CONFIDENTIAL Brightfields Development Identifying, Financing and Developing Renewable Energy Projects on Brownfield Sites Brownfields 2011 Conference April 5, 2011

Panelists Robert Springer, National Renewable Energy Laboratory (NREL) Stephen Parnes, EnviroFinance Group (EFG) Curtis Toll, Greenberg Traurig Robert Lamkin, Greenberg Traurig Mary Hashem, EFG Brownfield Partners, Moderator

Overview Industry Snapshot; Inside the Solar Project; Development Process Land Use, Real Estate and Financing Considerations Land Valuation and Solar Economics Contacts, Liability and Insurance Issues

Brightfields Development: Identifying, Financing and Developing Renewable Energy Projects on Brownfield Sites Stephen Parnes

Land Use Issues Renewable Economics Demand Low Land Values – Generally no other viable uses – Re-zoning farmland is bad public policy – Landfills/Brownfields excellent candidates because there isn’t any other use for the land – Usually closer to an interconnection point Thin margins requires careful management of liability – Liabilities can be transferred but renewable economics cannot support costs – BFPP Protections from Superfund vs. Lessee Operator

Geography Solar Resources Population Density Public Policy 6 Market attractiveness requires – Supply of Renewable Resources – Favorable State renewable Energy Standards and Market Structure – Demand for Energy Top Markets – New Jersey – Massachusetts

Financing Brightfields Revenue Sources – Electricity sales – RECs/Feed in Tariff – Treasury Grant Regulatory Risk associated with federal/state incentives make them difficult to finance Environmental issues increase the complexity and financing difficulties We are funding the projects with cash before the permanent debt Future – without the Treasury Grant – Tax Equity

Bernards Township Landfill Landfill Disturbance Permit vs. Major Modification Geotechnical Stability/Racking system LF Gas Management Wetlands Ongoing use of recycling center PJM Queue Timing Complexities

Project Equity is the Missing Link 9 Power Purchaser Lender / Tax Equity Investor EFG Developer Successful projects require: – Site Control and permitting (Developer) – Committed Capital (Lender / Tax Equity Investor) – Forward sales contract (Power Purchaser) – Completion & Performance Assurances / Guaranties (Money Partner) Developer cannot purchase panels and pay for construction without capital (equity and debt) Lenders will not commit to financing without a power purchase agreement to assure project revenues Power purchasers will not negotiate for “to be built” energy without substantial, money good performance assurances to cover their break costs

Brightfield Owner Concerns Recourse in the event of a LF breach cause by renewable developer Assurance on wherewithal to begin project vs. financing contingencies

Stephen Parnes

Curtis B. Toll, Esq. Greenberg Traurig, LLP 2700 Two Commerce Square 2001 Market Street Philadelphia, PA Telephone: (215) BRIGHTFIELDS DEVELOPMENT April 5, 2011 Robert M. Lamkin, Esq. Greenberg Traurig, LLP 2101 L Street, N.W. Suite 1000 Washington, DC Telephone: (202)

2 Solar Output Economics Two economic components – sales of SRECs and sales of energy. SRECs are much more valuable than energy in certain states (NJ, MA and PA) due to state incentives requiring Load Serving Entities (utilities and entities committed to sell to utilities) to buy percentage of load requirements from renewable sources or pay compliance penalty ($600 or more per MW). Utilities typically have cheaper sources of energy – no need to buy solar project energy output, just SRECs. Energy from solar projects generally sold into power grid at “spot market” prices (price fluctuation risk, difficult to obtain financing). Utilities typically do not enter into long-term Power Purchase Agreements from solar projects (intermittent resources, cheaper alternatives).

Utilities are reluctant to enter long-term SREC Agreements due to risk of: Utilities are reluctant to enter long-term SREC Agreements due to risk of: - Change in Law (will incentives continue to be supported by State Legislators?) - Change in Economics (if vast amounts of planned solar projects are actually constructed, market prices will drop significantly) Due to change in federal regulatory laws, utilities are no longer required to purchase power from solar “Qualifying Facilities” in states where viable power markets exits. Due to change in federal regulatory laws, utilities are no longer required to purchase power from solar “Qualifying Facilities” in states where viable power markets exits. 3

Brightfields Developments Contract Issues 1. Development Structure – option to lease; ground lease. 2. Lease Term – geared toward useful life of equipment, amortization period. 3.Landfill Issues – definition of “leased property” is critical. Allocation of environmental liability and responsibility. 4.Monitoring of existing wells. 5.Well relocation liability. 6.Access Issues – timing, repairs and restrictions. 7.Other Lease Issues – ownership of equipment, financing of equipment, right to remove or replace. 4

BRIGHTFIELDS: LAND VALUATION ISSUES Land usually has little or no economic value in its own right. No other viable or economically productive use to the subject land.Land usually has little or no economic value in its own right. No other viable or economically productive use to the subject land. Lease payments must reflect economic realities of the transaction. The vast majority of the economic upside is attributable to governmental subsidies – tax credits, ARRA grant, sale of SRECs.Lease payments must reflect economic realities of the transaction. The vast majority of the economic upside is attributable to governmental subsidies – tax credits, ARRA grant, sale of SRECs. 5

BRIGHTFIELDS: INSTALLATION ISSUES Installation and Implementation 1.Selection of EPC contractor – indemnities, risk allocation. 2.Selection of equipment – panel types, cost vs. performance. 3.Warranties – term and limitations of warranties. 4.Bonding – payment and performance bonds; limitations re: publicly owned lands. 5.Financial negotiations – will EPC or panel provider accept payment terms to defer cash outlays until RECs are sold or grant proceeds are available? 6.Interconnection to Interstate Power Grid. Timing of process and potential costs associated with interconnecting facilities to local utility systems.

INSURANCE ISSUES Liability Allocation Issues. - Ongoing Operations and Maintenance obligations. - Indemnifications – source of indemnity. - Liability for new releases. - Distinguishing between new conditions and pre-existing contamination. Pollution Legal Liability Coverage. - 3 rd party bodily injury and property damage claims. - Cleanup costs relating to unknown pollution conditions. - Limitation re: defined “pollution conditions”. - Additional vs. Named Insureds. Commercial General Liability coverage – pollution exclusion issues. Contractors Pollution Liability Coverage. - Exacerbation of known pollution conditions. - Corporate vs. project specific policy. - 3 rd party bodily injury and property damage claims. 6