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Presentation to Lee County Zoning Board of Appeals On Behalf of Local Landowners and Hamilton Township Tom Hewson John Stamberg P.E. Principal Energy Ventures Analysis Inc Arlington Virginia 703-276-8900 November 27, 2011

Decommissioning Costs and Risks  Why should Lee County care? Paul Gipe estimated that there over 14,000 wind turbines in California alone that were  abandoned by 1997. Abandoned wind turbines have/will continue to adversely affect local property values and character. Caithness Windfarm Information Forum (www.caithnesswindfarms.co.uk) tracks wind  turbine accident data that can be confirmed through press reports or official releases. They have documented (through 9/2012) 249 turbine blade failure incidents, 195 turbine fires and 130 structural failures– that can lead to premature unit decommissioning. Wind facilities are often developed as limited liability corporations. At the end of the  project life, the LLC may have no equity remaining to fund decommissioning cost. Pre-funding future decommissioning costs has become a common requirement for wind  project permitting. Intent to have cost paid by wind developer who financially benefits from wind project operation  Different approaches available to assign decommissioning cost and risk between wind project  operators and local community

Decommissioning Risk Abandoned Wind Turbines at Kamora Wind Farm (HI)

Decommissioning Risk 130 documented cases of structural failure such this January 2008 accident in Cumbria UK

Decommissioning Risk Wind turbine foundation failure

Decommissioning Risk 195 Documented Wind turbine fires such as this turbine in Germany. Can be caused by equipment failure or lightning.

Decommission Planning Decommissioning Plan Components  Defining Scope of Work: Dismantling wind turbines and met towers  Removing turbine foundations (to what depth?) and land reclamation  Removing crane pads  Substation removal (transformers, equipment, foundations, etc..)  O&M building removal  Access Roads- Retain or remove?  Collection system electrical system- Abandon underground lines or remove?  Trigger decommissioning as individual turbines cease operation or wait until entire  project is shutdown

Decommission Financing  Financing cost approaches  Project performance bond for a defined scope of work with an approved highly rated bonding company--- Assigns 100% of project risk to project bonding agency  Financial bond at a preset amount to be sufficient to cover anticipated decommissioning costs– Leaves future cost escalation and scrap value risks to local community and property owners  Other financial assurance – Assigns full financial risks to local community and property owners if financial assurance entity fails

Decommissioning Costs

Decommissioning Costs Table 1. Decommissioning Cost Known To Wind Turbine Contractors and Items with Insufficient Details to Make Independent Demolition Estimates

Decommissioning Costs Table 2 Net Scrap Salvage Value Dixon Iron and Metal Truck Cost to Cost to Load Per Turbine 7/20/12 Verbal Delivery Disassemble at Wind Farm Received Net Scrap (4) (5) (6) (7) Scrap Amounts Quote Scrap Value Cost or Torch Crew B-12N Value I. Turbine Metal (1),(3) A. Rotor 60 Tons 1. Hub Iron/Steel 40 tons $165/ton $6,600 $400 $1,000 $2,305 $2,895 (2 trips) 2. Blades 20 tons - - (1),(2) B. Nacelle 82 Tons 1. Gear Box, Transmission, 35 tons $165/ton $5,775 $400 Nil $2,305 $3,070 Brakes (2 trips) 2. Generator 35 tons $7,500/each $7,500 $200 Nil $1,153 $6,147 (1 trip) 3. Non-Metal 12 tons - - (2) C. Tower/Bolts 1. Tower 205 tons $165/ton $33,825 $4,000 $5,000 $11,525 $13,300 (10 trips) D. Subtotal per Turbine 280 tons $53,700 ($5,000) ($6,000) ($17,288) $25,412 E. Subtotal per 87 Turbines 24,360 tons $4,671,900 ($435,000) ($522,000) ($1,504,056) $2,210,844 II. Transformers/Miscellaneous A. Turbine Transformer 7.48 tons 1. Sheet Steel 3.1 tons 2. Core Steel 1.6 tons 6.3 tons $3,276 at $66 Nil $768 $2,442 (9) 3. Core Copper 1.6 tons (3 trips) $0.26/# 4. Oil 1.15 tons B. Subtotal per 87 Turbines $285,012 ($5,742) Nil ($66,816) $212,454 (10) C. Master Primary Transformer 120 tons $800 Nil ($2,305) $59,294 $62,400 (MPT) (4 trips) $0.26/# D. Miscellaneous (in above - - - - - Section I) E. Subtotal per 87 Turbines $347,412 ($6,542) Nil ($69,121) $271,748 III. Total Salvage Value $5,019,312 ($441,542) ($522,000) ($1,573,177) $2,482,592

Decommissioning Costs Table 3 Non-Metal Disposal Costs Landfill Item Amount Site Process Cost Trucking Cost To Load Dumping Cost Total Cost ( 1. Blades 20 tons $4,371.50/3 blades $200 (1 trip) $51.00 3/day $900 $5,542.50 (Crew B-7) (Crew B-10-U) 2. Nacelle Non-Metal 12 tons $1,452.60 $200 (1 trip) $51.00 3/day $450 $2,153.60 (Crew Q-20) (Crew B-10-U) 3. Transformer and Transmission 500 gal $1,200 = 12 barrels $50.00 Nil $450 $1,700.00 Oils @ $100/barrel 4. Cost per Turbine $7,024.10 $450 $102 $1,800 $9,376.10 5. Cost for 87 Turbines $611,097 $39,150 $8,874 $156,600 $815,721 Lee County landfill charge at $900 per 20 ton load

Decommissioning Costs Table 4- Foundation Removal and Land Reclamation

Decommissioning Costs Table 5 --Road Remova l Costs

Decommissioning Risk Future Labor Cost Escalation Scrap Market Value Changes Landfill Disposal Costs Land Acquisition Costs Landfill Regulation Changes Heavy Equipment Rental Costs Fuel Costs

Presentation to Lee County Zoning Board of Appeals On Behalf of Local Landowners and Hamilton Township Tom Hewson John Stamberg P.E. Principal Energy Ventures Analysis Inc Arlington Virginia 703-276-8900 November 27, 2011