SEPTEMBER 24, 2013 JON PIETRUSZKIEWICZ RYAN PLETKA SCE SONGS SUBSTATION RENEWABLE DG POTENTIAL ASSESSMENT

Scope of Work Potential Assessment Interconnection Feasibility and Cost Assessment Comparison to Other Renewable Resource Options Implementation Issues 2

SECTION 1 SCOPE OF WORK 3

This is a very-high level preliminary assessment to determine if the overall concept is feasible. Not a siting study or cost-benefit analysis 1.Solar PV Potential Assessment- Assess potential for distributed PV around six key Southern California Edison (SCE) substations. 2.Interconnection Feasibility and Cost Assessment- Assess high level scenarios to interconnect the PV capacity. Prepare rough order-of-magnitude estimates of interconnection cost. 3.Comparison to other Renewable Resource Options- Compare costs of DG resources to other options, such as large scale solar. 4.Implementation Assessment- Prepare high level discussion of issues and challenges of rapidly deploying large amounts of distributed PV SCOPE OF WORK 4

SECTION 2 POTENTIAL ASSESSMENT 5

SECTION HEADING–OPTIONAL AREA OF INTEREST – AREA SERVED BY 6 TRANSMISSION SUBSTATIONS IN ORANGE AND LA COUNTIES Approximately 300 square miles Source: Google Earth, SCE 6

Black & Veatch developed a new approach to automatically quantifying DG potential based on analysis of aerial imagery Three key areas of potential were analyzed: Commercial and industrial (C&I) roofs Residential roofs Parking lots “Open” spaces have not been quantified in this assessment due to limited time Special considerations and competing uses? Potential is quantified in terms of available square feet per parcel of land Overall accuracy of the square footage estimates is perhaps around +/-25% Square footage converted to energy potential using key assumptions This comprehensive approach identifies significantly more potential for DG than previous estimates METHODOLOGY FOR POTENTIAL ASSESSMENT 7

Theoretical Solar Potential – Potential that could be achieved if all identified area in a parcel was developed assuming typical PV deployment densities (2.5 acres/MWdc - Leaves room between rows for access) Technical Potential – Potential accounting for normal technical constraints on a site such as shading from trees, avoidance of other rooftop equipment, etc. Developable Potential – Potential assuming that only a small fraction of potential sites will participate in a program due to timing, economic, or other factors THREE ESTIMATES OF POTENTIAL WERE DEVELOPED 8

*Typical residential rooftop size based on CSI market data. Theoretical and technical potential estimates are the same as the CSI data already represents suitable development area. KEY ASSUMPTIONS TO ESTIMATE POTENTIAL Parking Lots C&I RooftopsResidential Rooftops Notes Theoretical Solar Potential 2.5 acres / MWdc 6 kWdc / parcel* Accounts for typical development densities Technical Potential (% of Theoretical) 75%50%100%Accounts for suitable development area (shading, skylights, etc.) Developable Potential (% of Technical) 10% Accounts for potential participation rate 9

IDENTIFIED LARGE ROOFS AND PARKING LOTS 10 Technical Potential Capacity, MWdc < 0.25 > 3

EXAMPLE DETAIL NEAR WOODBRIDGE AREA OF IRVINE (ABOUT MW TOTAL) 11 Updated screenshot Technical Potential Capacity, MWdc < 0.25 > 3

In addition to technical potential, LCOE calculated for rooftop and parking applications for each parcel EXAMPLE DETAIL NEAR JOHN WAYNE AIRPORT (5.2 MWDC PARKING LOT) 12 Updated screenshot Technical Potential Capacity, MWdc < 0.25 > 3

Almost 8 GWac of technical potential. About 800 MWac of developable potential based on a 10% participation rate. A 5% participation rate would cut this potential in half. ESTIMATED TOTAL POTENTIAL CAPACITY 13

Parking lots are more than half the potential TOTAL TECHNICAL POTENTIAL BY CATEGORY 14

TOTAL TECHNICAL POTENTIAL BY SUBSTATION ,000 1,500 2,000 2,500 Technical Potential (MWac) Residential Roofs C&I Roofs Parking

Interconnection capacity estimates at the substation level based on 30 percent of substation load (from SCE ). 30 percent estimate is rough rule-of-thumb to be verified with studies. Loading not available for one substation. DEVELOPABLE POTENTIAL BY SUBSTATION – WITH POTENTIAL INTERCONNECTION CAPACITY Developable Potential (MWac) Residential Roofs C&I Roofs Parking 30% of Substation Load

Developing the largest 1,400 sites (5%) would be 2,750 MWac – if every site could be developed Developing the largest 238 sites (<1%) would be 1,000 MWac – if every site could be developed NON-RESIDENTIAL TECHNICAL POTENTIAL – PARETO CHART OF PARCELS SORTED FROM LARGEST TO SMALLEST 17 (000’s)

Except for #11, these are not single parcels. They comprise multiple nearby parcels. 11 LARGE DEVELOPMENT PROSPECTS: 450 MW TECHNICAL POTENTIAL, 45 MW DEVELOPABLE POTENTIAL 18 No.Primary UseApprox. Tech Potential (MWdc) 1Mixed Retail & Office70 2College, Hospital70 3Mixed commercial50 4College, Recreation50 5Recreation40 6College40 7Mixed commercial35 8Retail30 9Retail30 10Retail20 11Warehouse17

Capital Costs Black & Veatch developed capital cost assumptions based on data from the CSI program and B&V engineering estimates (see appendix) Assumed capital costs are lower than average prices observed in the CSI program, but believed to be achievable for a large program of the type which may be implemented here Costs are based on the estimated technical potential for a site Carports assumed to be $500/kW more expensive than equivalent size roof system Example costs: COST AND PERFORMANCE ASSUMPTIONS ApplicationCapacity (kW ac)Capital Cost ($/kWac) Residential5$4,800 C&I Roof100$4,100 Parking Lot100$4,600 C&I Roof1,000$3,600 Parking Lot1,000$4,100 19

A typical parking lot is 2-3 times the size of the roof area on a given parcel CAPITAL COST ESTIMATES BASED ON PROJECT SCALE (SEE APPENDIX A FOR MORE INFORMATION) 20

O&M Cost Assumed to be $40/kWac-yr for all systems assuming fleet maintenance strategies implemented Inclusive of O&M contract, lease, and insurance Performance Black & Veatch estimated performance previously for solar projects across California Commercial systems in Orange County, assuming 10 degree tilt and 1.2 inverter loading ratio: 23% CF (ac) Residential assumed to be 20% CF (ac) Common assumption used across Orange and LA counties (simplification) COST AND PERFORMANCE ASSUMPTIONS 21

EXAMPLE LEVELIZED COST OF GENERATION ApplicationCapacity (kW ac)LCOE ($/MWh) Residential5$180 C&I Roof100$136 Parking Lot100$150 C&I Roof1,000$121 Parking Lot1,000$135 C&I Roof5,000$111 Parking Lot5,000$ Excludes any significant interconnection and distribution upgrade costs

Technical Potential. Developable potential would be 10% of this, but which 10%? Excluded significant interconnection and distribution upgrade costs. SUPPLY CURVE FOR URBAN DG LEVELIZED COST OF GENERATION Residential 23

SECTION 3 INTERCONNECTION FEASIBILITY AND COST ASSESSMENT 24

Lower cost interconnection limit assumed to be 30% of transmission and distribution substation capacity. An ideal scenario would target lowest cost interconnections first: First 15% of systems can be accommodated by existing distribution system with minor upgrades Estimated cost $100/kW or less Second 15% (up to 30%) will require upgrades similar to those identified in the recent Navigant study. Estimated cost $300/kW or less Individual and aggregated systems above 30% local penetration will require additional upgrades to be identified by SCE (such as dedicated feeders). Estimated cost $500/kW or less INTERCONNECTION SCENARIOS 25

EXAMPLE DISTRIBUTION SCENARIO #1: WEST IRVINE 26

EXAMPLE DISTRIBUTION SCENARIO #2: EAST IRVINE 27

SECTION 4 COMPARISON TO OTHER RENEWABLE RESOURCE OPTIONS 28

It can be asked whether urban DG or a plant located in the desert can best meet the current needs. There are two important factors that must be considered: What is the cost of DG vs a central station solar project? What is the time required to implement each? A central station solar plant located in the desert may require more time than available to accomplish permitting and to resolve transmission issues. If major system upgrades or new transmission lines are required, it may take 7 to 10 years to resolve not 3 to 4 years as needed. COMPARISON TO DESERT-SITED SOLAR 29

Costs are comparable, likely within 10%-20%, and transmission will take longer for desert plant Cost of Generation Large-scale desert solar projects: $75-85/MWh Urban DG: $ /MWh Transmission and distribution costs: Large-scale desert solar projects: $35/MWh Assuming $1000/kW in capital CF Urban DG: $5-25/MWh Assuming $ /kW in capital CF Total Costs Large-scale desert solar projects: $ /MWh Urban DG: $ /MWh ROUGH COST COMPARISON 30

SECTION 5 IMPLEMENTATION ASSESSMENT 31

Scenario 1 - Utility-Owned Scenario 2 - Developer / Customer Owned SCENARIOS 32

Interconnection Feasibility Interconnection Cost Procurement Approach Regulatory Siting Permitting PV industry capacity Cost/benefit assessment Design of targeted incentives PROGRAM IMPLEMENTATION ISSUES/CHALLENGES 33

APPENDIX A SOLAR DG CAPITAL COST ASSUMPTIONS 34

1.Reviewed 2013 Market Data from CSI Program 2.Reviewed recent LBNL/NREL Analysis 3.Compared to B&V estimates previously developed 4.Recommended Assumptions DG CAPITAL COST ESTIMATING APPROACH 35

Costs and system sizes in this section based on nameplate rating (kWdc) Data downloaded on from CSI website Generally focused on installed systems in 2013 Filters: Installed Status = Installed First Incentive Claim Request Review =>2012 Some activity (dates) in ,000 data points for that sample alone, including good representation across kW size range Minimal data clean-up performed CSI DATA SET 36

Steady decline, leveling recently. Some decline could be attributable to increasing system sizes. AVERAGE SYSTEM COSTS ($/KW DC) Date is based on the latest date listed in CSI database 37

Significant variation by system size. Prices in 2013 relatively stable COSTS BY CAPACITY BLOCK ($/KW DC) Date is based on the latest date listed in CSI database 38

Pricing for kW systems flat at around 4.7 AVERAGE INSTALLED COSTS ($/KW DC) FOR CSI SYSTEMS (2013) 39

Significant variation shows that lower costs are achievable, especially for kW systems. RANGE (1 SD) OF INSTALLED COSTS ($/KW DC) FOR CSI SYSTEMS (2013) 40

COMPARISON TO RECENT LBNL ANALYSIS 41

California tends to have slightly higher prices than LBNL’s national average; however, time difference compensates. CSI 2013 COSTS SIMILAR TO LBNL 2012 COSTS 42

B&V costs near lower range of market, but not outside of experience B&V ESTIMATES THAT A 300 KW ROOFTOP SYSTEM WOULD COST $3.29/WDC TODAY 43

B&V estimate of $3.29/Wdc for 300 kWdc system comports well with LBNL/NREL “bottoms-up” modeled estimate of $ /Wdc for 221 kWdc system B&V’s estimate represents the cost (including reasonable profit), whereas the CSI database records the price at which the system was sold B&V’s estimate is for a size that is not as competitive of a market segment as the rest of the CSI market (80 systems between kW in 2013 vs. 24,000 systems <10 kW B&V’s estimate is current as of 3Q 2013, whereas the CSI database contains systems quoted earlier, in some cases in 2012 or earlier B&V estimate also captures likely continued decline in system costs for next couple of years Relatively high soft costs persist in CSI market, B&V has assumed those can be brought down Other states and countries have significantly lower costs than California A coordinated, targeted, and competitive program in this area should achieve economies-of-scale resulting in lower costs WHY IS B&V ESTIMATE ON LOWER END OF CSI MARKET DATA? 44

Carports assumed to cost an additional $0.50/Wdc more than equivalent size rooftop system B&V CAPITAL COST ESTIMATES FOR OTHER ROOFTOP SYSTEM SIZES BASED ON OBSERVED ECONOMIES OF SCALE IN CSI DATA 45

Note: B&V system design philosophy different for rooftop and ground-mount systems. Ground mount designed to achieve higher performance (CF), with tradeoff of requiring more land area. GROUND-MOUNT CAPITAL COST ASSUMPTIONS Fixed Tilt Design Single Axis Tracking Design AC Capacity (kW)1,0005,00010,00020, $/Wdc$2.85$2.65$2.44$ $/Wac$4.00$3.71$3.41$3.28 AC Capacity (kW)1,0005,00010,00020, $/Wdc$3.22$3.02$2.81$ $/Wac$4.19$3.93$3.65$