Deepwater Wind - Energy Highway

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IV. Financial
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Long-Term Contract
In order to secure commercial financing for the Project a long-term contract (at least 20
years) with a credit worthy entity will be required. As previously stated, Deepwater
submitted a proposal for such a long-term contract to LIPA in 2011, which Deepwater
believes is still under consideration.
Pricing
Deepwater can deliver power to Zone K from its combined cable and offshore wind
Project at approximately 10 cents per kilowatt-hour in the first year of operation 4 (net of
system benefits). This is possible because:
1) advances in offshore wind technology plus a robust wind resource combine to deliver
offshore wind power from DWEC at one-half the price of power from a first-generation
project previously proposed in the region;
2) the new transmission link to ISO-New England also allows LIPA to import low-cost
firming power from surplus gas-fired generation; and
3) the utility-scale offshore wind plant will deliver substantial price suppression benefits,
and valuable environmental attributes, the economic value of which reduces the ratepayer
impact of the power delivery.
The Project compares very favorably to any other native renewable resource that can be
built at a utility-scale. Indeed, the Project can deliver a significant amount of clean
energy at a fraction of the cost of a comparable-sized solar energy plant in the downstate
region, without the associated onshore siting concerns for such a large facility.
There have been significant improvements in offshore wind technology in the last
decade. Since 2002, when a much smaller offshore wind plant was proposed for a site 3-
5 miles south of Jones Beach, Long Island, turbine generator sizes have increased
threefold. That increase substantially reduces the capital cost of projects, since a similar
amount of power can be produced from a plant with many fewer structures. Moreover,
wind turbines sited 20 or more miles from shore enjoy substantially higher capacity
factors, as much as 30% higher, than turbines sited closer to shore. And, with a larger
multi-state project, New York ratepayers achieve greater value by capturing the pricing
benefits that result from economies of scale.
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4 Over a 20-year contract term and with a modest escalator.
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