1. Financing Renewable Energy Projects: Issues and Opportunities Peter Y. Flynn Bostonia Partners July, 2013

2. Proprietary Information Of Energy 2013 www.bostonia.com Presentation Overview Renewable Energy Financing Basics Key Drivers of Renewable Energy Economics Importance of Long Term Authority Financing & Contracting Options Discussion of Capital Stack and Developer Returns Critical Issues – Financing Perspective Conclusions

3. Proprietary Information Of Energy 2013 www.bostonia.com Bostonia Introduction Founded in 1998, Bostonia Partners is a full-service investment bank with primary market focus in energy and real estate, and additional services in structured finance and advisory – over $5B in Federal projects Bostonia Global Securities, the broker/dealer affiliate, provides direct access to investors and daily participation in the capital markets Bostonia ranks 7 th among all banks for domestic private placements in 2009 – 2012

4. Proprietary Information Of Energy 2013 www.bostonia.com Renewable Energy financing is “project finance” Cash flow driven Non-recourse Projects are capital intensive (low cash flows vs. high project costs) with important requirements Investment grade developer and Power Purchase Agreement counterparty Large projects required to justify tax equity structure / achieve economies of scale Proven Technologies Capital stack typically consist of various sources Debt (supported by PPA revenue and contracted RECs) Tax equity Sponsor equity Renewable Energy (RE) Financing Basics

5. Proprietary Information Of Energy 2013 www.bostonia.com Key Drivers of RE Economics Generation Market with electricity prices to support Power Purchase Agreement at “grid parity” with or without escalators Renewable Portfolio Standard – Renewable Energy Credits (RECs) Federal and State Tax Incentives RPS Policies Average Price per kWh

6. Proprietary Information Of Energy 2013 www.bostonia.com The Importance of a Long-Term PPA PPAs efficient way to secure energy at an installation, and for developers and financiers to raise capital for RE projects PPAs provide fixed long-term energy price certainty and protection against rising energy costs Revenues generated from PPAs drive debt and equity returns; long term PPA necessary to secure financing No initial outlay of capital to procure energy

7. Proprietary Information Of Energy 2013 www.bostonia.com The Importance of Long-Term Authority Debt 4.5% yield 100% ESPC – no incentives 9.5 cents / KWh -- 25 year PPA 8.5 cents / KWh – 25 year PPA E SPC w/ Tax Equity Debt 4.5% Yield Tax Equity – ITC and Depreciation Monetization 60% 40% Debt 5.75% Yield Tax Equity - ITC and Depreciation Monetization Sponsor Equity 5% 40% 55% PPA – EUL 12.5 cents / KWh – 25 year PPA Based on 10 MW Solar Project @ 2.50 / watt All-in Cost

8. Proprietary Information Of Energy 2013 www.bostonia.com The Importance of Long-Term Authority Debt 4.5% yield 100% ESPC – no incentives 9.5 cents / KWh - 25 year PPA 24 cents / KWh – 10 year PPA 8.5 cents / KWh – 25 year PPA 20 cents / KWh – 10 year PPA E SPC w/ Tax Equity Debt 4.5% Yield Tax Equity – ITC and Depreciation Monetization 60% 40% Debt 5.75% Yield Tax Equity - ITC and Depreciation Monetization Sponsor Equity 5% 40% 55% PPA – EUL 12.5 cents / KWh – 25 year PPA 30 cents / KWh – 10 year PPA Based on 10 MW Solar Project @ 2.50 / watt All-in Cost

9. Proprietary Information Of Energy 2013 www.bostonia.com Financing and Contracting Options PPA UESC / ESPC EUL

10. Proprietary Information Of Energy 2013 www.bostonia.com Capital Stack Across Stages of Development $200,000$26,250,000$28,700,000 Development Stages of a Typical 10MW Project Shovel ReadyCOD

11. Proprietary Information Of Energy 2013 www.bostonia.com Operating Returns of the Project Owner Owner’s Economics Year Sponsor Tax Benefit Allocation Sponsor Cash Investment / Refundings Sponsor Project Cash Total Sponsor Share Sponsor Running IRR 01%(2,860,064)- 0.0% 11%-425,368 -85.1% 21%-467,119 -51.5% 31%-464,144 -29.4% 41%-461,168 -15.8% 51%(1,171,939)458,190(713,749)0.0% 6100%-689,598 -13.8% 7100%-686,614 -3.4% 8100%-683,624 2.1% 9100%-680,628 5.7% 10100%-230,568 6.6% 11100%-890,760 9.2% 12100%-892,046 11.0% 13100%-893,185 12.3% 14100%-894,172 13.3% 15100%-895,001 14.1% 16100%-895,666 14.7% 17100%-896,161 15.1% 18100%-896,480 15.5% 19100%-896,617 15.8% 20100%-921,564 16.1%

12. Proprietary Information Of Energy 2013 www.bostonia.com Assumptions Development Assumptions: Project Size: 10MW EPC Cost per Watt: $2.50 Additional Development Costs: Interconnection, Site Work, Legal Fees, Financing Fees, Construction Interest, Independent Engineer PPA Price: $0.10/KwH SREC Price: $150/MwH x 9 years Operations Expenses: O&M, Insurance, Property Tax, Administration Financing Assumptions: 85% Construction Loan to EPC Cost 10 Year Senior Loan, LIBOR swap + 350bps at a 1.35x Debt Service Coverage Ratio (48% of Capital Stack) 10 Year Debt Service and O&M working capital facility Tax Equity investment for 99% of benefits (ITC + MACRS Depreciation) and 2% preferred cash return over 5 years (40% of Capital Stack). Buyout is sized to approximately 10% of initial investment. Long Term Equity 20 year hurdle rate of 15% IRR (12% of Capital Stack)

13. Proprietary Information Of Energy 2013 www.bostonia.com Critical Issues – Government Government Risk Due diligence/pre-procurement work by agency/installation Project selection, size and technologies sought Essentiality of the installation Track record of the Agency and facility/installation Every project needs a “champion”

14. Proprietary Information Of Energy 2013 www.bostonia.com Critical Issues – Developer/Contractor Developer/Contractor Risk Experience with technology Track record for on-time, on-budget performance Guarantees for construction and operation Financial Strength to cover delays Experience with Federal procurement

15. Proprietary Information Of Energy 2013 www.bostonia.com Conclusions Long-term contracting authority is essential for financing Efficient way to raise capital and keep energy pricing low ESPC is an important tool for meeting Federal energy goals and achieving energy security RE projects are complex with steep learning curves Important to assemble the team early – including the financing Projects need a “champion” at the installation Work with a public/private mentality and remain adaptive and flexible Markets, incentives, and technologies drive projects Important to understand federal and state incentives, standards, and energy prices in order to determine complete revenue picture Important to determine what technologies are best suited to specific geographic conditions

16. Proprietary Information Of Energy 2013 www.bostonia.com This information has been prepared solely for information purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy. No representation or warranty can be given with respect to the accuracy or completeness of the information, or that any future offer of securities, if any, will conform to the terms hereof. Bostonia disclaims any and all liability relating to this information, including without limitation, any express or implied representations or warranties for, statements contained in, and omissions from, this information. Peter Y. Flynn Executive Vice President 617.226.8103 Direct 617.437.0150 Main pflynn@bostonia.com Contact Information