1. You Don’t Have To Be a Wizard to Understand the Private Financing of Solar Projects APRIL 3-6, 2013, LONG BEACH, CA These materials have been prepared for the CASBO CBO Professional Council. They have not been reviewed by State CASBO for approval, so therefore are not an official statement of CASBO.

2. YOU DON'T HAVE TO BE A WIZARD TO UNDERSTAND THE PRIVATE FINANCING OF SOLAR PROJECTS CASBO 2013 Presented by: Devon B. Lincoln, Esq. Trevin Sims, Esq. Adam S. Bauer

3. THE MAN BEHIND THE CURTAIN Are there real savings from solar? Who’s really investing in your project?

4. PULLING BACK THE CURTAIN Annual Savings = ((Solar Electricity Produced x Avoided Utility Rate) + (Credits and Incentives)) – Financing Costs

5. SOLAR ELECTRICITY PRODUCED Variables Include: Locations: Number and Insolation Technology: Guarantee? Maintenance? Security? Usage and Energy Efficiency

6. AVOIDED UTILITY RATE Usually assumes annual escalation factor 3%? 5%? ?% Who knows where utility rates will go?

7. PULLING BACK THE CURTAIN Annual Savings = ((Solar Electricity Produced x Avoided Utility Rate) + (Credits and Incentives)) – Financing Costs

8. CREDITS AND INCENTIVES California Solar Initiative (CSI) Renewable Energy Credits (RECs) Prop 39? Tax equity?

9. PULLING BACK THE CURTAIN Annual Savings = ((Solar Electricity Produced x Avoided Utility Rate) + (Credits and Incentives)) – Financing Costs

10. FINANCING OPTIONS Power purchase agreements Local bond funding Lease-Purchase Municipal finance/JPA

11. PULLING BACK THE CURTAIN ON Power Purchase Agreements No Cash Down Private Entity Is System Owner Tax Equity Investment 20-25 Year Term Limited Termination, Purchase and Re-Location Rights

12. PULLING BACK THE CURTAIN ON Local Bond Funded Project Community support for project Project delivery method (Who’s building it?) Compare system costs to “Avoided utility rate” General fund savings?

13. PULLING BACK THE CURTAIN ON Lease-Purchase Financing Institutional lender 7 Year term typical Compare interest rate to “Avoided utility rate” Future refi likely

14. PULLING BACK THE CURTAIN ON Municipal Partnerships/JPAs Pooling resources to achieve a project Project delivery method: Who’s building it? Managing long term maintenance, ownership issues

15. PULLING BACK THE CURTAIN ON Annual Savings = ((Solar Electricity Produced x Avoided Utility Rate) + (Credits and Incentives)) – Financing Costs

16. “PAY NO ATTENTION TO THAT MAN BEHIND THE CURTAIN” Ask the Hard Questions: What’s the technology? Who’s building It? What are the warranties? What’s behind the savings projections? Can we get credits and incentives?

17. “PAY NO ATTENTION TO THAT MAN BEHIND THE CURTAIN” Do we have local support? Who’s profiting from our project? Who’s partnering in our project?

18. PLEASE NOTE Disclaimer: These materials and all discussions of these materials are for instructional purposes only and do not constitute legal advice. If you need legal advice, you should contact your local counsel or an attorney at Lozano Smith. If you are interested in having other inservice programs presented, please contact clientservices@lozanosmith.com or call (559) 431-5600 Copyright © 2013 Lozano Smith All rights reserved. No portion of this work may be copied, or sold or used for any commercial advantage or private gain, nor any derivative work prepared there from, without the express prior written permission of Lozano Smith through its Managing Partner. The Managing Partner of Lozano Smith hereby grants permission to any client of Lozano Smith to whom Lozano Smith provides a copy to use such copy intact and solely for the internal purposes of such client.