Presentation

North America Wind Power Advisory

The PostPost Recession Wind Market Landscape

IHS Emerging Energy Research, Breakfast Presentation

26 May 2010
Matthew Kaplan Senior Analyst +1 617 551 8583 mkaplan@emerging energy.com mkaplan@emerging-energy com

2010 EMERGING ENERGY RESEARCH, LLC. All rights reserved. Reproduction of this publication in any form without prior written permission is strictly forbidden. The information contained herein is from sources considered reliable but its accuracy and completeness are not warranted, nor are the opinions and analyses which are based upon it.

The Post-Recession Wind Market Landscape

Overview: 2010 Wind Market Landscape

2010 Wind Market Landscape
12,000

ARRA Incentives
10,000

Power Demand/Power Pricing Dearth of PPAs/ No Merchant Wind Build Developer Build Plan Reductions

State St t RPS

US Wind Installatio (MW) ons

8,000

Future Expectations For Growth

6,000

OEM Supply Agreements Slow Component Suppliers/ EPC Business Slowdown

4,000 4 000

2,000

Energy Policy Uncertainty

0 2005
Source: IHS Emerging Energy Research

2006

2007

2008

2009

2010

Despite unprecedented federal wind incentives, reverberations from the financial crisis continue to create a difficult near-term market landscape, especially in light of continued demand uncertainty
North America Wind Power Advisory May 2010 Page 2

The Post-Recession Wind Market Landscape

Electricity and Gas Prices Plummet

Major M j RTO Power Pricing: 20082010 P Pi i 2008 2010

140 Average Monthly Day-Ahead Price PJM 120 SPP MISO ERCOT 100 US$ / MW Wh ISO-NE Henry Hub Gas Prices US / MMBtu S$ 80 8 MW 6,000 10 8,000 12 10,000 10 000 14 12,000

US Wind Project Power j Offtake: 20092010

Non- PPA PPA

60

4,000 40 4 2,000

20

0 2009 2010 (Q1)

Source: IHS Emerging Energy Research

The severe downturn in electricity demand, power and natural gas pricing, along with continued uncertainty over a national RES or carbon legislation, has made utilities hesitant to ink PPAs
North America Wind Power Advisory May 2010 Page 3

The Post-Recession Wind Market Landscape

Wind Developers Adapt to Changing Market Conditions

Leading North American Wind Project Owners
8,000 7,000 6,000 6%

2009 Installed Capacity by Owner (MW)

<1%

YE 2009

YE 2008

14% 41%

International IPP Domestic IPP Domestic Utility Domestic Developer Domestic Other

MW

5,000 4,000 3,000 2,000 1,000 39%

9,789 MW

Changing Build Expectations -150 to 400 MW (2010) -500 MW (2010/2011)

Source: IHS Emerging Energy Research

Despite a large build year in 2009, leading IPPs Horizon and NextEra have slashed build expectations, exemplifying near-term challenges
North America Wind Power Advisory May 2010 Page 4

The Post-Recession Wind Market Landscape

Wind Turbine OEM Domestic Manufacturing Facilities

Major OEM Manufacturing Facilities j g

Company 1 A Power A-Power Acciona Alstom Clipper DeWind 6 7 8 Fuhrlander

Component Assembly Assembly Assembly Assembly Assembly y Tower/Blade Assembly/Bade Assembly 15

Company Nordex

Component Assembly Blades

6 18 7 17 1 13 23 26 24 25 3 21 22 4 20 15 16 27 5 12 # Operating # Planned # Closed 11 2 19

2 3 4 5

16 17 18 19 Siemens 20 21 Suzlon 22 23 24 Vestas 25 26 27 Mitsubishi VienTek (Mitsubishi /TPI) Nordic Samsung

Assembly Tower/Blade Blades Assembly Assembly Blades Blades Assembly Blades Towers Assembly Blades Blades

14 9 8 10

9 10

Gamesa

Blades Blades Assembly Assembly

New Asia Pacific Turbine Supply Entrants

28 29

11 12 GE 13 14

Assembly 28 Gearboxes 29

Source: IHS Emerging Energy Research

More than 15 OEMs serve or look to serve the North American wind market through domestic manufacturing, in addition to several OEMs (mainly from Asia Pacific) inking supply contracts
North America Wind Power Advisory May 2010 Page 5

The Post-Recession Wind Market Landscape

Turbine Component Supplier Sourcing Overview

Major Component Manufacturing Facilities

OEM Towers Blades Gearboxes Bearings

Note: Includes operational and proposed manufacturing facilities Source: IHS Emerging Energy Research

The North American supply chain continues to expand domestically, supported by strong prospects for future wind growth
North America Wind Power Advisory May 2010 Page 6

The Post-Recession Wind Market Landscape

US Annual Growth Forecasts: 20102025

20 18 16 14 12 GW W 10 8 6 4 2 0 Base-Case Forecast High-Growth Low-Growth

Source: IHS Emerging Energy Research

Despite near-term uncertainty, EER forecasts 200 GW of wind energy installed by 2025
North America Wind Power Advisory May 2010 Page 7

The Post-Recession Wind Market Landscape

Long-Term Regional Forecast Outlook

Regional Wind Growth Forecasts ( (Onshore and Offshore) g )
P ifi Pacific Northwest New York Rocky Mountains Desert Southwest Great Plains
Pacific Northwest: 12,700 MW New York: 4,425 MW Midwest: 50,613 MW Rocky Mountains: ,600 24,600 MW New England: 3,293 MW

South New England

Midwest

Mid-Atlantic
Mid-Atlantic: 6,905 MW California: 11,300 MW Great Plains: 16,875 MW

California

Desert Southwest: 5,390 MW

South: 615 MW

Incremental 2020 RPS Demand (GWh)

Wind Additions (MW)

20202025
Wind Export

20152019 20102014

Texas: 27,635

Source: IHS Emerging Energy Research

National RES or federal energy policy legislation along with a streamlined transmission siting/cost allocation process will be essential to build a robust future wind market
North America Wind Power Advisory May 2010 Page 8

IHS Emerging Energy Research

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2010 EMERGING ENERGY RESEARCH, LLC. All rights reserved. Reproduction of this publication in any form without prior written permission is strictly forbidden. The information contained herein is from sources considered reliable but its accuracy and completeness are not warranted, nor are the opinions and analyses which are based upon it.

North America Wind Power Advisory May 2010

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