may 8, 2007 trintek energy consulting, inc. creating competitive advantage thru intelligent...

May 8, 2007

Trintek Energy Consulting, Inc. Creating Competitive Advantage Thru Intelligent Development

Visit Us On the Web@ http://www.trintek-energy.com

Western Renewable Power Development Summit San Francisco, California

Where The Wind Is In the West

2

Where The Wind Is In the West

I. Value Drivers in Selecting Wind Sites

II. Factors Affecting Cost Structure of Wind Projects

III. Most Promising Geographic Areas

IV. Niches and Contrarian Opportunities

V. Most Important Factors Affecting Development and Timing of New Projects

VI. Outlook and Forecast

Trintek Energy Consulting, Inc.

3

I. Value Drivers in Selecting Sites


A. Wind Resource Power Classification 3+ to 6 Direct Correlation to Capacity Factor and Revenue

B. Availability and Abundance of Land to Support Large Projects Benefit of Economies of Scale and Lower Cost of Power

C. Transmission Interconnection on or Near to Site Very Big Industry Issue Into The Future

D. Environmental and Zoning Permitting Feasibility County Zoning Ordinance –Nimby and Banana Airports, Military Radar, Radio, TV, and Microwave towers Waters of the State and U.S. BLM or Federal or Tribal – NEPA Avian Bird and Bat Migration Pathways, Wildlife Habitat

4

I. Value Drivers in Selecting Sites


E. Market Structure and Dynamics Ease of Obtaining PPA from Creditworthy Off taker Alternatives- Liquid Hubs and Financial Hedges RPS vs. No RPS States, Value of RECS Utility Avoided Cost Structure

Which Fuels on the Margin? The Penny Rule Where Gas Is Not on The Margin

F. Timing – Full Cycle Development Costs Policy Framework Vs. No RPS Big Player vs. Smaller Developer Financial Staying Power vs. Speed and Nimbleness Size Matters Where There is No Policy

5

II. Factors Affecting Cost Structure


A. Other than the PTC, The most important Factors to Lower The Cost of Power are:

Wind Resource and Capacity Factor

Economies of Scale- Larger Projects

Capital Costs and LTSA/Warranties

Industrial Equipment Sales Tax Exemption

Property Tax Relief

In Specific Projects - Transmission Interconnection Cost And Associated Upgrades

6

II. Other Factors Affecting Cost Structure


A. Corn Field or Flat Pasture Vs. Mountainous or Semi-Mountainous Terrain

Total Costs in Mountainous Terrain Can Increase 20-30% Especially for New Transmission Line, Foundations Transportation, Road Building, and Logistics Supply Chain

B. Long Haul Transportation Costs Can Now Approach 20% of the Capital Costs of a Wind Turbine.

Value of Transportation Survey and Optimization Through Best Port of Entry More Important. Timing Available Resources Is Also Key.

C. Cost of Substation Components and Power Collection Copper Cable Are Also Escalating

7



A. The Steering Group of the Western Interconnection Of the Western Governors Association’s Clean Diversified Energy Advisory Committee Expects:

In Their Reference Case an Incremental 16,723 MW’s of Wind by 2015 Added in Western States

In Their Hi-Renewables Case an Incremental 41,797 MW’s of Wind by 2015 Added in Western States

B. For Perspective, The industry has an Installed Base of 11,603 MW’s of Which 8,143 MW’s are in Western States

The Industry installed 2,454 MW’s in 2006 and Seems Constrained to About 2,500-3,500 MW’s a year currently.

1,673 of the MW’s Installed in 2006 were in Western States

8

ERGO!-This is A Promising Geographic Area

This is How We Prospect For Wind

9

Western States - Wind Installed Base MW’s End of 2006


Texas

2768

New Mexico497

Colorado

291

Wyoming288

UT1

Montana146

Idaho75

California2,361

Oregon439

Washington818

Greater than 2,000 MW

Greater than 400 MW

Greater than 50 MW

Zero to 50 MW

NO. 1NO. 2

NO. 3

Nevada 0

Arizona 0

10

Western States – Wind MW’s Installed During 2006


Texas

774

New Mexico90

Colorado

60

Wyoming0

UT0

Montana9

Idaho0

California212

Oregon100

Washington428

Greater than 200 MW

Greater than 100 MW

Greater than 50 MW

Zero to 50 MW

NO. 1NO. 2

NO. 3

Nevada 0

Arizona 0

11



State GwH RPS In Effect

1. Texas 1,190 YES 10,000 MW BY 20252. Montana 1,020 YES 15% BY 20153. Wyoming 747 NO4. Colorado 481 YES 20% BY 20205. New Mexico 435 YES 20% BY 20206. Idaho 73 NO7. California 59 YES 20% BY 2017

Western States (In the Top 20) Ranked by Resource Potential > Class 3

Note: Oregon, Washington, Arizona, Nevada, UtahNot Ranked in the Top 20 States for Wind Potential in the U.S.

12

Western States - Corridor of Untapped Resource PotentialShown on Map Of Installed Base MW’s


Texas

2,768

New Mexico497

Colorado

291

Wyoming288

UT1

Montana146

Idaho75

California2,361

Oregon439

Washington818

Greater than 2,000 MW

Greater than 400 MW

Greater than 50 MW

Zero to 50 MW

NO. 1

NO. 2

NO. 3

Swath of Untapped Resources

Montana,WyomingColorado, New Mexico, West Texas

13

Western States - Corridor of Untapped Resource PotentialShown on Map of Resource Potential GwH


Texas

1,190

New Mexico435

Colorado

481

Wyoming747

UT

Montana1,020

Idaho73

California59

Oregon

Washington

Greater than 1,000 GwH

Greater than 400 GwH

Greater than 50 GwH

Zero to 50 GwH

NO. 1

Swath of Untapped Resources

Potential Resource

No. 2

No. 3

Arizona

Montana,Wyoming,Colorado, New Mexico, West Texas

14 Trintek Energy Consulting, Inc.

IV. Niches and Contrarian Strategies

A. High Level Strategic Thoughts Large Developers Can Influence Policy Framework Their Staying Power and Large Balance Sheets Enable Them to Assemble a Position, and Wait for the Market to Develop Where There Is None

Example : Be in Idaho and Wyoming Before There is An RPSExample: Position in Likely National Interest Transmission Corridors Before there is Transmission Capacity (EPACT&FERC–890)

Smaller Developers May Be Better Off Working in Areas of Established Framework and Competing on Speed and

Nimbleness

Example: Texas, California, Colorado, New Mexico


IV. Niches and Contrarian StrategiesB. Specific Ideas For Niche Projects

Look at Untapped Resources on Native American Lands

Arizona Example : Gray Mountain Navajo Tribe Magnitude of 3-5,000 MW’s of Class 3+ Possible in

Arizona

Integrated Wind with Pumped Storage –Shaped Product May Integrate Well with Hydro in the Northwest or in Northern California

Re-powering Opportunities in Tehachapi Area of California - Could be up to 4,000 MW’s By 2015 Especially with New Transmission, like Tehachapi/Antelope Transmission Project

Consider the Economics of 100-120 Meter Towers in Some Areas of Arizona, Nevada, Utah, Idaho -Suited to Zoning in Vast Unpopulated Regions

16

Arizona - Gray Mountain Wind Energy Site


Most Important Factors Affecting New Project Development and Timing

A. The Two Most Important Factors Affecting New Project Development are RPS and Interconnection

Given that most Western States now have an RPS, the next Step in Policy Framework is Interconnection Initiatives at State and Possibly Federal Level

Which is most important? RPS or Interconnection?Answer: BOTH!

This is Like the Analogy of a Rowboat with Two Oars,One Oar is RPS, and the Other is Interconnection, and the Rowboat Can’t Row on a Straight Path Without Both Oars.

18Copyright Trintek 2007 w/Credits to Jon Sayer/Illustrationweb

Getting in the Queue for RPS Without Interconnection Policy Is a Shocking Mess!


The Importance of Integrated RPS and Interconnection Policy Framework

A. Western States That Really “Get It”

Texas – SB 20 CREZ Zone Initiative $2-3 Billion, Fast Track PUC & CPCN with Cost Recovery

New Mexico- HB 188 Renewable Energy Transmission Authority (RETA)– 30 % Must Come from Renewables

Colorado-SB 100 Energy Resource Zones, PUC Must Fast Track CPCN

California-SCE Proposed Renewable Trunk Line Tehachapi/Antelope Transmission Project- Integrate Large Clusters at Reasonable Distance from 220 Kv+ Lines with Cost Recovery

20

Would You Rather Row In Circles Or…. Sail?


= WindPowered

INTERCONNECTIONRPS +

21

Outlook and Forecast

Continued Development : Oregon, Washington, California California in Particular (Especially Southern California) is a Net Importer These will continue to be Established and Attractive Markets, but Maturing and Highly Competitive

Accelerating Development : Texas, New Mexico, Colorado,Wyoming, Montana, (The Corridor of Relatively Untapped Resources)Favorable Transmission Policy Framework + Untapped Wind Potential Makes Texas, New Mexico, and Colorado Compelling MarketsMontana and Wyoming Are Exporters and New Transmission Capacity Will Be Vied for By Both Coal and Wind Which May Slow Wind Development

Emerging Development : Arizona, Nevada, Utah, IdahoSmaller Wind Potential, But Well Positioned for Export to California Possible Attractive Niches in These 3,000-5,000 MW Size States Possibly Slightly Higher Return Opportunities without as Much Competition

may 8, 2007 trintek energy consulting, inc. creating competitive advantage thru intelligent...

Documents