AffordableRenewableWindEnergyGeneratedinMississippi

August17,2016

NationsEnergySolutions

2

NationsEnergySolutions• NESisarenewableenergydeveloperfocusedonthesoutheasternUnitedStatessince

2011,withprojectsandassetsin16states.o SeanRoberts,CEO– Constructedover3,700windturbinessince1983o BobBergstrom,President– Developedover2,500MWofwindacrosstheUS.

• NESsecuredawindenergyleasewiththeStateofMississippifortheParchmanStatePenitentiarylandsin2013

• MemberoftheDeltaCouncil• MemberoftheMississippiEnergyInstitute(MEI)

LedbySeanRoberts,CEO&nativeofStarkville,MS:• BornandraisedinStarkville,MS• FatherwasaprofessoratMSU• WifebornandraisedinGreenville• Manyfriendsandfamilyinstate

“IintendtobringwindenergytomyhomestateofMississippi”- S.Roberts

Terra-Gen&NationsEnergySolutions

3

Terra-Genhasexperienceinallfacetsofpowergeneration– development,financing,construction,andoperations

• Terra-GenandNESPrincipalso RandyHoyle,SeniorVP,HeadofWindandSolarDevelopment,Terra-GenPowero SeanRoberts,CEO,NationsEnergySolutions(NES)o BobBergstrom,President,NESo TeamhasdevelopedthefirstwindprojectsinKansas,Oklahoma,NewMexico,

NorthDakota,SouthDakota,PuertoRico,and2nd windprojectinIowa

• Terra-GenisaleadingU.S.-basedpowergenerationanddevelopmentcompanyownedbyEnergyCapitalPartners,aleadingfinancialsponsorwithaproventrackrecordinthepowergenerationmarketo Terra-GenisfocusedontheNorthAmericanmarketandowns1051 MWs(net

equity)ofwind,geothermalandsolargeneratingcapacityinoperationacross25renewablepowerfacilitiesthroughouttheUnitedStates

o Operateandmaintainofover2,000MWofrenewableprojectso Developedthenation’slargestwindenergyproject,theAltaWindEnergyCenter,a

$3billion1,546MWmulti-phasedwindprojectlocatedinCalifornia

OverviewofIn-StateRenewableProjects

4

Renewableprojects(windandsolar)havebeenindevelopmentsince2011• SeveralprojectsunderdevelopmentthroughouttheMississippiDeltasince2011,

chieflytheParchmanWindo ProjectsinSunflower,Tunica,Panola,Coahoma,andWashingtonCounties

FocusonParchman:KeyDates• March2012 – SuccessfullychangedMSlawtoallowmulti-yearleaseonstate

propertyforrenewableenergyprojects• September2013– RFPissuedbytheDepartmentofFinanceandAdministrationfora

ParchmanWindEnergylease• December2013– NESselectedinDFARFP• Spring2014– Finalizedleasewithfinanceabletermsforroughly14,000acres• February2015– ExecutedleasereceivedbyNESandpaymentforyearonereceived

byDFA• April2015– MeteorologicaltowerinstalledatParchman

5

PARCHMAN WIND Local Economic Impacts

Based on 150MW of Wind Energy: * Requires NO investment from community. Terra-Gen NES can generate an economic impact model to depict full economic impact into specific communities of Mississippi

Landowner (State of MS) Royalty – 150MW x Landowner royalty payments of roughly $32 million over 25

years x Each turbine (75) takes approximately ¼ – ½ an acre out of

production

Construction – 150MW x Peak workforce of 250-300 people for 8-9 months of construction x Ancillary spend of $2-3 million (hotels, food, etc.) during

construction

Property Tax – 150MW x In-State Wind Energy investment of $300 million into the local

property tax base will yield roughly $30 million in revenue over a 25-year period

Permanent Jobs – 150MW Attracts high performance work force of 12-15 individuals

Tourism & Development x Demand to see projects will draw local residents and schools,

including neighboring states without wind projects x Wind tech training program can be implemented at a local tech

college/school

Good for the Environment, the Economy, and the Energy Consumer x Good for health of the citizens of Mississippi

Utility Benefits

i. Promotes economic development in state – will bring hundreds of millions of dollars of tax base, landowner royalty payments and a high-performance workforce

ii. Fixed-price hedge against future energy and commodity price volatility iii. Diversifies utility’s in-state generation mix by procuring in-state renewables at a low cost

TheBasicsofWindEnergy

6

FourBasicsofWindDevelopment1) Land

o NEShassecured150+MWofwindpotentialattheParchman StatePenitentiarysiteo MultipleothersitesbeingpursuedthroughouttheDeltasince2011

2) Windo Resourceiscomparabletootherstateswithsignificantwinddevelopmento Over5yearsofdataatfivelocationsindicateacommerciallyviablewindresource

3) Transmissiono Criticaltoinitialprojectsiting,multiplesatisfactoryoptionsavailableo Parchman projectinMISOQueue

4) Marketo Emergingmarket

RequiredElementsv Permittingv Financing

AdvancesinTechnology

7

Twosignificantchanges:1. Turbinehubheightswere65meters10yearsago– theycanbe129mtoday

o Substantialincreaseinwindresource-- Speedsincreasesignificantlywithheight2. Turbinesaremuchmoreefficientthan10yearsago

Performanceofawindfarmdependson:• Hubheight:WindspeedintheRotorSweptZone• 8760:Shapeofwindproductionprofile• Turbineselection:Low-gearturbinesforlower

windspeedareas

Blades• Increasedrotordiameter,lighter• Evolutionfrom65mto126m

Gearboxes• Moreefficient,lowermaintenance

InstallationEngineering• Betterengineeringtolowerinstallationandcapitalcosts

WindinMississippi?

8

AcceptedwisdomhasbeenthatwindsarenotsufficientinMississippi…• So,what’schanged?

Technology• Tallertowers&

largerrotors• Turbinesspecifically

designedforlowwindregimes

• Improvedsiting&layoutmodelingsoftware

EconomicsofWind• Priceisafunctionof

capitalcosts,constructioncosts,andcapacityfactor(NCF)

MississippiWindResourceEvaluation

9

Top2Anemometers+Vane

Mid2Anemometers+Vane

Lower2Anemometers

GroundTemperature,Pressure

andLogger

MeteorologicalTower MetTowerSchematic

WhyRenewables?

10

WhyshouldUtilitiesInvestinRenewables?• Fixed-PriceHedgeagainstfutureenergyandcommoditypricevolatility.

• Pricecertaintyfor20-25years.• IncreasedDiversityofutility’sin-stategenerationmixbyprocuringin-state

renewablesatalowcost.• EconomicDevelopment

• Jobs,taxbase,royaltypayments• RegulatoryHedge

• CompliancewiththeCleanPowerPlan,August2015• AddedRateBase– (assumingownership)• DecliningProductionTaxCredit(PTC) – Declinesfrom100%tozeroover5years

WhyshouldCommunitiesInvestinRenewables?• Abundantsupplyoflocallygenerated,affordableelectricenergy• Healthbenefitsofzero-emittingelectricgenerationarequantifiable• Significantinvestmentinruralcommunitiesnopublicfundsfundsrequired• Jobcreationandtrainingforarapidlyexpandingindustry

11

PhotographicIntroductiontoWindEnergy

RoadConstruction

12

13

TrenchingforCollectionSystemFoundation

TurbineFoundation

14

15

TurbineFoundation

16

TurbineFoundation

17

TurbineFoundation

18

TurbineFoundation

19

TurbineFoundation

20

TowerSection

21

TowerConstruction

22

TowerConstruction

23

TowerConstruction

24

TowerConstruction

25

TowerConstruction

26

TowerConstruction

27

TowerConstruction

28

TurbinesBlades

29

TurbineBlades

30

Blade&RotorAssembly

31

FinalAssembly

TimetoExamineWindGeneratedinMississippi

32

NowistheTimetoConsiderWindinMississippi• Absentasafeharbor,100%federalPTCvalueerodes20%(about$8/MWh)in2017

o PTCvaluedrops20%morein2018o SafeHarborfor100%valueisstillpossiblethisyear,howevertimeexpiresvery

soon• Priceofnaturalgasislowandawindisanaturalhedgeagainstfuturegasprice

volatility• Lowcostlocalwindtodayshouldbefavoredovertheuncertaintyandchancefora

marginallycheaperwindproductthatcouldsomedaybeimportedfromanotherstate• Regulatoryuncertaintymeanspricesforbothmajorequipmentsuppliersandlabor

arelow• SignificantsupporttotheDepartmentofCorrectionsBudget(atParchman)with

annualroyaltypaymentsfromturbineproduction