1. Compressed Air Energy Storage (CAES) Wind Integration Study Team September 10, 2009

2. Discussion Outline Why storage? Why CAES? CAES technology overview Existing plants and conceptual designs Proposals and pilot projects CAES challenges

3. TransCanada A leader in developing and operating North American energy infrastructure – 36,500 miles of North American gas pipeline – 370 BCF of gas storage – 10,900 MW of power generation owned, controlled or under development Expertise, assets and financial stability to develop solutions to integrate wind and other renewable resources and technologies

4. Why storage? Why CAES? Intermittent resources introduce new operational variability, absorb traditional flexibility Storage a “new” tool to manage system ops/reliability/costs – multiple value streams –Operational “shock absorber” –Firm variable energy into capacity –Transmission benefits (load factor, right-size, deferral) Pumped hydro (since 1890s) and CAES (since 1978) have the scale for bulk storage (MW & hours) CAES may offer benefits of siting, scalability and cost

5. CAES technology overview Off-peak power drives compressors, air injected underground* (app. 1,200 psi) Underground storage in solution-mined salt deposits, aquifers, abandoned mines, and possibly depleted gas fields On-peak released air is heated and run through turbo-expanders and drives compressor side of gas turbine dramatically reducing gas burn/emissions First generation plants custom designs, relatively high developmental/capital costs, but proved the concept and highly reliable. (single shaft, “traditional” peak shift, arbitrage, A/S) Second generation conceptual designs seek to lower capital costs, and provide greater modularity and flexibility (fast response incs/decs) for the emerging market * Above-ground storage pilot projects also proposed.

6. Existing plants and conceptual designs Huntorf, Germany –On line 1978, 290 MW for up to 4 hours, heat rate 6,050 –Storage capacity 11 Mcf in 2 salt caverns Macintosh, Alabama –On line 1991, 110 MW for up to 26 hours, heat rate 4,100 –Storage capacity 19.6 Mcf in single salt cavern –On-line in 14 minutes, reliability 95% to 98% –Capital cost $730 to $830/kW + substation, permits, contingencies (per EPRI $2008) Second generation conceptual designs –Separates compression & generation (flexibility) –Generation centered on standard off-the-shelf CTs –EPRI projects capital costs of $600 to $750/kW, heat rate as low as 3810

7. Proposals and pilot projects Iowa Stored Energy Park (ISEP) –Iowa Association of Municipal Utilities, assistance from DOE and oversight from Sandia National Labs –Specifically wind integration –Sandstone aquifer based (constant hydrostatic pressure advantage), more challenging but proven in natural gas storage fields –268 MW, projected on-line 2014 Norton, Ohio –Haddington Ventures –Up to 2,700 MW facility (in nine 300 MW modules) –Storage in abandoned limestone mine EPRI CAES Demonstration Project –Seeking commitment from utility hosts for several 300 MW 10 hour underground and 15 MW 2 hour above ground CAES pilots –5 year program began in 2009

8. CAES Challenges Capital costs Policy/institutional – is it transmission or generation? Or something else? Cost recovery – multiple value streams/multiple beneficiaries; how to track, price and recover? Geology System location – market or production area location? Conceptual design veracity System planning perspective – how much storage is enough?

9. Thanks Jim Hicks jim.hickspdx@comcast.net 503 922 9257