November 2010 Prepared by: Pyramyth Liu Managing Director, Fremont Peak Renewable, LLC

12/3/2010 Mission Peak Renewable LLC 1

Purpose and Goal
y Building Solar PV Projects Large Commercial Projects vs. Utility Scale y Solar PV Value Chain y Solar PV Project Financing y Discussion - Question and Answer

12/3/2010

Mission Peak Renewable LLC

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CSP. CIGS y Initial Design Performance. Licenses. tilt. and O&M considerations y Planning Exemptions.Building Solar PV Plant y Location Solar Radiation (kWh/sqM/day) y Technology PV. Special Permits. Interconnection and environmental Studies y Construction Loan and Project Finance y Final Engineering Design and Construction y Commissioning. CPV. Thin Film: a-Si. mounting. panel. Operation and Maintenance . monitoring.

Cash Grant (30%) . Tax abatements (waivers of sales/property taxes . SRECs y Feed-in Tariffs.Section 179 Tax Credits y Accelerated Depreciation y State Mandates: Performance Based Incentives (PBI).Paying for Solar Energy Field y Cash Purchase y Loan Equity Loan y Capital Lease y Power Purchase Agreement (PPA) y Solar Project Finance Monetizing y ITC.

y Customers whose pays high rate tiers y Customers who can avoidable demand charges y Customers who can benefit from Time-of-Use (TOU) rates y Company s with tax equity appetites y Company s with good credit facilities y Company s looking for more predictable operating cost electricity utility as over 30% of variable operation cost 12/3/2010 Mission Peak Renewable LLC 5 .Benefits from Solar .

Better Clients y Location y Net Metering y Time-Of-Use (TOU) rate Structure Users y Fed .Renewable Energy Credits y State y California Solar Initiative (CSI) y Arizona Performance Base Incentive (PBI) y New Jersey _ Solar Renewable Energy Credits (SRECs) .

shading. Standard Test Condition y Manufacturer production tolerance (+x%. wind. air flow ) less than 6 clearing could reduce 10% efficiency y Wire losses y Soiling y System uptime and reliability . orientation. -y%) y System design factors (grading/penetration. mismatches y Invertors (94-98%) y Production Test Condition vs. tilt.Performance Consideration y Component performance y Module efficiency (15-24%) degradation. seismic.

142 73% ‡ Sources: Photo (Feb 2009) Deutsche Bank (Feb 2009) ‡ UBS March 2010 12/3/2010 Mission Peak Renewable LLC 8 .US PV System Market Size 2007 Commercial Residential Utility Federal Total (MW) % Growth 110 70 9 15 204 45% 2008 210 125 16 5 356 75% 2009 260 145 25 20 450 26% 2010* 390 200 110 100 800 78% 2011* 503 308 500 301 1.512 89% 2012* 900 502 1100 640 3.

PV Sectors in the US 12/3/2010 Mission Peak Renewable LLC 9 .

PV Value Chain Components Modules Mounting BOS Project Dev Service Financing Construction O&M Residence/Owner Bankers/Investment bankers Financial Intermediaries Project Developer System Integrator EPC Contractors Module Mfg's Mounting Mfg's Inverter Mfg's Independent Engineering Co's Roofers/Electricians/GC's Monitoring Co's/Technology 12/3/2010 Mission Peak Renewable LLC 10 .

Sign 20-25year PPA Can purchase RECs Solar Tax Credits (ITC) Solar Asset Depreciation 100% early stage revenue 10-20% late stage revenue Electricity User HOST Special Purpose Vehicle (SPV) PPA Contract LLC O&M contract Electricity Revenue Investment Debt & Equity INVESTOR Returns Equity Investment Installation. O&M on location service Solar Integrators Fees and Returns EPC Contract PV System Sales Financial Brokers Investment Management Service Fund Management Agreement ‡ Financial optimization ‡ State incentive rebate management ‡ Billing and administration ‡ Financial reporting ‡ Operation and Maintenance Contract 11 12/3/2010 Mission Peak Renewable LLC . does not own system Provide easement for developer.Solar PV Value Structure No outlay up front.

Depositary Agreement. Security Agreement Debt & Equity Financial Intermediaries (PPA Firms) Attributes Payment 3rd Party Financier Payment RECs Design & Engineering monitoring O&M SPV Commissioning Payment Revenue Contract .Solar PV Business Role Value Added Service Provider Project Developer Financial Modeling EPC Loan Agreement.Payment Component Vendor Modules Inverters Mounting BOS Electricity Bill Electric User Payment Site Plan Review Special Use Permits Financial and tax inceptive State IOU MOU IPPs Interconnect and Net metering standards Building Codes Influence PV System design Applications filled out. permits obtained 12/3/2 1 County City REC Federal Government Policies ITC/RPS State Utility Commission 12    Mission Peak Renewable LLC .

Solar PV Business Structure Project Developer Financial Modeling NDA. CDA Loan Agreement Site Options Depositary Agreement Land Purchase Agreement Security Agreement Rental/Lease Agreement EPC Agreement $$ EPC Construction Loan SEF Debt & Equity ( 70/30 ) BANKS AND Permanent INVESTORS Financing (SEF Owner) Green Attributes $$$$ Pay off Vendors take Ownership $$$ Buy RECs Interconnection Study Design & Engineering monitoring O&M Ownership $$$ Commissioning Credit Purchase Agreement $$ Power Purchase Agreement O&M Agreement Legal Components Rep. SPV $ Modules Inverters Mounting BOS Financial Intermedi aries Electric User $ Incentive 20 yrs Payment $$$$$ Provide Financial & tax inceptive Set Policies IOU MOU IPPs Set Interconnect & Net metering standards Environmental Study Site Plan Approval Special Use Permits State Building Codes Influence PV System design County City REC Federal Government ¡¡ 12/3/2 1 Applications filled out permits obtained Mission Peak Renewable LLC ITC/RPS State Utility Commission 13 .

CASH PURCHASE MODEL Project Developer Financial Modeling EPC 4-5 Milestone Payments $$$$$ Lawyers SEF Design & monitoring Engineering O&M $$ NDA. permits obtained 12/3/2010 County City REC Federal Government Policies ITC/RPS State Utility Commission 14 Mission Peak Renewable LLC . CDA Site Options Land Purchase Agreement Rental/Lease Agreement EPC Agreement Electric User OWNER Components Modules Inverters Mounting BOS IOU MOU IPPs Interconnect and Net metering standards Site Plan Review Special Use Permits Incentive 20 yrs Payment $$$$$ State Building Codes Influence PV System design Applications filled out.

PV System Cost Component 2010 Sept. Rocky Mountain Institute 12/3/2010 Mission Peak Renewable LLC 15 .

SREC. Equity and Debt ‡ PBI.Solar Project Development Notice Of Release ‡ Site Control ‡ Land/Lease Agreement ‡ Environmental & Interconnection Study & Queue ‡ License & Permits ‡ Site/Build Plan Commercial PROJECT VALUE Operations Date (COD) Permanent Finance Structure ‡ Project Finance and Syndication ‡ Investment Tax Credit (ITC) / Cash Grant ‡ Tax Equity. and TREC ‡ Depreciation ‡ Operation and Maintenance ‡ Legal and Accounting ‡ Design and Engineering ‡ Independent Review ‡ Construction ‡ Project Management ‡ Commissioning ‡ Construction Debt Developers Equity Project Development 12/3/2010 Developers Equity Construction Phase Mission Peak Renewable LLC Operation and Maintenance Phase 16 .

6/W $ 3/W Modules Inverters Mounting Installation BOS 12/3/2010 $3.Financing PV Solar Energy Field Special Purpose Vehicle Syndicated 20 year Financed Solar PV Project Construction Loan 8-12% Business Process Return on Tax Equity 6-12% Return on Equity 10-12% Long Term Debt Interest 4-8% $0.25$4.50/W 15-20-extendable to 30 years Solar Energy Field Ownership Sales Future Considerations Exchanges for REC Carbon tax State Feed-In-Tariff Mission Peak Renewable LLC 17 .

The Sources of Financing y Taxable Entity: y Balance Sheet y Operating Lease y PPA y Tax-Exempt Entity y Balance Sheet y Municipal Bonds y Clean Renewable Energy Bond y Tax-Exempt Lease y Service Contract 12/3/2010 y Pre-Paid Service Contract Mission Peak Renewable LLC 18 .

Consider PV Financing yValue of Tax Equity yLease vs. Risk Exposure 12/3/2010 Mission Peak Renewable LLC 19 . Partnership yValue vs.

Bank of America y Sovereign Wealth Fund China y VC. Public Pension.$3- 5Million) y Regional Banks Union Bank of California y National Banks West Fargo. Buyout. Angels (projects < 1MW . Hedge Fund. Infrastructure Fund. Mess Fund.PPA Sources y Individual Investors. Sovereign Wealth Fund 12/3/2010 Mission Peak Renewable LLC 20 .

Commercial Solar PV Projects Finance vs. Purchase Benefit and Challenges Solar Project Knowhow Transaction Fee Immediate Cash Outlay SEF Responsibility and Liability Maximize Solar Production Ownership changes O&M Expenditure. Others REC Claims Future Energy Saving Total Cost of Ownership 12/3/2010 Mission Peak Renewable LLC 21 Finance Not Required High Not Required Total Yes Possible None No No Purchase Important Lower High None Maybe None $8-10 dollar per MWh Yes Yes .

Environmental and Interconnection Queue 6-18 months ($60 to $250k) y Construction and Commissioning 4-6 weeks per MW (Construction Loan 4. plus EBO 6th and or 15th year) 12/3/2010 Mission Peak Renewable LLC 22 . option. Land Option or purchase Agreements ($3-24k per acre-6 acre per MW) y Permitting.Five Phase of Large Scale Solar PV Project Development (MW) y Site Control .5-8-10% interest) y Syndication/Permanent Financing Special Purpose Entity (legal and Syndication Fee $200k-800k <10MW) y Asset Management .Rooftop lease.O&M $8-20 per MWh (20 years.

Key Successful Factor y Shorten Project Development Cycle Creditable Project Pipeline y Access to Flexible Project Financing for Permanent Financing Right Structure for the Off-Taker y Tax equity participant y Low cost long term debt y Access to Construction Loan Facilities y y y y Equipment Bankable and Available Development Back by Strong Balance Sheet Good Credit Rating Off Taker Strong SREC or PBI Incentives Turnkey Design and Project Management Mission Peak Renewable LLC 23 12/3/2010 .

Sponsor/Tax Investor) 12/3/2010 Mission Peak Renewable LLC 24 . y Partnerships Sponsor and Tax Investor jointly own assets. Flip Timing. Key Variable In-Service Timing. Financing Choice (Lease/Partnership). Profits shared. Leverage. Sponsor retains profits in excess of rent. Sponsor buys back Tax Investor post-flip minority share at fair market value of the share. y Cash Grant Option to receive cash in lieu of 30% Investor Tax Credit (ITC). Cash Grant (Lessee/Lesser. y Leases Tax Investor owns leased assets. Buy Out timing. Sponsor buys back assets either by fixed price early buy-out option (EBO) or at fair market value at lease end.Definition y Tax Equity Source of capital that seeks returns from tax benefits generated by tax credits and deductions.

Pyramyth Liu 408 823-9068 pyramythliu@idsoftcapital.com 12/3/2010 Mission Peak Renewable LLC 25 .

Soltage. MMA Renewable Ventures.y PPA Recurrent Energy. MP2 y Investment Bank y Goldman Sach/Coengtrix Dan Bautch y Barclays Capital Carl Weatherly y Piper Jaffrey. y Banks y NORD/LB Vinod Mukani y Union Bank of California Lance Markowitz y HSH-Nordbank Apolka Totth y US Bank Darren Vanthof y Corporation y GE Com Finance Maria Klutey y Honey well William Johnston y Boeing Ronald Patterson y Insurance Company y John Hancock Financial Service Gavin Danaher y Met Life . Tioga Energy.fixed price during lease term and FMV of system at the end of lease term 12/3/2010 26 12/3/2010 Mission Peak Renewable LLC 26 y Solar Power Partners.Jeetindra L Balchandani y Lease . Financing Contacts . JP Morgan.