Frank Smith President Sologen Systems LLC

The Subsidies 30% Income Tax Credit or Cash Grant 30% Depreciation (5-year MACRS) $3.00 CPSE Rebate (per dc watt) 39% New Markets Tax Credit (over 7-years)

Example at $6.00 per watt System Cost$ % ITCminus$ % Depreciationminus$1.80 CPSE Rebate (approx)minus$2.40 Cost to Customer$0.00

Cost Per Watt System Cost $7.00 $6.00 $5.00 ITC-$2.10-$1.80-$1.50 Dep.-$2.10-$1.80-$1.50 CPSE-$2.40-$2.40-$2.40 Net Cost $0.40$0.00($0.40)

So what is the problem? Incentive Delays Must wait 60 days for CPSE rebate Must wait minimum 60 days for cash grant or ITC Must wait 5 years for all MACRS Depreciation Cash Flow needed for business Bonus Depreciation ends Business not profitable, cannot use ITC or Dep

Solution: Leverage Must establish relationship with Bankers or Leasing Companies who understand Renewable Energy Use 3 rd party investors for sizeable projects

Choosing a Finance Structure Tax Appetite? Performance Risk? Creditworthy? Can Fund Up-Front Capital Outlay? Sizable Project? Balance Sheet Capital Lease No Project Operating Lease Power Purchase Agreement Performance Risk? Yes No

New Markets Tax Credits Provides 39% Tax Credits to Equity Investors Over a 7-year period 5% for years 1-3 6% for years 4-7 Requires complex business structures Qualified Census Tracts /distressed-QCTs Only for large projects