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NaturEner Power Watch, LLC Managing a Wind Only Balancing Authority

NaturEner Power Watch, LLC Managing a Wind Only Balancing Authority Kenneth Young – Director, Asset Management May 11, 2010. 2. NaturEner Group. GRUPO NaturEner S.A. NaturEner USA. NaturEner Hydro. NaturEner Solar. 29 PV MWp under operation 81 PV MWp in late-stage development

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NaturEner Power Watch, LLC Managing a Wind Only Balancing Authority

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  1. NaturEner Power Watch, LLC Managing a Wind Only Balancing Authority Kenneth Young – Director, Asset Management May 11, 2010

  2. 2 NaturEner Group GRUPO NaturEner S.A. NaturEner USA NaturEner Hydro NaturEner Solar • 29 PV MWp under operation • 81 PV MWp in late-stage development • 700 MW of solar thermal in early-stage development • 210 MW in operation • 300 MW in late-stage development • 350 MW in early-stage development • 14 mini hydroelectric plants in operation • 2 new projects in late-stage development Canada Headquarters: Calgary, AB U.S. Headquarters: San Francisco, CA NaturEner Canada Wind energy development assets • 490 MW in late-stage development • 375 MW in early-stage development Source: Grupo NaturEner. 2009

  3. 3 NaturEner Group North America growth platform Non-recourse debt raised in 2008-2009 for renewable investments • Footprint in the U.S. exceeds its footprint in Spain • $600 million of new investments during the past three years were made in North America Relative share of project assets 53% 45% 26% 20% Source: Grupo NaturEner financial statements Source: BBVA

  4. 4 Renewable Market in the USA Wind resource • Released on Feb 2010 • 80-m Wind resource Map • States with higher potential: • Texas: 1,900 GW • Kansas: 950 GW • Montana: 940 GW • Nebraska: 920 GW • South Dakota: 880 GW • Total Potential: 10,500 GW Source: US Department of Energy. Natural Renewable Energy Laboratory. Feb 2010

  5. 5 Renewable Market in the USA Cumulative Wind Capacity by State through 2009 • State Facts • Texas again gains the largest amount of new capacity in 2009 • Iowa consolidates its position as #2, behind Texas and ahead of California • Thirty six states now have utility-scale wind installations and fourteen of them have more than 1,000 MW of wind power capacity • Montana added 104 MW in 2009, the NaturEner´s Glacier project phase 2, just 1.1% of the total installed in 2009, 9,410 MW Source: NREL 2009 report

  6. 6 Renewable Market in the USA Wind Project Installations by State Source: AWEA Year end 2009 report

  7. 7 Future of Wind Energy 20% Wind Energy by 2030: Potential 46 States Would Have Substantial Wind Development by 2030 Source: DOE 20% Report

  8. 8 Opportunities in Wind Energy Development Western US – Present Scenario • Average annual electric demand (load base) growing over 2.7% per year • No new coal-fired generation being permittedor funded – some plants will be retired • Regional demand for new electric generation in excess of 3.0 GW per year – major load centers need more energy • Permitting generation near densely populated areas is nearly impossible – new transmission is required • Transmission construction is almost stalled; Individual generation projects cannot justify large transmission upgrades • New transmission to selected regions will bring new merchant transmission

  9. 9 Opportunities in Wind Energy Development Issues: Markets, Transmission Systems, and Wind Integration USA Wholesale Power markets Source: FERC WECC Balancing Authorities (37) NERC Interconnections Source: WECC Source: WECC

  10. 10 NaturEner Power Watch, LLC – Balancing Authority, Montana to Havre Cut Bank to Browning GEC 115kV GW2 Shelby WAPA 230kV GEC 115kV GW1 WAPA 230kV NWMT 115kV Conrad WAPA 230kV to Mid-C NWMT115kV Avista 230kV, NWMT 230kV, etc Glacier Wind 1 (GW1) - 105MW LGIA with Northwestern Energy (NWMT) Glacier Wind 2 (GW2) - 100MW LGIA with Glacier Electric Cooperative (GEC) Bole WAPA 230kV GTF • Firm Bi-Directional Transmission on Glacier Electric Cooperative Line • Regulating and Contingency Reserves Inbound, Firm Point-to-Point Transmission to GW1-GW2 • GW2’s integration required LAPS with NWMT, GEC, and WAPA • Operations from San Francisco & Chicago, Trading from NY & BC,Balancing from Houston (CECD), • and ancillary products and transmission within WECC

  11. 11 Power Watch Operating Imperatives • Regulatory Compliance √+ • Firm Energy to Off Takers √+ • OPTIMIZE NOW

  12. 12 Power Watch Regulatory Compliance • North America Electric Reliability Corporation (NERC) • Control Performance Standards • CPS 1: Real Time Frequency Measurement • Assessed Annually • Reported Monthly • CPS 2: Generation to Schedule, 10 minute averages • Assessed and Reported Monthly

  13. 13 Ramping Events Histogram of 90 minute Ramp Magnitudes

  14. 14 Ramping Events Cumulative Histogram of 90 Minute Ramp Events

  15. 15 Ramping Events Effective Scheduling to Mitigate Downside Comparison of Cumulative Ramping Events to Schedule

  16. 16 Integrating Wind Energy – Balancing Assets • Solution:Develop additional generation assets to provide ancillary services to firm and balance Renewable Energy • Potential Actions for Additional Generation Capacity • Continue progress on forecast improvement, particularly around ramping events • Foster the development of emerging technologies (Public, Private, or Partnership) • Response Demand • Pumped Hydro • Battery • Compressed Air Storage • Develop, construct, and operate responsive thermal generation facilities • Increase flexibility in commercial products and regulatory response • Capacity could be “shared” based on geographically dispersed variable assets

  17. 17 Operational and Commercial Improvements Much Harder Improve Forecasting Commercial Products Improve Scheduling Difficulty Hard Right Size Reserves Optimize Transmission Easy Now Much Later (1 year +) Timing Potential Impact Small Big

  18. 18 Commercial Improvements Scheduling with Improved Commercial Products* Minimizing Curtailment/Capping is achievable with the right mix of reserves *Based on current forecast accuracy, scheduling methodology, product mix, and regulatory requirements

  19. 19 Our Plan • Implement flexible positions and operations • Minimize fixed capacity reservations • Minimize fixed transmission positions • Real time operations • Optimize reserve volumes • Reduce Automatic Generator Control (AGC) • Utilize flexible commercial products • Participate in and drive market / wind integration initiatives • Utilize ACE Diversity Interchange • Joint Initiative • Intra-hour scheduling • Dynamic Scheduling System • Potential rule changes • Use of Contingency Reserves for wind events

  20. 20 New Glacier Operating Imperatives OPTIMIZE • Execute Plan • Increase Revenue • Decrease Expenses • While maintaining regulatory compliance, commercial obligations, and quality

  21. 21 Kenneth YoungDirector, Asset ManagementNaturEner USA & NaturEner Canada394 Pacific Avenue, Suite 300San Francisco, CA  94111T: (415) 217-5526 kyoung@naturener.net

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