Developers’ Perspectives on New England’s Energy Infrastructure Needs and Challenges James Avery, Pierce Atwood LLP (moderator) Ethan Paterno, PA Consulting Group Thorn Dickinson, Avangrid Networks Thomas F. Brostrøm, DONG Energy Wind Power Jaya Velamakanni, Cyprus Creek Renewables F. Allen Wiley, NextEra Energy Resources October 20, 2017 Boston, MA NEW ENGLAND ROOTS GLOBAL EXPERTISE 3 2 Slide 12 3 Lauren Fowler, 10/4/2017 THE BEST PATH FROM QUÉBEC TO THE NEW ENGLAND ENERGY MARKET NEW ENGLAND CLEAN ENERGY CONNECT BEST ROUTE • End-to-end site control • 100 miles existing corridor • 45 miles new corridor COST COMPETITIVE • Overhead DC construction • Leveraging regional grid investments in Maine • Global purchasing power WE CAN DELIVER • Delivered $1.4 billion project on time and under budget (2015) • Experienced in Maine and regional permitting • Strong support from Maine Governor, local businesses, and host communities NECleanEnergyConnect.com 4 MASSACHUSETTS PROJECT BENEFITS LARGEST SAVINGS New England electricity customers will save more than $3.8 billion over 20 years – more than any other project. Massachusetts customers will save $150 million in electricity costs annually. LARGEST CAPACITY NECEC can deliver up to 1,200 megawatts of clean, reliable hydropower into the region’s grid. STRONGER ECONOMY Lower energy costs for businesses will increase the state’s GDP by an average of $243 million + each year and expand employment by nearly 2,000 full-time jobs. A COMMITMENT TO CLEAN NECEC’s ability to deliver a large capacity of clean hydropower allows for an unmatched contribution towards a cleaner footprint. In Massachusetts alone, NECEC will reduce carbon emissions annually by 1.4 million metric tons – the equivalent of taking 296,000 cars off the road. NECleanEnergyConnect.com 5 RENEWABLE ENERGY CHOICES FOR MASSACHUSETTS MAINE CLEAN POWER CONNECTION CLEAN ENERGY CHOICES Three levels of clean energy: Option 1: Maine wind energy Option 2: Maine wind and solar energy plus storage Option 3: Canadian wind energy plus Maine wind and solar energy plus storage OPTIMAL SITING • Maine wind in remote border area in northern Franklin and Somerset Counties • Canadian wind in eastern Province of Québec • Solar and storage adaptive re-use of a remote, decommissioned military facility • New transmission facilities sized to match each option and sited similar to NECEC 7 MASSACHUSETTS PROJECT BENEFITS LOW IMPACT LOW COST • $1.5 billion in wholesale electric cost savings in New England over 20 years • $1.9 billion in MA GDP gains over 20 years STRONGER ECONOMY • During permitting and construction MCPC will support 1,446 jobs. • Rate payer savings in New England will support 1,278 jobs annually over the first 20 years of the project. A COMMITMENT TO CLEAN • MCPC will reduce total CO2 emissions by up to 535,000 metric tons annually. • MCPC will reduce CO2 emissions in Massachusetts by up to 425,000 metric tons annually. WE CAN DELIVER Strong local support, expertise building in Maine, global resources. 8 Public DONG ENERGY – LEADING THE ENERGY TRANSFORMATION 19 Public DONG Energy Wind Power Overview Unparalleled experience and track DONG Energy Wind Power geographical footprint record USA Europe Asia Pacific Bay State Wind Boston office Taipei office Ocean Wind Formosa 1.1 25+ years of experience and Coastal Virginia Formosa 1.2 1991 track record in the offshore wind 2017 Greater Changhua projects sector Anholt 22 offshore wind farms 7 offshore wind farms Middelgrunden in operation under construction Walney 1 & 2 Horns Rev 1 & 2 Walney Extension Westermost Avedøre Rough Hornsea 1 West of Duddon Hornsea 2 Vindeby Sands Hornsea 3 & 4 Isle of Man Nysted Race Bank Gode Wind 2 Lincs Gode Wind 3 & 4 5.0 GW Barrow 3.8 GW 2,000 under Gode Wind 1 Constructe Dedicated Gunfleet Sands 1 & constructio Burbo Bank Ext. 2 d capacity employees Borkum Riffgrund 1 n Burbo Bank Borkum Riffgrund 2 Gunfleet Sands 3 Borssele 1&2 London Array Nördlicher Grund Borkum Riffgrund West 2 7.7 3.5 GW 15 OWP West million In operation World's Partnership Europeans leading s Under construction with clean operator electricity Under development Decommissioned after 25 years 20 Public Significant transformation of DONG Energy over the past decade CO2 emissions halved Operating profit Business transformed International expansion g/kWh (EBITDA) tripled Share of capital employed1 Share of operating profit (EBITDA) DKK Bn % % (50%) 3x International share >5x 462 19.1 0% 16% 24% 224 60% 84% 5.3 16% 200 201 200 201 200 201 200 201 6 6 6 6 6 6 6 6 1. Excluding unallocated capital employed on DONG Energy group level 21 Public Offshore wind is a large scale renewable technology with growth rates exceeding other renewables Fastest growing renewable technology in OECD Strong growth in established and new offshore wind Installed capacity CAGR, 2014-2020 markets % Installed Capacity, GW 27 % +6 GW 100.7 Offshore 25% wind 14 % +8 GW 46.8 70.9 1 Solar PV 14% 27 27.1 % +6 GW Onshore 7% 34.5 wind 33 % 9.8 +1 GW 53.9 43.8 11.9 1.0 24.7 Hydro 0% 0.7 11.0 200 201 202 202 203 5 5 0 5 0 % New markets Europe # GW % CAGR addition/year Source: Bloomberg New Energy Finance (BNEF), H1 2017 offshore wind market outlook 1. Sum of utility-scale PV and small-scale PV 2. BNEF forecast has a more conservative build-out pace for U.S. compared to DONG Energy’s pipeline options towards 2025 22 Public Significant Cost Reductions Driven by Scale, Innovation and Industrialisation Scale Innovation Offshore wind cost to society (EUR/MWh)1 3.6MW 6.0MW 8.0MW 2009 2014 2016 Increased size of Driving innovative windfarms and turbines solutions 156 145 Industrialisation Digitalisation 124 122 102 78 68 68 62 65 Walney Race East Borkum Horns Borssele Kriegers Borssele Cluster Hornse Extension Bank Anglia Riffgrund Rev 3 1 & 2 Flak 3 & 4 1 a 2 UK 2014 UK 2015 UK 2015 2 DK 2015 NL 2016 DK 2016 NL 2016 DE 2017 UK Standardisation and Fully capturing new DE 2015 procurement for multiple technological opportunities projects Sources: DECC; Danish Energy Agency; Energinet.dk; NEV 1. Cost to society over the lifetime of the project used as proxy for the levelised costs to society. It consists of a subsidy income on top of market prices for the first years and a pure market income for the remaining years of the 25 years lifetime. Discount rate of 3.5% used to reflect society’s discount rate. Market income based on country specific public wholesale market price projections at the time of contracting. For comparability across projects a generic scope adjustment (incl. transmission and extra project development costs) has been applied. 23 Public The Global Market Leader Within Offshore Wind Largest offshore wind player globally today Global offshore wind capacity MW 26% 8% 9% 8% 0% 1% 2% 4% 2% 1% 0% 2% 1% 8.8 5.0 2.8 2.1 2.0 3.8 1.5 0.8 0.8 1.1 0.9 0.9 0.9 0.7 1.3 1.3 0.6 0.3 0.5 0.4 0.4 1.2 1.1 0.6 0.4 0.3 0.6 0.3 0.3 0.2 0.1 0.3 0.3 0.4 0.3 0.2 0.1 Installed1 Under construction % share of global installed capacity Source: Bloomberg New Energy Finance, September 2017, DONG Energy analysis 1. If a project is executed on behalf of a lead developer managing the construction, then 100% of capacity is allocated to the lead developer. If construction is executed by an integrated joint venture, capacity is allocated in proportion to the JV share 24 Public DONG Energy Wind Power in the U.S. Secured project rights for ~3 GW capacity Entered U.S. 50/50 JV for Bay State Wind1 with Eversource in 2016 Announced Coastal Virginia Offshore Wind partnership with Dominion Energy in July 2017 Bay State Wind Bay State Wind Ocean Wind . 2,000 MW potential capacity CVOW . 15 miles from Martha’s Vineyard . Connecting into Massachusetts . Water depths of 100 – 125 feet Ocean Wind . 1,000 MW potential capacity . 10 miles from shore . Connecting into New Jersey . Water depths of 65 – 100 feet Coastal VA Offshore Wind . 12 MW Stage 1 (demo) windfarm . 22 miles from shore Coastal Virginia . Connecting into Virginia . Water depths of 80 – 100 feet Offshore Wind 1. Offtake, grid connections and planning consents have not yet been secured 26 Why is the time right for offshore wind? Beneficial to Reason U.S. Description Can be deployed • Can be deployed at a large scale providing: on a large scale, • Greater economies of scale far from land.. • More efficient development ($/MW) • Faster deployment of capacity • Significant distance to shore mitigates visual impact Reliable and • Capacity factors of more than 50% in Denmark increasingly so.. and UK • Future capacity factors close to baseload Costs are falling, • 70% cost reduction in Europe in less than 10 and fast.. years • Below 10 c/kwh in auctions in mature EU markets Jobs are created.. • A typical DONG Energy project will create up to: • 1,000 jobs during construction • 100 jobs during 25 year operation phase • Local Supply Chain and Manufacturing 27 Offshore wind could channel $20 billion into US economy by 2030 1 Projected offshore wind build-out and investments in the US MW USD billion 11,742 20 12,000 9,442 10,000 15 7,642 8,000 6,202 10 19.63 6,000 4,802 MW Cumulative Cumulative 14.96 USD billion 3,242 4,000 11.50 5 2,042 8.89 6.53 2,000 542 4.11 2.41 0 0,50 0 2016- 202 202 202 202 202 202 203 2023 4 5 6 7 8 9 0 Significant job creation - 12,000MW offshore wind supported over 54,000 jobs in Europe in 2015 Economic growth engine - $20 billion direct US investment spread across states from the East Coast to Hawaii The US has done it before - Offshore wind shares all characteristics that saw onshore wind establish a vast industrial base across 43 US states supporting over 50,000 jobs 1.