affordable renewable wind energy generated in mississippi

AffordableRenewableWindEnergyGeneratedinMississippi

August17,2016

NationsEnergySolutions

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NationsEnergySolutions• NESisarenewableenergydeveloperfocusedonthesoutheasternUnitedStatessince

2011,withprojectsandassetsin16states.o SeanRoberts,CEO– Constructedover3,700windturbinessince1983o BobBergstrom,President– Developedover2,500MWofwindacrosstheUS.

• NESsecuredawindenergyleasewiththeStateofMississippifortheParchmanStatePenitentiarylandsin2013

• MemberoftheDeltaCouncil• MemberoftheMississippiEnergyInstitute(MEI)

LedbySeanRoberts,CEO&nativeofStarkville,MS:• BornandraisedinStarkville,MS• FatherwasaprofessoratMSU• WifebornandraisedinGreenville• Manyfriendsandfamilyinstate

“IintendtobringwindenergytomyhomestateofMississippi”- S.Roberts

Terra-Gen&NationsEnergySolutions

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Terra-Genhasexperienceinallfacetsofpowergeneration– development,financing,construction,andoperations

• Terra-GenandNESPrincipalso RandyHoyle,SeniorVP,HeadofWindandSolarDevelopment,Terra-GenPowero SeanRoberts,CEO,NationsEnergySolutions(NES)o BobBergstrom,President,NESo TeamhasdevelopedthefirstwindprojectsinKansas,Oklahoma,NewMexico,

NorthDakota,SouthDakota,PuertoRico,and2nd windprojectinIowa

• Terra-GenisaleadingU.S.-basedpowergenerationanddevelopmentcompanyownedbyEnergyCapitalPartners,aleadingfinancialsponsorwithaproventrackrecordinthepowergenerationmarketo Terra-GenisfocusedontheNorthAmericanmarketandowns1051 MWs(net

equity)ofwind,geothermalandsolargeneratingcapacityinoperationacross25renewablepowerfacilitiesthroughouttheUnitedStates

o Operateandmaintainofover2,000MWofrenewableprojectso Developedthenation’slargestwindenergyproject,theAltaWindEnergyCenter,a

$3billion1,546MWmulti-phasedwindprojectlocatedinCalifornia

OverviewofIn-StateRenewableProjects

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Renewableprojects(windandsolar)havebeenindevelopmentsince2011• SeveralprojectsunderdevelopmentthroughouttheMississippiDeltasince2011,

chieflytheParchmanWindo ProjectsinSunflower,Tunica,Panola,Coahoma,andWashingtonCounties

FocusonParchman:KeyDates• March2012 – SuccessfullychangedMSlawtoallowmulti-yearleaseonstate

propertyforrenewableenergyprojects• September2013– RFPissuedbytheDepartmentofFinanceandAdministrationfora

ParchmanWindEnergylease• December2013– NESselectedinDFARFP• Spring2014– Finalizedleasewithfinanceabletermsforroughly14,000acres• February2015– ExecutedleasereceivedbyNESandpaymentforyearonereceived

byDFA• April2015– MeteorologicaltowerinstalledatParchman

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PARCHMAN WIND Local Economic Impacts

Based on 150MW of Wind Energy: * Requires NO investment from community. Terra-Gen NES can generate an economic impact model to depict full economic impact into specific communities of Mississippi

Landowner (State of MS) Royalty – 150MW x Landowner royalty payments of roughly $32 million over 25

years x Each turbine (75) takes approximately ¼ – ½ an acre out of

production

Construction – 150MW x Peak workforce of 250-300 people for 8-9 months of construction x Ancillary spend of $2-3 million (hotels, food, etc.) during

construction

Property Tax – 150MW x In-State Wind Energy investment of $300 million into the local

property tax base will yield roughly $30 million in revenue over a 25-year period

Permanent Jobs – 150MW Attracts high performance work force of 12-15 individuals

Tourism & Development x Demand to see projects will draw local residents and schools,

including neighboring states without wind projects x Wind tech training program can be implemented at a local tech

college/school

Good for the Environment, the Economy, and the Energy Consumer x Good for health of the citizens of Mississippi

Utility Benefits

i. Promotes economic development in state – will bring hundreds of millions of dollars of tax base, landowner royalty payments and a high-performance workforce

ii. Fixed-price hedge against future energy and commodity price volatility iii. Diversifies utility’s in-state generation mix by procuring in-state renewables at a low cost

TheBasicsofWindEnergy

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FourBasicsofWindDevelopment1) Land

o NEShassecured150+MWofwindpotentialattheParchman StatePenitentiarysiteo MultipleothersitesbeingpursuedthroughouttheDeltasince2011

2) Windo Resourceiscomparabletootherstateswithsignificantwinddevelopmento Over5yearsofdataatfivelocationsindicateacommerciallyviablewindresource

3) Transmissiono Criticaltoinitialprojectsiting,multiplesatisfactoryoptionsavailableo Parchman projectinMISOQueue

4) Marketo Emergingmarket

RequiredElementsv Permittingv Financing

AdvancesinTechnology

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Twosignificantchanges:1. Turbinehubheightswere65meters10yearsago– theycanbe129mtoday

o Substantialincreaseinwindresource-- Speedsincreasesignificantlywithheight2. Turbinesaremuchmoreefficientthan10yearsago

Performanceofawindfarmdependson:• Hubheight:WindspeedintheRotorSweptZone• 8760:Shapeofwindproductionprofile• Turbineselection:Low-gearturbinesforlower

windspeedareas

Blades• Increasedrotordiameter,lighter• Evolutionfrom65mto126m

Gearboxes• Moreefficient,lowermaintenance

InstallationEngineering• Betterengineeringtolowerinstallationandcapitalcosts

WindinMississippi?

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AcceptedwisdomhasbeenthatwindsarenotsufficientinMississippi…• So,what’schanged?

Technology• Tallertowers&

largerrotors• Turbinesspecifically

designedforlowwindregimes

• Improvedsiting&layoutmodelingsoftware

EconomicsofWind• Priceisafunctionof

capitalcosts,constructioncosts,andcapacityfactor(NCF)

MississippiWindResourceEvaluation

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Top2Anemometers+Vane

Mid2Anemometers+Vane

Lower2Anemometers

GroundTemperature,Pressure

andLogger

MeteorologicalTower MetTowerSchematic

WhyRenewables?

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WhyshouldUtilitiesInvestinRenewables?• Fixed-PriceHedgeagainstfutureenergyandcommoditypricevolatility.

• Pricecertaintyfor20-25years.• IncreasedDiversityofutility’sin-stategenerationmixbyprocuringin-state

renewablesatalowcost.• EconomicDevelopment

• Jobs,taxbase,royaltypayments• RegulatoryHedge

• CompliancewiththeCleanPowerPlan,August2015• AddedRateBase– (assumingownership)• DecliningProductionTaxCredit(PTC) – Declinesfrom100%tozeroover5years

WhyshouldCommunitiesInvestinRenewables?• Abundantsupplyoflocallygenerated,affordableelectricenergy• Healthbenefitsofzero-emittingelectricgenerationarequantifiable• Significantinvestmentinruralcommunitiesnopublicfundsfundsrequired• Jobcreationandtrainingforarapidlyexpandingindustry

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PhotographicIntroductiontoWindEnergy

RoadConstruction

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TrenchingforCollectionSystemFoundation

TurbineFoundation

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TurbineFoundation

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TurbineFoundation

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TurbineFoundation

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TurbineFoundation

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TurbineFoundation

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TowerSection

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TowerConstruction

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TowerConstruction

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TowerConstruction

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TowerConstruction

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TowerConstruction

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TowerConstruction

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TowerConstruction

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TurbinesBlades

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TurbineBlades

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Blade&RotorAssembly

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FinalAssembly

TimetoExamineWindGeneratedinMississippi

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NowistheTimetoConsiderWindinMississippi• Absentasafeharbor,100%federalPTCvalueerodes20%(about$8/MWh)in2017

o PTCvaluedrops20%morein2018o SafeHarborfor100%valueisstillpossiblethisyear,howevertimeexpiresvery

soon• Priceofnaturalgasislowandawindisanaturalhedgeagainstfuturegasprice

volatility• Lowcostlocalwindtodayshouldbefavoredovertheuncertaintyandchancefora

marginallycheaperwindproductthatcouldsomedaybeimportedfromanotherstate• Regulatoryuncertaintymeanspricesforbothmajorequipmentsuppliersandlabor

arelow• SignificantsupporttotheDepartmentofCorrectionsBudget(atParchman)with

annualroyaltypaymentsfromturbineproduction