MW in Operation 350 MW Contracted in 2010 and under Construction 202 – 300 MW Contracted in 2011 with Q1 2012 construction start 4,500 MW of active wind development in 11 States Projects in SPP, MISO, PJM, ERCOT, and WECC Company Profile Picture of Caney River Wind Farm – KS © 2011 Tim Nauman Photography P ipeline of ~ 500,000 acres of prime wind development sites

Excellent Qualifications : 

Excellent Qualifications Senior managers combined 100+ years of utility and IPP experience in power project development (gas, coal, hydro, wind, biomass ). In-house expertise: Meteorology GIS mapping Environmental & Permitting Project Interconnection Processes Transmission wheeling Company Profile Picture of Caney River Wind Farm – KS © 2011 Tim Nauman Photography Experience, Professionalism, and Integrity

Recent Project Activity: 

Recent Project Activity

Recent Successes : 

TradeWind 6 th place wind dev in 2010 Recent Successes

Slide 10: 

Rocky Ridge Wind Project 10

Slide 11: 

Caney River Wind Project 11

Slide 12: 

Chisholm View Wind Project 12

Focus on the Southeast: 

Focus on the Southeast

Slide 14: 

Tennessee Valley Authority PPA Caney River Wind Project Located in Southeastern KS PPA with the Tennessee Valley Authority (TVA) for 200 MW Power wheeled across SPP and AECI balancing authorities into the TVA system First project of its kind delivering wind energy across two states and two separate transmission systems to a customer. The then largest Renewable Energy PPA by a Southeastern Utility The first TradeWind Project that will deliver Midwestern wind energy into the Southeast 14 Picture of Caney River Wind Farm – KS © 2011 Tim Nauman Photography

Slide 15: 

Alabama Power Company PPA 15 ILLUSTRATION BY CHRIS SCHOELEN, THE OKLAHOMAN GRAPHICS Chisholm View Wind Project Located in Northern OK PPA with the Alabama Power Company for 202 MW Ability to build up to 300 MW Power wheeled across SPP and Entergy balancing authorities into the Southern Company system The now largest Renewable Energy PPA by a Southeastern Utility The second TradeWind Project that will deliver Midwestern wind energy into the Southeast

Slide 16: 

Alabama Power Company PPA "Signing this agreement is a significant accomplishment for Alabama Power, TradeWind Energy and the wind industry, demonstrating that wind energy from the Great Plains can be delivered to Southeast utilities while reducing cost to their customers" Frank Costanza E xecutive Vice President, Business Development TradeWind Energy 16

Slide 17: 

Lower cost than Offshore Wind Recent estimates ~ $200 / MWh Likely lower cost than Solar PV Recent estimates ~ $80 - $180/ MWh May be lower cost than biomass Recent estimates ~ $65 - 100 / MWh (Woody biomass) Switch-grass estimates are higher Why Wheel Power to the Southeast? Imported On-Shore Wind may be the Lowest Cost Renewable Option 17

Slide 18: 

Levelized Cost of Energy Comparison Source: Lazard Study, 2009 18

Private Sector Perspective: 

Private Sector Perspective

Slide 20: 

Like any going concern, we must keep the “lights on.” Wind developers like TradeWind are in business to earn a return on investment for their shareholders Positive ancillary benefits this business promotes include: Environmental sustainability Energy security E nergy independence Understand the Bottom Line 20

Slide 21: 

Customer service is key Customers include: Investor Owned Utilities Municipal Utilities Cooperatives Large Industrials or Aggregators They want/need: Low price Low price Low price High quality with performance guarantees Environmental Attributes / RECs Minimal risk Know the Customer 21

Slide 22: 

We are in the “Electric Power” Industry We deliver a commodity product - electricity Our competition is not just “green” electricity, but all forms of electric power New wind projects by other IPPs New solar / biomass projects Merchant wind Fossil Fuel projects – Gas, Coal, IGCC, Nuclear Wholesale power spot market prices Know the Industry 22

Slide 23: 

Developers and Utilities face Huge $ Capex decisions on building power plants with 20+ years of useful life without any future certainty Federal Tax Credits (PTC/ITC) Federal/State Renewable Electricity Standards Utility Integrated Resource Plans Emissions Rules: EPA CSAPR on SO 2 , NOx , particulates CO 2 – cap and trade / carbon tax? Natural Gas Prices Wholesale Power Prices Transmission Plans RTO Reserve Margins Energy storage costs Capital costs for s teel and other power plant components Understand Industry Drivers 23

Wind Development 101: 

Wind Development 101

Slide 25: 

Wind Rules Slight changes in a project’s net capacity factor can impact PPA price dramatically Extensive on-site wind data acquired via MET tower network Independent 3 rd party verification ( Garrad Hassan, VBar ) Site Selection 25

Slide 26: 

Environmental Studies are performed for the presence and/or habitat of multiple concerns Whooping Cranes, LPCs, Bats, Raptors, Avian, Reptiles, etc. Site Selection Work closely with governmental wildlife departments Concerns are either avoided or mitigated 26

Slide 27: 

Permitting Various concerns are researched (FAA, historic sites, etc.) Work closely with governmental entities and consumer groups Federal Aviation Administration State Depts. of Transportation Depts. of Agriculture Corps of Engineers Historic Preservation Society Site Selection 27

Slide 28: 

TradeWind Energy places significant emphasis on building trust and rapport in the communities surrounding our project development sites. Building Relationships 28

Slide 29: 

Landowners Very competitively priced easement acquisition Turbine arrays are often sited with landowner in mind Monthly newsletters Annual celebrations with neighbors meeting neighbors Building Relationships 29

Slide 30: 

Public Offices Local officials are proactively approached for support Payments in lieu of taxes are negotiated Roads are often improved Decommissioning plans are often agreed upon Building Relationships 30

Slide 31: 

Environmental Concerns Environmental impact reviews In-house biologist Third party involvement (e.g. Ecology & Environmental, Inc.) Proactively seek environmental group(s) feedback Consultation with Federal / State wildlife departments Building Relationships 31

Slide 32: 

Vendors / Contractors TWE works closely with multiple wind turbine manufacturers GE, Vestas , Siemens, etc. Willing to partner with in-state manufacturing facilities Great working relationship with Mortenson , Inc. North America’s leading wind project construction experts Working together on the Chisholm View Project Building Relationships 32

Slide 33: 

Utilities TWE works closely with Utility off-take customers to: Provide their rate-payers with low cost power Help Utilities diversify their portfolios TWE / Enel provide full-service, vertically-integrated services: Construction Project finance Operations Building Relationships 33

Slide 34: 

Attractive wind resource locations High capacity factors (up to 51% Net CF) Third party, independent verification Large scale potential (up to 750 MW) Multi-phase development Geographic diversity Competitive Price Creative pricing structures available Thoroughly vetted project sites Environmental, Permitting Third party consultation & verification Varied interconnection maturity 2012 – 2015 COD possible TradeWind Offerings 34

Challenges & Opportunities: 

Challenges & Opportunities

Slide 36: 

Stability Federal Tax Credits and “Boom – Bust” Cycles National RES or CES? Transmission Historic investment in transmission has been far too low No one wants to pay for greatly needed improvements Intermittency Short term wind forecasts improved Storage costs will come down Challenges 36

Slide 37: 

EPA New Control Rules… “Criteria” Air Pollutants – Nox , ozone, SO 2 , particulates Hazardous Air Pollutants (HAP), especially mercury Once-through cooling Coal combustion byproducts (ash) … May Result in 50 GW retired by 2020 Primarily older (> 40 yrs ), smaller (< 500 MW) coal units with no controls O ther sources will need to fill this gap More gas and renewable resources likely – gas and renewables complement each other well Nuclear / IGCC have very high initial capital costs and long lead times, so these resources will not fill this gap until after 2020 Opportunities 37

Slide 38: 

Competitively priced vis-à-vis other resources Price stability Known pricing offers hedge against fuel price volatility Inflation proof Bundled RECs Bank or Sell Environmentally friendly No water usage No emissions Benefits of Wind Power Resources 38

Slide 39: 

Thank you