kbra abs solarcity lmc series iv llc series 2015-1 new issue report

7/26/2019 KBRA ABS SolarCity LMC Series IV LLC Series 2015-1 New Issue Report

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August 14, 2015

U.S. Structured Finance

ABS New Issue Report

Analytical Contacts:

Cecil Smart, Jr., Senior [email protected],(646) 731-2381

Andrew Giudici, Managing [email protected],(646) 731-2372

Lenny Giltman, Senior [email protected],(646) 731-2378

SolarCity LMC Series IV, LLC,Series 2015-1

$123,500,000 Residential Distributed Generation Solar Securitization
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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August 14, 2015SolarCity LMC Series IV, LLC,

Series 2015-1

Page 2

Executive Summary ..................................................................................................................... 3

Key Credit Considerations .......................................................................................................... 4

Transaction Overview ................................................................................................................... 8

ABS Structure .......................................................................................................................... 8

Tax Equity Structure ................................................................................................................. 8

Originator and Manager Review ................................................................................................... 11

Management .......................................................................................................................... 11

Customer Acquisition & Development ............................................................................................ 13

Underwriting .......................................................................................................................... 13

Site Audit .............................................................................................................................. 14

Engineering Design ................................................................................................................. 14Contract Verification ................................................................................................................ 14

Installation ............................................................................................................................ 14

Monitoring & Maintenance ........................................................................................................ 15

Collections Policy .................................................................................................................... 15

Contract Reassignments .......................................................................................................... 16

Production Estimate ................................................................................................................... 18

KBRA Production Estimate ........................................................................................................ 18

Operations & Maintenance ........................................................................................................... 27

Cash Flow Assumptions .............................................................................................................. 29

Base Case Scenario ................................................................................................................. 29

KBRA Stress Scenarios ............................................................................................................ 30

Transaction Structure ................................................................................................................. 33

Table of Contents


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Executive SummaryThis new issue report is based on information regarding the underlying solar equipment, power purchase

agreements, leases, insurance policy and the terms of the securitization as of July 22, 2015. This report

does not constitute a recommendation to buy, hold, or sell securities. Kroll Bond Rating Agencys (KBRA)

rating represents timely payment of interest and full payment of principal by the transactions legal finamaturity date.

The total aggregate solar discounted asset balance (ASDAB), consisting of the discounted payments of

the leases and power purchase agreements (PPA), is approximately $214.1 million. The securitization

share of the ADSAB is approximately $182.0 million. The portfolio consists of approximately 55.9% PPAagreements and 44.1% lease agreements by ASDAB and approximately 55.3% PPA agreements and

44.7% lease agreements by number. The original tenor of each agreement is 20 years and the weighted

average remaining term of the agreements is 230.4 months. The weighted average FICO of the underlying

customers of the photovoltaic systems (PV Systems)is 742.

KBRA analyzed the transaction using theGeneral Rating Methodology for Asset-Backed Securities

published on July 30, 2012. In applying the methodology, KBRA analyzed the historical data associated

with solar lease and PPA collections, asset performance and the legal framework of the various tax equity

structures and insurance policy. The capital structure was tested by applying stressed assumptions in

KBRAs cash flow analysis of the transaction.

Transaction Parties

Issuer SolarCity LMC Series IV, LLC

Depositor SolarCity Series Holdings IV, LLC

Originator / Manager SolarCity Corporation (Company)

Custodian /Indenture Trustee /Transition Manager

U.S. Bank National Association

Financing Funds

Blue Skies Solar I, LLCSolar Integrated Fund I, LLCSolar Integrated Fund II, LLC

Visigoth Solar I, LLC

Managing Members

For Blue Skies Financing Fund: Solar Ulysses Manager I, LLCFor Integrated I Financing Fund: Solar Integrated Manager I, LLCFor Integrated II Financing Fund: Solar Integrated Manager II, LLCFor Visigoth Financing Fund: Visigoth Solar Managing Member I,LLC

Rated Notes

ClassInitial Amount

($)

Interest

Rate (%)

Anticipated

Repayment Date

Final Maturity

Date

KBRA

Rating

A Notes 103,500,000 4.18% February 21, 2022 August 21, 2045 A (sf)

B Notes 20,000,000 5.58% February 21, 2022 August 21, 2045 BBB (sf)

Total 123,500,000
https://www.krollbondratings.com/show_report/184https://www.krollbondratings.com/show_report/184https://www.krollbondratings.com/show_report/184


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Tax Equity Investor Members

For Blue Skies Financing Fund: American Honda Motor Co., Inc.For Integrated I Financing Fund: Solar TC Corp.For Integrated II Financing Fund: Solar TC Corp.For Visigoth Financing Fund: Capital One, N.A.

Tax Loss InsurersUnderwriters at Lloyds, LondonColumbia Casualty Company

Key Credit Considerations

Experienced Originator / Servicer

SolarCity is an experienced and capable originator/aggregator and servicer of

residential solar leases and PPAs. The Company has been operating in the residential

solar market since 2006 and is the largest company in the industry. SolarCity s

management team is experienced and has managed the new company through the

recent financial crisis. The Companys portfolio performance has been exceptional

with average delinquencies as a percentage of total billings over its previous fiscal

year for receivables 90 and 180 days past due at 0.79% and 0.56%, respectively.

KBRA believes the portfolios strong performance is a reflection of the Companys

underwriting, loss mitigation and collection practices.

+

Strong Credit Profile of Underlying Customers

The weighted average FICO (by ASDAB) of the underlying customers of the PV

Systems is 742. Customers with a FICO equal to or greater than 700 represent

69.2% of the PV Systems and 68.6% of the ASDAB. Per traditional credit metrics,

these customers would be classified as prime.

+

Transaction Structure Credit Enhancement

KBRA believes the transaction benefits from sufficient credit enhancement and a

structure that accelerates principal payments to the Notes upon weakening asset

performance. The credit enhancement levels in the transaction are sufficient to cover

KBRAs stressed cash flow assumptions for each class under the corresponding stress

levels for the assigned ratings. Credit enhancement for the Notes consists of

overcollateralization, an interest reserve account, a supplemental reserve account,

excess cash flows and, in the case of the Class A Notes, subordination:

Subordination and Overcollateralization:The Class A Notes benefit from

subordination provided by the Class B Notes and overcollateralization resulting

from the expected payments by the underlying customers of the PV Systems.At closing the overcollateralization relative to the securitizations share of the

ASDAB is 32.1%. The Class A Notes will also benefit from subordination from

the Class B Notes equal to approximately 11.0%.

Interest Reserve Account:At closing a liquidity reserve account will be fully

funded to cover six months of interest on both the Class A and Class B notes.

The initial deposit in the liquidity reserve will be approximately $2.8 million.

+


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Supplemental Reserve Account:At closing a supplemental reserve account

will be funded with $3 million. The account will accumulate additional funds

over time for future inverter replacement costs, the purchase options

associated with the related Financing Funds and the deductibles associated with

each Tax Loss Insurance Policy.

Excess cash flow:The transaction features significant excess cash flow, whichresults from the difference between the discounted cash flows expected from the

aggregate distributions to the respective Managing Members and the weighted

average interest rate on the Notes.

Transaction Structure Class B Interest Payments May Be Deferred

A Class B Interest Deferral Period will commence if the aggregate outstanding balance of the

Notes is greater than zero on the anticipated repayment date (i.e. February 2022), the DSCR is

less or equal to 1.00 on any determination date or if event of default under the indenture has

occurred. All Class B Note interest that becomes due during a Class B Interest Deferral Period

will be deferred until the interest and principal on the Class A Notes and the principal on the

Class B Notes are paid in full.

KBRA views the mechanism for deferral of some portion of interest on the Class B Notes as a

credit positive for the Class A Notes as these amounts are paid after principal payments on

the Class A Notes. However, KBRA views this feature as a credit negative for the Class B

Notes as a portion of the expected interest to the Class B Notes may become more deeply

subordinated. In KBRAs cash flow analysis, principal and ultimate interest of the Class B

Notes is fully repaid under all stress scenarios.

+/

Transaction Structure Tax Loss Insurance Policies to Cover Tax Basis

Adjustments

The PV Systems were financed via tax partnerships (i.e. the Financing Funds) between

a Managing Member and the related Tax Equity Investor. Each Financing Fund holds

the right to an investment tax credit (ITC)in an amount that is based on the fair

market value (FMV) of the related PV Systems at the time of purchase. The related

Tax Equity Investor retains a substantial interest in the Financing Fund, which entitles

it to 99% of the ITCs, until the flip date, which occurs on the later of a specified date

or once the Tax Equity Investor realizes a specified rate of return.

In the event the IRS subsequently determines the fair market value of the PV Systems

relating to any Financing Fund is lower than what was claimed, SolarCity has agreed

to pay the related Financing Fund the amount of any tax loss payable by the Managing

Member and Tax Equity Investor. In the event SolarCity is unable to fulfill this

reimbursement obligation, the Issuer will have the benefit of a Tax Loss Insurance

Policy for each Financing Fund, with the Indenture Trustee named as a loss payee, to

cover tax loss payments to the Tax Equity Investor up to 35% (inclusive of the

associated deductible) of the ITCs claimed by the Financing Fund with respect to the

PV Systems and fees and expenses (Contest Costs) incurred by the Financing Fund

related to its defense or appeal against such claim.

The insurers will be Underwriters at Lloyds, Londonand Columbia Casualty Company.

KBRA has performed credit estimates of these two insurers and does not view their

+/-


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creditworthiness to be a constraint on the rating of the Notes, although it should be

noted that the transaction documents will not require the replacement of an insurer if

an insurer is downgraded.

KBRA notes that the Tax Loss Insurance Policies only protect against tax losses and

Contest Costs in an amount up to of 35% (inclusive of the associated deductible) of

the ITCs claimed by each of the Financing Funds for the related PV Systems. Basedon KBRAs valuation approach of the PV Systems, it is not anticipated that any

adjustment to the FMV of the PV Systems would result in the sum of the Contest Costs

and tax loss payments to exceed 35% of the ITCs claimed. KBRA believes these Tax

Loss Insurance Policies act as an effective mitigant to the tax basis adjustment risk

posed by partnership flip structures that are sometimes used in solar securitizations.

Refund Payments May Reduce Available Cash Flow

The majority of PV Systems under lease agreements contain a minimum performance

guaranty that entitles the underlying customer to a performance guaranty payment

from SolarCity to the extent that the cumulative energy production for the PV System

during a calendar year is less than the contractual guaranteed amount. Moreover, theamount of the payment usually contains an annual escalator to account for the

anticipated annual increase in costs associated with obtaining energy from a

traditional utility provider to supplement the energy deficit. While performance

guaranty payments are obligations of SolarCity (other than in the case of the Blue

Skies Solar I, LLC), KBRA assumed in its analysis that cash flow from the transaction

would be used for these payments. Consequently, prolonged underperformance of PV

Systems under lease agreements will lead to increasing performance guaranty

payments over time, which would adversely impact available cash flow to service

interest and principal of the Notes.

The expected performance of the PV Systems was estimated by DNV GL, an

independent engineer. Per the independent engineers report, the PV Systemsaverage energy production is 103% of expected output, while the annual degradation

of this output is 0.5% per annum. However, KBRAs rating scenarios assume the PV

Systems will operate at a P90 generation profile with an annual degradation rate of

1.3%, which results in performance guaranty payments of approximately $25.6 million

and $26.1 million, respectively, under KBRAs BBB and A rating scenarios.

Lack of Historical Static Pool Data

Although SolarCity began offering leases and PPAs to homeowners in 2006,

approximately 50% of its installations were completed in the last year. SolarCity has

experienced significant growth over a short period of time, which could negatively

impact its business by straining resources and increasing expenses as it attempts tomanage a growing number of systems.

Further, residential solar systems are a relatively new asset class and the business

model for solar developers continues to evolve. As such, only limited performance

data is available for this sector. As a proxy, KBRA employed elements of its RMBS

methodologies to forecast payment defaults.


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Geographical Concentration

California residents represent approximately 46.3% by number of obligors on the

underlying PV Systems in the transaction and the top three states (CA, AZ, CO)

account for approximately 70.4% of obligors. KBRA believes that geographic

concentration for the subject transaction is significant as the top three states (CA, AZ,

CO) account for 76.5% of the portfolio by ASDAB. Transactions with greater

geographic diversity are better insulated from regional home price decline relative to

pools with higher geographic concentration. A regional downturn may result in

increased defaults and reduced cash flow.

Write-off Policy Atypical for Consumer Assets

A PV System is deemed defaulted if the underlying customer is 120 days past due on

any portion of the lease or PPA agreement and the PV System has not been removed

and redeployed within 240 days after the end of 120-day period. The total period of

360 days until recognition of a default is twice as long as the generally accepted

standard for most consumer assets. Once a default is recognized, on the next

payment date 90% of the expected discounted cash flow from the defaulted PV

System prior to the recognition of the default is payable to the Notes.

Despite the atypical default recognition policy, the impact of non-payment by any

underlying customer is captured in the debt service coverage ratio (DSCR)

calculation, which is calculated on every determination date. This transaction features

DSCR-related triggers for the following events: (i) an early amortization period will

commence if the DSCR falls below 1.15 for two consecutive determination dates; (ii) a

Class B Interest Deferral Period will commence if the DSCR falls below 1.00 for any

determination date; and (iii) a DSCR/Insurance Sweep Period will commence if the

DSCR falls below 1.25 on any determination date.


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Transaction Overview

ABS Structure

The transaction is secured by the equity interests of the managing members (Managing Members) in

the related Financing Funds that in the aggregate own a portfolio of 16,400 leases and PPAs associatedwith residential solar photovoltaic installations (PV Systems) and any proceeds received from draws

under any tax loss insurance policy (Tax Loss Insurance Policy) supporting the transaction. Portfolio

cash flow shall include payments from the underlying customers of the PV Systems and any payments due

from a utility or federal, state or local government authority under a performance based incentive (PBI)

program. However, the cash flow shall be net of operations and maintenance (O&M) expenses

administrative and insurance expenses and any distributions to a tax equity investor (Tax Equity

Investor)per the contractual schedule for the respective Financing Fund.

The transaction is structured such that interest is paid sequentially on the Class A Notes and then the

Class B Notes (together with the Class A Notes, the Notes)and then principal is paid sequentially on the

Notes. If the DSCR drops below 1.00 for any determination date, interest on the Class B Notes will be

deferred and subordinated to principal payments due to the Class A Notes and will remain in effect unti

the DSCR again rises above 1.00.

To the extent the aggregate principal balance of the Notes is unpaid after the anticipated repayment date

(ARD), additional interest (step-up interest)will accrue on the Notes at 5.0% per annum. Post-ARD

step-up interest is subordinated to the interest calculated at the rate as of the closing date for the

transaction and any principal payments due on the Notes. Moreover, any unpaid post-ARD step-up

interest in any collection period is not capitalized. KBRAs rating does not cover the payment of post-ARD

step-up interest.

The transaction benefits from credit enhancement in the form of overcollateralization, excess spread, an

interest reserve account, a supplemental reserve account and, in the case of the Class A Notes,

subordination. Proceeds deposited in the supplemental reserve account will be used to fund replacement

of active inverters in the portfolio, the purchase option associated with the respective Financing Funds andthe respective deductibles of the Tax Loss Insurance Policies.

Tax Equity Structure

The PV Systems were financed using four separate Financing Funds. SolarCity Corporation (SolarCity

or the Company) sold the PV Systems to the Financings Fund at fair market value (FMV). Each

Financing Fund is jointly owned via a partnership between a Tax Equity Investor and a Managing Member

that is an indirect wholly-owned subsidiary of SolarCity. The Tax Equity Investor has a substantial interest

(99%) in the Financing Fund, which permits the Tax Equity Investor to retain 99% of both the investment

tax credits (ITCs) granted and a majority of the associated depreciation in its Financing Fund. At

closing the Managing Members will become subsidiaries of SolarCity LMC Series IV, LLC (the Issuer).

The total ITCs are equal to 30% of the aggregate purchase price (i.e. FMV) of the PV Systems sold to the

Financing Funds. Moreover, any rebates, PBIs or solar renewable energy credits (SRECs) are paid to

the Financing Fund.

SolarCity relies on a third-party appraisal to determine the FMV of the PV Systems. The appraisa

calculates the FMV of the PV Systems using the lowest of the following approaches:

Income method (discounted cash flows of the net cash and tax benefits to the system owner)


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Market method (precedent sales of comparable properties)

Cost method (replacement costs of the PV Systems)

The purchase price of the PV Systems is the appraised FMV at the time it was sold to the Financing Fund.

The aggregate appraised FMV for the Financing Funds is $544.3 million.

Partnership FlipPPA and lease payments, PBI payments and monetized SRECs less O&M, administrative and insurance

expenses (Distributable Cash) are distributed in accordance with a contractual schedule for the

respective Financing Fund. Each Tax Equity Investor receives a priority return. The Tax Equity Investor in

Visigoth Solar I, LLC receives a pro rata return. Priority distributions to the Tax Equity Investors are

usually a preferred return based on each Tax Equity Investors capital contribution. Prorata distributions

are based on a contractual fixed percentage of Distributable Cash set forth in the partnership agreement.

When a Tax Equity Investor reaches a contractual IRR, its partnership interest reduces or flips. After the

flip the Managing Member has a call option to purchase all of the Tax Equity Investors partnership interest

in the Financing Fund after the flip date has occurred, except in the case of Visigoth Solar I, LLC a

specified date prior to a flip date. The timing of the purchase is either within 90 days after the projected

flip date or within six months after the actual flip date.

The option price is the generally the greater of:

the FMV of the Tax Equity Investors 99% interest at the time of the purchase; and

the amount of cash SolarCity would have to distribute to the Tax Equity Investor for it to reach the

buyout IRR.

The FMV is determined by an agreement between the Managing Member and Tax Equity Investor or by a

third-party appraisal.

ITCs assigned to the respective Financing Funds are subject to a five-year compliance period. Recapture

of the ITCs is triggered if:

the property ceases to be a qualified energy facility; or

a change in ownership interest occurs.

To avoid ITC recapture, the members of the partnership must retain ownership of the PV Systems for the

five-year period following the year the system is placed in service.

Tax Loss Insurance PolicyThe IRS may attempt to recapture a portion of the ITCs of a Financing Fund to the extent it concludes the

claimed FMV of the PV Systems on the Financing Funds tax return was overstated. The FMV serves as

the basis for the amount of the ITCs granted. The ITCs allowed are equal to 30% of the FMV. The ITCs

claimed by a Financing Fund are equal to 30% of the purchase price of the PV Systems sold to the

Financing Fund. If the IRS suspects the claimed valuation overstates the value of the PV Systems at the

time of the sale to a Financing Fund, it may audit the Financing Funds tax return.

Financing Fund Projected Flip Date

Solar Integrated I Fund, LLC 3/31/2020

Blue Skies Solar I, LLC 6/30/2020Visigoth Solar I, LLC 12/31/2020

Solar Integrated II Fund, LLC 12/31/2020


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Following the audit the IRS may formally challenge the FMV calculation. The IRS must submit its

challenge within 3 years following the filing of a Tax Equity Investor s tax return. If a challenge is made

during this period, the statute of limitations tolls until a decision is made regarding the challenge. The

minimum expected duration of an ITC challenge until resolution is approximately four years. Cash flow

received by the Issuer from payments under the lease and PPA agreements would still be available to

service interest and principal payments on the Notes during an IRS challenge.

To the extent an IRS challenge results in an adjustment in the FMV, the Financing Fund will have to repay

30 for every $1 reduction in the FMV. To mitigate against any reduction in the distributions to the

Managing Members associated with potential IRS recapture of ITCs, at closing the Issuer will purchase a

Tax Loss Insurance Policy for each Financing Fund with the Indenture Trustee named as loss payee under

the policy. The policy premiums will be paid at closing with proceeds from the transaction. If a policy

payment is required under a Tax Loss Insurance Policy, the associated deductible will be paid by the

Issuer via proceeds deposited in the supplemental reserve account. The aggregate deductibles of the Tax

Loss Insurance Policies will be funded on each Payment Date via deposits to the supplemental reserve

account.

The maximum protection provided by each Tax Loss Insurance Policy represents 35% (inclusive of the

associated deductible) of the ITCs claimed by each Financing Fund. After a review of SolarCitys valuechain and the associated cost per kilowatt to manufacture a PV System, KBRA concluded that the potentia

sum of tax loss payments and Contest Costs equal to 35% of the ITCs claimed is an appropriate Aleve

stress to the FMV.

Underwriters at Lloyds, London and Columbia Casualty Companywill provide coverage for all of the Tax

Loss Insurance Policies. The coverage provided by the insurance providers will be split 62.5%/37.5%

respectively. KBRA performed a credit assessment of the insurance providers and currently does not view

the providers as a constraint on the proposed ratings of the Notes. However, the transaction does not

provide for a replacement mechanism or any structural protections in the event one or both of the

insurance providers are downgraded.


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Originator and Manager ReviewAs part of the rating process, KBRA completed an operational review at SolarCitys San Mateo, CA

headquarters with satisfactory results.

Founded in 2006, SolarCity is a publicly traded (NASDAQ: SCTY) vertically integrated renewable energy

company engaged in originating, installing and servicing solar energy systems. The Company primarily

serves customers in 16 states and the District of Columbia. Per GTM Research, SolarCity is currently

installing approximately one out of every three solar energy systems installed in the U.S. and is the

largest employer in the U.S. solar industry. SolarCity has provided or has contracted to provide systems

or services to more than 200,000 customers.

SolarCity structures the vast majority of its customer agreements as leases, PPAs or customer loans. For

the year ended December 31, 2014, approximately 98% of new customers chose to enter into financed

lease, power purchase agreements or customer loans rather than buying a solar energy system for cash

Lease customers pay a fixed monthly fee with an electricity production guarantee. PPA customers pay a

fee based on the amount of electricity the solar energy system produces. SolarCitys consumer loan

product, MyPower, offers the benefits of customer-owned systems financed by SolarCity.

Management

KBRA has met with management and believes the team has the knowledge and industry experience to

service the securitized pool.

Lyndon Rive, Chief Executive Officer

Mr. Rive co-founded SolarCity in 2006 and is responsible for the overall direction of the Company. Mr

Rive has led the Companys efforts to raise sufficient funds to finance more than $4 billion on solar

projects from a range of investors. He has also helped the Company enter a range of new markets to

serve more than 300 schools and universities, more than 100 regional and national homebuilders and

major organizations. Mr. Rive co-founded Everdream, an industry leader in software services for large

scale, distributed computer management. He negotiated Everdreams partnership with Dell Computerwhich acquired the company in 2007.

Peter Rive, Chief Technology Officer

Mr. Rive is SolarCitys co-founder and Chief Technology Officer, overseeing the Companys development of

next generation software and hardware technologies, including battery systems and solar mounting

hardware. Mr. Rive has held several senior technology positions throughout his career focused on

streamlining operational activities through the use of advanced software. Prior to co-founding SolarCity

Mr. Rive was the chief technology officer at Everdream, where he designed a software platform to

centralize computer management. Everdream was acquired by Dell in 2007.

Hayes Barnard, Chief Revenue Officer

As Chief Revenue Officer, Mr. Barnard focuses on the ways in which consumers, businesses and

government organizations can switch to cleaner energy at a lower cost, through a range of integrated

solutions. Prior to joining SolarCity, Hayes was the chairman and CEO of Paramount Equity, a consume

finance company specializing in mortgage, insurance, and residential solar. By mid-year 2013, Paramount

Equity had funded more than $12 billion in consumer financing, and helped over 55,000 families achieve

greater savings since 2003. Mr. Barnard serves on the board of directors of Paramount G|R Holdings, LLC

and also serves as President of the GivePower Foundation, SolarCitys initiative to provide light via

renewable energy to schools that lack access to electricity. Mr. Barnard holds a bachelors degree in

business management and marketing from the University of Missouri.


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Tanguy Serra, Chief Operating Officer

As Chief Operating Officer, Mr. Serra oversees SolarCity's residential solar service delivery, including

installation, maintenance and customer account management. Prior to SolarCity, Mr. Serra was the CEO

of Vivint Solar, a company he co-founded in 2011 and grew into one of the largest residential solar

providers in the U.S. in less than two years. Vivint Solar was acquired by the Blackstone Group in Octobe

2012. Prior to his time at Vivint, Mr. Serra served for seven years as a vice president at TPG Capital, a

global private investment firm with $48 billion of capital under management. He led TPG Capital's

investments in a range of companies in Europe, Asia and North America during his tenure. Prior to joining

TPG Capital, Mr. Serra successively served on Merrill Lynch's energy investment banking team and Morgan

Stanley Capital Partners, the bank's private equity division. He has served on the boards of the TDF

Group, an operator of shared facilities and terrestrial networks in Europe and HKE, a leading Chinese

renewable energy company. Mr. Serra holds a bachelor's degree from ESCP in Paris.

Brad Buss, Chief Financial Officer

Mr. Buss is SolarCitys Chief Financial Officer and oversees SolarCitys global finance, accounting

structured finance and investor relations organizations. Mr. Buss has an extensive background in finance

and operations, including experience in mergers and acquisitions, project finance and capital market

transactions for both public and private companies. Prior to joining SolarCity, Mr. Buss served Cypress

Semiconductor as chief financial officer from August 2005 to June 2014 and oversaw a range of significant

achievements, including the IPO of the companys SunPower subsidiary. Prior to joining Cypress, Mr. Buss

served as vice president of finance at Altera Corp., and prior to that was CFO of Wyle Electr onics Atlas

Services Division. He also served as a member of Cisco Systems worldwide sales finance team, and as

chief financial officer at Zaffire Inc. Mr. Buss is currently a member of the board of directors of Tesla

Motors and Cafepress. Mr. Buss holds a bachelors degree in economics from McMaster University and an

honors business administration degree in finance and accounting from the University of Windsor.


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Customer Acquisition & DevelopmentSolarCity markets and sells its products and services through a national sales organization that includes a

direct outside sales force, call centers, a door-to-door sales team, a channel partner network and a robust

customer referral program. SolarCity has structured its sales organization to efficiently engage prospective

customers from initial interest to customized proposals to signed contracts.

Once a lead is generated, a salesperson typically schedules a call with the prospective customer. During

the call, the salesperson obtains utility bill information (usage and pricing tiers), designs a system and

generates a formal proposal. The customer remains on the phone throughout this process and views the

salespersons computer desktop over the internet, enabling the customer to participate interactively

during the system design process. A typical call takes approximately 30 minutes and culminates in a

proposal contract being emailed to the customer.

Initial system design occurs in conjunction with this highly interactive contract generation process, as

enabled by SolarCityscustom software tools, Energy Designer (ED) and SolarBid. Customer information

is imported from SalesForce (used for lead management) into EdLite (a version of ED), which leverages

satellite imagery (purchased separately) to allow rapid design of PV Systems. ED serves as an overlay for

design software in order to rapidly generate engineering drawings and to rapidly generate energyproduction forecasts. ED automates an array of basic electrical and structural engineering calculations

which streamlines the design process. The energy forecast, system specifications, and utility information

flow from ED to SolarBid, a software tool which automates pricing and creation of customer contracts.

Underwriting

SolarCitys general underwriting criteria require a minimum FICO of 650 for a prospective customer.

However, the specific credit underwriting policy with respect to the Financing Funds required that a

customer met the following conditions:

Under Blue Skies Solar I, LLC

o

Customer has a FICO score greater than or equal to 680; or

o Customer fully prepays its agreement.

Under Solar Integrated I Fund, LLC

o Customer has a FICO score greater than or equal to 680;

o Customer has a FICO score between 650 and 679 and no more than 5% of the total kW for

all systems and projects have customers with a FICO score between 650 and 679; or

o Customer fully prepays its agreement.

Under Solar Integrated II Fund, LLC

o Customer has a FICO score greater than or equal to 650; or

o

Customer fully prepays its agreement

Under Visigoth Solar I, LLC

o Customer has a FICO score greater than or equal to 650;

o Customers with a FICO score between 650 and 679 limited to 20% of total customers; and

o The average FICO score of all customers in the fund is 700 or greater.


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Site Audit

Site auditors based at each of SolarCitys regional operating centers visit each site to verify assumptions

made by the salesperson when generating a proposal. An audit involves verification of the following:

Key dimensions and measurements (to make corrections to the initial 3D model, which is created

based on multi-view aerial photography); Obstructions and shading;

Characteristics of the mounting plane(s) (roof surface, protrusions, etc.);

Structural characteristics (including an attic entry to verify rafter size, spacing, truss design);

Electrical characteristics (service panel location/age/rating, code compliance); and

Safety hazards.

Auditors record information in EdLite, an internet-enabled tablet computer. The auditor executes a photo

checklist so that attributes of the mounting plane, structure, obstructions, and electrical system are

documented visually.

Engineering Design

Following the site audit, the engineering design team performs a series of technical checks on the design

and finalizes drawings and the bill of materials. These checks include finalizing equipment selection

module placement, and racking layout. Basic structural and electrical engineering checks are integrated

into the ED and are performed on every design.

The Sponsors staff includes licensed professional civil and electrical engineers who can manually verify

those PV systems which require more complex calculations and can also certify drawings for certain

jurisdictions if required.

Contract Verification

A dedicated contract verification team compares the final design to the assumptions in the executed

customer contract. If a material change to the design has occurred, then a customer contract amendmentis executed. Common reasons for amendments include changes in assumed shade or sun exposure;

changes to module layout; and accommodation of customer requests. An amendment will be executed i

the forecasted electrical output varies by more than 20% or more for non-full prepay PPAs or by more

than 10% or more for leases, relative to the original estimate.

Installation

Installation is performed by a team of 2-3 persons. SolarCity obtained all necessary building permits prior

to installation. The Company is a licensed contractor or uses licensed subcontractors in every community

it services and is responsible for every customer installation. For substantially all of its residentia

projects, SolarCity is the general contractor, construction manager and installer. To assist installers while

onsite, the Company also provides a technical support hotline, which installers may call to obtain real-timeadvice to remedy installation issues. As of May 2014 less than 5% of SolarCitys residential installations

were installed by subcontractors.


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Monitoring & Maintenance

SolarCitys proprietary monitoring software provides its customers with a real-time view of their energy

generation and consumption. SolarCitys monitoring systems collect, monitor and display critica

performance data from its solar energy systems, including production levels, local weather, electricity

usage and environmental impacts. These monitoring systems allow SolarCity to confirm the continuing

proper operation of its solar energy systems, identify maintenance issues and provide its customers with

an understanding of their energy usage, allowing them the opportunity to modify their usage accordingly.

SolarCitys proprietary MySolarCity application offers a graphical display available on smartphones and any

device with a Web browser; its proprietary EnergyExplorer provides homeowners a self-guided tour of

their energy usage; and MySystem allows customers to track PV System installation throughout the

process.

Collections Policy

SolarCity has implemented the following collections policy with respect to lease agreements and PPAs. This

policy was designed to identify payment problems early enough to address delinquencies quickly and,

when necessary, remove, redeploy and reassign solar energy systems to preserve the value of solar

energy systems:

Day 1: Customer payment due and not made.

Day 10: Customer payment is officially late.

Day 15: Contact customer to understand why payment has not been made.

Day 31: Send reminder letter to notify customer of late payment that is due.

Day 61: Contact customer again to inquire about late payment and advise that SolarCity wil

turn off his/her system on Day 70 if payment is not received.

Day 65: Send letter to customer stating the same.

Day 65: Coordinate internally to arrange for system shutdown.

Day 65: Contact customer to inform him/her that SolarCity will shut down system within the

next five days.

Day 69: Confirm system ready to shut down.

Day 70: Commence the process to shut down system. Send note to customer that the

system has been turned off and if he/she does not bring their account current within

20 days, SolarCity will invoice the customer for all amounts outstanding, including

penalty payments in the agreement, and suspend performance under the contract

until receipt of such payments.

Day 90: Send suspension notice and the aforementioned invoice.

Following system shut down, customers have the option to pay the entire outstanding balance to have the

system turned on again.

Below are SolarCitys receivablesaging data from January 2014 through April 2015.


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Contract ReassignmentsSolarCity has the right to remove PV Systems upon default or failure of the customer to pay all amounts

outstanding and costs incurred. System removals are extremely rare and account for a small percentage

of the Companys portfolio. The redeployment process of systems is managed by SolarCitys asse

management group (AMG).

Generally, contract reassignments are the result of customer financial distress (short sale, foreclosure,

divorce, death of the customer, or sale of the home). In cases of death and divorce the agreement is

reassigned to surviving spouse or heir, where the system is installed. In other cases, AMG attempts to

redeploy a system by offering it at a discount to a prospective customer who has similar energy and

engineering requirements to the repossessed system.

0.75% 0.79% 0.76%

0.85% 0.90%

0.80%0.77%

0.66%

0.51% 0.54%

0.57% 0.60% 0.60%

0.53%

0.61%

0.48%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%0.60%

0.70%

0.80%

0.90%

1.00%

Receivables Aging as % of Total Billed

Past Due 90+ Days Past Due 180+ Days


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Below are the Companys reassignment and recovery data.

Normal Sale,

91.1%

Death, 3.2%

Short Sale, 2.7%

Divorce, 1.6% Foreclosure, 1.1%

Other, 0.3%

Reason for Reassignment

NormalTransfer, 91.0%

Title Transfer,

2.8%

Full Prepay,2.8%

Discounted,2.3%

Partial Prepay,0.9% Other, 0.2%

Reassignment Resolution


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Production EstimateThe amount of energy output from a solar system is dependent upon the solar resource. SolarCity

engaged DNV GL (Independent Engineer or IE) to evaluate its solar resource assessment that is a

primary input into its pro forma forecast. The solar resource assessment is based on using the PVWatts

forecasting engine, developed by the National Renewable Energy Laboratory. The data used by the

PVWatts forecasting engine are derived from the 1961 1990 National Solar Radiation Database and

include solar radiation and other meteorological elements for one year intended to represent typica

conditions over a long period of time. Given the background of these data, the IE considers theuncertainty of SolarCityssolar radiation data to be higher than a well calibrated ground measurement

station or newer satellite based measurements. However, per the IE the lack of accuracy for a given

home is reduced for a particular portfolio depending on the large number of PV Systems being

aggregated.

The IE evaluated the PV Systems financed by the Financing Funds. The production data obtained by the

IE was then compared to SolarCitys original forecast, which is consistent with a P50 generation profile

P50 production is the median expected production of a PV System. Based on the IEs findings, the

average production of the portfolio of PV Systems was 103% of the Companys P50 production estimate.

The standard deviation of the production data is 10.7%. Approximately 17% of the portfolio produced a

levels that are less than 95% of the Companys P50 production estimate, which accounts for the large

dispersion of the production data and suggests performance may vary greatly from one PV System to thenext.

KBRA Production Estimate

Probability of exceedance values (P-values) provide insight into the volatility of the solar resource over

a given period. Monte Carlo simulations are used to calculate P-values for the portfolios energy

production. A one-year P-value represents the probability of exceedance for any given individual year. Fo

example, the actual energy production for any given year is equally likely to be higher or lower than the

P50 value. Similarly, a multi-year P-value represents the probability of exceedance for any given multi-

year (i.e. the average energy production for a given 10-year period is 90% likely to exceed to the 10-yea

P90). KBRA analyzed the securitizations cash flows under a one-year P90 to account for the use of

satellite data and uncertainty imbedded in the solar resource forecast. However, unlike large scale utilityprojects, the securitization benefits from a portfolio effect, which should result in a reduction in inter-

annual variability as poor production in one region might be offset by stronger production in another area.

KBRAs rating stress incorporates a reduction in each systems availability rate in order to account for the

risk that the systems are offline for a given period of time and unable to produce power. KBRA uses a

1.3% degradation assumption under each rating scenario to account for the risk that the amount of

energy the system can produce deteriorates over time. It should be noted that KBRAs 1.3% degradation

assumption is substantially higher than the IEs base case assumption of 0.5%.

# of Completed

Reassignments

% of

Completed

Reassignments

PV of Contract

Cash Flows

(Before)

PV of

Contract Cash

Flows (After)

Amount of

Loss / (Gain)Recovery

Standard Transfer 3,950 97.7% $49,572,462 $49,572,462 ($1,539) 100.0%

Discounted Transfer 92 2.3% $2,098,485 $2,098,485 $599,121 71.4%

Total 4,042 100.0% $51,670,947 $51,670,947 $597,582 98.8%

Cumulative Reassignment Recoveries


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P-50 Production Estimates

Year 1 2 3 4 5 6 7 8 9 10

AZ 102.9% 102.3% 101.7% 101.1% 100.5% 99.9% 99.3% 98.7% 98.1% 97.5%

CA 101.6% 101.0% 100.4% 99.8% 99.2% 98.6% 98.0% 97.4% 96.8% 96.2%

CO 94.2% 93.6% 93.1% 92.5% 92.0% 91.4% 90.9% 90.3% 89.8% 89.2%

CT 100.3% 99.7% 99.1% 98.5% 97.9% 97.4% 96.8% 96.2% 95.6% 95.0%

DC 100.5% 99.9% 99.3% 98.7% 98.1% 97.6% 97.0% 96.4% 95.8% 95.2%

DE 95.2% 94.7% 94.1% 93.5% 93.0% 92.4% 91.9% 91.3% 90.8% 90.2%

HI 93.3% 92.7% 92.2% 91.6% 91.1% 90.5% 90.0% 89.4% 88.9% 88.4%

MA 99.1% 98.5% 97.9% 97.3% 96.8% 96.2% 95.6% 95.0% 94.5% 93.9%

MD 97.4% 96.9% 96.3% 95.7% 95.1% 94.6% 94.0% 93.4% 92.9% 92.3%

NJ 98.4% 97.8% 97.2% 96.6% 96.0% 95.4% 94.9% 94.3% 93.7% 93.2%

NV 99.4% 98.8% 98.2% 97.6% 97.0% 96.4% 95.9% 95.3% 94.7% 94.1%

NY 96.9% 96.4% 95.8% 95.2% 94.6% 94.1% 93.5% 92.9% 92.4% 91.8%

OR 104.4% 103.7% 103.1% 102.5% 101.9% 101.3% 100.7% 100.1% 99.5% 98.9%

TX 97.4% 96.9% 96.3% 95.7% 95.1% 94.6% 94.0% 93.4% 92.9% 92.3%

Year 11 12 13 14 15 16 17 18 19 20

AZ 96.7% 94.7% 93.5% 93.6% 94.0% 93.9% 93.5% 92.9% 92.3% 91.8%

CA 95.5% 93.5% 92.3% 92.3% 92.7% 92.6% 92.2% 91.7% 91.1% 90.6%

CO 88.6% 86.7% 85.6% 85.7% 86.0% 85.9% 85.6% 85.0% 84.5% 84.0%

CT 94.3% 92.3% 91.1% 91.2% 91.6% 91.5% 91.1% 90.6% 90.0% 89.5%

DC 94.5% 92.5% 91.3% 91.4% 91.8% 91.7% 91.3% 90.8% 90.2% 89.7%

DE 89.5% 87.6% 86.5% 86.6% 86.9% 86.9% 86.5% 86.0% 85.5% 84.9%

HI 87.7% 85.8% 84.7% 84.8% 85.2% 85.1% 84.7% 84.2% 83.7% 83.2%

MA 93.2% 91.2% 90.0% 90.1% 90.5% 90.4% 90.0% 89.5% 88.9% 88.4%

MD 91.6% 89.7% 88.5% 88.6% 89.0% 88.9% 88.5% 88.0% 87.4% 86.9%

NJ 92.5% 90.5% 89.4% 89.4% 89.8% 89.7% 89.3% 88.8% 88.3% 87.7%

NV 93.4% 91.5% 90.3% 90.4% 90.7% 90.7% 90.3% 89.7% 89.2% 88.6%

NY 91.1% 89.2% 88.1% 88.1% 88.5% 88.4% 88.0% 87.5% 87.0% 86.5%

OR 98.1% 96.0% 94.8% 94.9% 95.3% 95.2% 94.8% 94.2% 93.7% 93.1%

TX 91.6% 89.7% 88.5% 88.6% 89.0% 88.9% 88.5% 88.0% 87.4% 86.9%

* Source: DNV GL

Visigoth Solar I, LLC P-50 Production for One Year Period*


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Year 1 2 3 4 5 6 7 8 9 10

AZ 104.8% 104.1% 103.5% 102.9% 102.3% 101.7% 101.1% 100.5% 99.9% 99.3%

CA 103.8% 103.2% 102.5% 101.9% 101.3% 100.7% 100.1% 99.5% 98.9% 98.3%

CO 93.9% 93.4% 92.8% 92.2% 91.7% 91.1% 90.6% 90.0% 89.5% 89.0%

CT 101.0% 100.4% 99.8% 99.2% 98.6% 98.0% 97.5% 96.9% 96.3% 95.7%

DC 100.5% 99.9% 99.3% 98.7% 98.1% 97.6% 97.0% 96.4% 95.8% 95.2%

DE 98.7% 98.2% 97.6% 97.0% 96.4% 95.8% 95.2% 94.7% 94.1% 93.5%

HI 94.1% 93.5% 92.9% 92.4% 91.8% 91.3% 90.7% 90.2% 89.7% 89.1%

MA 100.5% 99.9% 99.3% 98.7% 98.1% 97.5% 97.0% 96.4% 95.8% 95.2%

MD 98.3% 97.7% 97.1% 96.5% 96.0% 95.4% 94.8% 94.3% 93.7% 93.1%

NJ 98.4% 97.8% 97.2% 96.6% 96.0% 95.5% 94.9% 94.3% 93.8% 93.2%

NY 98.4% 97.8% 97.2% 96.6% 96.0% 95.5% 94.9% 94.3% 93.8% 93.2%

OR 103.2% 102.6% 102.0% 101.4% 100.7% 100.1% 99.5% 98.9% 98.4% 97.8%

PA 98.2% 97.6% 97.0% 96.5% 95.9% 95.3% 94.7% 94.2% 93.6% 93.0%

TX 100.1% 99.5% 98.9% 98.3% 97.7% 97.2% 96.6% 96.0% 95.4% 94.8%

Year 11 12 13 14 15 16 17 18 19 20

AZ 98.5% 96.4% 95.2% 95.3% 95.7% 95.6% 95.2% 94.6% 94.0% 93.5%

CA 97.6% 95.5% 94.3% 94.4% 94.8% 94.7% 94.3% 93.7% 93.1% 92.6%

CO 88.3% 86.4% 85.3% 85.4% 85.7% 85.7% 85.3% 84.8% 84.3% 83.8%

CT 95.0% 93.0% 91.8% 91.9% 92.3% 92.2% 91.8% 91.2% 90.7% 90.1%

DC 94.5% 92.5% 91.3% 91.4% 91.8% 91.7% 91.3% 90.8% 90.2% 89.7%

DE 92.8% 90.9% 89.7% 89.8% 90.2% 90.1% 89.7% 89.1% 88.6% 88.1%

HI 88.4% 86.6% 85.5% 85.5% 85.9% 85.8% 85.4% 84.9% 84.4% 83.9%

MA 94.5% 92.5% 91.3% 91.4% 91.8% 91.7% 91.3% 90.7% 90.2% 89.7%

MD 92.4% 90.5% 89.3% 89.4% 89.8% 89.7% 89.3% 88.7% 88.2% 87.7%

NJ 92.5% 90.5% 89.4% 89.5% 89.8% 89.7% 89.3% 88.8% 88.3% 87.8%

NY 92.5% 90.5% 89.4% 89.4% 89.8% 89.7% 89.3% 88.8% 88.3% 87.7%

OR 97.0% 95.0% 93.8% 93.8% 94.2% 94.1% 93.7% 93.2% 92.6% 92.1%

PA 92.3% 90.4% 89.2% 89.3% 89.7% 89.6% 89.2% 88.7% 88.1% 87.6%

TX 94.1% 92.1% 91.0% 91.0% 91.4% 91.3% 90.9% 90.4% 89.8% 89.3%

* Source: DNV GL

Blue Skies Solar I, LLC P-50 Production for One Year*


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Year 1 2 3 4 5 6 7 8 9 10

AZ 105.0% 104. 4% 103. 7% 103. 1% 102.5% 101. 9% 101. 3% 100. 7% 100.1% 99. 5%

CA 103.7% 103.0% 102.4% 101.8% 101.2% 100.6% 100.0% 99.4% 98.8% 98.2%

CO 95.8% 95.3% 94.7% 94.1% 93.6% 93.0% 92.4% 91.9% 91.3% 90.8%

CT 100.6% 100.0% 99.4% 98.8% 98.2% 97.6% 97.0% 96.5% 95.9% 95.3%

DC 100.5% 99.9% 99.3% 98.7% 98.1% 97.6% 97.0% 96.4% 95.8% 95.2%

DE 97.7% 97.1% 96.5% 96.0% 95.4% 94.8% 94.2% 93.7% 93.1% 92.6%

MA 100.9% 100.3% 99.7% 99.1% 98.5% 97.9% 97.3% 96.7% 96.1% 95.6%

MD 98.2% 97.7% 97.1% 96.5% 95.9% 95.3% 94.8% 94.2% 93.6% 93.1%

NJ 99.0% 98.4% 97.8% 97.2% 96.7% 96.1% 95.5% 94.9% 94.4% 93.8%

NY 98.4% 97.8% 97.2% 96.6% 96.0% 95.5% 94.9% 94.3% 93.8% 93.2%

OR 104.4% 103.7% 103.1% 102.5% 101.9% 101.3% 100.7% 100.1% 99.5% 98.9%

PA 98.2% 97.6% 97.0% 96.5% 95.9% 95.3% 94.7% 94.2% 93.6% 93.0%

TX 100.4% 99.8% 99.2% 98.6% 98.0% 97.5% 96.9% 96.3% 95.7% 95.1%

Year 11 12 13 14 15 16 17 18 19 20

AZ 98.7% 96.6% 95.4% 95.5% 95.9% 95.8% 95.4% 94.8% 94.2% 93.7%

CA 97.4% 95.4% 94.2% 94.2% 94.6% 94.5% 94.1% 93.6% 93.0% 92.5%

CO 90.1% 88.2% 87.1% 87.1% 87.5% 87.4% 87.0% 86.5% 86.0% 85.5%

CT 94.6% 92.6% 91.4% 91.5% 91.9% 91.8% 91.4% 90.8% 90.3% 89.7%

DC 94.5% 92.5% 91.3% 91.4% 91.8% 91.7% 91.3% 90.8% 90.2% 89.7%

DE 91.9% 89.9% 88.8% 88.8% 89.2% 89.1% 88.7% 88.2% 87.7% 87.2%

MA 94.8% 92.8% 91.6% 91.7% 92.1% 92.0% 91.6% 91.1% 90.5% 90.0%

MD 92.4% 90.4% 89.3% 89.3% 89.7% 89.6% 89.2% 88.7% 88.2% 87.6%

NJ 93.1% 91.1% 89.9% 90.0% 90.4% 90.3% 89.9% 89.4% 88.8% 88.3%

NY 92.5% 90.5% 89.4% 89.5% 89.8% 89.7% 89.4% 88.8% 88.3% 87.8%

OR 98.1% 96.0% 94.8% 94.9% 95.3% 95.2% 94.8% 94.2% 93.7% 93.1%

PA 92.3% 90.4% 89.2% 89.3% 89.7% 89.6% 89.2% 88.7% 88.1% 87.6%

TX 94.4% 92.4% 91.2% 91.3% 91.7% 91.6% 91.2% 90.7% 90.1% 89.6%

* Source: DNV GL

Solar Integrated I Fund, LLC P-50 Production for One Year*


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Year 1 2 3 4 5 6 7 8 9 10

AZ 102.2% 101.6% 101.0% 100.4% 99.8% 99.2% 98.6% 98.0% 97.4% 96.8%

CA 101.2% 100.6% 100.0% 99.4% 98.8% 98.2% 97.6% 97.0% 96.5% 95.9%

CO 93.8% 93.2% 92.7% 92.1% 91.6% 91.0% 90.5% 89.9% 89.4% 88.9%

CT 100.3% 99.7% 99.1% 98.6% 98.0% 97.4% 96.8% 96.2% 95.6% 95.1%

DC 100.5% 99.9% 99.3% 98.7% 98.1% 97.6% 97.0% 96.4% 95.8% 95.2%

DE 95.2% 94.7% 94.1% 93.5% 93.0% 92.4% 91.9% 91.3% 90.8% 90.2%

MA 98.2% 97.6% 97.0% 96.4% 95.9% 95.3% 94.7% 94.1% 93.6% 93.0%

MD 97.3% 96.7% 96.1% 95.5% 94.9% 94.4% 93.8% 93.2% 92.7% 92.1%

NJ 98.4% 97.8% 97.2% 96.6% 96.1% 95.5% 94.9% 94.3% 93.8% 93.2%

NV 101.0% 100.4% 99.8% 99.2% 98.6% 98.0% 97.4% 96.8% 96.3% 95.7%

NY 96.0% 95.4% 94.9% 94.3% 93.7% 93.2% 92.6% 92.1% 91.5% 91.0%

OR 104.4% 103.7% 103.1% 102.5% 101.9% 101.3% 100.7% 100.1% 99.5% 98.9%

TX 96.7% 96.1% 95.5% 94.9% 94.4% 93.8% 93.2% 92.7% 92.1% 91.6%

Year 11 12 13 14 15 16 17 18 19 20

AZ 96.1% 94.0% 92.8% 92.9% 93.3% 93.2% 92.8% 92.2% 91.7% 91.1%

CA 95.1% 93.1% 92.0% 92.0% 92.4% 92.3% 91.9% 91.4% 90.8% 90.3%

CO 88.2% 86.3% 85.2% 85.3% 85.7% 85.6% 85.2% 84.7% 84.2% 83.7%

CT 94.3% 92.3% 91.2% 91.2% 91.6% 91.5% 91.1% 90.6% 90.0% 89.5%

DC 94.5% 92.5% 91.3% 91.4% 91.8% 91.7% 91.3% 90.8% 90.2% 89.7%

DE 89.5% 87.6% 86.5% 86.6% 86.9% 86.9% 86.5% 86.0% 85.5% 84.9%

MA 92.3% 90.4% 89.2% 89.3% 89.7% 89.6% 89.2% 88.6% 88.1% 87.6%

MD 91.4% 89.5% 88.4% 88.4% 88.8% 88.7% 88.3% 87.8% 87.3% 86.7%

NJ 92.5% 90.6% 89.4% 89.5% 89.8% 89.8% 89.4% 88.8% 88.3% 87.8%

NV 95.0% 93.0% 91.8% 91.8% 92.2% 92.1% 91.7% 91.2% 90.6% 90.1%

NY 90.3% 88.4% 87.2% 87.3% 87.7% 87.6% 87.2% 86.7% 86.2% 85.6%

OR 98.1% 96.0% 94.8% 94.9% 95.3% 95.2% 94.8% 94.2% 93.7% 93.1%

TX 90.9% 88.9% 87.8% 87.9% 88.2% 88.2% 87.8% 87.3% 86.7% 86.2%

* Source: DNV GL

Solar Integrated II Fund, LLC P-50 Production for One Year*


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P-90 Production Estimates

Year 1 2 3 4 5 6 7 8 9 10

AZ 98.4% 97.2% 96.1% 94.9% 93.8% 92.7% 91.5% 90.4% 89.4% 88.3%

CA 96.4% 95.3% 94.1% 93.0% 91.9% 90.8% 89.7% 88.6% 87.6% 86.5%

CO 89.3% 88.3% 87.2% 86.2% 85.1% 84.1% 83.1% 82.1% 81.1% 80.1%

CT 93.0% 91.9% 90.8% 89.7% 88.6% 87.6% 86.5% 85.5% 84.5% 83.4%

DC 91.4% 90.3% 89.3% 88.2% 87.1% 86.1% 85.1% 84.0% 83.0% 82.0%

DE 84.9% 83.9% 82.9% 81.9% 80.9% 80.0% 79.0% 78.1% 77.1% 76.2%

HI 87.1% 86.1% 85.1% 84.0% 83.0% 82.0% 81.0% 80.1% 79.1% 78.2%

MA 91.4% 90.3% 89.3% 88.2% 87.1% 86.1% 85.0% 84.0% 83.0% 82.0%

MD 90.5% 89.4% 88.3% 87.3% 86.2% 85.2% 84.2% 83.1% 82.1% 81.2%

NJ 90.6% 89.5% 88.5% 87.4% 86.4% 85.3% 84.3% 83.3% 82.3% 81.3%

NV 88.2% 87.1% 86.1% 85.0% 84.0% 83.0% 82.0% 81.0% 80.1% 79.1%

NY 89.1% 88.1% 87.0% 86.0% 84.9% 83.9% 82.9% 81.9% 80.9% 80.0%

OR 98.9% 97.7% 96.5% 95.4% 94.2% 93.1% 92.0% 90.9% 89.8% 88.7%

TX 90.4% 89.4% 88.3% 87.2% 86.2% 85.1% 84.1% 83.1% 82.1% 81.1%

Year 11 12 13 14 15 16 17 18 19 20

AZ 87.1% 84.7% 83.1% 82.7% 82.6% 82.0% 81.1% 80.2% 79.2% 78.2%

CA 85.3% 83.0% 81.5% 81.1% 80.9% 80.3% 79.5% 78.5% 77.6% 76.7%

CO 79.0% 76.9% 75.5% 75.1% 74.9% 74.4% 73.6% 72.8% 71.9% 71.0%

CT 82.3% 80.1% 78.6% 78.2% 78.0% 77.5% 76.7% 75.8% 74.9% 74.0%

DC 80.9% 78.7% 77.3% 76.9% 76.7% 76.2% 75.4% 74.5% 73.6% 72.7%

DE 75.2% 73.1% 71.8% 71.4% 71.3% 70.8% 70.0% 69.2% 68.4% 67.5%

HI 77.1% 75.0% 73.6% 73.2% 73.1% 72.6% 71.8% 71.0% 70.1% 69.3%

MA 80.9% 78.7% 77.2% 76.8% 76.7% 76.2% 75.4% 74.5% 73.6% 72.7%

MD 80.0% 77.9% 76.4% 76.0% 75.9% 75.4% 74.6% 73.7% 72.8% 71.9%

NJ 80.2% 78.0% 76.6% 76.2% 76.0% 75.5% 74.7% 73.8% 72.9% 72.0%

NV 78.0% 75.9% 74.5% 74.1% 74.0% 73.4% 72.7% 71.8% 71.0% 70.1%

NY 78.9% 76.7% 75.3% 74.9% 74.8% 74.2% 73.5% 72.6% 71.7% 70.9%

OR 87.5% 85.1% 83.5% 83.1% 82.9% 82.4% 81.5% 80.5% 79.6% 78.6%

TX 80.0% 77.9% 76.4% 76.0% 75.9% 75.3% 74.6% 73.7% 72.8% 71.9%

* Source: DNV GL

Visigoth Solar I, LLC P-90 Production for One Year Period*


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Year 1 2 3 4 5 6 7 8 9 10

AZ 101.3% 100.1% 98.9% 97.7% 96.6% 95.4% 94.3% 93.1% 92.0% 90.9%

CA 99.7% 98.5% 97.3% 96.2% 95.0% 93.9% 92.7% 91.6% 90.5% 89.4%

CO 90.8% 89.7% 88.6% 87.5% 86.5% 85.4% 84.4% 83.4% 82.4% 81.4%

CT 93.9% 92.7% 91.6% 90.5% 89.4% 88.4% 87.3% 86.3% 85.2% 84.2%

DC 90.6% 89.5% 88.5% 87.4% 86.3% 85.3% 84.3% 83.3% 82.3% 81.3%

DE 88.2% 87.2% 86.1% 85.1% 84.1% 83.1% 82.1% 81.1% 80.1% 79.1%

HI 88.1% 87.0% 86.0% 85.0% 83.9% 82.9% 81.9% 80.9% 80.0% 79.0%

MA 93.0% 91.8% 90.7% 89.7% 88.6% 87.5% 86.5% 85.4% 84.4% 83.4%

MD 92.1% 91.0% 89.9% 88.8% 87.7% 86.7% 85.6% 84.6% 83.6% 82.6%

NJ 90.7% 89.6% 88.5% 87.4% 86.4% 85.3% 84.3% 83.3% 82.3% 81.3%

NY 90.7% 89.6% 88.6% 87.5% 86.5% 85.4% 84.4% 83.4% 82.4% 81.4%

OR 98.1% 96.9% 95.7% 94.6% 93.5% 92.3% 91.2% 90.1% 89.0% 88.0%

PA 89.2% 88.2% 87.1% 86.1% 85.0% 84.0% 83.0% 82.0% 81.0% 80.1%

TX 94.1% 93.0% 91.8% 90.7% 89.7% 88.6% 87.5% 86.5% 85.4% 84.4%

Year 11 12 13 14 15 16 17 18 19 20

AZ 89.7% 87.2% 85.6% 85.2% 85.0% 84.4% 83.5% 82.5% 81.5% 80.6%

CA 88.2% 85.8% 84.2% 83.8% 83.6% 83.0% 82.2% 81.2% 80.2% 79.3%

CO 80.3% 78.1% 76.7% 76.3% 76.1% 75.6% 74.8% 73.9% 73.0% 72.2%

CT 83.0% 80.8% 79.3% 78.9% 78.7% 78.2% 77.4% 76.4% 75.5% 74.6%

DC 80.2% 78.0% 76.6% 76.2% 76.0% 75.5% 74.7% 73.8% 72.9% 72.0%

DE 78.1% 76.0% 74.5% 74.1% 74.0% 73.5% 72.7% 71.9% 71.0% 70.1%

HI 77.9% 75.8% 74.4% 74.0% 73.9% 73.4% 72.6% 71.7% 70.9% 70.0%

MA 82.3% 80.0% 78.5% 78.1% 78.0% 77.4% 76.6% 75.7% 74.8% 73.9%

MD 81.5% 79.3% 77.8% 77.4% 77.2% 76.7% 75.9% 75.0% 74.1% 73.2%

NJ 80.2% 78.0% 76.6% 76.2% 76.0% 75.5% 74.7% 73.8% 72.9% 72.1%

NY 80.3% 78.1% 76.7% 76.3% 76.1% 75.6% 74.8% 73.9% 73.0% 72.1%

OR 86.8% 84.4% 82.9% 82.4% 82.3% 81.7% 80.9% 79.9% 78.9% 78.0%

PA 79.0% 76.8% 75.4% 75.0% 74.9% 74.3% 73.6% 72.7% 71.8% 71.0%

TX 83.3% 81.0% 79.5% 79.1% 78.9% 78.4% 77.6% 76.6% 75.7% 74.8%

* Source: DNV GL

Blue Skies Solar I, LLC P-90 Production for One Year*


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Year 1 2 3 4 5 6 7 8 9 10

AZ 101.3% 100.1% 98.9% 97.7% 96.5% 95.3% 94.2% 93.1% 92.0% 90.9%

CA 99.3% 98.1% 96.9% 95.8% 94.6% 93.5% 92.4% 91.2% 90.1% 89.1%

CO 91.6% 90.5% 89.4% 88.3% 87.3% 86.2% 85.2% 84.2% 83.2% 82.2%

CT 93.3% 92.2% 91.1% 90.0% 88.9% 87.8% 86.8% 85.8% 84.7% 83.7%

DC 88.5% 87.4% 86.4% 85.3% 84.3% 83.3% 82.3% 81.3% 80.3% 79.4%

DE 87.7% 86.7% 85.6% 84.6% 83.6% 82.6% 81.6% 80.6% 79.6% 78.7%

MA 93.5% 92.4% 91.3% 90.2% 89.1% 88.0% 87.0% 85.9% 84.9% 83.9%

MD 91.6% 90.5% 89.4% 88.4% 87.3% 86.3% 85.2% 84.2% 83.2% 82.2%

NJ 91.3% 90.2% 89.1% 88.0% 87.0% 85.9% 84.9% 83.9% 82.9% 81.9%

NY 90.7% 89.6% 88.5% 87.5% 86.4% 85.4% 84.4% 83.3% 82.3% 81.4%

OR 98.9% 97.7% 96.6% 95.4% 94.3% 93.1% 92.0% 90.9% 89.8% 88.7%

PA 85.4% 84.4% 83.4% 82.4% 81.4% 80.4% 79.4% 78.5% 77.5% 76.6%

TX 94.1% 93.0% 91.9% 90.8% 89.7% 88.6% 87.6% 86.5% 85.5% 84.4%

Year 11 12 13 14 15 16 17 18 19 20

AZ 89.6% 87.2% 85.6% 85.1% 85.0% 84.4% 83.5% 82.5% 81.5% 80.5%

CA 87.8% 85.5% 83.9% 83.4% 83.3% 82.7% 81.8% 80.9% 79.9% 78.9%

CO 81.0% 78.9% 77.4% 77.0% 76.8% 76.3% 75.5% 74.6% 73.7% 72.8%

CT 82.6% 80.3% 78.8% 78.4% 78.3% 77.7% 76.9% 76.0% 75.1% 74.2%

DC 78.3% 76.2% 74.7% 74.4% 74.2% 73.7% 72.9% 72.1% 71.2% 70.3%

DE 77.6% 75.5% 74.1% 73.7% 73.6% 73.1% 72.3% 71.4% 70.6% 69.7%

MA 82.7% 80.5% 79.0% 78.6% 78.4% 77.9% 77.1% 76.2% 75.2% 74.3%

MD 81.1% 78.9% 77.4% 77.0% 76.9% 76.3% 75.5% 74.6% 73.7% 72.8%

NJ 80.8% 78.6% 77.1% 76.7% 76.6% 76.0% 75.3% 74.3% 73.5% 72.6%

NY 80.2% 78.1% 76.6% 76.2% 76.1% 75.5% 74.8% 73.9% 73.0% 72.1%

OR 87.5% 85.2% 83.6% 83.1% 83.0% 82.4% 81.5% 80.6% 79.6% 78.6%

PA 75.6% 73.5% 72.1% 71.8% 71.6% 71.1% 70.4% 69.6% 68.7% 67.9%

TX 83.3% 81.0% 79.5% 79.1% 79.0% 78.4% 77.6% 76.7% 75.7% 74.8%

* Source: DNV GL

Solar Integrated I Fund, LLC P-90 Production for One Year*


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Year 1 2 3 4 5 6 7 8 9 10

AZ 97.5% 96.4% 95.2% 94.1% 92.9% 91.8% 90.7% 89.6% 88.5% 87.5%

CA 96.2% 95.0% 93.9% 92.8% 91.7% 90.6% 89.5% 88.4% 87.3% 86.3%

CO 89.0% 87.9% 86.8% 85.8% 84.8% 83.7% 82.7% 81.7% 80.8% 79.8%

CT 93.0% 91.9% 90.8% 89.7% 88.6% 87.6% 86.5% 85.5% 84.5% 83.4%

DC 92.2% 91.1% 90.0% 88.9% 87.9% 86.8% 85.8% 84.7% 83.7% 82.7%

DE 84.9% 83.9% 82.9% 81.9% 80.9% 79.9% 79.0% 78.0% 77.1% 76.2%

MA 90.4% 89.3% 88.3% 87.2% 86.2% 85.1% 84.1% 83.1% 82.1% 81.1%

MD 90.3% 89.2% 88.2% 87.1% 86.1% 85.0% 84.0% 83.0% 82.0% 81.0%

NJ 90.7% 89.6% 88.5% 87.4% 86.4% 85.3% 84.3% 83.3% 82.3% 81.3%

NV 94.8% 93.7% 92.5% 91.4% 90.3% 89.2% 88.2% 87.1% 86.1% 85.0%

NY 88.1% 87.1% 86.0% 85.0% 84.0% 83.0% 82.0% 81.0% 80.0% 79.1%

OR 98.5% 97.3% 96.2% 95.0% 93.9% 92.7% 91.6% 90.5% 89.4% 88.4%

TX 89.4% 88.3% 87.3% 86.2% 85.2% 84.2% 83.2% 82.2% 81.2% 80.2%

Year 11 12 13 14 15 16 17 18 19 20

AZ 86.3% 84.0% 82.4% 82.0% 81.8% 81.2% 80.4% 79.4% 78.5% 77.5%

CA 85.1% 82.8% 81.3% 80.9% 80.7% 80.1% 79.3% 78.4% 77.4% 76.5%

CO 78.7% 76.6% 75.2% 74.8% 74.6% 74.1% 73.3% 72.5% 71.6% 70.7%

CT 82.3% 80.1% 78.6% 78.2% 78.0% 77.5% 76.7% 75.8% 74.9% 74.0%

DC 81.6% 79.4% 77.9% 77.5% 77.4% 76.8% 76.0% 75.1% 74.2% 73.3%

DE 75.1% 73.1% 71.7% 71.4% 71.2% 70.7% 70.0% 69.1% 68.3% 67.5%

MA 80.0% 77.9% 76.4% 76.0% 75.9% 75.3% 74.5% 73.7% 72.8% 71.9%

MD 79.9% 77.8% 76.3% 75.9% 75.8% 75.2% 74.5% 73.6% 72.7% 71.8%

NJ 80.2% 78.0% 76.6% 76.2% 76.0% 75.5% 74.7% 73.8% 72.9% 72.1%

NV 83.9% 81.6% 80.1% 79.7% 79.5% 79.0% 78.1% 77.2% 76.3% 75.4%

NY 78.0% 75.9% 74.5% 74.1% 73.9% 73.4% 72.7% 71.8% 70.9% 70.1%

OR 87.2% 84.8% 83.2% 82.8% 82.6% 82.1% 81.2% 80.2% 79.3% 78.3%

TX 79.1% 77.0% 75.5% 75.1% 75.0% 74.5% 73.7% 72.8% 72.0% 71.1%

* Source: DNV GL

Solar Integrated II Fund, LLC P-90 Production for One Year*


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Operations & MaintenanceSolarCity is responsible for performing operations and maintenance services for all PV Systems in the pool

Each Financing Fund entered into a maintenance services agreement (MSA) with SolarCity at such

Financing Funds inception. Under the terms of the MSAs, SolarCity provides all services necessary to

operate, maintain, and repair each PV System. These services include normal maintenance, reportingmonitoring and administrative services.

In addition to providing routine maintenance, SolarCity is responsible for replacing defective equipment,

such as panels, inverters and/or meters. All inverters are expected to be replaced over the tenor of the

transaction given KBRAs useful life assumption of 10-15 years. While it is likely that SolarCitys MSA fee

payment compensates it for this expense, KBRA has made the assumption that SolarCitys credit quality is

weaker than the Notes and at some point SolarCity is replaced. As such, KBRA believes the Issuer will be

responsible for these expenses and has included this as an expense in its ratings stresses.

SolarCitys MSAswith the Financing Funds provide for a fixed annual fee of $15/kW escalating at 2.5%

each year. However, KBRAs rating scenarios utilize higher rates (A stress scenario: $27.5/kW; BBB

stress scenario: $25/kW) which we believe are needed to attract a new O&M provider in a distressed

scenario. U.S. Bank National Association will serve as the Transition Manager and will have theresponsibility of identifying a replacement manager in a default scenario. Noteholder approval of the new

manager is also required. KBRA views the inclusion of the Transition Manager favorably as it allows the

securitization to continue to operate as expected if SolarCity as manager needs to be replaced.


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Summary of Collateral

Total PV Systems 16,400

ADSAB ($ millions) $214.1

Average ADSAB $13,054

Range of ADSAB $(7,680) to $91,954

Aggregate PV System size (kW DC) 108,168

WA PV System Size (kW DC) 6.60

Range of PV System Sizes (kw DC) 1.47 to 99.96

WA Customer Agreement Initial Term (months) 240

WA Customer Agreement Remaining Initial Term (months) 230

WA Customer Agreement Seasoning (months) 8.0

Range of Customer Agreement Seasoning (months) 0 to 22

WA Price per kWh $0.14

WA Annual Customer Agreement Price per kWh Fee Escalator 2.02%

Expected PBI Payments (% of ADSAB) 3.14%

WA FICO Score 742

Range of FICO Scores 558 to 850

Number of Lease agreements 9,075

Number of PPA Agreements 7,325

Percentage of PPA agreements (by ADSAB) 55.9%

Percentage of Lease agreements (by ADSAB) 44.1%

Portfolio Summary

Fund DataFinancing

Fund A

Financing

Fund B

Financing

Fund C

Financing

Fund D

PV Systems 3,840 3,841 1,658 7,061

Aggregate PV System size (MW DC) 24.6 26.3 11.1 46.2Weighted average FICO 752 731 743 743

ADSAB ($ millions) 46.0 51.0 19.3 97.9

Average Discounted Solar Asset Balance $11,968 $13,266 $11,654 $13,858

Range of customer agreements - Months remaining 225 to 239 230 to 240 218 to 240 229 to 240

Weighted average customer agreement - Months remaining 231 234 222 234

State (% of ADSAB)

Arizona 17.7% 17.9% 15.0% 13.6%

California 53.9% 50.9% 36.9% 60.7%

Colorado 6.4% 5.6% 21.6% 3.3%

Connecticut 3.1% 3.9% 3.9% 4.0%

District of Columbia 0.0% 0.0% 0.0% 0.0%

Delaware 0.5% 0.7% 0.5% 0.5%

Hawaii 0.0% 0.0% 3.3% 0.6%

Massachusetts 4.4% 7.0% 1.5% 5.4%

Maryland 7.4% 4.8% 8.1% 4.5%

Nevada 0.0% 0.1% 0.0% 0.0%

New Jersey 1.7% 2.3% 2.3% 2.2%

New York 2.0% 6.0% 1.7% 4.0%

Oregon 1.0% 0.2% 2.9% 0.4%

Pennsylvania 0.1% 0.0% 0.5% 0.0%

Texas 1.8% 0.6% 1.8% 0.7%


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Cash Flow Assumptions

Base Case Scenario

KBRA performed cash flow modeling on the SolarCity LMC Series IV, LLC, Series 2015-1 transaction to

determine whether the projected cash flow from the PPAs and leases were sufficient to warrant therequested rating levels.

KBRAs base case assumes the following:

P50 energy production No defaults or renegotiations Management fee of $23/kW DC increasing at 2% annually All inverters are replaced at $1,300 during years 10-12 Flip date occurs as scheduled Module degradation rate: 1.3% per annum System availability of 99% Notes are not refinanced on the ARD

Under the base case scenario, the Class A Notes are repaid in period 26 (year 13) and the Class B Notes

are repaid in period 28 (year 14). The chart below illustrates KBRAs base case scenario projections.

$-

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

0 10 20 30 40 50 60

Period

KBRA Base Case

SolarCity LMC Series IV, LLC Series 2015-1

Class A Notes Class B Notes


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KBRA Stress Scenarios

KBRA ran a number of sensitivities to test the transaction structure to test stresses related to timing of

defaults, cumulative net losses, energy production and reduced contract rates. The scenarios detailed

below were analyzed to determine if the transaction structure and cash flows could sustain the requested

ratings. Based on the analysis, the transaction appears to be able to withstand such stresses.

Scenario 1: AStress

Under Scenario 1 the following stresses were applied to the structure:

P90 energy production 15.8% of residential leases/PPAs default and never pay again. Lease/PPA defaults were based on

the lowest FICO scores defaulting first and defaults were spread evenly over 10 years. The defaultrates were determined by doubling the probability of default output determined by KBRAs RMBSmodel, based on each obligors FICO score.

KBRA assumed in years 5, 10, and 15, a portion (30%/40%/50%) of residential customers woulddefault and not make payments for 12 months. After 12 months, the defaulting customers wouldrenegotiate their lease/PPA rate to 20% below the prevailing utility rate in their respective states atthat time. KBRA used current utility rate data found on www.EIA.gov and grew the current rate by1% annually. The contracts that were most out of the money were modified first. Renegotiatedcontract rates grow at 1% annually. Based on the above stresses it was assumed:

o 659 contracts were renegotiated in year 5o 786 contracts were renegotiated in year 10o 546 contracts were renegotiated in year 15

Management fee of $27.5/kW DC increasing at 2% annually All inverters are replaced at $1,600 during years 10-12 Flip date for Visigoth Solar I, LLC extended by 12 months Flip dates for other Financing Funds are same as Base Case Aggregate purchase option prices associated with flip dates increased by 8.1% relative to Base

Case

All Tax Loss Insurance Policies are triggered requiring full payment of deductibles Module degradation rate: 1.3% per annum System availability of 95%


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In Scenario 1, the Class A Notes were repaid in period 35 (year 18) and the Class B Notes were repaid in

period 38 (year 19).

$-

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

0 10 20 30 40 50 60

Period

KBRA 'A' Stress Case

SolarCity LMC Series IV, LLC Series 2015-1

Class A Notes (Base Case) Class B Notes (Base Case)

Class A Notes (A Stress) Class B Notes (A Stress)


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Scenario 2: BBBStress

Under Scenario 2 the following stresses were applied to the structure:

P90 energy production 9.4% of residential leases/PPAs default and never pay again. Lease/PPA defaults were based on

the lowest FICO scores defaulting first and defaults were spread evenly over 10 years. The defaultrates were determined by doubling the probability of default output determined by KBRAs RMBSmodel, based on each obligors FICO score.

KBRA assumed in years 5, 10, and 15, a portion (22.5%/30%/37.5%) of residential customerswould default and not make payments for 9 months. After 9 months, the customers wouldrenegotiate their lease/PPA rate to 15% below the prevailing utility rate in their respective states atthat time. KBRA used current utility rate data found on www.EIA.gov and grew the current rate by1% annually. The contracts that were most out of the money were modified first. Renegotiatedcontract rates grow at 1% annually. Based on the above stresses it was assumed:

o 483 contracts were renegotiated in year 5o 665 contracts were renegotiated in year 10o 728 contracts were renegotiated in year 15

Management fee of $25/kW DC increasing at 2% annually

All inverters are replaced at $1,500 during years 10-12 Flip date for Visigoth Solar I, LLC extended by 6 months Flip dates for other Financing Funds are same as Base Case Aggregate purchase option prices associated with flip dates increased by 0.2% relative to Base

Case All Tax Loss Insurance Policies are triggered requiring full payment of deductibles Module degradation rate: 1.3% per annum System availability of 97%

In Scenario 2, the Class A Notes were repaid in period 30 (year 15) and the Class B Notes were repaid in

period 32 (year 16).

$-

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

0 10 20 30 40 50 60

Period

KBRA BBB Stress CaseSolarCity LMC Series IV, LLC Series 2015-1

Class A Notes (Base Case) Class B Notes (Base Case)

Class A Notes (BBB Stress) Class B Notes (BBB Stress)


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Transaction Structure

Legal Structure

Transaction

Structure

The SolarCity LMC Series IV, LLC, Series 2015-1 Class A Notes and Class B Notes are

newly issued asset-backed notes secured by the equity interests of the ManagingMembers in the related Financing Funds that own a portfolio of PV Systems and any

proceeds received under the Tax Loss Insurance Policies. The following diagram

illustrates the basic securitization structure:

SolarCityCorporation

Originator

100%Ownership

SolarCity LMCHoldings IV. LLC

Depositor

NoteProceeds

SolarCity LMCSeries IV. LLC

Issuer

100%Ownership

Note Proceeds

Contribution Agreement(Class A Membership Interests of

each Managing Member)

US Bank

Indenture Trusteeand Custodian

US Bank

Transition Manager

Noteholders

Series 2015-1 NotesSemi-annual Payments

IndentureCustodial Agreement

Manager TransitionAgreement

100%Ownership

Managing MemberDistributions

Solar UlyssesManager I, LLC

Managing Member

TaxEquity

Investor

Blue SkiesSolar I, LLC

Financing Fund

Leases/PPAsPV Systems

Customer PaymentsPBI Payments & Rebates

ManagingMemberDistributions

100% Class AMember

100% Class BMember

Solar IntegratedManager I, LLC

Managing Member

TaxEquity

Investor

Solar IntegratedFund I, LLC

Financing Fund




100% Class AMember

100% Class BMember

Solar IntegratedManager II, LLCManaging Member

TaxEquity

Investor

Solar IntegratedFund II, LLCFinancing Fund




100% Class AMember

100% Class BMember

Visigoth SolarManaging

Manager I, LLCManaging Member

TaxEquity

Investor

VisigothSolar I, LLC

Financing Fund




100% Class AMember

100% Class BMember


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Priority ofPayments

On each payment date, available funds will be distributed to pay the following

amounts in the following order:

i. Capped Indenture Trustee fee and expenses (although uncapped if theres anevent of default);

ii.

Custodian fee;

iii. Manager fee;

iv. Capped Transition Manager fee and expenses (although uncapped if theres anevent of default);

v. Interest on the Class A Notes;

vi. Interest on the Class B Notes;

vii. To the liquidity reserve account up to the required amount;

viii. To the supplemental reserve account up to the required amount;

ix. To the Noteholders:

1. During a regular amortization period in the following order:,a) Class A Scheduled Note Principal Payment;b) Class A Unscheduled Note Principal Payment*, until the

outstanding note balance of Class A Notes is zero;c) Class B Scheduled Note Principal Payment;d) Class B Unscheduled Note Principal Payment*, until the

outstanding note balance of Class B Notes is zero;e) Class B Deferred Interest

2. During an Early Amortization Period, first to the Class A Notes untilpaid in full, and then to the Class B Notes to (1) reduce the outstandingClass B Note balance to zero and (2) to pay any unpaid Class BDeferred Interest;

x. if a DSCR/insurance sweep period is in effect, to the liquidity reserve accountup to the required amount;

xi. Indenture Trustee extraordinary expenses not paid in clause i. above;

xii. Transition Manager expenses not paid in clause iv. above;

xiii. Sequentially to the Class A and Class B Noteholders, any make whole amount;

xiv. Sequentially to the Class A and Class B Noteholders, any Post-ARD step-upinterest due and unpaid; and

xv. To the Issuer.


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* Unscheduled Note Principal Payments generally include payments by customers orrecoveries on PV Systems relating to the following categories:

Terminated solar assets Defaulted solar assets Customers who have exercised purchase options prior to expiry of the

customer agreement Prepayments Liquidated damages payable by the Depositor for breaches of asset-

level representations or warranties Solar assets subject to modifications

Certain material events occurring with respect to a Financing Fund,such as bankruptcy or being deemed an investment company

Early

Amortization

Period

Class B Interest

Deferral Period

DSCR/Insurance

Sweep Period

An "Early Amortization Period" will commence if:

(i) the DSCR is less than or equal to 1.15 for two consecutive determination

dates; and

(ii) a Class B Interest Deferral Period is not in effect.An Early Amortization Period will continue until the DSCR is greater than 1.15 for two

consecutive determination dates.

A "Class B Interest Deferral Period" will commence if:

(i) the DSCR is less than or equal to 1.00 for any determination date;

(ii) an Event of Default has occurred; or

(iii) on the Anticipated Repayment Date, the Class A Notes and Class B Notes have

not been reduced to zero.During a Class B Interest Deferral Period, so long as the Class A Notes are still

outstanding, interest and principal will be paid on the Class A Notes before interest

and principal will be paid on the Class B Notes. A Class B Interest Deferral Period

caused by an event described in clause (i) above will continue until the next

determination date on which the DSCR is greater than 1.00. A Class B Interest

Deferral Period caused by an event described in clause (ii)

kbra abs solarcity lmc series iv llc series 2015-1 new issue report

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