INVESTOR CONFERENCE 2010 BUILDING THE NEXT ERA OF CLEAN ENERGY Innovations in Understanding Wind and Solar Resource Mark Ahlstrom CEO, WindLogics May 4, 2010
Cautionary Statements And Risk Factors That May Affect Future Results Any statements made herein about future operating and/or financial results and/or other future events are forward-looking statements under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forwardlooking statements may include, for example, statements regarding anticipated future financial and operating performance and results, including estimates for growth. Actual results may differ materially from such forward-looking statements. A discussion of factors that could cause actual results or events to vary is contained in the Investor section of FPL Group s website and in our Securities and Exchange Commission (SEC) filings. 2
Weather systems provide an inexhaustible source of energy Power in the Weather A brief movie shows the fuel available to wind power NextEra Energy Resources wind plant locations are marked by purple dots 3 Particles are color-coded to show wind speed at turbine hub height. Also shows upper air pressure levels (lines) and jet streaks (shaded) that tend to guide and initiate storms and faster winds.
NextEra Energy Resources is a global leader in wind resource analysis capabilities and has invested more than $80 million in our resource analysis team Renewable Resource Analysis Capabilities Over 80 people support key customers, daily production activities, core systems and development activities An operations center for real-time data acquisition and management Data from 770 met towers and 8,300 wind turbines across North America Uninterrupted assimilation of national and global weather data sets Field staff for site sensor deployment, equipment rotation and GIS data collection Real-time wind production forecasting for over 4,000 MW High performance computer arrays provide advanced capabilities for the management and visualization of large data objects More than 1,000 CPUs and 150 terabytes of storage in operation Redundancy of methods to ensure greater investment certainty Statistical models Numeric / physics models Artificial intelligence and swarm computing The drive to scale, speed and accuracy is essential 4
Wind resource analysis activities span the entire project life-cycle Wind Analysis Value Chain 5 ConstructionSupport InvestmentDecision Wind FarmDesign Site Assessment MetTowerManagement Wind Prospecting Operations Support Operational Assessment Short-Term Forecasting (1) (1) An operational assessment is a review of the expected wind resource based on actual turbine performance as opposed to weather data and reference tower data
Complexity of Wind Energy Location & terrain make a significant difference Power in the wind is proportional to cube of wind speed Small changes in wind speed = big changes in production (i.e., if wind speed doubles, power increases by 8 times) Wind distributions are critical, averages are misleading Value in optimizing location and layout Many other variables to consider Air density Wind resource and associated weather patterns are extremely complex, requiring sophisticated models to understand many important variables Shear (speed increases with height) Daily & seasonal patterns Year-to-year variability Losses wake, availability, electrical, weather 6
Highly computational methods allow NextEra Energy Resources to produce proprietary wind prospecting maps that provide a strong competitive advantage Provides initial understanding of the wind characteristics for a specified area of interest Uses proprietary weather data archives and high-resolution modeling capabilities Geographic information systems (GIS) used for integrated analysis and delivery of results Facilitates an iterative development process that considers not just wind, but many other factors including markets, transmission, land use and setbacks Wind Prospecting 7
High quality data from well placed meteorological towers is critical for a successful project Met Tower Management We retain all data in a secure data center We screen all data to improve the accuracy of results WindLogics has a proactive approach for built-in quality from the start 543 NextEra Energy Resources meteorological towers deployed as of January 2010 8
then, it s all about what you do with the data Integrated Understanding Properly collect and manage highquality met tower data and other onsite measurements (Sodar/Lidar) Leverage the best available weather data from government agencies worldwide Add the best available high-resolution topography and land cover information Properly apply a range of numerical weather models and wind field models both physical & statistical Use ensembles of multiple methods to understand the long-term resource, variability, risk and how other consultants will view the project 9
We use multiple modeling methods to understand wind speeds over long time periods, consistent with investment duration Establishing Long-Term Certainty Swarm & Computational Learning Systems Long-Term Time Series Long-term normalization Use long-term weather data and short-term site data to produce a long-term time series Multiple methods: Typical Meteorological Year (TMY) Measure-Correlate-Predict (MCP) Multidimensional methods (E-MCP) Methods differ significantly in bias and stability when benchmarked in the real world 20% 16% 18% 14% Percent of total occurrences [%] 16% 14% 12% 10% 8% 6% 4% Percentage of total occurrences [%] 12% 10% 8% 6% 4% Tower E-MCP Linear 10 2% 0% 0-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 10-11 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 Wind speed [m/s] 19-20 20-21 21-22 22-23 23-24 24-25 25-26 Tower E-MCP Linear 26-27 27-28 28-29 29-30 30-More 2% 0% 0.00 0.06 0.13 0.19 0.25 0.31 0.38 0.44 0.50 0.56 0.63 0.69 0.75 0.81 0.88 0.94 1.00 Energy production [normalized]
Evolution of long-term normalization methods has significantly improved our forecast accuracy 11 11 10 9 8 7 6 5 11 10 9 8 7 6 5 Evolution of Long-Term Normalization Methods Traditional Typical Meteorological Year Wind Speed (m/s) 2 4 6 8 10 12 Month of the Year Enhanced Measure-Correlate-Predict Wind Speed (m/s) 2 4 6 8 10 12 Month of the Year 11 10 9 8 7 6 5 Industry-standard Measure-Correlate-Predict Wind Speed (m/s) 2 4 6 8 10 12 Month of the Year Dark line is the 41-year actual value (the true long-term mean) Lighter lines show the estimate derived from using each one-year value to estimate the other 40 years
NextEra Energy Resources is benefiting from both real-world experience and the latest research activities for wind farm design Design team has a wealth of experience relative to the industry (500 arrays/year) Currently running Computational Fluid Dynamics (CFD) tests on real wind plant with field validations to improve industry-standard tools Will use proprietary platform with an optimization engine to maximize financial returns rather than energy production Wind Farm Design 12
Our short-term wind power forecasting systems provide a forecast for the next seven days, augmented by a staff of meteorologists Forecasting for the entire NextEra Energy Resources wind plant fleet Advanced physical and statistical methods Ensemble of multiple weather forecast models Computational Learning System Adaptive adjustment based on wind plant measurements and performance Short-Term Forecasting 13
Wind production in the second half of 2009 and for early 2010 has raised many questions regarding wind performance Where did the wind go? Rolling 15 Months, Current Portfolio 1.2 Rolling 10 Quarters, Current Portfolio 1.2 1 1 Wind Energy Index/100 0.8 0.6 0.8 Wind Energy Index/100 0.6 0.4 0.4 0.2 0.2 0 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 0 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Short-term volatility is to be expected! 14
Recent wind production achieved a 30 year low, forcing a comparison of the risk profile of different fuels Wind Resource Variations vs. Fuel Price Volatility Inter-Annual Volatility 40% 35% 30% 25% 20% 15% 10% 5% 0% Natural Gas Crude Oil Coal High Wind Projects Low Wind Projects The volatility of intermittent wind production is significantly lower than international fuel price volatility 15 Price volatility is based on the annualized logged returns of a 12-month strip Wind and solar volatility is based on typical inter-annual resource variations used by independent bank engineers
We are rapidly increasing our understanding of the relationships between complex climate cycles and wind energy production Mid-Term Forecasting - Climate Cycle Impacts Typical Winter Storm Tracks Jet Stream El Niño Influence Jet Stream Typical Fall Storm Tracks Jet Stream Jet Stream Jet Stream Jet Stream 16
Looking back at the closing frame of our weather movie Jet Stream Tracks on November 30, 2009 Note the El Niño split flow pattern starting to be established 17 Shows upper air pressure levels (lines) and jet streams (shaded) that tend to guide and initiate storms and faster winds
For all assets, we index and re-analyze to improve both assessment methods & performance metrics going forward Long-Term Operational Assessment Analyses of predicted to actual results shows our historical assessments have been highly accurate Portfolio performs near projected level Even so, we constantly re-evaluate our forecasts on each project Improve our budgets of long-term production going forward Climate analysis is important to anticipate variation around the long-term expectation Our assessment process has proven to be accurate, but we continually reevaluate our projects and methods 18
The performance of our operating projects is constantly monitored and analyzed # of Wind Farm Years 255 Wind Farm Production Years (2005 2010) Actual Production (LtAdj) 90 80 70 60 50 40 30 20 10 0 Mean: 99% 50% 60% 70% 80% 90% 100% 110% 120% 130% 140% 150% Post-Construction NCF / Pre-Construction NCF The chart above compares the pre-construction long-term normalized Net Capacity Factor (NCF), based on met tower data, with the post-construction normalized NCF, based on actual power production data 19 Operating performance compares very favorably with our pre-construction wind resource assessment reports
Now, WindLogics is leveraging its wind knowledge & experience for solar energy Solar Power Analysis Summary Onsite data with full quality control Long-term reference datasets from multiple sources Requires extremely thorough analysis As with wind, emphasis on time-series data & very-longterm simulation methods Detailed analysis of climate cycles, impacts from forest fires and aerosols, etc. 12 10 8 6 4 2 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 20
How is solar resource measured? Direct Normal Irradiance (DNI) and Global Horizontal Irradiance (GHI) Accepts only direct irradiance - Solar Thermal Accepts all solar irradiance - Photovoltaic 21
Solar resource instrumentation currently used by NextEra Energy Resources Surface Data Resource Instruments RSR2 Shadow-band Radiometer sensors Measures both GHI (for photovoltaic panels) and DNI (for thermal solar) Currently installed at 18 sites Pyrheliometer Measures only DNI (thermal solar only) Sunlight enters the instrument through a window and is directed onto a thermopile which converts heat to an electrical signal that can be recorded Shadow-band Radiometer (RSR2) Pyrheliometer 22
We look at multiple independent data sources, with satellite-derived data sets becoming a primary source for long-term solar reference data Solar Resource Data Sets Surface Data Sources National Renewable Energy Lab (NREL) METSTAT Station Data Based on surface-based observation of cloud cover Available from 1991-2005 Satellite Data Sets NREL, SUNY-Albany, Clean Power Research, and others Hourly values available from 1998- present in various combinations Surface irradiance is generated from satellite observations of visible brightness for most of North America Annual Global Horizontal Irradiance (GHI) 8 Year Mean Values (1998 2005) Annual Global Horizontal Irradiance (GHI) - 8 year mean values (1998-2005) 23
NextEra Energy Resources has the resource analysis capabilities to develop successful wind and solar projects Renewable Resource Analysis: Summary Good analysis is critical to having a good project Wind: 1% off in NCF ~30 bps off in IRR Solar: 1% off in NCF ~35 bps off in IRR Get it right the first time Wind and solar analysis is complex Understanding the long-term variability Laying out the site NextEra Energy Resources investments in resource assessment and forecasting are providing substantial benefits We make the significant investments in people and technology that are needed to deeply understand wind & solar energy resources 24
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