1. Gainesville’s Solar Feed In Tariff: Lessons Learned Diane Wilson Managing Utility Analyst Gainesville Regional Utilities

2. 2 Why Solar? Regulatory Hedge In line with goals of City Commission and our community Future value in RECs Good fiduciary and environmental stewards for our customers - their money and their environment Fuel Diversity Opportunity for tax credits and state rebates make this an ideal time to begin

3. 3 Why FIT, Not Just Net Metering? Assure good performance from installed PV systems Encourage early private investment and innovation in photovoltaic installations Capture tax benefits for customers not directly available to GRU as a public entity Make solar PV a good investment for both GRU and our customers Economic Development for our community

4. 4 How does GRU’s FIT work? Program began March 1, 2009 20 year fixed price by contract Degression schedule to reflect declining system costs in the future GRU pays producers $0.32 per kWh for building or pavement mounted systems and $0.26 per kWh for greenfield systems installed in CY 2009 & 2010 Price set to assure profitability for investor, based on cost of systems vs. avoided cost to utility After tax return of about 5%

5. 5 Solar Feed In Tariff Schedule Effective March 1, 2009

6. 6 Overwhelming Success Annual capacity stop loss limit for FYs 2009 and 2010 reached in one week Capacity through FY 2015 reserved in seven weeks – even without price commitment Capacity queue had to be created after implementation due to overwhelming demand

7. 7 GRU’s Solar Capacity Management Stop Loss provision in enacting ordinance Set to limit the impact on fuel adjustment 4 MW (DC) installed per year Capacity assignment is non-assignable Challenges Queuing Process Defining “Accepted” Reservation Applications Set time limits for process completion to prevent invalid projects from tying up capacity 60 days for engineering approval 120 days for project completion 60 days for proof of equipment purchase

8. 8 Financing Requirements Language in power purchase agreement for co-lateralization and assignment critical to lenders Strong Counterparty (GRU) with AA bond rating GRU was cautious about assignment of any parts of the agreements to protect the utility’s system

9. 9 We Don’t Want to be the Solar Police Many contractors challenged FIT model –Pricing debates –Defining contractor qualifications Customer and Price undercutting –Project not assignable until completed –No location, ownership, or size changes Multiple applications for the same location or contractor reserving capacity on rooftop without property owner having knowledge –Proof of ownership or leasehold for application to be valid

10. 10 Goal: Create Local Jobs “Out of towners” reserved capacity quickly leaving residential and not-for-profits without participation –No way to legitimately limit outside companies from participating –Out of state companies benefit the process Bring money in front outside of the community Pay building owners for rooftop leasing Hire local contractors Create more competition to help customers –Capacity carve outs for residential and not-for- profits would have been an administrative challenge (another policing issue) –Limit on green field capacity per year did help

11. 11 The REC Debate Most participants didn’t care about the RECs GRU cares strongly about the RECs –Meeting environmental standards –Potential future value –Retail customers paying a premium for solar need to get some value in return

12. 12 Work with City and County Agencies in Advance –Planning and Development Boards for zoning & permitting issues –Let them know what you’re planning so they can staff and plan accordingly –Understand the local codes before setting policy –Keep in mind that it’s not the utility’s responsibility to set or enforce the codes Local Development Codes

13. 13 Lessons Learned Have business process in place (and in writing) prior to implementation –Don’t forget all departments – engineering, solar coordinator, accounts payable, IT, metering –Administration must be manageable –Keep it simple Be sure organization can absorb added staffing and expense requirements of the program Manage the politics No matter how tight the policy, people will find the loop holes Avoid knee-jerk reactions when setting or changing policy Look at GRU’s policies and any others you can find prior to starting program

14. 14 Results New solar companies and business models came to Gainesville Capital infusion Intense competition Solar print and radio advertising Amazing improvement in $/watt (DC!!!) New market in leasing rooftops!

15. 15 Yes – We Would Do It Again! Helps achieve Climate Protection goals Provides jobs and economic growth –Local solar contractors have increased from one in 2006 to five currently –Attracting solar developers from other states Customers Like it! 75% of respondents in customer survey said they’d be willing to pay a premium of up to a dollar on their bill each month for solar.

16. 16 City Commission “Signing Day” A Happy Moment In Our History

17. 17 For additional information on GRU’s Solar FIT Program, contact: Diane Wilson Gainesville Regional Utilities wilsondm@gru.com (352) 393-1282