Building a mainstream wind i ndustry admist shale g as realities

Building a mainstream wind industry admist

shale gas realities

mainstreamwind industryshale gas

can the wind industry

survive Shale Gas?

Shale Production

Henry Hub Price

Source: Energy Information Administration

Shale Production is up 340% since 2008, and

Henry Hub prices are down 50% in the same time

January 2008 August 2014

Source: Energy Information Administration, Enerfax

Falling gas prices have led to

Energy Prices at key US Power Hubs

Gas Price

January 2008 August 2014

falling but volatile power

prices

However things have not gone that bad

for wind energy…

Fast facts on US Wind Energy market

+ 60GW of operating capacity, across more than

900 wind projects and 45,000 utility-scale wind turbines

Fast facts on US Wind Energy market

Fast facts on US Wind Energy market

+ Invested over $100B across 50GW of new capacity during

last decade

Fast facts on US Wind Energy market

+ Wind was the #1 new source for electric capacity,

supplying over 33% of all new power capacity during last 5

years

Fast facts on US Wind Energy market

+ 550 active manufacturing facilities to supply components

reaching over 70% domestic content in 2013

wind is becoming a mainstream source of electricity

Source: Energy Velocity, a EDPR NA análisys, EIA

19501952

19541956

19581960

19621964

19661968

19701972

19741976

19781980

19821984

19861988

19901992

19941996

19982000

20022004

20062008

20102012

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000Hydro46 yr

Coal40 yr

Nuclear32 yr Gas

20 yr

Oil39 yr Renewables

10 yr

Capacity, GW

the U.S. generated 4.1%

of its electricity from wind in 2013,

up from 3.5% in 2012

ERCOT: 10%

Data Source: EIA

Chart Source: AWEA U.S. Wind Industry Annual Market Report 2013

20% of electricity in states such as IA and SD and over 10% across nine states

and, what about Texas?

Investment in new transmission infrastructure: $6.2 Billion

Wind penetration: up to 40% during windiest days

Capacity under construction in 2014: 7,000 MWs

# 1 in wind powerTexas

Installed capacity: 12,800 MWs

but, what has changed over the last years to drive this growth?

for the industry in general

for the industry in general

technology innovation

20

The evolution of taller towers & larger generators increases production while decreasing the number of turbines per wind farm

100MW wind farm (2007)

Tower: 80mRotor: 80-85m 245k

MWh

360k

MWh

50% increase in Annual

Production

Production increases exponentially with wind speed and rotor diameter

100MW wind farm (2014)

Tower: 100mRotor: ~110m

As blade length increases, so does production while the wind speed needed to produce a profitable project decreases

Year Introduced

Swept Area

NCF @ 7.5 m/s

1984 – 17m 227 13.2%

1995 – 44m 1521 20.6%

2000 – 80m 5026 30.6%*

2005 – 90m 6361 38.5%

2010 – 100m 7854 40.3%*

2013 – 110m 9503 44.2%*

8m

21m

39m

44m

Blade Length

*Avg. wind speed required to match the V110’s AEP @ 7.5 m/s (i.e., 7646 MWh):

V80: 11.0 m/s V100: 8.25 m/s

By adding 89% more swept area, we can produce the same amount of energy at lower wind speed sites

49m

54m

+570%

+231%

+27%

+23%

+21%

Improved technology allows for attractive NCF at lower wind speeds opening up wind potential in previously

underserved areas

Source: NREL, AWS

Regions benefit the most from the recent technology evolution

…and while energy demand growth

remained low ….

100 GW

50 GW

0 GW2020

63.8 GW

20252010 2015

There is significant pressure on coal generators

63.8 GW retired or officially announced to retire since 2010

23.0 GW Already Retired

40.8 GW Announced

Market analysts expect as much as 15% of the coal

fleet to retire by 2025

Source: Energy Information Administration, Energy Velocity

EIA Projection

+ Cheap electricity

+ Fixed prices of electricity for 20-25 yrs

New pockets of wind energy demand from large industrial consumers, who look for

but, what is driving such growth in TX?

$6.2 billion of investment in

transmission infrastructure

&

some of the best wind resource

in the country

however, challenges remain

Challenge #1

volatile market

difficult to plan

Installed U.S. Wind Energy Capacity

Source: AWEA U.S. Wind Industry Third Quarter 2013 Market Report

70% of wind benefits in Republican districts, but it does not translate into R leadership support

Challenge #2

Myths diluting

our brand

Wind brand is getting diluted

now seems that

everything is CLEAN not GREEN

Renewable energy subsidies are dwarfed by those for fossil fuels

37Source: Congressional Research Service, May 2010

Natural Gas Credit for unconventional

fuel (shale, etc)

Renewable energy PTCTax

benefits for oil & gas

3-6 birds per wind-powered megawatt are lost annually in the U.S, 186K – 372K per yr based on

current installed capacity

Wind vs Birds

National Academy of Sciences found less than 3 in 100,000 (i.e., .0003%) of human-caused bird fatalities are attributed to wind energy

By contrast, FWS has estimated:• Collisions with buildings kill 97 to 976 million birds annually • Collisions with high-tension lines kill at least 130 million birds per yr • Collisions with communications towers kill 4-5 million, but could be as

high as 50 million birds annually;• Cars kill 80 million birds annually • Environmental toxins including pesticides kill more than 72 million birds

annually;

Challenge #3

Texas?

40

SD

MT

TexasKS

NC

MO

ID

VA

GA

IAOK

TN

NE

Indiana

ARMS

WV

AL

SC LA

ND

DC

KY

WY

AK NH

CT

MA

MEVTCA

HI

RI

NY

IL

NJ

NM

MD

UT

CO

MI

AZPennsylvania

OR

WI

Florida NVMN

DE

Ohio

WA

CO2 emissions per MWh of electricity generated

HighElectricity Consumption

per Capita

High

Low

US Average

Texas generation fleet emits less CO2 per MWh than the average state… US

Average

41

45

114120120121

220

US AverageIndianaOhioTexas Pennsylvania Florida

Million metric tons of carbon dioxide emitted in 2010

…however, Texas leads the nation in carbon dioxide emissions from electricity generation

42

Carbon Emissions per MWh

Water Consumption

per MWh

Natural Gas

WindSolar Nuclear

Coal

water shortage meets carbon emissions

43

Industrial / Mining

Irrigation & Livestock

Domestic & Commercial

Power Generation41%

39%

12%

8%

5

100

225

550

775Nuclear

Solar PV

Pulverized Coal

Natural Gas CC

Wind

Water Consumption over Plant Life CycleGallons consumed per MWh generated

Note: Water consumption including fuel cycle, plant construction & demolition, and plant operationSource: National Renewable Energy Laboratory

water usage for energy generation

44

43138

138

124

0

50

100

150

200

250

300

350

Texas 2013 PowerGeneration, TWh

Total Generation

335

90%

10%

Other Renewables

WindNuclearGasCoal

Texas is starting on the path to lowering both emissions and water consumption, but much work remains

High CO2 emissions and/or high water consumption

Low CO2 emissions AND low water consumption

45

What can Texas do?

46

Doing nothing is the worst path forward“You can’t be neutral in a moving train”

Leveling the playing field

47

Energy efficiency and mix

Transmission infrastructure

Carbon price

Responsible siting

48

Thanks