THE TRES AMIGAS SUPERSTATION

Transmission Summit 2013

February 28, 2013

UNITING THE NATION’S ELECTRIC POWER GRID

2

Project Value Creation

Connects the three US asynchronous power grids through a DC hub that can regulate the direction and level of power flows between the grids

Provides economic incentives to further drive the growth of the nation’s renewable resources

Optimizes the value of existing and planned AC and DC/ HTS infrastructure

Provides open-access and cost-effective transmission services consistent with NERC standards and regional reliability requirements

Provides voltage support, capacity firming and other value-added and ancillary services

3

Scope of the Business

Source: The National Institute of Standards and Technology (NIST) Smart Grid Conceptual Model

1

21

2

Transmission: The fundamental offering of Tres Amigas is transmission service. From this base it is possible to offer other services, both to support stable system operations, in the interconnected grids, and to facilitate commercial transactions.

Operations: Tres Amigas Operations will serve as the hub for both the transmission operator and market/exchange services. It will ensure reliability and interchange coordination, and it will carry out a number of core market functions necessary to support robust markets

The Tres Amigas Transmission Superstation can be mapped against the NIST Smart Grid Conceptual Model to illustrate the scope of the Tres Amigas business.

4

The Location: Regional Renewable Resource Potential

Source: NREL

5

From the 2010 Transmission Summit in Sweetwater

w/ HVDC Proposals

6

Site Location in New Mexico

7

First Phase Scope of Construction

8

Alstom Grid HVDC MaxSine Technology

• Voltage Sourced Converter (VSC) technology

• Modular multi-level converter design

• Control of real and reactive power flow into AC grids

• Harmonic free output voltage

Ideal for use on weak AC grids

+ V

- V

+ V

- V

= chain link module

VSC HVDC scheme

9

Folded Back-to-Back Convertor Layout

Provides for AC and DC HTS businterconnections

DC Bus Connections

AC Bus Connections

10

China: Current HVDC National Grid Plan

11

Europe: Extended Grid Plan

• From Iceland (Northwest) to Israel (Southeast)= 3,200 mi

• Concept of grid is 25,000 miles of line

Solar Power

Wind Power

Geothermal

Hydro

Biomass

The new high-voltage network would range from the Sahara to the polar cap. The concept calls for main lines that are 40,000 kilometers long. And parts of it already exist.

Connections already in place or planned

Vision of ABB and DLR

12

• “The full significance of a switchable HVDC innovation has not yet been

appreciated by policy makers or by the business community. It is clear that a

network incorporating a HVDC grid with the redundancy and reliability of current

AC grids is now a reality and that the limits of what is technologically possible

have been greatly expanded.”

• “HVDC technology will open markets, strengthen security of supply and create

another global opportunity for European companies to export sustainable energy

technology. The technology underpinning the Supergrid will give competitive

advantage to the companies involved with its specification and design. This type

of integrated AC/DC grid will be a template for what will be needed in other global

markets including the US and China.”

Friends of the Super Grid Quote:

13

Design

14

Phase 1 & 2 Transmission Lines

15

Products & Services - How Will Customers Use TA Services?

Customer Action Tres Amigas Service Customer

Genco LoadEnergy

Merchnt DSM

Third-Party

StorageLocal

Genco

ERCOT PNM SPP

Transport electricity from one interconnect to another

● PTP Transmission

Move electricity in/out of station-connected storage

● PTP Transmission

Buy and sell spot/cash electricity and RECs

● Trade Execution (cash) & Clearing (cash)● Delivery Integration

Buy and sell forward electricity and RECs

● Trade Execution (forward) & Clearing (forward)● Market Information

Offer ancillary services produced from one interconnect into another

● PTP Transmission● Ancillary Service Coordination

Provide electricity storage services ● Direct Connection● Energy Storage Management

Move electricity into market of choice

● Direct Connection● PTP Transmission● Scheduling, System Control & Dispatch● Trade Execution (cash) & Clearing (Cash)● Delivery Integration

Firm/shape renewable generation ● Firming & Shaping Utilize system control services Scheduling, System Control &

Dispatch

Purchase reactive power ● Voltage Control

Purchase other ancillary services ● Ancillary Service Coordination (with AS providers)

16

Products & Services - Operations Services

Tres Amigas Operations can be mapped against a generic electricity market structure, illustrating TA Operations core functions – system operations, spot market operations and information services. Tres Amigas will most likely engage an established clearinghouse to support forward trading and clearing.

17

Products & Services - Transmission

Transmission service will be sold in blocks ranging from one to 20 years in duration, as well as on a seasonal, monthly, weekly, daily and hourly basis.

Three distinct mechanisms will be used to sell transmission service:• Negotiated, long-term ‘Anchor Tenant Agreements’• Competitive ‘open seasons’, mostly for annual service, but also including

an initial ‘Anchor Tenant Auction’ for terms up to 20 years.• Web-based real-time portal, for non-firm and shorter-term firm capacity,

with a duration less than one year (e.g. monthly, weekly, daily, hourly).• Additionally, the real-time portal will facilitate a secondary market for Tres

Amigas customers to trade transmission capacity purchased previously.

Anchor Tenant Agreements

Spot Sales(via Portal)

FIRM SALES

NON-FIRM SALES

Up to 50% of firm capacity

remaining available firm capacity after Anchor Tenant Agreements

remaining available firm capacity after Anchor

Tennant Agreements and Anchor Tennant Auction

Any available long-term firm capacity

Additional short-term firm capacity

All non-firm capacity

Secondary trading of previously purchased capacity

Open Season

AT Auction Annual Auction

20 years Annual Monthly Daily Hourly

18

Markets that could join next as part of an agreed European roadmap

* Source: UCTE 2007 power consumption data

Development of the Price Coupling of Regions (PCR) Initiative since 2009

Markets which showed interest to join

Markets initially included in PCR - 2860 TWh

2/3 of the European power consumption is today covered by 5 PXs only

19

Integrated Clearing

Integrated Clearing

ERCOT SPPWECC

Clearing

Reports

20

Startup: research, regulatory and local filings, ROW, preliminary engineering, environmental, economics and business plan.

Startup 8M

Preconstruction12M

Phase I 500 M

Preconstruction: detailed engineering, vendor selection/contracts, product development, additional filings and detailed business plans.

Phase I: construction & operations, East/West transmission node, including HVDC converters, buildings and business infrastructure, EMS Operations

Funding – Tres Amigas Merchant Transmission

Unlike traditional transmission facilities, merchant transmission project owners assume all market risk. Tres Amigas has been successful in receiving significant capital through investors and private placements.

Phase II – III1.5B

Phase II-III: construction & operations, Texas node, additional HVDC converters, facilities, and business infrastructure

2013

2010

2012

2015

Concept 2M

2008

21

Tres Amigas SuperStation….

Uniting the Electric Grid