Financing Energy Efficiency Projects: Credit Enhancements for Commercial Finance September 26, 2011 Presented by: Dan Clarkson Energy Efficiency Finance Corp

Seattle Steam Company Energy Efficiency Project Development & Finance Program EE investments for Seattle Steam Company customers on customer side of the meter MacDonald-Miller Facilities Solutions provides turnkey project development, implementation & savings guarantees Customer signs Energy Services Agreement to make payments based on energy savings as operating expense Customer payments collected on SSC steam bill ARRA funds used for subordinated debt financing, debt service reserve & carbon reduction incentives Scalable & replicable program

HOW IT WORKS Customer MECS MMFS Senior Lender State Sub- Loan CPW Seattle City Light Seattle Steam On-Bill Repayments Repayment to MECS via Escrow Agreement – Wells Fargo Turnkey Project Implementation via ESA Payment with approval of CPW Utility Incentives

MECS Retrofit Model Utility Costs ESA Payments Cumulative Customer Savings Retrofit 22% Savings Net Customer Savings

Property Assessed Clean Energy “Commercial PACE” PACE financing available to to fund performance upgrades Building owner negotiates directly with contractor & investor Funding available for up to 100% of project Lower rates and longer loan terms Enables projects to be cash-flow positive in first year PACE assessment runs with the real estate Property taxes are an operating expense Share costs and savings with current tenants & future owners Debt service reserves improve credit

Building Owner Lender Energy Upgrade LA LA County 4. CRA/LA approves application and forwards to County EE Retrofit Contractor PACE Investor 1. Owner engages Contractor 2. Contractor conducts audit and develops scope of work 3. Owner submits Program Reservation package 5. Owner uses notification of eligibility to negotiate project-specific financing terms with PACE Investors 8. County remits coupon payments to the PACE investor 7. Owner remits assessment payments to County 6. County structures bond according to owner- negotiated terms, Investor purchases the bond through “private placement” How it Works

Thank You! Dan Clarkson Energy Efficiency Finance Corp. Olympia, WA