CONFIDENTIAL PERFORMANCE THAT ENDURES Opportunities and Challenges for Community-Based Wind Dr. Karl-Heinz Mertins Mgr, Business Development Deere & Company Moline, IL Windpower 2005 Rural Wind Energy Development

CONFIDENTIAL PERFORMANCE THAT ENDURES John Deere – Facts Founded in 1837, Deere & Company Stays focused on solutions for agriculture, construction and forestry, grounds care Employs over 45,000 people Does business in more than 160 countries Is known as one of the most valued and trusted brands in mobile equipment Has annual sales of ~ $20 Billion

CONFIDENTIAL PERFORMANCE THAT ENDURES John Deere – Renewable Energy Activities Running Green projects prove environmental considerations in business planning and decision-making: Ethanol: E-diesel R&D Biodiesel: 5% biodiesel in diesel engines Biomass: -Alholmens Kraft power plant, Finland / Timberjack -Chariton Valley Biomass Project Hydrogen: Fuel cell R&D Wind Power....

CONFIDENTIAL PERFORMANCE THAT ENDURES How can farmers get involved ? Again. Wind: A Cost Competitive Midwest Resource Wind energy is mature and cost effective Wind turbines are, and will continue to be, placed on farm land Well aligned with John Deere’s market presence Can increase buying power of farmers

CONFIDENTIAL PERFORMANCE THAT ENDURES Five Success Factors Of Wind Projects Land Rights Wind Resource Financing Energy Markets Wind Turbines Cost of Energy, Returns Regional differences must be considered

CONFIDENTIAL PERFORMANCE THAT ENDURES Utility Scale 600 kW to 2.0 MW nameplate capacity Provides lowest cost of energy Suitable for community wind Generally no net-metering Wind Turbines Come In Many Sizes …And This Size Fits

CONFIDENTIAL PERFORMANCE THAT ENDURES Room For Different Wind Farm Models Investor - owned: MW projects Concentrated Community - owned: MW Projects Dispersed clusters Aggregated “Peaceful Coexistence”

CONFIDENTIAL PERFORMANCE THAT ENDURES Grouping Turbines Into Small Wind Farms Small defined as < 20 MW per site Allows connection to distribution systems at or below 34.5 kV: –Opens up many locations for wind development Regulatory Support: –FERC NOPR for “Small Generators” Other Benefits: –Streamlined permitting –Direct engagement of land owners –Some economies-of-scale

CONFIDENTIAL PERFORMANCE THAT ENDURES Interconnection At Distribution System Level Minimizing substation efforts Feeding small load centers directly Avoiding ISO interconnection studies, fees, and queues

CONFIDENTIAL PERFORMANCE THAT ENDURES Compatible With Existing Power Grid Calhoun County, Iowa 69 kV lines 70 MW potential 10 Sites Over 140 local owners Source: Wind Utility Consulting Opportunities for many participants

CONFIDENTIAL PERFORMANCE THAT ENDURES Examples To Learn From Erkelenz, Germany Brewster, MN Schneebergerhof, Germany Jutland, Denmark

CONFIDENTIAL PERFORMANCE THAT ENDURES Pilot Project On Buffalo Ridge Deere has become equity investor in farmer-owned turbines Objective: proof of concept Model & learning platform for future activities “Learning By Doing”

CONFIDENTIAL PERFORMANCE THAT ENDURES Pilot Project On Buffalo Ridge Building partnerships Collaborating with local developers Need to work with turbine manufacturers, contractors, off-takers Partners

CONFIDENTIAL PERFORMANCE THAT ENDURES Refining The John Deere Model Projects typically less than 20 MW Geographically distributed to accommodate power grid Aggregated where it makes sense Local owner(s) Receive annual land lease rent for first ten years Receive annual management service fee for first ten years Purchase the LLC or LP at the end of ten years for Fair Market Value Receive 100% of income for remaining life of project (10+ years) John Deere works with qualified local partners Wind developers who initiate projects Experienced contractors who participate in BOP work Gives local partners a fair share

CONFIDENTIAL PERFORMANCE THAT ENDURES Additional Economic Benefits Construction Creates one to two part-time jobs per MW installed 2.4 times more than required for coal & natural gas power plants Routine O&M One permanent local FTE job per 8-10 MW installed Many renewable energy jobs are high wage ($38k-$48K) Indirect and induced economic activities Restaurants, hotels, tourism others Creates high local impact

CONFIDENTIAL PERFORMANCE THAT ENDURES The PTC Is Essential To Success Supports cash flow distribution to rural America Enables long-range planning and execution Helps deliver adequate returns to investors Significant growth through long-term PTC extension 9-year renewal 3-year renewal 2-year renewal Source: EIA-DOE

CONFIDENTIAL PERFORMANCE THAT ENDURES The Opportunity An historic opportunity exists to stimulate rural economic development through wind energy projects John Deere will continue to invest in distributed wind projects if given consistent and adequate Production Tax Credit policy

CONFIDENTIAL PERFORMANCE THAT ENDURES Wind Energy Can Turn Rural Decay…

CONFIDENTIAL PERFORMANCE THAT ENDURES Education Transparent project planning process Sincere consideration of environmental impacts Fair investment opportunities for local participants – “Saving the land for the next generation” Direct and indirect benefits for local businesses – “Keeping the money in the State/Community” – Financial benefits to local tax districts …Through Active Participation Of Farmers… C ommunity O wned R enewable E nergy “CORE”

CONFIDENTIAL PERFORMANCE THAT ENDURES …Into New Rural Development "I think it's one of the greatest things that ever happened. It's good for my pocketbook. It's good for the environment.” -- Chuck Goodman, retired farmer near Alta, Iowa; Has three wind turbines on his land