2. Understanding the Economics and Running the Numbers Why is it important to prepare a financial model? Who are the users of the financial model? When does the financial model get prepared? Who prepares the model?

3. Understanding (balancing) the sources and uses How much debt can the project afford and at what terms/rates? How much is available in state & local incentives? How much PPA revenue is available? How much equity can the project attract/afford? Whats the maximum fee the developer can charge? When will developer collect their fee? Projecting future cash obligations Investor issues addressed proactively Yield requirements Book / GAAP issues Structuring / Exit issues Running the Numbers: Developer Perspective

4. Understanding the flow and timing of benefits When and how much capital do I contribute? How much, and when will I receive my tax credits? What, when and how much will my other tax benefits be? How much and when will I receive cash distributions? What other benefits can I expect? Who do I share the benefits with? What is my risk? When will the investment end? What is the projected IRR? Evaluate structuring options Problematic issues can be addressed timely Running the Numbers: Investor Perspective

5. Key Assumptions: Entity type, allocations, life term –Partnership Flip- Investor exits after 5-year recapture period ends, ownership interests flip from 1% / 99% to 80% / 20% –GP (Developer) exercises call option to buy out Investor in Year 6 –GP (Developer) owns system until year 20 –In year 20, Developer sells system to third party Running the Numbers

6. Key Assumptions – System Size, Cost and Electricity Production Project Size - kW DC862 Project Size - kW AC724 Installation Cost per kW DC $ 6,000 Developer Fee (% of Installation Costs)10.00% kWh per kW AC1,800 Annual Degradation %0.50% Running the Numbers

7. Key Assumptions – Operations Power Purchase Agreement ("PPA") - $/kWh - Year 1 Price $ 0.185 Annual Escalator for PPA Price3.00% Length of PPA20 years State Incentive - $/kWh (60 months)$0.22 Operating Expenses (Year 1), 4% escalator30,160 Bonus Depreciation, 5 year MACRs for balanceYes Running the Numbers

8. Key Assumptions – Sources and Uses Sources Tax Credit Equity From Investor $ 3,200,000 Deferred Developer Fee 378,200 Permanent Loan(15 year term, 6.5%) 2,300,000 Total Sources $ 5,878,200 Uses Hard Costs $ 5,172,000 Developer Fee 517,200 Syndication Costs (approximately 1% of equity) 25,000 Permanent Loan Fee (2% of loan) 46,000 Cost Certification Fee 3,000 Reserves 100,000 Organization Costs (approximately.5% of equity) 15,000 Total Uses $ 5,878,200 Running the Numbers

9. Running the Numbers: Tax Credit Calculation Investment Tax Credit % 30.00% Estimated Energy Tax Credits $1,707,660 Limited Partner Share – 99% $1,690,583 General Partner Share – 1% $ 17,077 Installed kW, DC 862 Installation Cost per kW $6,000 Project Costs $5,172,000 Total Development Fee 517,200 Cost certification 3,000 Eligible Energy Tax Credit Basis $5,692,200

10. Net Operating Income – Partnership Flip

11. Taxable Income – Partnership Flip

12. Investor Return Summary – Partnership Flip

13. Investor Benefits – Partnership Flip Total capital contributed by Investor = ($3,200,000) Tax credits allocated to Investor = $1,690,583 Total cash distributions to Investor (Years 1-5) = $914,589 Tax savings benefit = $438,808 Buyout payment to Investor (Year 6) = $186,383 Cumulative net benefits (35% tax rate) = $30,363 Annual Internal Rate of Return (IRR) = 10.74%

14. Developer Benefits – Partnership Flip Total Fee paid to Developer (Years 1-6) = $517,200 Tax Credit allocated to Developer in year 1 = $17,077 Total cash distributions to Developer (Years 1-20) = $1,487,787 Less: Limited Partner Buyout in year by Developer = ($186,383) Projected Residual value of system (Year 20) = $2,805,849

15. Questions and Answers Tony Grappone Novogradac & Company LLP www.energytaxcredits.com (617) 330-1920 Extension 114 Tony.Grappone@novoco.com