An Independent Power Producer with 33 MWs of Awarded ComFIT Projects - - PowerPoint PPT Presentation

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An Independent Power Producer with 33 MWs of Awarded ComFIT Projects - - PowerPoint PPT Presentation

An Independent Power Producer with 33 MWs of Awarded ComFIT Projects in Nova Scotia at $0.131/kW 1 DISCLAIMER Watts Wind Energy Inc. Important Notice: This document has been prepared by Watts Wind Energy Inc. ( Watts Energy ). Some of the


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An Independent Power Producer with 33 MWs of Awarded ComFIT Projects in Nova Scotia at $0.131/kW

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Enquiries: Stan Mason, P.Eng., President Watts Wind Energy Inc. Phone: +1.902.482.0920 Email: Invest@wattswind.com

Watts Wind Energy Inc. Important Notice: This document has been prepared by Watts Wind Energy Inc. (“Watts Energy”). Some of the information in this document has been obtained from sources which Watts Wind believes to be reliable, we do not represent or warrant its accuracy and such information may be incomplete or condensed. This document may contain or refer to certain forward-looking statements relating, but not limited to, Watts Wind's expectations, intentions, plans and beliefs with respect to Watts Wind. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "does not expect", "is expected", "budget", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or equivalents or variations, including negative variations, of such words and phrases, or state that certain actions, events or results, "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements rely on certain underlying assumptions that, if not realized, can result in such forward-looking statements not being

  • achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of Watts

Wind to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. Although Watts Wind has attempted to identify important factors that could cause actual actions, events or results or cause actions, events or results not to be estimated or intended, there can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Other than as required by applicable Canadian securities laws, Watts Wind does not update or revise any such forward-looking statements to reflect events or circumstances after the date of this document or to reflect the

  • ccurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements.

This document may not be reproduced (in whole or in part) to any other person without the prior written permission of Watts Wind. THIS CEDIF OFFERING MAYBE A HIGH RISK INVESTMENT. THE CEDIF OFFERING IS MADE THROUGH AN OFFERING DOCUMENT, WHICH CAN BE OBTAINED FROM AN AUTHORIZED SALES AGENT OR FINDER, BY CONTACTING 902-482-0920 OR INVEST@WATTSWIND.COM. THIS OFFERING CONSTITUTES AN EXEMPT OFFERING OF THESE SECURITIES ONLY IN NOVA SCOTIA BY AUTHORIZED SALES AGENTS. INVESTORS SHOULD READ THE OFFERING DOCUMENT BEFORE MAKING AN INVESTMENT DECISION. WATTS WIND IS SUBJECT TO NUMEROUS RISK FACTORS AND POTENTIAL CONFLICTS OF INTEREST AS DESCRIBED IN THE OFFERING DOCUMENT AND INVESTORS SHOULD CAREFULLY READ AND CONSIDER SUCH RISK FACTORS AND POTENTIAL CONFLICTS OF INTEREST.

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DISCLAIMER

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Current Projects

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Watts Wind Current and Phase One Projects Watts Section 1.5 MW – 1 unit In-service: 2011 Barrington 3.2 MW – 2 units In-service: 2015 New Glasgow 6.4 MW – 4 units In-service: 2015 Wedgeport 1.7 MW – 1 unit In-service: 2015

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Watts Wind Energy - Overview

  • Generating operating cash flow since March, 2011
  • Track record of consistent dividends
  • 9.7% projected average annual yield(1)
  • Structured as a “CEDIF”(2) to provide Nova Scotians up to 65%

in personal tax credits(3)

  • Most MWs awarded under the NS ComFIT program, 33 MWs
  • Experienced board and management team

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Notes: 1) Tax credits are non-refundable provincial tax credits the applicability for which the Issuer is subject to additional requirements

Notes: 1) Assumes a top marginal tax rates for a Nova Scotia resident used and includes non-refundable provincial tax credits assuming an investor has sufficient taxes payable Additional conditions apply to the non-refundable tax credits. The 9.7% is comprised of cash distributions of 6.4% and 3.3% in non-fundable NS tax credits. 2) Community economic development investment fund 3) Tax credits are non-refundable provincial tax credits the applicability for which the Issuer is subject to additional requirements.

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Mandate for Clean Power in NS

  • 40% of power

generation must come from renewable sources by 2020

  • ComFIT program

introduced to help achieve this

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Securing Power Purchase Agreement Wind Resource Assessment Site Prospecting and Land Lease Negotiation Environmental Impact Screening Project Operation and Management

  • Prospecting for

suitable project sites which included finding the basis resources, including land, wind and a transmission market

  • Negotiating land

access agreements

  • Assessing the

environmental impacts such as wildlife, birds, bats, vegetation, ground and surface water, noise and visual impacts.

  • Measuring the wind

data at the project sites (typically using a meteorological tower (MET tower) and possibly a sodar

  • unit. (Land based

sodar units are typically used in conjunction with MET towers as a second source of wind speed data, useful in extrapolating 60m wind data to 80m turbine hub height).

  • Entering into a

PPA (typically with a utility) as part of a Request for Proposal process, a Feed- in-Tariff, such as the ComFIT, or some other process.

  • Procuring the wind

turbine(s).

  • Final interconnection

studies and entering into an interconnection agreement with the utility or systems

  • perator
  • Ongoing operations

and maintenance of the wind turbine(s).

  • Obtaining all

municipal and building permits.

  • Obtaining all

necessary debt and equity financing

  • Preparing the

engineering plans, specifications and contractor tendering documents

  • Contracting with

suppliers and subcontractors

  • Construction of the

balance of plant, include roads and power lines.

  • Installation of

turbines, including installing the foundation, raising the wind turbines, electrical connections, utility interconnection, etc. Post - trade

Watts Does Not Bear the Risk of Speculative Development Activities…

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…it only invests in a project once there is a signed contract from NS Power Inc.

Project Construction

Speculative ‘Development’ Activities Watts Wind Activities

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Project Pipeline

Project Name Project Size (MW) Wind (m/s) Land Lease Option Comments

Watts Section 1.5 6 - 7 Yes Operating New Glasgow 6.4 7 – 8 Yes Under construction – Apr. 1 target Wedgeport 1.7 7 - 7.5 Yes Under construction – Mar. 11 target Barrington 3.2 7.5 - 8 Yes Under construction – Mar. 4 target Porters Lake 3.2 6 - 7 Yes Fully developed – construction ready Ketch Harbour 4.8 7 - 7.5 Yes ComFIT contract awarded. Advanced stage development. Otter Lake 9.0 7 – 7.5 No ComFIT contract awarded. Early stage development. Lingan 0.8 7.5 - 8 Yes ComFIT contract awarded. Advanced stage development. Bayswater 1.6 7 – 7.5 No ComFIT contract awarded. Early stage development. Arlington 3.0 7.5 - 8 No Kings County Bylaw review underway. 7

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Watts Business Structure

Watts Wind Energy Inc.

(A Nova Scotia CEDIF company)

Watts Wind LP New Glasgow – 4 turbines Barrington – 2 turbines Wedgeport – 1 turbine Watts Wind II LP

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Watt Section - 1 turbine Watts Wind III LP Porter’s Lake – 2 turbines

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Project Equity Partner Elemental provides supplemental equity to Watts’ projects but stands behind Watts for its annual returns

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Name Function Experience David Regan, MBA

Non-executive chairman EVP, Corporate Development, DHX Media Ltd. Former management consultant with A.T. Kearney. INSEAD MBA.

Stan Mason, P. Eng.

President Principal, Seaforth Engineering Group Inc. 15 years experience installing 50kW wind turbines around the world. Owns and operates a 750kw hydro power plant supplying NS Power.

Paul Pynn, P. Eng.

Vice-president President and founder, Eon WindElectric Inc. Installs and maintains turbines for large wind farms. Installed, managed or supported in excess of 250 MW of wind power.

Michael Kinley, CA

CFO Former CFO of several public companies and former partner at KPMG.

Gordon Stevens, CFA Independent director

Former VP with Goldman Sachs and chartered accountant with Deloitte. Founder and president of the Uncommon Group.

Keith Abriel, CA, CFA Independent director

Former CFO of Linear Gold and Senior Manager with

  • PwC. CFO-for-hire to emerging public and venture

backed start-up companies.

  • J. William Ritchie

Independent director

Angel investor, former director of Empire Company Ltd, Sobeys Inc. and co-founder of Scotia Bond Ltd. Current director of DHX Media Ltd. and e-Academy Inc.

The Team Consists of Experienced Wind Engineers and Finance Professionals

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$50,000 Investment (non-RRSP)

  • $17,500

(35%) Nova Scotia Equity Tax Credit $32,500 Net Cost (non-RRSP)

  • $15,000

If new money to RRSP a deferral at the marginal tax rate (1) $17,500 Net Cost (RRSP)

  • $10,000

If held for ten years(2) (less discount for time value of money)

  • $5,000

If held for fifteen years(2) (less discount for time value of money) $2,500 Total cost of investment if held for fifteen years (less discount for time value of money and provided shares maintain their value)

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A $50k Investment Could Have a Hypothetical Net Cost of $2.5k, Assuming the Following:

(1) For illustration, a 30% marginal rate is used and the assumption is that there is sufficient RRSP room available. In addition, please note that this results in a tax deferral, not a tax credit. The above example may not be applicable to all investors. (2) The additional 20% and 10% non-refundable tax credits are subject to the Issuer conducting and successfully closing additional offerings.

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Note: 1) Assumes a $10,000 investment at $1.30/share and top marginal tax rates for a Nova Scotia resident used and includes non- refundable provincial tax credits assuming an investor has sufficient taxes payable Additional conditions apply to the non-refundable tax credits. 2) The 9.7% is comprised of cash distributions of 6.4% and 3.3% in non-fundable NS tax credits.

For a $10,000 investment:

Financial Estimates – Watts Believes Average Annual Yield to Investors Will Be 9.7%(1)

12 Year Tax Credit Dividend Total 1 $ 3,500 $ 456 $ 3,956 2 $ 838 $ 838 3 $ 843 $ 843 4 $ 839 $ 839 5 $ 2,000 $ 789 $ 2,789 6 $ 789 $ 789 7 $ 922 $ 922 8 $ 1,193 $ 1,193 9 $ 1,189 $ 1,189 10 $ 1,000 $ 1,184 $ 2,184 Year Tax Credit Dividend Total 11 $ 1,005 $ 1,005 12 $ 343 $ 343 13 $ 324 $ 324 14 $ 305 $ 305 15 $ 260 $ 260 16 $ 238 $ 238 17 $ 214 $ 214 18 $ 249 $ 249 19 $ 276 $ 276 20 $ 617 $ 617 Totals: $ 6,500 $ 12,872 $ 19,372

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Note: 1) Assumes a $50,000 investment at $1.30/share and top marginal tax rates for a Nova Scotia resident used and includes non- refundable provincial tax credits assuming an investor has sufficient taxes payable Additional conditions apply to the non-refundable tax credits. 2) The 9.7% is comprised of cash distributions of 6.4% and 3.3% in non-fundable NS tax credits.

Financial Estimates – Watts Believes Average Annual Yield to Investors Will Be 9.7%(1)

13 Year Tax Credit Dividend Total 1 $17,500 2,280 19,780 2 4,188 4,188 3 4,213 4,213 4 4,193 4,193 5 $10,000 3,946 13,946 6 3,946 3,946 7 4,609 4,609 8 5,967 5,967 9 5,944 5,944 10 $5,000 5,922 10,922 Year Tax Credit Dividend Total 11 5,027 5,027 12 1,714 1,714 13 1,618 1,618 14 1,523 1,523 15 1,301 1,301 16 1,189 1,189 17 1,071 1,071 18 1,243 1,243 19 1,379 1,379 20 3,087 3,087 Totals: $32,500 $64,359 $96,859 For a $50,000 investment:

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Summary

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  • Mitigated risks
  • Limited exposure to highly uncertain development activities
  • Preference in project cash flow distributions ahead of other

equity providers for all projects

  • Long-term contracts
  • All projects benefit from 20 year NSPI contracts
  • Governance
  • Experienced independent directors with CFA’s
  • Alignment of interests with directors who have invested >

$300k cash at same price as outside investors

  • Experienced team
  • Principals have installed and managed >100 MWs
  • Three years of dividends
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Appendix

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Project Size Customer Responsibilities Amherst Wind Farm

  • Nova Scotia

32 MW – 15 Suzlon S90 turbines Sprott Power Corp. Owners engineers for development and

  • construction. 2010/2011

Digby Wind Farm

  • Nova Scotia

30 MW – 20 GE 1.5MW turbines Nova Scotia Power Inc. Owners engineers for construction. 2010 Fermeuse Wind Farm

  • Newfoundland

27 MW – 9 Vestas V90 turbines Skypower Corp. Owners engineers for development and construction.2009 Maryvale Wind Farm,

  • Nova Scotia

6 MW – 4 Vensys V77 turbines Maryvale Wind Inc. Project manager for development and construction.2010 Phase 2 West Cape Wind Farm - PEI 34 MW – 17 Vestas V80 turbines Ventus Energy Manage construction of roads, foundations and crane pads to prepare for turbine installation spring 2008. Norway Wind Farm

  • PEI

9 MW - 3 - Vestas V90 turbines Ventus Energy Construction manager erection of the turbines and completion of the substation.2007/2008 Phase 1 West Cape Wind Farm - PEI 22 MW - 11 Vestas V80 turbines Ventus Energy Construction manager erection of the turbines and completion of the substation and collection system. 2007/2008 Gifforrn Wind Farm, Gifforn, Germany 20 MW – 8 - 2.5MW Fuhrlander turbines Fuhrlander North America Technical support wind farm installation 2007 Phase 1 Higgins Mn Wind Farm - NS 3.6 MW - 3 - 1.2 MW Vensys turbines Springhill Riverhurst Windpower Ltd. Manage development, construction and commissioning.2006

Partial List of Recent Wind Energy Project Work by Watts Principals(1)

Watts Wind Principals Have Installed More Than 200 MWs of Wind Power(1)

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Notes: (1) Projects supported by EonWindelectric Inc. of which Watts Wind officers and directors Paul Pynn and Stan Mason are principal and director, respectively.

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Friday, January 29th 2015 - Tower Erection – New Glasgow Project

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  • Civil engineering
  • Road construction
  • Foundation

Site Preparation – Maryvale Project(1)

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Notes: (1) Project was supported by EonWindelectric Inc. of which Watts Wind officers and directors Paul Pynn and Stan Mason are principal and director, respectively.

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Tower Shipment – Watt Section Project

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Tower Erection – Watt Section Project

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  • Turbine selection
  • Installation and grid connection
  • Commissioning

Turbine Installation – Watt Section Project

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Sprott Power’s Amherst Wind Farm – Project Supported by Watts’ Principals(1)

Notes: (1) Project was supported by EonWindelectric Inc. of which Watts Wind officers and directors Paul Pynn and Stan Mason are principal and director, respectively.