V SEPA GREEN POWER PARTNERSHIP9 Aligning Green Power Partners with New Renewable Energy Projects Pilot Project Summary Project Name: Chapman Ranch I, LLC Developer Name: Apex Wind Energy Holdings, LLC Contact: Greg Cardenas, gregffiapexwind.com Renewable Energy Type: Wind Energy Total Planned Megawatt Size: Phase I: 200MW Phase II: 100 MW Project Location: Nueces County, Texas (Gulf Coast / South Texas) Is the project permitted?: At this time, no discretionary permits are required. The Project has minimal permitting requirements; only standard administrative permits and consultations are required prior to the start of construction. Extensive environmental studies have been performed across the Project area consistent with US Fish and Wildlife Service (USFWS) recommendations, including six seasons of avian use surveys and a wetlands delineation. The results of these studies indicate that wildlife and environmental concerns within the Project area are typical for the region, and no significant impacts to federal endangered species are expected. Apex is preparing an Avian and Bat Protection Plan (ABPP) that proposes typical post-construction species monitoring, and we anticipate both USFWS and Texas Parks and Wildlife Department to concur with our proposed ABPP. Chapman Ranch is located in the vicinity of two U.S. Navy facilities (Naval Air Station Kingsville and Naval Air Station Corpus Christi). Apex is negotiating a Memorandum of Agreement (MoA) with the US Navy and Department of Defense that would allow Chapman Ranch to proceed while also protecting the operational interests of both bases. If no, what is the permit status?: N/A What is the status of the project's site?: Chapman Ranch has obtained full site control for Phase I. The Project will be sited on privately owned lands located outside of the Corpus Christi city limits on unincorporated land in Nueces County (approximately 15,000 acres for Phase 1). Leases with a term of 30 years, and a 15 year renewal option, have been signed for all acreage. ------- Have land leases been filed with the county?: Yes. What is the status of interconnection, and have system impact and facility studies been completed? (Distribution or transmission level projects are both eligible): The ERCOT Interconnection Study (Facilities Study) has been completed and we are in process of acquiring the required Transmission ROW. The IA is currently under negotiation and is expected to be completed by Q3/2014. The Project will interconnect to the Nelson Sharpe 345KV substation which will be built and owned by AEP Texas. Does the transmission owner (TO) or independent system operator (ISO) have a process to study the project's impact on the local or regional grid and the subsequent cost to interconnect?; Yes, the project's impact on the grid and cost of interconnection were analyzed as part of the ERCOT Interconnection Study. Environmental Impact Statement status: There is no federal nexus that would trigger the need for an Environmental Impact Statement under the National Environmental Policy Act. Apex has coordinated with Texas Parks and Wildlife and U.S. Fish and Wildlife Service on baseline studies and incorporated agency recommendations in siting of project features to avoid or minimize impacts to sensitive environmental resources. The environmental studies completed to date suggest that impacts to sensitive environmental resources are not expected during construction or operations of the project. Is any element of the project - technology or other - experimental or pilot-phase?: No. Chapman Ranch will utilize only commercially proven technology. What is the long- and short-term operations program of the project? Does the renewable energy technology manufacturer have a technical support team locally available?: Apex currently anticipates using a manufacturer that has supplied turbines to eight major projects, with several hundred turbines currently in operation in Texas. The expected supplier maintains a large local presence and will be able to provide reliable and prompt service when and as required, including maintenance of an adequate spare parts inventory. For wind projects, has a meteorological tower been installed, and when was the tower installed/how much data has been collected?: The Project Site contains five (5) Met towers. Two Met towers have been installed since May 2009, and two additional Met towers were installed in September and Novemeber, 2010. A fifth Met tower was installed in April 2013. A cumulative 152 months of meteorological data has been recorded. Who has analyzed the data and what is that person's experience with respect to projects that have actually been financed?: The Project retained GL-Garrad Hassan (GLGH) to review the Met data.. Further, the Apex development team has been developing wind projects in the Gulf Coast region for 12 years, including the Gulf Coast Wind Project in Kenedy County. Can the turbine manufacturer be financed through "traditional" tax equity and debt in the U.S.?: ------- Yes. The selected turbine manufacturer will be one of the leading suppliers to the US wind energy industry and will be able to satisfy the requirements of both debt and equity investors, including tax equity. Provide a short summary of how the project views project finance and structure/ownership: Apex Wind Energy's financing plan for the Chapman Ranch Project will be similar to our recent financing of the 300MW Canadian Hills Project which we completed in December, 2012. Construction financing, in the amount of roughly 55% of Project Cost is expected to be provided by a group of commercial banks on a limited-recourse basis (first priority security interest in all Project assets). The balance of funds necessary to complete construction of the Project will be provided by the equity investors in Chapman Ranch I, LLC. Currently Apex owns 100% of the Project equity; however, our standard business practice is to sell substantially all of our ownership interest to a long term investor (Sponsor Equity) at the start of construction with a full transfer of our ownership interests as of the Commercial Operation Date. The Chapman Ranch Project has a unique, and particularly attractive, generation profile as it generates peak production during the afternoon hours. Due to this unique profile, and its high capacity factor, we believe the Chapman Ranch Project represents an attractive generation source for utility and/or corporate off-take customers who are seeking to access renewable energy at fixed (or fixed with stated escalation) rates over the long term. The strength of the off-take contract will ultimately determine the terms of the financing; however we believe Chapman Ranch will be one of the most competitive sources of wind energy in the ERCOT market. What are your ideal types of prospective institutions/partners?: The Apex management team has closed over $10 billion in financing for wind projects completed in the US and is well regarded by debt and equity investors (including tax equity) that are active in the market today. The Apex development portfolio consists of 5,700MW of projects throughout the US. Accordingly, we maintain a constant dialogue with debt and equity investors across the spectrum to ensure that we understand the current market conditions and appetite for projects of the type that we plan to bring to market. Since Chapman Ranch will benefit from the US Federal Production Tax Credit, Apex will utilize tax equity under a standard tax-equity flip structure that will fund as of the Commercial Operation Date - with such proceeds being used to repay construction debt financing provided by commercial banks. The balance of funds will be provided by "Sponsor Equity" to be selected by Apex. Sponsor Equity may represent strategic investors (independent power producers), institutional investors (insurance companies, pension funds), or private equity or other equity funds in addition to Apex's balance sheet. Typically, we would expect to present the investment opportunity to several debt and equity sources prior to selecting the parties that provide the most favorable terms and certainty of execution. However, all of the investors and debt providers will be highly experienced investors with substantial current experience in the wind industry. ------- |