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  • 1. WindPower Manufacturing & Supply Chain Summit USA Chicago Manufacturing&SupplyChainSummitUSA WhyFederalTaxandGrantIncentives y AreCriticaltoWindEnergyExpansion intheUnitedStates? By: Frank A. Hoffman, President By: Frank A. Hoffman, Partner Wind Energy Manufacturers Association Krieg DeVault LLP 345 South High Street 12800 N. Meridian Street, Suite 300 N Street Muncie, Indiana 47305 USA Carmel, Indiana 46032 USA (317) 238-6240 (Direct) (317) 238-6240 (Direct) (317) 989-4070 (Mobile) (317) 989-4070 (Mobile) (317) 636-1507 (Fax) (317) 636-1507 (Fax) fhoffman@wemawind.org fhoffman@kdlegal.com www.wemawind.org www.kdlegal.com 1
  • 2. FAHResumefromWINDIANA ConferencePresentationFrankA.Hoffmanispresident ofthenewlyformedWind EnergyManufacturesAssociation(www.wemawind.org) andapartnerinthelawfirmofKriegDeVaultLLP withofficesin Chicago,AtlantaandIndianapolis(www.kriegdevault.com). TheWindEnergyManufacturersAssociation(WEMA)hasbeencreatedtopromotethemanufacturingsupplychainforthe WindEnergyIndustryintheUnitedStates. FrankHoffmanconcentrateshispracticeincreativeandcomplexfederal,state,andlocalincentivebasedfinancingtransactions. MostrecentlyMr.HoffmanhasassistedhisclientsandWEMA membersinobtainingover$40millionin RecoveryAct,stateandlocaleconomicdevelopmentincentivesandover$50millioninpermanentfinancingfor windenergy componentpartmanufacturingintheUnitedStates.(http://www.kriegdevault.com/our_professionals/frankhoffman).TaxIncentiveFinancingExperience CreatedtheNewMarketsTaxCreditProgramfortheIndianaBankersAssociationandits180memberbanks 2004$50millionAllocation AssistedinthecreationoftheNewMarketsTaxCreditProgramforthecityofFortWayne 2008$15millionAllocation A i di h AssistedinthecreationoftheNewMarketsTaxCreditProgramforthetownofFrenchLickandseventeen(17)participatingsouthernIndianacounties 2009 $50 illi i f h N M k T C di P f h fF h Li k d (17) i i i h I di i 2009$50millionAllocation Representsten(10)otherIndianaunitsofgovernmentdevelopingnewmarketTaxCreditPrograms CombinedIndianaCRED Credit,LocalTIFBondandNMTCtofund$5.5millionstartupmanufacturingplant(Marion,Indiana) CombinedlocalTIFBondandNMTCtofund$20millionhotel/indoorwaterpark facility(FrenchLick,Indiana) Closedover$150millioninNMTCfinancing(2004topresent) Created the Wind Energy Manufacturers Associations Inc to attract capital investment under ARRA to Indiana in 2009 CreatedtheWindEnergyManufacturersAssociations,Inc.toattractcapitalinvestmentunderARRA toIndianain2009 Obtainedover$28millioninARRA economicdevelopmentincentivesand$53millioninpermanentfinancingforIndianastartupwindturbinecomponentpartmanufacturessinceFebruary2009Education DePauwUniversity B.A.,(Economics),June,1979 IndianaUniversitySchoolofLaw Indiana University School of Law J.D.,(Taxation);January,1982 J.D., (Taxation); January, 1982 AdmittedtoIndianaBar 1983,IndianaBirthPlace:Evansville,Indiana,September1,1957HighSchool:Andrean CatholicHighSchool,Merrillville,Indiana;1975 2
  • 3. WhyWeAreAllHere U.S.Market Installed capacity in the USA Cumulative end 2009: 35,159MW 10,000 50,000 9,000 45,000 8,000 40,000 7,000 7 000 35,000 35 000 umulative MW 6,000 30,000MW 5,000 25,000 4,000 20,000 Cu 3,000 15,000 2,000 10,000 1,000 5,000 0 0 1995 1998 2001 2004 2007 2010 Installed MW Forecast Cumulative Cumul. forecastSource: BTM Consult ApS - March 2010 3
  • 4. 19962009AnnualInstallations The five-year average annual growth rate for the industry (2005-2009) is now 39%, up from 32% between 2004 and 2008. As annual installations have doubled twice in the last three years, the five-year annual growth rate continues to increase. The l tilit i thi h t in the Th volatility in this chart i th early 2000 l 2000s reflects the strong effect that on-again, off- again tax policy had on the market.Source:AmericanWindEnergyAssociationU.S.WindIndustryAnnualMarketReportYearEnding2009Year Ending 2009 4
  • 5. 20072010QuarterlyInstallationsReflectMarketVolatilitySource:AWEA ThirdQuarter2010MarketReport 5
  • 6. ProductionTaxCredit Start,AlmostStop,StopPolicy ThePTC wasinitiallyenactedbyCongressintheEnergyPolicyActof1992.However,aftertheinitial19922001periodthePTC hasincurredthefollowingstar,almoststopandstopcongressionalsupport: g pp December,2001PTC expired. March,2002PTC extendedthroughDecember31,2002. December,2003PTC expired. October,2004PTC extendedthroughDecember,2005. July,2005PTC extendedthroughDecember,2007. December,2006PTC extendedthroughDecember,2008. October,2008PTC extendedthroughDecember,2009.(TARPBill) October 2008 PTC extended through December 2009 (TARP Bill) February,2009PTC extendedthroughDecember,2012.(StimulusBill) 6
  • 7. FinancialCrisis StimulusBill1603GrantProgram 30%ofEligibleBasisGrantInLieuofTaxCreditProgram. ResponsetothecollapseoftheTaxCreditEquityMarket. ExpiresDecember31,2010. GrantsMadeThroughNovember10,2010: G M d Th hN b 10 2010 Source Number Amount % Wind 196 $4,634,917,958 85.12 Solar 1,118 $396,377,178 7.28 Geothermal 22 $266,915,014 4.90 Biomass 25 $113,094,212 2.08 Other 26 $33,553,799 .62 Total 1387 $5,444,858,161 $5 444 858 161 100.00 100 00 Average Project: $3,925,637 Median Project: $56,457 Projects < $20m 1318 Projects >$20m 69 7
  • 8. 1603GrantProgram SignificantFundingSourceforWind As of November 10, 2010, twenty-five (25) wind energy developers of the top sixty (60) 1603 Grant Program winddevelopments received 79.31% ($4,318,156,063) of the 1603 Grants made. Just eight (8) wind energy developers p (