IPED Conference Financing Wind Power Dennis J Duffy

IPED Conference Financing Wind Power Dennis J. Duffy VP-Regulatory Affairs August. May 7 – 9, 2008 10, 2005 WWW. Cape. Wind. org

Wind Park Proposal l l Electric Service Platform l Two 115 kv circuits to shore – two cables each l 468 MW Generating Capacity l On Average, 75% entire electrical requirements of the Cape & Islands. l 2 130 WTGs (3. 6 MW) On-peak and high capacity factor production. WWW. Cape. Wind. org

Site Locus 3 WWW. Cape. Wind. org

Locating New England’s Commercial Grade Wind Resources 4 WWW. Cape. Wind. org

Wind Energy Map of Southern New England 5 WWW. Cape. Wind. org

Critical Differentials in Evaluating Wind Resources ` ` Average and peak capacity factors and daily and seasonal production curves vary widely by location; ` These variations will result in widely differing impacts on the production cost model, both in the energy and capacity markets; ` 6 All MW of installed wind capacity are NOT of equal value; The following existing Information shows relative benefits of offshore wind resources to the production cost model. WWW. Cape. Wind. org

Comparison of Onshore and Offshore Wind Capacity Factors within NYISO Figure 7. 21 Average Hourly Wind Speeds for 2002 Source, “The Effect of Integrating Wind Power On Transmission System Planning, Reliability and Operations, ” prepared by GE Energy Consulting for NYSERA in 2005. Note: “Zone K is offshore; “All other” is onshore. 7 WWW. Cape. Wind. org

Comparison of Daily Onshore and Offshore Wind Production within NYISO Figure 7. 23 NYISO Wind Capacity Factors Source, “The Effect of Integrating Wind Power On Transmission System Planning, Reliability and Operations, ” prepared by GE Energy Consulting for NYSERDA in 2005. Note: “Zone K is offshore; “All other” is onshore. 8 WWW. Cape. Wind. org

Offshore Example: Cape Wind at 76% CF During NEPOOL’s Top 10 Historical Peaks 9 WWW. Cape. Wind. org

Avian Radar Barge 10 WWW. Cape. Wind. org

Six Years of Environmental Study l l Wind, Tide and Wave Conditions l Sediment Transport Patterns l Benthic Infauna and Shellfish Resources l Essential Fish Habitat Assessment l Commercial and Recreational Fisheries l 11 Surface and Subsurface Geological Conditions Marine Mammals and Threatened & Endangered Species WWW. Cape. Wind. org

Six Years of Environmental Study - continued l l Visual Impact Assessments l Navigational Transit and Vessel Type Assessment l Marine Archaeological/Cultural Resources l Aviation Flight Patterns and Conditions l 12 Avian Autecology and Risk Assessment Shoreline Landfall Conditions Assessments WWW. Cape. Wind. org

Successful Federal Court Litigation l l Ten Taxpayers v. Cape Wind Associates, 278 F. Supp. 2 d 98 (D. Mass 2003), aff’d 373 F. 3 d 183 (1 st Cir. 2004), cert. denied, 160 L. Ed. 2 d 1069 (U. S. 2005). l Courts upheld ACOE’s well-established authority over permitting of non-extractive structures on the Outer Continental Shelf (“OCS”) l 13 Alliance to Protect Nantucket Sound v. ACOE, 228 F. Supp. 2 d 24 (D. Mass 2003), aff’d 398 F. 3 d 105 (1 st Cir. 2005); ACOE role now supplemented by MMS Leasing Role per Energy Policy Act of 2008 WWW. Cape. Wind. org

State Permitting Process l l Twenty-one days of hearings, Fifty Thousand page evidentiary record. l EFSB Approved petition on May 11, 2005. l Massachusetts Supreme Judicial Court UPHELD Approval on December 18, 2006, Alliance to Protect Nantucket Sound v. EFSB, SJC-09689. l 14 Petition for transmission facilities approval filed with Massachusetts Energy Facilities Siting Board (“EFSB”) on September 17, 2002. Petition for Comprehensive Override Certificate pending; Decision due in December 2008. WWW. Cape. Wind. org

Key Adjudicatory Findings of the EFSB on behalf of Massachusetts l l Air Quality: “Overall, the Siting Board finds that the air quality benefits of the wind farm are significant, and important for Massachusetts and New England” (Id. at 189); l Reliability: “The variability or the unpredictability of the energy generated by the wind farm is unlikely to adversely affect the reliability of the electric system” (Id. ); l 15 Need: There is a need for capacity provided by this wind farm beginning in 2007 for reliability purposes” (EFSB 02 -2 at 152); “There will be a need for the renewable resources produced by the wind farm to meet regional RPS requirements in 2006” (Id. at 156); Cost Savings: “The record shows that the wind farm will tend to reduce market clearing prices for electricity because it typically will be bid into that market at its marginal operating costs, which are close to zero, and displace power plants with higher marginal costs. The savings resulting from this displacement would accrue to electric customers, and are estimated to be $25 million per year for New England customers. …” (Id. at 162. ) WWW. Cape. Wind. org

Federal Permitting Status l l Favorable Draft Environmental Impact Statement issued by ACOE in November 2004. l Over 4, 000 pages in ACOE DEIS, considered 17 alternative Sites. l MMS released favorable DEIS on January 15, 2008 l 16 NEPA process, lead by MMS, with 17 participating agencies. Final EIS and MMS Lease scheduled for Fall of 2008 WWW. Cape. Wind. org

Favorable Comments on ACOE DEIS l l NRDC: “[Cape Wind] is, to our knowledge, the largest single source of supply-side reductions in CO 2 currently proposed in the United States and perhaps the world. ” l USDOE Asst. Secretary Garmon: “As the first shallow water offshore project under review in the United States, utility-scale projects like Cape Wind are important to our national interest and a crucial first step to building a domestic, globally competitive wind industry. ” l 17 “CLF commends the Corps and the project proponents for providing a fairly exhaustive, comprehensive and accurate picture of the range of potential environmental impacts from the project and reasonable alternatives from the project. ” Former USDOE Asst. Secretary and Massachusetts Secretary of Environmental Officers Susan Tierney: “[The Cape Wind DEIS] is thorough. It is detailed. It identifies, analyzes and describes a wide array of impacts with great care, detail and comprehensiveness. Indeed, it is one of the most thorough that I have ever seen. ” WWW. Cape. Wind. org

Lessons from Denmark’s Success with Offshore Wind l l Fish: “Few effects on the fish communities so far” l Birds: Effects on overall species are negligible. l Socioeconomic: “Both local and national populations are generally positive towards wind farms. ” l 18 December 2006 Report based on 7 year offshore monitoring program. “Open Door” Policy for New Industry Proposals: In addition to governmental proposals, “applicants may seek authorization at any time to carry out preliminary studies, establish installations, and exploit wind energy. ” WWW. Cape. Wind. org

IPED Conference Financing Wind Power Dennis J. Duffy VP-Regulatory Affairs May 7 – 9, 2008 August 10, 2005 WWW. Cape. Wind. org