Committee of Chief Risk Officers 8000 Research Forest Dr. info@ccro.org STE 115 #278 http://ccro.org The Woodlands, TX 77380 10 Advancing Our Energy Industry’s Risk &Compliance Best Practices Chris Dann: One means or another, whether you're making something like hydrogen or a sin fuel, or if it's lithium- iron batteries or whatever it is, you're going to be facing negative prices. One piece of analysis that we have has within the next five to ten years, MISO is running 70% of the time at negative prices. That creates an enormous opportunity for somebody to come in and use that negatively priced power. CCRO Member: I appreciate the skepticism. It's real. But you laid out a lot of constraints which are very real resources, like supply chain, the queue, and transmission. It doesn't matter how many tax credits you're getting, there is still capital at risk. Utilities are not known for taking capital risk to do so many big projects. They must lay that risk off on the other side. So now you're looking at a five-year time horizon from groundbreaking. Even though you may in two years see a change in administration. I broke ground, I spent money, do the tax credits go away? How much risk am I creating by chasing these tax credits now? Chris Dann: It's a good question. I can't predict lots of things, and I certainly can't predict politics. The fact that the inflation reduction act’s spending is pretty widespread across both blue and red states makes it pretty resilient politically. After all, who is the constituency for repealing it if it's spending is spread across, and everybody gets some? The act’s spending is widespread across both blue and red states, which makes it pretty resilient politically. Andy Roehr: It is looking like there's more investment coming out of this in the red states than there is in the blue. Which by the way, is really upsetting some of my friends in the blue states. CCRO Member: Why would there be a need for a secondary carbon market if this happens? Andy Roehr: That's an interesting question. Chris Dann: In my mind, these types of policies are running at cross purposes to carbon markets. Germany has learned this as well as anyone, right? They spent a trillion dollars putting wind and solar in their system, and then they had a hard time with the Emissions Trading System (ETS) and keeping that going. With these types of policies you've mandated-out a technology rather than letting markets decide the best way. For example, consider putting a tax on carbon and then just letting the market figure out the best way to decarbonize. Well, markets may determine that the best way is to move associated gas