THE TRES AMIGAS SUPERSTATION UNITING THE NATION’S ELECTRIC POWER GRID THE TRES AMIGAS SUPERSTATION Class 4 Winds April 11, 2014

The Location Tres Amigas Is Ideally Situated in Eastern New Mexico Near the Borders of CO, OK and TX Serving as a Three-Way Interconnection of WECC, Eastern and ERCOT

Why Is Tres Amigas a SuperStation? Tres Amigas will: Connect the three U.S. synchronous power grids through a DC Hub that can regulate the direction and level of power flows between the grids, thereby improving the efficiency of the transmission systems in all regions Provide economic incentives to further drive the growth of the nation’s transmission grid by expanding opportunities for efficient transactions across currently inaccessible market regions Optimize the value of existing AC infrastructure by utilizing state of the art technology Provide reliable and cost effective transmission services consistent with NERC standards and regional reliability requirements Tres Amigas Will Present Significant Opportunities for the Grid

Why Is Tres Amigas a SuperStation? Tres Amigas will: Enable the buying, selling and physical delivery of electricity between participants in multiple grids Optimize the performance of renewable energy sources by offering or creating options to firm intermittent power across a broad geographic area Promote the development of renewable energy projects by creating an opportunity for such projects to connect to multiple high demand load areas Enable renewable energy to follow hourly demand fluctuations throughout a large portion of North America Integrate large scale renewable resources by providing the capability to manage real-time power fluctuations that would otherwise exceed the capability of many existing balancing authorities

Proposed Layout

Power Module “Full Bridge” IGBT (x4) Capacitor Cooling plate Gate drive Frame Cabling D.C. Fuses Lifting Frame Insulated supports

Valve Hall Interior

Conceptual 750 MW “Folded” VSC

Site Location

Development Plan – Phased Approach Tres Amigas’ development strategy emphasizes a phased approach to growth, building the Superstation overtime using 750 MW VSC block increments. The phases are designed to add VSCs as needed, dictated by customer demand, as follows:

Funding – Tres Amigas Merchant Transmission Unlike traditional transmission facilities, merchant transmission project owners assume all market risk. Tres Amigas has been successful in receiving significant capital through investors and private placements. Phase II – III 1.5B Phase I 500 M 2015 2013 Phase II-III: construction & operations, Texas node, additional HVDC converters, facilities, and business infrastructure Preconstruction 12M Phase I: construction & operations, East/West transmission node, including HVDC converters, buildings and business infrastructure, EMS Operations 2012 Startup 8M Preconstruction: detailed engineering, vendor selection/contracts, product development, additional filings and detailed business plans. 2010 Startup: research, regulatory and local filings, ROW, preliminary engineering, environmental, economics and business plan. Concept 2M 2008 11

Next steps Complete Anchor Tenant Negotiations Complete Financing Finalize Transmission Line ROW Procurement Release Contractors for Control Center, Civil Works, VSCs, Transmission Line Groundbreaking

Proposed Layout

AC vs DC Systems •Thomas Edison, the inventor of the light bulb and the father of electric power was a supporter and promoter of DC power •Tesla, the crow-prince of electric power industry, the inventor of multi-phase AC system, and the AC Transformer, felt that AC was the way of the future.

AC vs DC Systems •Battle Ground – Chicago World’s fair- Tesla and AC Power won!!! •The last nail in the coffin for Edison and DC system - Contract for the hydro plant on Niagara River •The key advantage of AC, the ability to transform voltage and transport energy over long distances •Power electronics allowed DC to make a comeback in the form of HVDC systems

Advantages of HVDC Systems Ability to transmit energy over longer distance More power transmitting capability per ROW Reduced losses Voltage support at the terminal 100% controllability Ability to provide asynchronous ties

Dis-advantages of HVDC Systems A point-to-point system Cost effective only for long distances Lower reliability due to additional system components

Definitions DC Converter – facility for converting power from AC to DC (rectifying) or DC to AC(inverting) Line commutated converters - LCC (conventional thyristor based) Voltage source converters - VSC (IGBT –Insulated Gate Bipolar Transistor) Poles – term for conductor transporting the power, will be positive or negative voltage Bipole – has a positive and negative pole Monopole – has one positive or negative pole Overhead or underground transmission can be used for the positive and negative poles Earth Return – return path provided by the earth via ground electrodes Metallic Return – return path provided by metallic conductor

Bi-PolE Converter Arrangement

VSC Symmetrical Monopole Most common VSC configuration for Submarine and UG Cables

DC Converter Stations Costs VSC technology most frequently used for UG cables for voltages < 320 kV VSC 500 MW converters cost approx $120M for each terminal VSC converters cost are a little higher than LCC converters today, will continue to become more competitive in price

Tres Amigas SuperStation…. Uniting the Electric Grid