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Characteristics of Financeable Wind Energy
Projects

• Northwest Power and Conservation Council
• Workshop on Wind Energy and Electric Power
  Systems
• December 5, 2003

Kevin J. Smith, PE Global Energy Concepts,
LLC 5729 Lakeview Dr, Suite 100 Kirkland, WA
98033 425-822-9008 ksmith_at_globalenergyconcepts.com
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Overview

• Wind Resource and Energy Projections
• Land Acquisition
• Permits and Approvals
• Transmission/Interconnect
• Power Purchase Agreement/Purchaser
• Turbine Equipment/Supplier
• O M Approach

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Wind Resource and Energy Projections

• Reducing Uncertainty Increases Financeability
• Long-term, high quality on-site data to
  characterize seasonal variations and terrain
  effects
• 10-minute turbulence and shear data
• Hub-height?
• Good correlation to long term reference
• Well documented anemometry
• Detailed and well documented analysis

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Uncertainty Analysis
Probability of Occurrence
Net Annual Energy Production

• Lenders focus on energy production estimate
  associated with 90 or greater confidence level
  of being exceeded.
• Less uncertainty increases the energy
  production estimate associated with 90
  confidence level.
• Higher energy production level increases debt
  capacity

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Land Acquisition

• Long term access to the land must be secured
• Lease agreements are most common
• Agreements must be transferable in event of
  property sale.
• Carefully research land ownership
• Title due diligence
• Consider wind easement on surrounding land?

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Permit and Approvals

• Ensure all required local, state, and federal
  permits are in place and project is in compliance
• Complex review and approval process can adversely
  impact projects ability to obtain financing
• Local project acceptance concerns
• Zoning, building permit, set back requirements

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Transmission/Interconnect

• Completed utility interconnection study
• Completed grid congestion study
• Interconnect agreement that provides long term
  and reliable access to the market

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Power Purchase Agreement

• Products
• Energy, capacity, attributes, ancillary services
• Take All when available
• Price
• Fixed with annual escalation (inflation)
  preferred
• Term
• Longer term, more likely to obtain financing
• 20 years (expected project life)
• Delivery
• Scheduling requirements must accommodate
  intermittent non-dispatchable generation.
• Lender Step-in Rights
• Allow lender ability to assume project control to
  corrected operating deficiencies before
  termination.

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Power Purchaser

• Purchaser must be credit worthy B rating or
  better.
• Not on watch list for potential downgrade
• Parent company guaranty
• Letter of Credit or 12 months of payments in
  escrow
• Reputation

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Turbine Equipment/Supplier

• Proven turbine models with multiple year
  operation history
• Site suitability analysis
• Turbine certified by IEC, DNV, or GL
• Warranty terms
• Financial health of supplier
• Experience and reputation of supplier in the
  industry

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O M Approach

• Project Owner vs. O M contractor
• Past O M experience
• Financial health of O M contractor
• Attainable performance goals with penalties
• Long term