Strictly Private and Confidential US Wind Power: Where is the Money? Where is the Risk? September 17th, 2007 – Houston

Confidential2 Disclaimer The views presented herein are my own. They do not necessarily reflect the views of EDP, S.A., Horizon Wind Energy LLC, or any of their affiliates.

Confidential3 Who We Are Horizon Wind Energy, formerly Zilkha Renewable Energy Develop, construct, own and operate wind farms throughout the U.S. Headquarters in Houston with regional offices in New York, Oregon, Illinois and California, and roughly 100 employees Owned by EDP, purchased from Goldman Sachs in July 2007 Will own ~1350 MW by the end of 2007

Confidential4 What We’ve Done Mill Run Wind Farm 15 MW, Fayette County, PA Tierras Morenas 24 MW, Costa Rica Somerset Wind Power Project 9 MW Somerset County, PA Meyersdale Wind Power Project 30 MW, Casselman River Valley, PA Blue Canyon Wind Farm 225 MW near Lawton, OK Top of Iowa Wind Farm 80 MW Worth County, Iowa Madison Windpower 12 MW, Madison County, NY Maple Ridge Wind Farm 320 MW, Lewis County, NY

Confidential5 Wind Timeline in the Capital Markets Jun 2005 July 2007 Oct 2007 Zilkhas buy and rename International Wind GE buys Enron Wind for $328 mm Goldman Sachs buys Zilkha Renewable Energy; renames it “Horizon Wind” EDP buys Horizon for $2,150+ mm USD Iberenova set to go public; raise expected to be ~$4,000 mm USD Slow Acceptance Wall Street Enters Consolidation of Developers US Installed GW Wind Goes Public Senior FPL portfolio bond deals rated BBB-

Confidential6 Not so quixotic anymore…

Confidential7 Wind and the PTC The Section 45 production tax credit allows owners of wind projects $20/MWh off their taxes for 10 years Wind farm assets are also largely depreciated over 5 years for tax Market share leader FPL made a business using the PTCs themselves Now FPL is almost out of tax capacity, and foreign utilities and financial institutions are rivaling FPL in their annual construction programs How does the market take advantage of the PTC? What is its long-term future?

Confidential8 Institutional Equity Market JP Morgan Chase was the first in the market, investing alongside developers to help them use the PTC and accelerated depreciation GE has entered in a dramatic way and is now JP Morgan’s biggest competitor IRS to issue “safe harbor” rules for partnership flip structure Deal structure gives the institutional investor a preferred return—but tax equity prices at ~6.5% after-tax while debt prices closer to ~7% pre-tax More demand for deals than there is supply

Confidential9 The Future of the PTC Current extension through 12/31/2008, but developers already buying turbines for 2009 and 2010 House Energy Bill has 4-year extension capped at 35% of project cost Senate Energy Bill has no tax component –Increased taxes on oil companies would have caused filibuster –Couldn’t muster the 60 votes for super majority Long-term extension has bipartisan support Let’s hope for a compromise

Confidential10 Wind Derivatives Chicago-based US Futures Exchange has launched financial wind indexes. Based on deviations from 20-year wind speed averages In NY and Texas regimes Who will hold the floating leg? Analogue to credit derivative swaps Is CAPM really right?