Concrete Supply Manufacturing Agreement by opw15343


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									Energizing West
Michigan with Offshore
Wind Power
West Michigan’s greatest assets

•   Access to the world via cheap transportation via the water

•   An unmatched manufacturing base with a world class quality control standard
    honed by the auto industry

•   Innovation

•   Entrepreneurial DNA
Critical factors to establish a turbine
manufacturing base
“In order to stimulate manufacturing there is need for a sizeable local market, with
a competitively priced power purchase agreement and a strong grid connection
available to service the expansion of a large offshore project””

A major US Original Equipment Manufacturer (OEM) of wind turbines

•   Stable regional energy market
•   Suitable sites for wind farms
•   Test facilities for new turbine design
•   Incentives to establish manufacturing facilities
•   Support for training new employees
•   Strong supply chain potential within reasonable distance

Scandia Wind intends to share its broad network and experience to enhance the
current work underway to diversify Michigan into the wind industry.
The Aegir project -- a catalyst to attract an OEM?
•   Make the project large – offer unit volume to the turbine manufacturer willing to
    build manufacturing facilities in the region:

     – an onshore wind farm of 150 MW
     – two offshore facilities (2x500 MW)
     – one test site

•   Facilitate an in-house test facility connected to the BC Cobb plant or former
    waste water treatment site on Muskegon Lake

•   Make a public/private partnership between the manufacturer and the State,
    enhancing public economic support for the test turbine and test program

•   Work with the state to get a permanent support scheme in place to establish a
    permanent market for offshore wind power in the Great Lakes
Why Now?

•   Michigan needs to be first in the   •   The Competition is leading:
    lakes                                    – Ohio
•   Whoever is first has the                 – New York
    manufacturing and infrastructure         – East Coast
    head start
                                             – Ontario
Scandia Wind Offshore
A proposal West Michigan

Make the West Michigan lakeshore
region an offshore wind energy hub
with the goal to generate 3,000 new
jobs in the renewable energy industrial
What is important for siting offshore wind farms?
•   Better wind conditions than onshore. 10% change in mean wind is 30% change
    of mean power production (rule of thumb)

•   Transmission capacity in existing power lines.

•   Proximity to major consumption areas

•   Ability to build bigger than onshore
Wind speeds on Lake Michigan
    Wind Quality and Load
    Centers in the U.S.
Michigan is situated near three
   large load centers

•   Blue - high wind potential

•   Brown - large demand

•   Green - little wind and smaller
    demand centers.
    The Aegir project sketch, approximately 1,150 MW
•   150 MW at Muskegon Wastewater Treatment Plant

•   Two off-shore sites: 500 MW each                                Ludington
                                                    Aegir I
     •   5 – 10 MW wind turbines

     •   100 – 200 turbines

     •   300 – 450 feet high towers
                                                                       Aegir III
•   $3-$4 billion investment                                         Muskegon

•   3.7 billion kWh per year based on 9 m/s                             Grand Haven
                                                         Aegir II
    average wind speed

•   Powering over 300,000 US households
Ludington, south viewpoint angle
Silver Lake, northwest viewpoint angle
Mears Park Pentwater, west/southwest viewpoint angle
Kirk Park, west/northwest viewpoint angle
Grand Haven, west/northwest viewpoint angle
Electrical interconnection example Havsul I
Installation offshore in Europe, challenges in the US
Concrete Foundation for the US challenges
Placing the Wind Turbine – Concrete Foundations

•   Potential Additional Manufacturing Opportunity.

•   A 1,000 Megawatt wind farm would require (approximately):

     o   1 million tons of concrete
     o   200,000 tons of steel
     o   2 million man-hours of labor for foundations
     o   Foundation Production Cost: $500 million - $1 billion
      Aviation lighting and watercraft navigation

•   No operational aviation lighting on a daily basis:

     o Radar system to detect aircraft
     o Activates the aviation lighting system when
       aircraft come within a certain distance
     o Activates radio message to the pilot if
       entering an inner circle of the wind farm
     o FAA approved

•   Fog horns and naval navigation lighting:

     o Fog horns and naval navigation lighting must
       be heard from at least 2 mile distance from
       the outer boundaries of the wind farm
     o Will in normal circumstances never be heard from the shore. Only under
       very specific weather conditions will the fog horns be heard
Goals for the Aegir Project

•   Successfully develop, build and operate:

     o 150 MW onshore wind farm
     o 1,000 MW offshore wind power in Lake Michigan

•   Develop the offshore wind industry using the Aegir project as a stepping stone:

     o   Attract a turbine manufacturer to the region
     o   Develop the supply chain connected to the manufacturing facilities
     o   Develop the port of Muskegon as center for offshore renewable activities
     o   Establish O&M facilities in Mason County and Muskegon
Additional Goals

Link with university research and technology development efforts

     •   Increase the offshore wind knowledge base of universities and research
         facilities in Muskegon area

     •   Turbine research facility connected to MAREC

     •   Technicians for O & M -- trained at local community colleges
Renew(able) Muskegon
                                                Aegir 2 grid

                                                Test turbine site


                                O&M Site

          Current SAPPI site,
          potential manufacturing
B.C. Cobb plant in Muskegon   10 MW
198 meters                    100 meter hub height
Turbine manufacturing and supply chain “ripple effect”

                                In creating an industry
                                epicenter in Muskegon, many
                                job opportunities will be

                                By succeeding attracting an
                                OEM to Muskegon,
                                approximately 3,000 jobs
                                could be created.

                                Most jobs would be in the
                                supply chain -- creating
                                opportunities for existing and
                                new businesses in the
Estimated total job creation to construct the
Aegir project
Aggregated results from the Siragrunnen (S) and Mariah (M) projects:

•   Approximately 3,500 man-years in the construction phase (S)
•   Approximately 100 direct permanent jobs in the operational phase (S)
•   Approximately 200 to 300 indirect jobs in the operational phase (rule of thumb)

•   Potentially approximately 3,000 jobs in turbine supply chain activities that can
    become permanent jobs (M)

Separate analysis will be performed for the Aegir project
Cost distribution typical offshore project
                                                PHASE II-C O NTRAC TING PHASE

                                                                   PRO JEC T MANAGEMENT PHASE
                           PHASE I-C O NC EPTUAL DESIGN
            O N-SHO RE C ABLES, LINES &                                         3%
                        3%                                             INSURANC E & FINANC E
                                                                              10 %
                   O FFSHO RE EXPO RT C ABLE                                                            PHASE I-CONC
                              8%                                                                        PHASE II-CON
            5%                                                                        FO UNDATIO NS
                                                                                                        PROJECT M AN
                                                                                           14 %
                                                                                                        INSURANCE &
                                                                                                O HVS   OHVS
                                                                                                        OFFSHORE IN
                                                                                                        OFFSHORE EX
                     51 %                                                                               ON-SHORE CA

                                                                     Distribution of CAPEX
Going Forward – Estimated Timetable

 2009 - 2010                      2011-2012                  2011-2013

•Local advice                •MISO application             •Environmental studies
•Define layout               •Lease application            •Non environmental studies
•Comp model                                                •Permits applications
Counties,                    Grid access                   •Wind measurements
Twps, and                    approvals
Munis                        Lease approval

             2013-2015                             2015-2020

              •Financing            Financial
              •Commercial           closure       •Construction
             All permits issued
   Sample of Permits Needed
State                                 Federal

                                      US Army Corps Of Engineers
MI Public Service Comission
                                      National Environmental Policy Act
Department of Environmental Quality
                                      US Coast Guard
Great Lakes Submerged Lands
                                      Costal Zone Management Act

MI Endangered Species Law             Fish and Wildlife Service

Water Quality Certification           Eagles Protection Act

                                      Migratory Bird Treaty Act

                                      National Historic Pres Act

                                      Federal Aviation Agency
Studies to be Performed
(for approvals by State and Federal agencies)

Over 20 studies to be performed, including (among others):

•   Habitat/Biological (above water, below water)

•   Cultural Heritage

•   Native Tribes fishing impacts

•   Private Industry

•   Transportation/Navigation
Summary: Why is the Aegir Project being
considered in Michigan?
• Excellent wind conditions

• Feasible water depths

• Excellent grid capacity

• The Ludington pump storage facility, potentially working as a “battery” for the wind farm

• The B.C. Cobb plant in Muskegon will likely be closed, providing approximately 500 MW
of grid capacity

• Close to major load centers reducing transfer losses

• Strong political drivers towards offshore

• Reduces CO2 emissions by 2.2 million tons yearly

• The Aegir project will reproduce all energy used to put it into operation appr 42 times

• The Aegir project will be carbon neutral after appr 7 months in operation
Next steps as we see it (subject to local authorities input)

Discuss the options with the local authorities:

•   Gauge interest in moving forward
•   Modifications of the project
     – Fixed distance from the shore
     – Overall shape and size
•   Compensation model
•   Presentations to the local boards
•   Counties’ advice on stopping the project or moving it into the further studies,
    preferably by September 1
Compensation Model

 Scandia Wind Offshore proposes the following compensation model for the
 Aegir Project:

  •   $2,000 per megawatt (“Fixed”) annual compensation paid to Muskegon
      County and Ottawa County
  •   A “revenue-share” model (“Variable”): a percentage (to be determined) of
      gross revenue produced by the proposed wind farm
  •   A mutually-agreed upon combination of the Fixed and Variable
      compensation models

  A Public/Private Partnership whereby Muskegon County and Ottawa County
  receive a profit-share in the project
Request of the Counties

 Approval of the project is not requested at this point, merely advice as to whether the
View change is acceptable in order to move forward with environmental, socioeconomic
                                    and technical studies
    The Aegir project:

Kilde: StatoilHydro
Kilde: StatoilHydro

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