Wind in the USA Martin McAdam. Alternative Energy Technology Innovation The Coming Economic Boom May 12 13, 2005

Transcription

1 Wind in the USA Martin McAdam Alternative Energy Technology Innovation The Coming Economic Boom May 12 13, 2005

2 Agenda Airtricity Wind Technology Offshore Why the US needs wind

3 Who is Airtricity? Founded in Employees 35,000+ SME Customers 2004 Revenue $190 million

4 Airtricity Overview Airtricity has a unique vertically integrated business model, based on three activities Wind farm development & construction Electricity generation Renewable electricity trading and supply

5 Airtricity Milestones to Date MWs of consented sites in UK, Ireland and U.S. Phase 1 of the world s largest offshore wind farm in initial operational stage 25MWs Completed an $110m equity placing in 2004, valuing Group at $330m

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10 TV

11 Wind Technology

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17 Technology Gearbox Direct Drive

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20 Direct Drive

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28 Size of Turbines

29 Turbine Size Growth Source Vestas

30 Offshore

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32 Why Offshore? Construction Risk Operational Risk Insurance Environment hostile and corrosive Finance Leading Edge

33 Why Not Offshore? Unlimited resource Scale Wind quality (speed and turbulence) Low Visible impact

34 Airtricity and Offshore Offshore will be critical to achieving targets of renewable energy in a number of markets Europe is running out of land! Airtricity has competitive advantage by being an early adopter in this critical renewable energy space Arklow is strategic to our plans for international development BTM 22% of new European capacity in 2007 Crossover in 2012 to 2015 >50% will be offshore Develop Offshore in Ireland Develop Offshore in Europe and USA

35 Why Arklow? Good wind resource Ireland has some of the best wind in Europe Arklow has average winds of 8.5m/s Shallow water 5-20m Ground conditions Dense Sand Strong grid node Local connection to both Distribution and Transmission systems Environmental constraints minimal PPA Fauna / Aesthetic Provide our own PPA to allow financing of the windfarm

36 Arklow Bank Site Details 60 km south of Dublin 7-12 km from coast Arklow 24 km long 2.5 km wide

37 Strata Record Core Sample Medium to dense sand Very dense sand Stiff, firm dark grey silty clay Very dense sand

38 Turbine locations & cable route

39 Survey Area Bathymetry, Phase m water depth 2 Borings over the area 7 Cone Penetration Tests one at each turbine location Shallow geology: several tens of metres of sand, overlying tens of metres of sandy gravel or gravel Turbine location At the base of the western slope, a series of sand waves extend out from the bank in a ENE-WSW orientation

40 Arklow Bank Timeline - Summary Work commenced with civil servants in 1999 Foreshore License granted Q Meteorological Mast installed Q Project EIS completed - June 2001 Application for Foreshore Lease - June 2001 One month of public display - July 2001 Foreshore Lease granted - January 2002

41 Arklow Bank Timeline (cont) Networks Connection Offer - October 2002 CER licenses (generate & construct) - March 2003 GE agreements for construction of Phase 1 - June 2003 Construction of Phase 1 Summer 2003 First Turbine 4 th September 2003 First power off - January 2004

42 Construction

43 Project Statistics Turbines 3.6MW x 7 Dept of piles 35-45m Weight of piles 280tonne (5m diameter) Weight of turbines 290tonne Blades 50.5m, 15tonne each Nacelle/Hub height 73.5M Rotational speed rpm Distance offshore 10km Onshore cable 5km Voltage 38kV distribution connected Rotor diameter 104m > soccer pitch area 25MW serves 16,000 households (Irish) Sandbank 24 miles long & 2.5 wide, depths 3-20 m Largest commercially operating turbines installed to date Largest consented offshore site todate

44 Transition Piece & Platform Lower tower section Platform Transition piece Grouted area Foundation

45 Installation Foundation, Transition Piece and Platform Foundations driven approx 35m into the sea bed During the driving process, constant checks are made to ensure the necessary degree of verticality is maintained Transition pieces and platform then installed Tower and Turbine The wind turbine tower installed in two sections The fully assembled nacelle then lifted into place The rotor and blades then lifted into place Scour Protection A layer of stone placed in the area of each turbine to protect against seabed erosion caused by local hydraulic action around the foundations

46 # 3 under construction

47 Installation Rig

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52 Transition Piece

53 Blades

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56 Cable Drum

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59 4km

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63 Onshore Preparations 38kV cable trenching, from harbour switch station to ESB substation Total length 4.2km Burial depth 1.2m

64 Future Phases Phase II - 110kV connection secure Further phases may be connected to the UK via interconnector Connecting large wind farms to the grid Transmission investment / Grid compliance System support / Forecasting Need to benefit from offshore industry experience Construction techniques / O & M Educate the funders

65 Future Offshore UK Greater Gabbard site awarded to Airtricity and Fluor joint venture 500MW site in Thames Estuary Construct in 2007/2008 Supportive ROCs market Spain Option on 350MW site USA Under investigation

66 Wind in the USA

67 Why does the US need wind?

68 Its not about CO2 President Bush says his administration will not require U.S. power plants to reduce emissions of carbon dioxide -- a greenhouse gas believed by many scientists to be a key contributor to global warming. In a March letter to four Republican senators, Bush said he did not believe "that the government should impose on power plants mandatory emissions reductions for carbon dioxide, which is not a 'pollutant' under the Clean Air Act." Friday, August 29, 2003, Bush Administration: Carbon Dioxide Not a Pollutant

69 Its not about Oil The IRS has decided that hybrid vehicles qualify for a one-time "Clean Fuels" tax deduction. If you re paying the top 35% rate, that s $700 off your bill V8 6.0L Power: 316 5,200 rpm; 486 4,000 rpm Curb weight 3,900kg To qualify for tax incentive it must be above 6000lbGVW. Up to $35,000

70 Some of it is about Gas!

71 What is happening to gas pricing? U.S. demand is expected to rise from 22.8 trillion cubic feet (tcf) in 2003 to about 33.8 tcf by U.S. Department of Energy figures paint a bleak picture for U.S. dependence on imported energy in the coming decades. Imports from Canada, whose own energy demand is increasing, are projected to pick up some of the burden. Major other sources are LNG imports from Nigeria, Sao Tome, Trinidad, Venezuela and Qatar.

72 U.S. Natural Gas Spot Prices Henry Hub 12 Forecast Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Dollars per Thousand Cubic Feet Sources: History: EIA; Projections: Short-Term Energy Outlook, February 2005.

73 Import of Natural Gas

74 The US needs wind 1. Reduces dependency on Natural Gas 2. Smoothes gas price volatility 3. It is now competitive 4. It cleans the air by reducing fossil fuel usage 5. It cleans the water by reducing fossil fuel usage 6. It does not need cooling water 7. It is not a terrorist target 8. Dispersed generation is good for electricity grids 9. There are no waste products

75 Northwest Power Prices

76 Where is the wind?

77 Where is the load?

78 Where is the RPS? RPS Enacted No RPS Voluntary RPS

79 Deregulation : Crucial

80 Support Mechanisms Federal Production Tax Credit (PTC) State Renewable Portfolio Standard (RPS)

81 Production Tax Credit Federal support mechanism Every kwh gets a US1.8c as a tax credit To use it you must have a tax appetite Most wind developers do not have a tax appetite so this results in complex structured finance deals where the majority of the project equity is sold to a tax investor for 10 years and the developer has rights to acquire the asset after 10 years. Its good Its better than nothing Its 1.8c after tax Its bad It comes and goes It suppresses power prices Its addictive

82 Challenges Goldman Sachs FPL

83 US best country in the world to do wind! There is plenty of it If the capitalists can make money it will happen You must understand the customer You must understand the product You must frame your message to suit the listener Alternative Energy Technology Innovation The Coming Economic Boom