1. Offshore Wind Energy: How much will it cost, CAN it cost? George Hagerman VCERC Director of Research Virginia Tech Advanced Research Institute 900 North Glebe Road Arlington, VA 22203 Email: hagerman@vt.edu Phone: 703-387-6030hagerman@vt.edu Opening Plenary Session Virginia Offshore Wind Conference 2011 Virginia Beach, VA 22 June 2011

2. How much will offshore wind energy cost?

3. Is offshore wind really this far off the chart? Industrial rates

4. U.S. Energy Information Administration Estimates Disagree with U.S. Wind Market Trends

5. VCERC Modeled Capital Costs Compared with European Project Data for Major Cost Centers London Array I 630 MW Siemens SWT-3.6-120 Global Tech I 400 MW Multibrid M5000 Thanet 300 MW if fabricated in Hampton Roads Lincs 270 MW Based on MTH announced contract value in March 2010 Lincs 270 MW Based on MTH max steel weights if fabricated in Hampton Roads

6. US Projects Racing to be First are Disadvantaged by Higher Manufacturing Labor Costs in Europe Manufacturing wage data published by U.S. Bureau of Labor Statistics on 22 Oct 2009 (www.bls.gov/fls/prodsupptabletoc.htm, Table 8. Hourly compensation, U.S. dollar basis) Cost breakdown and labor / material ratios from Dong Energy presentation dated 11 Aug 2009 (www.energirike.no/pub/56/filer/Dong%20-%20EnergiRikekonferancen%20perhp%202009.pdf)

7. VCERC Results Compared with Recent National Academy of Sciences Study VCERC: ~06-07 ¢/kWh VCERC: ~11 ¢/kWh VCERC: ~13 ¢/kWh VCERC: ~10-12 ¢/kWh Coal costs now increasing; offshore wind would increase price stability of Virginia’s energy supply portfolio; see backup slides

8. Ratepayers Must Consider Price Stability and the Potential for Future Fuel Price Increases

9. Coal is No Longer Stably Priced

10. Thank You! Any questions? Email: hagerman@vt.edu VCERC Offshore Wind Studies Final Report: www.vcerc.org/report.htm