1. City of Flagstaff Renewable Energy Development April 30, 2015 1

2. Renewable Energy Development Presentation  Renewable Energy Portfolio  City’s Financing Mechanisms  Energy Service Company  Power purchase agreement  Lease to Own  Lessons Learned 2

3. Renewable Energy Portfolio 2.135 MW 3 LocationSize kWTypeSystem COD City Hall14.4Custom Solar PV Film2006 Wildcat WWTP292Cogeneration2007 Aquaplex140Solar Thermal2009 Fire Station7.5Solar PV Roof Mount2009 Wildcat WWTP285.23Solar PV Tracking Ground Mount2011 Wildcat WWTP283.25Solar PV Tracking Ground Mount2011 City Hall200.5Solar PV Carport2011 Aquaplex93.51Solar PV Rooftop2011 Wildcat WWTP231Solar PV Ground Mount2013 Rio de Flag310.2Solar PV Roof and Ground Mount2013 Aquaplex277.2Solar PV Carport2013

4. Financing Mechanisms 4

5. Energy Service Company (ESCO) 15 year contract initiated in 2004: - Cogeneration unit - Solar film - City secured loan - Performance guaranteed in year 1 - Bundled efficiency and renewable projects for economy of scale 5

6. Power Purchase Agreement (PPA) 6 - Long-term energy planning - No up-front capital cost - 3 rd party incurs risk - responsible for operation and maintenance - utilizes utility, federal and state tax incentives - Project initiated in 2010 - Projects cash positive in year - APS incentives vary between $0.9 and $0.12 per kWh

7. Lease to Own 15 year contract initiated in 2013. - Secured financing at low interest rate - Utility incentives, no sales tax and financing made project cash positive in year 1 - Outsource operation and maintenance 7

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9. Lessons Learned 9

10. Thoughts on Financing Models PPA Lease to Own 10  Customer service  Pay sales tax  Must provide 24 hour access to site  Option to purchase equipment at fair market value  Pending property tax issues  Read the fine print  Customer service  No sales tax  APS incentives  Outsource Operation and Maintenance outsourced  Cash positive in year 1 (out performed pro-forma) 3 rd quarter of the fiscal year $117 received in incentives