2. 2011 ADC WINTER FORUM | PAGE 2 Developing Renewable Energy Projects on DOD Land Anita Molino Bostonia Partners LLC

3.  Founded in the 1990s, Bostonia Partners, LLC (“Bostonia”) is a financial services company headquartered in Boston, MA  The firm is well recognized in the industry for structuring innovative financing solutions in structured project finance and nontraditional debt and equity placements for energy efficiency, renewable energy and real estate projects  Bostonia established its own broker/dealer, Bostonia Global Securities, LLC (“BGS”) in 2004  Bostonia’s principals have created numerous financing and investment programs and structures which were the first of their kind  Bostonia has structured approximately $7.6 billion in financings Bostonia Partners Introduction

4.  Capital Markets Update  Renewable Energy Market  Development  Federal Incentives  Challenges and Benefits  Electricity Market  Generation  Renewable Portfolio Standards  SRECs  REC Benefits and Challenges  Value Proposition for Renewable Energy  Financing Renewable Energy  Conclusions  Q&A Agenda

5. Capital Markets Update  Crisis in Middle East and economic turmoil in Europe adding volatility to global equity, debt and commodity markets  Safety and stellar credit quality continues reign supreme  Spreads have tightened into Q4 2010, but have widened through January  Continued Positive Outlook for Investment Grade Issuers  Investors put a large amount of capital to work in 2010  Below investment grade lending has begun to reverse its decline

6. 2011 ADC WINTER FORUM | PAGE 6 Private Placement Market 2010  Private Placement Market Profile:  $40 billion in issuance in 2010  Represented about 10-15% of the total corporate debt market  Another $40 billion expected in refinancing activity over the next two years should lead to a large increase in issuance in 2011 and 2012  Private Placement Issuer Profile:  68% were repeat issuers  65% were unrated by national rating agency  50% were private companies  Private Placement Buyer Profile:  $120 billion in demand / average deal was 3x oversubscribed  50% of buyers looking for NAIC-3 debt  Increased demand has reduced the premium buyers received for private issuance.

7. 7 Renewable Energy—The Market  Renewables: solar, wind, biomass, landfill gas, geothermal  The market:  $18.6 billion invested in 2009  Over $350 billion invested by 2035  The challenge: renewable energy costs more than traditional carbon- based energy  But, utilization of renewable energy incentives, tax incentives and renewable energy credits makes the business case work in certain circumstances  Project owners can take advantage of tax incentives (private tax payers)

8. Basic Ingredients for Renewable Energy Development  Appropriate renewable technology type(s) must be determined based upon the availability of natural resources  Analysis of current electricity costs must be weighed in conjunction with the cost of electricity produced from a renewable source  Siting / water requirements / permitting / and other due diligence items must be considered  Availability of state / federal offered incentives including:  RPS Standards (29 States currently have an established RPS)  Utility Rebates  ARRA Incentives  Depreciation Incentives extended to 2012 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010  Ability to enter into long term Power Purchase Agreements (“PPAs”)  Transmission & grid considerations

9. 2011 ADC WINTER FORUM | PAGE 9 Challenges and Benefits of Renewable Energy Development Challenges  High upfront capital obligations, inflexible budgets  Higher short-term cost of energy  Long term cost and security benefits are not immediately realized  Value proposition not readily definable  Geographic and market constraints Benefits  Power Purchase Agreements (PPAs) provide for fixed long-term energy price certainty and protection against rising energy costs – don’t require outlay of Capital to procure  Power contractually delivered with assured quality and in assured quantities  Renewable Energy Credits generated from the renewable power installation can be used for compliance with federal mandates for the DoD

10. Financing Renewable Energy Projects The ability to monetize federal tax credits/incentives is the key to financing renewable energy projects. Employing Debt and Project Equity are also be essential ingredients. Tax Equity monetizes: Investment Tax Credit (ITC) or 1603 Cash Grant in lieu of ITC Production Tax Credit (PTC) Bonus Depreciation MACRS Depreciation Project Equity: Necessary for developers to have “skin in the game” Debt can serve to enhance the returns of the Equity

11. Renewable Energy Federal Incentives  Menu of Federal tax incentives:  Projects can claim one of the following:  Production Tax Credits (PTCs): 10-year inflation adjusted credit per MWh produced (does not apply to solar).  Currently, $21/MWh  Investment Tax Credit: credit on the depreciable installed cost when the project becomes operational – does not depend on ongoing generation of electricity  30% for solar, fuel cell and small wind; 10% for others  Section 1603 Grant Program: allows renewable energy developers to qualify for a 30% Federal grant for qualified capital costs (the same value as the ITC)  Program was extended, now set to expire on December 31, 2011  5-year (MACRS ) accelerated depreciation for most capital items  100% Bonus Depreciation election available in lieu of MACRS depreciation 11

12. Renewable Energy on DoD Land  Benefits to development, power user (installation) and project financing  Development:  Utilizes idle and under-utilized land  Provides jobs for the community  Provides Energy Security for the United States  Progress towards Renewable Energy Mandates and Goals  Power User (installation):  Clean, secure source of power to installation at a fixed, predictable cost  Utilize Renewable Energy Credits to meet mandate  Financing:  Contracts with Federal Entity provide strong foundation for lowest-cost of capital  Ability to secure low-cost capital equates to lower PPA rates for DoD

13. 2011 ADC WINTER FORUM | PAGE 13 On-Base Development Considerations in Texas Texas has largest renewable energy potential in the nation and with abundant and multiple resources: wind, solar, biomass  Address the problem of inadequate power transmission infrastructure in Texas by having an opportunity to sell power “inside the fence”  Sufficient and cost-effective land resources for siting renewable generation projects  Provide energy security and mitigate against threats to the utility grid by reducing reliance on energy resources from off the base  Potentially Purchase energy at the same cost or at a lower cost through a PPA. (~$.09/kWh Average Retail Price of Electricity as of Oct 2010)

14. Electricity Market in Context of RE  Electricity prices vary state-to-state, and are variable month-to-month  Pricing of electricity on the commercial market is non-negotiable  Price of Renewable Energy varies state-to-state, but is negotiated  Deregulated states experience higher average prices  Areas with higher rates more easily suited for RE development  Low-rate areas demand innovative approaches

15. Average Retail Price of Electricity by State (2008 ) Generation Market Map of Regulated and Unregulated States  Deregulated states experience higher average prices  Areas with higher rates more easily suited for RE development Source: EIA

16. Generation Market  The cost of traditional energy sources is based on the price of oil, hydrocarbons  The cost of renewable energy sources is based on the price of technology  Incentives are necessary in low-rate areas: Renewable Portfolio Standards incentivize utilities to purchase RE, broadening market; Federal tax incentives lower development costs; Power Purchase Agreements incentivize developers and financiers

17. Effects of State and Federal Incentives on Levelized Cost  Federal and state tax incentives can make energy projects affordable  Developers and financiers must utilize incentives, lowering the levelized cost Source: Lazard, Ltd.

18. 18 Renewable Portfolio Standards  Many states have adopted Renewable Portfolio Standards (RPS) – vary from state to state.  RPS requires utilities to obtain a minimum percentage of their power from renewable sources by a mandatory date.  A utility can also satisfy the requirement by purchasing renewable energy credits (RECs).  A REC represents the right to claim attributes and benefits of renewable power – 1 REC = 1 MWh  Bought and sold through contractual arrangements.  Debate continues over a Federal RPS – until then, the action is at the state level  Renewable Energy Credits can be utilized to meet DoD mandates

19. Renewable Portfolio Standards

20. SREC Markets  Solar Renewable Energy Credits (SRECs) necessary for enabling feasibility of Solar projects  In SREC states, the Renewable Portfolio Standard (RPS) requires electricity suppliers to secure a portion of their electricity from solar generators  1 SREC = 1,000 kWh of solar electricity = 1 MWh of solar electricity 10 kW solar capacity = ~12 SRECs per year  SRECS are priced via supply and demand and sold in spot market auctions or else through long term (3,5,10 year) contracts  The demand is determined by individual state RPS solar requirements and the Solar Alternative Compliance Penalty (SACP) set by the state  SRECs in states with higher SACPs, like New Jersey, are worth more than states with lower SACPs

21. Current SREC Markets

22. REC Benefits and Challenges  Benefits:  Renewable Energy Credits are critical for enabling the feasibility of RE projects  RECs can be sold through various exchanges or directly to customers under long term contracts  RECs can be utilized by the DoD to meet RE mandates  Challenges:  RECs sold on the spot market are not “financeable”  RECs negotiated for sale under long term contracts are “financeable,” but must not be overly discounted. This will jeopardize the economic feasibility of the project  RECs are usually sold “unbundled” from PPAs under separate contracts, adding difficultly to financing of the project

23.  PPAs provide protection against the rising cost of electricity  Savings are realized in the long run  PPAs are an efficient way for developers and financiers to raise capital for RE Extracting the Value Proposition for Renewable Energy Source: EIA

24.  Procuring energy through a PPA grants energy price certainty  Based on current projected electricity prices, paying a premium today can translate to savings over the term of the contract  Potential for greater savings if energy prices rise at a faster rate  Investment incentives and technological advancements are driving costs down, closing the gap and increasing affordability Installation Demanding 5MW / Year for 20 Years With a Fixed Price Power Purchase Agreement (PPA) vs. Status Quo Present Value of Electricity Cost Average Cost Difference Status Quo (No PPA)$7,615,921.97 - PPA with 10% Premium$7,237,742.87-5% PPA with 15% Premium$7,566,731.19-1% PPA with 20% Premium$7,895,719.504% Extracting the Value Proposition for Renewable Energy

25. Renewable Energy Project Year 1Year 2Year 3Year 4 Year 5 KwH/Yr 5,000,000 4,975,000 4,950,125 4,925,374 4,900,748 PPA Rate / KwH 0.1000 PPA Revenue 500,000 497,500 495,013 492,537 490,075 REC Price/ kwh 0.3000 REC Revenue 1,500,000 1,492,500 1,485,038 1,477,612 1,470,224 Bundled PPA+REC Price 0.4000 Total Revenue 2,000,000 1,990,000 1,980,050 1,970,150 1,960,299  The REC price is the main driver of a Renewable Installation’s performance  Power and RECs fixed for a certain number of years will benefit DoD by eliminating long-term risk of rising power prices  Attaining price certainty for RECs is essential for developers for financing needs  Bundling RECs with PPA contracts is an effective tool for ensuring project development, strategy eliminates REC risk from developer (no longer has to sell RECs forward or on spot market). DoD utilizes RECs for meeting mandates.

26. Cost of Capital: A Few Scenarios Tax Equity + Project Equity 12.00% 100% Cost of Capital 12.00% Tax Equity + Project Equity 12.00% Project Debt 5.50% Cost of Capital 10.375% 25% 75% Cost of Capital 9.00% Project Debt 6.00% Tax Equity + Project Equity 12.00% 50% RATE

27. RE Financing—Key Takeaways  Bring the financing in early  Build a business plan with conservative assumptions yielding market – based returns  Understand your market – RECs, incentives, etc  Bundle PPA with REC Contract  DoD should utilize RECs to meet Federal Mandates  Enhances financeability of project  Documentation and structure are key drivers  Developer’s and customer’s ability to execute – complex transactions with steep learning curves  Every project needs a champion  Only sound projects with quality participants and strong cash flow will get done  Work with public/private mentality and remain adaptive and flexible

28. Conclusions  RE development can be successful under Private development or through EUL authority  Leverage existing underutilized assets strategically for best results  Long term PPAs and REC contracts with creditworthy off-take essential for financing  The time is right to take advantage of stimulus benefits  EUL is ideal opportunity for installations to meet their energy goals and achieve energy security  Developer advantages:  Existing infrastructure and transmission lines  Inside-fence development provides additional security for the infrastructure  Single-source off-take for RECs and Power (DoD)  Contracts with Federal Entity provide strong foundation for lowest-cost of capital

29. Questions & Answers THANK YOU Anita Molino Bostonia Partners LLC 699 Boylston Street, 7A One Exeter Plaza Boston, MA 02116 617.437.0150 amolino@bostonia.com