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Characteristics of Successful Wind Energy Markets: A Developer’s Perspective on Lessons for New England TJ Deora Restructuring Roundtable Boston, MA 12 June 2009 Horizon Wind Energy is… A wind energy leader who develops, constructs, owns and operates wind farms throughout North America Owned by EDP Renewables, a leading global renewable energy company listed on the Lisbon Euronext exchange Headquartered in Houston with over 20 offices across the country An employer of over 250 people A developer of over 2,800 MW of wind farms and operator of over 2,000 MW of installed capacity Ranked third in the U.S. in terms of installed capacity in 2008 7 July 2015 2 …established across the major markets nationwide 7 July 2015 3 We manage complex uncertainties to develop projects… Project Development Turbine Supply EPC Financing & Operation Operations & Maintenance Interconnection Interconnection & & Transmission Transmission • Locating AIC and ATC • Managing the LGIP • Securing transmission rights Land • Met agreements • Development options • Wind easements • Transmission easements Wind • Desktop evaluations • On-site testing • Layout development Studies and Permits • Wildlife studies • Wetlands • Cultural and viewshed impacts • State and local permits 5 June 2008 Market • Market forecasting • Biz Dev • PPA negotiations • REC marketing …as the constraints in the supply chain continue to evolve Resourcs & Projects Years Pre-1999 1999-2007 Turbine Supply Constraints US Annual Installed Wind Power Capacity MegaWatts Turbine Supply Finance: PTC expired 2008 Finance: PTC market 2011+ Load Service (Market) Market 2000, ‘02, ‘04 2009-’10 Financing Transmission Finance: capital availability Injection and transmission capacity Source: AWEA / UCS 5 June 2008 States with the most installed wind capacity… 5 June 2008 …share key characteristics Installed Wind Capacity 30 April 2009 Development Characteristics State Land Rank RTO TX 1 ERCOT IA 2 MISO CA 3 CAISO MN 4 MISO NY 7 NYISO CO 8 None Wind Siting T&I Market Electricity RECs Least attractive Most attractive 5 June 2008 …share key characteristics Installed Wind Capacity 30 April 2009 Development Characteristics State Capacity, MW TX 8203 1 ERCOT IA 2862 2 MISO CA 2668 3 CAISO MN 1802 4 MISO NY 1274 7 NYISO CO 1068 8 None New 143 England 5 June 2008 Rank RTO ISO-NE Land Wind Siting T&I Market Electricity RECs Providers’ responses to growing scarcity of AIC/ATC vary BPA’s 2008 open season obtained commitment for 2.8 GW of generator funded transmission service Several merchant lines are proposed to deliver GWs of wind to CA, NV, and AZ CAPX 2020 will bring over 8 GW on line from 2016-25 courtesy of ratepayers ISO-NE MISO NYISO WECC PJM CAISO TRTP will unlock 4.5 GW of renewables for SCE from 2009-13 with ratepayer financing and generator reimbursement SPP ERCOT Texas ratepayers will fund CREZ, facilitating 18 GW of wind generation starting in 2013 EHV Overlay will enable over 13 GW of wind energy to come on line starting in 2013 Source: EER, HWE 5 June 2008 • Transmission providers across the country are proactively responding to the constraints • New England suffers from high energy prices but has not attracted much investment to date • The lack of investement in transmission for renewables will excerbate this situation Innovation delivery proposals for ISO-NE abound… ILLUSTRATIVE High Low Green Line 1200 MW NNEWCL 2000 MW Complexity MPC ? MW NESCOE 1200 MW ? MW Gen Leads Low JCSP ? MW Small High Low High Scope 5 June 2008 Cost Irving …to deliver the benefits of wind power to ratepayers Benefit Low, stable energy prices New capacity resources Environmental quality Economic development and energy security 5 June 2008 Capture Strategy • Invest in transmission to unlock low-cost resources • Facilitate imports • Support long term PPAs • Proactively invest to relieve congestion • Facilitate new generation additions • Continue to improve forward capacity markets • Facilitate open and transparent REC markets • Support national renewables and carbon policy • Focus builing on existing comparative advantage • Develop wind where it is wanted • Ensure generation added from a diverse portfolio of resources 11 We have a wide scope of potential solutions… Source: McKinsey and Company, 2007 5 June 2008 …but will need to deploy them all to tackle challenge Figure 1 Idealized emissions. Shown are three idealized CO2 emission paths (a) each consistent with total cumulative emissions (b) of 1 trillion tonnes of carbon. Varying the timing of emissions alone has almost no impact on projected temperatures (c) relative to uncertainty in the climate system’s response (grey shading and red error bar), provided the cumulative total is unaffected (the two blue shaded regions in a have the same area, as do the green); but the higher and later emissions peak, the faster they have to decline to stay within the same cumulative budget. Diamonds in c indicate observed temperatures relative to 1900 -1920 http://www.nature.com/climate/2009/0905/pdf/climate.2009.38.pdf 5 June 2008 Key Take Aways 1. Wind development thrives when reasonable wind resource has open access (RTO with injection capacity) to an attractive market. 2. Transmission is the emerging constraint across the country, and the regions that add transmission capacity will “win” investment in wind energy. 3. Given the magnitude of the benefits and need we are facing and the timeline we have to act, facilitating all forms of cost effective carbon reduction is immediately critical. Tanuj “TJ” Deora Project Development Manager Horizon Wind Energy 1526 Blake Street, Suite 200 Denver, Colorado 80207 303.568.1700 303.718.7244 [email protected] 5 June 2008 For More Information… • WECC: 1. development thrives when reasonable wind resource has open – Wind BPA Open Season: http://www.transmission.bpa.gov/customer_forums/open_season/default.cfm • MISO: – CapX2020: http://www.capx2020.com/faq.html#1 • access (RTO with injection capacity) to an attractive market. 2. Transmission is the emerging constraint across the country, and the ERCOT: regions that add transmission capacity will “win” investment in wind – CREZ: energy. – 3. http://www.puc.state.tx.us/about/commissioners/smitherman/present/pp/Sen_Fraser_CREZ_100308.p df http://www.ercot.com/news/presentations/2006/ATTCH_A_CREZ_Analysis_Report.pdf Given the magnitude of the benefits and need we are facing and the timeline we have to act, facilitating all forms of cost effective carbon • SPP: reduction is immediately critical. – EHV: http://www.spp.org/publications/spp_ehv_study_final_report.pdf • Regional Plans: – JCSP: http://graphics8.nytimes.com/images/blogs/greeninc/jointplan.pdf – WGA: http://www.westgov.org/wga/initiatives/wrez/ • National Perspective: – Emerging Energy Research’s Market Brief: “Transmission Initiatives Adapt to US Wind Growth.” 7 January 2009 – American Wind Energy Association: www.awea.org – US Department of Energy: “20% Wind by 2030.” www.20percentwind.org 5 June 2008