Offshore Wind Energy: Federal Funding Strategy and Advocacy for Offshore Wind Energy Development

1. Offshore Wind Energy:Federal Funding Strategy and Advocacy for Offshore Wind Energy Development Presentation to the Cuyahoga County Regional Energy Task Force Hon. Kelly H. Carnes CEO,TechVision21 April 12, 2007

2. ABOUTTECHVISION21 • Washington DC-based consulting firm integrating business, technology and government expertise • Specializing in federal R&D funding and technology policy • Former high-ranking state & federal technology officials • Extensive experience in alternative energy: • Former Assistant Secretary of Commerce for Technology Policy • Former Chief of Staff for White House CEQ; PNGV Executive Director • Developed successful funding strategies for various alternative energy technologies, including fuel cells, hydrogen, vehicle technologies, power generation • Worked with all key agencies: Energy, DOD, NSF, Commerce, Labor

3. Policy Environment • National Energy Policy Act of 2005: • Orders DOE to develop a “wind roadmap” • DOE to establish 5 projects to demonstrate production of hydrogen at wind facilities • DOE to support relevant university research • Advanced Energy Initiative: • Goal: Reduce demand for natural gas and foster alternatives for power production • Focus areas: clean coal, nuclear, renewable solar and wind energy • Wind energy research budget: FY07—$44M; FY08—$40M • Legislative Initiatives

4. Legislative Initiatives Democrats’ New Direction for America • Goal: Achieve Energy Independence by 2020 • Commitment: Investment in bio-fuels, geothermal, clean coal, fuel cells, solar, wind, hybrid and flex fuel vehicle technology and manufacturing • Create E-DARPA Clean Energy Act of 2007 (H.R. 6) • Eliminates subsidies for oil & gas industries • Establishes strategic energy efficiency/renewable reserve • Funds offset subsequent energy legislation • New energy legislative package by July 4 National Competitiveness Investment Act (NCIA) (bipartisan) • Authorizes doubling of NSF and DOE Office of Science budgets • Creates Council on Innovation and Competitiveness in White House • Creates Innovation Acceleration Program (8% set-aside) • Creates E-ARPA

5. Types of Federal Funding for Wind Energy • Competitive, Merit-based Grant Programs • Publicly Advertised—Solicitation, Broad Agency Announcement (BAA), Request for Proposals (RFP) • Fixed Deadlines • Well-defined Program Requirements • Peer Review • Cooperative Agreements and CRADAS • “Unsolicited” Proposals • Loan Guarantees • Contracts • Special Projects/Appropriations Line Items

6. Federal Wind Energy Priorities • Program Goals: • By 2010, facilitate installation of at least 100 MWH in 30 states—up from 8 states in 2002 • By 2012, reduce cost of electricity from large land-based systems from base cost of $.055 to $.036 per KWH • By 2014, reduce cost of electricity from shallow-water offshore systems (up to 30 meters) from $.095 to $.07 per KWH • By 2015, expand by 5 the number of distributed wind turbines deployed in US (from 2007 baseline) • Focus Areas: • Distributed and community-owned technology local power • R&D for land-based systems; “balanced” exploration of offshore wind and other emerging markets

7. Federal Wind Energy Priorities • 2007—2008 Program Milestones: • Complete sea-based concept study to examine system design tradeoffs across ranges of size, configuration and available technology innovations. “SeaCon” studies will help DOE narrow the technology options it supports • Work with industry partners to assess potential of the offshore wind industry • Determine technology development strategy for offshore wind • FY08 solicitation for component technology development

8. Key Elements of Cleveland’s Federal Strategy for Wind Energy • Participate aggressively in competitive merit-based grant and loan guarantee programs • Seek Congressionally-directed appropriations during FY09 budget cycle—begins October 2007 • Leverage Federal tax credits and incentives (and seek new ones) • Recruit Federal agency champions for Cleveland • Engage with industry associations • Advocacy for increased wind energy funding

9. Key Elements of Cleveland’s Federal Strategy for Wind Energy • Competitive Funding/Loan Guarantee Opportunities • Potential for CRADA for shallow water offshore large LWST • Facilities construction/expansion: $9B FY 08 DOE loan guarantees; $1B for new technologies for electric transmission facilities or renewable power generation systems • FY 08 solicitation planned for LWST component technology development (turbines) • USDA renewable energy systems grants and loans for rural small business/agricultural producers/some electric utilities providing services to rural communities

10. Key Elements of Cleveland’s Federal Strategy for Wind Energy • Directed appropriations: • Develop pilot project not covered by competitive programs • Work with partners/appropriators • Focus on FY 09 budget cycle—begins October 2007 • $12.8 million in FY 06 wind line items at DOE • Leverage tax credits and financial incentives: • current credit for electricity generated by wind—1.9 cents per kilowatt-hour; first 10 years of operation

11. Key Elements of Cleveland’s Federal Strategy for Wind Energy • Recruit Federal agency champions for Cleveland: • Build relationships with key executive branch officials to drive R&D agenda and create discretionary funding opportunities • Studies underway in FY 08 will define offshore program direction beginning in FY 09 • Program funds shifting to distributed wind technology

12. Key Elements of Cleveland’s Federal Strategy for Wind Energy • Engage with Industry Associations • New wind action plan due June 2007 • Joint effort of American Wind Industry Association/Department of Energy (NREL) • Could play major role in shaping Federal wind energy investment

13. Key Elements of Federal Strategyfor Wind Energy • Advocacy for offshore wind funding: • Goal: positioning the Cleveland project with Federal agencies as representative of offshore wind’s potential for successful commercialization • Key Activities: • Preparing appropriate educational materials • Briefing Members of Congress, staff, and executive branch officials • Technology demonstrations • Congressional testimony • Participate/speak at conferences and events • Positioning in speeches by public officials, reports, etc. • Opinion pieces and advertising

14. Kelly H. Carnes (202) 966-6610 kcarnes@techvision21.com www.techvision21.com

15. TECHVISION21 SERVICES • Securing competitive and discretionary funding for leading edge technology • Developing a 12-24 month funding strategy • Preparing quality competitive grant applications • Building relationships with federal program managers • Directed appropriations • Washington representation and advocacy

16. ABOUT TECHVISION21 Strong track record of results: • Kettering University Center for Fuel Cell Systems and Powertrain Integration: $6+M from multiple sources • USC Annenberg Center for the Digital Future: $3M from the Department of Defense • Council on Competitiveness: $2M for Economic Development Initiatives (EDA and NSF) • Integrity BioFuels: $.5M for plant in Indiana • SC Internet Company: $1M from DOD