oEPA GREEN POWER PARTNERSHIP" Aligning Green Power Partners with New Renewable Energy Projects Pilot Project Summary Please return the completed summary via email to Blaine Collison, Green Power Partnership Director, collison.blaine@epa.gov / 202-343-9139 Project Name: Sugar Creek Wind Project Developer Name: Akuo Energy USA, Inc. Renewable Energy Type: Wind Energy Total Planned Megawatt (MW) Size: Phase I: 50 MW Phase II: 150MW Project Location: Montgomery County, Indiana Is the project permitted?: No, in process If not, what is the permit status?: The project is in late-stage development and has received a consistently high level of support from county officials. Environmental studies, including wetlands, cultural, and bird, and bat surveys, will be complete by the fall of this year. Negotiations have already begun with the county regarding the various agreements that must be agreed upon prior to county approval, such as road use and decommissioning plans, and it is anticipated that this process will be complete within the next 6 months. What is the status of the project's site?: [< The site is fully under Developer control, with long-term lease options ready for immediate execution and recorded for a 45-year term. ------- 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): System Impact and Facility Studies are complete. The project is located within the Midwest Independent System Operator territory. We anticipate entering the System Planning & Analysis phase of the interconnection process and refreshing the Facility Study by the end of June, when the transition period is complete and queue reform is enacted. As soon as the final project milestones have been completed, the project will enter the Definitive Planning Phase, which will lead to Generator Interconnection Agreement within approximately 12 months. 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. MISO has a process to study the project's impacts on their grid and the subsequent interconnection upgrades and costs. The project will inject into MISO via the transmission owner Duke Energy. The project has already been studied by both the TO and MISO. What is the status of the Environmental Impact Statement?: The project will complete all environmental studies, including wetland, cultural, and bird, and bat surveys, by the fall of this year. We are in preliminary discussions with the state and federal agencies regarding project impacts, but based on our experience with previous projects we anticipate achieving either a Technical Assistance Letter or Incidental Take Permit once the environmental studies are complete. Additionally, given our extensive avoidance measures during project siting, we anticipate that the NEPA process will only require an EA leading to a FONSI, and not an EIS. Is any element of the project - technology or other - experimental or pilot-phase?: No. The project is using commercial-grade, utility-scale wind turbines manufactured in accordance with international standards. ------- 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?: Although the turbine model has not been finalized, it is guaranteed that the project will utilize a major utility-scale wind turbine manufacturer, with significant installed capacity in the US. As is standard, the turbines will be under manufacturer's warranty for two years after construction, and will be operated onsite by full-time manufacturer Operations & Maintenance technicians. Thereafter, the project will either elect to extend the manufacturer's O&M agreement, or contract a reputable 3rd party O&M contractor through the end of the life of the project. For wind projects, has a meteorological tower been installed? If yes, when was the tower installed and how much data has been collected?: Yes. Four met towers have been installed and two are currently operating. A 60m and 80m met tower were revamped in the spring of 2010 and have consistently collected data since installation. The project has over 3 years' worth of data for the site. Who has analyzed the data and what is that person's experience with respect to projects that have actually been financed?: The data has been analyzed in partnership with Hatch Associates, one of the world's leading providers of renewable energy solutions to developers, investors, utilities, and governments. Akuo Energy has contracted Hatch to perform met tower installation, data acquisition and QA/QC, monthly reporting, and the preparation of bankable wind resource assessment report including net energy yield and uncertainty analysis. Over 3 years of data measurement Hatch has achieved a 99% data recovery rate which is excellent by industry standards. Can the turbine manufacturer be financed through "traditional" tax equity and debt in the U.S.?: Yes, the turbine manufacturer is a leading supplier to the US wind industry, with a proven track record of performance internationally. Provide a short summary of how you view project finance and structure/ownership: Akuo intends to structure the projects on a non-recourse project finance basis. The planned structure is a Tax Equity Flip structure, through either a Partnership or a single lease investor, depending on what is most optimal for the project. ------- In a typical Tax Equity Partnership, the Tax Equity Investor and the Sponsor form a Partnership designed to provide all the tax benefits to the Tax Equity Investor. A division of the cash distributions provides the Tax Equity Investor with its agreed return, consistent with optimal tax efficiency. . The partnerships are designed such that , in the base case, once the tax benefits inherent in a project have been effectively monetized and the tax equity investor has reached its target after-tax yield, the tax equity's share of taxable income and cash distributions "flip" down to a minority percentage. In the Sale\Leasebacks structure, the Sponsor sells the Project to a Lessor beneficially owned by the Tax Equity Investor for 100% of its Fair Market Value at COD and simultaneously leases the Project back for a term. The Sponsor will use the proceeds to create rent and O&M reserves, and to prepay a portion of the rent due under the Lease. The rentals under the Lease are optimized to provide for the lowest present value of rent to the Sponsor consistent with tax requirements and the Investor's return requirements. What are your ideal types of prospective institutions/partners?: The Sugar Creek Wind Project seeks the partnership of an interested electricity offtaker or consumer to benefit from the long-term price stability the project would offer. Since wind energy does not bear the risk of fuel prices- whether coal, oil, natural gas, or uranium- the project is able to guarantee the price of electricity for 20 years or longer. The partner would play an essential role in the creation of local jobs, the promotion home-grown, renewable power, the increase in tax and commerce revenue for a rural community, and the transition to a more sustainable, clean energy economy. Additionally, Indiana is the ideal location for a project of this size, since it has an excellent wind resource and a goal of 10% energy production from renewable sources by the year 2025. Producing approximately 150,000 MWh per year, the first phase of this project alone can service the electricity needs of a large load-consuming entity, such as a manufacturing facility, university, or municipal utility at a competitive price, while locking in low electricity rates long-term. All of these entities are located in close proximity to the project site. Furthermore, a large company with multiple locations would be able to source electricity from a single producer, as well as benefit from long- term rate stability and a consistent, reliable connection to the electricity grid. ------- What is the intended off-take for the renewable power with respect to bundled or unbundled products and is there a preference? The ideal offtake partner would purchase the electricity bundled with the Renewable Energy Credits, although the purchase of the RECs would not be mandatory. ------- |