Investor Information

Wind Industry Outlook

With the recent extension of the Production Tax Credit through 2005, the industry is poised for significant growth. The industry considers it highly likely that Congress will work diligently on an extension for 2006 and beyond so as to permit the industry to continue this growth in the long term.

With high energy prices associated with new thermal power plants and the increasing momentum toward a national Renewable Portfolio Standard (RPS), wind energy has a bright future in the U.S. and around the world. Currently, at least seventeen states have some form of Renewable Portfolio Standard, which requires states to derive a minimum percentage of electric power from renewable energy sources by a certain target date. Among those are California, New York, Texas, Pennsylvania, Massachusetts, and Minnesota. Over nine-tenths of the new capacity built for state mandates was wind power (93%).

The industry has seen explosive growth in recent years. At the end of 2003, U.S. wind power capacity reached 6,374 MW. Utility wind power projects now under construction or negotiation will add at least 3,000 megawatts of wind capacity in the U.S. over the next five years.

US Growth of 300% over Last Five Years

"The U.S. Department of Energy has announced a goal of obtaining 5% of U.S. electricity from wind by 2020 - a goal that is consistent with the current rate of growth of wind energy nationwide. As public demand for wind energy grows, and as the cost of producing the wind energy continues to decline, it is likely that wind energy will provide a growing portion of the nation's energy supply." (Wind Energy Outlook 2004 - American Wind Energy Association).

A Value-Added Business Concept

The experience and expertise of the company professionals, as well as the track record and reputation associated with a 100% success rate of projects undertaken, combine to make Padoma a stand out in the wind energy industry.

The principals bring to their clients and their partners an extensive and comprehensive proven experience in the successful development, construction, technical integration, financing, management and operation of more than 40 wind power projects over 20 years.

The wind power development business appears to be simple. Nothing could be further from reality. The key to success in any business is the ability to take acceptable risks, while recognizing and rejecting those that are unacceptable. Sound decision making in this regard can only be built on experience. This is particularly important in a regulatory environment characterized by non-continuous legislative support, which often forces the development of wind energy projects against deadlines associated with expiring incentives.

Padoma's proven track record and an unparalleled reputation for integrity, as well as responsible, community-sensitive development, allows for a smoother, more comprehensive development effort. The experience accumulated around an endless list of development and technical integration issues, successfully resolved over many years in both domestic and international environments, is surpassed only by the innovation in resolving problems and "show stoppers", which leave many other developers incapable of getting to the closing of a project.

Primary drivers in the wind energy business.

• Renewable Portfolio Standard - At least seventeen states, including California, New York, Pennsylvania, and Texas, are now under pressure to comply with mandates for renewable energy, which are expected to provide for over 12,400 megawatts of new renewable power by 2012. Colorado voters approved an RPS on November, 2, 2004, which calls for 3% renewable energy generation by 2007, increasing to 10% by 2015.
  
  
• Economics (vs. Natural Gas & Oil) - The sharp increases in natural gas and oil prices have made wind energy more competitive.
  
  The graph below shows how wind power electricity cost per kWh has steadily declined and is now cost competitive with fossil fuels.







• Production Tax Credit - 1.5 cents per kilowatt-hour tax credit, available for 10 years from initial plant operation; indexed for inflation, worth 1.8 cents for the 2005 tax year.
  
  
• Environmental Requirements, Green Tags - Purchasers can offset a portion of the carbon dioxide and other greenhouse gas emissions and get credit for purchasing a percentage of their power from renewable sources.
  
  
• Fuel Price Volatility - Long-term wind power purchase agreements can be signed at fixed kWh prices; thereby avoiding the exposure to highly volatile natural gas and oil prices.
  
  
• Energy Security - studies have found that a 20% U.S. renewable standard by 2020 would reduce natural gas use by 6%, while saving nearly $27 billion, and reducing imports significantly.
  
  
• Technology - is making wind power more efficient and cost effective.
  
  
• Consumer Demand - for non-polluting, renewable "green" energy.