Fire IslandWind Project

2010 Alaska Rural 2010 Alaska Rural Energy ConferenceApril 26, 2010

Presented by

Fire Island Wind ProjectGeneral Disclaimer

All information provided by CIRI in this presentation is provided for informational purposes and does not constitute an offer by or legal contract between CIRI and any person or entity unless otherwise specified. Information in this presentation is preliminary and subject to change without prior noticechange without prior notice.

Although every reasonable effort was made to present accurate information, CIRI makes no guarantee of any kind.

Fire Island Wind ProjectCIRI’s Business Portfolio

• Energy and resource development

• Oilfield and heavy construction services

• Commercial and retail real estate development

• Environmental remediation services

• Tourism and destination resortsTourism and destination resorts

• Telecommunications

A d f• Aerospace defense

Fire Island Wind ProjectLocal CIRI Developments

• Tikahtnu Commons – Shopping Centerpp g

• 11000 C Street – Office Park

• Fire Island Wind Project• Fire Island Wind Project

• Underground Coal Gasification

Fire Island Wind ProjectMeeting Overview & Objectives

• CIRI’s development team

• Detailed project overview

• The time is now - $70 Million on the lineThe time is now - $70 Million on the line

• Identify critical path Items

• Discuss overall project schedule

Fire Island Wind ProjectProject Development Team

• Summit Power Group – Program Manager

• Cadiente Consulting – Transmission Interconnection Project Management

• Restoration Science Engineering – Permitting/ Environmental Sciences

• Subcontractors: HDR, S&W, TBC, Stanley Consulting, CRW, DNV-GEC, AIC, Spernak, Pollux, Precision Power

Fire Island Wind ProjectCIRI’s Project Philosophy

•Open book pricing structure

C ll b ti ff t ith ti i t•Collaborative effort with participants

•Lowest cost renewable supply option

•Capitalize on Federal ARRA 1603 Grant

•Utilize SoA grant for transmission infrastructure•Utilize SoA grant for transmission infrastructure

•Mitigate future carbon taxes

Fire Island Wind ProjectProject Overview

• Alaska’s first commercial-scale wind projectAlaska s first commercial scale wind project

• 3 miles west of Anchorage

CIRI l d• CIRI land

• 33 GE 1.6 MW wind turbines

• Total nameplate capacity of 52.8 MW

• 15.5 mile double circuit 34.5kV transmission line

Fire Island Wind ProjectProject Overview

G t 146 000 MWh ll• Generate ~146,000 MWh annually

• Save ~1.7 BCF natural gas annually (4.6%)

• Power ~17,000 Alaska homes

Fire Island Wind ProjectFire Island Map

Fire Island Wind ProjectTransmission Line Route

Fire Island Wind ProjectOn-Island Activities - 2009

• Completed Resource Assessment and micro siting for 36 WTG projectmicro-siting for 36 WTG project

• Survey & staking of access roads, wind bi d i turbine generator pads, maintenance

facilities and sand/gravel “borrow” sites

• Extensive tree clearing

• Extensive geotechnical investigationExtensive geotechnical investigation

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Fire Island Wind Project

• State and Federal Permits in hand:

Permitting

• USACE Section 404 and Section 10

• DEC 401 Certification

DF&G S i l A P it• DF&G Special Areas Permit

• DNR Tidelands Permit

• DNR Final Consistency Determinationy

• Permits Anticipated this Summer• FAA Land Use Permits and Easements

• DNR Utility Easement

• AIA/DOT/MOA/FAA Utility Permits

• VOR/AIA Navigational Aid Lease and NEPAVOR/AIA Navigational Aid Lease and NEPA

• USFWS Eagle Take Permit

Fire Island Wind ProjectSources of Project Capital

• CIRI – Project Equity

• Federal Government – Project Grant

• Commercial Lender Project Debt• Commercial Lender – Project Debt

• State of Alaska – Interconnect

Fire Island Wind ProjectFederal Grant Funding

• IPPs qualify for Section 1603 Cash Grants - Federal financial incentives in the American Recovery & financial incentives in the American Recovery & Reinvestment Act of 2009

• Pertinent Incentive – 30% of Qualified* Project Costs refunded upon delivery of first commercial power

• Available for projects under construction by December 31, 2010 d i ll ti l b D b 31 20122010 and commercially operational by December 31, 2012

• As a qualified IPP, CIRI will apply for the 1603 Cash Grant in lieu of claiming federal production or investment tax in lieu of claiming federal production or investment tax credits

Fire Island Wind ProjectFederal Grant Funding

• 100% of federal dollars will be credited to the Projectlti i l t f t tiliti d th i resulting in a lower cost of power to utilities and their

customers

• Safe Harbor Provision of Section 1603 Grant:Safe Harbor Provision of Section 1603 Grant:

• Work of a significant physical nature by 12/31/10 - >5% of qualified project costs: wind turbines, excavation of turbine q p jfoundations, roads critical to build and maintain the project

• Costs which do not qualify for meeting the 5% Safe Harbor: i d d l i l d fi i wind measurement and analysis, land, financing,

preliminary engineering, geotechnical investigation

Fire Island Wind ProjectSummary of Estimated Project Cost

Approx Project Capital Cost: $ 167 MM

A S 1603 G t $ 46 MMApprox Sec. 1603 Grant: $ 46 MM

Est. Net Project Cost: $ 121 MM

Assumed D/E Ratio: 65/35

Bank Amt Financed: $ 79 MMBank Amt Financed: $ 79 MM

CIRI Equity Investment: $ 42 MM

Fire Island Wind ProjectTransmission Interconnection

• Funded by $25 MM State of Alaska grant

• Submarine Cable – separate EPC contract

• Dual 34 5kV Underground/overhead linesDual 34.5kV Underground/overhead lines

• Coordination with Chugach at International SubstationSubstation

Fire Island Wind ProjectPreconditions To Financial CloseFall - 2010

• Economically viable wind regime - verified

• Clear title to land - complete

• Permits authorizing construction – Fall 2010

• Fully executed WTG purchase contract – Summer 2010

• Fully executed BOP contract – Summer 2010

• Interconnect Agreement – Fall 2010

• RCA approved power purchase agreements – Fall 2010 pp p p g

• Executed interconnect construction Agreement – Fall 2010

Fire Island Wind ProjectEPC Contractor Selection

• Local Owner’s Engineer (HDR) has been retained

• BOP scope definition & perform conceptual design

• Contractor will be responsible for design, procurement, p g pconstruction, and testing of balance of plant equipment

• Contractor will erect /commission wind turbine generators

• RFP - EPC proposals expected to be issued in May 2010

• EPC Contract to be awarded as early as August 2010

Fire Island Wind ProjectOn-Island Activities - 2010

• Complete geotechnical investigations

• Complete surveying & tree clearing

• Development of sand/gravel resources• Development of sand/gravel resources

• Development of water supply

• Identification, clearing & initial preparation of lay down, staging & material off-loading areas

• Access road development

Fire Island Wind ProjectOn-Island Activities - 2011

• Engineering & Procurement – long lead materials

• Mobilize EPC contractor & materials

• Access road constructionAccess road construction

• Construct wind turbine generator foundations

• Electrical installation & collector bus

• Admin/Shop/Storage building

Fire Island Wind ProjectOn-Island Activities - 2012

• Mobilize EPC Contractor – small crew & crane

• Erect wind turbine generators

• 34.5 kV Backfeed

• Facility commissioning including GE field technicians

• Operations & Maintenance staffing

• Achieve commercial operation Summer 2012• Achieve commercial operation – Summer 2012

• Complete punch list & demobilize

Fire Island Wind ProjectPower Purchase Agreements –CIRI (Seller’s) Objectives

• Move Railbelt towards IRP goals for renewable energy

• Offer as much flexibility and transparency to buyers as possible

– Open book project accounting

– Multiple financial structures possiblep p

– Buyer control over project dispatch to ease integration issues

• Cooperative approach to system integration

• Reduce AK reliance on natural gas• Reduce AK reliance on natural gas

• Reduce air emissions - CO2 (>100,000 tons/year)

• Reduces NOx, SOx, and particulates

• Provide price hedge to increasingly volatile and high natural gas price

• Utilize Federal & State grant funds: $45 + $25 = $70 MM

Fire Island Wind ProjectPower Purchase Agreements

FIWP i i l d d i th Al k IRP J 2010•FIWP is included in the Alaska IRP – January 2010

•Cost of FIWP energy is below average cost of IRP resources

•IRP indicates no cost penalty for adopting Renewable Resourcesd cates o cost pe a ty o adopt g e ewab e esou ces

At least 60% higher than project cost

Fire Island Wind ProjectPower Purchase Agreements

CEA gas usage relates directly to electric load shapeCEA gas usage relates directly to electric load shape

Fire Island Wind ProjectAverage Wind Speed by Month

• Good correlation to electric load shapep

Peak Production inPeak Production in colder weather months

Fire Island Wind ProjectPower Purchase Agreements –Investment Rationale cont’d

• Long term PPA pricing is fixed (with modest escalation) and quantifiableand quantifiable

• Environmental attributes may significantly reduce cost of power

• Project is well into development and major project risks • Project is well into development and major project risks have been mitigated = very likely to proceed with construction

• Open book development approach allows buyers to • Open book development approach, allows buyers to understand cost and schedule of project

• Buyer to have full control over project dispatch to help mitigate integration issuesmitigate integration issues

• Utility control over ramp rates, and on-line status