UNITING THE NATIONS ELECTRIC POWER GRID THE TRES

UNITING THE NATION’S ELECTRIC POWER GRID THE TRES AMIGAS SUPERSTATION WORLD WIDE EMERGING DEVELOPMENT IN HVDC 2013

Common Interconnected AC System Problems Diminishing Returns with large interconnected AC Systems Long Distance Transmission • Line losses Interconnections • Steady state • Uncontrolled Load flow problems and bottlenecks – Congestion Issues – Inter Area loop flow – Cascading Blackouts • Transient Stability • Oscillation Stability • Subsynchronous Oscillations • Frequency control • Latency issues (ie Spinning Reserves) • Voltage Stability • Inductive and Capacitive limitation factors • Physical interactions between power systems • System Voltage Stability/Levels • Reactive Power Loading 1

Common Interconnected AC System Problems High Cost of Interconnections – Reliability Costs: NERC, Relaying – N-1 criteria often creates underutilization of transmission lines – Complex coordinating arrangements (RTOs, IA, JOAs, etc. ) – Need for sophisticated and costly system impact studies – Participation agreement complications with multiple impacted entities – Regional/Subregional perturbations/phenomena difficult and costly to analyze and manage – Deterministic planning practices do not capture the true economic value of transmission additions/upgrades

China Plans for Point to Point HVDC 3

Friends of the Super Grid “a pan-European transmission network facilitating the integration of large-scale renewable energy and the balancing and transportation of electricity, with the aim of improving the European market”. 4

Med. Grid – Opening New lines for Sustainable Electicity “Sun and wind: SEMCs have limitless wind and solar energy potential. The MSP, launched in November 2008, aims to install 20 Gigawatts (GW) of new generation capacity by 2020. ” 5

South American HVDC projects in operation, construction or planned Under Planning: Colombia – Panama 600 MW – 400 k. V Under Planning: Central - North 1000 MW – 500 k. V Under Planning: Chile - Argentina 2000 MW – 500 k. V Under Planning: Central - South 2000 MW – 500 k. V Under Planning Manaus - Roraima – Venezuela 600 MW – 400 k. V Under Planning: B Monte Tapajos 2 x 4000 MW 800 k. V Under Construction: Rio Madeira 2 x 3150 MW 600 k. V In operation: Itaipu 2 x 3150 MW 600 k. V In Oeperation: Garabi 2 x 1000 MW Bt. B In Oeperation: Rivera 70 MW Bt. B Under Construction: Melo 500 MW Bt. B Under Planning: Brazil – Uruguay 500 MW Bt. B 6

Friends of the Super Grid Quote: • "Supergrid" is the future electricity system that will enable Europe to undertake a once-off transition to sustainability. • “The full significance of a switchable HVDC innovation has not yet been appreciated by policy makers or by the business community. It is clear that a network incorporating a HVDC grid with the redundancy and reliability of current AC grids is now a reality and that the limits of what is technologically possible have been greatly expanded. ” • “HVDC technology will open markets, strengthen security of supply and create another global opportunity for European companies to export sustainable energy technology. The technology underpinning the Supergrid will give competitive advantage to the companies involved with its specification and design. This type of integrated AC/DC grid will be a template for what will be needed in other global markets including the US and China. ” 7

Alstom Grid HVDC Max. Sine Technology • Voltage Sourced Converter (VSC) technology • Modular multi-level converter design VSC HVDC scheme +V -V = chain link module • Control of real and reactive power flow into AC grids • Harmonic free output voltage Ideal for use on weak AC grids

Folded Back-to-Back Convertor Layout DC Bus Connections Provides for AC and DC HTS bus interconnections AC Bus Connections

First Phase Scope of Construction

Design

Products & Services - How Will Customers Use TA Services? 12

Products & Services - Operations Services Tres Amigas Operations can be mapped against a generic electricity market structure, illustrating TA Operations core functions – system operations, spot market operations and information services. Tres Amigas will most likely engage an established clearinghouse to support forward trading and clearing. 13

Products & Services - Transmission service will be sold in blocks ranging from one to 20 years in duration, as well as on a seasonal, monthly, weekly, daily and hourly basis. 20 years Anchor Tenant Agreements Up to 50% of firm capacity Annual Open Season Annual Auction AT Auction remaining available firm capacity after Anchor Tenant Agreements remaining available firm capacity after Anchor Tennant Agreements and Anchor Tennant Auction Monthly Daily Hourly Spot Sales (via Portal) Any available long-term firm capacity Additional short-term firm capacity All non-firm capacity Secondary trading of previously purchased capacity FIRM SALES NON-FIRM SALES Three distinct mechanisms will be used to sell transmission service: • Negotiated, long-term ‘Anchor Tenant Agreements’ • Competitive ‘open seasons’, mostly for annual service, but also including an initial ‘Anchor Tenant Auction’ for terms up to 20 years. • Web-based real-time portal, for non-firm and shorter-term firm capacity, with a duration less than one year (e. g. monthly, weekly, daily, hourly). • Additionally, the real-time portal will facilitate a secondary market for Tres Amigas customers to trade transmission capacity purchased previously. 14

Funding – Tres Amigas Merchant Transmission Unlike traditional transmission facilities, merchant transmission project owners assume all market risk. Tres Amigas has been successful in receiving significant capital through investors and private placements. Phase II – III 1. 5 B Phase I 500 M 2013 Preconstruction 12 M 2012 Startup 8 M Concept 2 M 2010 2015 Phase II-III: construction & operations, Texas node, additional HVDC converters, facilities, and business infrastructure Phase I: construction & operations, East/West transmission node, including HVDC converters, buildings and business infrastructure, EMS Operations Preconstruction: detailed engineering, vendor selection/contracts, product development, additional filings and detailed business plans. Startup: research, regulatory and local filings, ROW, preliminary engineering, environmental, economics and business plan. 2008 15

Tres Amigas Super. Station…. Uniting the Electric Gri 16