1. Update Value of Solar for Austin Energy Tom Hoff President, Research and Consulting November 21, 2011

2. Confidential Agenda  Background  Objective and approach  Nodal price calculations  Value of Solar update  Conclusions

3. Confidential Clean Power Research Founded by Dr. Thomas E. Hoff in 1998 Pioneers in economic analysis of PV and clean energy Software services powered by research and industry-leading data Research and consulting in Napa, CA Software development in Kirkland, WA

4. Confidential Products and services Solar Prediction Program Optimization Economic Valuation Clean Power Estimator ® PowerBill ™ QuickQuotes ™ PowerClerk ® PVCheck ® SolarAnywhere ® Research and Consulting

5. Confidential CPR’s distributed PV value analysis history  Grid-Support PV: Evaluation of Criteria and Methods to Assess Local and System Benefits to Electric Utilities (1993)  Final Results from the PVUSA Project at Kerman (1994, 1995, 1996)  Photovoltaic Economics and Markets: The Sacramento Municipal Utility District as a Case Study (1996)  A Preliminary Analysis of Block Island Power Company’s Use of Clean Distributed Resources to Provide Power to Its Customers (1998)  Distributed Resources: A Potentially Economically Attractive Option to Satisfy Increased Demand on Okanogan County Electric Cooperative’s Mazama Feeder Line (1998)  Final Results Report with a Determination of Stacked Benefits of Both Utility-Owned and Customer- Owned PV Systems to SMUD (2002)  Determination of Photovoltaic Effective Capacity for Nevada Power (2003)  Determination of Photovoltaic Effective Capacity for New Jersey (2004)  Moving Towards a More Comprehensive Framework to Evaluate Distributed Photovoltaics (2005)  The Value of Distributed Photovoltaics to Austin Energy and the City of Austin (2006)  Shining on the Big Apple: Satisfying New York City’s Peak Electrical Needs with PV (2008)  PV Value Analysis for We Energies (2009)

6. Confidential Objective and approach  Update Value of Solar study to include effects of Nodal Market  Approach Calculate weighted average energy/capacity value using historical PV output and nodal prices Integrate result into Value of Solar Study

7. Confidential

8. Obtain PV output & nodal price data Nodal PriceHorizontal PV Output

9. Confidential Calculate weighted average nodal price

10. Confidential Repeat for configurations in original study Nodal PriceHorizontalSouth-30ºSW-30º West-30ºWest-45º1-Axis1-Axis 30º August 3

11. Confidential Nodal price analysis results (portion of total value) PV output weighted nodal prices range from 6.1¢ to 8.2¢ per kWh and can double the average nodal price Solar Premium Avg. Nodal Price

12. Confidential How to use results of nodal price analysis?  Nodal prices only reflect energy and capacity value while total benefits to AE include energy, generation capacity, fuel price hedge, T&D capacity deferrals, environment, and loss savings  Nodal prices are assumed to be valid for 1 to 2 years as a forecast for future value while Value of Solar study is a long-term analysis

13. Confidential Analysis approach  Reorganize existing Value of Solar spreadsheet Clearly separate assumptions from analysis Use implied heat rate based on study results Automate calculation of multiple scenarios  Replace 2 years of energy and capacity value with results from nodal price analysis

14. Confidential Reorganize existing tool to facilitate modifications

15. Confidential Reorganized tool compares well to AE’s version Scenarios Validated: 1/9/2006, 5/30/2007, 8/14/2008, 10/6/2009, 3/16/2011

16. Confidential Results Value of Solar results increase by 0.15¢ to 0.38¢ per kWh by including nodal prices in analysis

17. Confidential Conclusion  Inclusion of results from nodal price analysis increases Value of Solar results by 0.15¢ to 0.38¢ per kWh  The Value of Solar for a fixed 30 ⁰ degree system should equal 12.8¢ kWh

18. Confidential Next Steps  Potential for indirect value was identified but not included. It is worthy to give further consideration to this potential value stream  CPR has developed a tool to calculate the Value of Solar that updates all inputs (not just ones related to nodal pricing). AE might consider using this tool to simplify the process of updating the Value of Solar in the future

19. The information herein is for informational purposes only and represents the current view of Clean Power Research, L.L.C. as of the date of this presentation. Because Clean Power Research must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Clean Power Research, and Clean Power Research cannot guarantee the accuracy of any information provided after the date of this presentation. CLEAN POWER RESEARCH, L.L.C. MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION. Thank you Questions? Contact Tom Hoff tomhoff@cleanpower.com 707.224.9992 cleanpower.com