Presentation on Locally-Owned Wind Market
Community Wind What is Community Wind? Locally owned, utility scale wind Typically smaller, varying from 2MW to 100MW Single or multiple local owners Sell power to the grid or offset end-use power consumption Why is Community Wind important? For the US to reach 20% wind, we need projects of all sizes More participants = more stakeholders involved Political power = stable, wind-friendly policies Maximize value of wind for local communities Community Wind - 3.4x impact on local job creation; 5.0x economic impact on the local region, relative to a corporate-owned development (Kildegaard, OwnEnergy A and Myers-Kuykindall, J: University of Minnesota, Morris) Empowering the Future 2
OwnEnergy Background Who We Are Better, cheaper, faster renewable energy development company Focused on small to mid-size projects (10 80 MW) Include local partners in project development and ownership Industry leading team (50+ years) from: Goldman Sachs, AES, FPLE and GE What Makes Us Unique Differentiated Business Model: Accelerates and simplifies development process Innovative process that emphasizes standardization Lower development risk via disciplined: project screening process partner acquisition process Connects individuals with renewable power and creates leading brand Bottom Line We include local landowners, developers and communities in an unprecedented way We develop higher-margin projects at a lower cost, capturing low-hanging fruit in smaller opportunities OwnEnergy Empowering the Future 3
Lessons Learned Local ownership typically results in more control and a significantly greater financial outcome for community members than a lease Smaller, locally-owned projects can be developed faster with less opposition Smaller projects have fewer transmission i constraints t Local developers have difficulty accessing project finance and proven turbines without a pipeline pp and track record 4
Community and Mid-Sized Wind Projects Niche sectors will account for an increasing proportion of the US market as large-market growth moderates Community Wind (M MW) Cumulative 3,000 2,700 2,400 2,100 1,800 1,500 1,200 900 600 300 0 MW (left scale) Penetration (right scale) State + 10% USDA 2007 2008 2009 2010 2011 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% ion ind Market Penetrati Community Wi Community Wind 2,187 MW of new capacity 2008-2011 (2,495 MW total in 2011) Projection taken from updated forecast by Mark Bolinger; Lawrence Berkely National Labs Mid-Sized (10-80 MW) 8000 Wind Projects 12000 10000 6000 4000 4,177 MW of new capacity 2008-2011 (9,915 MW total in 2011) 2000 0 2006 2007 2008 2009 2010 2011 2012 2007 market size according to AWEA. The mid-sized market has grown 20% on average over the last five years. Projections based on OwnEnergy estimates 5
Landowner Rationale/ Community Benefits After-Tax Cumulative Returns 30 MW Capacity 40% Net Capacity Factor $ 55 Power & REC's $ 2,313 Capital costs per MW After-Tax Cumulative Returns 6,500 5,500 Equity $000's 4,500 3,500 2,500 1,500 Average annual after tax income, Equity case $325k Lease Average annual after tax income, Lease case $195k 500 (500) 2.5 2 1.5 1 0.5 COD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Development Lease Operations Equity Assume active role as local partner in development of wind project Share resulting profits Optimize financial outcome from wind development on their property Apply relevant business experience and entrepreneurial nature Be involved in a business venture that: - provides net positive impact on environment - contributes to energy independence 6
Community Wind European Experience Approximately 80% of wind power in Germany, Denmark, Sweden and the UK are community owned German Drivers: Long term fixed tariffs Pi Priority i grid connection Overall marketing scheme Everyone can produce electricity Ease and availability for financing 7
Current Domestic Policies for Community Wind Production Tax Credit USDA Section 9006 grants Community Based Energy Development (C-BED) State production tax credits targeted at community wind State investment tax credits Standard offer pricing for wind QFs Met tower loan programs 8
Additional Policies for Community Wind Renewable Portfolio Standards Carve-outs for locally-owned projects Creation of nation-wide RPS Streamlined permitting & transmission process for locally-owned projects Nationwide interpretation of 20MW FERC rule Power off-take Uniformity in PURPA pricing Standardized PPA Contracts Pre-established norms for calculating wind intermittency discount / capacity value Increase Net Metering Capacity Access to capital for landowners to install met towers and pursue development Production Incentives 9 Long-term extension of PTC Alternative cash incentive
Why Community Wind in OK? Focus economic benefits in the community New economic growth engine Smaller projects can utilize existing transmission Smaller projects can be built faster Local stakeholders facilitate community support Smaller projects can be built to serve local load 10
Development Process Phase I Screening Phase II Early Devl. Phase III Late Devl. Phase IIIa Financing Phase IV Construction Phase V O+M Prospecting Evaluating Contracting Financing Building O+M Siting g Feasibility Negotiate g power Raise capital Engineering g g & Desktop Studies Construction management Land Acquisition Locally-Oriented Development purchase agreements and Balance of plant contracts 1 month 6 months 12 months 18-24 months 24-36 months 11 Typical Timeline
Contact Details Jacob Susman Chief Executive Officer OwnEnergy, Inc. 45 Main Street, Suite 538 Brooklyn, NY 11201 Office: (646) 898 3694 Mobile: (215) 805 1686 jacob.susman@ownenergy.net 12