IEP’s 34th Annual Meeting - 2016 Challenges for the Independent Power Industry Panel Joe Greco

Overview Market Opportunities Market Challenges Valuation Needs and Developments

Market Opportunities California’s 50% RPS CARB reduction goals OTC and Nuclear Facility closures CAISO’s expansion Western markets effort to value transmission and true integration costs PTC/ITC extension Geothermal parity being considered CA and Western States have abundant geothermal resources EPA Clean Power Plan Clean Energy Incentive Program

Policy Impact on U.S. Industry PTC reenacted for 2 years Megawatts

Reliability and Cost Benefits System reliability is critical Renewable baseload generation offers system stability Baseload generation offers stability to allow renewable diversification Ramping capabilities offer system flexibility Expanded ISO and EIM create options Renewable integration needs to be fully evaluated Curtailments effect overall system costs and individual generators Renewable baseload generation offers opportunities to minimize curtailments Transparency is needed to assess true cost impacts to ratepayers Local economic benefits High property and sales taxes High paying construction and operations jobs in rural communities Highest number of permanent local jobs

Geothermal Market Impacts Federal and State subsidies for renewable choices become asymmetrical State policies promote least cost on a project by project basis True system impacts may be overlooked Utility evaluations may be impacted by policy State policies do not appropriately recognize baseload value Replacement for coal; improved GHG region wide Natural gas prices remain low

Geothermal Challenges Long permitting and development cycles Plant designed after resource is proven Resource development risk Majority of wells must be drilled prior to financing; all fuel is purchased prior to COD Wells depths range from 3,000 to 11,000 ft. Resource locations designate interconnection costs Limited equipment manufacturer competition Gaining full economic value for system benefits

Industry Challenge: Understanding Factors that will Enhance Renewable Baseload Generation How can we improve the true evaluation of increased renewable penetration? What are transmission and reliability needs? Are distributed generation impacts fully understood? Will an ISO expansion improve economics? What approach are utilities taking to incorporate renewable baseload generation? How can policies be implemented that foster existing fleet and new growth? How to restore value for diversity in power supply procurement?

Thank You www.geo-energy.org