Brian Bentz Amec-ert2005

A Comparison of Wind Farm Projects The United Kingdom and Canada

Brian Bentz President, Project Investments, Americas AMEC Project Investments 1

Overview: • An Introduction to AMEC • A Comparison of Key Project Issues in the UK and Canada •

AMEC’s Wind Energy Experience and Capability in the UK and Canada

•

Concluding Remarks

2

AMEC - a Global Solutions Provider An international project management and services company that designs, delivers and supports infrastructure for customers Markets Served • Energy, Oil and Gas

• PharmaChem

• Transportation

• Mining and Metals

• Forest Industry

• Utilities and Telecom

• Consumer and Industrial • Public Sector Infrastructure

• Investments – PPP, Wind Energy, Property Development

Corporate Information • 44,000 people in 40 countries • 13,000 people in the UK • Corporate office (plc) in London

• Annual Revenue Cdn $ 11 billion • 3,500 people in Canada • Listed on the London Stock Exchange 3

A Comparison of Key Issues in the UK and Canada An Overview of Wind Energy Key Drivers: - Kyoto Protocol

- Security of Supply

- Price stability

- Local employment

New Renewable Projects Needed to Meet Targets: -In the UK some 5,000 gigawatt hours needed annually up to 2010/11 - In Canada if we had similar requirement across the nation by the same date, we would have a requirement of 7,000 gigawatt hours annually. 4

Key Project Issues – The UK & Canada Differences The key issues without significant differences: • Technology and Construction Risk • Operations and Maintenance Risk • Location regarding wind speed, wind consistency, and transmission

5

Key Project Issues – The UK & Canada Differences • Planning Approvals Differ. The United Kingdom  Strong overarching government policies supporting renewables  Planning guidance available to steer the process.  Projects below 50 MW – approval process totally at local level with a four month process target for community and prescribed statutory authority consultation.  Projects above 50 MW – approval process split. Community consultation at the local level, statutory authority consultation a central government responsibility. No time limits for process set.  Failure to meet the time frame (below 50 MW) or rejection of the application can lead to reconsideration by public inquiry. 6

Key Project Issues – The UK & Canada Differences • Planning Approvals Differ. Canada  Environmental approval is a provincial jurisdiction.  Federal approval also required if there is federal interest in the project, such as a project on federal land, aboriginal lands or receiving federal funds.  Environmental approval processes now harmonized between the Provinces and the Feds. Therefore a single program will be completed meeting the requirements of both levels of government.  Provincial processes somewhat more streamlined and can be achieved more expeditiously.  Public consultation required by both levels of government.  Approvals can be received in 4 to 6 months providing no major public opposition. 7

Key Project Issues – The UK & Canada Differences • Planning Approvals Differ. • Ontario – Ontario Energy Board » Generator/ Transmitter License » Distribution Exemption License » Leave to Construct (Section 92)

– Independent Electric System Operator (IESO) » System Impact Assessment » Market Participant Registration » Metering/Operating Agreement

– Hydro One Networks (HONI) » Customer Impact Assessment » Joint Use Agreement (for existing voltage lines) » Approval for electrical Connection

– Municipal Permits » Easement Agreement for Collector Lines » Zoning Agreement » Construction Permits

8

Key Project Issues – The UK & Canada Differences • Revenue and Government Incentives Differ. The United Kingdom  One government incentive, the Renewable Obligation Certificates (ROC)  Power suppliers responsible for meeting government requirements for power from renewable energy (2002/3 -3%, 2010/11-10.4%) – use ROC’s – annual penalty of £30 + esc for each MW target missed.  ROC’s issued to generators – 1 for each MWhr of power generated, carry a face value of £30 + esc per certificate plus annual right to a portion of the penalties paid.  Suppliers buy certificates from generators to meet their renewable energy requirements. ROC now worth more than £30 + esc as if supplier meets their requirements they will receive a portion of the penalty pool for each certificate held.  ROC’s are sold either on a short term basis or on under a long term contract – contracts cover both the ROC and the provision of power. 9

Key Project Issues – The UK & Canada Differences • Revenue and Government Incentives Differ. Canada  Contracts are generally long term power purchase agreements.  Contracts may be for the purchase of the wind power with the government incentives flowing to generator or a single overall price for power with the incentives flowing to the purchaser.  Government incentives are Federal, Provincial and Municipal.  Provincial programs are income tax driven, connection charge support or renewable energy targets.  Municipal support generally comes through federal government endowed programs (the Green Municipal Enabling Fund and the Green Municipal Investment Fund).  Larger government incentives are Federal. 10

Key Project Issues – The UK & Canada Differences • Revenue and Government Incentives Differ. Canada  Federal Programs:  Wind Power Production Incentive (WPPI) (now 1 cent per kWh generated for the first ten years of operation)  Canadian Renewable and Conservation Expense (CRCE) – 100% flow through for the write off of eligible costs  Accelerated Capital Cost Allowance (Class 43.1) (write off for eligible equipment at 30% declining balance rate).  Federal Green Power Procurement Program (Federal program pays the difference between the price the provincial utility pays for the renewable energy (determined by competitive bidding) and the price for normal grid supply.  Emission Reduction Credits (ERC’s) 11

AMEC Wind Energy Experience United Kingdom

# of projects

Developed and Operational

10

Under Development Onshore

10

Development Services Offshore

3

MW Canada 36

# of projects

MW

10

39

Completed Services

1500 Services Provided for Projects Under Development – Onshore 1000 EPC Construction by AMEC

7

400 139 2

Wind Energy Development Since 2000

Example Projects

Wind Energy Services Since 2002 Location Capacity

Turbines

Isle of Lewis - Onshore

Isle of Lewis, UK

351MW

117

Huron Wind

Ontario, Canada

9MW

5

Ayrshire, UK

300MW

100

Manitoba, Canada

100MW

63

Blyth Offshore

Northumberland, UK

4MW

2

Lynn Offshore

Skegness, UK

90MW

30

Erie Shores

Ontario, Canada

99MW

66

Kingsbridge

Ontario, Canada

40MW

22

Kyle Forest, Aryshire St Leon

12

AMEC Capabilities in Wind Energy – The UK & Canada Feasibility and Approval Services Provided

United Kingdom

Americas

Site Identification and Assessment

X

X

Site Layout and Optimization

X

X

Environmental Impact and Permitting

X

X

Wind Monitoring and Energy Calculations

X

X

Turbine Specification and Recommendation

X

X

Capital Cost Estimates

X

X

Operations and Maintenance Cost Estimates

X

X

Financial Modeling

X

X

Full Feasibility Studies

X

X

Due Diligence

X

X

13

AMEC Capabilities in Wind Energy – The UK & Canada Engineering, Construction and Development Services Provided

United Kingdom

Americas

Civil and Electrical Design

X

X

Procurement–Specification through Contract Negotiations

X

X

Construction Management including Logistics

X

X

Complete Project Management Services

X

X

Design Build for Balance of Plant

X

X

Project Finance Arrangement and Negotiation

X

X

Development Management and Services

X

X

Investment

X

X

United Kingdom

Americas

Commissioning

X

X

Operations and Maintenance

X

X

Decommissioning

X

X

Post Construction Services Provided

14

A Comparison of the UK and Canada Conclusion: •

Both countries are politically driven to provide incentives to help the industry mature.

•

Planning and approval processes are in place but continue as a major challenge.

•

AMEC has experience and capability in both.

15