© Siemens Energy, Inc. 2012

US wind market overview“Challenges ahead”

Power Association of Northern California –

Spring Seminar

May 16th

2012

©

Siemens Energy, Inc. 2012Hatchet Ridge, CA

Candido VeigaRegion Vice PresidentSiemens Energy Sales

© Siemens 2012. All rights reserved.Page 2

Siemens AG operates in 190 countries with over 360,000 employees worldwide

Revenue

$20 billion

Orders

$22 billion

Employees

60,000

R&D Expenditures $1.36 billion

R&D Employees

7,319

Global HQs

9

Patents

13,824

U.S. Fast Facts FY 2011

Siemens AG –

4 dynamic sectorsIndustry Infrastructure & Cities

Energy Healthcare

■

Industry Automation■

Drive Technologies■

Customer Services

■

Power Distribution/Smart Grid Applications

■

Building Technologies■

Mobility

■

Fossil Power Generation■

Wind Power■

Solar & Hydro■

Power Transmission■

Oil & Gas■

Energy Service

■

Imaging & Therapy■

Clinical Products■

Diagnostics■

Customer Solutions

Energy SectorApril 2011 © Siemens AG 2011

Highly Efficient Coal-

and gas-

fired Power Plants

Wind Power Generation

Solar Power Generation

HVDC-Trans-

mission and HVDC Grids

Smart Grid incl. Energy Storage,

E-Mobility

Pipeline Transportation and

Gas LiquefactionCarbon Capture

and StorageGasification

Offshore & Subsea Oil&Gas

Nuclear Power Generation

Innovation fields along the entire energy conversion chain

© Siemens AG 2012. All rights reserved.

One of the world’s leading suppliers of wind power solutions

Global Installed Base: > 10,600 turbines with > 15,800 MW capacity1)

Installed: >2,900 MWs in 2011, >1,235 MWs in the US

8,200 employees globally, >1,800 in the US

Record order backlog of ~ $16 billion

Siemens Wind Power Global facts at a glance

Revenue in 2011: ~ $5.3 billion2)

Siemens Wind Power facts

1) Dec 2011

2) consolidated on Renewable Energy

Division level

No. 1 in offshore, No. 1 in Canada, No. 3 in USA

Page 5 © Siemens AG 2011

The US wind industry has been a success story Creating more than 75,000 wind-related jobs

Boulder

(Wind & Aerodynamics)

Hutchinson (Nacelles/ Hub)

Ft. Madison (Blades)

Woodward(Service)

US wind manufacturing in 43 states

The US wind industry has attracted over $15 billion annually in private investment to the US during the last five years

The industry has built out a significant domestic manufacturing sector, with nearly 500 U.S. manufacturing facilities producing wind turbine components

Copyright © Siemens Energy, Inc 2011. All rights reserved.

The US market will face challenges in the short term, but remains a strong, growing long-term market

Market overview Market forecasts

Market drivers Market challenges

Significant wind resource potential (~11,000 GWs)

Cumulative US wind installations -

>45,000 MWs (2011)*

Wind installations have added 35% of all new installed capacity in the US over the past 4 years

The US wind industry has created one of the fastest growing manufacturing sectors, expanding 12-fold in recent years to more than 470 facilities in 43 states

The US is the second largest market only behind China in terms of forecasted new capacity from 2012-2016

Production Tax Credit (PTC)

tax credit of 2.2 cents per kWh for the first 10 years of energy production

Status: Expected to expire Dec. 2012

Investment Tax Credit (ITC)

tax credit equaled to 30% of expenditures

Section 1603 Cash Grant

cash grant equaled to 30% of expenditures

Federal & State Policy

Renewable Portfolio Standards (RPS)

Increase in EPA regulations

Transmission & integration hurdles

Low natural gas prices / PPAs

Availability of tax equity? (if PTC is extended)

High generation reserve margins

Flat energy demand growth for the past 5 years

No clear long-term renewable energy policy (high volatility due to the PTC)

Non existent Federal and Weak state RPS

*AWEA

MWs installed

2012 2013 2014 2015 2016

10.000

8.000

6.000

4.000

2.000

0

12.000

Bloomberg 3yr PTC (05/12)

MAKE (03/12)

EER -

3yr PTC (05/12)

Bloomberg No PTC (05/12)

Slide 7© Siemens Energy, Inc. 2011

PTC expired Dec. 2003

PTC renewed Oct. 2004

PTC set to expire on Dec. 2007

Renewed on Dec. 2006

PTC set to expire on Dec. 2008

Renewed on Oct. 2008

Stimulus bill signed on Feb. 2009

PTC, ITC, set to expire on Dec. 2012. cash grants set to expire Dec. 2011

PTC set to expire on Dec. 2005 Renewed on Aug. 2005

PTC expired June 1999

PTC renewed Dec. 1999

PTC expired Dec. 2001

PTC renewed March 2002

Annual installed wind capacity and the impact of the expiration of the PTC

Historically, every time the PTC expires, or almost expires, installations drop by 73-92%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

-76%-76%

-92%

2015201320122011201020092008200720062005200420032002200120001999 2014

Wind industry in the US is facing challenges with the expiration of the incentives

Impact of financial crisis.

Lack of tax equity (PTC)

appetite

lowest forecasted installationsHistorical installations

Page 8 © Siemens AG 2011

Incentives have worked to lower the costs from wind power through technology improvement and cost optimization

900

950

1,000

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1,400

1,450

0

1

2

3

4

5

6

7

8

9

10

11

Q4 2011Q3 2011Q2 2011Q1 2011Q4 2010Q3 2010Q2 2010Q1 2010Q4 2009Q3 2009Q2 2009Q1 2009Q4 2008Q3 2008Q2 2008Q1 2008

Turbine prices

Henry Hub

Turb

ine

pric

es

Hen

ry H

ub p

rices

*Turbine prices –

EER Nov. 2011

$/kW +14%+4%

3.0 -

1133.0 -

1083.0 -

1012.3 -

1082.3 -

101

+5%+4%

+29%

Improved Annual Energy Production (AEP)

Copyright © Siemens Energy, Inc 2011. All rights reserved.

Spectrum of wind integration solutions

Solutions for integrating wind energy

Wind Generator Flexibility

Storage

Improved Weather Forecasting

Flex Plant Solutions

Net Converter

–

Full power conversion system

Stable

Controllable ( VAR generation at no wind) Controls Capability

Controlled Ramp-up

Load following

High wind ride through

Potential to increase wind penetration Examples of current storage technology:

Scalable battery systems Compressed Air Energy Storage (CAES) Pump hydro storage

Short-term/Long-term weather forecasting

1 hr –

for operators and balancing authorities

1 day

–

planning for reserve requirements, spinning and non-spinning

1 week

–

maintenance scheduling for installation and transportation

Increase ability to predict wind farm output

Fast gas fired generation can compensate for wind intermittency

Economical /Efficient

Shaping power

Fast ramping

Low emissions

Copyright © Siemens Energy, Inc 2011. All rights reserved.

Two challengesDemand (example)

For this example, this is the shape of power that must be available to fully enable renewables.

1.

Fast ramps upand down

2. Large changes in power supplied

Renewable challenge in California Need for quick and highly flexible compensation of loads

Energy Sector© Siemens Energy, Inc. 2012. All rights reserved

Confidential Information

Flex-PlantTM

30 Startup Profile

300 MW in 10 minutes

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0.0 15.0 30.0 45.0 60.0 75.0 90.0 105.0 120.0 135.0 150.0 165.0 180.0

30 minutes

ST roll-off10 minutes

300 MW

56 minutes

ST VWO

ST

GT

Time (min)

2x1 Flex-PlantTM

30 (< 16 hr shutdown)

Load

(%) Conventional CC

Flex-Plant

300 MWs in 10 min (full load < 1 hr.)

Low start-up emissions and fuel consumption

Load following at 75 MW/min ( 2 ppm NOx and 2 ppm CO)

APPA Web SeminarMar 2012

Siemens Energy, Inc., 2012. Confidential and Proprietary. All Rights Reserved.Siemens Energy, Inc., 2010. Confidential and Proprietary. All Rights Reserved.

Siemens Flex-Plant solutions addressing California needs

Successfully Meeting the Needs of California

Marsh LandingCommercial operation 2013

Flex-Plant 10Peaking

El SegundoCommercial operation 2013

Lodi Energy CenterCommercial operation 2012

Flex-Plant 30

Low Capacity FactorPeaking Duty

High Efficiency Combined CycleHighly Flexible Intermediate Duty

Thank you...

Slide 14

California was the first state in the US to install Siemens wind turbines starting in 1984 (316.6 MWs)

Techacahapi, CA (19.8 MWs)Oak Creek(1984) –

51 units (3.3 MWs)Pajuela

Peak(1985) –

230 units(15 MWs)Windland(1984) –

4 units (.3 MWs)Windland

2(1985) –

11 units (1.3 MWs)

Altamont Pass, CA (58.7 MWs)American Diversified(1984) –

105 units (6.8 MWs)Capital Corp(1985) –

106 units (6.9 MWs)Fayette(1985) –

25 units (3 MWs)Flowind(1987) –

225 units (27 MWs)Flowind

2(1987) –

100 units (15 MWs)

Palm Springs, CA (21.8 MWs)San Gorgonio(1984) –

44 units (2.9 MWs)Energy Unlimited(1985) –

79 units (5.1 MWs)Whitewater(1985) –

56 units (1.5 MWs)Energy Unlimited 2(1985) –

1 unit (.12 MWs)Whitewater 2(1986) –

56 units (6.7 MWs)Aeroturbine

Energy(1989) –

38 units (4.6 MWs)Windustries(1990) –

1 units .15 MWs)Aeroturbine

Energy 2(1990) –

1 unit (.3 MWs)Whitewater 3(1990) –

1 units (.45 MWs)

Pattern EnergyHatchet Ridge(2010) –

44 units (101.2 MWs)SWT 2.3 -

93

NextEraMontezuma(2010) –

16 units (36.8 MWs)SWT 2.3 -

93

NextEraVasco Winds(2011) –

34 units (78.2 MWs)SWT 2.3 -

101