Strictly Private and Confidential

US Wind Power: Where is the Money? Where is the Risk?

September 17th, 2007 – Houston

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Disclaimer

The views presented herein are my own. They do not necessarily reflect the views of EDP, S.A., Horizon Wind Energy LLC, or any of their affiliates.

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Who We Are

Horizon Wind Energy, formerly Zilkha Renewable Energy

Develop, construct, own and operate wind farms throughout the U.S.

Headquarters in Houston with regional offices in New York, Oregon, Illinois and California, and roughly 100 employees

Owned by EDP, purchased from Goldman Sachs in July 2007

Will own ~1350 MW by the end of 2007

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What We’ve Done

Mill Run Wind Farm15 MW, Fayette

County, PA

Tierras Morenas24 MW, Costa Rica

Somerset Wind Power Project9 MW Somerset County, PA

Meyersdale Wind Power Project30 MW, Casselman River Valley, PA

Blue Canyon Wind Farm225 MW near Lawton, OK

Top of Iowa Wind Farm80 MW Worth County,

Iowa

Madison Windpower12 MW, Madison County,

NY

Maple Ridge Wind Farm320 MW, Lewis County,

NY

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Wind Timeline in the Capital Markets

2000 2002 2003 Jun 2005 July 2007 Oct 2007

Zilkhas buy and rename International

Wind

GE buys Enron Wind for $328 mm

Goldman Sachs buys Zilkha Renewable

Energy; renames it “Horizon Wind”

EDP buys Horizon for

$2,150+ mm USD

Iberenova set to go public;

raise expected to be ~$4,000 mm USD

Slow AcceptanceWall Street Enters

Consolidation of Developers

13118642US Installed

GW

2000 2002 2003 2004 2006 2007

Wind Goes Public

Senior FPL portfolio bond

deals rated BBB-

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Not so quixotic anymore…

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Wind and the PTC

The Section 45 production tax credit allows owners of wind projects $20/MWh off their taxes for 10 years

Wind farm assets are also largely depreciated over 5 years for tax

Market share leader FPL made a business using the PTCs themselves

Now FPL is almost out of tax capacity, and foreign utilities and financial institutions are rivaling FPL in their annual construction programs

How does the market take advantage of the PTC?

What is its long-term future?

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Institutional Equity Market

JP Morgan Chase was the first in the market, investing alongside developers to help them use the PTC and accelerated depreciation

GE has entered in a dramatic way and is now JP Morgan’s biggest competitor

IRS to issue “safe harbor” rules for partnership flip structure

Deal structure gives the institutional investor a preferred return—but tax equity prices at ~6.5% after-tax while debt prices closer to ~7% pre-tax

More demand for deals than there is supply

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The Future of the PTC

Current extension through 12/31/2008, but developers already buying turbines for 2009 and 2010

House Energy Bill has 4-year extension capped at 35% of project cost

Senate Energy Bill has no tax component

– Increased taxes on oil companies would have caused filibuster

– Couldn’t muster the 60 votes for super majority

Long-term extension has bipartisan support

Let’s hope for a compromise

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Wind Derivatives

Chicago-based US Futures Exchange has launched financial wind indexes.

Based on deviations from 20-year wind speed averages

In NY and Texas regimes

Who will hold the floating leg?

Analogue to credit derivative swaps

Is CAPM really right?