1. Virginia : Offshore Wind Feasibility Analysis Trevor S. Daubenspeck

2. US Offshore Wind Potential

3. Virginia Offshore Wind Potential

4. Benefits of Chesapeake Bay Location Natural, ice free, bay Proximity to Norfolk / Newport News: – Railroad / Airport / Highway connectivity – Established engineering / construction labor force – Existing Naval / Industrial terminals – Proximity to electrical grid & population center Renewable Energy Standards – Virginia Law : 15% of all electricity must be derived from renewable sources by 2025 – US Navy : 50% of onshore energy must come from renewable sources by 2020

5. Couple with Additional Energy Investment Outer Continental Shelf – Estimated contents: 130 to 500 million barrels of oil 1.14 to 2.5 trillion cubic feet of natural gas

6. Offshore Location

7. Wind Details Class 5 & 6 Wind Installations Potential of 47,900 MW Max Pot. Output 176m MWhrs / yr Specified 25 OCS lease blocks (seen in slide above), can support 3,200 MW – 11m MWhrs / yr (10% of VA’s annual consumption) Efficiency level of 89%

8. Wind Details Current Levelized Costs of Energy (LCOE): – Offshore Wind:$105 to $130 per MWh – Coal-fired:$85 to $100 per MWh – CC Gas turbine:$80 to $100 per MWh Assume 600 MW yield Assume no emission capture – Definition of LCOE: the cost of generating electricity including initial capital, return on investment, as well as the costs of continuous operation, fuel, and maintenance. from Virginia Coastal Energy Research Consortium (VCERC)

9. Cost Structure of Wind 3 Main components (85% of total cost): – Wind Turbines – Submarine Power Cables – Monopile Foundations VCERC’s Cost model predicts: – $3,000 to $3,600 per kW – Comparison: Scrubbed Coal @ $2,809 per kW Advanced CC @ $991 per kW – Offshore Wind won’t be price competitive until Y2017

10. Cost Breakdown Scenarios

11. Offshore Wind Electricity Generation Like Onshore Wind, Offshore wind does not produce a constant flow of energy

12. On-peak / Off-peak Prices

13. Offshore Wind Cost Estimates (Incremental) Submarine Cable Cost Estimate: – $5.54 per km per kilowatt Foundation / Monopile Cost Estimate: – $410 per kilowatt Wind Turbine Cost Estimate: – $2,160 per kilowatt

14. Cost Uncertainties Wind Turbine Costs – Rise/fall : supply driven market Steel Prices Exchange Rates Price of Electricity – Prices expected to increase in L-T

15. Looking at Past Offshore Wind Projects A PWC / GBI Research survey report on Existing Offshore Wind projects revealed the following: – Post-tax IRRs : 10 ~ 15% (for 85% of respondents) – Weighted Average Cost of Capital (WACC): 10 ~ 15% Suggesting that the IRR of the majority of offshore projects breakeven or are economically profitable

16. Actions Federal Government – Investing $50.5m in R&D over next 5 years for additional viability analysis Gamesa (Wind Turbine manufacturer) – Constructing an R&D center in Chesapeake, VA to develop a 5 MW offshore turbine prototype for North America Virginia funding is currently stalled