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 19.1 462 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
70.9 46.8 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 1.2 1.1 0.6 0.3 0.4 0.5 0.4 0.4 0.3 0.3 0.6 0.30.3 0.2 0.4 0.1 0.3 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 6,000MW 4,802 Cumulative Cumulative USD billion 14.96 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. Calculations are based on DEWP experience in the UK, with local content growth and USD investment figures based on realised investments by DEWP/Orsted in the Humber Region. Build-out rate is based on announced policy proposals and proprietary forecast. Annual cost reduction of 2,5% assumed. Source: MAKE; BVG Associates; BWE; TKI-WoZ; SdER; DONG Energy
28 Offshore Wind Can Create Economic Development Opportunities in for U.S. Ports and Domestic Supply Chain Focus on Ports – Case Study from Belfast Harbor, Northern Ireland
DONG Energy signed a long-term lease on the $60m state-of-the art Offshore Wind Terminal at Belfast Harbor, the first custom built installation and pre-assembly harbor in the UK and the source of 300 full time jobs
Onshore Operation & Export Offshore Installation Founda- Inter-Array Electrical Maintenance Cables Substations Vessels tions Cables Turbines Offshore Wind’s Economic Impact for Sponsor States Case Study from the Humber Region in the United Kingdom
DONG Energy experience in the UK provides a good proxy for U.S. opportunity • 1,600 jobs/year on average 2015 thru 2020 DE is • 500 long-term jobs (operations and Edinburgh constructing maintenance) 2,000 MW Siemens completed new wind turbine factory in offshore wind in Hull, started operation September 2016 the Humber Region of the • $470m inward investment United Kingdom • 1,100 direct new jobs • Close working relationship with DONG Energy a Cardiff “significant factor in decision to build the Hull
London Siemens factory”
Because of its relative proximity to population centers, offshore wind creates jobs in the states that are benefitting from and paying for the resource
30 On November 6th - DONG Energy becomes Ørsted
• We want to create a world that runs entirely on green energy
• We no longer produce oil and gas and have decided to stop all use of coal to focus entirely on green energy
• Because of our transformation, we will now become Ørsted. We are inspired by the curiosity, dedication and interest in nature of one of Denmark’s best known scientists, H.C. Ørsted. 200 years ago he helped lay the foundation for how we produce power today
31 Public Cypress Creek Renewables Pierce Atwood Energy Infrastructure Conference October 20, 2017 Jaya Velamakanni – Corporate Counsel CYPRESS CREEK RENEWABLES CCR is a leading integrated utility-scale solar platform in the US. We develop, build, finance and operate every project to maximize value & expected 35yr+ asset life
. $2B+ in committed capital in 3 years FINAN . Experienced team has financed more >200 solar energy generation assets (over $5B)
CE . Broad network of repeat and sophisticated investors
. Sold 780+ MW; capital reinvested in development pipeline
. Developed over 1.5 GW in 3 years; Multi-pronged greenfield development platform DEVE . 5 GW+ development pipeline in 13 states LOP . In-house site origination and customer acquisition allows us to enter distinct markets quickly
. Involved in construction of 1.4GW through prime contractor model
BUILD . Constructed 400 MW+ in 2016 and ~900 MW forecasted for 2017 rd . 3 Party Services: >250 MW; Delivered 100MWs on time & budget to 2nd largest US utility
. ~1 GW operating portfolio with 95% contracted for 15 years+ OPER . Creates stable revenue stream and strong balance sheet Maximizing Value & Quality at Each Step Value Maximizing
ATE . Incentives aligned with long term profitability of the fund and investors Expansion into New Markets
Beginnings in North Carolina: Currently 788 MW in operation
Understand regulatory, permitting and legal frameworks
Assessing five factors when entering new markets:
Fair Compensation
Predictability
Interconnection
Siting
Taxation Expansion into New England
Massachusetts
Rhode Island
Vermont
New Hampshire
Maine Market Focus: Massachusetts
Global Warming Solutions Act (August 2008) – reduction in greenhouse gases (GHG) by 25% by 2020 and 80% by 2050
Establish regulations requiring reporting of greenhouse gas emissions by largest sources by January 1, 2009
Establish baseline assessment of statewide GHG in 1990
Develop projection of statewide GHG emissions for 2020 under “business as usual”
Establish target emission reductions to be achieved by 2020
Create advisory committees to analyze strategies and make recommendation for adapting to climate change
Source: Energy and Environmental Affairs, mass.gov Benefits and Challenges in Massachusetts
New England Market Generally
Good economics
Rapidly expanding
Low penetration of renewables
Political interest and commitment to reducing carbon footprints 5MW DC and smaller projects in MA
Tied to community or utility offtakers
Small and quick to deploy
SMART is an excellent step to be as efficient and cost-effective as possible
Comparison to RI and ME compensation Utility-scale projects in MA
Renewable Portfolio Standard in MA not up to 2050 greenhouse emissions production goal – no interim milestones
Are merchant prices and merchant Class I RECs in ISO-NE competitive?
TriState RFP and 83D Case Study Project: MA <5MW Site
Five factors when entering new markets: Fair Compensation Predictability Interconnection Siting Taxation
Questions and Final Remarks BUILDING THE NEXT ERA OF CLEAN ENERGY
Pierce Atwood Energy Infrastructure Symposium
F. Allen Wiley, Vice President - Development October 20, 2017 NextEra Energy is comprised of two strong businesses supported by a common platform
• $70 billion market capitalization (1) • 45,900 megawatts in operation in 30 U.S. states and 4 Canadian provinces (2,3) • $90 billion in total assets (3) • 14,700 employees
One of the largest electric The world leader in utilities in the U.S. by retail electricity generated from megawatt-hour sales the wind and sun Engineering & Construction Supply Chain Nuclear Generation Non-Nuclear Generation
(1) As of October 16, 2017; Source: FactSet (2) Includes megawatts sold to NextEra Energy Partners 43 (3) As of December 31, 2016 NextEra Energy is a leading clean energy company with ~45,900 megawatts of generating capacity in operation
NextEra Energy Inc. Generating Units
44 NextEra Energy was the third-largest U.S. capital investor across all industries in 2016
2016 Top 10 U.S. Capital Investors(1)
$20.2 $17.1
$ B $9.6 $9.1 $8.6 $8.5 $8.4 $8.3 $8.1 $7.9
NEE
Outside of the telecommunications industry, NextEra Energy was the largest capital investor in the U.S. in 2016
45 1) NEE internal estimates based on publicly available information In 2016, NextEra Energy maintained its status as the largest producer of wind and solar energy in the world
World’s Top Generators of Global Wind Wind and Solar Energy in 2016(1) Installations (Dec. 2016)(3)
44.2
33.5 30.2 24.5 GWh GW 19.7 19.8 19. 4 17.8
NEE(2) Energy Resources has more wind capacity in its portfolio than all but six countries in the world
1) Based on third-party research data and corporate disclosures 2) NextEra Energy actuals; Includes 100% of NEP assets operated by Energy Resources 46 3) Source: Global Wind Energy Council Our ability to deliver results is a product of our people and culture of continuous improvement
Culture of Delivering Results • Recognized as the most admired company in our industry and one of the best companies in any industry – Fortune World's Most Admired Companies – Ethisphere Institute World's Most Ethical Companies – Forbes Best Employers • Key elements of our culture: – Financial discipline and risk management – Operational excellence/continuous improvement – Commercial and development skills • NextEra has a diverse and talented team of employees with an unyielding focus on meeting our commitments Proud of our track record; never satisfied; focused on the future with a drive to be better every day
47 Florida Power & Light is one of the best utility franchises in the U.S. with electric rates ~25% below the national average
Florida Power & Light (FPL) • One of the largest U.S. electric utilities • Vertically integrated, retail rate-regulated • ~4.9 million customer accounts; ~10 million people • ~26,000 MW in operation • $10.9 billion in operating revenues • $45.5 billion in total assets
Note: Data is as of year ended December 31, 2016 48 NextEra Energy Resources’ focus is to be the leading North American clean energy company
NextEra Energy Resources • World leader in electricity generated from the wind and sun • ~20 GW(1) of generation in operation – ~14 GW wind – ~2 GW solar – ~3 GW nuclear
– ~1 GW natural gas/oil Wind • ~8 BCF of natural gas pipeline 70% capacity operating or under development(2) • $4.9 B(3) in operating revenues Nuclear Natural Gas Solar 14% • $42.7 B in total assets 2% Oil 10% 4%
1) As of December 31, 2016. Generation mix is based on MW capacity operated by Energy Resources including 2,788 MW of NextEra Energy Partners’ assets 2) Includes 4 BCF Texas Pipelines operated by Energy Resources for NextEra Energy Partners 3) For the year ended December 31, 2016 49 Note: All other data as of March 31, 2017 NextEra Energy Resources’ Affiliates have approximately 2,000 megawatts of generation currently in operation in New England NextEra Projects in Operation in New England Gross Net Project State Fuel MW MW (1) Small Scale Solar MA Solar 3 3 NEA Bellingham MA Nat. Gas 305 153 Casco Bay Energy Storage ME Battery 16 16 Cape 4-5 ME Oil 36 36 WF Wyman 1-3 ME Oil 214 214 WF Wyman 4 ME Oil 613 517 Seabrook NH Nuclear 1,247 1,100 Total 2,434 2,039
(1) Net MW reflects NextEra’s ownership share
50 NextEra Energy Resources’ Affiliates have ~360 megawatts of solar projects under contract at fourteen sites in New England NextEra Solar Projects Under Contract in New England
Project State Fuel MW Competitive RFP Constitution CT Solar 20 CT DEEP Nutmeg CT Solar 20 Tri-State Quinebaug CT Solar 49 Tri-State Farmington ME Solar 49 Tri-State Hinckley ME Solar 20 CT DEEP Sanford ME Solar 49 Tri-State Winslow ME Solar 20 CT DEEP West Portsmouth NH Solar 10 CT DEEP Chinook NH Solar 30 Tri-State Coolidge VT Solar 20 CT DEEP Davenport VT Solar 15 CT DEEP Highgate VT Solar 20 CT DEEP Randolph Center VT Solar 20 CT DEEP Sheldon VT Solar 20 CT DEEP
51 NextEra Energy Resources’ Affiliates submitted ~1,000 MW of renewable bids into the MA Clean Energy RFP MA Clean Energy RFP – NextEra Projects • Maine Wind, Solar and Battery Storage combined with Central Maine Power MCPC Transmission (660 MW) – Wind (460 MW) plus Battery Storage (50 MW) – Solar (150 MW) plus Battery Storage (40 MWdc) – CMP Transmission – Maine Clean Power Connection (“MCPC”) • Stand-alone Solar Projects (320 MW) – Five sites located in Maine and New Hampshire – Sites ranging in size from 20 MW to 150 MW
52