Venture Catalyst Inc State, Municipal & Tribal Renewable Energy Financing Accessing Financing Opportunities for Government Renewable Energy Projects

Venture Catalyst Inc Discussion Points Definitions Benefits of Renewable Energy Financing Strategies Examples Beginning the Process

Venture Catalyst Inc What is Renewable Energy? Energy resources that are constantly replenished in contrast to fossil fuel sources that have a finite supply. Examples are solar, wind, geothermal, hydro, and ocean (tide, wave & temperature differential). Solar energy can be in the form of photon or heat capture (photovoltaics/ solar thermal). Current Renewable Generation Share (2002) –National 9.1%, 2.3% non-hydro –Arizona 8.0%, 0.2% non-hydro –California 29.8%, 12.9% non-hydro (Energy Information Administration, Renewable Energy Outlook 2003 & Annual Energy Outlook 2005)

Venture Catalyst Inc Benefits Diversify Fuel Sources Reduction of pollution and liability exposure (coal, especially) – Greenhouse Gas & Mercury Emissions Security/ Surety and on-site power generation Coal Imports & Transportation risks Aging Distribution Infrastructure (especially in “downtown”) Nonexistent Distribution Infrastructure Abundant Local Renewable Resources Local Economic Development

Venture Catalyst Inc Financing Strategies Self-Fund Regulatory Renewable Energy Requirements & Funding Existing Bonding Third Party Financing Clean Energy Bonds Financing “Suites”

Venture Catalyst Inc Self Financing Strategies Self-Fund 1% for Solar – “ the Restructuring dividend” Existing Government Financing

Venture Catalyst Inc Regulatory Requirements & Funding for Renewable Energy State regulators of electric utilities in 25 states require minimum percentages of renewable energy Funding source available to meet requirement. Funding is often made available to customers and other renewable energy developers. To see what is available in your state: –Database of State Incentives for Renewable Energy

Venture Catalyst Inc Green Tag Sales The Sale of Renewable Energy Certificates (RECs) RECs are the renewable attributes unbundled from the energy produced from renewable energy systems Current Market Value of $155 to $185 million Current Price Range is wide: $.70 to $49 per Mh Fragmented Market, used for compliance and voluntary commitments As market matures and consolidates could be an additional source of financing

Venture Catalyst Inc Existing Bond Funding Industrial Revenue “Special Purpose” bonds Municipal Bonds

Venture Catalyst Inc Third Party Financing Capital Cost Financed through a third party rather than customer or vendor financed Customer pays for energy produced by the renewable energy system and/ or shares the energy cost savings Third party is responsible for design, build, operations, maintenance and overall performance of system. Variations Leasing Energy Savings Performance Contracts Independent Energy Producer Purchase Agreements

Venture Catalyst Inc Clean Energy Bonds –Monetize tax aspects for non tax paying entities (municipalities, tribes, coops, other nonprofits) –Federal Energy Policy Act of 2005

Venture Catalyst Inc Federal Investment Tax Credits 30% up to $2,000 per system residential 30% no cap for commercial Energy Policy Act of 2005 Begins 1/1/2006 Ends 12/31/2007 (but could be extended)

Venture Catalyst Inc Accelerated Depreciation Five Year Accelerated Depreciation Effective incentive (at 35% tax rate) of 12-15% of capital costs

Venture Catalyst Inc Financing “Suites” Combining the strategies Who coordinates? Internal coordination Third Party Financier integrates tax credits, accelerated depreciation, and other sources into a single financing package

Venture Catalyst Inc Special Considerations for Government & Tribal Entities Do procurement protocols permit. Lease or Ground lease mechanism. Facilities Use Agreement for Tribal Entities.

Venture Catalyst Inc Examples  City of San Diego up to 5MW of PV  City of Tucson, 5 municipal pools & Solar AC pilot  City of Long Beach  San Diego City Schools (1 MW)  Staples Distribution Facility, Rialto, California 280kW  Moscone Convention Center, San Francisco, California  US Postal Service, Sacramento, California, 593kW

Venture Catalyst Inc Beginning the Process– all strategies Securing the Support of Elected Officials and Government Staff Identify potential projects/ sites (select) Running the numbers Select the Financing Approach Convene the Technical Team Identify & Assign Tasks

Venture Catalyst Inc Securing the Support of Elected Officials and Government Staff Elected Officials –Advisory Bodies –Recognized Stakeholders –Relationship Staff –Advisory Bodies –Relationship Support –Preliminary –May need Resolution, Direction or Ordinance later

Venture Catalyst Inc Identify potential projects/ sites Identify select sites –Comprehensive or Targeted Review Physical Capacity –Roof space (10 watts = 1 sf for PV, Solar Thermal, less) –Protected space (Ground Mounted) Loads –What load level and when? »seasonally and daily –What kind of existing energy use ? »Natural gas, Electricity Intersecting the two

Venture Catalyst Inc Running the numbers Cash Flow Forecast 10 to 20 Years –Capital Costs –Energy Production –Tax Credits and Incentives –Green Credit Sales/ Buy-downs –Projected Discount Rate –Operating Costs, maintenance, insurance, etc. –Current Price of Energy –Projected Energy Price Increases

Venture Catalyst Inc Selecting the Financing Approach

Venture Catalyst Inc Convene the Technical Team Financial Staff Procurement Staff Facilities Staff Energy Manager Technical Advisors

Venture Catalyst Inc Identify & Assign Tasks Secure Sample Request for Proposals and/ or Quotations Revise RFP/ Q Publish Request. Establish Evaluation Committee. Select Contractor & Establish Scope of Work.

Venture Catalyst Inc Resources & Documents Solar Financing Website: SunEdison: RWE Schott: Valerie Rauluk: