November 19, 2009

Steven J. St.ClairManager – Renewable Assets

Phone: 425-462-3057Email: steven.stclair@pse.com

Wild Horse Solar Photovoltaic Project

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Agenda

IntroductionPSE Renewable Energy FacilitiesWild Horse Solar Facility

ConsiderationsRequest for ProposalsEvaluationConstructionPerformanceSolar Advisor Model Studies

Conclusions

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PSE, a Washington CompanyState’s oldest and largest utility1 million electric customersMore than 700,000 natural gas customersService territory stretches across 11 countiesSubsidary of Puget Energy (NYSE:PSD)2-3% customer growth annually

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Hopkins Ridge Wind Project

Key Dates:Letter of Intent Oct 29, 2004PSE Board Approval Jan 11, 2005Closing / Notice to Proceed Mar 11, 2005Commercial Operations Date Nov 22, 2005

Developed by Renewable Energy SystemsAll-in cost of $200 million157 MW35% capacity factorVestas Turbines

1.8 MW Capacity220 feet tall at hub320 feet to tip of blade

Project Site

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Wild Horse Wind Project

Developed by Horizon Wind≈ 11 miles east of Ellensburg in Kittitas County, WashingtonShrub steppe habitat - primarily grazing land≈ 8-mile 230kV transmission line to PSE IP Line at new Wind Ridge Substation 229 + 44 = 273 MW

Private land owned by PSE≈ 5,400 acres (≈ 87 WTGs)≈ 1,280 acres (site access)

State land leased by PSEDNR ≈ 2,560 acres (≈ 31 WTGs)WDFW ≈ 640 acres (≈ 9 WTGs)

Five (5) transmission leasesAll-in cost of $380 millionCommercial Operation Dec 22, 2006

Project Site

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Why Build a Solar Project?

To develop the Solar industry in Washington and the Pacific Northwest

Triple the size of next largest NW solar projectGrow Washington solar manufacturing capabilityRoom for another 500 kW

To understand how well solar works in our region and at a wind farm

Nation’s first utility scale wind-solar projectStudy power profile differences

Educate the State and region about solar energyDouble I-937 credit

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US Photovoltaic Solar Resource

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Wild Horse Solar Project

Quarry Site –90% of the panels. Already disturbed land.

Wild Horse Wind Farm –127 Turbines Visitor’s Center Site – 10% of the panels

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Benefits of Wild Horse Site

Great solar resourceSame sun as Houston

Synergies with wind farmOwned landExisting transmissionPersonnel already at site

Potential synergy with future wind farmsGood access for educational purposesReduce/Backup station service loadsRoom for another 500 kW

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Wild Horse Solar RFPReleased December 2006Unrestricted bid listExtensive technical specificationsRequested flat PV, concentrating, and thermal systems500 kW with option for an additional 500 kWRequired 5-year warranty on system and 25-year on PV modulesReceived 12 conforming proposals and evaluated on basis of cost, performance, design maturity, and supplier experience

Download: http://www.pse.com/energyEnvironment/energysupply/Pages/solarRFP.aspx

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Project Overview

500 kW solar facility (300 homes when the sun is shining)Interconnected to the 34.5 kV wind collection system$4.3 million in capital costSelected photovoltaic solar technology~ 5 acre footprint

D ec Jan F eb M ar Apr M ay Ju n Ju l Aug Sep O ct N ov Dec

R FP & B idd ing

Eva lua tionSe lection (If Any) & N egotia tions

D esign & Procurement

C onstruction

Substantia l C omple tion

F ina l C omple tion

2007

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Basic System Layout

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Commercial Solar Modules

Convert solar light energy to DC electrical energyPoly-CrystallineTextured cell surface to increase light captureSharp uses anodized aluminum frame for strengthSilicon Energy uses glass composite constructionOver 12% efficiency-40°F to 190°F operating temperature range

Sharp USA

187 Watts per module

(450 kW total)

Silicon Energy

170 Watts per module

(50 kW total)

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Panel Interconnection Architecture

Panel InterconnectionStrings of 14 modules make a circuit, ~ 600 VDCCircuits joined in combiner boxes and feed to inverterInverter converts DC power to AC powerVoltage increased to 34.5 kV at padmount utility transformerInterconnect to wind turbine electrical collection system

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Satcon 50 kW and 500 kW Inverters

Controls all functions of solar electric systemExtracts power from PV array at most efficient point (Maximum Power Point Tracking)Converts power from direct current (DC) to alternating current (AC)Monitors the utility grid & disconnects if out of acceptable Voltage or Frequency rangeProvides production data stream to plant data acquisition system

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The array foundation is almost complete

Wild Horse Solar Project500 kW, Washington, Phase I - October 2007

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Setting panels in place

Wild Horse Solar Project

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The First Array at 95% complete

Wild Horse Solar Project

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The First Array

Wild Horse Solar Project

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Wild Horse Solar Project

Aerial view of quarry site

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Wild Horse Solar Project

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Wild Horse Solar Performance

http://siteapp.fatspaniel.net/siteapp/detailView.jsf?eid=72046

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Predicted vs. Actual Generation

Wild Horse Solar Performance

010,00020,00030,00040,00050,00060,00070,00080,00090,000

100,000

Oct-07

Dec-07

Feb-0

8Apr

-08Ju

n-08

Aug-08

Oct-08

Dec-08

Feb-0

9Apr

-09Ju

n-09

Aug-09

Oct-09

Ener

gy (k

Wh)

Actual Expected

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Is Solar Cost-Competitive?

Solar is currently much like wind was in the 1990sPositions PSE and our customers as solar becomes more cost-competitiveAssist growth of the in-state solar manufacturing industry

Generates less than 1/7 of one wind turbine

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NREL: Solar Advisor Model

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NREL: Solar Advisor Model

Easy to Use interface with detailed analysis capabilitiesModel performance, costs and financing consistently across technologies for appropriate comparisons.

Concentrating solar power (CSP)Photovoltaics (PV)

Implementation of best performance models (Sandia PV module, NREL parabolic trough model, Sandia Inverter, 5-Parameter PV module via UW-Madison and CEC)Siting Tool (especially with detailed Google-Maps solar satellite dataPolicy, Markets and Technology Analysis

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Solar Module Modeling

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Capital Cost Modeling

Adjusts with varying plant sizeCost variables change with different markets

ResidentialCommercial (Owned, 3rd Party Owner)Utility (IOU, IPP)

Relatively High LevelAble to link to complex cost model spreadsheets in Excel

Send variables from SAM to ExcelCapture “named ranges” from Excel back into SAMExcel linkage works with parametric runs

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Solar Advisor Model

Download: www.nrel.gov/analysis/sam/download.html

Models solar performance, cost, finance, and incentivesPerformance models for PV, thermal trough, and concentrating PVIncludes tracking and fixed systemsModels for residential, commercial, & utility applications

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Annual Energy Production

31 28 31 30 31 30 31 31 30 31 30 31Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0:00 - - - - - - - - - - - - 1:00 - - - - - - - - - - - - 2:00 - - - - - - - - - - - - 3:00 - - - - - - - - - - - - 4:00 - - - - - 0.0 0.0 - - - - - 5:00 - - - 0.0 0.5 1.2 0.4 0.0 - - - - 6:00 - - 0.2 11.2 42.3 47.5 28.3 10.0 4.0 0.4 - - 7:00 0.0 3.2 49.1 94.5 121.0 125.3 119.5 110.4 97.1 63.1 9.2 0.0 8:00 29.9 68.8 139.8 168.5 193.2 201.5 199.4 194.2 184.5 140.1 64.2 29.3 9:00 93.8 150.8 202.6 219.5 245.6 256.5 249.5 256.1 246.2 215.0 123.3 83.9

10:00 135.7 196.2 250.9 261.2 277.1 293.0 295.4 296.8 290.9 250.6 150.3 120.3 11:00 152.4 228.6 275.1 280.7 288.8 311.0 311.7 317.3 300.5 261.1 163.9 150.7 12:00 150.1 228.4 272.2 267.9 295.0 293.2 315.9 314.1 307.8 261.7 156.3 146.1 13:00 140.6 209.0 255.1 250.4 273.6 285.8 298.1 286.5 282.3 223.2 126.7 139.4 14:00 110.2 165.7 219.9 212.0 241.9 253.7 258.6 245.4 228.9 171.2 81.2 99.7 15:00 50.6 102.4 156.6 151.8 180.7 186.8 199.7 185.5 167.3 100.6 32.0 40.9 16:00 4.4 33.2 78.5 86.5 112.3 125.0 133.2 114.4 80.6 25.5 0.2 0.0 17:00 - 0.0 2.6 11.4 39.4 51.5 55.2 32.2 2.8 0.0 - - 18:00 - - - 0.0 0.4 1.3 0.8 0.1 - - - - 19:00 - - - - 0.0 0.0 0.0 - - - - - 20:00 - - - - - - - - - - - - 21:00 - - - - - - - - - - - - 22:00 - - - - - - - - - - - - 23:00 - - - - - - - - - - - -

Expected Energy

The "12x24" expected energy should be made at a "P50" confidence level for the average lifetime output

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Benefits of Solar Energy

Abundant Fuel Supply (largely untapped)Reliable Source of EnergySupplies Peak Power DemandLow MaintenanceDisplaces Fossil FuelsClean EnergyNo Greenhouse GasRebates and Tax BenefitsCreates Economic GrowthSaves Money (depending on where you live)

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PSE Renewable Energy Incentives

Renewable Energy Advantage Program (REAP)Wind, Solar, Anaerobic Digester systemRebate of 12¢ to 54¢ / KWh$2,000 rebate per year (thru June 2014)

Net MeteringHydro, Solar, Wind, BiogasLess than 100 KW systemOffsets your own consumptionCan accumulate credit for heavy use monthsCan’t generate more than you consume annually

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Net metering grows . . . and grows

2 7 12 18 24 44 57113

227

333

520

819

1,327

-

200

400

600

800

1,000

1,200

1,400

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Projection: 12,000 systems; 42,000 kW

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Questions?

Fun Energy FactsFun Energy FactsThe world will consume The world will consume 80 million barrels of oil 80 million barrels of oil todaytodayThe world consumes 2 The world consumes 2 barrels of oil for every barrels of oil for every barrel discoveredbarrel discoveredThere are 194 countries in There are 194 countries in the world the world –– none are none are energy independentenergy independentThe average US electric The average US electric customer uses about customer uses about 11,500 kWh each year 11,500 kWh each year ––nine times the average for nine times the average for the rest of the worldthe rest of the worldThe United States imports The United States imports more than nine million more than nine million barrels of crude oil per barrels of crude oil per day day

A decrease of only 1% in A decrease of only 1% in industrial energy use would industrial energy use would save the equivalent of about save the equivalent of about 55 million barrels of oil per 55 million barrels of oil per year, worth about $4 billion year, worth about $4 billion Residential appliances, Residential appliances, including heating and including heating and cooling equipment and cooling equipment and water heaters, consume water heaters, consume 90% of all energy used in 90% of all energy used in the U.S. residential sector the U.S. residential sector For the 2 billion people For the 2 billion people without access to without access to electricity, it would be electricity, it would be cheaper to install solar cheaper to install solar panels than to extend the panels than to extend the electrical grid electrical grid