The Business Case for Distributed Rural Electric Cooperative Wind System Applications

1. The Business Case for Distributed Rural Electric Cooperative Wind System Applications  Wind WebCast Presentation Sept 8, 2005

2. Why Wind? Wind energy is an attractive resource because of its renewability, lack of fuel costs, speed of construction, lack of emissions, and ability to be easily sited on land used for grazing or farming Also lowest-cost non-hydro renewable energy source

3. Why Should A Utility Get Involved? Stimulate Rural Economic Development Environmental Benefits Push Renewable Energy Development Promote Technology Changes Still Create a Financially Feasible Project?

4. Our Coop Initial Interest Meeting in Lisle (important to get word out) Not significantly informed before that Learned key industry involved and manufacturers Learned status today and that Illinois wanted to explore potential resources NREL Maps!

5. NREL Wind Map

6. Our Coop on NREL Map

7. Exploration Time Were we sitting on a gold mine? How to explore possibilities? Permitting, site issues? How to get it on the grid? How to measure? Who to talk to? Grant and incentives available?

8. Our Coop Niche 5% DG Requirement No Investors Some Access to Transmission High Wholesale Power Costs No �Green� market in our system

9. End Result Decided to pursue installing single 1.65 mega-watt turbine from NEG Micon Meet 5% DG requirement Integrate into our own distribution system �Base Load� all power derived from turbine Offset higher power costs from our power supplier Put the energy back to work in our own rural membership base!

10. How to Make it Work Financially Initially sought the USDA-RBS grant for 25% of project costs Taking into account debt, depreciation, and maintenance fees, still not feasible No assurance over long term for Coop lenders No real premium �Green� market to support debt Member�s income levels lower than state and national levels �not fair to subject them to this debt No guarantee that we will have production during on-peak periods Variable demand only benefits incremental demand, transmission, and energy components

11. How to Make it Work Financially Basically we can�t make electricity at a higher cost then our wholesale rate and still build a worthwhile project!

12. How to Make it Work Financially Began seeking other sources PTC not available to coops Began relationship with IL Clean Energy Community Foundation Green tag purchase of renewable attributes worth another 10% of project costs

13. How to Make it Work Financially With a balance of 65% of project costs remaining, project close to break-even or slightly better than wholesale cost equivalent The whole project would have been too much debt to subject our rural membership to initially Final tally, project would not be feasible without grants or other incentives!

14. Does it Make Sense? Since barely a break-even proposition, why do it? To promote renewables Show leadership to other small utilities Explore Coop owned distributed generation Take advantage of under-utilized resource Respond to public opinion on wind technology Help Illinois meet its wind goals!

15. Even Better Option! Received word from IL DCEO grant opportunity for another portion of project costs Officially announced by the Governor to be funded as part of western Illinois Opportunity Returns initiative!

16. Other Issues to Address Site Selection (availability of wind) Obtain or Measure Meteorological Data Independent Feasibility Study (correlation) Environmental Concerns Permitting Zoning Issues Landowner Relationships Turbine Manufacturer Selection Size and Type of turbine(s) Interconnection Issues Capacity Factor Dispatch Storage Issues

17. Reasons for Getting Involved If other utilities don�t get involved, industry will not take off (especially in Illinois) Get word out that this can work for small to medium sized utilities Keep utilizing grants & incentives to maintain needed funding for project feasibility

18. Reasons for Getting Involved Coops and Municipals cannot take advantage of tax credits which makes the need for grant programs and incentives even greater Economic Development Options Public Education Opportunities

19. Summary Cleaner, greener US ahead as long as level of support continues to increase Get the word out to utilities that even a single turbine can work and help meet local, state, and national goals for wind harvesting Get word out to legislators to keep grant programs and incentives which are a �must� at this point to get involved

20. Questions?