Restricted © Siemens AG 2013 All rights reserved.Answers for infrastructure and cities. “Shaking the Money Tree” Session B: Finance and Affordability Maryland Clean Energy Summit October 16, 2013

Restricted © Siemens AG 2013 All rights reserved. Page 2SEM / Pace Global What Do You Need to Know to Successfully Finance a Distributed Generation Project? Developer’s Perspective Elements of a Financeable Project, Portfolio Financing Sources and Solutions Steps to Financing Scalability Challenges

Restricted © Siemens AG 2013 All rights reserved. Page 3SEM / Pace Global Developer’s Perspective on Executing Distributed Generation Projects Site and host opportunity assessment Technology options assessment Revenue stream and path assessment Financial structuring options assessment RE resource or fuel supply assessments Value proposition case development EPC and O&M strategy, options Operations or contract sell-down strategy Development Strategy Project Financing Pro-forma management Contract management Address due diligence issues Finalize regulatory commitments Legal / contractual review Conditions precedent met Financial close Start construction draw and management Project / Asset Management O&M management Fiduciary / contract management Risk management Credit and collateral management Environmental asset management Financial reporting and management Project ID and Planning Site selection and permitting Technology selection and commitments PPA and REC path confirmation Financing assumptions Detailed resource assessment Host provisions and commitment terms Develop EPC and O&M contracts Develop extension and termination rights Project Development Finalize site development Equipment warranties, performance guarantees Vendor Off-take commitments Regulatory process and approvals Financing pro-forma Finalize EPC Finalize O&M contract Finalize equity and debt commitments

Restricted © Siemens AG 2013 All rights reserved. Page 4SEM / Pace Global Elements of a Financeable Project, Portfolio Financing Reliable, monetized revenue streams Strong O&M and availability guarantees Strong un- levered returns on equity Credible sponsor and technology

Restricted © Siemens AG 2013 All rights reserved. Page 5SEM / Pace Global Financing Sources & Solutions Financing Sources StrategicTaxTermConstrBridgeCredit State Equity Debt SupportGrantsIncentivesPACEOther Project Class Solar Wind Bio Fuels CHP DR Key Excellent capital availability for well-structured projects Average capital availability with emerging challenges Good capital availability for well-structured projects Significant challenges to capital availability Not available, or only in special cases

Restricted © Siemens AG 2013 All rights reserved. Page 6SEM / Pace Global Steps to Financing Development & Partnering Develop Bankable Project Portfolio with Strong Site, Host and Revenue Features Financing Optimize Capital Components to Generate Requisite Returns Structuring and Securitization Provide Performance Guarantees and Supplemental Security Create stakeholder interests among equity, off-take, lenders and vendors

Restricted © Siemens AG 2013 All rights reserved. Page 7SEM / Pace Global Scalability Challenges Macro EnvironmentProject – SpecificFinancingMacro Environment Incentives’ HorizonsReplication across Sites & Hosts Sponsor Quality and Experience Incentives’ Horizons Avoided Cost CurveResource VariationTerm of Revenue Streams Avoided Cost Curve Declining Technology Costs (Wait) SG&A CostsCredit Support, Reserve Requirements Declining Technology Costs (Wait)

Restricted © Siemens AG 2013 All rights reserved. Page 8SEM / Pace Global What is a Partnership and Lease? These structures unlock the value of tax incentives (ITC/PTC, MACRS)… A (leveraged) tax partnership creates a pass thru LLC Allocates income and loss to separate LLC members Allocable items are tax credits, cash, depreciation, and interest deductions Tax equity investors (TEI) are preferred, ownership flips once yield is achieved (JP Morgan) A (leveraged / single investor) lease is essentially debt Project is sold by lessee (the developer) to lessor (the bank) Bank monetizes the tax equity capacity of the asset Lessee operates the project and pays rent to lessor An agreement is a lease if it meets both GAAP and Tax (IRS) requirements Ownership - 95%; 5% Depreciation Allocations - 95%; 5% COD Ownership - 5%; 95% Depreciation Allocations - 5%; 95% Yr 6

Restricted © Siemens AG 2013 All rights reserved. Page 9SEM / Pace Global Structural (Risks / Rewards - Developer) PartnershipLease Larger up front developer fee Up front equity investment required Long-term ownership option Higher cost of buyout option Preferred structure for lower performing project/s Greater complexity Higher transaction & ongoing SG&A costs Market interest and familiarity with structure There are pros and cons to each financing structure, for developers and their financial partners. What are the Differences?

Restricted © Siemens AG 2013 All rights reserved. Page 10SEM / Pace Global Thank You For more information, please contact: Bo Poats