Draft User Guide to Alternative VDER Project Appraisal Model September 17, 2021

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Model Overview The Alternative Value of Distributed Energy Resource (“VDER”) Project Appraisal Model (“VDER Model”) is a stand-alone Excel workbook that calculates an appraisal value for property tax purposes using the capitalized net income methodology for projects that receive revenues from New York State Energy and Research Authority’s (“NYSERDA”) VDER program. Given basic data about a VDER project, the VDER Model estimates revenues and expenses over the project’s assumed 30-year economic life. It uses a discount rate to determine the present value of net cash flows, to determine the appraised value of the project.

Project Database The VDER Model includes a table of project-specific information for 814 projects uniquely identified by their NYSERDA Application Numbers. While the included data alone are not sufficient to run the model for any of the included projects, the VDER Model is capable of supplying reasonable default values for many items, allowing the VDER Model to run the majority of the projects in the table without requiring additional inputs from the user.

Required Inputs To calculate an appraised value, the VDER Model requires the following shown in Table 1 below.

Table 1. Required Model Inputs

Input Description Comment In Database Project Name Needed for identification of results Most Project Size (kW DC) Required (no default) Yes Project Technology Required (no default) Most Project ZIP Code Required for NYISO Load Zone (no

default) Most

Project Utility Required (no default) Yes NYISO Load Zone Can usually determine from ZIP Code No 25% Interconnection Cost Payment Date (25% ICPD)

Can be estimated from COD1 Most

Commercial Operation Date Can be estimated from 25% ICPD No NYSERDA Incentive Payment No way to estimate if not provided Most Community Adder No way to estimate if not provided Yes Metering Method Required (no default) Most DRV2/CSRP3 Window (ConEd Only) Defaults to Option 2 (ConEd only) No CC4/MTC5 Tranche (Community DG only) Defaults based on utility and 25% ICPD No MTC/CC Service Class (Community DG only) Defaults to SC-1 No Capacity Value Method Alternative Defaults to Alternative 1 No

1 Commercial Operation Date 2 Demand Reduction Value 3 Commercial System Relief Program 4 Community Credit 5 Market Transition Credit

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Capacity Price Average Years Defaults to 1-year lookback No Profile (Nearest) City Defaults based on NYISO Zone No Full Value Property Tax Rate Defaults to 3.0% (Important) No

Model Description The VDER Model is divided into six main sections. Table 2 below lists the sheets in each section, which can also be found on the Table of Contents ([TOC]) sheet in the model. Each section and sheet is briefly summarized below.

Table 2. Model Excel File Structure

1. Inputs and Key Calculations, and Results – This section contains the two key input sheets, [InputForm] and [Lookup], that allow the user to define the project details and key assumptions used by the VDER Model. They are the only two sheets the user needs to enter data into the VDER Model. The remaining sheets in this section present the annual-level calculations, and detailed project reports.

Tab Group Description

InputFormLookupProjectDataProjectReportsProjectCalcsMonthlyCalcsRevCalcsCapCalcsDRVCalcsChartAnnValChartAnnCFChartRevChartOpExChartPVChartTableAssumptionsDRV DataComCreditDataE-ValuesLossesCostDataCapacityFactorsProjectListCity ListCapacityDaysZonebyZipEnergyPricesCapacityPricesUCAP_FactorsDayCounts

Inputs and Key Calculations, and Results

Calculation Details

Results Charts

Hard Data tables

Default Value Tables

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a. [InputForm] – This sheet is the primary location for entering project data. The user specifies the project to be modeled by entering a NYSERDA Application Number in cell E6. Default values for the project are pre-loaded into column G. The user has the ability to input project-specific information into column E. If the user does not enter project-specific information then the VDER Model will utilize the default values. Upon NYSERDA Application Number selection, the sheet will flag whether or not there is sufficient data provided for that project. It is the responsibility of the user to ensure the correctness of any database values and fill in any missing data.

b. [Lookup] – Upon selection of a city in cell B5, the sheet will populate the corresponding list of NYSERDA Application Numbers in that city. Select the desired application number in column A and press the macro button to paste the application number into the [InputForm] sheet, which will cause the VDER Model to refresh the default data in column G.

c. [ProjectData] – This sheet automatically populates with the data from several sheets, including [Assumptions], [InputForm], and [CostData]. No user inputs are entered into this sheet.

d. [ProjectReports] – This sheet presents an appraisal report for the selected project. It draws on the more detailed monthly and hourly calculations performed in the calculation sheets (tan sheet labels) and the data tables (purple sheet labels), both of which can be unhidden from TOC.

e. [ProjectCalcs] – This sheet is the core of the model. It calculates the annual appraised value by year. It collapses monthly cash flow information from the [MonthlyCalcs] sheet into annual values. This sheet ties in project costs, depreciation, etc. It also provides summary totals at the bottom of the sheet that support some of the charts in the model.

2. Calculations Details – This section contains the intermediary calculations that feed into the [ProjectCalcs] sheet. They draw from the 4. Default Value Tables. a. [MonthlyCalcs] – This sheet summarizes each cash flow component on a monthly basis. Similar

to the [ProjectCalcs] sheet, the top of the sheet contains project-specific information drawn from supporting sheets.

b. [RevCalcs] – This sheet calculates the market energy revenues received by the project. c. [CapCalcs] – This sheet calculates capacity revenues received by the project. d. [DRVCalcs] – This sheet calculates DRV revenues received by the project.

3. Results Charts – The section contains several charts that summarize model results based on information contained in the [ProjectCalcs] sheet. a. [ChartAnnVal] – This chart summarizes annual appraised value for the modeled project by

component. The annual net appraised value is the light red line with yellow markers. b. [ChartAnnCF] – This chart summarizes annual cash flows ($ 000) for the modeled project by

component. The annual net cash flow is the light red line with yellow markers. c. [ChartRev] – This chart summarizes annual net revenue ($ 000) for the modeled project by

component. The annual net cash flow is the light red line with yellow markers. d. [ChartOpEx] – This chart summarizes annual expenses ($ 000) for the modeled project by

component. The total expense (excluding property tax) is the light red line with yellow markers. e. [ChartPV] – This chart summarizes the present value of the net cash flows by category in $/kW.

The categories include revenue, expense, income tax, and net appraisal value. f. [ChartTable] – The sheet contains a chart identical to the chart on [ChartPV]. The sheet also

includes a detailed corresponding table below the chart.

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4. Default Value Tables – The following sheets include basic modeling assumptions and default datasets that flow into the 2. Calculation Details sheets. a. [Assumptions] – This sheet contains the default assumptions used throughout the VDER Model

(inflation rate, economic life, discount rate, MACRS schedules, etc.). It includes profile city by zone, project detail.

b. [DRV Data] – This sheet contains utility-specific DRV rates ($2021/kW-year) and windows. All utilities except ConEdison have one DRV window (ConEd has four possible windows).

c. [ComCreditData] – This sheet contains utility-specific CC/MTC rates by tranche and date. This data flows into [InputForm] and [MonthlyCalcs].

d. [E-Values] – This sheet contains Environmental (E) Values by date. This data flows into [MonthlyCalcs].

e. [Losses] – This sheet provides utility-specific distribution loss factors for energy and capacity. The data flows into [ProjectData]. The VDER Model only uses the energy loss factors.

f. [CostData] – This sheet includes capital expense (CAPEX) and operating expense (OPEX) data that are used in the model. It also includes detailed scalers by size and location for both CAPEX and OPEX expenses.

g. [CapacityFactors] – This sheet contains the generic capacity factor profiles that are used in the model. These generic profiles were created from hourly data in the NYSERDA Value Stack Calculator’s Solar Profiles sheet. These data flow into [ProjectData].

h. [ProjectList] –This sheet contains detailed project-specific information provided by NYSERDA, including location, size, application date, completion date, estimated annual energy production, etc., for 814 projects. These data flows into both [InputForm] and [Lookup].

5. Hard Data Tables - The following set of sheets contain raw or slightly processed input data that flows into the various calculation sheets. They are permanently hidden from view.

a. [City List] - This sheet is a unique list of cities from the [ProjectList] sheet used to aid in lookups.

b. [CapacityDays] – This sheet counts the number of Capacity Days for each calendar year. This data flows into [CapCalcs].

c. [ZonebyZip] – This sheet contains a mapping of zip code to NYISO zones. Note: there are 272 zip codes that tie to more than one zone. This data flows into [InputForm]. If there are more than one possible zone, the user will be alerted by reviewing cell Q14 on [InputForm]. Users can override the default zone if so desired.

d. [EnergyPrices] – The Forward Energy Prices are collapsed to average zonal annual 12x24 (all days, weekday, and weekend) prices. The data series covered May 2021 through December 2021 – prices before and after this period are adjusted by an assumed 2% inflation rate. This data flows into [RevCalcs].

e. [CapacityPrices] – The Capacity Prices cover January 2021 through December 2021. Prices before and after this period are adjusted by an assumed 2% inflation rate. This data flows into [CapCalcs].

f. [UCAP_Factors] – Contains the UCAP production factor forecasts. This data flows into [MonthlyCalcs].

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g. [DayCounts] – Contains the number of weekdays and weekends by month covering 2010 through 2070. This data flows into [RevCalcs].

Loading Project Data from the [Lookup] sheet The VDER Model runs on a project specific basis using either a project’s NSERDA Application Number to incorporate the project-specific data in the model’s database or user-supplied data on [InputForm] that can override the data from the database. To aid the user, the list of possible NYSERDA Application Numbers, along with corresponding basic information for each project, are tied into the [Lookup] sheet, filtered by city. The user can select the project city by clicking on the drop-down in cell B5. In the screenshot below, “New York” has been selected in cell B5 (highlighted in yellow), and the table has listed automatically listed all of the possible NYSERDA Application Numbers in the selected city.

Figure 1. [Lookup] Sheet Snapshot

The user should select the desired NYSERDA Application Number in column A, and then press the large gray macro button. The macro button will copy the selected NYSERDA Application Number into cell E6 on the [InputForm] sheet. The macro will also clear all previously entered user inputs on [InputForm].

Selecting Values for Missing Data on the [InputForm] sheet In the example screenshot below, NYSERDA Application Number 0000253472 was populated into cell E6 via the [Lookup] sheet’s macro button. Column G (Database Value) is then automatically populated with the available project-specific data.

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Figure 2. [InputForm] Sheet Snapshot

A visual inspection of the sheet will reveal that the Project Technology is missing in column G, which flows to column C (“Used by Model”). This trips an error flag at the bottom of the table:

It is the user’s responsibility to fill in the gaps in the dataset and override the dataset value if the user has received better data. Column E in the sheet “User Input” contains drop-down lists in several cells to aid the user in selecting pre-defined default choices. In this case, the user can select one of five default technologies, as shown in the screenshot below.

VDER Project Appraisal ModelModel Version: Release 0.6 09/17/2021 PRELIMINARYUser Inputs Form

Retrieve Data from NYSERDA DatabaseNYSERDA Application Number: 0000253472Data Retrieval Status: Match found in NYSERDA Database. Data has been retrieved for Application 0000253472.Primary Contractor Account: Siemens Industry, Inc.

Required Project Data Used by Model User Input Database/Default ValueProject Name 0000253472 - Siemens Indu 0

0000253472 - Siemens Indu

Project Size (kW DC) 1,708.96 0 1,708.96Project Technology 1

Project Zip Code 10001 0 10001Project Utility Consolidated Edison 0 Consolidated EdisonNYISO Load Zone J - New York City 0

25% I/C Cost Payment Date (mm/dd/yyyy) 07/08/2020 0 07/08/2020Commercial Operation Date (mm/dd/yyyy) 04/01/2022 0

NYSERDA Incentive ($) $518,938.00 0 $518,938.00Community Adder ($) $0.00 0 $0.00Metering Method On-site metering 0 On-site meteringCSRP/DRV Window (ConEd only) 2 - 14:00 thru 18:00 EDT 0 2 - 14:00 thru 18:00 EDTMTC/CC Tranche (CDG Only) Not Applicable 0 Not ApplicableMTC/CC Service Class (CDG Only) Not Applicable 0 Not ApplicableCapacity Value Method Alternative Alternative 1 0 Alternative 1Capacity Price Average Years 1 Year 0 1 YearProfile (Nearest) City New_York_City 0 New_York_CityFull Value Property Tax Rate 3.00% 0 3.00%

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There is insufficient data to operate the model. Make sure that user inputs are entered for all data not supplied by default or from database.

There is insufficient data to operate the model. Make sure that user inputs are entered for all data not supplied by default or from database.

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Figure 3. [InputForm] Sheet Snapshot (Technology Input Detail)

The updated [InputForm] is shown in the screenshot below, with the missing data field now populated by the user.

Figure 4. [InputForm] Sheet Snapshot (Updated with User Inputs)

The previously existing error message is now replaced with:

VDER Project Appraisal ModelModel Version: Release 0.6 09/17/2021 PRELIMINARYUser Inputs Form

Retrieve Data from NYSERDA DatabaseNYSERDA Application Number: 0000253472Data Retrieval Status: Match found in NYSERDA Database. Data has been retrieved for Application 0000253472.Primary Contractor Account: Siemens Industry, Inc.

Required Project Data Used by Model User Input Database/Default ValueProject Name 0000253472 - Siemens Indu 0

0000253472 - Siemens Indu

Project Size (kW DC) 1,708.96 0 1,708.96Project Technology 1 - Fixed_Open Rack_Monofacial 0 1 - Fixed_Open Rack_MonofacialProject Zip Code 10001 0 10001Project Utility Consolidated Edison 0 Consolidated EdisonNYISO Load Zone J - New York City 0

25% I/C Cost Payment Date (mm/dd/yyyy) 07/08/2020 0 07/08/2020Commercial Operation Date (mm/dd/yyyy) 04/01/2022 0

NYSERDA Incentive ($) $518,938.00 0 $518,938.00Community Adder ($) $0.00 0 $0.00Metering Method On-site metering 0 On-site meteringCSRP/DRV Window (ConEd only) 2 - 14:00 thru 18:00 EDT 0 2 - 14:00 thru 18:00 EDTMTC/CC Tranche (CDG Only) Not Applicable 0 Not ApplicableMTC/CC Service Class (CDG Only) Not Applicable 0 Not ApplicableCapacity Value Method Alternative Alternative 1 0 Alternative 1Capacity Price Average Years 1 Year 0 1 YearProfile (Nearest) City New_York_City 0 New_York_CityFull Value Property Tax Rate 3.00% 0 3.00%

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Data provided are sufficient for model operation.

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The possible options for the user inputs with drop-down lists is shown in Table 3 below.

Table 3. Available Pre-selected Options for User Inputs on [InputForm]

Printing Project Reports After selecting the project Application Number on [Lookup] and adjusting for any missing data fields on [InputForm], the VDER Model will summarize the results on [ProjectReport] as well as on the various charts. The user can print the output reports. If the project required detailed input adjustments, we

Data provided are sufficient for model operation.

Project Technology Metering Method1 - Fixed_Open Rack_Monofacial Community DG2 - Fixed_Roof Mount_Monofacial On-site metering3 - Tracking_Open Rack_Monofacial Remote net metering4 - Fixed_Open Rack_Bifacial5 - Tracking_Open Rack_Bifacial MTC/CC Tranche (CDG Only)

MTC 1, MTC 2, MTC 3,Project Utility MTC 4, CC 1, CC 2

Central Hudson Gas & ElectricConsolidated Edison MTC/CC Service Class (CDG Only)National Grid SC1New York State Electric and Gas SC2Orange and RocklandPSEG Capacity Value Method AlternativeRochester Gas and Electric Alternative 1

Alternative 2NYISO Load Zone Alternative 3

A - WestB - Genessee Capacity Price Average YearsC - Central 1 year, 2 years, 3 yearsD - NorthE - Mohawk Valley Profile (Nearest) CityF - Capital AlbanyG - Hudson Valley BinghamtonH - Millwood BrookhavenI - Dunwoodie BuffaloJ - New York City IthacaK - Long Island New_York_City

PlattsburghCSRP/DRV Window (ConEd only) Rochester

1 - 11:00 thru 15:00 EDT Syracuse2 - 14:00 thru 18:00 EDT3 - 16:00 thru 20:00 EDT4 - 19:00 thru 23:00 EDT

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suggest saving the Excel model with the manual inputs intact, thereby avoiding the need to recreate the results at a later date. An example [ProjectReport] is shown below in Table 4.

Table 4. Sample VDER Project Appraisal Report

Release 0.6 09/17/2021 PRELIMINARY

Calculated: 9/16/2021 20:15Application Number: 0000253472Cash Flow Tax Mode: Pre-Tax ModeDiscount Rate Used (Unloaded) 8.00%Project Name: 0000253472 - Siemens Indu

Zip Code 10001Technology Type 1 - Fixed_Open Rack_MonofacialProfile City New_York_CityProject Size (Nameplate MWDC) 1.709Project Size (MWAC) 1.23825% Interconnection Payment Date 7/8/2020Commercial Operation Date 4/1/2022NYISO Load Zone JUtility Consolidated EdisonFull Value Property Tax Rate 3.60%

Summary Metrics Discounted at WACC of 8.00%Discounted at Property Tax-Loaded

Rate of 11.60%Present Value

MWh QuantitiesEconomic Life 16,123 12,578

Cash Flows (Economic Life)Merchant Energy Revenue $546,160 $438,864 Capacity Value $70,102 $56,106 Environmental (E) Value $400,661 $318,563 Demand Reduction Value $676,158 $552,980 MTC/Community Credit $0 $0 Community Adder Payment $0 $0 NYSERDA Incentive Payment Excluded Excluded

Total Revenues $1,693,081 $1,366,515 Operating Expenses ($236,841) ($177,326)Land-Lease Expense ($105,281) ($78,825)Insurance Expense $0 $0 Property Tax Expense ($224,179) Excluded

Income Before Taxes $1,126,780 $1,110,363 Nominal Income Tax $0 $0 Investment Tax Credit $0 $0 Depreciation Tax Shield $0 $0 CapEx and Decomm ($44,292) ($27,875)

Appraisal Value $1,082,488 $1,082,488 First year generation (MWh) 1,525 First year Property Tax Expense

Nominal $ per year $32,475 Nominal $/MW-year $26,224

Economic Life Tax ExpensePresent value $188,438 Levelized Nominal $/MW-year $17,506

15-year Levelized Property TaxPresent Value $175,331 Levelized Nominal $/MW-year $19,691

Timing of ITC (After-tax mode only) ITC Taken in Year 0 ITC Taken in Year 1Appraisal Value (Year 1) $1,082,488 $1,082,488 Appraisal Value (Year 2) $1,041,259 $1,041,259

VDER Project Appraisal ModelProject Appraisal Report