© 2013 Barnes & Thornburg LLP. All Rights Reserved. This page, and all information on it, is the property of Barnes & Thornburg LLP which may not be reproduced, disseminated or disclosed without the express written consent of the author or presenter. The information on this page is intended for informational purposes only and shall not be construed as legal advice or a legal opinion of Barnes & Thornburg LLP. SOUTHERN SOLAR SUMMIT COMMON CHALLENGES WITH FUNDING SOLAR PROJECTS SEPTEMBER 19, 2013 William P. Ewing Partner Barnes & Thornburg LLP 3343 Peachtree Road, N.E., Suite 1150 Atlanta, Georgia Direct: Cell: Fax: Stephen Elkind Senior Director, Development OCI Solar Power, LLC Five Concourse Parkway, Suite 2500 Atlanta, Georgia Direct: Cell: Fax: Atlanta Chicago Delaware Indiana Los Angeles Michigan Minneapolis Ohio Washington, D.C.

© 2010 Barnes & Thornburg LLP. All Rights Reserved. This page, and all information on it, is the property of Barnes & Thornburg LLP which may not be reproduced, disseminated or disclosed without the express written consent of the author or presenter. The information on this page is intended for informational purposes only and shall not be construed as legal advice or a legal opinion of Barnes & Thornburg LLP. INTRODUCTION  Alignment of all construction, financing, tax planning and contracts takes time and coordination – with many pitfalls  Solar project finance depends heavily upon federal and state tax incentives (generally > 60% of lifetime project cost)  Federal investment tax credit  Accelerated depreciation deductions  State tax credits and other incentives (e.g., Georgia Clean Energy State Tax Credit)  Common funding vehicles  Partnership Flip  Sale/Leaseback

© 2010 Barnes & Thornburg LLP. All Rights Reserved. This page, and all information on it, is the property of Barnes & Thornburg LLP which may not be reproduced, disseminated or disclosed without the express written consent of the author or presenter. The information on this page is intended for informational purposes only and shall not be construed as legal advice or a legal opinion of Barnes & Thornburg LLP. Developer` EPC Tax Equity Financing Debt Financing Public Finance Land Owner Mineral Rights Owner State Permitting Federal Permitting County Permitting Legislative Policy Property Tax Assessment Insurance Carriers Equipment Suppliers Utility / Grid Operators SOLAR ECOSYSTEM

© 2010 Barnes & Thornburg LLP. All Rights Reserved. This page, and all information on it, is the property of Barnes & Thornburg LLP which may not be reproduced, disseminated or disclosed without the express written consent of the author or presenter. The information on this page is intended for informational purposes only and shall not be construed as legal advice or a legal opinion of Barnes & Thornburg LLP. Objective: Developer wants long term ownership

© 2010 Barnes & Thornburg LLP. All Rights Reserved. This page, and all information on it, is the property of Barnes & Thornburg LLP which may not be reproduced, disseminated or disclosed without the express written consent of the author or presenter. The information on this page is intended for informational purposes only and shall not be construed as legal advice or a legal opinion of Barnes & Thornburg LLP. Objective: Developer wants to maximize upfront cash

© 2010 Barnes & Thornburg LLP. All Rights Reserved. This page, and all information on it, is the property of Barnes & Thornburg LLP which may not be reproduced, disseminated or disclosed without the express written consent of the author or presenter. The information on this page is intended for informational purposes only and shall not be construed as legal advice or a legal opinion of Barnes & Thornburg LLP. Common Pitfalls/Challenges TopicDescription Bank Support Project bankability (panels, inverters, etc.) Solar resource (reliability of weather tools) Amount of electricity that can be expected (P50, P75, P90) Equipment warranties, guarantees Reliability of Cash Flows Off-taker creditworthiness PPA terms (assignment, default terms) Debt service coverage ratios range (1.2x-1.4x) Tax Requirements 30% ITC for qualifying solar property through safe harbor requirements Placed-in-service deadlines (50% bonus depreciation) Site Issues Land/roof rights and lease terms Easements, surveys Environmental review (USACOE, USFWS, etc) Permitting timeline Interconnection variability

© 2010 Barnes & Thornburg LLP. All Rights Reserved. This page, and all information on it, is the property of Barnes & Thornburg LLP which may not be reproduced, disseminated or disclosed without the express written consent of the author or presenter. The information on this page is intended for informational purposes only and shall not be construed as legal advice or a legal opinion of Barnes & Thornburg LLP. Common Pitfalls/Challenges TopicDescription Other Commercial Contractual Issues EPC contract terms (exclusions, change orders) O&M operator (scope of services) Equipment guarantees (the who’s and when’s) Transaction Costs Financing > risk mitigation > complexity > cost Transaction costs can kill a project’s profitability Timing of Financing Financing comes only after risks mitigated Duration to obtain lender/tax equity investor commitment Corporate/personal guarantees can expedite Finding Right Financing Party That Can Use Tax Benefits Banks and insurance companies – low risk, low return Small projects have relatively high transaction costs Private Equity – higher risk, higher return Typical hurdle = 7 to 9% unlevered Passive loss limitations for individual investors Minimum investment hurdles for larger financing parties

© 2010 Barnes & Thornburg LLP. All Rights Reserved. This page, and all information on it, is the property of Barnes & Thornburg LLP which may not be reproduced, disseminated or disclosed without the express written consent of the author or presenter. The information on this page is intended for informational purposes only and shall not be construed as legal advice or a legal opinion of Barnes & Thornburg LLP. Conclusion Awareness of all parties involved, all requirements for moving forward and all timing constraints will help avoid project pitfalls