THE TRES AMIGAS SUPERSTATION UNITING THE NATION’S ELECTRIC POWER GRID THE TRES AMIGAS SUPERSTATION Project Overview and Status Report to ERCOT Regional Planning Group May 21, 2013

Tres Amigas Presentation Team David Stidham, COO and Senior VP, Tres Amigas Ziad Alawyan, CEO, ZGlobal and member of Board of Directors, Tres Amigas (by remote) Andre Canelhas, Managing Director, HVDC Solutions LLP Pat Wilkins, ERCOT Representative, Tres Amigas

Presentation Agenda Tres Amigas Background Voltage Source Converter Technology Overview VSC Capabilities and Grid Benefits Tres Amigas Project Development Aspects  

Background – Investment and Milestone History 2009 2010 2011 2012 New Investors Energy IT Optimization Inc. Key Milestones Attracted TA’s first strategic investment from American Superconductor Signed the option to enter into a 99-year lease with the State of New Mexico Signed 99-year lease for 16,000 acres Received FERC approval to sell transmission at negotiated rates Entered into a supply Agreement for VSCs with Alstom Received the first Series-B investment from Hennepin Ventures Legislation passed in State of New Mexico exempting Tres Amigas from Gross Receipts Tax Received the second Series-B investment from Mitsui & Co. 3 3

Background – Project Strategically Located Tres Amigas Is Ideally Situated in Eastern New Mexico Near the Borders of CO, OK and TX Serving as a Three-Way Interconnection of WECC, Eastern and ERCOT

Background – Phased Development Phase I Phase II (a) Phase II (b) WECC 750 MW SPP 750 MW ERCOT 0 MW WECC 750 MW SPP 2250 MW ERCOT 1500 MW WECC 750 MW SPP 2250 MW ERCOT 1500 MW 750 MW AC line 2 components: Tres Amigas Substation to Public Service of New Mexico’s Blackwater Substation (TA to WECC) Tres Amigas will be a Balancing Authority in WECC Tres Amigas Substation to SPS’s Tolk Substation (TA to SPP) Construction to begin in 2Q13 and completed by 2Q16   1500 MW merchant AC Line Line will run from Tres Amigas to ERCOT with interconnection at a Panhandle CREZ line point to be determined by ERCOT DC conversion will occur either at ERCOT interconnection point or Tres Amigas - TBD Not synchronous between SPP and ERCOT Construction to be begin pending regulatory approvals with COD mid 2017   Line runs from Tres Amigas to the Potter Substation Configuration TBD   5

Background - Regulatory History and Status March, 2010 - FERC issued approval of negotiated rate authority (not cost-based) to Tres Amigas to sell transmission service October 7, 2012 – Phase I Interconnection Agreement with Public Service of New Mexico approved by FERC April 8, 2013 – Phase I Interconnection Agreement with SPP and SPS/Xcel Energy approved by FERC

Background – Proposed Transmission Routing Phase 2 Phase 2 Line constructed for single circuit operation in Phase 1 and expanded to double-circuit in Phase 2 Phase 1 Phase 1 & 2 Phase 2 7

VSC Technology – How Does It Work

VSC Technology - Multi-Level Converter Output Voltage Multi-level VSC + Steady DC Voltage Input

VSC Technology - Modular Multi-Level Converter (MMC) Idc Idc/3 + ½ Vdc Vs Vc  Iac/2 iac Iac/2 Vs Vc - ½ Vdc

VSC and Super Station Capabilities Normal Active and Reactive power exchange determined and controlled independently; Active and reactive power controlled electronically accurate in real time to the micro-second; Fire-wall for system disturbances; Emergency power control and power modulation as well as run-back programed as prescribed by network planning studies; Voltage control; Frequency control; Damping of electro-mechanical oscillations; Tres Amigas will offer robust and reliable grid solutions to increase overall reliability and efficiency.

VSC and Superstation Grid Benefits Black-start and grid restoration; Strategic operation supported by powerful simulation center with state of the art tools and capability to adapt control algorithms as needed; Interaction with transmission owners with information exchange process designed to capture, study and offer solutions to serve grid needs towards efficiency and reliability; Competent people being developed and trained by working hands-on throughout system development Tres Amigas will offer ancillary and grid support services to increase overall reliability.

Project Development - ERCOT IA Process Initial Steps April 2, 2013 – Tres Amigas team briefed PUCT commissioners and staff on project development and status April 8, 2013- TA submitted notification to ERCOT as specified under Process for Evaluating Transmission Projects Related to Asynchronous Ties April 12, 2013 – ERCOT notified RPG of TA IA notification and designated Sharyland as lead TSP for system impact analysis May 15, 2013 – Reliability study scoping meeting among Sharyland, ERCOT, Cross Texas Transmission and Tres Amigas

Project Development - Interconnection Reconfiguration Based on concerns expressed by the PUCT commissioners, TA began an evaluation of a reconfiguration of its ERCOT interconnection: Installation of two VSCs at Hereford Windmill location Two separate DC lines from Windmill to Tres Amigas main station in New Mexico Initiating RFP processes for VSCs and DC line construction

Project Development - Two Types of Interconnection AC DC 1 Station  = WECC 750 MW SPP 750 MW ERCOT 0 MW Phase 1 2 x 750 MW VSC Converters back-to-back at Tres Amigas Super Station WECC 750 MW SPP 2250 MW ERCOT 1500 MW Phase 2 (a) AC DC Station 2 Station 1 =  An HVDC scheme requires two converters, one to convert from ac to dc, and the other to convert ac back into ac, as can be seen in all of these diagrams. There are two main types of HVDC schemes: “Back to Back”. These are usually used for applications which connect systems with different frequencies, for example 50Hz to 60Hz or where the ac schemes to be connected are asynchronous, even if nominally at the same frequency. The two converters of a back to back scheme are built into one building, so there is only one physical station. “Point to Point”. These are used for bulk transmission of power over long distances and will consist of two remote stations. There are two sub-types: those in which the two stations are connected together by lines overland as can be seen in the centre diagram, and those in which the stations are connected together by special cables under water - but the cables could equally be buried underground. The rules of design for the converters are different for each of these systems. …………………………. So now let’s look at a few examples ……………….. NEXT 2 x 750 MW VSC Converter at Tres Amigas Super Station 2 x 750 MW VSC Converters at Hereford, TX The possibility to interconnect the converters by a super-node remains available

Project Development - Phase 2

Project Development - Timeline 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Phase I Incremental Capacity: 750MW for WECC and SPP Operation Construction Phase II (a) Incremental Capacity: 1,500 MW for ERCOT and SPP Construction Operation Construction Operation Phase II (b) Incremental Capacity: 2,250 MW for ERCOT and SPP 17

More information available at www.tresamigasllc.com

Tres Amigas SuperStation…. Uniting the Electric Grid