1. NREL is a national laboratory of the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy operated by the Alliance for Sustainable Energy, LLC NREL webinar Michael Mendelsohn Senior Financial Analyst March 31, 2011 NREL’s Finance Team and the Cost of Renewable Energy Spreadsheet Tool (CREST)

2. NREL Finance Team Activities, by Activity Type National Renewable Energy Laboratory Innovation for Our Energy Future 2

3. Data - RE Finance Tracking Initiative (REFTI) MACRS depreciation applied in roughly half of projects reported (32 participants responding) Form of Depreciation Taken 3 Current questionnaire (Q4 2010) open at: http://www.surveymonkey.com/s/LBN56LZhttp://www.surveymonkey.com/s/LBN56LZ

4. National Renewable Energy Laboratory Innovation for Our Energy Future Policies – FIT in the U.S. Source: Adapted from Gipe 2010, Oregon PUC 2010. Rhode Island (2008) San Antonio Sacramento Gainesville 2010 2008 2010 2009 2010 2009 3 states enacted FIT policies based on RE project cost (VT, HI, ME (but with a rigid payment level cap)) 1 state/ 1 federal agency enacted FIT policies based on avoided cost (CA, Tennessee Valley Authority) 10 states proposed FIT legislation based on RE project cost (CA, FL, IL, IN, MI, MN, NY, RI, WA, WI) (Year last proposed) Solar FIT policies approved by municipal utilities 2010 4

5. Tools – Adding Adv. Financial Structures to SAM National Renewable Energy Laboratory Innovation for Our Energy Future 5 Developer Tax Investor (100% of equity) Project Owned by Tax Investor; leased by Developer Power (and REC) Sales to utility Cash Revenue Investment Tax Credit/ Cash Grant less Operating Expenses (including lease payment) Depreciation Deductions equals Distributable Cash 100%  Federal Incentive  100% 100%  Lease Agreement Sale of Asset Lease Payment Developer constructs project and sells 100% to Tax Investor. Developer (Lessee) leases the project back from Tax Investor (Lessor). Lessee operates the project and pays Lessor an annual lease payment. Lease payment sized to provide Lessor with target return. Lessee retains free cash flow after lease payments and operating costs. Lessor receives annual lease payment from Lessee, and tax incentives and depreciation from ownership of project assets. Each party to the transaction has a separate taxable income (project taxable income is not shared as in the Partnership Flip Structures). Structure Details: Sale Leaseback SAM beta testing to begin in April, new version by April / May

6. Financial Information Portal National Renewable Energy Laboratory Innovation for Our Energy Future 6 http://financere.nrel.gov/

7. CREST - Development Borne from DOE – NARUC Partnership: Saw need for simple yet robust tool Sustainable Energy Advantage (SEA) hired to assess current slate of publicly available tools & design and build new model: Cherry-picked best features of other public models Enable multiple options of input detail No macros Provide immediate feedback on inputs of concern Worked with several PUCs in development: Colorado Hawaii Michigan Washington National Renewable Energy Laboratory Innovation for Our Energy Future 7

8. CREST Models Available At following link: http://financere.nrel.gov/finance/content/CREST-model Or Google “CREST Model” Models are protected outside of primary inputs Caveat: some technical issues with Mac version of MS Excel (NREL still working on a solution) User manual posted today Analytic report to come shortly National Renewable Energy Laboratory Innovation for Our Energy Future 8