michigan wind energy resource zones board: wind powering ... · increased energy efficiency and 20%...

Michigan

Wind Energy Resource Zones Board:

Wind Powering the Triple Bottom Line

February 17, 2009

Michigan Public Service Commission

Richard F. Vander Veen

Mackinaw Power, LLC

414 E. Main Street, Suite B, Lowell, MI 49331

Phone: 616.897.1304 Fax: 616.897.1307

[email protected]

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Privileged and Confidential – For Internal Use Only

Mackinaw Power, LLC

Obama Administration & 111th U.S. Congress: Impacting the MI WERZ Report

February 10 Senate Energy Committee Hearing 20% by 2020 RPS

February 12, 2009 Stimulus Bill Adopted by House & Senate:

Extends $21/MWh Production Tax Credit (PTC) thru Dec. 31, 2012

Or , Allows Alternative 30% Investment Tax Credit (ITC)

Or, Allows Treasury Grant to Monetize ITC for Wind Projects COD 2010

Enhanced Depreciation 2009

Transmission Plans and Funding +

2009 Federal RPS & Climate Change Laws Hearings >>

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Mackinaw Power, LLC

Key Conferences Involving Transmission (TM) & Wind Industry Planning

March 3-4, 2009 Michigan Wind Conference, www.glrea.org Cobo Hall, Detroit MI

WTG Manufacturing, Jobs, New Projects, New TM Plans

April 1-3 Utility Wind Integration Group, www.uwig.org Philadelphia PA

Forecasting & Integrating Wind, Interconnections, New TM Planning

May 4-6, 2009 AWEA www.awea.org Chicago IL

Siting, Forecasting, Developing, Financing, Manufacturing & Transmitting Wind

Fall, 2009 AWEA Wind Turbine Supply Chain Conference, Grand Rapids, MI

www.nextenergy.org

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Mackinaw Power, LLC

MI WERZ Board

Mackinaw Power & Windpower Update: MISO/Great Lakes IRP & TM Strategy

Federal Policies and Funding

2009 Obama Administration, 111th U.S. Congress, Treasury, DoE, FERC

2/09 Stimulus Bill: RE & Transmission Tax Incentives

2009 Federal RPS & Climate Change Laws Hearings >>

State and Regional Policies and Funding

Governor Granholm’s February, 2009 State of the State Address

+ 10% Great Lakes States RPSs & 30% Midwest Governors Goals

20% Plan: 300,000 MW by 2030 = 300,000 + Great Lakes Mfg. Jobs

GL Offshore Wind: GLW Council, GLOW Collaborative & Atlas

Wind Powering the Great Lakes Triple Bottom Line

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Privileged and Confidential

Copyright, 2007

Mackinaw Power, LLC

Mackinaw Power Overview

To create financial, social, and ecological capital as we develop, finance, construct, operate and maintain 500+ MW of

state-of-the-art renewable energy in Great Lakes StatesTo design, own Intellectual Property and manufacture energy

efficient and renewable energy products

To create financial, social, and ecological capital as we develop, finance, construct, operate and maintain 500+ MW of

state-of-the-art renewable energy in Great Lakes StatesTo design, own Intellectual Property and manufacture energy

efficient and renewable energy products

VisionVision

In 3 to 5 years we will be:• The renewable energy developer-of-choice in the Great Lakes• Recognized as a catalyst for technological breakthrough• A full-service renewable energy firm• An employer-of-choice for talented people in high demand

In 3 to 5 years we will be:• The renewable energy developer-of-choice in the Great Lakes• Recognized as a catalyst for technological breakthrough• A full-service renewable energy firm• An employer-of-choice for talented people in high demand

MissionMission

To be the first mover in developing world class wind power projects in the Great lakes States and Canada by engaging and

empowering all stakeholders.

To be the first mover in developing world class wind power projects in the Great lakes States and Canada by engaging and

empowering all stakeholders. StrategyStrategy

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Mackinaw City Substation 14.4/24.9 kV

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Mackinaw Power, LLC

First to Market!Mackinaw City Wind Power Project = First Privately-Financed

Wind Power Project in the Great LakesMichigan’s first Wind Turbine Zoning Ordinance: Emmet County

Passed Unanimously, 2001; Jim Tamlyn, Chair, Emmet Co. Comm.

Michigan’s first Private Wind Turbine Leases & Community Benefits

$$$ to Mackinaw City, Emmet County and Mackinaw City

First Michigan Tariff: Consumers Green Power Pilot Program, U-13029

$ Sold Out! December 2001 – December 2005 at a 40% premium or 3.2 cents per kWh; 2006 > at a 1.67 cent/kWh premium

First Michigan Power Purchase Agreements

Consumers Energy 35 MW, 17 Years; U-13843

First Michigan Interconnection Agreement

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Mackinaw Power, LLC

Mackinaw City and Emmet County Community Benefits

Strong Community Support: Mackinaw City EDC Cites Wind Turbines in Promoting #1 Tourist Destination in Michigan

50 + Open Houses and Meetings with Mackinaw City and Emmet County Officials

Mackinaw City and Emmet County Ordinances Set the Standard

Mackinaw City Wind Project:

Invested > $2,500,000

Property Taxes $100,000 + Paid

Lease Payments to Mackinaw City $68,000 +

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Mackinaw Power, LLC

Environmental Impact of Consumers Electricity Source: Consumers Energy

Pollution Avoided by Mackinaw City Wind Project

20 million KWh (20,000 MWh) 2001-2009

Consumers Energy Supply Profile

PollutantConsumers Energy

Annual Pounds Produced

Regional Annual Pounds Produced

Sulfur Dioxide 183,200 374,000

Carbon Dioxide 46,588,000 41,890,000

Oxides of Nitrogen 65,000 140,000High-level Nuclear Waste 132 148

MercuryN/A; Unregulated

See MDEQ Mercury Task Force Report

N/A

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Mackinaw Power, LLC

Global Wind Power is Growing at 30% Compounded Rate

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Mackinaw Power, LLC

Operational Characteristics of Wind Power

• High availability: 98% or more • Wind turbines generate some electricity

most of the time• Capacity factor: one megawatt of wind

generates electricity for 250-300 homes• One of highest energy payback ratios of

any power technology

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Mackinaw Power, LLC

NCF 100 MW 200 MW 500 MW

25% 219,000 MWh 438,000 MWh 1,095,000 MWh

30% 262,800 MWh 525,600 MWh 1,314,000 MWh

35% 306,600 MWh 613,200 MWh 1,533,000 MWh

40% 350,400 MWh 700,800 MWh 1,752,000 MWh

Wind Power is Cubed; Net Capacity Factor (NCF) is Key

Economic Characteristics of Wind Power:

Increased tax revenue Income to landownersSome jobs to rural communitiesPurchase of goods & servicesManufacturing jobs-in the U.S.

Environmental Characteristics of Wind Power: Low Pollution

No fuel = no global warming pollution(CO2) No fuel = no air pollution (SO2, NOx, Mercury)No fuel = no mining or drillingNo wasteNo water pollutionNo water use

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Mackinaw Power, LLC

Windpower Cuts Risks, Adds to the Triple Bottom Line

= “Credits” Reducing the cost by ($___)/kW and ($_____) /MWh:

A. Cutting Costs & Locking in stable, competitive pricing, 2009-2029+

B. Mitigating the risk of rising, volatile fuel prices: coal, natural gas...

C. Saving Natural Gas: 100 MW = 2 BB Cubic Feet/ Year

D. Eliminating future emissions risks (compliance & corporate liability)

E. Reducing Carbon Emissions

F. Establishing Sustainable Business Leadership

G. Earning Future Customers’ Sales

H. Each 100 MW Wind Project invests more than $35 million in the Community

Environmental Characteristics: Low Impact

• No electricity generation is without impacts.

• Wind’s impacts are among the lowest of any generation technology, but not zero

• Wind energy industry is committed to environmental stewardship

Great Lakes Generation Portfolios

Great Lakes 261,000 MW Generation Portfolio

Great Lakes Capacity Growing 2% Demand Annually = 5,220 MW/year

2009-2030 = >100,000MW

NY41,572

WI15,524

PA 50,972

OH37,611

MI33,554

Renewables 10%

IN29,959

Great Lakes States Renewable Portfolio Standards: 10%

Great Lakes 261,000 MW Generation Installed

Great Lakes Capacity Needs Forum cites 2% Demand Annually = 5200 MW/year

2008-2030 = >100,000 MW

Increased Energy Efficiency and 10% New Renewable Energy Could Stabilize and Reduce Energy Costs with 10,000+ MW of Wind, 2009-2015

Like a Treasury Bill Boosts Financial Portfolio Performance, 10,000 MW New Wind Power Boosts the Great Lakes’ Generation Portfolio Performance

Coal 64%

Nuclear 20%

Gas 4%

Renewables 10%

Ren

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Mackinaw Power, LLC

Federal RPS: 20% by 2020 Great Lakes Generation Portfolios



2009-2030 = >100,000 MW



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Mackinaw Power, LLC

Midwest Governors: 30% by 2030



2009-2030 = >100,000 MW



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Mackinaw Power, LLC

MISO/Great Lakes Integrated Resource Plan

To Meet Future Generation Demand of 100,000 + MW, Transmission and Distribution Requirements, Evaluate Economic, Social and Environmental Costs, Impacts and Risks

> Energy Efficiency & Demand Response (Conservation = Least Cost/Risk)

>>Renewable Energy: Wind Power, Biomass, Solar, Geothermal …

>>>”Clean Coal,” IGCC…

>>>> “Advanced Nuclear”

>>>>> “Clean Gas”

>>>>>> New Resources

Ontario Power Authority “Integrated Power System Plan” > MISO & PJM

Wind map examples: Michigan

• Michigan: 14th largest wind resource in U.S.

• Minnesota: 9th

• Wisconsin: 18th

Wind/Transmission Map

LEGEND

Green -120-138 kV

Red - 345 kV

Average Windspeed (mph)

Source: AWS Truewind

6.7-6.9

6.9-7.1

7.1-7.3

7.3-7.7

7.7-8.9

•Michigan is ranked 14th among US states for wind energy potential (on-shore wind)*

•At 100 meters (approximate height of a wind turbine), the best areas for wind in Michigan are on the west side and the Thumb

•Primary siting concern in the Thumb is lack of available transmission capacity

*Ranking Source-Pacific Northwest Laboratory, 1991, PNL-7899

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Cost Spectrum for Michigan Renewable Energy Alternatives

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Wind resource: New York – as large as California’s

Wind resource: Ohio

• Ohio wind resource :36th in the U.S.

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Mackinaw Power, LLC

MISO Market

20% Vision & Roadmap20% Vision & Roadmap

“20 % OR 350 GW is achievable through increased scale, better materials, better technologies. U.S. industry must step up to the challenge. Busbar costs will come down as:

1. Wind turbines increase in efficiency & hub heights2. Higher wind capacity factors are found through better wind

resource studies and forecasting3. Onshore and offshore wind farms grow in size4. Transmission systems are strengthened5. More than $ 1 Trillion in new infrastructure is created”

Ric O’Connell, Black & VeatchAWEA, 12/8/06

GE’s Jeffrey Immelt vowed to “double spending on green-related research to $1.5 billion a year by 2010.”

A Vision: Create Energy Independence for the Great Lakes & America

Great Lakes Offshore Collaborative Overview

To create financial, social, and natural capital as we develop, finance, and disseminate data, information, knowledge and wisdom through the Great Lakes Offshore Wind Collaborative and Atlas

To create financial, social, and natural capital as we develop, finance, and disseminate data, information, knowledge and wisdom through the Great Lakes Offshore Wind Collaborative and Atlas

VisionVision

Create the GLOW Collaborative to involve Great Lakes’ stakeholders, 2007-2012• Catalyze technological breakthroughs in Offshore Technologies, 2008-2016• Create 21st Century Jobs for talented people in high demand

Create the GLOW Collaborative to involve Great Lakes’ stakeholders, 2007-2012• Catalyze technological breakthroughs in Offshore Technologies, 2008-2016• Create 21st Century Jobs for talented people in high demand

MissionMission

To create GLOW wind power projects on the most promising sites in the Great Lakes by engaging and empowering all stakeholders To create GLOW wind power projects on the most promising sites in the Great Lakes by engaging and empowering all stakeholders StrategyStrategy

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Mackinaw Power, LLC

Great Lakes Offshore Wind Potential600/60,000MW of generation installed, worldwide

Majority in European waters.

U.S. D.O.E. estimates there is more than 900,000 MW of wind energy off our coasts[i], with 44,000 MW of offshore wind generating capacity within 5 miles of Michigan’s shorelines.[ii]

[i] A Framework for Offshore Wind Energy Development in the United Sates, Offshore Wind Collaborative Organizing Group, Massachusetts Technology Collaborative, US Department of Energy, and GE, http://www.masstech.org/offshore/final_09_20.pdf, accessed 2/9/06, p.2.

[ii] Pryor, S., Shahinian, M., and Stout, M., Offshore Wind Energy Development in the Great Lakes: a Preliminary Briefing Paper for the Michigan Renewable Energy Program, April, 2005, http://www.dleg.state.mi.us/mpsc/electric/capacity/cnf/othergen/offshorewindrept_apr2005.pdf, accessed 3/10/2006.

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Wind Industry• Fastest growing segment of renewable energy –

29% annual growth since 2001

• $23 billion dollar market in 2006

• Significant United States growth in Wind:–U.S. added 2,454MW of new wind in 2006

–70% of new 2006 projects in 5 RPS States (TX, WA, CA, NY, MN)

–Grown from 2,500MW in 99’ to 13,078MW in 07’

• U.S. is third worldwide in cumulative capacity (Germany #1 and Spain #2), but 2006 leader in newcapacity

• Significant additional U.S. growth potential: Wind is 0.8% of overall electricity consumption (vs. Germany at 7.0%, Spain at 8.8%, and Denmark at 21.4%)

20% Wind Power Stimulates 21st Century Technologies & Great Lakes’ Manufacturing Capacity

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Why Wind in Michigan!

1. California 12,7172. Ohio 11,6883. Texas 8,9434. Michigan 8,5495. Illinois 8,5306. Indiana 8,3177. Pennsylvania 7,6228. Wisconsin 6,9569. New York 6,54910. South Carolina 4,96411. North Carolina 4,66112. Tennessee 4,23313. Alabama 3,57114. Georgia 3,53215. Virginia 3,38616. Florida 3,37117. Missouri 3,23418. Massachusetts 3,21019. Minnesota 3,06420. New Jersey 2,920

Potential Wind Manufacturing JobsTop 20 States

Michigan’s ranks second in combined wind generation and manufacturing potential!

SOURCE: Renewable Energy Policy Project

Recent studies have ranked Michigan as high as 4th in wind potential.

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Turbine

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Manufacturing OpportunityDiversification:• NAICS Code Analysis: 1,973 MI Companies (Ranked 4th in Nation)• 27 companies in the wind industry and additional 95 “interested” pursuing• NextEnergy, through their 21st Century Jobs Fund Award, has developed a supplier

diversification program

– Training manual and curriculum

– Classes every quarter

– Arranging introductions and presentations with wind OEMs

• European licenses

Attraction:

• Developing relationships through NextEnergy and delivering value w/ MI supply chain

• New incentives

• Supply chain research and targeting

• Responding aggressively to opportunities

• Local market is the critical site decision factor for Wind Manufacturing OEM’s

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2009 Supply Chain Snapshot

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• Project Example: $17/mile to ship a 25 meter blade set• Manufacturing has tracked wind farm development

– IA (Siemens, Clipper, Acciona), PA (Gamesa), CO (Vestas), CA (Mitsubishi, GE), TX (EU Energy), MN (Suzlon)

– Europe: Germany/Denmark/Spain (Approx 71% wind market = 68% manufacturing locations)

• Attraction Project Feedback

Local Market Criteria

16 Foot DiameterTypically 85 Foot in Length

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Mackinaw Power, LLC

20% = Economic Development & Jobs

40-140 jobs during construction per 100 MW (less for new projects)

6-10 permanent O&M jobs per 100 MW (average 10 per 100 MW)

Local construction and service industry – local contracts

Local benefits if local labor base has robust technical and construction resources

Multiplier effect: increased local income induces spending on other local goods and services

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20% = Economic Development Impact: Manufacturing

3000 manufacturing jobs per 1000 MW (REPP)

20% = 350,000 MW = > 1,000,000 New Manufacturing Jobs

The U.S. wind industry employs more than 2,000 people, and contributes to the economies of 46 states (AWEA)

In a mature wind market, these numbers are larger. The Danish Wind Manufacturers Association estimates:

wind power creates 22 direct and indirect jobs for each MW of installed capacity

5 jobs/MW (installation)

17 jobs/MW (manufacturing related)

Spanish company Gamesa is building new plant in PA, creating 1,000 new jobs over next 5 years and $40M in new investment

ND towers and blades are valuable state exports:- LM Glasfiber blade manufacturing plant

created 130 jobs, 20% of the ND lignite industry- DMI has towers installed in 12 states

Spanish company Gamesa is building new plant in PA, creating 1,000 new jobs over next 5 years and $40M in new investment

Wind Power Transforming Transportation With Electric Plug Ins & The “Hydrogen Economy”

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ReferencesInternational: United Nations, European Wind Energy Assn., Hydro Ontario, Environment Canada, Canadian Wind Energy Association, GE Wind, Vestas,

National: U.S. Depts. Of Energy, Commerce, Interior, Defense, Transportation, NOAA, NREL, FERC, EIA, EPA, NF&WLS, MMS, ACE; AWEA, NWCC/GLWCC,

MISO, PJM, ITC, ATC, Hydro One, AEP, CMS, DTE…

States: Great Lakes States’ Governors, Legislatures, LADCO, DEQs, DNRs, Energy Offices, Public Service/Utility Commissions, Commerce, MEDC

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ReferencesIndustrial Energy Associations & Coalitions

Great Lakes Universities and Colleges

Offshore Wind (GLOW) Collaborative and Atlas

Engineering Companies: Black & Veatch, STS, ABB,

GLREA, Wind Power Developers…

Investment Banks and Tax Equity Investors

Consultants and Law Firms

michigan wind energy resource zones board: wind powering ... · increased energy efficiency and 20%...

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