final boma may 2012 renewable energy and environmental(1)

www.entechgroupinc.com © 2012 The Entech Group, Inc. All Rights Reserved. 1.800.571.8661Please refer to the Limitations section at the end of this presentation.

May 23, 2012

1

Presented to

http://www.entechgroupinc.com/


Renewable Energy & Management

Update on Solar Renewable Energy

Environmental Changes in New

Jersey

Presentation Overview

2


Single Source or Selected Services Provider

The Entech Group, Inc.

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Professional Services

Environmental Engineering & Construction Energy


Renewable & Alternate Energy SourcesSolar**Geothermal**Natural Gas**Biomass/LandfillHydro PowerWave/TidalWind

Energy Conservation ProgramsEnergy Star CertificationSustainable DevelopmentLeadership Energy and Environmental Design (LEED)Green Building Practices vs. LEED Certification

4

Renewable Energy


2008 2009 2010 2011 2012

Federal Energy Laws & Policies

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Small Business Jobs Act of 2010

9/27/10

Current Market

30% ITC CreditFirst Year Bonus Depreciation of 50%Extended Section 179 Deduction of $139,000

American Recovery and Reinvestment

Act of 20092/19/09

Energy Improvement and Extension Act of

20089/17/08

Tax Relief Unemployment Insurance Reauthorization

and Job Creation Act of 201012/17/10


Commercial Energy Management

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Appliances, 9% Refrigeration,

8%

Other, 8%Cooking,

2%Adjust to

Seds, 11%

Space Heating, 27%

Lighting, 14%

Space Cooling,

10%

Water Heating,

7%

Computers, 2%

Electronics, 3%

How we use Energy in Commercial Buildings

Source: US Department of Energy- Buildings Energy Data Book Website, last updated March 2012

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http://free-extras.com/images/sun-2271.htm


Typical Commercial Installations

MerckWhite House Station , NJ

Tiffany & Co.Whippany, NJ


Electricity to Facility

Electricity from Solar

Electricity from Grid

Surplus Solar Electricity to Grid

Electric GridElectrical

Distribution Panels

Inverter

Solar Array

Utility Meter

How a Solar System Works

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Net Metering

-to $0.25/kWhr.

Net metering - surplus electricity is delivered to the grid for credit.

Electric meter will run backwards.

consumptionSurplus electricity credited at

Typically at $.07/kWhrIf there is a loss of power from the grid

Solar system automatically shuts down.

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Federal Investment Tax Credit (ITC)30% Tax Credit

TotalBenefits

First Year Bonus Depreciation Tax Benefit50% Depreciation in Year 1 (2012 only)

6 Year Depreciation Tax Benefits(Modified Accelerated Cost Recovery System MACRS)

Electrical Energy Savings25+ Years of Avoided Electrical Costs

Solar Renewable Energy Certificate EarningsSREC 15 Year Program

Incentives For Solar Renewable Energy

Section 179 DeductionDeduct up to $139K for Qualifying Equipment

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New Jersey Clean Energy Program (NJCEP) Solar Renewable Energy Certificate

Provides for Generation and Trading of Solar Renewable Energy Certificates (SRECs) by Solar Owners

NJCEP requires electric utilities to supply a percentage of their electricity from solar.Utilities can meet requirements by purchasing SRECs from solar electric owners.

A SREC is a Tradable Commodity with Monetary Value

If utilities do not purchase SRECs they must make an Alternate Compliance Payment (ACP).

ACP was set at $658 for 2012; drops 3% each year

New Senate Bill S 1925 introduced May 14, 2012

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Signed into law on January 18, 2010, by Governor Corzine.

The Act required electric suppliers to procure a minimum of 195 Gigawatthours (GWH) of electric power from solar generators in 2010 and increases to 5,316 GWH by 2026.

The BPU is required to establish a 15 year Solar Alternative Compliance Payment (SACP) schedule. Prior to this requirement, the SACP extended out 8 years.

If the average SREC price decreases for 3 years or if the supply of SRECs meets or exceeds demand for 3 years the requirement increases by 20%.

0

1000

2000

3000

4000

5000

6000

2010

2011

2012

2012

F20

1320

1420

1520

1620

1720

1820

1920

2020

2120

2220

2320

2420

2520

26

Gwhrs / Energy Year

The Solar Energy Advancement and Fair Competition Act (A3520)

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Production for EY 2012 is Forecasted to be higher than 2012 Objective which has affected SREC Values


Introduction of New Jersey Senate Bill S-1925 on May 14, 2012

The proposed bill addresses the current Solar market in NJ and will attempt to stabilize the Solar Renewable Energy Certificates (SRECs) for Solar Owners

Increases the Renewable Portfolio Standard (RPS) Beginning in Energy Year 2014 Lower the Solar Alternate Compliance Payment (ACP)Change the RPS to a Percent Value compared to a Fixed ValueLimits solar farm development to 100Mw per year for 2014, 2015 & 2016 and sets BPU approval requirement thereafterSchool & Municipality net metering revisionsNew Projects will participate in Solar Registration Program

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Solar Renewable Energy Certificates (SRECs) in New Jersey

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Typical 100 kW system produces about 120,000 kWh per year.

1 SREC1 SREC1 SREC1 SREC1 SREC1 SREC1 SREC1 SREC1 SREC1 SREC

=

About 120 SRECs per year.

= $16,200 for 2012

Estimated SREC Values:2011: $650 2012: $1352014: $3002019: $260

1,000 kW hoursof solar production =

One SREC

$78,000 for 2011

$36,000 for 2014


SREC Transactions

1 SREC

Utility companies purchase SRECs

to meet their renewable

energy goals.

Every 1,000 kW Produced = 1 SREC

Commodity Exchange

Currently, a 100 kW system will

earn $16,200 per year (2012)


Solar Finance Options

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Capital OutlayLoan

Ownership Investment

OperatingCapital

Lease

Power Purchase Agreement (PPA)

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Is Solar for Your Project?

Entities Balance Sheet

Federal Benefits & Incentives

Commodity Value of SRECRenewable

Solar Energy System

Electrical & Inflation

Rates


Commercial Building 200 kW

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Solar Pathfinder

20

Feasibility

Shade Location

Area Type


Design & Installation Process

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Feasibility

Installation Design

Project Schedule

Final Project Deliverable


2012 Cash Flow Capital Investment

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Project Economic Inflow Over 15 Years 2011($655 SREC) 2012 ($225 SREC) 2012 ($135 SREC)

Electric Savings & SREC Income $2,313,732 $1,298,181 $1,086,952

Federal Incentives & Benefits $575,309 $442,368 $442,368

Potential Revenue $2,889,041 $1,740,559 $1,529,320Project Economic Outflow

Project Investment + O&M ($994,446) ($766,627) ($766,627)

Potential Investment ($994,446) ($766,627) ($766,627)Net Expected Income (Pre Tax) $1,894,575 $973,932 $762,693

Return on Investment 1.90x 1.27x 0.99x

-500000

0

500000

1000000

1500000

2000000

2500000

3000000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Cas

h Am

ount

Years


2012 Cash Flow Operating Lease

23

0

200000

400000

600000

800000

1000000

1200000

1400000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Cash

Am

ount

Years

Project Economic Inflow Over 15 Years

Electric Savings & SREC Income $1,298,191

Potential Revenue $1,298,191Project Economic Outflow

Solar Renewable Energy Project Payments + O&M ($872,707)

Potential Investment ($872,707)Net Expected Income (Pre Tax) $425,484


A customer hosts the solar system and agrees to purchase the electricity produced under a 15 to 20 year contract.

Benefits:

Power Purchase Agreement

Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Provides a capital freemeans to obtain solar energy.Assured of obtaining electricity at a predictable price for 15 to 20 years.Electricity will be less expensive and less inflationary than utility supplied electricity.


herein are made on the basis of incomplete information and without the benefit of knowing what will actually happen in the future with a particular matter or any other item. The Projections shall not be relied upon as final. The ultimate project fees, costs and other financial considerations may be different than the Projections.

27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements

expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated.

IRS Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. Federal tax advice contained herein is not intended or written to be used, and cannot be used by you or any other person, (i.) for the purpose of avoiding any penalties that may be imposed under the Internal Revenue Code, or (ii.) in promoting, marketing or recommending any Federal tax transaction(s) or matter(s) addressed herein.

This document contains computer enhanced images that are general in nature and provided for demonstration purposes only and they are not intended to be relied on for any other purpose.

The information and content provided within this document is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a recommendation, or legal, tax or investment advice, or a legal opinion. You should contact your tax advisor, lawyer and Certified Public Accountant to help answer questions about your individual or business specific situation or needs prior to taking any action based upon this information.

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Limitations


May 23, 2012

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Presented to

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Brief History Federal to State

Typical Environmental Concerns

Typical Scenarios

How New Environmental Changes in

New Jersey affect the process

Environmental Overview

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Resource Conservation & Recovery Act (RCRA) of 1976,

Comprehensive Environmental Response Compensation and Liability

Act (CERCLA) 1980 & 1986 ~ Superfund Amendments and

Reauthorization Act (SARA) 1986

Former toxic waste site near Niagara Falls, NY

Residents suffered severe health problems

President Carter declared State of Emergency

Start of the Superfund (SARA)


Environmental Cleanup Responsibility Act (ECRA) 1983

Industrial Site Recovery Act (ISRA) 1991(Supersede ECRA)

Site Remediation Reform Act (SRRA) 2009

New Jersey State Adoptions


Licensed Site Remediation Program Enacted November 2009 & Effective May 2012

Expedite Process Investigate, Delineate & Remediate Impacted / Contaminated Soil, Groundwater & Air Report ActivitiesProject Closure

No Further Action (NFA) vs.Response Action Outcome (RAO)

Environmental Changes inNew Jersey - SRRA

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Environmental Phases

31

Phase One

Phase Two

Phase Three

Phase Four

Initial Due Diligence

Site Investigation Is there a Concern

Delineation What & Where is it, Direction & Affect on Others

Remediation How to Clean it & Project Closure


1. Potential Responsible Party (PRP) / Responsible Party (RP)

2. Innocent Purchaser (IP)

Two Party Types


Impacts

Air

GroundwaterSoil

PROJECT


Asbestos, mold, lead, carcinogensGroundwater impactsVapor Intrusion (VI)

Impacts: Air


CarcinogensHydro CarbonsVolatile Organics (VOCs)Base Neutrals (BNs)Metals / Dioxins

Impacts: Groundwater


Type of contaminant and locationImpact to groundwater and airContact and absorption

Impacts: Soil


Owner / Operator

Real Estate BuyerDue diligence

Real Estate SellerNAICS (1997)SIC (1987) Code

Triggers


Preliminary Assessment (PA)Site Investigation (SI)Remedial Investigation (RI)Remedial Action (RA)Remedial Action Report (RAR)Project and Transaction Completion

Negative DeclarationPast No Further Action (NFA)Current Response Action Outcome (RAO)

New Jersey Procedures & Terminology


Bulk Storage Tanks and AppurenancesStorage and Staging AreasDrainage Systems and AreasDischarge and Disposal AreasBuilding Interior AreasOther Site-Specific Areas

Recognized Areas of Concern (REC)


Aboveground Storage TanksUnderground Storage TanksSilosRail CarsLoading and unloading areasPiping, pumping stations, sumps, pits

Bulk Storage Tanks & Appurtenances


Storage padsDrum and/or waste storageSurface impoundmentsLagoonsDumpstersChemical storage cabinets or closets

Storage and Staging Areas


Floor drains, trenches, piping, sumps

Process area sinks and piping

Roof leaders

Drainage swales & culverts

Storm sewer collection systems

Storm water detention ponds and fire ponds

Surface water bodies

Septic systems leachfields

Drywells and sumps

Drainage Systems and Areas


Areas of dischargeWaste pilesWaster water collection systemsLandfills / landfarmsSprayfieldsIncineratorsHistoric FillOpen Pipe discharges

Discharge and Disposal Areas


Loading / Transfer areasWaste Treatment areasBoiler roomsAir vents and ductsHazardous material storage

Building Interior Areas


Electrical transformers & capacitorsDiscolored or spill areasAreas of stressed vegetationCompressor vent dischargesNon-contact cooling water dischargesProduction wells

Other Areas of Concern


PastEnvironmental consultant and NJDEP Case Manager involved to obtain No Further Action (NFA) letter

Current

Only a Licensed Site Remediation Professional (LSRP) can issue Response Action Outcome (RAO)

Expect a decrease in NJDEP involvement, project completion will be quicker and more efficient

New Environmental Changes


Good Housekeeping with Prevention and Rapid Response Plans

Proper Storage and Handling of Materials

Manifesting Materials

Suggestions for:


Health, Safety and Action PlansDischarge Prevention PlanSpill Prevention Countermeasure & Containment Plan (SPCC)Emergency Action Plan (EAP)Material Safety & Data Sheets (MSDS)

Environmental TrainingOverall Company and Individual Health & Safety PlansConfined SpaceLockout & Tag out Procedures

Neighborhood Awareness

Suggestions for:


Owner / Operator and Seller

Preliminary Assessment (ISRA applicable)

Site Investigation

Based on Results -Potential additional actions:

Delineation Limits & Quantity

Remediation

Project Close Out

Common Scenario for:


Client: Confidential Real Estate OrganizationLocation: North New Jersey

Professional Services:Performed Preliminary Assessment and Site Investigation activities to identify potential Areas of ConcernObtained site history informationIdentified Industrial Site Recovery Act (ISRA) concerns and review of previous corporate transfer documentationEvaluated and determined multiple previous leaseholdersInvestigated / documented previous uses and processesPerformed preliminary soil sampling and analytical servicesPreparation and submission of:

Phase I Environmental Site Assessment Preliminary AssessmentSite Investigation ReportRemedial Action Work PlanReceived Negative Declaration

Seller - Project Experience


Client: Fortune 1000 Company Industrial UseLocations:

Professional Services:Performed initial site investigation and remediation services of for Areas of ConcernRemediation of contaminated areas impacted by site operationsExcavated and removed one 8,000 gallon underground storage tank system and one hydraulic liftExcavated, transported and disposed of approximately:

250 tons of non-hazardous contaminated soils3,000 gallons of hazardous liquid materialsTwenty-five 55 gallon drums

Cleaned and disposed of sediment from oil-water separators, sumps and inletsInstalled, operated and maintained a remedial groundwater treatment systemPerformed numerous soil borings and soil sampling activitiesPerformed preliminary and final groundwater sampling servicesReceipt of closure documents from governing agencies

Owner / Operator - Project Experience


Seller - Project ExperienceClient: Fortune 1000 MergerLocation: Central New Jersey

Professional Services:Performed Preliminary Assessment and Site Investigation to identify Areas of ConcernObtained site history informationInvestigated / documented inventory of all hazardous materialsReviewed production processes including water useResearched previous environmental permits given by government agencies and administrative actions against any property owners for violating environmental lawsPerformed environmental remediation activities, that resulted in favorable site conditions.Submitted a Remedial Action Report (RAR) and materials to the NJDEP addressing each area of concernReceived No Further Action (NFA) letter


BuyerEnvironmental Due Diligence & To What Degree

Transactional ScreenEnvironmental Phase OnePreliminary Assessment (PA)

Determine Recognized Environmental Concerns (RECs)Decision points

Common Scenarios for:


Client: Energy CompanyLocation: North New Jersey

Professional Services:Performed Preliminary Assessment and Site Investigation activities to identify potential Areas of ConcernObtained site history informationIdentified Industrial Site Recovery Act (ISRA) concerns and review of previous corporate transfer documentationEvaluated and determined multiple adjacent properties, which documented off site impacts from previous uses by othersInvestigated / documented uses and processesPerformed preliminary soil sampling and analytical servicesPreparation and submission of:

Phase I Environmental Site Assessment Preliminary AssessmentPreliminary Soil Sampling ReportReceived Negative Declaration

- Project Experience


Contact Information

1 (800) 571-8661www.entechgroupinc.com

Thomas A. Furey, P.E., [email protected]

Joseph P. Colucci, [email protected]

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final boma may 2012 renewable energy and environmental(1)

Technology