1. New Jersey’s Clean Energy Program Rutgers University Wind Symposium September 25, 2009

2. REIP Overview Current Installations vs. RPS EPBB Overview Wind EPBB applications EPBB Calculator Project considerations Cost benefit analysis models Presentation Overview Agenda

3. Energy Master Plan Goals 1.To provide New Jersey with secure, safe and reasonably priced energy supplies and services. 2.To encourage and maintain economic growth prospects for the State. 3.To promote the achievement of Federal and State environmental requirements and objective in a low cost manner. (Environmental protection and impact) REIP Overview

4. Conventional Generation MWHs of Energy Demand 80,000 100,000 Expected Growth, Business as Usual and Existing Levels of Energy Efficiency 80,000 62,000 Energy Master Plan Goals REIP Overview

5. Conventional Generation Energy Efficiency MWHs of Energy Demand 80,000 100,000 Expected Growth, Business as Usual and Existing Levels of Energy Efficiency Goal with 20% Efficiency 80,000 62,000 Energy Master Plan Goals REIP Overview

6. Conventional Generation Energy Efficiency Conventional Generation Renewables Energy Efficiency MWHs of Energy Demand 80,000 100,000 Expected Growth, Business as Usual and Existing Levels of Energy Efficiency Goal with 20% Efficiency 80,000 62,000 Goal with 30% Class I Renewables, 2.5% Class II Renewables Energy Master Plan Goals REIP Overview

7. New Jersey Wind Market The required wind resource (>11mph) is along the shore and highlands. Best example of installed project is at ACUA, similar interest building among at other coastal municipalities Small wind projects have run into home rule issues; first model ordinance adopted by Ocean Gate. 2009 REIP has dedicated $7.5M to small wind projects. REIP supports Behind the Meter (BTM) projects Rule changes required to support Group Net Metering and Community Wind Offshore wind evaluation is underway (summary on NJCEP and NJDEP websites) REIP Overview

8. NJ Class I Renewable Energy Solar technologies, photovoltaic technologies, wind energy, fuel cells powered by renewable fuels, geothermal technologies, wave or tidal action, and/or methane gas from landfills or a biomass facility, provided that the biomass is cultivated and harvested in a sustainable manner. Types of class I renewable energy that qualify for use in meeting the requirements of this subchapter are set forth at N.J.A.C. 14:8- 2.5. Electric energy produced from: REIP Overview

9. Renewable Energy Certificates (RECs) One REC certificate given per MWh of solar electricity produced Certificates traded on the open market RECs ultimately are purchased by the power generators (Load Serving Entities - LSE) to offset their requirement to produce Clean Energy Class 1 REC value significantly less than Solar REC REIP Overview

10. Net-Metering and Interconnection Standards Interconnection State regulations that permit small generators (< 2MWs) to be installed behind the meter. These generators cannot be sized to over produce based on current site consumption. Mandates that utilities connect them to the grid. Net-Metering State regulations that allow interconnected generators to offset their electric consumption with an on-site resource. Allows production of electricity beyond site consumption to be sold to the grid and be compensated at the wholesale price of energy. REIP Overview

11. New Jersey Profile Today 94 MW PV solar 4100 installs 4.2 MW Biomass 7.6 MW Wind 1.1 MW Fuel Cells Tomorrow 1,600 MW Solar 3,000 MW Offshore Wind 200 MW Onshore Wind 900 MW Biomass Government Activism Energy Master Plan NJ RPS BPU commitment Renewable Resources Wind: Shore, highlands Sustained winds of 11 mph Solar: Output ~1200 kWh AC Biomass Includes LFG, WWT, wood residue, food waste and aggregation of resources Current installations vs. the RPS

12. New Jersey Wind Resources EPBB Overview

13. Output as a Function of Wind Speed EPBB Overview

14. 2,709 kWh 6,136 kWh 60’ 80’100’ 9,338 kWh (a) 10kw system; source Mick Sagrillo; “Incremental Tower Costs vs Incremental Energy” Output as a Function of Tower Height EPBB Overview

15.  30-percent tax credit for both residential and commercial renewable energy installations. Small wind is eligible up to 100 kW.  Eliminates the prohibition on utilities from benefiting from the credit;  Allows Alternative Minimum Tax (AMT) filers to take the credit  Calculated net of state rebate  Note that projects greater than 100 kW are eligible for the Production Tax Credit at $0.021 per kWh for ten years. Investment Tax Credit EPBB Overview

16. EPBB Incentive levels This is different than the previous wind incentive level which was calculated on the capacity of the system. Factors included in calculating annual input –Location specific wind speed –Hub Height –Obstructions within 500 feet Wind Incentives - EPBB Annual Estimated ProductionIncentive Level 1-16,000 kWh$3.20 / Annual kWh 16,000-750,000 kWh$0.50 / Annual kWh EPBB Calculations

17. Renewable Energy Incentive Program - EPBB Wind Program Incentive is calculated based upon Expected Performance Based Buy-down (EPBB). –Expected performance based on output Specific turbine Specific site How does the EPBB work? –Performance calculator calculates output for a given location Input parameters –Wind speed at 50m –System hub height –Turbine power curve The EPBB is designed to produce higher rebates for project which maximize power production More closely calibrates with goals defined in the Renewable Portfolio Standard (RPS) and the Energy Master Plan (EMP). EPBB Calculations

18. Renewable Energy Incentive Program - EPBB Obtaining locals average annual wind speed Wind maps for no charge are available at: http://firstlook.3tiergroup.com/ http://www.awstruewind.com/maps/united- states.cfm/region/46688http://www.awstruewind.com/maps/united- states.cfm/region/46688 http://eosweb.larc.nasa.gov Additionally a wind resource site assessment may be performed even though the average wind speed can be determined from the wind maps Site assessments are performed by; 1.Certified site assessor evaluates topography and site characteristics to give a more accurate evaluation 2.Engineering firm performs detailed site assessments including wind speed analysis based on anemometer readings EPBB Calculations

19. Wind turbine equipment currently accepted by the program: If a wind turbine is not presently accepted by the program the following information must be provided –Power curve based on one year of actual energy production data –Engineering certification form the manufacturer based on the power curve from an independent third party To apply to the program applicant must complete a pre-application for guidance purposes Renewable Energy Incentive Program - EPBB –ARE–Entegrity Wind Systems –Bergey–Energie –EWP–Eoltec –Enertech–Northern Power Systems –Fuhrlander–Proven –GAIA Wind –NextGen –WTIC –Endurance –South West Wind Power –Wind Energy Solutions EPBB Calculations

20. Turbine Availability vs. Turbine Size Availability 1kW 10kW 50kW 100kW 500kW 700kW 1.5MW 2.0MW 3.5MW Larger turbines, MW size turbines, have a two year wait Project Considerations

21. Small Wind Turbine Height Comparison Project Considerations

22. Building PermitZoning NJDEP Evaluations Engineering and Pre Construction Permit Determine Wind Resource and direction Site specific evaluation (project owner) Wind Generating Facility: Pre Construction and Permitting Process Wind Resource Evaluation Engineering- design and seals required Equipment Selection —Turbine —Tower —Inverter Pre-Construction Permit (owner) —Site Evaluation —Facility —Equipment Turbines —Some turbines have up to a two year lead time Facility Pre- Construction Permit process (NJDEP CAFRA review if applicable) NJDEP is working to streamline the permitting process Engineering drawings Site Map Ownership NJDEP certifications Local Land Use Permit —Seals & Stamps Restrictions and variances Building Permit Electrical Project Considerations

23. Local land-use building electrical State (DEP): CAFRA/Waterfront Pinelands Highlands Well Drilling Federal FAA Bird and Wildlife DOD Model Wind Ordinances Adopted by 8 NJ Communities NJDEP Fast Track Proposal Small Wind Permitting Project Considerations

24. Model Ordinance The Model ordinance passed by Ocean Gate was designed to allow the development of wind projects in their community. It acknowledges the NJ BPU Renewable Portfolio Standard Their current zoning regulations to not inhibit the installation of wind projects there were unintentional barriers to developing wind projects The Model Ordinance standardizes and streamlines the requirements for permitting wind turbine projects The ordinance is designed to preserve and protect public health and safety without significantly increasing the cost or decreasing the efficiency of a wind project. The ordinance addresses the following issues: Standards Setbacks Access Permit requirements Abandonment Administration and enforcement Project Considerations

25. Renewable Energy Value Drivers REIP Subsidy Federal Investment Tax Credit Accelerated Depreciation Tax Impact Energy Value REC Value Capital Cost of System Overhead & Maintenance Other??? Cost Benefit Analysis Models

26. Project type comparison Compare three different project types Residential Commercial Municipal Based on the following 20 kW turbine 12 MPH wind Speed at 50m 120 foot hub height Cost Benefit Analysis Models

27. Residential Installed Cost$90,000 Estimated Annual Output17,596 kWh Current electric rate$0.15 per kWh Estimated Annual Energy Savings $2,639.40 Rebate$51,200 Federal ITC$11,640 MACRS DepreciationNo REC Value$51 per year O&M (Annual contract)$600 Approximate payback period 10 years

28. Cost Benefit Analysis Models Commercial Installed Cost$90,000 Estimated Annual Output 17,596 kWh Current electric rate$0.12 per kWh Estimated Annual Energy Savings $2111.52 Rebate$51,705.50 Federal ITC$25,500 MACRS DepreciationYes REC Value$51 per year O&M (Annual contract)$600 Approximate payback period 5 years

29. Cost Benefit Analysis Models Municipal Installed Cost$100,000 Estimated Annual Output 17,596 kWh Current electric rate$0.12 per kWh Estimated Annual Energy Savings $2,111.52 Rebate$51,705.50 Federal ITCNone MACRS DepreciationNo REC Value$51 per year O&M (Annual contract)$600 Approximate payback period 20 years

30. If you have any questions about this presentation or New Jersey’s Clean Energy Programs, please feel free to contact: Mark Loeser at mark.loeser@csgrp.com@csgrp.com Phone 732-218-4430