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Transcript of 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
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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
Trintek Energy Consulting, Inc.
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
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I. Value Drivers in Selecting Sites
Trintek Energy Consulting, Inc.
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
Trintek Energy Consulting, Inc.
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
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II. Other Factors Affecting Cost Structure
Trintek Energy Consulting, Inc.
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
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III. Most Promising Geographic Areas
Trintek Energy Consulting, Inc.
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
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Western States - Wind Installed Base MW’s End of 2006
Trintek Energy Consulting, Inc.
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
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Western States – Wind MW’s Installed During 2006
Trintek Energy Consulting, Inc.
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
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III. Most Promising Geographic Areas
Trintek Energy Consulting, Inc.
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.
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Western States - Corridor of Untapped Resource PotentialShown on Map Of Installed Base MW’s
Trintek Energy Consulting, Inc.
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
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Western States - Corridor of Untapped Resource PotentialShown on Map of Resource Potential GwH
Trintek Energy Consulting, Inc.
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
15 Trintek Energy Consulting, Inc.
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
17 Trintek Energy Consulting, Inc.
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!
19 Trintek Energy Consulting, Inc.
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?
Trintek Energy Consulting, Inc.
= WindPowered
INTERCONNECTIONRPS +
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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