RESPONSE TO THE CITY OF EVANSTON (RFI) TO DEVELOP POWER FROM AN OFFSHORE WIND ENERGY FACILITY IN LAKE MICHIGAN OFF THE NORTHERN SHORE OF EVANSTON ISSUED: May 1, 2010 RESPONSE DUE DATE: June 30, 2010

City of Evanston Request for Information: Offshore Wind Farm (RFI) © Mercury Wind LLC Offshore Wind Energy Confidential Information, June 2010

Table of Contents

Mercury Wind Description………..…………………………………………………………….. 5

Mercury Wind Experience………………………………………………………………………. 7

Mercury Wind Primary Contact…………………………………………………………………9

Definitions and Acronyms…………………………………………………………………….. 10

1.0 Proposed Project Scope and Business Plan…………………………………………..11 1.1 Project Scope…………………………………………………………………………….. 11 1.2 Business Structure………………………………………………………………………. 17 1.2.1 Development of proposed Evanston Offshore Wind Farm……………………. 17 1.2.2 Operation and Maintenance of an Offshore Wind Facility…………………….. 17 1.2.3 The City of Evanston’s Role……………………………………………………… 18 1.3 Capital Requirements……………………………………………………..……..……… 18 1.3.1 Costs for a 101 MW Offshore Wind Farm………………………………………. 18 1.3.2 Sources of Capital and Financing Availability………………………………...…18 1.3.3 Renewable Energy Credits……………………………………………………….. 21 1.3.4 Projected Range of Pricing for Energy and Anticipated Incentives………….. 21 1.3.5 Decommissioning and Turbine Removal……………………………………….. 22 1.4 Power Purchasing Agreement (PPA) …………………………………………………. 22 1.4.1 Interest……………………………………………………………………..……….. 22 1.4.2 Ideal Length of a PPA…………………………………………………………….. 22 1.4.3 Terms of Service…………………………………………………………………... 24 1.4.4 Ancillary Services………………………………………………………………….. 26 1.4.5 Pricing Structures………………………………………………………………….. 26 1.4.6 Production and Availability Guarantees…………………………………………. 27 1.4.7 Outages……………………………………………………………………..……… 27 1.4.8 Facility Operations and Reliability Standards…………………………………... 28 1.4.9 Facility Description………………………………………………………………… 28 1.4.10 Facility Operating Criteria……………………………………………………….. 31 1.4.11 Curtailment………………………………………………………………………... 33 1.4.12 Start-up and shut-down Considerations……………………………………….. 33 1.4.13 Insurance and Indemnification Requirements………………………………… 35 1.4.14 Default Provisions………………………………………………………………... 38 1.4.15 Additional Information and Recommendations……………………………….. 40 1.5 Operations and Performance…………………………………………………………… 40 1.5.1 Average Offshore Turbine Availability…………………………………………… 40 1.5.2 Basis for Projections………………………………………………………………. 41 1.5.3 Performance Degradation over Project Life…………………………………….. 42 1.5.4 Ability to Accurately Predict Wake Effects……………………………………….42 1.5.5 Maintenance Plan/Facilities/Staffing…………………………………………….. 44 1.5.6 Evanston Marina…………………………………………………………………… 45

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1.5.7 Spare Parts………………………………………………………………………….45 1.5.8 Response Time for Unscheduled Maintenance…………………………………45 1.5.9 Scheduled Maintenance Procedures and Frequency…………………………. 46 1.5.10 Remote Communications……………………………………………………….. 47 1.5.11 Control…………………………………………………………………………….. 47 1.5.12 Monitoring and Dispatch Systems……………………………………………… 47 1.5.13 Safety and Emergency Rescue Plans and Facilities………………………….48 1.5.14 Curtailment due to bird migration………………………………………………. 48 1.6 Timeline…………………………………………………………………………………… 48

2.0 Technical and Infrastructure Considerations………………………………………….. 50 2.1 Interconnection…………………………………………………………………………… 50 2.1.1 Overall Electrical Interconnection System Design……………………………... 52 2.1.2 Offshore Substations……………………………………………………………… 52 2.1.3 AC or HVDC Interconnection…………………………………………………….. 52 2.1.4 Converter Location………………………………………………………………… 53 2.1.5 Lake Floor Cabling Routing and Landfall Considerations…………………….. 53 2.1.6 Strategies for Interconnection Reliability and Security………………………… 53 2.1.7 Energy Deliverability…..…………………………………………………………... 54 2.2 Technology Availability and Limitations……………………………………………….. 57 2.2.1 Size, Availability, and Suitability of Commercial Offshore Wind Turbines...… 58 2.2.2 Foundation Requirements…………………………………………………………59 2.2.3 Special Logistical and Cost Considerations……………………………………..60 2.2.4 Quality, Durability, and Manufacturer Equipment Warranties………………… 61 2.3 Infrastructure for Construction and Maintenance……………………………………..61 2.3.1 Specialized Equipment and Current Illinois Port Facilities……………………. 62 2.3.2 Skilled Labor and Trained Crews………………………………………………… 63 2.3.3 Laying of Electrical Cabling………………………………………………………. 64 2.3.4 Construction Insurance…………………………………………………………….64 2.3.5 Seasonal Impacts on Construction and Operation…………………………….. 64

3.0 General Planning and Predevelopment Considerations……………………………. 65 3.1 Regulatory approval Process…………………………………………………………… 65 3.2 Environmental Issues and Anticipated Studies………………………………………..66 3.3 Public Outreach and Stakeholder Engagement……………………………………….66 3.3.1 Aesthetics…………………………………………………………………………... 66 3.3.2 Noise…………………………………………………………………………………67 3.3.3 Impacts on Real Estate and Property Values …………………………………..67 3.3.4 Impacts on Recreation……………………………………………………………. 67 3.3.5 Access to Waters Around the Facility…………………………………………… 67 3.3.6 Impacts on Commercial Fishing…………………………………………………. 67 3.3.7 Impacts on Commercial Navigation and Aviation……………………………….68 3.3.8 Local Tourism……………………………………………………………………….69 3.3.9 Impacts on Public Safety and Security………………………………………….. 69 3.3.10 Site Decommissioning and Restoration……………………………………….. 69

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4.0 Economic Development Opportunities and Local Company Procurement...…… 70 4.1 Procurement of Regional Products and Services……………………………………..70 4.2 Port Development and Enhancement……………………………………………..…... 70 4.3 Job and Industry Development…………………………………………………………. 71 4.4 Potential Adverse Economic Impacts………………………………………………….. 71 4.4 The City’s Role in Facilitating Economic Development……………………………… 71

5.0 Developer Expectations of the City……………………………………………………... 71

6.0 Additional Items, Impact on Birds and Wildlife…………………………………….…. 72

List of Figures and Tables Table 0.0.0 Partial List of MWe Sub-Contracting Companies………………………….. 8 Table 1.1.1 Offshore and Coastal Onshore Siting Considerations…………………… 11 Figure 1.1.2 Relationship of Wind Speed to Power…………………………….………..12 Figure 1.1.3 Bathymetric Map of Lower Lake Michigan………………………………… 13 Figure 1.1.4 Current Monopile Technology……………………………………………….14 Figure 1.1.5 EWEA data of 2009 Offshore Turbine Foundations……………………… 15 Table 1.1.6 Preliminary Turbine Evaluation Cost Versus Output…………………….. 16 Table 1.1.7 Sizing Turbines To Wind Speed……………………………………………. 16 Table 1.3.1 Anticipated Pricing for the Evanston Offshore Wind PPA………………..21 Figure 1.4.1 Average price of Electricity over a 10 year period……………………….. 23 Table 1.4.2 Savings to Evanston Residents Over 20 Year Period…………………… 24 Table 1.4.3 Sample Terms of a Service Agreement…………………………………… 25 Figure 1.4.4 Controls and Monitoring Wind Farm Facility……………………………… 29 Figure 1.5.1 Turbine Wake Effects………………………………………………………...42 Figure 1.5.2 Sample Layout Assumptions ………………………………………………. 43 Figure 1.5.3 Possible Port Locations For Wind Farm Maintenance Boats…………… 44 Figure 1.5.4 Spare Parts Account For 83% Of Wind Turbine Downtime……………… 45 Table 1.6.1 Offshore Wind Farm Timeline………………………………………………. 49 Figure 2.1.1 Overall System Design and Electrical Cabling Schematic……………….. 51 Figure 2.1.2 Wind Farm Approximately 7.14 Miles from Evanston Shore…………….. 51 Figure 2.1.3 Wind Farm Approximately 10.1 Miles from Evanston Shore…………….. 52 Figure 2.1.4 Typical Offshore Wind Farm Components………………………………….53 Table 2.2.1 Technology Constraints & Wind Farm Area Boundaries…………………. 58 Figure 2.2.2 The Evolution of Wind Turbine Technology 1981-2010………….………. 58 Figure 2.2.3 Gravity and Monopile turbine Foundations…………………...……………59 Table 2.2.4 Weight and Installation of Foundation Types……………………………... 60 Figure 2.3.1 A Deep Water Port & Offshore Wind Turbine Part Staging Area………..61 Figure 2.3.2 European TIV lifting a massive 5MW Turbine with tower and rotor……. 62 Figure 2.3.3 Danish TIV ship with preassembled towers and rotors………………….. 63 Table 3.1.1 Required Approvals and Permits……………………………………………65 Figure 3.3.1 Picture of how an offshore wind farm appears on radar………………….69

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Company Description Mercury Wind Energy LLC (Mercury wind) is located on the northwest coast of the Lake Michigan Coast in the Great Lakes Region, developing offshore wind energy projects. Mercury Wind's staff and corporate partners have as much or more experience than competing firms in the: wind, energy, environmental, project finance, capital allocation, raising capital, engineering, and marine sectors. Mercury Wind is proud to be family owned, a local Illinois company, and headquartered out of Evanston. In response to public requests, Mercury Wind selects potential offshore locations, conducts environmental studies, community surveys, assesses wind resources, raises capital, oversees construction of the wind farm, and oversees the operation & maintenance of the wind farm. In addition, Mercury Wind selects only experienced contractors who plan connection to the grid and arrange for delivery of the energy to customers. Lastly, Mercury Wind secures financing early on in the development process to see the project through from concept to eventual decommissioning.

Mercury Wind was founded in 2009 by Mr. Lyle R. Harrison. Mr. Harrison was born and raised in Evanston. Mr. Harrison graduated as an ETHS “Wildkit” earning the prestigious James M. Hartrey engineering scholarship, showing at an ealy age a penchant for engineering and science. After attending; Washington, Chute, and Evanston Township High School, Mr. Harrison went on to earn 5 college degrees in 18 years. Including earning an Industrial Manufacturing Engineering degree from the #1 private engineering University in the United States, Kettering University. All degrees were earned while working full or part time jobs during school.

After working as an R&D release engineer at the legendary Chrysler Tech Center in Auburn Hills, Michigan, Mr. Harrison went on to work for a company that invented “corporate finance” today as we know it, The Ford Motor Company. While working at Ford Motor Company in the prestigious Finance division, Mr. Harrison distinguished himself as a team player, and results oriented professional. In the first year of employment at Ford Motor Company, Mr. Harrison saved Ford Motor Company through “lean engineering”, cost analysis, cost avoidance, and productivity increases, +$30 million. Ford Motor Company realized the potential that Mr. Harrison demonstrated, and recommended that he attend Thunderbird Global School of Management. This resulted in Mr. Harrison being selected by Thunderbird Global School of Management to attend their global MBA cohort

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in the fall of 2007. While at Thunderbird, Mr. Harrison distinguished himself as a leader and was chosen for a global finance internship located in Scotland by Katherine Garrett- Cox. As the newly appointed CEO of AllianceTrust Plc, Katherine asked Mr. Harrison to examine the US equities strategy and company budget allocation. This resulted in a savings opportunity of +$61 million annually. Upon graduating from Thunderbird in 2009 with an MBA in global finance, Mr. Harrison decided it was time to make a difference in the world and founded, Mercury Wind. That said, the desire of Mercury Wind is not just to provide clean, renewable power, but to provide employment, community education, growth, and global leadership. The four pillars of Mercury Wind are;

1. Mercury Wind is committed to providing clean, renewable energy to its customers.

2. Mercury Wind is committed especially to each community it is involved in, and will find some way to give back to that community. In the case of the Evanston Wind offshore wind farm project, after the wind farm is completed, Mercury Wind will replace all the shoddy L-Train bridges in Evanston at 35 - 50% discount. Mr. Harrison realizes the sad shape the bridges are in, and wants to do something about it! 3. Mercury Wind is committed to never harming the environment, people, or animals with any business practice or potential wind farm site opportunity. Including stepping back from a wind project that will have adverse harmful effects on avian or marine life.

4. Mercury Wind is committed to building a brand new Engineering & Science Lab in the High School of every community it constructs an offshore energy facility. Because Mr. Harrison graduated from ETHS, it is his passion to especially provide this new engineering & science lab for Evanston citizens and future students of his alma mater, Evanston Township High School.

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Company Experience FACT!: As of June 30, 2010 no offshore wind farms have been constructed in the United States, therefore no US wind companies have offshore wind farm construction experience. However, in order to remedy this situation Mercury Wind is doing the following things;

1. Hired a C-level executive 1 from one of the top 5 wind turbine companies just to work on the Evanston wind farm project. This C-level executive has been contacted and cannot be disclosed at this time. This C-level executive has personally constructed from the ground up and maintained +8 offshore wind farms in Europe.

2. Mercury Wind is committed; to engaging the citizens of Evanston, to answer questions, and provide the very best offshore wind farm. Mercury Wind CEO, Lyle R. Harrison, was the only developer to attend the city council meeting on April 13, 2010. Mr. Harrison was also the only developer to attend the public viewing of the movie, “Windfall”. 2 There are 9 other developers that are responding to the “RFI”, but none of them have shown up to engage the citizens of Evanston and answer questions? Mercury Wind is proud to say, “We don’t just claim public engagement, we live it.”

3. Mercury Wind is also committed to improving the educational system in each city it conducts wind farm contracts. Therefore, Mercury Wind is hiring an international consortium of leading educators to work with ETHS to improve the quality of its education from a global perspective. This educational consortium will consist of experts from the European Union, competing high schools, and college professors who have taught at the high school level and college level. These are not armchair academics, but all have taught a minimum of 10 years, and are all considered leaders in their fields not only by their peers, but by leading scholars.

4. Mercury Wind has a core management team of 4 executives that have each worked for a minimum of 14 years or more in the corporate world. These 4 executives have engineering, finance, math, and graduate degrees in related fields. They are all considered to be technical leaders in their fields. The top 4 executive positions at Mercury Wind have a combined total of over 82+ years of engineering, and business experience. The list of fortune 500 companies which the top 4 executives have worked for; AT&T, Ford Motor Company, UPS, Siemens Controls, and DaimlerChrysler. All 4 Mercury Wind C-level executives possess engineering degrees and average 2.5 degrees per executive!

1 This C-level (CEO, CFO, CTO…etc) executive has over 16 years of constructing offshore wind farms, and knows the success and failures of many of the offshore wind farms already constructed in Europe. This executive must remain anonymous until the contract is awarded for obvious reasons. 2 The Movie “WindFall” was shown at the Orrington Theatre on May 7, 2010. After the movie was over, Mercury Wind CEO – Lyle R. Harrison, citizens for greener Evanston, and other Evanston people gathered in a conference room to ask questions. It was interesting to note, that none of the other developers showed up to answer questions or to engage their customers, the citizens of Evanston. Mercury Wind is committed to engagement on the local level, and many of the questions asked were valid. Mercury Wind answered all those questions with this document and to this day remains committed to the people of Evanston, not just the monetary opportunity the wind farm represents!

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5. Mercury Wind seeks first and foremost to use local products and employ local companies as much as possible, however if a local company with experience cannot be found, Mercury Wind will contract experienced sub-contractors from out of state or from Europe. That said, all local companies are invited to bid, and will be seriously considered. 6. Mercury Wind is hiring experienced contractors and sub-contractors that have completed onshore and offshore wind farms. Table 0.0 list’s a few of the experienced offshore wind farm contractors Mercury Wind will employ for the proposed Evanston offshore wind farm. Approx. 90% of the sub-contracting companies listed in table 0.0 have installed and worked on one or more of the 28 offshore wind farms in the world. The rest of the sub-contracting companies have experience with onshore wind farms or an extensive marine resume.

Category Company Turbines Vestas, Repower, GE, Acciona,Siemens EPC Contractor FLUOR, Peak Power Owner's Special Engineer C-Level Turbine Engineering Executive Insurance Holmes & Murphy, TOG Civil Engineering Cemcon, Tecno, Mcmullen & Pitz Offshore Electrical Grid SEAS, Synergy Cables, Draka, AWG Interconnection/Onshore Electrical Eng. Energy Intiatives Group, ABB Aqua Survey, University of Michigan, Oceans Marine Field Studies Survey, Northwestern University Electrical Equipment ABB, Synergy Cables, American Superconductor Permitting Tetra Tech Wind Assessment AWS TruePower, Garrad Hassan, GWS Offshore Barge Equipment Dong Energy, Mammoet, Baltship Construction White, Turner, Mortenson, McHugh, Kenny Operations & Maintenance Global Wind Alliance, Frontier Pro…et al…. Engineering Consultants SGURR, Cinco, DNV Table 0.0.0 Partial List of MWe Sub-Contracting Companies

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Mercury Wind Contact Information CEO – Mr. Lyle R. Harrison Email: [email protected] Phone: (847)977-8981 Fax: (847)864-4996 Website: www.mercurywindenergy.com

Mercury Wind CEO – Lyle R. Harrison pictured here with Denise Bodie, President of the American Wind Energy Association (AWEA)

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Definitions Ancillary Services – Services that support the reliable operation of the transmission system as it moves electricity from generating sources to retail customers. Baseload - The minimum electric demand level at a facility. Curtailment - The process of decreasing electric demand. Megawatt - one million watts of electricity. Transmission - The flow of electricity over interconnected electric lines from a generation facility to local distribution lines. Watt - A unit of electrical power that equals one joule per second.

Acronyms AWEA - American Wind Energy Association EWEA - European Wind Energy Association FERC - Federal Energy Regulatory Commission FAA – Federal Aviation Agency GWh - gigawatt-hour HVDC - high-voltage direct current ITC – Investment Tax Credit Km - kilometer kW - kilowatt kWh - kilowatt-hour M - metre m/s - metres per second MW - megawatt MW e – Mercury Wind Energy LLC O&M – Operations and Maintenance PPA – Power Purchasing Agreement PTC – Production Tax Credit REC – Renewable Energy Credit SCADA - Supervisory Control And Data Acquisition

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Response to The City of Evanston RFI

1.0 Proposed Project Scope and Business Plan 1.1 Project Scope The first step in the site selection process was to understand the primary siting parameters for an offshore wind project in the Great Lakes. Factors inclusive of regulatory (political boundaries, aviation, etc.), environmental (wildlife, fishing areas, etc.), technical (wind resource, water depth, etc.), and logistical (proximity to ports and the transmission grid, etc.) issues were identified. Table 1.1.1 lists some of the parameters in the offshore and coastal onshore environments that were considered in this study.

Offshore Onshore Wind Resource/Airports Airports Bathymetry Radar Facility/Broadcast Towers Shipping Lanes Ports Shipwrecks & Obstructions Transmission / Substations Dumping Grounds Railroads and Major Highways Anchorage Areas Federal Lands Cables / Pipelines Parks and Other Protected Areas Political Boundaries Historic / Archeological Sites Air Traffic Restrictions Bird Habitat/Migration/Watch Sites Ice Cover (No. of days 90% or greater) Rare / Endangered Species Species Habitat Coastal Land Cover/Land Use Rare / Endangered Species Coastal Erosion Zones Fishing Areas Rivers / Streams Military Practice / Operations Wetlands Surface Geology Floodplains Contaminated Sediments Administrative Boundaries Zebra Mussel Distribution Populations Density / Major Cities Great Lakes Area of Concern Existing / Proposed Wind Farms C-MAN Stations / Buoys Power Plants Table 1.1.1 Offshore and Coastal Onshore Siting Considerations Wind Resource In order to achieve the desirably high levels of energy production from an offshore wind project, a minimum annual average wind speed of 7.5 meters per second (m/s, or 16.8 mph) at a representative turbine hub height of 80 meters (m, or 262 ft) above the local

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surface was selected. The proposed Evanston offshore wind farm area is projected to have average annual wind speed of at least 8.0 m/s at 80 meters.

Figure 1.1.2 Relationship of Wind Speed to Power

With a 10% increase in wind speed, the power capacity increases by almost 30%. The importance of a strong wind resource is a common need for offshore and onshore wind. The electricity output from a wind turbine is proportional to the cube of the wind speed, and therefore a small difference in wind speed can produce a substantial difference in power output. For example, doubling the wind speed from ten miles per hour to twenty miles per hour results in an eight-fold increase in wind power production from a wind turbine. The power increases linearly with the cross-sectional area of the converter traversed; it thus increases with the square of its diameter. Even with an ideal airflow and loss less conversion, the ratio of extractable mechanical work to the power contained in the wind is limited to a value of 0.593. Hence, only about 60% of the wind energy of a certain cross- section can be converted into mechanical power. When the ideal power coefficient achieves its maximum value cp = 0 .593, the wind velocity in the plane of flow of the converter amounts to two thirds of the undisturbed wind velocity and is reduced to one third behind the converter.

Turbine Power Formula Used To Calculate Energy:

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Lake Michigan/Evanston Water Depth (Bathymetry)

Figure 1.1.3 Bathymetric Map of Lower Lake Michigan Including Evanston

Current offshore wind turbine foundation technology shows the maximum practical water depth for the deployment of offshore wind turbines is roughly 120 feet (ft, or 36 m). However, many developers may seek project sites with shallower water depths ranging up to 100 ft (31 m) to minimize risk. This preference is largely due to the extensive experience with commonly used monopile and gravity foundation types, which have been deployed in Europe mostly in the shallower water depths. This site screening RFI study elected to consider water depths up to 120 ft given the industry’s trend toward deeper water foundation technologies. The sizing of this wind farm is determined by the following factors; depth of water, distance from shore, PPA pricing, the number of turbines required, financial constraints, and an average minimum wind speed of 8.0m/s at 80m hub height. The proposed offshore Evanston wind farm cannot maintain a distance greater than 7 miles from shore if it is larger than 250MW and uses the currently tested monopile

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technology. Current offshore wind farms are technologically constrained by the monopiles that are required for installation. Figure 1.1.4 below shows these constraints;

Figure 1.1.4 Current Monopile Technology Financial Requirements and Business Plan Aspects The ideal size of the proposed Evanston wind farm is 100MW – 250MW. 100MW being the smallest, because in order for the developer/owner to make a profit, the project will not receive economies of scale or break-even unless the minimum 100MW threshold is met. Since the ideal wind turbine size for an Evanston offshore wind farm would be rated 3MW – 3.6MW, the proposed wind farm project should be no larger than 250MW. 3 The primary reason is that a wind farm of 250MW with average wind speeds of 8.0m/s would necessitate using 56 - 83 turbines. Using the current technology, increasing the number of turbines over 250MW would require the wind farm to be built closer than 7 miles to shore. This closer proximity may allow detractors to object to the wind farm being built on the basis of poor visual impact.

Conclusion The Evanston wind farm should not exceed 9 miles from shore because the depth of the water after 9 miles is too great for currently proven technology. This is illustrated in figure

3 The size being limited primarily by three factors; water depth not greater than 30m, wind turbine distance from Evanston shore being no less than 7 miles, and north and south boundary not exceeding the boundaries of Evanston.

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1.1.4.4 However, there is new technology currently being tested to install wind turbines in deeper water, this technology has not been proven extensively yet. Figure 1.1.5 shows the monopile foundation type is still used 88% of the time in offshore wind farms.

Figure 1.1.5 EWEA data of 2009 Offshore Turbine Foundations

The floating foundation type 5 was used for European deep water wind turbine foundation’s less than 0.5% of the time. Floating foundations can be used for the Evanston offshore wind project, but the technology must be proven first.

The Evanston offshore wind farm area sees an average wind speed of 8.0m/s at 80m hub height.6 Therefore, the proposed wind farm project is limited to a 3.0MW-3.6MW turbine. Average annual windspeeds of 8.0m/s prevent using a 5MW turbine because the capital cost of the 5MW turbine cannot be recouped without raising residential electricity prices to greater than 18¢ per kW/h. The current residential price for electricity in Evanston is 10.5¢ per kW/h. The Cape Cod Wind Farm off of Massachusetts has an average annual windspeed of +8.7m/s. However, the Cape Cod Wind Farm was economically constrained to using a

4 There are Wind Turbines currently being tested with a new technology that floats the wind turbines in water depths greater than 60m. Mercury Wind presents using this newer floating technology with proposal #2 on page 20. 5 The floating technology has not been fully proven out and is a lot more expensive than monopiles. 6 Wind speeds are extrapolated by NOAA data and buoy data that was recorded for 4 years. However, banks and lenders still require onsite data to be gathered and verified. This means that a meteorological tower will have to be placed onsite and data measued for a minimum of 6 months before a wind farm can be contructed.

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total of 130 3.2MW Siemens wind turbines. Table 1.1.6 shows the economical constraints that will surely be encountered by the proposed Evanston offshore wind farm.

Vestas Repower Siemens GE 3.6S MW V112 5MW 3.6MW 3.0MW Blade Diameter 126 Meters 107 Meters 104 Meters 118 Meters Electrical Losses 2% 2% 2% 2% Average Windspeed 7.6 7.6 7.6 7.6 Net Capacity Factor 30.82 30.51 29.94 30.31 Hub Height 80 Meters 80 Meters 80 Meters 80 Meters Availability 86.60% 86.60% 86.60% 86.60% GrossProduction MWh 15,905 11,338 11,124 15,245 Total Turbine Cost $ 7,400,000 $ 4,500,000 $ 4,500,000 $ 4,500,000 Capital Cost per MWh $ 465.26 $ 396.90 $ 404.53 $ 295.18 Table 1.1.6 Preliminary Turbine Evaluation Cost Versus Output

Turbine Selection Conclusion Based upon the information in the table 1.1.6, simply purchasing a larger turbine will not produce more electrical power, but will significantly increase the capital cost of the project as well as residential electricity prices. As an offshore wind farm development company, Mercury Wind Energy LLC recommends utilizing the 3MW, 3.2MW, or 3.6MW turbine for the proposed Evanston wind farm. In addition, the heavier 5MW turbine increases the installation time for the project by +30%. This increased installation time not only raises the Capital Cost, but increases the amount of interest that must be repaid. If the Cape Cod Wind Farm cannot economically afford to purchase 63 5MW turbines for a 375MW Wind Farm at an average residential electricity cost of 17.2¢/KWh, it is difficult to imagine that the proposed Evanston wind farm of less than 200MW and an average residential electricity cost of 10.5¢/KWh can possibly afford an over-sized 5MW turbine. 7

Evanston Cape Cod Average Annual Wind 8.0 m/s 9.0 m/s Max. Size of Wind Farm 200MW 420MW Average Residential Price of Electricity KW/h 10.5¢ 17.2¢ Optimal MW Size of Turbine Chosen 3.2 MW 3.2 MW Table 1.1.7 Sizing Turbines To Wind Speed Lake Michigan Ice Characteristics and Implications for Offshore Structures The extent of Icing in Lake Michigan will need to be measured at the proposed Evanston offshore site which varies depending upon the lake’s bathymetry as well as climatology. Consequently, the additional challenges associated with developing an offshore wind

7Most people think that buying a bigger turbine will result in more power, not true. Power is limited by wind speed. Therefore, a 5MW turbine may be purchased, but the result will be significantly higher residential electricity prices.

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project in an ice-prone environment need to be taken into consideration. This high-level study sought to generally describe the ice cover conditions on the lakes, identify the hazards posed by ice to offshore structures and transmission systems, and outline potential approaches to mitigate the impact of said hazards.

The primary concerns regarding the implications of lake ice center on the considerable forces that the ice could potentially apply to the offshore structures, as well as the potential for underwater cables to sustain damage due to ice scour. Existing offshore wind farms located in ice prone waters have demonstrated that foundations can be designed to withstand certain types of ice. Typically, the foundation designs will incorporate ice cone structures as a means to reduce loading. Provided that the foundations are designed appropriately for onsite conditions, this approach is expected to be equally effective for projects in Lake Michigan. With regard to ice scour, it is common practice to bury the underwater cables in a trench that is dug along the lakebed. When appropriately defined, this technique can provide ample protection against cable damage due to ice scour, as well as other underwater hazards. The detailed specifications for each of these methods will need to be determined based upon site specific conditions. Therefore, it is recommended that further investigation be undertaken to sufficiently characterize the ice conditions on the lake once a project location(s) is identified and approved. 1.2 Business Structure

1.2.1 Development of proposed Evanston Offshore Wind Farm Mercury Wind Energy recommends to the City of Evanston that a wind developer, namely itself; construct, manage, develop, operate, maintain, and eventually decomission the proposed Offshore Wind Farm for the City of Evanston for the following reasons: A. The minimum capital requirements to develop a 100MW Offshore Wind Farm in Evanston would be +$313 million. The City of Evanston is currently financially challenged; therefore, a project of this scope and size would be highly risky and unadvisable for the city itself to finance the project. B. Mercury Wind Energy is fully experienced and capable of raising the financing, overseeing capital allocation, and contracting the most experienced wind turbine construction companies, marine engineers, and environmental organizations needed for the scope of this project.

1.2.2 Operation and Maintenance of an Offshore Wind Facility Mercury Wind Energy recommends to the City of Evanston that the operation of the proposed Offshore Wind Farm be operated and maintained by a utility company, the developer, or by another privately held experienced offshore operations and maintenance company for the following reasons; A. The City of Evanston has limited expertise in energy development, utility maintenance, or the energy markets. To acquire these skills would require too much time, capital, and labor as of right now, which the city does not possess.

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Therefore, it is much less expensive for a larger energy company, such as ComEd/Exelon, EnXco, PJM, or others to operate and maintain the offshore wind farm. B. Cost, financial risk, and environmental risk prevent the possibility of the City of Evanston maintaining, building, or owning the wind farm. C. Contracting out the operations and maintenance of the proposed offshore wind farm to an experienced operations and maintenance company will allow the developer to utilize previous knowledge, experience, and economies of scale. 8 Mercury Wind has already developed a relationship with 2 highly experienced O&M companies that are interested in operating and maintaining an offshore wind farm for Evanston.

1.2.3 The City of Evanston’s Role A. The role the city can play in the proposed offshore Evanston Wind Farm is aiding the preferred developer in: obtaining land lease rights, obtaining permits from the FAA, obtaining governmental permits, setting contract requirements, and aiding the developer in obtaining electrical interconnection permits. B. Specifying and outlining what the developer, the city, and the current electrical provider are responsible for. C. Helping with obtaining construction permits and right of way easements to bury electrical interconnection cables under city streets as they are installed from the offshore wind farm to the substation.

1.3 Capital Requirements 1.3.1 Anticipated Total Costs & Cost Components For A 101MW Evanston Offshore Wind Farm For the proposed Evanston Wind Farm of 101MW the minimum estimated capital requirements are; A. Approx. $154 million Turbines B. Approx. $10 million Offshore Transmission Station C. Approx. $40.4 million Homerun Cable to Coast D. Approx. $15 million Offshore grid system E. Approx. $66 million Support Monopiles F. Approx. $19 million Engineering Design & Project Management G. Approx. $6.3 million Environmental Analysis H. Approx. $3.1 million SG&A…Miscellaneous 101MW Capital Total $313.8 Million

1.3.2 Sources of Capital & Financing Availability Major Banks such as; JP Morgan Chase and Mitsubishi bank are some of the banks that loan to wind developers. The larger the project, the more interested the banks are in the loan. Over the last couple of decades, the vast majority of commercial wind farms have been funded through project finance. Project finance is essentially a project loan, backed

8 O&M companies abound that are more than willing to partner with Mercury Wind to operate and maintain the offshore windfarm. These companies are listed in section 1 of this RFI response.

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by the cash flow of the specific project. The predictable nature of cash flows from a wind farm means they are highly suited to this type of investment mechanism. Recently, as an increasing number of large companies have become involved in the renewable energy sector, there has been a move towards balance sheet funding, mainly for construction. This means that the owner of the project provides all the necessary financing for the project, and the project’s assets and liabilities are all directly accounted for at company level. At a later date, these larger companies will sometimes group multiple balance sheet projects in a single portfolio and arrange for a loan to cover the entire portfolio, as it is easier to raise a loan for the portfolio than for each individual project. The structured finance markets (such as bond markets) in Europe and North America have also been used, but to a more limited extent than traditional project finance transactions. Such deals are like a loan transaction as long as the deals provide the project with an investment in return for capital repayment and interest. However, the way in which transactions are set up is quite different than a traditional loan. Different types of funding for renewable energy have emerged in recent years in the structured debt market, which has significantly increased the liquidity in the sector.

STRUCTURED FINANCE Over the last five years there has been an emergence of a number of new forms of transactions for wind financing, including public and private bond or share issues. Much of the interest in such structures has been with renewable energy funds, long-term investors, such as pension funds, and even high net worth individuals seeking efficient investment vehicles. The principle behind a structured finance product is similar to that of a loan, being the investment of cash in return for interest payment; however, the structures are generally more varied than project finance loans. As a result, there have been a number of relatively short-term investments offered in the market, which have been useful products for project owners considering project refinancing after a few years of operation. Structured finance investors have had a considerable appetite for cross-border transactions and have had a significant effect on liquidity for wind (and other renewable energy) projects.

BALANCE SHEET FINANCING The wind industry is becoming a utility industry in which the major utilities are playing a significant role. As a result, and while there are still many small projects being developed and financed, an increasing number are being built 'on balance sheet' (i.e. with the utility’s cash). Such an approach removes the need for a construction loan and the financing consists of a term loan only. Finally, if the wind farms are located in different countries other than the portfolio, this reduces regulatory risks. The risk associated with such financing is significantly lower than that of financing a single wind farm before construction, and attracts more favourable terms. As a result, the interest in such financing is growing. Portfolio financing can be adopted even after the initial financing has been in place for some time. It is now quite common to see an owner collecting together a number of individually financed projects and re-financing them as a portfolio.

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TECHNOLOGY RISK The present 'sellers’ market', characterised by the shortage in supply of wind turbines, has introduced a number of new turbine manufacturers. Many of these companies are not financially stable, and none of them have a substantial track record. Therefore, technology risk remains a concern for the banks, and the old-fashioned way of mitigating these risks, through extended warranties, 9 is resisted forcefully by new and experienced manufacturers. Technology risk has increased recently, rather than diminishing over time. However, some banks still show significant interest in lending to projects that use technology with relatively little operational experience.

OFFSHORE WIND Offshore wind farms are now more common in Europe. The first few projects were financed in the way described above -- by large companies with substantial financial clout, using their own funds. The initial involvement of banks was in the portfolio financing of a collection of assets, one of which was an offshore wind farm. Banks were concerned about the additional risks associated with an offshore development, and this approach allowed the risks to be diluted somewhat. Although there are still relatively few offshore wind farms, banks are clearly interested in both term loans, associated with the operational phase of offshore wind farms, and the provision of construction finance. This clearly demonstrates the banks’ appetite for wind energy lending. It is too early to define typical offshore financing, but it is likely to be more expensive than that for the equivalent onshore farm, at least until the banks gain greater confidence in the technology.

BIG PROJECTS Banks like big projects. The cost of the banks’ own efforts and due diligence does not change significantly with the project (loan) size, so big projects are more attractive to them than smaller ones. Wind projects are only now starting to be big enough to interest some banks, so as project size increases, the banking community available to support the projects will grow. Furthermore, increasing project size brings more substantial sponsors, which is also reassuring for banks.

CONCLUSIONS The nature of wind energy contracts is changing. Energy projects are growing larger, and large-scale offshore activity is increasing. Since banks favour larger projects, this is a very positive change. If the general economic picture deteriorates, this may give rise to certain misgivings concerning project finance, in comparison to the last few years. Political and environmental support for renewable energy means that funding of wind energy remains a very attractive proposition. Obtaining financing for the large-scale expansion of the industry will not be a problem.

9 Warranties will be addressed with more detail later in this RFI response, but as you see here, the warranties on turbines are increasing.

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1.3.3 Renewable Energy Credits(REC’s) & Price Change Risk Mercury Wind has no desire to keep any of the REC’s, but as is the custom with most wind farm developers, bundle the REC’s with the electricity and sell both in the PPA. Mercury Wind, along with 90% of the wind developers, has no desire to risk price changes in electricity forward contracts. Therefore, to eliminate risk and establish a hedge against possible downward pressure on commodity prices, Mercury Wind will sign a 20 year PPA. By signing a 20 year PPA, Mercury Wind does not have to worry about pricing uncertainty. As is common with the offshore PPA’s currently signed, Mercury Wind would ask for an annual inflation adjustment to cover any fluctuations due to changes in manufacturer’s quotations of spare parts or other materials. The 20 year PPA is the best strategy to allow wind developers to reduce pricing uncertainty, this is the main reason the government developed the 20 year PPA.

1.3.4 Projected Range of Pricing for Energy & Anticipated Incentives Mercury Wind has estimated PPA contract kW/h pricing for an offshore wind farm in Evanston at 14¢ – 18¢ based upon currently signed offshore PPA agreements in 2010.

Offshore Wind Farms Current Residential Prices (kW/h) PPA Prices (kW/h) Massachusetts - Cape Cod 17.2¢ 20.7¢ Rhode Island – Bluewater 17.0¢ 24.0¢ Illinois – Evanston 10.5¢ 14.0¢ Percent Difference 63.81% 59.64% Table 1.3.1 Anticipated Pricing For Evanston Offshore Wind PPA The east coast has always paid more for electricity than the Midwest so Mercury Wind is not expecting a PPA pricing rate that is equal to the east coast. However, based upon current PPA contracts a pricing range of 14¢ - 18¢ per kW/h seems reasonable to assume. Also, the Rhode Island PPA was signed with inflation adjustments, which means that PPA prices will rise an average of 3.5% per year for Rhode Island rate payers. The anticipated incentives that Mercury Wind has calculated into the proposed Evanston offshore wind farm are the Investment Tax Credit (ITC) and the Production Tax Credit (PTC). The ITC is a 30% grant the federal government gives the developer after the wind farm is completed and running for at least 60 days. The ITC is voted on by congress and must be renewed every year. Production tax credits (PTC) support the introduction of renewables by allowing companies which invest in renewables to write off this investment against other investments they make. A PTC is used as the central mechanism for the support of renewables as part of a national or regional mechanism, but it can be used in support of other mechanisms, such as a quota mechanism. Production tax credits have been supplied at the federal level in the U.S.; they have tended to be most effective in states which also provide some other form of support, most notably a quota mechanism.

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1.3.5 Decommissioning & Turbine Removal Mercury Wind accepts full responsibility for the decommissioning and turbine removal of the proposed Evanston offshore wind farm, but asks that a 20 - 50 year offshore land lease be approved by the city of Evanston. The longer the offshore land lease the lease rights, the easier it is for the developer to pay for the offshore wind farm. Mercury Wind has investigated the decommissioning timeline for a wind farm. Estimated site decommissioning has a timeline range from 6 months to 2 years. 10 Based upon additional conservative estimates of tearing down a large scale construction project, Mercury Wind estimates the decommissioning of an offshore wind farm will take approximately 6 months. Site restoration will take anywhere from another 6 months to a year. Total time spent, 1–2 years. The faster a wind farm is decommissioned, the cheaper. However, Mercury Wind is committed to the environment and will do nothing to harm the marine ecological structure within Lake Michigan. If the process to decommission turbines and restore the lakebed floor takes longer than intial estimates, Mercury Wind has budgeted for that.

1.3 Power Purchasing Agreement (PPA)

1.4.1 Interest Mercury Wind is interested in selling all of the output of the offshore wind farm to the IPA or local utility provider. Mercury Wind prefers to sign a 20 year PPA with the Illinois Power Authority, ComEd/Exelon, PJM, or another local electricity provider.

1.4.2 Ideal Length of PPA The turbine manufacturers and insurance companies currently provide a 20 year warranty on wind turbines. Therefore, the capital cost of the project is best hedged with a minimum 20 year power purchasing agreement. Allowing a developer, such as Mercury Wind Energy, to sign a 20 year power purchase agreement with the local electric utility is advantageous to the consumer, the utility, the city, the manufacturer, and the developer. 11 Figure 1.4.1 illustrates that US average annual electricity prices rise ~3.5% per year.

10 Decommissioning is “estimated” because no companies have torn down an offshore wind farm yet. Every estimate published to date is conjecture. Mercury Wind has spoken with professional contractors and conducted market research on this topic, neither of which was easy because no one in the US has offshore wind energy experience. Mercury Wind in partnership with a sub contractor has developed a proprietary method to decommission an offshore wind farm, quickly and with little environmental effect. This will be discussed in greater detail during the RFP stage. 11 The 20 year PPA was specifically developed by the government to spur investment and growth in the renewable energy sector. Utilizing the 20 year PPA is a win-win situation for everybody, therefore it is the goal of Mercury Wind.

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Figure 1.4.1 Average price of Electricity over a 10 year period.

Based upon the historical pricing data in figure 1.4.1 published by the United States energy information administration, electricity prices have an average price increase of 3.5% annually. Therefore, the average price per kW/h in the year 2030 is projected to be 22.9¢. The average kW/h price of electricity in the USA today is 11.5¢. If the city of Evanston builds the proposed offshore wind farm, the average price of electricity for Evanston residents can be held constant at 14¢ per kW/h or less for the next 20 years.12 Figure 1.4.2 on the next page shows the annual savings that is possible to Evanston residents over the life of a 20 year offshore wind farm. For an average of 35,000 households, the 20 year savings would be ~$2,054 per household or about $100 per household per year. Again, these calculations are based upon the wind farm; contracted to Mercury Wind, being a minimum of 100MW, and installed with the current monopile design. If the proposed Evanston offshore wind farm is built using a floating foundation design, there is no 20 year PPA agreement in place, Mercury Wind does not receive the contract, or the wind farm is smaller than the minimum 100MW, than the average residential price of electricity will undoubtably be higher than 14¢ per kW/h. Figure 1.4.2 illustrates the monetary savings that Evanston residents may achieve if Mercury Wind is allowed to construct a 100MW offshore wind farm and sign a 20 year PPA, thereby locking in elecrtricity prices for the next 20 years.

12 A constant price for 20 years is possible, but must be negotiated with the power utility.

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Fixed Evanston Market Total Yearly Wind Total Yearly Year Residents Pricing Cost Farm Cost Savings Pricing 2010 10.50¢ 11 10.90¢ $28,645,200 14¢ $36,792,000 $(8,146,800) 12 11.25¢ $29,565,000 14¢ $36,792,000 $(7,227,000) 13 11.64¢ $30,589,920 14¢ $36,792,000 $(6,202,080) 14 12.05¢ $31,667,400 14¢ $36,792,000 $(5,124,600) 15 12.47¢ $32,771,160 14¢ $36,792,000 $(4,020,840) 16 12.91¢ $33,927,480 14¢ $36,792,000 $(2,864,520) 17 13.36¢ $35,110,080 14¢ $36,792,000 $(1,681,920) 18 13.83¢ $36,345,240 14¢ $36,792,000 $(446,760) 19 14.31¢ $37,606,680 14¢ $36,792,000 $814,680 20 14.81¢ $38,920,680 14¢ $36,792,000 $2,128,680 21 15.33¢ $40,287,240 14¢ $36,792,000 $3,495,240 22 15.87¢ $41,706,360 14¢ $36,792,000 $4,914,360 23 16.42¢ $43,151,760 14¢ $36,792,000 $6,359,760 24 16.99¢ $44,649,720 14¢ $36,792,000 $7,857,720 25 17.59¢ $46,226,520 14¢ $36,792,000 $9,434,520 26 18.21¢ $47,855,880 14¢ $36,792,000 $11,063,880 27 18.84¢ $49,511,520 14¢ $36,792,000 $12,719,520 28 19.50¢ $51,246,000 14¢ $36,792,000 $14,454,000 29 20.19¢ $53,059,320 14¢ $36,792,000 $16,267,320 2030 20.89¢ $54,898,920 14¢ $36,792,000 $18,106,920

Total Savings: Evanston Residents For 20 Years $71,902,080 Table 1.4.2: Savings to Evanston Residents Over A 20 Year Period

Mercury Wind is interested in setting electricity prices constant for 20 years through a PPA agreement. Table 1.4.2 shows that a 20 year PPA with a set price can yield Evanston residents savings of $72 million. 13 This is not to mention the fact that the energy is clean, and will not harm the environment. This green turbine energy will prevent the equivalent green house gases of more than 100,000 cars for 20 years! Just think, 20 years from now, maybe Evanston residents will be able to eat the fish in Lake Michigan again. Figure 1.4.2 proves that offshore wind power is not only clean, but can be affordable over the long term.

1.4.3 Terms of Service Mercury Wind is responsible for: delivering power, constructing, maintaining, operating, and the eventual decommisioning of the wind farm. Mercury Wind would be responsible for delivering this power under the agreed upon contract terms of the PPA.

13 These prices are what Mercury Wind can offer. Other, larger, wind developers have greater overhead, and desire for a larger return. Mercury Wind cannot speak for those developers about their cost structure, we know our cost structure.

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Metric Term Sheet Contract Effect Project Size 450MW 450MW Same Energy Cap at any one hour 300MW 300MW Same $65.23/kW - Capacity Price year $70.23/kW – year 7.7% increase Capacity Price (Energy = 1,106 GWh/yr; capacity = 105MW) $6.19/MWh $6.67/MWh 7.7% increase Energy Price (if purchase capacity) $105.9/MWh $98.93/MWh 6.6% decrease Subtotal (energy + capacity) 112.13/MWh $105.60/MWh 5.8% decrease Energy Only Price (no capacity) 109.71/REC $104.23/MWh 4.99% decrease Renewable Energy Credit (REC) price 19.75/REC $19.75/MWh Same Number of RECs Equal to the purchased by Electrical amount of energy Utility 175,000 sold-1,106,000 Increased by 931,000 RECs, plus federal and state credits; RGGI credits or Greatly expanded to certificates; and include carbon Environmental emissions allowances; additional Attributes transferred to reductions, offset benefit to ratepayers Electrical Utility RECs only and allowances for price stability Same (less than Inflation Factor 2.50% 2.50% recent inflation) Federal permits deadline Nov. 30, 2011 Nov. 30 2011 Same Guranteed initial Delivery Date 1-Jun-14 1-Jun-14 Same Date Certain for Utility 30 days notice of termination Nov.30, 2015 Nov. 30, 2015 Same Interconnection Wind Farm Electrical Utility Lower cost Owner Change in Utility approval With Mercury Wind Control (Other than unless entity has and this provision, public offering or within Terms not gross assets of at financing is all but Mercury Wind) agreed to least $10 Billion assured Table 1.4.3 Sample Terms of a Service Agreement For An US Offshore Wind Farm

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1.4.4 Ancillary Services Ancillary services typically are in reference to the support of the reliable operation of the transmission system as it moves electricity from generating sources to retail customers or the grid. In this case, since the proposed Evanston wind farm will be attaching to the existing grid, the ancillary services provided by Mercury Wind will consist of; monitoring the wind farm electrical cable to shore, monitoring the cable connection from the offshore transformer to the onshore transformer, monitoring the output of each turbine, monitoring the condition of the collector voltages and collector cables, monitoring the impact of snowstorms/thunderstorms on turbine production, and 24/7 monitoring of the lakefront. Mercury Wind in partnership with other companies has developed a special system to monitor the lake and wind farm continously. This system is proprietary and will not be revealed until the RFI stage and/or contract approval. That said, Mercury Wind will also provide inflatable life rafts on each turbine, turbine to shore telephones for boats in distress, foghorns on the turbines to warn ships, and high powered warning lights to alert evening boaters, aircraft, and freighters. Mercury Wind is committed to providing the city of Evanston and its citizens the very best offshore wind farm. Any additional ancillary services that are not mentioned here, but the city would need or require, Mercury Wind will happily provide.

1.4.5 Pricing Structures All offshore Wind farm PPA’s signed for in 2010 no longer have a 2 tiered pricing structure. Meaning, there is not a separate price for on-peak versus off-peak electricity for a wind farm. So far, the two offshore PPA’s that have been signed for Cape Cod and Delaware have been signed under a single tiered pricing structure for 20-25 years or length of the PPA. That said, if the “external” costs of damage to health and other environmental effects of different fuels are added in, the European Commission External project has concluded that the cost of coal-fired generation would double and the cost of gas-fired generation increases by 30%. A recent study by Emerging Energy Research, for turbine manufacturer Vestas, concluded that if a cost of €30 per tonne of CO 2 was applied to emissions from fossil fuel power stations, onshore wind energy would be the cheapest source of new power generation in Europe. One of the most important economic benefits of wind power is that it reduces countries’ and power producers’ exposure to fuel price volatility. This risk reduction is presently not accounted for by the standard methods of comparing electricity costs, which have been used by public authorities, including the International Energy Agency and the European Commission, for more than a century. Pricing guarantees for a Mercury Wind farm were addressed in greater depth on pages 13 – 14 under the “Ideal length of PPA” heading. The purpose of the Vestas (world’s largest offshore wind turbine maker) study is to show that although wind farms will increase the up front cost of electricity, over time the cost of electricity will fall, and greenhouse gas emission will be reduced, thus making electricity prices cheaper due to limiting the environmental impacts and the greenhouse gases being saved. 14

14 For an approximation of the amount of money saved by using an offshore wind farm please see table 4.2.1.

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1.4.6 Production and Availability Guarantees Offshore wind turbines are generally expected to produce 30 – 35% of their rated capacity depending on the wind speed and the turbine manufacturer. 15 For example, an offshore wind farm of 100MW with an average wind speed of 8.0m/s should yield approximately 31% or 31MW of consistent power. Turbine reliability is expected to be steady at 86.6% during the first year, and over 95% every year afterwards 16 , with an expected power loss of 2%. Generally, when a PPA is signed between the wind farm developer and the utility, the utility buys the rights to the entire “rated” facility at a set price (including REC’s), but only pays for what the wind farm produces. For example, if a 100MW wind farm produces 30MW’s of power the local utility only pays for 30MW at the already agreed upon rate. The current laws in place require the electric grid owner (in the Evanston offshore wind farm case: Exelon) to accept as much renewable energy as can be produced. Therefore, it is the responsibility of the grid provider to work with Mercury Wind (Wind Farm Owner/Independent System Operator) to develop baseload calcluations based upon historical and current average wind speeds to calculate availability. Historically, in the United States, current onshore wind farms are producing 25% - 30% of rated power annually. In Europe, Offshore wind farms vary considerably, and this is why Mercury Wind has deveoped strategic partnerships with experienced offshore wind farm teams. Mercury Wind executives have engineering degrees, graduate degrees, experience, and are committed to knowing not just which offshore wind farms have the highest and most consistent production outputs, but why. 17 Mercury Wind will choose its wind turbines based upon reliability and efficiency. The largest turbines do not always provide the most efficient production. Mercury Wind can provide availability of +95.6% with electrical losses of less than 2%.

1.4.7 Outages Wind farm developers and owners make every effort to prevent downtime, outages, power failure, or part malfunction. However, parts do fail, and systems do malfunction. Redundancy systems will be built into any wind farm that Mercury Wind constructs, period. The offshore grid system will be daisy chained in a parallel fashion to institute these redundant systems so in the event one turbine is down, the entire wind farm is not down. Mercury Wind cannot make money if the Wind Farm is not generating electricity; therefore Mercury Wind is making every effort during the design and installation phase of the Evanston Offshore wind farm process to only engage the most experienced and best companies to design redundant systems into the front end of the wind farm.

15 All Turbines are not created equal, and neither are Turbine executives. Mercury Wind has met with more than just a few executives and asked the difficult questions to determine production. Mercury Wind has scrutinized European offshore wind farms and understands not just which farms are most productive, but why. This information is propriatary and because the City of Evanston is disclosing this information to the public, regrettably Mercury Wind cannot put this information into the RFI. 16 There are Wind farms in Europe that are producing with 97% availability. Some of this is due to wind obviously, but more of this is due to the type, position, and parts reliability of the particular offshore wind farm. This is where having superior engineer’s turns a project from average, to superior. Mercury Wind has superior engineers and superior logistics to create the best wind farm in America. 17 Just having a “big” developer construct an offshore wind farm, does not guarantee “big” results. There have been too many black eyes and mismanaged projects to detail them all here. Needless to say, Mercury Wind has partnerships with the very best people in the offshore wind segments and hires the best people. The “people” really do make the difference, not just the size of the company. Big companies die everyday, this was the reason for the TARP bailout!

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1.4.8 Facility Operation and Reliability Standards The following was taken from a typical legal agreement between the seller and buyer of a wind farm: Seller shall maintain the Facility in a manner that complies with the rules for safety and reliability set forth in the Interconnection Facilities Agreement and Good Utility Industry Practice. Seller shall comply with all applicable local, state, and Federal laws, regulations, and ordinances, including, but not limited to, all applicable Federal, state, and local environmental laws and regulations presently in effect or which may be enacted during the term of this Agreement. Seller shall staff, control, and operate the Facility consistent at all times with the Operating Procedures referenced below in this Section. (1) Seller shall provide a maintenance schedule for the Facility for the first year of operation at least thirty (30) days prior to the Completion Date. Thereafter, Seller shall submit to Buyer annual maintenance schedules no later than October 1 of each year that cover the twelve (12) month period starting January 1 and ending December 31 and a long-term maintenance schedule that will encompass the immediately ensuing four (4) maintenance years. Buyer shall provide written notice of any reasonable objections to the proposed annual maintenance schedule within ten (10) Business Days of receipt thereof, and failure to so object shall be deemed approval of the annual maintenance schedule. Seller shall furnish Buyer with reasonable advance notice of any change in the annual maintenance schedule. Reasonable advance notice of any change in the annual maintenance schedule involving any shutdown of the entire Facility is as follows: Scheduled Outage Expected, Duration, and Advance Notice to Buyer (a) Less than 2 days at least 24 hours (b) 2 to 5 days at least 7 days (c) Major overhauls (over 5 days) at least 90 days (2) Seller shall not schedule any planned maintenance outages for the entire Facility during any weekday of an On-Peak Month without the prior written approval of Buyer not to be unreasonably withheld, delayed, or conditioned.

1.4.9 Facility Description The monitoring facility can be located anywhere in Evanston. There is no requirement as to the area where the monitoring facility is built. Mercury Wind suggests that the facility be located close to where the service boats will be, but that is not a requirement. The monitoring facility is built to control and monitor the offshore wind farm once it has been fully constructed. Recently, it has been possible to even monitor wind farms over the internet and several O&M wind farms companies are doing that. Mercury Wind prefers to locate the O&M facility as close to the service boats and offshore wind farm as possible. The following excerpt is from an existing wind farm facility description. (a) Summary Description Seller shall construct, operate, and maintain the Facility. Exhibit 4.2 below provides a sample picture and basic interconnection schematic/description of the Facility, including the control network of the Wind Turbines, other equipment, and components that comprise the controls facility.

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Figure 1.4.4 Controls and Monitoring Wind Farm Facility

(b) Site A typical site agreement is generally set up like this: The Facility shall be located at the area generally described as: Facility Name: ___ Evanston Offshore Wind Farm Location: Sections ___, Township ___, Range ___ of the ___ Principal Meridian, ______, with a portion of Seller’s Interconnection Facilities also located at: __ Emerson & Dewey _. County/State__ Cook County, Illinois _. A scaled map that identifies the location of the Facility, the Wind Turbines, the Interconnection Facilities, and significant ancillary facilities, including the facilities located at Point of Delivery, is included in the maps under section 5 titled Operations and Performance of this RFI.

(c) General Design and Construction of the Facility Seller shall construct the Facility in a workmanlike, professional manner according to Good Utility Industry Practice(s). The Facility shall be: (1) Capable of supplying Energy Output in compliance with the requirements of the Interconnection Facilities Agreement; (2) Capable of operating at power levels as specified in the Interconnection Facilities Agreement; (3) Equipped with protective devices and generator control systems designed and operating in accordance with the Interconnection Facilities Agreement and Good Utility Industry Practice(s). 5.2 Construction. (a) Design, Development and Construction. Except as otherwise provided in an Interconnection Construction Services Agreement, as between Buyer and Seller, Seller

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shall have sole responsibility for the design and construction of the Project and the Project Meter and all related metering and submetering facilities, including the obligation to perform all studies, including environmental studies, pay all fees, obtain all necessary Permits and execute all necessary agreements with Exelon/PJM and Participating Transmission Owners for the Electrical Interconnection Facilities necessary for the ownership, construction, operation and maintenance of the Project and delivery of Seller’s Products in accordance with the terms hereof. All of such design, construction and upgrades shall be consistent with all standards and provisions set forth by FERC, PJM or any other applicable Governmental Authority and the interconnecting Participating Transmission Owner. All Electrical Interconnection Facilities, including metering and submetering facilities must be of sufficient capacity to permit the Project to operate at all times during each month at the Project Capacity. Metering and submetering facilities must meet such additional specifications as set forth in Section 3.8. (b) Construction Scheduling. At least three (3) months prior to issuance of the EPC Notice to Proceed by Seller to the EPC Contractor, Seller shall provide Buyer a construction schedule detailing the schedule and construction milestones for completing the Project and each of the Units and reaching the Project Commercial Operation Date, the Initial Delivery Date and each Unit Group Commercial Operation Date. Seller shall provide Buyer with monthly progress reports, including projected time to the Project Commercial Operation Date and each Unit Group Commercial Operation Date, and Buyer shall have the right, during business hours and upon reasonable Notice, to inspect the construction site and monitor construction of the Project. (c) Permitting. Seller shall be permitted to terminate the Agreement and Buyer will return the Development Period Security to Seller less six million dollars ($6,000,000) as liquidated damages (such liquidated damages being Buyer’s sole remedy for such termination by Seller) if Seller, after making all commercially reasonable efforts to do so, is unable to secure the Permits required for the construction and commencement of Commercial Operation of the Project, excepting such Permits for operation which are routinely granted on or about the time of the commencement of Commercial Operation (the “Permitting Milestone”), on or prior to November 30, 2011 (the “PermittingDeadline”). In the event that, after making all commercially reasonable efforts to do so, Seller cannot satisfy the Permitting Milestone prior to the Permitting Deadline, then, at Seller’s sole election, the Seller shall be permitted to extend the Permitting Deadline by six (6) months if Seller agrees, going forward, to pay the then undrawn amount of the Development Period Security to Buyer as liquidated damages if Seller is unable to achieve the Permitting Milestone by the extended Permitting Deadline and Buyer exercises its right to terminate this Agreement for failure to meet the Permitting Milestone (which such termination and liquidated damages shall be Buyer’s sole remedies for such Event of Default). Nothing in this subsection (c) shall be construed to limit the Buyer’s ability to recover the full Development Period Security, Services Term Security or other damages (to the extent described elsewhere in the Agreement) for any default of Seller arising other than as a result of a failure to meet the Permitting Deadline.

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1.4.10 Facility Operating Criteria Operations & Maintenance

The PPA generally outlines the seller’s responsibility to operate and maintain the project in accordance with prudent utility practices. Such duties typically include regular inspection and repair, as well as completion of scheduled maintenance. To make it clear that the parties do not intend to allow the buyer to use the prudent utility practice standard to improve on the output guarantee or mechanical availability guarantee, the PPA will often provide liquidated damages due for a failure to achieve guaranteed output or mechanical availability which is the buyer’s sole remedy for underperformance by the wind farm.

Metering. The metering provision is used to determine the quantity of output for which the seller will be paid. The PPA usually requires one party (typically the seller) to install and maintain a meter. The other party typically has the right to install a check meter. If the seller’s meter is out of service or generating inaccurate readings, the PPA should specify how the parties will determine the project’s output. Tests should be conducted regularly to verify the accuracy of the seller’s meters. The PPA usually states how often such tests will occur, at whose expense, and what form of notice will be given to each party. The PPA should specify how much variance in the meter’s accuracy will be permitted and how repair or replacement of defective meters will be handled. Real-Time Data. The PPA may require the seller to provide the buyer with standard real- time data (including meteorological data, wind speed data, wind direction data, and output data). All this data is provided by the main met mast for the wind farm, as well as data gathered from each turbine. A. Output Guarantees. The PPA may include an output guarantee to the buyer. An output guarantee requires the seller to pay the buyer if the project’s output over a specified period fails to meet a specified level. The period may be biannual, annual, or seasonal. The PPA usually allows the owner to operate the project for one or two years before the output test is applied, enabling the owner to fix any problems at the project. The owner should offer such a guarantee only if they are very confident about the project’s wind regime, wind variability, and capacity factor. Note: Wind turbine manufacturers generally do not provide output warranties to project developers. Rather, the project owner assumes the risk that the wind at the project will produce enough energy to meet the project’s revenue requirements. A. Availability Guarantees. The owner of the wind project is usually more willing to offer the purchaser a mechanical-availability guarantee rather than to offer an output guarantee. Such an availability guarantee requires the wind turbines in the project to be available a certain percentage of the time, after excluding hours lost to force majeure and a certain amount of scheduled maintenance. Mechanical-availability percentages usually range from 90 percent to 95 percent, but they may decline over the life of the project to reflect wear and tear on the turbines. This wear and tear curve is different depending on the size and manufacturer of the wind turbine. Wind turbine manufacturers typically provide availability warranties that support the project

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owner’s mechanical-availability guarantees for the first few years of the project. However, such warranties generally last ten years or less, and the seller is usually on his own if he chooses to give a mechanical-availability guarantee that covers the period after the manufacturer’s warranty expires. With the advent of permanent magnets and direct drive, generators and turbines are lasting longer. This has led to longer warranties. It is now possible to purchase a warranty for 20 years. This again, depends on the manufacturer and insurance company chosen. Shaping. Transmission is often very expensive for wind projects because the intermittent nature of the resource can produce generation imbalance penalties and the party responsible for transmission has to pay for the maximum transmission capacity that the project can produce, even though the project will deliver that much energy only part of the time. To reduce these costs, a project owner may enter into an integration and exchange agreement (often called a “shaping agreement”) with a utility that has a load that can be served by the project. In general, a shaping agreement allows a project to deliver energy into the utility’s system as the energy is generated. The intermittent energy serves the utility’s load. In the following week or month, the utility redelivers the energy that it has received as a flat product at an agreed-on point of delivery. Not surprisingly, the utility will charge a fee for this service. Shaping can also be accomplished through market transactions, but this typically requires the developer or the non-utility provider of the shaping services to have access to a sophisticated trading desk.

B. Power-Curve Warranties. Wind turbine manufacturers also may warrant the ability of the turbines to produce a specified output at specified wind speeds. The power curve represents a calculation of the amount of energy that the turbines are rated to produce at different wind speeds. Power-curve warranties are intended to compensate the project owner for lost revenues resulting from inefficient turbine operation, i.e., the failure of turbines to operate within a certain percentage (typically 95 percent) of the power curve. Power curve warranties are not usually passed through to buyers under PPAs. Seller’s Responsibility . Except as otherwise expressly set forth in the Agreement, during the Services Term and the Pre-Services Term Period, Seller shall arrange, schedule and be responsible for electric transmission service up to and at the Delivery Point and any and all costs or charges imposed on or associated with the Products up to and at the Delivery Point or its delivery of the Products to the Delivery Point, including electric transmission costs, transmission losses, Electrical Losses, congestion costs and all risks and costs associated with any transmission outages or curtailment up to and at the Delivery Point, consistent with all standards and provisions set forth by FERC, PJM, Exelon, or any other applicable governing agency or tariff, or set forth by a Participating Transmission Owner. Seller shall maintain the power factor at the Delivery Point between 0.95 leading and 0.95 lagging consistent with PJM/Exelon requirements. Regardless of whether Buyer is a Participating Transmission Owner, Seller shall be responsible for all of Seller’s interconnection arrangements

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1.4.11 Curtailment The PPA often describes circumstances in which either party has a right to curtail output. For example, the seller may have a right to curtail deliveries if the wind farm is affected by an emergency condition such as a hurricane, bird migration, or terrorist attack. The PPA may permit the buyer to curtail for convenience, in which case the PPA usually requires the buyer to pay the purchase price for the curtailed generation and the after-tax value of the production tax credits that the seller would have earned had the buyer not curtailed the wind farm’s output. Facility curtailments caused by transmission congestion or conditions beyond the point of delivery are often handled in the same manner, although the topic of curtailment is frequently a difficult issue in PPA negotiations. From a technological standpoint, Mercury Wind will be able to turn off one turbine, a group of turbines, or the whole wind farm if necessary. Most offshore wind farms use SCADA, PLC’s, or some other common controls system to curtail one or all wind turbines if necessary. In recent years, wireless controls have become more popular than the standard communication cables that were used on earlier offshore wind farms. Mercury Wind is able to use either method to curtail power. Force Majeure. If energy is curtailed at a party’s discretion or because the party is at fault, the PPA usually requires the curtailing party to pay damages to the other. If curtailment is caused by an event beyond a party’s control, the party’s duty to perform under the PPA may be excused. For example, if a disaster disables the transformer at the delivery point, the seller would be excused from delivering energy, and the buyer would be excused from taking and paying for energy, until the transformer is repaired. The party responsible for maintaining the transformer would, of course, be required to use diligent efforts to make repairs. Parties often heavily negotiate force majeure provisions. Good provisions should carefully distinguish between events that constitute “excuses” (which relieve the affected party from its duty to perform) and those that are “risks” (which are simply allocated to a party). The ability to buy energy and environmental attributes at a lower price or sell them at a higher price is generally not a force majeure event. Moreover, a party’s inability to pay should not constitute a force majeure event under the PPA. A well-drafted force majeure clause will usually list a number of items that both parties can agree upon. 1.4.12 Start-up and Shut-down Considerations The following is an excerpt from an existing arrangement between a wind farm developer and electricity provider. These conditions may serve as a guide, not a yardstick for the Evanston wind farm project. Test Energy Rate. Because a single wind turbine can generally function independently of other wind turbines, the PPA may require the purchaser to buy power from the turbines as they are installed, connected to the transmission grid, and made operational, even though the project as a whole has not achieved its commercial operation date. To encourage the seller to achieve commercial operation as soon as possible, such energy is often sold at a test energy rate, which is lower than the contract rate that will be paid once the commercial operation date is reached. (a) Conditions Precedent. The Initial Delivery Date shall occur, on or after the Effective Date, upon the date on which each of the following conditions precedent have been satisfied or waived by written agreement of the Parties.

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(i) Seller shall construct or cause to be constructed the Project with an aggregate nameplate capacity rating equal to 100MW (or a lesser Capacity, to the extent permitted under the PPA) at no expense to Buyer, which shall include the equipment and characteristics as described in the PPA, and which shall reasonably be expected to enable Seller to satisfy the obligations of the Seller herein. (ii) Seller shall construct or cause to be constructed the Electrical Interconnection Facilities at no expense to Buyer such that the Electrical Interconnection Facilities are capable of delivering the maximum quantities of Energy to the Delivery Point as contemplated in this Agreement during each month (in addition to any other output of the Project as the Electric Interconnection Facilities are required to transmit) and shall cause them to be placed into service, in each case, in accordance with the requirements of the interconnecting transmission owner and/or operator, and applicable rules, if any, of FERC, PJM, Exelon, the Commission and any other organization or Governmental Authority charged with reliability responsibilities. (iii) At Seller’s expense, Seller shall have obtained (and demonstrated possession of) all Permits required for the lawful construction, operation and maintenance of the Project and the Units, inclusive of the Electrical Interconnection Facilities, including all those related to environmental matters, as necessary to permit the Seller to operate the Project at the Project Capacity and for Seller to perform its obligations under the Agreement. (iv) Seller shall have executed all interconnection and transmission services agreements, including the Interconnection Services Agreement and the Interconnection Construction Service Agreement, all agreements necessary for its use and control of the Site for purposes of the construction, operation and maintenance of the Project for a term at least equal to the Pre-Services Term Period (if a Pre-Services Term Period occurs) and the Services Term, and all other agreements that are necessary for Seller to perform its obligations hereunder, in form and substance reasonably satisfactory to both Buyer and Seller in the case of each interconnection and transmission services agreement, and which agreements shall be in full force and effect as of the Initial Delivery Date. (v) The Project Commercial Operation Date shall have occurred or will occur simultaneously with the Initial Delivery Date. (vi) Seller shall provide Buyer with Notice that the Project Commercial Operation Date has occurred or will occur simultaneously with the Initial Delivery Date. (vii) No default or Event of Default shall have occurred and remain uncured as of the Initial Delivery Date. (vii) Seller shall have provided Buyer with Notice of the expected occurrence of the Initial Delivery Date no later than ten (10) Business Days prior and again three (3) days prior to its occurrence and again immediately prior to the date it occurs. (viii) Seller is a PJM/Exelon Member and shall have entered into all required PJM/Exelon Agreements required to perform under the Agreement, which shall be in full force and effect, the Project has been accepted as a Capacity Resource of PJM/Exelon as of the date in question, and (i) if there shall not have been a Pre-Services Term Period, Seller shall be able to transfer the Contract Capacity Amount to Buyer as required pursuant to Section PPA. A) with respect to the first Capacity Year commencing after the Initial Delivery Date, or (ii) if there shall have been a Pre- Services Term Period for which a Capacity Year remains in effect in accordance with Section 3.1(a)(ii), Seller remains able to transfer the Contract Capacity Amount for such Capacity Year to Buyer.

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(ix) The Project has qualified and has been certified by the Commission as an Eligible Energy Resource (as defined by the Commission in the RPS Rules and the RPS Act) and all Energy produced by the Project qualifies as generation from an Eligible Energy Resource under the RPS Act and the Commission RPS Rules. (x) Seller has posted the Collateral required to be posted in favor of Buyer as of the Initial Delivery Date pursuant to Section 8.1(b) and entered into the Project Security Agreements . (xi) Seller shall have all necessary rights to the Project Site to construct and to operate the Project in accordance with the terms hereof. (b) Initial Performance Test Procedure. The “Initial Performance Test” shall consist of a test of each of the Units in accordance with the terms of the Turbine Supply Agreement to confirm each such Unit is integrated with the PJM/Exelon Grid and is delivering Energy to the PJM/Exelon Grid consistent with PJM/Exelon requirements. Buyer may have a representative present at the Project at any time during any Initial Performance Test and Section 3.11 shall apply thereto. (c) Subsequent Performance Tests Procedures. The “Subsequent Performance Tests” shall consist of tests and warranties of the Turbine Supply Availability and Power Curve of the Units to the extent provided by, and in accordance with the terms of the Turbine Supply Agreement. Such tests and confirmation of warranted performance shall be undertaken in accordance with the terms of the Turbine Supply Agreement Buyer may have a representative present at the Project at any time during the Subsequent Performance Tests and Section 3.11 shall apply thereto. Buyer shall promptly be provided with all results of the Subsequent Performance Tests by Seller.

1.4.13 Insurance and Indemnification Requirements Insurance There are two types of insurance that wind farms acquire. During the construction phase there is one type of insurance that is billed on a monthly basis. Upon completion of the wind farm, there is another type of operating insurance that is set at an annual rate. Either construction or operating insurance is required from the banks during all phases of the wind farm project. Mercury Wind and its sub contractors will acquire all insurance needed.

Indemnities The following is an example indemnity used by an offshore wind developer; (a) Indemnity by Seller. Seller shall release, defend, indemnify and hold harmless the Buyer, its directors, officers, agents, attorneys, representatives and Affiliates (“Buyer Group”) against and from any and all damages, claims, losses, liabilities, obligations, costs and expenses, including reasonable legal, accounting and other expenses, and the costs and expenses of any and all actions, suits, proceedings, demands, assessments, judgments, settlements and compromises, which arise out of or relate to or are in any way connected with (i) the Product(s) delivered to Buyer prior to and at the Delivery Point; (ii) any other Energy or Product produced by the Project and not required to be delivered to Buyer hereunder; (iii) Seller’s participation in the PJM, RPM, or Exelon Market and compliance with PJM/Exelon Capacity Rules; (iv) the Project and Seller’s operation and/or maintenance of the Project; (v) Seller’s actions or inactions, including breach and violation, with respect to this Agreement, the Ancillary Agreements or other agreements related to the development, construction, ownership, operation or maintenance of the

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Project; (vi) any environmental matters associated with the Project or the delivery to Buyer of the Products hereunder, including the use, disposal or transportation of Hazardous Substances by or on behalf of the Seller or at the Seller’s direction or agreement, and the protection, maintenance and restoration of the Site; or (vii) resulting from Seller’s negligence, misconduct, or violation of any applicable Law, or requirements of PJM, the Commission, NERC, Reliability First Corporation, FERC or other Governmental Authorities; in each case including any loss, claim, action or suit, for or on account of injury, bodily or otherwise, to, or death of, persons, or for damage to or destruction of property belonging to Buyer, Seller or others, excepting only such damages, claims, losses, liabilities, obligations, suits, proceedings, demands or assessments, as may be caused solely by the fault, willful misconduct or negligence of a member of the Buyer Group. Without limiting Buyer’s rights to collect liquidated damages as set forth in this Agreement, Seller shall not be liable for any loss of profit or revenues, loss of product, loss of use of products or services or any associated equipment, interruption of business, cost of capital, downtime costs, increased operating costs, claims of ratepayers for such damages, or for any special, consequential, incidental, indirect, punitive or exemplary damages of Buyer; it being understood such limitation does not apply to Third Party Claims. (b) Indemnity by Buyer. Buyer shall release, indemnify and hold harmless Seller, its directors, officers, agents, attorneys, representatives and Affiliates (“Seller Group”) against and from any and all damages, claims, losses, liabilities, obligations, costs and expenses, including reasonable legal, accounting and otherexpenses, and the costs and expenses of any and all actions, suits, proceedings, demands, assessments, judgments, settlements and compromises, which arise out of or relate to or are in any way connected with (i) the Products delivered in accordance with the terms hereof, after the Delivery Point, (ii) Buyer’s actions or inactions, including breach and violation, with respect to this Agreement or the Ancillary Agreements, or (iii) resulting from Buyer’s negligence, misconduct, or violation of any applicable Law, or requirements of PJM/Exelon, the Commission, NERC, Reliability First Corporation, FERC or other Governmental Authorities; in each case including any loss, claim, action or suit, for or on account of injury, bodily or otherwise, to, or death of, persons, or for damage to or destruction of property belonging to Buyer, Seller, or others, excepting only such damages, claims, losses, liabilities, obligations, suits, proceedings, demands or assessments, as may be caused solely by the fault, willful misconduct or negligence of a member of the Seller Group. Without limiting Seller’s rights to collect liquidated damages as set forth in this Agreement, Buyer shall not be liable for any loss of profit or revenues, loss of product, loss of use of products or services or any associated equipment, interruption of business, cost of capital, downtime costs, increased operating costs, claims of ratepayers for such damages, or for any special, consequential, incidental, indirect, punitive or exemplary damages of Seller; it being understood that such limitation does not apply to Third Party Claims. (i) Notice of Claim. Subject to the terms of this Agreement and upon obtaining knowledge of a claim for which it is entitled to indemnity under this Section 11.1, the Party seeking indemnification hereunder (the “Indemnitee”) will promptly notify the Party against whom indemnification is sought (the “Indemnitor”) in writing of any damage, claim, loss, liability or expense which the Indemnitee determined has given or could give rise to a claim under Section 11.1(a) or (b). (The written Notice is referred to as a “Notice of Claim”). A Notice of Claim will specify, in reasonable detail, the facts known to the Indemnitee regarding the

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claim. (ii) Notice of Third Party Claim. If an Indemnitee receives Notice of the assertion or commencement of a Third Party Claim against it with respect to which an Indemnitor is obligated to provide indemnification under this Agreement, such Indemnitee will give such Indemnitor a Notice of Claim as promptly as practicable, but in any event not later than seven (7) calendar days after such Indemnitee’s receipt of Notice of such Third Party Claim. Such Notice of Claim will describe the Third Party Claim in reasonable detail, will include copies of all material written evidence thereof and will indicate, if reasonably practicable the estimated amount of the Indemnifiable Loss that has been or may be sustained by the Indemnitee. The Indemnitor will have the right to participate in, or, by giving written Notice to the Indemnitee, to assume the defense of any Third Party Claim at such Indemnitor’s own expense and by such Indemnitor’s own counsel (as is reasonably satisfactory to the Indemnitee), and the Indemnitee will cooperate in good faith in such defense. (iii) Direct Claim. Any Direct Claim must be asserted by giving the Indemnitor written Notice thereof, stating the nature of such claim in reasonable detail and indicating the estimated amount, if practicable. The Indemnitor will have a period of sixty (60) calendar days from receipt of such Notice within which to respond to such Direct Claim. If the Indemnitor does not respond within such sixty (60) day period, the Indemnitor will be deemed to have accepted such Direct Claim. If the Indemnitor rejects such Direct Claim, the Indemnitee will be free to seek enforcement of its rights to indemnification under this Agreement. (iv) Failure to Provide Notice. A failure to give timely Notice or to include any specified information in any Notice as provided in this Section 11.1(c) will not affect the rights or obligations of any Party hereunder except and only to the extent that, as a result of such failure, any Party which was entitled to receive such Notice was deprived of its right to recover any payment under its applicable insurance coverage or was otherwise materially damaged as a direct result of such failure and, provided further, the Indemnitor is not obligated to indemnify the Indemnitee for the increased amount of any claim which would otherwise have been payable to the extent that the increase resulted from the failure to deliver timely a Notice of Claim. (d) Defense of Third Party Claims. If, within ten (10) calendar days after giving a Notice of Claim regarding a Third Party Claim to an Indemnitor pursuant to Section 11.1(c)(ii), an Indemnitee receives written Notice from such Indemnitor that the Indemnitor has elected to assume the defense of such Third Party Claim as provided in the last sentence of Section 11.1(c)(ii), the Indemnitor will not be liable for any legal expenses subsequently incurred by the Indemnitee in connection with the defense thereof; provided, however, that if the Indemnitor fails to take reasonable steps necessary to defend diligently such Third Party Claim within ten (10) calendar days after receiving written Notice from the Indemnitee that the Indemnitee believes the Indemnitor has failed to take such steps, or if the Indemnitor has not undertaken fully to indemnify the Indemnitee in respect of all Indemnifiable Losses relating to the matter, the Indemnitee may assume its own defense, and the Indemnitor will be liable for all reasonable costs or expenses, including attorneys’ fees, paid or incurred in connection therewith. Without the prior written consent of the Indemnitee, the Indemnitor will not enter into any settlement of any Third Party Claim which would lead to liability or create any financial or other obligation on the part of the Indemnitee for which the

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Indemnitee is not entitled to indemnification hereunder; provided, however, that the Indemnitor may accept any settlement without the consent of the Indemnitee if such settlement provides a full release to the Indemnitee and no requirement that the Indemnitee acknowledge fault or culpability. If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnitee for which the Indemnitee is not entitled to indemnification hereunder and the Indemnitor desires to accept and agrees to such offer, the Indemnitor will give written Notice to the Indemnitee to that effect. If the Indemnitee fails to consent to such firm offer within ten calendar days after its receipt of such Notice, the Indemnitee may continue to contest or defend such Third Party Claim and, in such event, the maximum liability of the Indemnitor to such Third Party Claim will be the amount of such settlement offer, plus interest.

1.4.14 Default Provisions The following is an example of a default provision agreement currently being used by an offshore wind developer. (a) Events of Default of Seller (1) The occurrence of any of the following shall constitute an immediate Event of Default without the opportunity to cure: (i) Seller dissolution or liquidation; (ii) Seller assignment of this Agreement or any of its rights under it for the benefit of creditors; (iii) Seller abandonment of construction and/or operation of the Facility; and (iv) Seller filing of a petition in bankruptcy or insolvency or for reorganization or arrangement under the bankruptcy laws of the United States or under any insolvency act of any state, or Seller voluntarily taking advantage of any such law or act by answer or otherwise. (2) The occurrence of any of the following shall constitute an Event of Default of Seller unless Seller shall have cured the same within ninety (90) days after receipt by Seller of written notice thereof from Buyer: (i) Seller’s failure to meet the Completion Date as set forth in Section 6(a) (subject to the extensions of time available to Seller under Section 6(a)); (ii) Seller’s assignment of this Agreement or any of Seller’s rights under this Agreement or the sale or transfer of voting control of Seller or Seller’s sale or other transfer of any material portion of its interest in the Facility without obtaining Buyer’s prior written consent pursuant to Section 18; (iii) The filing of a case in bankruptcy or any proceeding under any other insolvency law against Seller as debtor or its parent or any other affiliate that could materially impact Seller’s ability to perform its obligations hereunder; provided, however, that Seller does not obtain a stay or dismissal of the filing within ninety (90) days of the date of such filing; (iv) After the Completion Date, Seller tampering with or adjustment of the Metering Devices for the B Wind Turbines in ways not expressly permitted by Sections 5(c)(2) and 5(c)(3); (v) After the Completion Date, the sale by Seller to a third party, or diversion by Seller for any use, of the Energy Output committed to Buyer by Seller absent Buyer’s prior written consent to such diversion or use;

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(vi) After the Completion Date, Seller’s failure to maintain in effect any material agreements required to deliver the Energy Output to the Point of Delivery; (vii) Commencing on the first (1st) anniversary of the Completion Date, Seller’s failure to use commercially reasonable efforts to obtain, for the Buyer Wind Turbines, an average Availability Factor greater than seventy-five percent (75%) in the immediately preceding twelve (12) consecutive months; provided that such failure is not the result of Force Majeure; (viii) Seller’s failure to acquire or maintain permits needed to construct and operate the Facility; (ix) Seller’s failure to acquire or maintain land rights needed to access, construct, and operate the Facility; or (x) Seller’s failure to comply with any other material obligation under this Agreement. (3) Seller’s failure to make any payment when required under this Agreement shall constitute an Event of Default of Seller unless (1) Seller shall have cured the same within thirty (30) days after receipt by Seller of written notice thereof from Buyer or (2) Seller has filed in good faith a Billing Dispute with respect to such unpaid amounts and complied with Section 8(d).

(b) Events of Default of Buyer (1) The following shall constitute Events of Default of Buyer upon their occurrence and no cure period shall be applicable: (i) Buyer’s dissolution or liquidation, provided that division of Buyer into multiple entities shall not constitute dissolution or liquidation; or (ii) Buyer’s general assignment of this Agreement or any of its rights hereunder for the benefit of creditors. (2) The following shall constitute Events of Default of Buyer upon their occurrence unless cured within ninety (90) days after the receipt by Buyer of written notice thereof from Seller: (i) Buyer fails to purchase the entire Energy Output of the Buyer Wind Turbines in accordance with Section 6(b); (ii) Buyer defaults on its obligations under the Delivery Arrangements Agreement, and such default renders Seller unable to deliver the Energy Output at the Point of Delivery or affects Seller’s right to be paid under this Agreement for delivery at the Point of Delivery for its Energy Output; (iii) Buyer’s assignment of this Agreement or any of Buyer’s rights under this Agreement without obtaining Seller’s prior written consent pursuant to Section 18; or (iv) Buyer’s failure to comply with any other material obligation under this Agreement after receipt of notice thereof. (3) Buyer’s failure to make any payment when required under this Agreement shall constitute an Event of Default unless (1) Buyer shall have cured the same within thirty (30) days after receipt by Buyer of written notice thereof or (2) Buyer has filed in good faith a Billing Dispute with respect to such unpaid amounts and complied with Section 8(d).

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(c) Termination for Cause In addition to any other right or remedy available at law or in equity or pursuant to this Agreement, including the right to seek damages for breach of this Agreement, the non- defaulting Party may, upon written notice to the other Party, terminate this Agreement if any one or more of the Events of Default described in this Section occur and are not cured within the time periods set forth herein. In the event of a termination by Buyer due to an Event of Default under Section 10(a) (2) (i), neither Party shall have any further liability or obligation to the other Party with respect to this Agreement, except Seller shall, after receipt of a detailed, written itemization and description, reimburse Buyer for reasonable payments made by Buyer pursuant to the Delivery Arrangements Agreement. Neither Party shall have the right to terminate this Agreement except as provided for upon the occurrence of an Event of Default as described above or as otherwise may be explicitly provided for in this Agreement. All remedies in this Agreement shall survive termination or cancellation of this Agreement and are cumulative. (d) No Consequential Damages In no event shall either Party be liable for the other Party’s alleged lost profits or other consequential damages; provided, however, that any amounts which are expressly provided herein to be included.

1.4.15 Additional Information or Recommendations for PPA Terms and Conditions that Should be Considered If the proposed Evanston offshore wind farm may have to curtail power due to avian migration in the spring and fall seasons, the PPA should not penalize the seller for any loss of electrical output during this migration event. In addition, if the proposed Wind farm is curtailed due to a tornado or terrorist event, the seller should not be penalized.

1.5 Operations and Performance

1.5.1 Average Offshore Turbine First Year Availability and Long Term Availability The average turbine availability during the first year is currently at 86.6 - 90%. There are offshore wind farms that consistently deliver more than 95% availability annually after the first year, but usually not before. The vast majority deliver 86.6% availability during the first year of operation because control systems. Considering the average 95% availability of an offshore wind turbine and given the fact that the annual average wind speed in western Lake Michigan is estimated to be above 8 m/s at 100m hub heights. The capacity factor can be calculated by the following capacity factor formula:

Actual Amount of Power Produced Over Time Capacity Factor = Power That would have been produced if Turbine operated at Max. output 100% of the time

A conventional utility power plant uses fuel, so it will normally run much of the time unless it is idled by equipment problems or for maintenance. A capacity factor of 40 - 80% is typical for conventional plants. A wind plant is "fueled" by the wind, which blows steadily at times and not at all at other times. Although modern utility-scale wind turbines typically

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operate 65% to 90% of the time, they often run at less than full capacity. Therefore, a capacity factor of 25% to 35% is common, although they may achieve higher capacity factors during windy weeks or months. An average capacity factor of 30% for offshore has been estimated for offshore wind farms. The 101MW Evanston offshore wind farm is estimated as having an annual energy output of 264,902 MWh per year when considering the availability of wind turbines of 95 - 98% and a 30% capacity factor. The long-term availability of a commercial wind turbine is usually in excess of 97%. This value is superior to values quoted for conventional power stations. However, it will usually take a period of some six months for the wind farm to reach full, mature, commercial operation, and hence, during that period, the availability will increase from a level of about 80%–90% immediately after commissioning to the long-term level of 97% or more. After commissioning, the wind farm will be handed over to the operations and maintenance crew. A typical crew will consist of two people for every 10 to 20 turbines in a wind farm. For smaller wind farms there may not be a dedicated O&M crew but offshore wind farms require a dedicated and specially trained maintenance crew. There is now much commercial experience with modern wind turbines and high levels of availability are regularly achieved. Third party operations companies are well established in all of the major markets, and it is likely this element of the industry will develop very much along the lines associated with other rotating plant and mechanical/electrical equipment. According to Danish wind farm site experience, in addition to the planned preventive maintenance, maintenance indicated by a condition monitoring system, and corrective maintenance, the influences on the availability of production capacity of an offshore wind farm are derived from maintenance methods, transport ships, and the climatic conditions. There will be two main contributors to the unavailability of the turbines. The first contributor will be the time during preventive maintenance operations, when the turbine will have to stand still. The second contributor to the unavailability will be unforeseen faults of the technical equipment requiring immediate attendance. An unforeseen fault will cause an immediate stop of the turbine until the maintenance crew can fix it, while preventive maintenance will cause the turbine only to be halted during parts of the activities. There are also 10 main parameters, which might indirectly affect the availability of a wind turbine. They are; wind speed, air temperature, visibility, lightning, precipitation, waves, sea-currents, water level, sea-ice, and ice cover, each with the ability to prohibit access to the wind farm. These rules will be incorporated into the future Mercury Wind cost model as a part of the solution and cost effectiveness of electricity generation.

1.5.2 Basis for Projections Turbine availability was projected based upon offshore wind farms currently in service in Europe, and upon turbine manufacturer’s recommendations. In consulting with several different sources, Mercury Wind discovered the same ratios and numbers were being used within a 1½% or 1.8 degree of reliability. Overall, Turbine availability has increased due to permanent magnets, direct drive, hub height, and rotor size. All of these factors together have increased the reliability, and allowed offshore wind farms to increase their output.

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1.5.3 Performance Degradation over Project Life In consulting with several wind industry authorities; Mercury Wind discovered the majority of turbine degradation over a 20 year period was mainly due to the following factors; 1. Blade degradation due to; icing, inclement weather, faulty balancing, unscheduled cleaning or maintenance. 2. Gearbox failure. 3. Wind Shear or inconsistent wind gusts putting strains on turbine parts. Of these three main causes, only the first 2 are easily preventable. When offshore wind farms regularly schedule blade cleanings, this puts less strain on the generator and reduces wear and tear on the turbine system. In addition, since the newer offshore turbines are manufactured with direct drive, 18 they have eliminated almost entirely the gearbox failure issue.

Figure 1.5.1 Turbine Wake Effects

1.5.4 Ability to Accurately Predict Wake Effects on Production and on Component Fatigue Loads Wake effect is a function of wind speed and turbine spacing. Plainly, the faster the wind speed, the closer the wind turbines can be spaced apart. Most developers space turbines 5-10 rotor lengths apart depending on the consistent wind speed. There is no automatic

18 Offshore Turbines being delivered in 2011 and beyond are pratcially all being made without gearboxes. There are a few manufacturers that have yet to adopt the newer technology, but the industry overall is shifting.

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rule to be used when spacing turbines, everything is site dependent. Therefore, based upon the assumption that wind speeds are 8 m/s annually, then in order to minimize wake effect, the Evanston offshore wind farm should space turbines a minimum of 7 – 10 rotor lengths. In order to determine the approximate wind plant capacity (in megawatts) for each area, some basic turbine layout assumptions were made. First, a relatively conservative approach was assumed by spacing turbines 10 rotor diameters apart in all directions. This spacing is appropriate for a project consisting of numerous turbine rows oriented perpendicular to the prevailing wind direction. Relatively wide spacing between turbines is desired in this case to reduce the compounding wake effects as the wind blows through the wind farm. A more packed approach was also considered to account for areas where turbines may be aligned only a few rows deep relative to the prevailing wind. The spacing for this setup was 5 rotor diameters in the direction perpendicular to the prevailing wind and 10 rotor diameters in the direction of prevailing wind. This spacing allows for twice the capacity per unit area. While other spacing assumptions are possible, the two described here are illustrated in figure 1.5.2.

Figure 1.5.2 Sample Layout Assumptions Different turbine models have different rotor diameter lengths and the appropriate spacing among them is site specific and dependent on the primary wind speed, direction(s) and shape of the project area, among other factors. For this study, a representative turbine with a rotor diameter of 100m and a capacity rating of 3MW was assumed. The two aforementioned spacing scenarios were selected to determine the range of megawatt capacity for the potentially feasible areas. By determining the number of turbines for each area and the rated capacity of the sample turbine, the relative density in terms of megawatts per unit area was derived. A range in density from approximately 10 to 21 megawatts per square n-mi (3-6 MW per square kilometer) was calculated from this analysis. In turn, the density was applied to the total area specific for each site to calculate the overall range of potential wind project capacity in megawatts. 19

19 Industry experts and Turbine manufacturers will tell you that spacing your turbines before collecting all your MET tower onsite data is not wise. Using an approximation is fine, but nothing definite can be said until onsite data is collected. Mercury Wind used spacing of ~7 rotor lengths per turbine. In actuality this distance may be anywhere from 5 – 10 rotor lengths. This is completely dependent on average onsite wind speed.

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1.5.5 Maintenance Plan/Facilities/Staffing Figure 5.3 shows Mercury Wind has located 3 ideal port locations from which to perform any operating and maintenance procedures on the Offshore Evanston Wind Farm. These 3 ideal port locations are; Winnetka Electrical Utility dock, 20 Wilmette harbour, 21 or the Evanston dock area curently located near the Church street beach. 22

Figure 1.5.3 Possible Port Locations For Evanston Wind Farm Maintenance Boats

As was stated earlier in this RFI, 2 people are needed to service every 10 – 20 turbines. The turbine controls facility can be located anywhere in Evanston, but it would be best to locate the controls and monitoring facility as close to the wind farm, and boat port as possible. This allows for a faster service and maintenance time from the crews and for decreased issues with faulty or inaccurate communication.

20 Winnetka has its own electrical power station located right on the shoreline of Lake Michigan and Tower road. Based upon the intial investigation conducted by Mercury Wind executives, there is a docking area that is currently not being used, but could potentially hold 2 – 8 offshore wind farm service boats. There is also enough room next to the power generation plant to create a helipad for using a helicopter. Since this docking area is right on the water, it would be an ideal location to base maintenance boats and/or helicopters as well as a monitoring station if Evanston property is unavailable. 21 Wilmette harbour is easily big enough to accommodate 2 – 4offshore Wind Farm service boats. 22 The city of Evanston has no “harbour” in the true sense of the word, because boats cannot be left overnite on the Evanston shore. Mercury Wind is more than willing to invite an experienced Marina builder to change this.

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1.5.6 Evanston Marina Another O&M facility option is; construct a Marina in Evanston between the Davis/Church and Clark Street beaches. A Marina could be built to include a fine restaurant right on the water, and located on the second floor could be the controls and monitoring facility for the Wind farm. Mercury Wind is in talks now with a well known construction company that just finished building, “The Grand Marlin”. 23 The Grand Marlin is a high end Marina built on the famous white sand beaches of Pensacola, Florida. Here is the URL link to the new Grand Marlin Marina should you care to take a look; http://www.thegrandmarlin.com/

1.5.7 Spare Parts When an offshore wind farm is out of commission, 83% of the time it is due to a lack of spare parts. It should be obvious here that the wind farm developer and owner do not make money during a downtime. Therefore, it is in the best interest of the wind farm owner to perform regularly scheduled maintenance and replace turbine parts BEFORE needed. In addition, newer turbines are now made without gearbox’s (transmissions) to reduce maintenance issues. These newer turbines without gearboxes are referred to as, “direct drive” turbines. Since most of the problems and wear and tear was occurring in the gearbox the turbine engineers redesigned the turbines to run without the gearbox. The gearbox is one of the items that Mercury Wind is eliminating in its turbines to reduce maintenance items and turbine downtime.

Figure 1.5.4: Spare Parts Account For 83% Of Wind Turbine Downtime

1.5.8 Response Time For Unscheduled Maintenance Most offshore wind farms use a combination of boats and helicopters to perform unscheduled maintenance. The reason being, during periods of icing on the great lakes, trying to reach your offshore wind farm by boat may not be possible; therefore, the

23 A combined building housing; a Marina, offshore boat maintenance facility, dock, & monitoring station would be a great way to do all three and bring more business and revenue to the city of Evanston. More details and Marina design optinos will be provided during the RFP stage.

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helicopter is the only option. Utilizing a helicopter during unscheduled maintenance times is cheaper because parts can be changed quicker and there is less downtime. The response time of a helicopter flight from shore to the turbines located 7 miles offshore is less than ½ hour. Needless to say, most prudent offshore O&M companies schedule their large part replacement to occur in the summer time, when getting to the offshore wind farm is easily accessible. However, when unscheduled maintenance is the only option, the helicopter is the best and fastest way. Mercury Wind will stand by the 30 minute mark for a response time for unscheduled maintenance. Furthermore, Mercury Wind will also guarantee immediate turbine shutdown if need be. Since the offshore wind farm will also be monitored wirelessly, in theory, one turbine or the entire wind farm can be shutdown in 60 seconds using a cell phone. That is certainly a fast enough reponse time for almost any crisis.

1.5.9 Scheduled Maintenance Procedures And Frequency (Including periodic turbine overhauls or major component replacement/repair) When performing routine maintenance on turbines, Mercury Wind will have O&M control systems in place that allow for one turbine at a time to be shut down for scheduled maintenance. This will enable the rest of the turbines to keep producing power, and will prevent loss of power generation. Moreover, Mercury Wind Energy will order the appropriate parts, months ahead of repair schedule. Within the wind community, part replacement is the driving issue with downtime. A staggering 83% of the downtime of a wind farm is due to inavailability of parts. All periodic maintenance and major part replacement will ideally be performed during the summer months, when offshore turbine access is easy. Component ordering will occur at least 6 months before part replacement is needed. According to the manufacturer’s O&M instructions, the wind turbines will undergo regularly scheduled maintenance, which can require from one to two days per turbine. The scheduled maintenance will not require the use of any cranes other than those already attached to each turbine. The crew can access the equipment using an elevator system, the helipad, or from the ladder located in the tower. O&M can easily be handled by a two- man crew. Compared to onshore wind farms, an offshore wind farm electricity system’s reliability and availability are much more important due to: A. Longer lead times required to repair faults B. Less frequently scheduled maintenance C. More aggressive environment conditions D. Less optional cable routes E. Potential environment hazards of mixing water and electricity F. Offshore access difficulties

Mercury Wind plans to build or lease the operation/maintenance and monitoring/control center offices necessary for wind turbine management, control computers, communication systems, and an operations & maintenance shop. The operations & maintenance shop will be used to store vehicles, tools, heavy equipment, safety equipment, and spare parts. This O&M shop will provide an onshore workspace for the repair of small turbine components.

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1.5.10 Remote & Wireless Communications Most, if not all, of the turbines developed within the last 2 years have the capability to be controlled via the internet wirelessly. Some of the O&M companies that Mercury Wind deals with monitor their wind farms remotely. This is an excellent option when dealing with an onshore & offshore wind farm. In order to prevent communication issues, Mercury Wind will bury controls cabling from the offshore wind farm to the onshore monitoring facility, but remote wireless communications will also be used. Hardwiring the facility is the best way to construct the offshore wind farm because in the event that there is an issue with remote communications, there is a redundant back up system. The wireless system is used mainly to remotely monitor the windfarm, while the hardline system is used to make adjustments.

1.5.11 Controls All of the wind turbines will be controlled through a remote SCADA 24 system located at the monitoring/operation center. Preventative maintenance data and fault conditions will be provided real-time to the operation staff in order to control operation of the wind turbines. After-hours, on-call personal are expected to respond on site within 30 minutes of any conditions that require personal attention. The standard SCADA system includes measurements of power, rotational speed, gearbox temperature, oil temperature and any other information the turbine manufacturer makes available. In addition to these, vibration sensors, cameras, audio stream, lightning detection, environmental conditions and wind power predictions can be made available via a web interface. The offshore wind farm will also have wireless monitoring capability with information being sent to the utility customer if this information is desired. Moreover, the wind farm will be able to be shut down if need be by; remote communication, wireless link, manual switchgear, or at the substation.

Communications medium The SCADA system for wind farm monitoring and control will require a communications network between the wind turbines in the wind farm, and the onshore O&M center. Communication cables connecting the central computer with the individual turbine controllers are commonly buried in the same trenches as the electrical collection system.

Voice communications Primary voice communications will be separate to the SCADA communications system as communications would be required between support vessels and maintenance crews, probably using maritime radio or simple cell phones. There are data programs available that allow a wireless device like an i-phone, to monitor and control an offshore wind farm.

1.5.12 Monitoring And Dispatch Systems Most wind farms constructed now use some sort of remote monitoring system, however for an offshore wind farm these systems are much more critical. The main reason for this is inclement weather. At certain times of the year, the offshore wind farm may have limited accessibility due to; tornados, icing, severe rain, tides, part availability, or snow storms. Therefore, the very best monitoring systems must be in place to allow for preventative

24 SCADA = Supervisory Controls And Data Acquisition. This type of communications protocol has been in use for over 40 years and is considered to be highly reliable.

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maintenance and routine maintenance. Mercury Wind understands it is critical to have the right monitoring systems in place, and these systems are able to dispatch workers to the wind farm within 30 minutes to correct any potential issues. Time is of the essence when repairing an offshore wind farm.

1.5.13 Safety And Emergency Rescue Plans And Facilities Standard offshore wind farm safety and emergency rescue plans will be enacted and used for the offshore wind farm and the monitoring facility. Additionally, both the onshore controls facility and the offshore wind farm will have evacuation and rescue procedures approved by the Coast Guard. As was documented earlier in section 1.5.11, a cell phone can be used to shut down one or all of the wind turbines should an emergency arise. Each offshore turbine tower will contain; lifeboats, life preservers, tower to shore communication phones, and emergency first aid kits. Response time will be under 30 minutes with the use of the Mercury Wind helicopter.

1.5.14 Construction or Operational Curtailment Due to Bird Migration With respect to overall density of waterbirds, it is likely that there is a gradient from the shoreline outward. The greatest densities of birds, including migrants and foraging species, is likely to occur closest to shore and decline dramatically at distances greater than one mile (1.6 km) from the lake shorelines. This analysis reveals that the impacts of an offshore wind farm, as proposed, would not be damaging to avian populations. It is recommended that field studies take place when further refinements to the proposed project area(s) are completed.

1.6 Timeline The proposed offshore Evanston wind farm is expected to be in operation for at least 20~25 years and will consist of; construction, installation, commissioning, operation, and decommission phases. Existing crane vessels have not been specifically designed for wind turbine installation, but large wind farms may benefit through time and cost incentives from purpose-built units. All marine operations are subject to weather constraints and downtime, so scheduling during calm periods when wind and wave speeds are minimal is recommended. The construction time estimates for piled foundations either from jack-up units or floating vessels should consider weather-related downtime. However, there is a significant cost savings for a two-phase installation (i.e. foundation unit installation followed by sub-structure, tower, and rotor-nacelle assembly installation) versus a three-phase installation (i.e. foundation, sub-structure and tower, and rotor-nacelle assembly installed separately). As an estimate, the total duration of installation for a multi-unit wind farm will take several months.

The expected Evanston wind farm construction will commence in 2011, 6 -12 months after all MET tower data is collected if all mandated approvals and permits have been secured. Commissioning of the last turbine will be on or before December 2012. See the itemized activity schedule in Table 6.1.1. The project schedule for major activities is subject to contingency scheduling for potential delays. Mercury Wind has developed a 40-week project schedule outlining all of the major design and construction tasks. This schedule accounts for a likely groundbreaking project start date, and includes “adverse weather”

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days. Given that physical turbine erection will take place during the relatively calm spring and summer months, only minimal “adverse weather days” are considered. The preliminary project schedule is broken down into various tasks as shown in Table 6.1.1.

2011 2012 TASK 2010 6 6 6 6 Mnths Mnths Mnths Mnths RFP Approved by City of Evanston Resources Analysis Environmental Study Work Public Consultation Monitoring Sampling in the Lake Desktop Study Site investigations Deliverables Interconnection Request Studies Agreement Permitting Federal Provincial Municipal Local Conservation Authorities Secure Equipment Order turbine & Major Equipment Equipment Delivery Design Foundations Cable laying Construction Foundations Submerged Electric Cable Tower installation Nacelle/Blade Installation Commissioning Commissioning Complete Table 1.6.1 Typical Offshore Wind Farm Timeline

Expended equipment lead time and significant tasks include:

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Wind turbines have a 6-12 month lead-time A. Various switchgear items have between 10-14 week lead time B. Site preparation and access road work takes 1-2 months C. Drilling and pad construction takes 1-6 months D. The turbines are installed by crane in 20-30 weeks E. Turbine Commissioning is completed within 6 months or 1 week per turbine

Table 1.6.1 illustrates how one of the wind farms in Europe was set to a timeline. Typically, the rule of thumb for constructing an offshore wind farm is, 7 days of construction per turbine. If the Evanston wind farm is at least 100MW, this would require approximately 28 - 34 turbines, so the construction time would be about 31 weeks. The area that is mostly likely going to require the greatest amount of time will be obtaining the permits from the various organizations. From meeting with developers and turbine companies, obtaining permits can take anywhere from 6 weeks to 6 years! The area of obtaining permits is where the city of Evanston can work on behalf of the developer to cut the timeline in half or at least reduce the waiting time. Also, the whole timeline does not by neccessity need to be fulfilled in a linear manner. Rather, many of the jobs can completed in a parallel fashion or at the same time as each other. Implementing “lean”, “six-sigma”, or “just in time” will save on costs and reduce the amount of wasted time or energy. Mercury Wind has an executive who has years of experience in working on timeline’s and project management. The auto industry has honed to perfection and really “invented” the whole study of “lean engineering”. Implementing best practices learned from the auto industry is how Boeing cut their manufacturing and assembly time by 75%, while at the same time increasing quality. Mercury Wind plans on implementing the same “lean engineering” for the Evanston offshore wind farm. Better management leads to a better project and better use of capital.

2.0 Technical and Infrastructure Considerations 2.1 Interconnection & Overall Offshore Electrical Interconnection System Design All existing offshore wind farms without offshore substations are connected to shore at the voltage used within the wind farm (generally 12 - 13.8 kV low voltage, oil and gas platforms also use 13.8kV). However, based upon initial electrical analysis, Mercury Wind has concluded that the Evanston offshore wind farm should have an offshore substation. This substation will take collector voltages of 12kV or 34.5kV and increase them to 69kV or 138kV in the “homerun” cable to shore. In a separate conduit, an interface cable will be installed to enable each turbine to be tripped off in the event of a ground fault on the turbine side of each transformer. Finally, a third conduit will house the fiber optic lines for turbine communication. Interconnection of the wind farm to ComEd’s electric grid will consist of an existing three-phase overhead feeder line. The disconnection of wind farm or isolation to faulty equipment from the utility grid will be controlled by switchgear. Underwater cable laying, internal cable layout in the offshore wind farm, cable layout through the shoreline ground area; landfall and connection to the grid will be disclosed in the Evanston RFP. The submarine cables will be buried 3-4 ft into the lake bottom and encased in concrete or grouted into the lake bottom at the shoreline to avoid damage to the cable by the winter ice. This main “collector” submarine cable will be connected from turbine to turbine, at the offshore wind farm, until all the turbines are connected electrically

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like a grid. There will be one “homerun” submarine cable from the offshore wind farm substation to take the wind farm output power, to the onshore electrical substation near the intersection of Dewey and Emerson streets. 25 This onshore substation is located approximately 1.4 miles inland and is owned by ComEd/Exelon. Figures 2.1.1 and 2.1.2 illustrate the system design and location of the proposed offshore Evanston wind farm.

MERCURY WIND ENERGY LLC OFFSHORE EVANSTON WIND FARM JUNE 2010

Lake 101 MW Michigan Total Shoreline

N

1.4 7.14 1.14 miles miles miles 2.27 miles 138 KV 34.5 KV connection Collector at ComEd Voltage Substation at Emerson and Dewey

Figure 2.1.1 Overall System Design & Electrical Cabling Schematic

Figure 2.1.2 Mercury Wind Proposed 101MW Offshore Wind Farm Approximately 7.14 Miles from Evanston Shore and 1.4 miles from onshore substation.

25 Initial investigations by Mercury Wind have concluded an offshore substation would decrease transmission losses.

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Once the “homerun” electrical cable has reached the shoreline, it must be buried underground for approximately 1.4 miles until it reaches the substation. The underground interconnecting cable burial will require the City of Evanston to allow road construction on Emerson Street for about 1-2 months.

2.1.1 Floating Foundation Offshore Wind Farm Option If the City of Evanston determines having an offshore wind farm 7 miles from the Evanston shoreline ruins visual impact or is too great a controversy, Mercury Wind proposes in figure 2.1.3 the foating foundation option.

Figure 2.1.3 Picture of Mercury Wind Proposed 101MW Offshore Floating Foundation Wind Farm Approximately 10.1 Miles from Evanston Shore

After a distance of 10 miles, the curvature of the earth would render the offshore wind turbines invisible to the naked eye. Therefore, if the City of Evanston needed a wind farm farther offshore, Mercury Wind is presenting the option here. 26

2.1.2 Offshore Substations All of the turbine electrical outputs will be connected through an electrical “collector” network to an offshore substation. A single, “homerun” cable will carry the total, electrical, wind farm output current from the offshore substation to the lake shore and then onshore to the interconnection location at the utility substation. The interconnection/substation location is the point at which the responsibility for ownership and operation changes from the wind farm owner to the utility grid owner. One offshore substation is recommended for every 150MW’s of wind turbines.

2.1.3 AC or HVDC Interconnection Costs of HVDC capital equipment and losses become more cost-effective than traditional AC systems only at a cable connection distance greater than 50km. The proposed

26 The two disadvantages in having floating foundations are; increased costs to rate payers and unproven technology.

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offshore wind farm is less than 50km. Therefore, Mercury Wind is designing an AC interconnection cable to be connected at the Evanston substation with the proper phasing.

2.1.4 Converter Location Because the proposed Evanston Wind Farm will be much less than 50km from the AC network tie, HVDC converters are not a consideration. The only converters needed are the ones that convert the DC power from the wind turbine, and those will be contained in the Nacelle or wind farm area.

2.1.5 Lake Floor Cabling Routing & Landfall Considerations For the Evanston Offshore wind farm, Mercury Wind proposes buring the electrical cabling 3-4 feet deep below the Great Lakes floor. This cable construction burial will have minimal ramifications for fish breeding and lake-floor ecology in general. The electromagnetic fields generated by electrical cabling are extremely weak, and will have a minimal affect on the lake bottom ecology. Any affects on the lake bottom ecology are likely to be highly localized near the cables.

Figure 2.1.4 Typical Offshore Wind Farm Components The figure above depicts how the wind farm buried cabling will look when completed. Overall, the lake floor electric cabling is not expected to significantly adversely affect the ecology. In Europe, wind turbine foundations on the sea floor have become habitats for fish. At the lake shore, the submarine cable would be connected to standard electric utility underground cable and run in conduit to the ComEd high voltage substation line at Emerson and Dewey.

2.1.6 Strategies For Interconnection Reliability & Security The disconnection of the wind farm or isolation from faulty equipment on the utility

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Electrical grid will be controlled by switchgear and breakers. A sub-contracted electrical engineering consulting firm 27 will be used to provide detailed designs for both reliability and electrical network safety to the utility grid and to the wind farm. The consulting firm designs will be submitted during the RFP process to the local utility, ComEd, the City, and to the turbine manufacturer for their review and approval. So far the best point of interconnection appears to be at the ComEd substation located on Emerson and Dewey Street. Concerning security, since the cable will be buried starting 7 miles offshore and then buried under concrete approx. 1.4 miles to the Emerson substation, it will be very difficult for anyone to disturb or vandalize the homerun cable. For anyone to dig up the cable would be very difficult to do, without everyone seeing. So far in Europe, the most reliable cables have been the buried cables. The cables that have been giving the wind farms reliability and security concerns have been left unburied.

2.1.7 Energy Deliverability Electrical energy will be delivered from the wind turbines over the electrical interconnection to the utility grid and distributed over that grid to existing utility customers. With a 10% increase in wind speed, the power capacity increases by almost 30%. The importance of a strong wind resource is a common need for offshore and onshore wind. The electricity output from a wind turbine is proportional to the cube of the wind speed, and therefore a small difference in wind speed can produce a substantial difference in power output. For example, doubling the wind speed from ten miles per hour to twenty miles per hour results in an eight-fold increase in wind power production from a wind turbine. The power increases linearly with the cross-sectional area of the converter traversed; it thus increases with the square of its diameter. Even with an ideal airflow and loss less conversion, the ratio of extractable mechanical work to the power contained in the wind is limited to a value of 0.593. Hence, only about 60% of the wind energy of a certain cross-section can be converted into mechanical power. When the ideal power coefficient achieves its maximum value cp = 0 .593, the wind velocity in the plane of flow of the converter amounts to two thirds of the undisturbed wind velocity and is reduced to one third behind the converter. The simple translation to all this is; the faster and more consistent the wind speed, the greater the amount of energy and the more reliable the amount. The main reason that developers are moving to set up offshore wind farms is that the wind offshore is more reliable, faster, and more consistent. These factors combined lead to greater energy deliverability.

A sample energy deliverability agreement between a wind farm owner and a utility is illustrated here; Seller shall negotiate in good faith and enter into an Interconnection Facilities Agreement that is reasonably acceptable to the buyer for the purposes and in accordance with the schedules set forth in this Section 5(a). Buyer shall diligently cooperate with Seller in these negotiations. The Interconnection Facilities Agreement shall address and describe: (a) The switching, metering, relaying, communications and safety equipment that will

27 There are many good electrical offshore consulting firms. The two largest electrical engineering consulting and construction firms are; ABB and Universal Pegasus. Both have extensive offshore and onshore wind farm experience. Universal Pegasus even has experience in wiring offshore oil rigs.

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constitute the Interconnection Facilities, (b) The processes, procedures for, and timing of the procurement, construction, testing and placement into operation of the Interconnection Facilities and their connection to the Point of Delivery, (c) The billing and payment schedules for the construction, operation and maintenance of the Interconnection Facilities, (d) the operating procedures and requirements of the Interconnection Facilities, including the requirements for the Buyer Wind Turbines to be capable of immediate disconnection from the Point of Delivery in accordance with Good Utility Industry Practice(s) or in the event of Emergency, and (e) The terms, conditions and other requirements relating to the construction, operation and maintenance of the Interconnection Facilities. As between Buyer and Seller, all expenses associated with the procurement, construction, installation and operation of the Interconnection Facilities shall be paid by Seller in accordance with the Interconnection Facilities Agreement.

(ii) It is an objective of this Agreement that the First Delivery Date occur no later than ______, provided that such date shall be extended day-for-day by any Force Majeure or any delay caused by Seller. Seller shall give Buyer fifteen (15) calendar day’s written notice prior to the First Delivery Date. If the Completion Date occurs more than thirty (30) days after the First Delivery Date, irrespective of the occurrence of any Force Majeure and otherwise not due to the negligence or fault of Buyer, then Seller shall reimburse Buyer for payments made for transmission services for the period commencing on the day following the thirtieth (30th) day after the First Delivery Date and continuing until the Completion Date; provided that Buyer shall act in a commercially reasonable manner to minimize costs related to such transmission services.

b. Delivery Arrangements Agreement Power Business Line shall enter into one or more agreements with the Transmission System Operator and/or with others that provide for the receipt of the Energy Output at the Point of Delivery and for the transmission and delivery of such Energy Output to points beyond the Point of Delivery (such agreements shall constitute the “Delivery Arrangements Agreement”). Seller shall be solely responsible for negotiating, and maintaining during the term of this Agreement, the Delivery Arrangements Agreement. Seller shall diligently cooperate with Seller in these negotiations.

c. Other Provisions Related to Interconnection (i) Access to Facility During the term of this Agreement, appropriate representatives of Buyer shall at all reasonable times, including weekends and nights, and with reasonable prior notice, have access to the Facility, including the control room and the Interconnection Facilities, to read and maintain meters and to perform all inspections, maintenance, service, and operational reviews as may be appropriate to facilitate the performance of this Agreement. While at the Facility, such representatives shall observe such reasonable safety precautions as may be required by Seller and shall conduct themselves in a manner that will not interfere with the construction, operation or maintenance of the Facility.

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(ii) Metering Devices (a) All Metering Devices used to measure the Energy Output under this Agreement shall be subject to approval by Buyer, owned by Seller, and installed in accordance with the Interconnection Facilities Agreement. Seller shall, at Seller’s expense, install communication equipment that allows Buyer to read the Metering Devices from a remote location (such as Buyer’s headquarters) at any time. Metering Devices shall be maintained directly by Seller or by agents or subcontractors directly under the Seller’s control or by the Transmission System Operator. All Metering Devices used to measure the Energy Output under this Agreement shall be sealed and the seal may be broken only when such Metering Devices are to be inspected, and tested and/or adjusted. The number, type, and location of such Metering Devices shall be specified in the Interconnection Facilities Agreement. (b) All Metering Devices shall be maintained, calibrated, and tested in conformance with the policies of the Transmission System Operator and the terms of the Interconnection Facilities Agreement. Seller shall arrange to test the Metering Devices at least once per calendar year. Buyer, at its own expense, may require that Seller initiate testing and inspection of the Metering Devices. Seller shall permit a representative of Buyer to witness and verify such inspections and tests, provided, however, that Buyer shall comply with all of the Seller’s safety standards. Seller shall provide Buyer with copies of any periodic or special inspection or testing reports relating to the Metering Devices. (c) Buyer may elect to install and maintain, at its own expense, Metering Devices and data gathering and communication equipment used to monitor, record, or transmit data relating to the Energy Output from the Mercury Wind Turbines. Seller shall arrange for a location within the Facility Substation control house accessible to Seller and Buyer, for such data gathering and communication equipment that may be installed. (d) Seller shall notify Buyer within 48 hours of Seller receiving actual notice of any inaccuracy or defect in a Metering Device. Seller shall cause the Metering Devices to be adjusted, repaired, replaced, and/or recalibrated as near as practicable to a condition of zero error at the expense of Seller or the Party owning the defective or inaccurate device.

(iii) Adjustment for Inaccurate Meters If a Metering Device fails to register or is found upon testing to be inaccurate by more than a quarter of one percent (0.25%), an adjustment shall be made correcting all measurements by the inaccurate or defective Metering Device, for both the amount of the inaccuracy and the period of the inaccuracy, in the following manner: (a) In the event that the Metering Device is found to be defective or inaccurate and an adjustment factor for the Metering Device cannot be reliably calculated, the Parties shall use the measurements from Buyer-owned meters if they have been installed, fully operational and calibrated pursuant to Section 5(c) (2)? If Mercury Wind-owned meters have not been installed or, if installed, are not fully operational or calibrated, the Parties shall use production data from Seller’s Computer Monitoring System to determine the amount of such inaccuracy. (b) In the event that Seller’s Computer Monitoring System is found to be inaccurate by more than two percent (2.0%), the Parties shall estimate the amount of the necessary adjustment using the site meteorological information for the period of the inaccuracy based upon deliveries of Energy Output from the Buyer Wind Turbines during

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periods of similar operating conditions when the Metering Device was registering accurately. The adjustment shall be made for the period during which inaccurate measurements were made. (c) In the event that the Parties cannot agree on the actual period during which the inaccurate measurements were made, the period during which the measurements are to be adjusted shall be the shorter of (1) the last one-half of the period from the last previous test of the Metering Device to the test that found the Metering Device to be defective or inaccurate, or (2) the 180 day period immediately preceding the test that found the Metering Device to be defective or inaccurate. (d) To the extent that the adjustment period overlaps with a period of deliveries for which payment has already been made to Seller by Buyer, Buyer shall use the corrected measurements as determined in accordance with this Section to recalculate the amount due for the period of the inaccuracy and shall subtract the previous payments by Buyer for such period from such recalculated amount. If the difference is a positive number, the difference shall be paid by Buyer to Seller; if the difference is a negative number, that difference shall be paid by Seller to Buyer, or at Buyer’s discretion such difference may take the form of an offset to payments due Seller by Buyer. Payment of such difference by the owing Party shall be made not later than thirty (30) days after the owing Party receives notice of the amount due, unless BPA elects payment via an offset.

(iv) Reliability Standards Seller shall operate the Buyer Wind Turbines in a manner that complies with the operating requirements set forth in the Interconnection Facilities Agreement.

The City of Evanston’s Role Regarding Electrical Interconnection A. The role the city can play in the proposed Evanston Wind Farm is in aiding the preferred developer by: obtaining land lease rights, obtaining permits from the FAA, obtaining governmental permits, setting contract requirements, and aiding the developer in obtaining electrical interconnection permits from the local utility. B. Specifying and outlining what the developer, the city, and the current electrical provider are responsible for. C. In addition, the city may help with obtaining construction permits and right of way easements to bury electrical interconnection cables under city streets as they are installed from the offshore wind farm to the substation.

2.2 Technology Availability and Limitations The two biggest technological constraints are wind speed and water depth. Evanston has appropriate water depth to about 9 miles and the wind speed is expected to be constant at 8 m/s annually. If the proposed wind farm is limited to the Evanston boundaries 28 , the maximum size of the Evanston offshore wind farm is 250MW. If floating foundations are used, then the Evanston wind farm could potentially be as large as 2000MW. Table 2.2.1 shows a partial list of potential constraints that the Evanston offshore wind farm will most likely need to observe.

28 Evanston lake boundaries meaning; 7 miles from shore, and 3 miles between the northern and southern boudaries. This limits the possible wind farm to an area of 3 miles long by 2 miles deep.

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Offshore Data Layer Constraint Criteria

Wind Resource Mean annual wind speed ≥ 7.5 m/s at 80 meters (16.8 mph @ 262 ft)

Water Depth Depths < 100 ft Shipping Lanes Tracklines plus 0.5 n-mi buffer Political Boundaries 0.25 n-mi buffer Shipwrecks & Obstructions Plus 30 m buffer Dumping Grounds Plus 300 m buffer Anchorage Areas Plus 300 m buffer Cables/ Pipelines Plus 300 m buffer Visual/Avian Consideration 2.0 n-mi buffer from shoreline Table 2.2.1 Technology Constraints & Wind Farm Area Boundaries

2.2.1 Size, Availability & Suitability of Commercial Offshore Wind Turbines Over the past 20 years size, availability, & technology has developed to the point where wind turbines are more than capable of supplying energy to entire communities.

Figure 2.2.2 The Evolution of Wind Turbine Technology 1981-2010

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Wind power has been in use since the time of the pharoahs, but wind power has never been able to produce the output necessary to power cities until the past 10 years. Turbine evolution has come to fruition because towers are built taller, blades diameters are manufactured larger, and computers through FEA 29 have enabled developers to site and build properly. The size of the turbine is not determined by the developer, but rather by the wind speed. The offshore Evanston wind farm should be using turbines that are sized 2.MW – 3.6MW. 30 For a more detailed breakdown, please consult section 1.0 – 1.3 of this report. Through technology wind turbines now have greater availability and the generators do not break down quite as frequently. As little as 5 years ago, turbine availability was 86.6%, but now getting +95% availability out of your offshore wind farm is not unheard of.

2.2.2 Foundation Requirements Foundations can sometimes account for a staggering 16% - 20% of the entire capital costs for an offshore wind farm. Therefore, there is an emphasis on exploring options for cost- reduction through innovative design and installation procedures. As shown in Figure 2.2.3, the most popular offshore wind turbine foundations are gravity and monopile foundations.

Figure 2.2.3 Gravity Turbine Foundation Monopile Turbine Foundation

Type Diameter Weight Construction Sequence Gravity Base 12 - 15 Meters 850 Tons 1. Prepare seabed, 2. Placement, 3. Infill Ballast Monopile 3 - 6 Meters 250 Tons 1. Prepare seabed, 2. Placement, 3. Infill Ballast Caisson 4 -5 Meters 100 Tons 1. Placement, 2. Suction Installation Table 2.2.4 Weight & Installation of Foundation Types

A comparison of three main types of offshore foundations is described in Table 2.2.4 showing weight, diameter, and construction sequence of each foundation type. The tower

29 Finite Element Analysis: Has allowed for simulation of forces acting upon blades, weight simulation of towers, and turbine generating adjustment. 30 The sizing range used in Cape Cod & Cleveland was 2.3MW – 3.6MW. Cape Cod has better wind than Evanston, but Cleveland will have virtually the same annual wind speed as Evanston. Evanston does not have the wind speed to justify the increased cost of a 5 or 6MW turbine.

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and foundation design will be determined by the results of a geotechnical survey of the lakebed and measurement of waves and currents as well as data on wind and seismic activity. The monopile foundation structure provides an added benefit of a more flexible foundation compared to gravity based foundation systems. The monopile foundation design provides aerodynamic damping capabilities to increase the wind turbine’s design life. The aerodynamic damping capability results in a design that offers considerably reduced fatigue from aerodynamic loading compared to more rigid foundation types. Unlike a gravity base foundation system, the installation of the monopile foundation will not require excavation or backfilling of bottom sediments. Thus, it also represents the foundation type system that is the easiest to install and results in the least amount of lakebed disturbance. Minimal disturbance of sand and sediment will take place by piledriving activities. The steel tower and nacelle will be mounted on a welded steel monopile foundation, which represents the most commonly used design solution in conventional offshore installations, and is a well-proven structural foundation type for offshore applications. Compared to the gravity base foundation, the monopile has minimal and localized environmental impact. The monopiles will be hollow open-ended steel pipe piles that will be driven approximately 20~30m into the lakebed. This will provide appropriate structural stability and loadbearing capacity, allowing the lateral and axial loading forces of the wind turbine to be transferred to the lakebed. The monopile consists of a steel pipe pile up to 6 m (20 feet) in diameter with wall thicknesses as much as 150 mm (6 inches). Depending on the subsurface conditions, typical installation procedure calls for the pile to be driven into the lakebed by either large impact or vibratory hammers, or the piles are grouted into sockets drilled into rock. The handling of the monopiles requires the use of a crane of sufficient capacity, preferably a floating crane vessel. Use of open-ended driven pipe piles allows the lake bottom sediment to be encased inside the pipe, thus minimizing disturbance. The noise generated during pile driving in the marine environment might cause a short-term adverse impact to aquatic life, but because the number of piles is typically small, these adverse impacts are only short-term and relatively minor. Recent innovations in the pile driving industry, such as the bubble curtain, offer a way to mitigate noise impacts. A bubble curtain involves pumping air into a network of perforated pipes surrounding the pile. As the air escapes, it forms an almost continuous curtain of bubbles around the pile, preventing the sound waves from being transmitted into the surrounding.

2.2.3 Special Logistical & Cost Considerations The biggest challenges wind farms developers confront much of the time is getting the turbines, nacelles, foundations, rotors, and other parts just to the job site. Many of the components of the wind farm cannot be shipped by truck unless they are broken down piece by piece. Therefore, Mercury Wind has made arrangements to ship the components by barge and rail. The cost to ship components by rail is sufficiently cheaper and safer than by truck. Shipping anything by barge/ship is the best way to move parts, because components can be fully assembled, and there is little risk of damage. However, because Evanston has no appropriate part staging area, there will be a small amount of cost increase having an offsite parts staging area. This additional staging cost has been calculated as minimal, but it is worth noting.

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2.2.4 Quality, Durability, & Manufacturer Equipment Warranties As was stated earlier in this RFI response, 31 the Quality, Durability, and Warranty of wind turbines has improved remarkably. So much so, even in the midst of a global recession where banks have tightened lending, big banks are willing to lend hundreds of millions of dollars to finance offshore wind farms. That itself should convince you of the durability and quality of current wind turbines. In addition, in recent years there has been an increase in many new turbine manufacturers. Increased competition has led to longer equipment warranties and more favorable pricing. That said, insurance companies and turbine manufacturers are also offering extended warranties (20 year) for a small increase upfront. Competition, like every other industry, has spawned better quality, and better warranties.

2.3 Infrastructure for Construction and Maintenance At least a 1/4 mile of lakefront area with a deep water port will be required as a staging area for turbine foundations, rotors, and other components.

Figure 2.3.1 Example of A Deep Water Port & Offshore Wind Turbine Part Staging Area

31 Warranties and quality were addressed in greater detail in Sections; 1.4.6, 1.4.8, 1.4.10, & 1.4.13. Please consult these sections for great detail.

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Figure 2.3.1 is an example of the onshore component staging area used for the Gun Fleet Sands offshore wind farm. Evanston does not have such a deep water port facility, staging area, and probably cannot provide one without significant expense. Mercury Wind has already talked to several deep water port cities in close proximity to Evanston that will lease a staging area for the Evanston offshore wind project. As far as an appropriate O&M facility, that issue was addressed earlier in sections 1.5.5 and 1.5.6.

2.3.1 Specialized Equipment and Current Illinois Port Facilities Construction Vessel Requirements and Availability & Suitability of Existing Ports The vessels required for the construction and operation of an offshore wind farm installation represent an integral component of the development process. Given the unique capabilities and limited availability of these vessels, an understanding of how these vessels will influence project development is crucial. Accordingly, a study was conducted to define vessel requirements, assess vessel availability, and develop viable approaches that can be pursued to contract or acquire the necessary equipment. This analysis found that the opportunity to use existing vessels is hindered by the navigational restrictions of the Great Lakes, as well as provisions included in the Jones Act, which impose limitations on the use of foreign vessels in the U.S.A.. While these challenges are admittedly formidable, they by no means represent a fatal flaw; careful analysis will be required to fully understand their implications and develop alternative approaches. Of all the vessels involved in offshore wind farm development and operation, the turbine installation vessel (TIV) is expected to pose the greatest challenge. One potential option is to construct a TIV specifically for projects in the Great Lakes; this can be accomplished by either commissioning a new build or converting an existing vessel to meet the project’s requirements. There is also the possibility that legislative regulations could be logistically circumvented so that existing foreign vessels can be utilized. A picture of a TIV vessel is shown in figure 2.3.2.

Figure 2.3.2 European TIV lifting a massive 5MW Turbine with tower and rotor!

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It is important to emphasize that the present lack of suitable vessel options is an obstacle that encompasses all of the Great Lakes. Consequently, there exists an excellent opportunity for joint collaboration among the many stakeholders in this region to develop solutions that will facilitate offshore wind energy development in the Great Lakes. There are barges and boats that may be outfitted for offshore wind development, but currently there are no boats like the one in Figure 2.2.3 specifically designed for offshore wind farm construction.

Figure 2.3.3 Danish TIV ship with preassembled towers and rotors. The potential positive staging characteristics of existing Illinois ports was also investigated. Mercury Wind has determined that existing port facilities are available on Lake Michican to accommodate the basic construction and maintenance requirements of the Evanston offshore wind project. Mercury Wind found 3 suitable port locations for staging parts, but none are located within Evanston borders. If the City of Evanston were to allow some minor modifications to its port facilities once the specific size and design elements of the project are known this would be extremely helpful for construction and maintenance. 32 2.3.2 Skilled Labor & Trained Crews Massive cranes lifting weights more than 800 tons at a time. Add to that structures that are +400 feet tall and then combine electricity with water. Highly skilled laborers and experts are needed at every level of this project. The odd thing is, one company in Europe is responsible for installing over 65% of the offshore wind farms. It is interesting to note that within the onshore U.S. wind turbine world, 6 construction companies install 85% of the wind farms! The Evanston offshore wind project will be completed with skilled, local, union labor. The union has the workers, and the engineering and consulting companies working in partnership with Mercury Wind have the experience. Some of these 30 companies will be bringing trained workers that will work with the union. Other companies

32 The city of Evanston does not necessarily need to tear up or remodify the shoreline, but a little 50’ docking area for the maintenance boats or for the engineering boats to dock would be helpful.

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will be bringing engineering and know how. At least 30 companies will be involved in the Evanston offshore wind farm project. This is projected to create at least 200 construction jobs, $50 million in direct investment, 10 – 30 O&M jobs, and $3,100 - $3,600 per every kW of electricity built. It also has the potential to create an Evanston marina, further driving jobs and investment in the city of Evanston.

2.3.3 Laying of Electrical Cable The retained wind turbine service contractor will prepare the necessary tools and equipment for each of the installations required. Contractors will install machines, and connect electrical equipment. Mercury Wind has requested proposals from highly experienced electrical installation contractors. The detailed design service for wind farm and network electrical interconnections will be provided by the retained electrical engineering consultants. The service includes critical issues such as load-flow studies, fault and protection co-ordination, power quality calculations and design for optimum lifetime costs. The electrical contractor is responsible for connection of the wind turbine generator to the grid as well as the following: Securing the correct placement of the required cable tubes during casting of the foundation; Co-ordination of the installation and examination of the turbine earthing system; Delivery and installation of the grid cables between the turbine switch cabinet; Installation of control and communication cables to and between turbines; Installation of the metering unit (in co-ordination with the local power utility). Greater electrical layout details and schematics will be provided during the Evanston RFP process.

2.3.4 Construction Insurance The offshore project cost will include a 2-3 year maintenance agreement with the manufacturer. The turbines will be maintained by the manufacturer according to their recommended schedule. Mercury Wind’s staff will accompany the manufacturer’s staff during every visit during the first 2-3 years in order to be trained thoroughly with the manufacturer’s preventative process. An additional 10-year manufacturer’s warranty option to cover the equipment through years 3-10 is also available to Mercury Wind. Mercury Wind will purchase property insurance to cover all major corrective maintenance and catastrophic equipment failures including lightning, mechanical failures, tower collapse, fire, blade failures etc. Meanwhile, Mercury Wind will require all installation contractors to purchase full insurance coverage for this project including liability, site, and equipment breakage for the construction period.

2.3.5 Seasonal Impact Construction, Maintenance, Production, & Availability The spring, summer, and fall months are the time of year when all construction and maintenance companies rejoice. The same is true in the wind turbine world. It should be noted here that during the winter months, ships have limited access to the site area. That said, Mercury Wind has drawn up extensive construction and O&M schedules that make every contingency to deal with this issue. My response to this question is, Mercury Wind will be providing the same construction timelines and installation guidelines as the European offshore wind farms have done, with one exception. Mercury Wind will learn from each success and failure of the European offshore wind farms during their

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construction and maintenance periods. Mercury Wind is committed to learning and implementing the most optimal timeframe for construction and maintenance.

3.0 General Planning and Predevelopment Considerations

3.1 Regulatory Approval Process Mercury Wind Energy believes that the most difficult aspect of constructing an offshore wind farm for the City of Evanston will be in obtaining the regulatory permits. These regulatory permits from local government, state government, and the Federal government will be the most difficult aspect of the project. As of this moment, no offshore wind farms have been constructed in the U.S. Therefore, there are many uncertainites as to navigating the permit process. The first step is for the City of Evanston to award a development contract to construct an offshore wind farm. The second step would be getting the approval at the state level. The third and final step would be getting approval at the Federal level. The city’s roll throughout this process is petitioning the State and Federal government to grant the regulatory approval to the preferred developer. The key uncertainties that are not known at this time are: A. Who grants approval at the local level? B. Who grants approval at the State level? C. Who grants approval at the Federal level? D. Which entity receives the tax revenue from the wind farm? E. Who grants the leasing rights and determines the length of the leasing rights in Lake Michigan? F. What entity receives the annual leasing fees of Lake Michigan?

Table 3.1.1 lists a few of the political departments that have had to approve other offshore wind farms in the US.

Approvals & Permits: Local, State, & Federal Federal Regulations & Reviews State Reguations, Permits & Approvals Federal Energy Regulatory Commission (FERC) DNR - State Environmental Review (associated with EPA) Federal Aviation Administration US Coast Guard Private Aids to Navigation (PATON) Subaqueous Lands permits and leases Army Corp of Engineers Environmental Protection Agency (EPA) Section 401 Water Certification IL Storm Water Permit Local Authorities Air Quality Permits To be participant in NEPA/State review DNR - Div. Of fish and Wildlife Municipalities with potential visible impacts DNR - Div. Of Parks and Recreation Local communities transited by onshore cable route IL Economic Development Office Building/Construction permits as required Great Lakes Commission IL Energy Office Table 3.1.1 Necessary Approvals Required For U.S. Offshore Wind Farm Development

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3.2 Environmental Issues and Anticipated Studies A. The cost of the necessary permits and studies to be obtained depends on how many studies are required by the city, state, and federal government… and how involved the local city government is in obtaining these permits. If the city of Evanston remains positively involved, the permitting process schedule can take as little as 6 weeks. 33 Political will and support is the single most valuable asset to an offshore wind developer. For a more detailed timeline of the scheduling process to obtain approvals, please see section 1.6 of this report, that details an actual wind farm approval timeline. B. The average cost per MW for obtaining the necessary permits and approvals for an offshore wind farm is approx. $62,376 or about $6.3 million per 100MW. Jim Gordon (owner of Cape Wind) spent $45 million on getting approvals for 420MW wind farm. This equates to $107,142 per MW. However, everyone recognizes because Jim was the first US offshore developer, he had to spend the most. C. A minimum of 6–12 months of onsite wind data with a site installed met tower must be collected to verify existing estimated wind data. D. Mercury Wind has investigated extensively ways to mitigate the impact on the City of Evanston during construction of the wind farm. This will be revealed during the RFP process. E. A 1-4 month electrical interconnection feasibility study must be conducted to develope a safe reliable, efficient, and cost effective offshore wind facility. F. The city’s roll in facilitating these studies and approvals should be two-fold. Granting the developer the necessary permits to collect wind data offshore and approving the correct organization to conduct the environmental assessments and studies that still need to be completed.

3.3 Public Outreach and Stakeholder Engagement The public impact is anticipated to be generally positive with a few residents against the wind farm because of visual impact or bird migration. It is the responsibility of the developer to engage key stake holders such as: active bird/avian societies, sailing enthusiests, fishing groups, other user groups who would potentially dislike the wind farm. The benefits of a wind farm and impacts on commercial fishing are as follows: Warning and direction lights on turbines to guide boaters, inflatable life rafts, in the event of terrorist attack to the on shore power plant, Evanston still has power, free turbine-to-shore communication stations, free S.O.S. calling, turbine shut-down during bird migration, abundant fishing zone for fisherman, fog horn and lighthouse level lighting during inclement weather.

3.3.1 Aesthetics Mercury Wind desires to paint the turbines a light gray or light blue color to blend in with the horizon. This will reduce the visual impact by an additional 20%. Mercury Wind also prefers to construct the wind farm +7 miles from shore which further reduces the visual impact by 50%.

33 The city of Cleveland and the Governor of Ohio worked together and got offshore wind farm approval in less than 1year. However, the Cape Cod wind farm took 9 years to get approved. Why? Political support was too weak.

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3.3.2 Noise Studies have shown conclusively that turbines cannot be heard more than 2,000 feet away. Since Mercury Wind is placing the turbines a minimum of 37,000 feet from shore, it would be impossible for someone to hear the turbines at that distance. If any claims are made in reference to audibly hear the turbines 7 miles away, I suggest a career for that person as a submariner in the Navy.

3.3.3 Impacts on real estate and property values This is completely arbitrary. Some people like the turbines, other people do not. For example, in Hawaii there are 6 wind farms with at least 4 more being proposed. The property value in Hawaii is at least 10 times greater than Evanston. However, the Hawaiian wind farms were still erected on land. Furthermore, the Federal government believes that turbines increase the property value, therefore, they tax it. Mercury Wind is not suggesting that the city raise taxes on lake shore residents, simply noting that property values will increase.

3.3.4 Impacts on Recreation Very few residents will ever boat more than 5 miles off shore. It is estimated that less than 2% of Evanston residents will ever boat on the water. The turbines will not interfere with most of the boating and will certainly not harm anyone in the general vicinity. Moreover, the turbines can act as a safety guide to recreational boaters that may lose their way, or require emergency aid. Mercury Wind will install on every turbine tower; a ladder, turbine- to-shore phone, inflatable raft, warning lights, and lifesaving devices in the tragic event that they are needed.

3.3.5 Access to waters around the facility The turbines will be spaced a minimum of 2000ft. (600m) apart. There should be no problem with boats going through the wind farm or around it if need be. The foundations of the turbine structures are 8 – 12 ft. in diameter. It will be exceedingly difficult for a boat to hit the foundation structure, unless it was trying to do so. In addition, since the largest barges in the Great Lakes area are less than 225ft. wide, even they could easily access the waters between and around the wind farm. If a sailboat happens to sail into the area, there is little chance of the turbine rotor hitting the sail mast, as the bottom tip of the turbine rotor is still 100ft. above sea level. This means that 95% of the sailboats on Lake Michigan can sail through the wind farm without fear of hitting a rotor.

3.3.6 Impact on Commercial Fishing Studies that have already been completed on existing wind farms suggest that fish are attracted to the foundations of the wind turbines. These foundations serve as an artificial reef for marine life. The turbines will be spaced apart by a minimum of 600 m in a linear configuration at the wind farm . Therefore, the linear dimensions of the 101MW wind farm are roughly: 2 miles long by 1 mile wide. The 28 wind farm towers will take up roughly 3,164 square feet out of a total wind farm water area of 72.2 million square feet. The Evanston shoreline length is approximately 15,840 feet. Each row of seven towers are each approximately 12 feet in diameter, with a total visible length of 84 feet or about ½ of one percent of the visible shoreline length. Since the proposed wind turbines are all

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located at least 7 miles from the shoreline, and since there are no reefs or shoals in most of Lake Michigan, these factors will significantly limit the visual impact of the wind farm on fishing boats and other boats on the lake. Furthermore, as there is no trawl effort in Lake Michigan, this annuls the potential for trawl nets to become ensnared upon turbine foundations and accompanying structures. The Evanston offshore wind farm will not significantly adversely affect either commercial or recreational fishing in the proposed and surrounding areas. The total project area is extremely limited when compared to the total area of the lake front. Furthermore, turbine foundations act as artificial reefs, which attract concentrations of fish in the area. These artificial reefs also have the potential to promote spawning in species, which do not currently spawn in the study area due to a current lack of suitable habitat (i.e. species which normally spawn over rocky reefs near the mid-basin islands). Overall, the Evanston wind farm will have very limited impacts on commercial and recreational fishing in Lake Michigan. *Special note: Studies that have been done in Europe have proven conclusively that fish congregate in mass quantities to the turbine area because fish like the sub-sonic turbine vibration, the gentle movement of the waves, and the monopile structures. The problem isn’t the fish being harmed by the turbines; it’s keeping them away from the turbines.

3.3.7 Impact on Commercial Navigation and Aviation Mercury Wind has contacted the Coast Guard concerning Lake Michigan. The Coast Guard has stated that the proposed Evanston Wind Farm does not interfere with current shipping lanes. In addition most of the sea traffic on Lake Michigan occurs from the south Chippewa basin to Lake Huron. Most of the ships travelling this route prefer the shortest distance to save fuel. The shortest distance is through the center of Lake Michigan which is 30 miles to the east of the proposed wind farm. Therefore the impact on commercial navigation should be non-existant. One nighttime navigational benefit that these ships could potentially have is the 30 lighthouse level lights mounted on the turbines to help guide boaters. All proposed structures over 200 ft. must undergo an Obstruction Evaluation by the Federal Aviation Administration (FAA) and be permitted through a form 7460-1 filing prior to construction. Wind turbines chosen for the project are likely to be in the range of 500 to 600 ft. from the base of the tower (lake level) to tip of blade, and therefore will require FAA approval. Because the turbines will be located 7 miles from shore and greater than 20 miles from O’Hare, aviation should have no impact on the turbines. The highest point on the turbine blade will reach less than 600 feet. Since most small private planes travel above 3,000 feet, there should be no problem. Commercial airliners travel above 35,000 feet until they prepare to land, in which case they drop to 3,000 feet 15 miles from the airport. In addition, there are no military exercises or flight training occuring over Lake Michigan. However, because the wind farms are above 200 feet, the FAA and military will need to be consulted for approval. Furthermore, the picture below shows the radar signature of an offshore wind farm.

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Figure 3.3.1 Picture of how an offshore wind farm appears on radar.

3.3.8 Local Tourism The expected impact of the wind farm on local tourism will be minimal. Mercury Wind would like to increase local tourism and revenue. Therefore, Mercury Wind would like to offer boat tours once a week during the summer, to allow tourists for a small fee to tour the Evanston offshore wind farm. The main group of tourists that come to Evanston, visit in the summer without boating on the water. Some people like wind turbines and other people dislike wind turbines. Mercury Wind has seen no evidence of offshore wind turbines affecting tourism. In addition, since Hawaii has 6 onshore wind farms, tourism cannot be affected as greatly as some people say. If tourism were hurt by wind farms, why would Hawaii have them?

3.3.9 Impacts on public safety and security The main benefit to the public concerning their safety is that these turbines can provide guidance, lighting, fog horns, off shore distress phones, off shore inflatable rafts, and a place to anchor a boat in the event of a tragedy. In addition, in the event of a grid black- out, or terrorist attack on the grid, by utilizing the wind farm power, the public will benefit from continued lighting. Moreover, the public will also benefit in a calculated savings of more than $71 million. The public also benefits because less coal is burned, thereby salvaging the environment, and Lake Michigan, from further ecological damage.

3.3.10 Site Decommissioning & Site Restoration Mercury Wind has investigated the decommissioning timeline for a wind farm. So far, the timeline’s range from 6 months to 2 years. Based upon conservative estimates of tearing down a large construction project, Mercury Wind estimates that to decommission an offshore wind farm will take approximately 6 months. Site restoration will take anywhere

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from another 6 months to a year. Total time spent, 1 – 2 years. Obviously, the faster the wind farm is decommissioned, the cheaper. However, Mercury Wind is committed to the environment and will do nothing to harm the marine ecological structure. So if the process to decommission ends up taking longer, Mercury Wind has budgeted for that.

4.0 Economic Development Opportunities Mercury Wind desires to use as many local experienced companies for the proposed wind farm project as possible. Cranes will be rented locally, electricians, electrical engineers, civil engineers, marine engineers, architects, lawyers, construction companies, barge companies, and many other companies will need to be contracted. Many of the companies that can be hired to complete this project are located in Evanston, Chicago, or the state of Illinois. While Mercury Wind Energy recognizes that some offshore engineering and consulting expertise will be hired from Europe, the majority of the offshore wind farm project can be completed with American Labor.

4.1 Procurement of Regional Products and Services Mercury Wind has visited Tower Tech Corporation located 200 miles north of Evanston in Manitowoc, Wisconsin. The Tower Tech COO has assured Mercury Wind they are willing to supply all monopiles and towers needed for the Evanston Wind Farm. In addition, the CEO of Mercury Wind has met with the Indiana Office of Economic Development, and they have expressed a desire to make all steel monopiles at the Indiana Steel Works. Furthermore, Mercury Wind wishes to contract experienced road construction crews, laborers, and electricians located in the City of Evanston to perform the electrical interconnection of the wind farm to the Evanston transmission and substation. Mercury Wind has already consulted with Cemcon, a civil engineering company, based in Chicago. Although many of the engineers and managers Mercury Wind recruits are required to have experience in constructing an offshore wind farm, there will be a substantial amount of jobs that will be created locally. Mercury Wind estimate’s that from $20 - $145 million of the offshore wind farm can be spent contracting with local companies.

4.2 Port Development and Enhancement Mercury Wind has calculated at least 1/4 mile of shore line staging area will be needed to dock the towers, the nacelles, and the turbine blades. At this time, the City of Evanston does not have the appropriate port size, rail yard, or deep water barge capacity for this wind farm project. Therefore, Mercury Wind Energy would like to either develop existing Evanston shore line, or locate the staging area for the turbines at an alternate location. We have investigated three ports in Illinois, Indiana and Wisconsin as potential staging areas. Mercury Wind is unsure of the City of Evanston’s preference concerning port development. Does the city of Evanston want its port developed? Or would Evanston prefer another location. Mercury Wind has stated earlier in this RFI that an experienced Marina builder & owner is more than willing to build a Marina and develop a port for Evanston at no charge to the city. In conclusion, in order for the turbines to be maintained and serviced, Mercury Wind needs to dock at least two boats on the Evanston shoreline or the two other locations mentioned under the operations and maintenance section of this RFI.

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4.3 Job and Industy Development In order for the proposed Evanston Wind Farm to be constructed, at least 30 different suppliers and one wind turbine manufacturer must be contracted. This combination of 31 companies will employ at least 2,000 recruits to construct the wind farm. Once a 100MW wind farm is constructed offshore, at least 20 highly skilled workers will be needed to operate and maintain the wind farm. These jobs will pay from $40K to $55K annually. In addition, several other cities are proposing offshore wind farms. If the City of Evanston developes their offshore wind farm first, they could potentially add an additional 10 - 30 highly skilled employment opportunities.

4.4 Potential Adverse Economic Impacts Mercury Wind has calculated a substantial savings in electricity to the citizens of Evanston over a twenty year period. In addition, we see $20-$145 million in capital being spent in the community to erect the wind farm. Mercury Wind has pointed out a Marina can be built to store and maintain yachts. The economic opportunity and impact should Evanston allow a Marina to be built would result in at least 80 additional jobs and potential boat docking revenues in excess of $1 million. The average Marina brings in about $2 - $6 million in revenue. This also creates jobs and will enhance the waterfront. In addition, having a Marina would allow Mercury Wind to provide weekly boat tours of the offshore wind farm. A lot of people are interested in the technology and would like to visit an offshore wind farm. Mercury Wind is more than willing to offer wind farm boat tours for a nominal fee. Finally, we see the creation of high paying jobs for the operation and maintenance of the wind farm. Mercury Wind does not see a potentially adverse economic impact on the City of Evanston.

4.5 The City’s Role in Facilitating Economic Development The City of Evanston can aid economic development by giving each developer a list of companies located in Evanston, Chicago, and throughout Illinois that are interested in bidding in on the proposed offshore wind farm. There are many construction companies in Illinois; however, it takes a considerable amount of the developer’s time to seek out all interested subcontractors. However, the city can access this information in many cases much more quickly than a developer. *Special Note: most of the wind farms currently being developed in Illinois are owned and constructed by companies located outside of Illinois. If the City of Evanston would like to spur local economic growth, Mercury Wind suggests the city give preference to local developers who will hire experienced local subcontractors as much as possible.

5.0 Developer Expectations of the City Mercury Wind does not currently have any expectations from the city of Evanston. If the city does not have the resources to devote to this subject, Mercury Wind will take care of that. Mercury Wind has a desire to reduce greenhouse gas emissions, provide clean energy, spur economic growth, generate new businesses, and promote good education & health in Evanston. Mercury Wind wants to earn the business and respect of the honorable people of Evanston, its Mayor, and its city council. Mercury Wind would like to bring something to Evanston, not ask for something. If the City of Evanston would allow it,

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Mercury Wind wants to bring clean energy, stop emitting harmful greenhouse gases, and a better engineering & science lab to Evanston Township High School. This is what Mercury Wind wants to do give, not receive.

6.0 Additional Items, Impact on Birds and Wildlife Wind power has limited impacts on habitats and wildlife. Wind farm developers are required to undertake an Environmental Impact Assessment to ensure that their potential effect on the immediate surroundings, including fauna and flora, are carefully considered before construction is allowed to start. They also work closely with conservation and wildlife groups to ensure that new developments are sympathetic to existing habitats. In many cases impacts can be avoided or reduced by adjusting the location of the whole project, the number of turbines or re-siting individual turbines. Wind power’s overall impact on birds, bats, other wildlife and natural habitats is highly site specific. In addition, impacts from wind power are extremely low compared with other human-related activities. Deaths from birds flying into wind turbines represent a small fraction of those caused by other human-related sources such as cats and buildings. US statistics show 1 billion birds are killed by colliding with buildings each year and up to 80 million by vehicles. By comparison, it’s estimated that commercial wind turbines in the US cause the direct deaths of only 0.01 - 0.02 of all of the birds killed annually by collisions with man-made structures and activities. In Europe, a 2003 study in the Spanish province of Navarra - where 692 turbines were then operating in 18 wind farms - found that the annual mortality rate of medium and large birds was just 0.13 per turbine. In the UK, the Royal Society for the Protection of Birds says that “we have not so far witnessed any major adverse effects on birds associated with wind farms.” Despite this minimal impact, extensive efforts are made to avoid siting wind farms in areas which might attract large numbers of birds or bats, such as migration routes. Avian studies are routinely conducted at wind sites before projects are proposed, and any changes monitored afterwards. With careful siting and strategic planning, the most sensitive areas can be avoided and wind development can proceed quickly.

In conclusion, avian studies and bird migration is very site specific. Therefore, Mercury Wind cannot give exact information regarding the species and amount of birds affected without further study of the offshore wind farm site. There are many additional avian studies and mitigation options that may be implemented in order to reduce or eliminate potential bird and waterfowl issues, these will be carefully outlined during the RFP process. Mercury Wind is grateful to the citizens of Evanston, the honorable Mayor Tisdahl, and to the rest of the city council of Evanston for this exciting opportunity. Thank you for your continued involvement, and we at Mercury Wind sincerely hope you enjoyed reading our responses to your RFI.

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