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Terra-Gen Power, LLC

Terra-Gen Power, LLC. California Renewables Portfolio Standards: Challenges and Opportunities CCPUC Annual Meeting October 5, 2009. Presentation Overview. Terra-Gen Power LLC – Company Summary RPS – Potential Benefits to CA RPS – Challenges to Implementation Conclusion Questions.

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Terra-Gen Power, LLC

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  1. Terra-Gen Power, LLC California Renewables Portfolio Standards: Challenges and Opportunities CCPUC Annual Meeting October 5, 2009

  2. Presentation Overview • Terra-Gen Power LLC – Company Summary • RPS – Potential Benefits to CA • RPS – Challenges to Implementation • Conclusion • Questions

  3. Company Overview • Terra-Gen Power LLC (“Terra-Gen”) is a privately held company focused on geothermal, wind and solar generation • Owns or leases 831 MW (net ownership interest) of operating generating capacity through 21 renewable energy projects located across the western US • Geothermal: 387 MW • Solar: 80 MW • Wind: 364 MW • Terra-Gen is a unique renewable energy company • Terra-Gen is the only US based company that owns, operates and develops three different renewable technologies; wind, geothermal and solar • Terra-Gen operates 13 of its 21 projects • Terra-Gen has an experienced management team • Terra-Gen is led by a team with a heavy focus on operations and development and decades of industry experience; leverages substantial project-level expertise in its stewardship of the assets and in pursuit of high value growth opportunities • Terra-Gen has an experienced and committed sponsor • With over $6.8 billion under management, ArcLight is an experience private equity investor in over 6,000 MW of power assets • ArcLight has approximately $6.8 billion of equity commitments and invested capital under management across its four funds

  4. Company Development Efforts • Wind • Developing 1,500 MW in the Tehachapi area with a total potential of approximately of 3,000 MW • Pursing repowering opportunities at existing sites in CA • Developing an additional 1,500 MW of Wind in several states • Geothermal • Actively developing 180 MW in Nevada for direct delivery to the CA electrical grid • Exploring expansion of existing sites • Solar • Expanding Solar portfolio to potentially add more than 200 MW in Western States

  5. Terra-Gen Power Footprint

  6. RPS – Potential Benefits to CA • California’s 33% Renewable Portfolio Standard (“RPS”); the most robust in the nation • CA is a leader in establishing its renewable goals • Motivates developers to continue doing business in CA; annual RFPs are helpful • Creates incentive for developers to utilize federal stimulus monies • CA’s natural resources will be utilized to its fullest potential • Critical to achieving GHG goals • Renewable generation; a hedge to natural gas volatility • Consumer pricing will be stabilized in the long run • Long term power purchase contracts at levelized prices will create pricing stability • Competitive program assures reasonable prices; REC market will be established around the CA program • Financing stability; financial institutions reevaluating CA investments • Long term power purchase agreements provide comfort for investors • Economic development ; local governments can enhance financial independence • Increased property taxes will benefit communities • Thousands of jobs will be created during construction and thereafter • Federal grants moneys will stimulate technology advancements and education

  7. RPS – Implementation Challenges • Transmission Capacity Constraints • Insufficient capacity continues to create uncertainty for developers • Renewable generators must produce where the resources permit • CAISO and Utilities are diligently working toward developing transmission clusters; queue continues to remain sizeable • Timing to develop transmission does not meet the need; permitting continues to create challenges • Permit Approval Process • California permitting process is expensive and lengthy • Multiple agency interaction creates delays and uncertainty • Staffing is insufficient to handle the workload • Federal leasing applications and permitting requests are backlogged • Mitigation measures are not standardized and create further delays to the process • General Opposition to Development • Many environmental groups and local community members have a general dislike to any new development • Transmission and project development delays are frequent

  8. RPS – Implementation Challenges (con’t) • Project Viability • Many PPAs which have been signed are struggling to come to market • Technology, permitting and pricing remain barriers • Credible developers struggle to compete with unreasonable pricing and development expectations • Financing • Capital markets have been tight as a result of recent and current economic conditions • Tax equity markets have shrunk making it more difficult to utilize production tax credits. • The new federal grant program addresses this problem, but reduce a drafting problem limits the access for companies with private equity funding. A repair is now being crafted by Congressional Tax Committees. • Federal loan guarantee programs for commercial project s have been delayed and may not provide substantial savings to proven technology • Regulatory Uncertainty • Market Price Referent pricing caps create caps which are not tied to true renewable development costs • Legislative changes cause pause while the process is being “baked” • Changes in CEQA and other permitting processes create hesitation on the part of developers • Federal land designation may make a significant portion of land “untouchable” • Cash grants, production tax credits, and investments tax credits durations are uncertain

  9. Conclusion • The RPS will create a balanced portfolio while reducing GHG in the State • CA continues to run ahead of the pack • Goals can be meet with modifications to the current systems • Transmission needs to be sited quickly; hubs will be key to the development of high resource potential areas • Siting projects must be expedited; a “one stop permitting shop” will streamline efforts • Outreach programs are necessary to educate legislators and communities on the benefits of renewable energy • Focus on the transmission needs and permitting of viable projects • Continue to enhance and stabilize federal stimulus programs • A team effort is needed to efficiently meet RPS targets • Federal, State and Local government needs further coordination • Federal RES must defer to stricter state program; and appropriately treat state RECs. • Developers, IOUs, Munis and the CAISO must work together to bring more renewables to the grid

  10. Joe Greco jgreco@tgpnyc.com Terra-genpower.com

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