Cleaner Air with Electricity Infrastructure Renewal

Cleaner Air with Electricity Infrastructure Renewal Presentation to the Ontario Power Authority August 5, 2005 David Teichroeb david.teichroeb@enbridge.com Business Development, Fuel Cell Markets

Agenda 1. Technology Update 2. Overview of Enbridge Project Project Overview, status & innovation 3. Projected Benefits for Ontario 4. Project Opportunities & Challenges Managing the Technology & Funding Risks Open Dialog Possible OPA Participation

Desired Outcome of Today Enbridge believes its DFC -ERG power plant presents Ontario with Clean Electrical Infrastructure: Opportunity for province to leverage utility investments (gas & electricity) to deliver new electricity infrastructure and cleaner air Desired Outcome Today Determine how OPA can participate in pilot plant Identify linkages into other ministries where the OPA can facilitate engagement

Large Stationary Fuel Cells as Grid Support AMP-Ohio (CAT) Westerville, OH Main Street (LADWP) Los Angeles, California Energy Park at RWE (MTU) Essen, Germany Headquarters Building (LADWP) Los Angeles, California Technology Center (Caterpillar) Peoria, Illinois Vattenfall/BeWag Utility (MTU) Berlin, Germany

Technology Moving to Multi MW Installations 1-MW DFC1500 Wastewater Treatment Plant 2-MW DFC3000 King County Wastewater Treatment Facility Sierra Nevada Brewing Co. Sheraton San Diego Hotel & Marina Santa Rita Correctional Facility

A Portfolio to Alternative Energy The right technology / right application Fuel Cell Hybrid Plant ~ 1.5 megawatts Wind benefits from zero fuel input Wind Enbridge s SunBridge Plant ~ 660 kw Turbine (17 units) Fuel cells an urban capacity solution with predictable emission offsets (Peak Day Guarantee with fuel cells)

Meaningful Emission Offsets Direct FuelCell Ontario Power Grid Comparison of Emissions from the Fuel Cell Relative to Wind based on 8,760 MWhrs of Operation (1 MW at 100% availability for one year) Emissions from Fuel Cell less than from Wind -91% Particulates -89% -73% CO -34% -93% SOx -93% -93% -92% NOx -49% CO2 35% -100% -80% -60% -40% -20% 0% 20% 40% 60% Emission from Fuel Cell Greater than Wind Fuel Cell Emissions Relative to Wind when supplemented by OPG Fossil Fuel Scenario (coal, oil, gas) Fuel Cell Emissions Relative to Wind when supplemented by OPG Mix Scenario (all generation sources) Source: Panel Review Application Enbridge submission to TerraChoice, April 2005

Enbridge s DFC -ERG Hybrid FuelCell Plant Enbridge Innovation collaboration with FuelCell Energy Focus on utilities as early adopter sector Optimize exiting pipeline assets / recovery of lost energy Hybrid plant combines: Best-in-class fuel cell & pipeline energy recovery 34% reduction in capital costs In addition to manufacture cost reduction program 25% reduction in fuel consumption 25% reduction in maintenance costs Hybrid plant is a catalyst for the growth of Ontario based end-user clusters

Cleaner Electricity is Cost Effective Engaging Electrical Utilities is Key Realized Cost Potentially 15-50 Percent Less 0.14 3.4 9.6 Incentives Today / Volume in Future 1.0-2.4 1.0 0.0-0.5 0.3-0.5 0.5-1.0 7.8-4.2 0.12 0.1 0.08 0.06 0.04 cents/kwhr 0.02 Today's Cost of Generation Avoided TS/DS Power Production Credits Emission Credits Reduced Line Losses VAR Support Net Electrical Costs 0

Hybrid Fuel Cell Plant Innovation in Emission Reductions Comparison of Emissions from the Hybrid Plant Relative to Wind based on 8,760 hours of Operation (1 MW at 100% availability for one year) Emissions from Hybrid Plant less than wind -92% -90% 5 Particulates -81% -58% 4 CO -93% -93% 3 SOx -93% -93% 2 NOx -62% 1-2% CO2-100% -80% -60% -40% -20% 0% 20% 40% Emissions from Hybrid Plant greater than wind Hybrid Plant Emissions Relative to Wind when supplemented by OPG Mix Scenario (all generation sources) Hybrid Plant Emissions Relative to Wind when supplemented by OPG Fossil Fuel Scenario (coal, oil, gas) Source: Panel Review Application Enbridge submission to TerraChoice, April 2005

Tour of a Sustainable Future - Proposed Hybrid Pilot Plant Enbridge Gas Distribution Headquarters 500 Consumers Road

A Look at Today s Operations 1.2 Megawatts Purchased from Grid

Hybrid Fuel Cell Plant Powers Building & Delivers 3,400 MWhrs/yr of Grid Exports

Hybrid Fuel Cell Plant - Environmental Attributes of Like Wind Energy in the City - Equivalent wind plant would require three wind turbines with rotor diameters of 71 meters - Total environmental benefits (emission reductions): - 4.86 ktonnes/year CO * 2 (equal to 1,000 cars removed from area highways) - 8.7 Tonnes/yr NOx / 24.3 Tonnes/yr SOx / Particulate Reductions* * Emission Reduction Forecast Enbridge Application to SDTC January 2005

Status Hybrid Plant Feasibility Study Completed Engineering - 1.5 MW pilot plant underway Engaging Additional industry partners U.S. & Canadian utilities Federal Government desire for > Provincial Involvement Provincial (Ontario/Alberta) & State Governments Engineering refinements / cost reduction planning underway 9.3 Megawatt commercial hybrid plant identified 40MW of near term potential in Enbridge franchise 100 MW of potential in Ontario (2010 and beyond)

Enbridge Efforts to Engage Partners / Benefits to Ontario Government & Industry Project Consortia Partners include: Enbridge / Toronto Hydro / SatCon Power Systems Canada / BC Hydro / FuelCell Energy Project endorsed by Hydrogen Village DFC -ERG power plant provides Ultra-Clean fuel cell capacity competitive with wind PPAs 1. Unique wholesale power solution with CHP 2. Environmental benefits must be valued like wind energy 3. Urban based solution strengthens infrastructure 4. Diversity in generation a catalyst for future fuel cell uptake as best-in-class end user cogen 5. Local industry benefits Manufacturers of grid interconnection systems (SatCon) High skilled employment resulting in service infrastructure

Consideration for Negotiated PPA (Gov t of Ontario and Utilities) Hybrid Plant optimizes existing utility assets Market Size 50 to 100 MW by 2012 Advance initial market for fuel cells in Ontario Subsequent rate payer benefits Fuel cell cogen (base load, DSM, < infrastructure $) Lower transaction price for Ontario PPA Low impact electricity PPA offers the province capacity

Theoretical example of PPA Options for Fuel Cell Electricity Utility Investment Model Gas Price at Ontario Gate Investment Costs Debt 7.31% Equity 9.57% WACC 6.38% (after tax) $0.095/kWhr Cost if Eligible for federal production incentives $0.087/kWr IPP Investment Model Gas Price includes distribution charges Investment Costs Debt 8.0% Equity 15% WACC 12.53% (after tax) $0.116/kWhr Cost if Eligible for federal production incentives $0.108/kWhr Note: Above modeling assumes commercialized 9.3 MW hybrid plant

Status Hybrid Plant $7 million in Industry commitments (50% of pilot plant project costs) Phase One Expander Generator Project NRCan (TEAM / T&I) involvement Anticipated commitments ~ $1.5 million Industry commitments in place Phase Two Integrated fuel cell for complete hybrid plant Funding opportunities through Industry Canada s Hydrogen Early Adopters Program Ontario s Fuel Cell Commercialization program (MEDT) Alberta Energy Research Institute Investigating other public sector support through stakeholders like the OPA Power Purchase Agreement for pilot plant demonstration? Leverage federal engagement by demonstrating provincial leadership

Industry Needs Your Assistance Project highlight a need for industry and government to collaborate on near-commercial stationary fuel cell projects that advance Ontario based end-user clusters, innovation, infrastructure renewal, and clean air solutions. Opportunity to send a common message to federal government opportunity to shape partnership funding Federal and Provincial partnering on infrastructure renewal and climate change benefits.

Open Discussion