GenerationHub Quarterly Market Update May 27, 2015 Wayne Barber, Chief Analyst, GenerationHub Barry Cassell, Chief Analyst, GenerationHub Kent Knutson, Director Hub Services, PennWell Corporation

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Power Generation Drivers and Uncertainties

• Capital spend stays high but end in sight • Clean Power Plan roll out this summer • EPA and States set stage for CPP gunfight • MATS implemented in April – coal retirements surge –

expected to peak this year • New NAAQS Standard in October could be costly • Both generation and electric demand show decline • Gas dominates the planning horizon but many projects

are being pushed out further • PTC/ITC fate weighs heavy for renewable industry • Energy Storage on the rise

Coal Plant Retirements (MW)

• GenerationHub is tracking $134bn (133 GW) in planned and under-construction natural gas projects and growing . . . .

• Utility scale solar and wind continue to expand

• Solar 15.3 GW in development next two years • Wind 33.2 GW from 2015 to 2018, with about 16.6

GW in 2015 alone – though some will likely be pushed into 2016 and beyond

• Nuclear 15.0 GW planned between now and 2024 • Hydro (mostly pumped-storage 12.5 GW – most

after 2018

Gas, Solar and Wind Continue to Dominate the Future

US Current Electric Capacity First Year Online by Fuel Type (MW)

• Gas, Wind and Solar Continue to Dominate the New Generation Landscape

Investment 2015-18 • Gas: 118.9 GW (66%) • Wind: 33.2 GW (18%) • Solar: 17.4 GW (10%) • GWS: 169.5 GW (94%) • All: 180.8 GW

New Capacity Additions (MW)

Natural Gas Power Development (MW)

Planned Gas Power by NERC Region – MW

New Gas Generation in 2015

Operating (R) Refuel Project

Nuclear Power in the News

Nuclear Power in the News

Clean Power Plan in the News

Clean Power Plan in the News

US Supreme Court Cases

Energy Storage in the News

Coal Plant Retirements by NERC Region (MW)

Coal Retirements in the News

Gas Power In the News

Gas Power in the News

Renewables in the News

Renewables in the News

US Wind Power Capacity – Annual and Cumulative (MW)

• AWEA supports extension of tax credits – costs down 58% in 5 years

• A lot of Christmas’s ruined – cycle of job losses and factory closures

• Is the PTC a tax revenue generator rather than subsidy

• Marchant-Pompeo bill (H.R. 1901) – supports phase out (by 2025) and is tax payer friendly – could save 35%

• Senator Grassley (R-IA) put tax credits in context

• YieldCos – enough projects now to support investment

• ITC set to expire in 2016 – will affect solar development

Fate of Renewable Energy Hinges on Tax Incentives

Energy Storage on the Rise

• 185 GW Globally • Costs coming down sharply -

- $2,000/kWh in 2009 to $700/kWh in 2013 . . . . consider battery costs for EV’s – $1,300/kWh in 2005 – now around $400/kWh with goal to reach $150/kWh for commercialization

• >95% Utilization rate • SCE – 50 MW required – 261

MW procured • Faster and more effective

response • Oncor announced in 2014

interest in spending $5.2 billion on 5 GW of storage to firm up the grid

• Next legislative session to act will be in 2017

US Energy Storage Market Forecast

RECENT TRENDS US Electric Utility Fuel Mix – Electric Generation

Most Recent 12 Months – Ending February 2015 Most Recent 12 months ending

February, 2015 compared with same period in prior year:

Gas 2.3% Coal -4.7% Nuclear 0.9% Hydro 1.6% Renew 8.7%

Trends in Average Delivered Price of Coal and Natural Gas to US Electric Power Plants

Most Recent 12 months ending February, 2015 compared with same period in prior year: Electric Utilities • Coal up 0.8% to $2.39/mmBtu • Gas flat at $4.83 Independent Power Producers • Coal up 0.9% to $2.23/mmBtu • Gas down 9.8% to $4.34 Electric Rates • Residential up 3.5% to 12.6 c/kWh • All Customers up 3.0% to 10.5

Ozone Non-Attainment Areas (2008 Standard, 0.075 ppm)

• National Ambient Air Quality Standards (NAAQS)

• 2011 EPA study estimated cost of reducing from .075 ppm to .070 ppm at $11bn

• More recent studies peg cost at $22bn to reach .070 and $38bn to reach .065

• Review stipulated range of .060 to .070 as target

• Compliance will benefit Solar, Wind and long-haul transmission in the west

What can we expect going forward?

• The EPA Clean Power Plan will change based on comment period feedback – 2020 goals will likely decline

• PTC/ITC extension will be extended but not without fight • EPA Ozone standards could be costly – final rule in October • Gas power will be front and center stage over the near term

but over all development is dependent on load growth • Gas prices will stay competitive – but electric rates overall

will continue to increase as regulatory costs pile up • 2015 will be a year to remember . . . . 2016 a year to watch

Questions and Answers

At this point we would like to field questions . . . .

Thank You for Attending . . . .

To find out more about GenerationHub and to schedule a demonstration of our online intelligence service call or email . . . Laura Kresse (918) 831-9731 laurak@pennwell.com

And don’t forget GenForum at POWER-GEN Natural Gas . . .