Confident Decisions Definitive Returns

AltaE Webinar Series: Making the Business Case for Commercial Solar

July 25, 2013

Welcome

• First in the series of webinars designed to inform enterprises, commercial real estate owners, and related professionals on the opportunity to evaluate, recommend, approve and deploy solar projects

• Attendees will be muted

• Type in questions in Q&A box

• Presentation slides will be available on our website www.altaenergyinc.com after the presentation

• Next webinar: “Unlocking the Economic Potential:

Assessing the Feasibility of Your Property for Solar”

Agenda

• Introductions

• Webinar objectives

• Solar market overview

• Business case tools

• Putting the tools to use • Don Fritts, Aetna Building Maintenance

• Q & A

Today’s Presenters

• Sam Lee Founder & CEO, Alta Energy Inc.

Alta Energy, Inc. is a company dedicated to enable volume adoption of renewable energy solutions in the commercial & industrial segment - by streamlining deployment process to be effective & efficient, yielding an optimized solution every time.

• Don Fritts Director of Facility Services, Aetna Building Maintenance

• Over 35 years of experience in the Office and Building Services field

• Facility Management certification in 1997

Aetna Building Maintenance has been providing a unique range of sustainable solutions for corporate and industrial clients for over 75 years . Founded in 1936, and headquartered in Columbus, Ohio, Aetna Building Maintenance has 11 operations branches in five states: Columbus, Dayton, Springfield, Canton, and Cincinnati OH; Louisville and Lexington, KY; and Huntington and Charleston, WV; Indianapolis, IN; Nashville, TN. Client portfolio includes universities and colleges, manufacturing and distribution centers, airports, and numerous office and government centers.

Webinar Objectives

Provide tools to help C&I property owners and users: • Objectively evaluate solar viability

• Consistently identify opportunities to deploy solar projects which meet your criteria

• Effectively create business case for each property

• Confidently complete right solar projects

The Growing Solar Market

• Total installed PV capacity in U.S. > 10 GW

• > 3.3 GW installed in US in 2012

• Expected to grow another 30% to 4.3 GW in 2013

• Why is solar growing? • Economically makes sense –

C&I install costs fell to $3.92/W in Q1 ‘13

• Monetize untapped real estate assets

• Hedge against volatility of rising utility rates

The Problem: The Complexity

Decisions on renewable energy are often ad-hoc and disjointed

• No objective criteria set

• Property “portfolio” not considered

• Difficult to aggregate

• Each property is unique

• Complex eco-system

• Who to trust?

Making the Case: Five Steps

1. Understand your corporate goals

2. Determine the criteria for a viable solar project

3. Understand the choices involved in commercial solar projects

4. Analyze your portfolio to identify the best projects

5. Present your recommendations to company decision-makers

1. Understand Your Corporate Goals

What is your company’s primary motivation? • Lower operating costs

• Hedge against volatile & rising energy costs

• Create additional revenue stream

• Meet corporate sustainability goals

Company A: Financially Driven 1. Project IRR > 12% 2. Purchase and own system 3. Target offset percentage > 30% 4. Green metrics - CO2 offset > 500M

tons/year

2. Determine Your Criteria for a Viable Solar Project

What are the key, measurable factors that will determine viability? • Financial, sustainability or other?

• Quantifiable and specific

• Prioritized

Company B: Sustainability Driven 1. Meet publicly-stated goals for renewable

energy generation 2. Maximize offset percentage 3. Project IRR > 8% 4. May consider third party owned

Company C: Balanced Approach 1. Project IRR > 9% 2. Help to meet publicly-stated goals for

renewable energy generation 3. Balance offset and capital risk 4. Flexible ownership approach

3. Understand the Choices Involved

Each project is unique in its location and requirements, thus influencing key choices:

Ownership Structure Self-financed Leveraged with debt Power Purchase Agreement Tax lease Not for profit

Incentives Available Federal ITC State and local tax benefits Rebates (CBI) Performance-based incentives Feed-in tariff

Technology/Design Choice Roof, canopy or ground mount Maximize production Minimize cost Roof condition factors Duration of system

Vendor Selection Developer, PPA & integrator EPC vendors and contractors Financiers: Tax equity & debt Technology and product vendors Post install service providers

4. Analyze Your Portfolio to Identify the Best Projects

Methodically analyze your portfolio to gain a holistic view of viable projects, both current and future

Property-Specific Data Roof condition and clutter Parking lots/garages? Structural considerations System size estimation Location and shading

Incentive Analysis Usability of tax credits Available incentives Qualification criteria Application or bidding? Timing and limitations

Utility Consideration Electrical usage at location Type of usage Utility tariff analysis Any third-party energy?

Portfolio View

Currently Viable: • Meets criteria • Incentive available • Able to qualify

Viable in Near Future: • Will meet criteria • Incentive coming • Rates changing

Possible; Watch: • Criteria within range • Proactively watch for

incentive changes, price declines and/or tariff changes

Unlikely: Track • Not likely within 2 yrs • Track for changes

5. Present Your Findings

Effectively communicate findings and gain continuing support throughout the organization

Outline Process

Analyze Portfolio

Identify Viable Projects

Deploy Successfully

Track and Report

“Going Solar”

Analyze Property Portfolio

Site & Utility Data

Available Incentives

Vendors and Technologies

Operate & Maintain

Financing O&M

Options & Vendors

Apply Incentives & Contracting

Determine Systems /

RFP

Qualify

Vendors / Solicit Bids

Contract Vendors

Oversee Install

Utility

Connection

Successful Deployment Starts With Careful Planning

Don Fritts Dir. of Facility Services

• Offers broad array of customized facility, office and building support services throughout the Midwest

• Corporate headquarters to small remote satellite offices; serving international ABM properties and outside clients

• Sustainability is a key focus

Aetna “Going Solar”

Aetna’s corporate ”go solar” goals • Be a good corporate citizen

• Cut expenses and eliminate escalating costs

• “Walk the walk” – set example for clients

Where to begin? • Corporate threshold for return on investment

• Concerned about vendor bias

• Marketing potential

Portfolio Overview

Incentive analysis

Different utilities

Analyze for critical

decision making data

Consider corporate

goals based on research

Multiple properties in multiple

states

Financial and C-suite

approval

Building Details Roof Area: ~9,000 ft2

Usable area: 80% (HVAC equip.) Roof Type: TBD Roof Tilt: Flat

Electric Bill Details: Utility: Columbus Southern Power Rate Type: General Service (GS-2) Average Rates: $0.07/kWh

Solar System Details: Module Type: Class A 255W Number of Modules: 170 Base Cost: $3.75/Watt Gross System Cost: $160,000 System Size: 43 kW Annual Production: 50 MWh

Columbus, Ohio

0.07

0.08

0.09

0.10

1990 1995 2000 2005 2010

IRR 25 20 15 10 5 0

Aetna PSATS® REPORT – Columbus 4/26/12 Location: 646 Parsons Ave, Columbus, OH

Current Status Goal: Maximize IRR

Ow

ner

Pu

rch

ase

Rooftop System Overview

System Size: 43 kW

System Azimuth: 180°

Panel Tilt: 30°

Avoided CO2: 8 MT/yr

Current Status

Federal Incentives

Market Trend

State Incentives

Utility Incentives

Panel Prices

Installation Costs

Utility Columbus Southern Power

Rate Structure General Service

Average Elec. Price $0.07/kWh

30% Federal Tax Credit Modified Accelerated Depreciation Renewable Energy Technology Program – Utility Rebate ($1.50/W))

Good Poor

Incentive Summary

IRR: 7%

Payback Period: 9 years

Gross Cost: $162k

Net Cost (Gross – ITC): $114k

Net Present Value: $10k

25 Yr Electricity Savings: $153k

Electricity Offset: TBD

• Present to Aetna Management • Full Property Solar Deployment Analysis

Next Steps

Marketplace Snapshot

Ohio Commercial Electricity Price

$/k

Wh

State/Utility/Local Summary

31%

Aetna Modeling

$-

$50,000

$100,000

$150,000

$200,000

$250,000

1% 2% 3% 4% 5% 6%

25

Ye

ar E

lect

rici

ty S

avin

gs

Annual Electricity Price Inflation Rate

Economic Analysis

Utility Rate

Database

Physical/Geo

Database

Solar Engineering

Inputs

Client Data &

Requirements

Web Sources Manually Sourced Direct Interface

Feed

Incentive Database

Prdts&Tech Database

Total Savings on Electricity

Vendor Bid Summary

Projected IRR 9-10%

Rooftop Capacity 54.1 kW

Price [$/W] $3.87/W

Gross Cost $210k

Net Cost (Gross – ITC – Rebate) $72k

Quoted System Efficiency 1,141 kWh/kW

• Required : U.S. made panels

• 32% annual electricity offset

• Warranties • 1 year workmanship

• 25 year panel

• 10 year inverter

• 25 year racking

• Production guarantee at 90% of 1st year production w/ 0.5% decliner for 10 years

• Installer experience • 1.5 MW installed in OH

• 4.5 MW in USA

• Strong safety rating

• Last full year: $14M revenue

Aetna Results

• System live for 4 months

• Currently offsetting 40-50%

• Meter points backwards on optimal days

• Beating expectations- even on hot, sunny days with AC

• Set conservative and realistic goals, allowing them to exceed expectations

Lessons Learned

• Portfolio overview to identify “best” opportunity

• Facts and figures are critical to presenting your case

• Neutral party consulting/analysis is key

• Solar may pencil out in smaller properties

• Clients and community want to learn from our experience

• Monitoring other properties for right time

• Multiple contractor teamwork – solar, roof, HVAC

Summary

1. Understand your corporate goals

2. Determine the criteria for a viable solar project

3. Understand the choices involved in commercial solar projects • Ownership structure

• Government/Utility incentives

• Technology choices

• Vendor type

4. Analyze your portfolio to identify the best projects

5. Present your findings to the company decision-makers

Deploy solar on right property at right time

Questions & Answers

Any Questions?

Please use the WebEx Q&A

feature on right of your screen to submit your

questions

Contact Information

Still have questions? Contact Us: Email: info@alta-energy.com Tel: 650-345-2582 (ALTA) www.altaenergyinc.com

Upcoming Webinar: “Unlocking the Economic Potential:

Assessing the Feasibility of Your Property for Solar”