Houston Marine Insurance Seminar 2007 “Wind & Renewable Energy:

1. Houston Marine Insurance Seminar 2007 “Wind & Renewable Energy: Past, Present and future challenges for Operators and Insurers Offshore”

2. Alternative and Renewable Discussion Framework Alternative sources of electric power Alternatives to petroleum based fuels Two major issues Reduction of CO2 emissions Reduction of dependence on foreign oil

3. Alternative Energy Alternative Energy Waste to Energy Biomass Landfill Gas Fuel Cells Coal Gasification Liquefaction Carbon Sequestration Recycled Energy Renewable Energy Wind Solar Geothermal Hydro Biofuels Ethanol Biodiesel Companies involved in the manufacture, assembly, construction and operation of the equipment, projects or plants utilizing these technologies.

4. AIG and Alternative Energy AIG Global Marine and Energy Insurance Products Operational Insurances Construction Marine Loss Control Consulting Claims AIG Insurance Environmental D&O A&H AIG Financing and Investments Consulting Sindicatum Carbon Capital Ltd Solomon Associates

5. Waste to Energy Insure > 70% of the operational US waste to energy capacity Geothermal Insure > 60% of the operational US geothermal capacity Wind Insure almost 50% of the operational US wind capacity Ethanol Insure > 30% of operational US capacity Bio-diesel Insure >15% of the operational US capacity AIG Global Marine and Energy Current Involvement - US

6. U.S. Energy Flow 2005

7. U.S. Power Generation

8. U.S. CO2 Emissions

9. Alternative and Renewable Sector Growth Potential Continued growth in the demand for electric power Energy independence Legislation enacted or planned at federal, regional and state levels Carbon Cap & Trade or Carbon Tax State Renewable Portfolio Standards, Production Tax Credits, Government Grants, Ethanol replacing MTBE Response to Global Pressures on GHG emissions and Climate Change Expansion of existing Alternative/Renewable technologies Development of new technologies

10. Federal Legislation (2007) Global Warming Pollution Reduction Act Safe Climate Act Global Warming Reduction Act Climate Stewardship Act Climate stewardship and Innovation Act Electric Utility Cap and Trade Act Bingaman Proposal

11. World Renewable Portfolio Standards LEGEND Renewable Energy Targets Renewable Energy Targets by State/Province No Renewable Energy Targets

12. US Renewable Portfolio Standards StateRPS State Goal Pending

13. Renewable Generation

14. U.S. Alternative Energy Present and Future

15. U.S. Revolutionary Growth Goals 20 by 20 – Union of Concerned Scientists 25 by 25 – Energy Future Coalition 30 by 30 – American Solar Energy Society

16. Alternative Energy Scenario - World

17. Wind Energy – World Capacity and Predicted Growth Source: WWEA member survey and research

18. Wind Energy

19. Wind Energy

20. Why Offshore? Availability of open land areas Better wind resources Higher mean speeds Steadier wind Aesthetics Increased transmission options

21. U.S. Offshore Resource Estimates (MW) 5 -20 Nautical Miles 20 – 50 Nautical Miles Region < 30m => 30m < 30m =>30m New England 9,900 41,600 2,700 166,300 Mid Atlantic 46,500 8,500 35,500 170,000 California 2,650 57,250 0 238,300 Pacific NW 725 34,075 0 93,700 Total 59,775 141,425 38,200 668,300

22. US Offshore Wind Developments Estimated Potential 900,000 MW Possible to reach 70,000 MW by 2025 Current operating in US none Current under construction in US none Current planned in US 3 Cape Wind; MA; 130 units; 420 MW Long Island Offshore Wind Park; NY; 40 units; 140 MW Galveston: TX; 50 units

23. Worldwide Offshore Wind Development (end of 2006) 16 Wind Farms Operating (North Sea) 587 units; 587 MW Denmark, Sweden, Holland, UK, Ireland Under Development/Construction UK Round 1 13 Projects announced in 2001 3 Operating, 1 under construction, 2 indefinite hold, 7 delays 11 GW of Projected, Planned, Predicted and Proposed Projects by 2010 Mostly shallow water deployment (4 – 18 meters) Monopile and gravity base foundations

24. Example of Issues with Offshore Wind Horns Rev; Denmark; 2002 80, 2 MW units 1st two years of operation, 75,000 maintenance trips 2 per unit per day Reliance on Helicopter By 2004; 20-30% of transformers affected Offshore weather conditions Manufacturing problems Numerous broken gears (wave and wind action) As of this year all Transformers have been replaced

25. Issues Costs are at least double onshore facilities Costs to build have increased 33% Exposure to elements (turbines, transformers) Technology challenges increase in deeper water

26. Issues Cable Damage Accessibility Availability of adequate vessels Reliance on Helicopters Mobilization/ Demobilization Costs Substation platforms Weather related delays Transport / Towing Heavy Lifts Ship Collision

27. US Offshore Wind Issues Deeper water technology Siting Issues Shipping lanes Private aircraft flight patterns Commercial and recreational fishing areas Environmental Impact Studies Grid connections Harsher wave and weather conditions Hurricanes

28. Framework for Offshore Wind Energy Development findings Offshore systems are in early years of design stages New Technologies will emerge to meet the challenges Larger MW turbines Deep water platform concepts These new technologies need to be fully tested The new technologies need to be successfully demonstrated

29. Summary Offshore wind development presents unique challenges Government support and incentives needed to make the economics work Technology improvements will be made over time Early stages of development with a long term horizon Competition for financing from other energy sources in the near term Part of an overall Energy Plan

30. Thank you