"advanced payback

“Advanced Payback &

Financing Solar Projects”

Solar Living Institute: September 24, 2007, Long Beach, CA, 8:30am-12noonContact: Solar Living Institute: www.solarliving.org, 707 744 2017 to register

8:00 Check-in

8:30 Introductions

Advanced Solar Financial Analysis

Analysis Variables in Greater Depth

TOU Case Studies

Break, Q & A

Choosing Rebates vs. PBIs

Financing with Leasing & PPAs

Formal Conclusion, Final Q & A

Interactive Examples (for those who wish to stay)Using the OnGrid Solar Financial Analysis Tool

12 Noon We must be done by 12:00 (add’l questions outside)

Diligence:

Heights by great men reached and kept were not obtained by sudden flight, butthey, while their companions slept, were toiling upward in the night.

- Henry Wadsworth Longfellow

Andy BlackSolar Financial Analyst

(408) 428 [email protected]

“Advanced Payback &

Financing Solar Projects”Solar Living Institute: September 24, 2007, Long Beach, CA, 8:30am-12noon

Contact: Solar Living Institute: www.solarliving.org, 707 744 2017 to register

Abstract:This advanced workshop will go into further depth regarding the financial analysis methods (Internal Rate of

Return (IRR), Cash Flow analysis, and Appraisal Resale Value), involving interactive examples and real casestudies using the OnGrid Solar Financial Analysis Tool (both residential & non-residential). The session will

also include a discussion on financing medium and large commercial, government, and non-profit projects

using various lease and PPA structures.

The class is designed for the deal makers: the sales staff and their management, and the customers

purchasing staff and management, for the purpose of encouraging the flow of good quality deals between

informed partners.

It is strongly recommended that students have completed or have equivalent knowledge of the “PV 212:

Payback: The Financial Case for Solar” class, and that they have strong familiarity with the Full or freeDemo version of the “OnGrid Solar Financial Analysis Tool” (license agreement required, visit

www.ongrid.net/payback to get the free demo). Good familiarity with the various parts and screens of the

OnGrid Tool will greatly enhance the experience and understanding of these complex topics as we work

though them on-screen in class.

Example scenarios may include residential & non-residential Time-of-Use rate schedules with and without

solar, Demand Charges, Changing Rate Schedules, adjustments to Tilt and Orientation of the array, Shading.Students are encouraged to submit case studies in advance for discussion. Students may wish to bring a

laptop computer (Mac or PC) to follow along with the interactive scenarios. All students are encouraged to

receive a free copy of the demo version of this software tool before the class (license agreement required).

Biography:Andy Black is a Solar Financial Analyst & Purchasing Consultant (Broker) and the owner of OnGrid Solar.OnGrid Solar provides financial analysis software to solar installers to help them make the financial case for

solar electricity to their customers. Andy has more than ten years of design, consulting, teaching, sales, and

research experience in solar. He specializes in demonstrating the financial payback of solar electricitysystems. He is a NABCEP certified solar installer.

Andy Black is a member of the Board of Directors of the American Solar Energy Society and serves as

Chapters Representative. He is also a member of the Board of Directors of the Northern California Solar

Energy Association and serves as its Treasurer.

Andy’s formal education includes a Bachelor’s in Electrical Engineering from Penn State University, aMaster’s in Electrical Engineering from University of Southern California, and a Marketing Certificate at the

University of California. His training in solar electricity includes Solar Energy International’s intensive

photovoltaic coursework and more than a dozen specialty courses in solar electric and related fields. Hepresents regularly on the financial analysis of solar electricity to audiences nationwide.

Andy is also the groundskeeper and servant for a cat at his home in San Jose, CA.

Contact Info: Andy Black, CEO

OnGrid Solar

4175 Renaissance Dr #4, San Jose, CA 95134(408) 428 0808 [email protected] www.ongrid.net

Registration: Solar Living Institute, www.solarliving.org, 707 744 2017

Andy BlackSolar Financial Analyst

(408) 428 [email protected]

1

Andy Black

Solar Financial Consultant

& Payback Analysis Software

Solar Living Institute

Fall 2007

FINANCING & ADVANCEDFINANCIAL ANALYSIS METHODS

FOR PV SYSTEMS

Fall 2007 - SLIFinancing & Advanced Financial Analysis for PV

© 2007 OnGrid Solar. All rights reserved. 2

Introductions & Thanks

� Solar Living Institute

� Our hosts: Lindsay Dailey & Jamie Eldrett

� Solar Power 2007

� Andy Black, OnGrid Solar

� Solar Financial Analyst & Marketer

� Solar Financial Analysis & Sales Software

� You for coming!



Quick Survey - Who’s Here?� Here Friday for Regular Payback Class?

� Existing dealer / installers� Owners, not doing sales

� Salesperson for dealer / installer� Including owners if you do sales

� New or hopeful dealer / installers

� Government

� Customers / end users

� Manufacturers

� Others?



Quick Survey -Your Goals for Today?

� Learn about payback for general knowledge

� Want to use payback in selling / growbusiness

� Want to learn about / have the OnGrid SolarFinancial Analysis & Sales Tool

� Want to increase your knowledge to developyour own tool

� Other goals?



About OnGrid Solar

� 12 Years involved with Solar

� 5 Years as solar salesman

� Now a Consultant

� Solar Financial Analysis

� Technical Sales & Marketing Training



Learn More

� Visit www.ongrid.net

� Upcoming classes & events

� Articles on Payback

� PowerPoint Presentations

� The OnGrid Tool (Free Demo)

� Solar Today & ASES - discount offer

� Solar Resource Guide

2



Agenda

� Advanced Solar Financial Analysis

� Analysis Variables in Greater Depth

� TOU Case Studies

� Choosing Rebates vs. PBIs

� Financing with Leasing & PPAs

� Interactive Examples using the OnGrid Tool

Questions preferred at points marked:� Please focus on Payback Questions?



System Variables in More Depth

� Demand Charges

� RECs

� Tier 1-5 Inflation

� Time-of-Use (TOU) Choices & Issues

� Commercial Tax Issues



Demand Charges� Applies only to Large users

� Commercial and Agricultural

� On a per kW basis (load, not usage)

� Size of the wire, power plant for peak usage

� Based on highest 15 minute average any time during eachbilling month

Questions?Fall 2007 - SLI

Financing & Advanced Financial Analysis for PV© 2007 OnGrid Solar. All rights reserved. 12

Demand Profile vs.Solar Production

7am 12noon 5pm

HOUR

DEMAND&

PRODUCTION SOLARPRODUCTION

TYPICALBUILDINGDEMAND



Reducing Demand Charges - PG&E

� Difficult for solar to offset demand

� Clouds, spikes in usage not during solarhours, inverters tripping offline

� A10 & E19 have Demand Charges

� A6 is non-Demand rate

� Switch from A10 & E19 to eliminate demand

� Add control systems ~$30K+



Reducing Demand Charges - SCE



� GS-2-B, GS-3-B have high Demand Charges

� GS-2-A, GS-3-A have lower charges

� Switch to “Option A” rate


Questions?

3



Reducing Demand Charges - NJ+



� In future, switch to non-Demand rate?




RECs, Green Tags, TRCs

� RECs = Renewable Energy Credits

� TRC = Tradable Renewable Certificates

� Green Tags = RECs = TRCs = S-RECs

� What are these?

�The green value part of a solar kWh



What Are RECs?

� The green part of a solar, wind or

other renewable kWh

Electricity (kWh)

Green Tags (kWh)

Generating Plant(kWh)



REC Value

� RECs have value to other consumers

�Those who can’t get solar directly

�Utilities who need it to get intocompliance with emissionsrequirements.

� Value ranges from 1¢ to 25¢/kWh

� Depends on location, type & term

� Depends on state mandate for S-RECs



CA REC Value

� REC sale value can be added to other valuegenerated by the system to calculate payback, etc.

� Not included in any examples here

� Likely 1¢ to 5¢/kWh in California - same as Wind

� Must give up “Green Attributes” & claims

� Challenges in aggregating from small systems

� The best performing systems produce the mostRECs

� Double counting in sales



NJ REC Value

� REC sale value can be added to other valuegenerated by the system to calculate payback, etc.

� Included in examples at 20¢ for 14 years

� Challenges in aggregating from small systems

� Estimated/calculated RECs used

� The best performing systems produce the mostRECs

Questions?

4



Electric Rates & Inflation

� Electric Rates increased 6.7% /yr

�1970-2001 Compound Average

� CPI/Inflation was 3.5% since 1981

�CPI: Consumer Price Index

� Inflation can only occur in Tier 3-5

�All rate hikes exaggerated for large users



California Public Utilities Commission

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

Residential 2.23 2.31 2.46 2.63 3.37 3.64 3.82 4.23 4.48 4.47 5.86 6.51 7.67 7.12 7.07 7.78 7.94 8.04 8.54 9.45 9.98 10.79 11.08 11.30 11.43 11.61 11.32 11.32 11.32 11.32 11.32 14.40

Small Business 1.71 1.81 1.92 2.09 2.74 2.98 3.28 4.11 4.47 4.46 6.14 6.59 7.43 7.31 7.52 8.06 8.25 8.01 8.24 8.64 8.98 9.59 9.92 9.99 10.36 10.26 9.78 9.78 9.78 9.78 9.78 14.37

Large Business 0.99 1.03 1.13 1.28 1.96 2.29 2.60 3.23 3.67 3.74 5.47 6.18 7.25 6.77 6.68 7.51 7.38 6.95 6.88 7.13 7.28 7.58 7.59 7.33 7.09 7.37 6.93 6.93 6.93 6.93 6.93 11.42

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Source: Prepared by the CPUC Energy Division. Dataset from Energy Information Administration (EIA), DOE/EIA-0376(95), State Energy Price and Expenditure Report,1995, Tables 36-38. 1996 through 2000 reflects AB 1890 frozen rates. 2001 rates include 4 cent increase in SCE and PG&E Rates.

*Rates only for SCE and PG&E.

Residential

Small Business

Large Business

1982

Ce

nts

pe

rk

ilo

wa

tt-h

ou

r California Electric RatesResidential, Small Business, and

Large Business Sectors 1970 to 2001*



Source: Prepared by the CPUC Energy Division. Dataset from Energy Information Administration (EIA), DOE/EIA-0376(95), State Energy Price and Expenditure Report,1995, Tables 36-38. 1996 through 2000 reflects AB 1890 frozen rates. 2001 rates include 4 cent increase in SCE and PG&E Rates.

*Rates only for SCE and PG&E.

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

Residential 2.23 2.31 2.46 2.63 3.37 3.64 3.82 4.23 4.48 4.47 5.86 6.51 7.67 7.12 7.07 7.78 7.94 8.04 8.54 9.45 9.9810.7911.0811.3011.4311.6111.3211.3211.3211.3211.3214.40

Small Business1.71 1.81 1.92 2.09 2.74 2.98 3.28 4.11 4.47 4.46 6.14 6.59 7.43 7.31 7.52 8.06 8.25 8.01 8.24 8.64 8.98 9.59 9.92 9.99 10.3610.269.78 9.78 9.78 9.78 9.78 14.37

Large Business0.99 1.03 1.13 1.28 1.96 2.29 2.60 3.23 3.67 3.74 5.47 6.18 7.25 6.77 6.68 7.51 7.38 6.95 6.88 7.13 7.28 7.58 7.59 7.33 7.09 7.37 6.93 6.93 6.93 6.93 6.93 11.42

1970197119721973197419751976197719781979 1980198119821983198419851986198719881989 19901991199219931994 19951996199719981999 20002001

Residential

Small Business

Large Business

1982

Ce

nts

pe

rk

ilo

wa

tt-h

ou

r

California Electric RatesResidential, Small Business, and

Large Business Sectors 1970 to 2001*

Tier 5, 36¢

Tier 4, 31¢

Tier 3, 22¢

Tier 2, 13¢Tier 1, 11¢

PG&E 2007

asa

s

asf

sf

asdf

f

f

df

asf

a

sdf

PG&E 2001

Tier 5, 26¢

Tier 4, 24¢

Tier 3, 17¢

Tier 2, 13¢

Tier 1, 11¢

Questions? Fall 2007 - SLIFinancing & Advanced Financial Analysis for PV


Time of Use Choices & Issues

� Several TOU structures:

� PG&E & SDG&E: TOU with Tiers

� vs. non-TOU with Tiers

� SCE: TOU w/o Tiers vs. non-TOU with Tiers

� Most other places: TOU vs. non-TOU (no

tiers in either)

Questions?



Time of Use: PG&E & SDG&E

� PG&E & SDG&E:

� Tiers don’t affect TOU choice/results

� Choose TOU based only on usage pattern

� Tiers are on total usage, TOU is separate



PG&E Rates� PG&E E1: Tiered only - no TOU

� Base Rate $0.1143 per kWh + Tier Increments

� PG&E E6 & E7: TOU + Tiers� Rate = Base Rates + Tier Surcharges

$ 0.01559 per kWh $ 0.11292 per kWh $ 0.20289 per kWh $ 0.25004 per kWh

Tier 2 increment over Tier 1Tier 3 increment over Tier 1Tier 4 increment over Tier 1Tier 5 increment over Tier 1

$ 0.20865 per kWh $ 0.29372 per kWh $ 0.11174 per kWh $ 0.09418 per kWh $ 0.08664 per kWh


Summer PeakSummer PartPeakSummer OffPeak

Winter PeakWinter PartPeakWinter OffPeak

PG&E E6 PG&E E7


Tier 2 increment over Tier 1Tier 3 increment over Tier 1Tier 4 increment over Tier 1Tier 5 increment over Tier 1

5



PG&E Residential Tiered Rates

�Surcharge currently +25¢/kWh for Tier 5

� Base is 11¢/kWh

� Top is 36¢/kWh

Residential Tiered Usage Before Solar

0.0¢

5.0¢

10.0¢

15.0¢

20.0¢

25.0¢

30.0¢

35.0¢

Tie

r 1

Tie

r 2

Tie

r 3

Tie

r 4

Tie

r 5

Ce

nts

pe

r k

Wh

26¢/kWhsurcharge

11¢/kWhbase

charge



Sunday Monday Tuesday Wednesday Thursday Friday Saturday

Midnight - 10am Off-Peak Off-Peak Off-Peak Off-Peak Off-Peak Off-Peak Off-Peak

10am - 6pm Off-Peak Peak Peak Peak Peak Peak Off-Peak

6pm - Midnight Off-Peak Off-Peak Off-Peak Off-Peak Off-Peak Off-Peak Off-Peak

Residential Time-of-Use Pricing Periods

SCE Time Of UseResidential TOU-D-1 & TOU-D-2

� 33% of the day is Peak… when most people are away from home

� Off-Peak rates are Nights, Mornings & Weekends

… when most people are home & using



SCE Rates

� SCE D: Tiered only - no TOU

� SCE TOU-D-1 & TOU-D-2 Time-Of-Use only

� No Tiers, but there is “baseline credit” in TOU-D-1

� Excluding Solar:

� High user almost always saves on TOU - lower average rate

� Low user almost always saves on non-TOU

SCE D (Domestic Tiered)Baseline Quantity: 309 kWh/mo

Tier 1: 11.6 ¢/kWhTier 2: 13.7 ¢/kWhTier 3: 22.7 ¢/kWhTier 4: 26.3 ¢/kWhTier 5: 30.0 ¢/kWh

SCE TOU-D-1 (Domestic TOU)Baseline Quantity: 309 kWh/moSummer Peak: 36.7 ¢/kWhSummer Off-Peak: 18.9 ¢/kWh

Winter Peak: 21.5 ¢/kWhWinter Off-Peak: 17.8 ¢/kWh

Baseline Credit: 5 ¢/kWh






TOU & Solar

� Solar can only produce during day

� TOU hours subject to Daylight Savings Time

� Noon-6pm clock time on meter = 11am-5pm solar time

� 10am-6pm on meter = 9am-5pm solar

� Solar production peaks during Peak

� Sufficient PV sizing (but less than total usage offset)must turn meter backwards on peak.

� So at some point in PV size, customer only pays “off-peak” rates

� TOU is better if “off-peak” is lower than customer’saverage non-TOU rate



SCE & Solar

� With ~30% or more Solar� Most customers do better on TOU

� TOU-D-1 is generally better for Solar� Better selling & buying, plus Baseline Credit

SCE D (Domestic Tiered)Baseline Quantity: 309 kWh/mo

Tier 1: 11.6 ¢/kWhTier 2: 13.7 ¢/kWhTier 3: 22.7 ¢/kWhTier 4: 26.3 ¢/kWhTier 5: 30.0 ¢/kWh









Estimating Peak UsageHow Is Energy Used?

� Who’s home during Peak?

� What are they doing?

� Air Conditioning Climate? Into the evening?

� Ability/willingness to shift usage?

� Solar Pool Heating?

� Large Base-load usage is good:

� Refrigeration, electronics, servers, hot tub

6



Getting Perspective

� Only 6 to 8 hours are peak: 25% - 33%

� Even w/ AC, what’s a reasonable peak %?

� 40-50%-60% max in homes

�Much higher in businesses

� Note: The other 67-75% of the day alsoneeds energy

� OnGrid is working on a calculator to helpestimate TOU peak & off-peak usage



Sensitivity In The New Bill

� Impact of being off 5-10% in peak

estimation

� Examples in OnGrid Tool



TOU Examples



Agenda


� System Variables in More Depth





� Break?



Choosing BetweenEPBB Rebates

&Performance Based

Incentives (PBIs)



CSI Incentives: EPBB Rebate

� EPBB: Expected Performance Based Buydown

� Upfront Rebate to reduce initial system cost

� Amount adjusted for Expected Performance:

� Tilt, Orientation, Shading, Location

� EPBB Calculator: www.csi-epbb.com

� Systems under 100kW only (Rebate option)

7



CSI Incentives:Performance Based Incentive or PBI

� PBI: Performance Based Incentive

� Incentive paid over time based on actualperformance

� Automatically accounts for real loss factors

� Required for systems over 100kW

� Optional for under 100kW (PBI option)

Questions? Fall 2007 - SLIFinancing & Advanced Financial Analysis for PV


AdministratorCustomer

Class

Current

Step

MW

in

Step

Unused MW from

Previous Step

Total MW

in Step

Issued

Conditional

Reservation

Letters (MW)

Total MW

Available

MW Under

Review

Residentia l 2 10.1 0 2.93 13.0 3 8.96 4.07 5.81PGE Non-

Residentia l4 38.1 0 5.93 44.0 3 13.1 0 30.9 3 11.5 8

Residentia l 2 10.6 0 0.07 10.6 7 3.16 7.51 1.99SCE Non-

Residentia l4 40.1 0 0.91 41.0 1 7.31 33.6 9 12.1 0

Residentia l 2 2.40 0.00 2.40 1.36 1.04 0.92CCSE Non-

Residentia l3 6.90 0.04 6.94 6.10 0.84 5.04

EPBB Payments (per Watt) PBI Payments (per kWh)

StepStatewide

MW in StepResidential Commercial

Government

/

Non-Profit

Residential Commercial

Government

/

Non-Profit

1 50 n/a n/a n/a n/a n/a n/a

2 70 $2.50 $2.50 $3.25 $0.39 $0.39 $0.50

3 100 $2.20 $2.20 $2.95 $0.34 $0.34 $0.46

4 130 $1.90 $1.90 $2.65 $0.26 $0.26 $0.37

5 160 $1.55 $1.55 $2.30 $0.22 $0.22 $0.32

6 190 $1.10 $1.10 $1.85 $0.15 $0.15 $0.26

7 215 $0.65 $0.65 $1.40 $0.09 $0.09 $0.19

8 250 $0.35 $0.35 $1.10 $0.05 $0.05 $0.15

9 285 $0.25 $0.25 $0.90 $0.03 $0.03 $0.12

10 350 $0.20 $0.20 $0.70 $0.03 $0.03 $0.10

CSI Trigger Tracker

$1.90

$1.55

$1.10

$0.65

$0.35

$0.25

$0.20

$

$1.55

$1.10

$0.65

$0.35

$0.25

$0.20

$0.22

$0.15

$0.09

$0.05

$0.03

$0.03

$

$0.32

$0.26

$0.19

$0.15

$0.12

$0.10

$0.26

$0.22

$0.15

$0.09

$0.05

$0.03

$0.03

$

$2.30

$1.85

$1.40

$1.10

$0.90

$0.70

Trigger Tracker website: http://www.sgip-ca.com/As of 9/11/07



CSI PBI: Requirements

� Must use 2% accurate IDR (Interval Data Recording)meters

� Up front cost: ~$1,000-$2,500

� Must subscribe to meter reading & reporting service

� Monthly fees ~$15/mo

� Must supply ISP, phone or cellular connection

� Monthly fees ~$15/mo

� Ineligible for 1% metering cost limit

� All PBI must have metering regardless of cost



EPBB & PBI Taxation

� Residential

� Probably neither are taxed

� IRS Sect 136 (Res only)

� Commercial

� Both are probably taxed

� Rebate taxation affects ITC basis and depreciation

Disclaimer: I’m not a CPA or lawyer, and am not providing tax advice.Seek qualified professional help



Residential PBI Taxation

� Not clear if exempted under Section 136

� Is not a rebate, but is a utility payment for“energy efficiency”

� Needs more investigation

� Makes a significant difference in choice vs.rebate

� Installers or manufacturers probably won’t acceptthe PBI payments, and that probably wouldn’tavoid tax anyway, but would hide the 1099



EPBB & PBI Taxation

� Residential

� Probably neither are taxed

� IRS Sect 136 (Res only)

� Commercial

� Both are probably taxed

� Rebate taxation affects ITC basis and depreciation

Disclaimer: I’m not a CPA or lawyer, and am not providing tax advice.Seek qualified professional help

8



Rebate Tax Interactions

� If the rebate is non-taxable, the federal

tax credit is on amount after rebate

� If rebate is taxable, then federal tax credit

is on amount before rebate



Commercial Rebate Taxation

� If commercial, make rebate taxable*

� Then tax credit and depreciation are on amountbefore rebate

� Worth more to pay tax on rebate, then get 30%credit and depreciation on rebate

� Depreciation is on tax credit basis, minus 1/2of the federal tax credit amount� I.e. 85% of pre-rebate system cost

*SEIA Tax Manual: www.seia.org



Tax Credit & Depr. ExampleNon-Taxed Rebate

$150K System Cost

-$50K Rebate

$100K Net Cost After Rebate

-$30K Tax Credit Value (30% of $100K)

-$36.6K Depr Value (85% of $100K * 43%)

=$33.4K Net Cost

43% = combined federal & state tax rates



Tax Credit & Depr. ExampleTaxed Rebate

$150K System Cost

-$50K Rebate

+21.5K Rebate Tax ($50K * 43%)

-$45K Tax Credit Value (30% of $150K)

-$54.8K Depr Value (85% of $150K * 43%)

=$21.7 Net Cost



Tax Credit & Depr. Example

Taxed Rebate

$150K System Cost

-$50K Rebate

+21.5K Rebate Tax

-$45K Tax Credit Value

-$54.8K Depr Value (127.5K * 43%)

=$21.7 Net Cost

Non-Taxed Rebate

$150K System Cost

-$50K Rebate

$100K Net Cost After Rebate

-$30K Tax Credit Value

-$36.6K Depr Value (85K * 43%)

=$33.4K Net Cost



PBI Taxation: Commercial

� Almost certainly taxable

� Does not provide same benefit as makingrebate taxable (as in previous examples)� Doesn’t affect basis

� PBIs have lower IRR for San Jose areacustomers� Gets better w/ higher production

Questions?

9



Issues PBI vs. Rebate

� Cash Flow & Time Value of Money

� Rebate paid up front

� Lower Capital cost

� PBI paid over 5 years

� More Capital required up front

� More total incentive received, but have to wait for it

� Risk of lower performance or system problem(output interruption, failure, etc)

� Add’l meter & monitoring expense



CommercialCash Flow EPBB & PBI

EPBB Rebate ~ $19,000

PBI Total ~ $26,000 over 5 years

Commercial After-Tax AnalysisYear:

Operating Savings: 0 1 2 3 4 5 6Avoided electricity Purchases 3,655 3,819 3,991 4,171 4,359 4,555Performance Based Incentive. Assumed Taxable 5,211 5,185 5,159 5,133 5,108

Operating Expenses:(213) (221) (229) (237) (245) (254)

System Capital Cost with Fees, before Rebates (86,097)Rebates & Grants

Operating profit (loss): (86,097) 8,653 8,784 8,922 9,068 9,221 4,301

System Maintenance at 0.25% of gross system cost per year


Operating Savings: 0 1 2 3 4 5 6Avoided electricity Purchases 3,655 3,819 3,991 4,171 4,359 4,555No Performance Based Incentive Included

Operating Expenses:(213) (221) (229) (237) (245) (254)

System Capital Cost with Fees, before Rebates (86,097)Rebates & Grants 19,089

Operating profit (loss): (67,009) 3,441 3,598 3,763 3,934 4,114 4,301




Net Cost at Year 8


Operating Savings: 0 1 2 3 4 5 6 7 8Avoided electricity Purchases 3,655 3,819 3,991 4,171 4,359 4,555 4,760 4,974Performance Based Incentive. Assumed Taxable 5,211 5,185 5,159 5,133 5,108

Operating Expenses:(213) (221) (229) (237) (245) (254) (262) (272)

System Capital Cost with Fees, before Rebates (86,097)Rebates & Grants

Operating profit (loss): (86,097) 8,653 8,784 8,922 9,068 9,221 4,301 4,497 4,702Federal & State Tax benefits


Value of lost Federal tax deduction of electricity expense (1,205) (1,259) (1,317) (1,377) (1,440) (1,505) (1,574) (1,646)Value of lost State tax deduction of electricity expense (304) (318) (333) (348) (364) (380) (398) (416)Fed Tax Benefit on State deduction loss of electricity expense 106 111 116 122 127 133 139 145

After-Tax Net Annual Profit/Loss for IRR (41,179) 831 10,679 7,498 5,627 5,734 4,385 3,015 3,137After-Tax Cash Flow, Cumulative (41,179) (40,348) (29,669) (22,171) (16,544) (10,810) (6,426) (3,410) (274)

EPBB Rebate Year 8 Cash Position: -$274

PBI Year 8 Cash Position : +$2,604

Value of lost Federal tax deduction of electricity expense (3,028) (3,074) (3,123) (3,174) (3,227) (1,505) (1,574) (1,646)Value of lost State tax deduction of electricity expense (765) (776) (789) (802) (815) (380) (398) (416)Fed Tax Benefit on State deduction loss of electricity expense 268 272 276 281 285 133 139 145

After-Tax Net Annual Profit/Loss for IRR (60,268) 10,600 13,751 10,555 8,669 8,760 4,385 3,015 3,137After-Tax Cash Flow, Cumulative (60,268) (49,668) (35,916) (25,362) (16,693) (7,933) (3,548) (533) 2,604


Operating Savings: 0 1 2 3 4 5 6 7 8Avoided electricity Purchases 3,655 3,819 3,991 4,171 4,359 4,555 4,760 4,974No Performance Based Incentive Included

Operating Expenses:(213) (221) (229) (237) (245) (254) (262) (272)

System Capital Cost with Fees, before Rebates (86,097)Rebates & Grants 19,089

Operating profit (loss): (67,009) 3,441 3,598 3,763 3,934 4,114 4,301 4,497 4,702




Ideal Rates of ReturnResidential Examples

Sacramento, CA

Pre-Solar

Bill

kWhper

MonthUsage

SystemAC Size

SystemGross

Cost

Final NetCost w/

TaxBenefits

& Rebate

EPBBPre-

TaxAnnual

Return

PBIPre-

TaxAnnual

Return

$100 710 3.0 kW $28K $19K 11.3% 12.4%

$243 1200 6.0 kW $56K $39K 14.6% 16.0%

$419 1700 9.0 kW $81K $57K 17.2% 18.5%

Assumes neither PBI & Rebate are taxable



Residential Variables & Assumptions� 28% federal tax bracket and 9.3% state tax bracket

� Facing south, 22° pitch, simple comp roof, full service

provider, no complications near San Jose, CA

� Slightly conservative real system performance (approx 1,630

AC kWh per CEC AC kW), no shading

� Final Net Cost is total installed system costs-CSI Rebate+$500

Permit+$0 TOU meter fee. System maintenance cost is 0.25%of gross system cost per year, adjusted for inflation

� Billing starting on PG&E E1-XB, switching to PG&E E7-XBTOU Net Metering with 28% on-peak

� 5.0% electric inflation. Module degradation 0.5% per year

� Inverter replacement costing $700/kW occurs in year 15



Ideal Rates of ReturnCommercial Examples

SF, CA

Pre-Solar

Bill

kWhper

MonthUsage

SystemAC

Size

SystemGross

Cost

Final NetCost w/

TaxBenefits &

Rebate

EPBBAfter-

TaxAnnual

Return

PBIAfter-

TaxAnnual

Return

$325 2000 10kW $85K $18K 8.7% 7.8%

$958 6000 30kW $247K $51K 9.2% 8.2%

$3174 20000 100kW $799K $160K 9.6% 8.5%

Assumes both PBI & Rebate are taxable

10



Ideal Rates of ReturnCommercial Examples

Dagget, CA

Pre-Solar

Bill

kWhper

MonthUsage

SystemAC

Size

SystemGross

Cost

Final NetCost w/

TaxBenefits &

Rebate

EPBBAfter-

TaxAnnual

Return

PBIAfter-

TaxAnnual

Return

$325 2000 10kW $85K $18K 10.3% 9.8%

$958 6000 30kW $247K $51K 10.8% 10.3%

$3174 20000 100kW $799K $160K 11.3% 10.7%

Assumes both PBI & Rebate are taxable



Commercial Variables & Assumptions� 35% federal tax bracket and 8.84% state tax bracket

� Facing south, 22° tilt rack, simple flat roof, full service provider,

no complications near San Jose, CA

� Slightly conservative real system performance (approx 1,630

SFO or 1,995 (Daggett) AC kWh per CEC AC kW), no shading

� Final Net Cost is total installed system costs-CSI Rebate+$800

Permit+$0 TOU meter fee. System maintenance cost is 0.25% ofgross system cost per year, adjusted for inflation

� Billing starting on PG&E A1, switching to PG&E A6 TOU NetMetering with 60% on-peak, 25% part-peak energy use





Ideal Rates of ReturnMunicipal Examples

Sacramento, CA

Pre-Solar

Bill

kWhper

MonthUsage

SystemAC

Size

SystemGross

Cost

Final NetCost w/

Rebate

EPBBAnnual

Return

PBIAnnual

Return

$325 2000 10kW $85K $59K 5.7% 5.7%

$958 6000 30kW $247K $169K 6.2% 6.1%

$3174 20000 100kW $799K $536K 6.6% 6.5%



Municipal Variables & Assumptions

� Facing south, 22° tilt rack, simple flat roof, full service

provider, no complications near San Jose, CA

� Slightly conservative real system performance (approx 1,690AC kWh per CEC AC kW), no shading

� Final Net Cost is total installed system costs-CSI Rebate+$800Permit+$0 TOU meter fee. System maintenance cost is 0.25%of gross system cost per year, adjusted for inflation

� Billing starting on PG&E A1, switching to PG&E A6 TOU NetMetering with 60% on-peak, 25% part-peak energy use





Agenda


� System Variables in More Depth





� Break?Fall 2007 - SLI


Financing Non-ResidentialSolar Projects

11



Sales Benefits of Financing

� Offering Financing keeps salesperson in controlof the sale� If the customer is out looking for financing, you’ve

lost control of the sale.

� If you offer it, you can continue to control the sale.

� Creates more purchasing options, more chances ata close

� Gets salesperson closer to decision maker & theirreal thinking

� Can use to overcome objectionsFall 2007 - SLI


Financing Options For Solar

� Leases - Ways of paying for ownership and/or

use over time, having tax and/or cash flowbenefits during term, usually with intention ofpurchasing or renewing at the end

� PPAs - Power Purchase Agreements -

Paying for just the energy if/when delivered



CharacteristicsCommon to PPAs, & Leases

� Good end-customer credit helps

� Lower interest rate environment helps

� Attractive if based on fundamentallyattractive scenario



“Good” or “Strong” Credit

� >5 years in business

� >$50 million revenue

� Positive trends (increasing revenue & profits)

� Standard ratios (cash flow, etc)

� Dun & Bradstreet, etc



Leases

� Several Types

�Finance

�True

�Operating

�Tax-Exempt Lease Purchase

*Excerpted from Conergy Commercial Financing presentation byBaker Davenport & Tim Pedersen, Rockwell Financial Group



What is a Lease

� Finance contract between 3 parties

� Lessor, Lessee, Vendor

� Looks like either a loan or a rental

� Ability to transfer ownership benefits

� Tax Benefits or for Accounting purposes

� Specified term & payment

� Many types of leases

12



Lease “Flow”

Lessee

Lessor

Vendor

Lease

Payments

Use of

System

Purchase

Payment

PV System

Initial “sales” interaction

Info on leasing resources



Benefits of a Lease

� Terms more flexible than a purchase

� Allows for 100% financing� Covering freight, maintenance, fees, …

�Which might not be allowed in a loan

� Doesn’t tie up capital and/or effectivelystretches line of credit� Keeps bank line of credit free

� Tax benefits capture by those who can fullyuse them: AMT, no tax “appetite”



Widely Used

� Solar Leases similar to other asset leases

� Well established market� 80% of companies and gov’t agencies use

leasing, rather than owning, for at least someof their equipment

� Some companies only use leasing, rather thanpurchasing

� Lessor = Owner of system

� Lessee = User (“renter”) of system



Lease vs. Loan

Bank Loan Leasing

Interest Rates Floating interest rates Fixed rate with fixed payments

Terms Usually 2-3 years, and often year-to-year Up to 10 years

Opportunity CostsUses up bank line of credit, thus restrictingfuture investments

Frees bank lines and cash for futureinvestments

Upfront Payment Typically 20% to 30% 0% (100% financed)

Hidden CostsCompensating balances, loan covenants,bank charge s

Non e

Soft Cost CoverageCan't finance shipping, tech support,maintenance, etc.

All soft costs can be financed

Financial Reporting Carried on balance sheet as debtMay not have to be reflected on balancesheet

*Conergy Commercial Financing presentation by Baker Davenport & Tim

Pedersen, Rockwell Financial Group



Lease Term Set By:

� Price of project - larger is better

� Credit of customer

� Structure of the deal



Finance Lease

� Same as bank loan

� Fully amortizing or with balloons

� Lessee gets tax credit & depreciation

� Interest is deductible

� Most commonly utilized for energy projects

13



Finance Lease Typical Terms

� 5 year, $100K

� 7 year, $500K

� 8 year, $1MM

� 10 year typical max

� Limits: Longer = higher risk

� Easiest lease to create wrt due diligence



True Lease

� Rental contract w/ fixed terms & conditions

� Lower interest rate than finance lease

� Lessor gets depreciation & tax credits

� Lessee expenses monthly payments

� Lease considered “on balance sheet”

� Not available to non-profits & gov’t entities



True Lease Typical Terms

� E.g.: $500K, 75kW system

� ~7yrs on “standard” credit

� ~10yrs on strong credit

� End of lease:� Purchase equipment at greater of FMV or % of original

(10% for 10yr, 20% for 7yr)

� Extend lease for add’l 12 months at fixed rental rate� Repeat indefinitely or sell

� Lessor typically doesn’t want equipment at the end

� Additional due diligence - less than a PPA, more thanFinance Lease



Operating Lease

� Rental contract w/ fixed terms & conditions

� Lower interest rate than finance lease� Lessor gets depreciation & tax credits

� Lessee expenses monthly payments

� Lease considered “off balance sheet”

� Paid with operating, not capital funds

� Not available to non-profits & gov’t entities

� Can do, but no transfer of tax benefits so less valuable

� Unusual



Operating Lease Typical Terms

� E.g.: $500K, 75kW system

� ~7yrs on “standard” credit

� ~10yrs on strong credit

� End of lease:� Purchase equipment at greater of FMV

� Extend lease for add’l 12 months at fixed rental rate

� Repeat indefinitely or sell

� Return equipment to Lessor

� More difficult, more due diligence than True Lease,Less than PPA



Cash Benefits ofTrue & Operating Leases

� Lessor offers lower monthly cost of solarsystem to end user because of enjoyed taxbenefits

� Lessor gets lower taxes

� Lessee gets lower cost PV system (lowerpayments)

14



True & Operating Lease Term

� Typically >= 6 years to get alldepreciation benefit

� Asset transferred to Lessee at greaterof:

�Fair Market Value (FMV)*

�Predetermined price

*Critical to avoid tax violation



Typical Lease Terms

� Lease can’t exceed 80% of life of asset� Must have a residual value

� Lessor owns, but takes no operating risk� Hell or high water - Lessee must pay for system

regardless of performance� Incentive on Lessee to maintain system

� Property tax, insurance, maintenance isresponsibility of lessee

� May require tax indemnity if tax benefits aren’ttransferable to Lessor



Returns for Lessors

� ~6%-9% range

� Requires:

�Lessees with good credit

�Limited project risk

�Low transaction costs via standardterms and “conforming” projects



Tax Exempt Lease Purchase

� Primarily for State & Local governments

� Includes public schools & universities

� Longer terms: 10-20 yrs by project size (>20kW)

� Current debt obligation for lessee

� Non-profits qualify for larger projects (> $1MM)

� Must have gov’t sponsor

� Special structuring - more “complicated” lease

� “Tax Exempt” means the lessor doesn’t pay Fed taxon income: Reduces interest ~ 300 basis points



Non-Profits w/o Gov’t Sponsors

� Non-Profits not eligible for True or OperatingLeases

� Can’t pass tax benefits to lessor

� Instead - Capture via a 3rd party ownershipstructure:

�PPA

� 3rd “For-Profit” party owns or leases (lessee)the system and sells PPA energy to non-profit



Which Lease Is Right?Can your customer utilize tax benefits and interested inowning system?

Finance Lease

Is your customer a government entity?Tax exempt Lease(purchase), PPA

Is your customer a non-profit? PPA

Is your customer restricted in utilizing tax benefits ormotivated more by buying electricity rather than solarsystem, and your deal size is less than $1MM?

True Lease

Is your customer restricted in utilizing tax benefits ormotivated more by buying electricity rather than solarsystem, and your deal size is $1MM or greater?

PPA

15



Get Lessor, Lender orBroker Involved Up Front

� They can help present and sell the deal -

include them early on

� Helps and increases sales person’s control

� Helps get the right questions asked up front

� Speeds the sale

� Or determines early that this is a no-go

� Determine which type is best



Lease Brokers & AgentsDavid J. Clamage

Renewable Energy Financial, LLC

[email protected]

303-629-8777 x102

Gene Beck

EnviroTech Financial, Inc

[email protected]

714-532-2731

www.etfinancial.com

Baker Davenport

Davenport Finance Company (works w/ Conergy Dealer Net also)

[email protected]

804-323-6061



Financing Options For Solar

� Leases - Ways of paying for ownership and/or

use over time, having tax and/or cash flowbenefits during term, usually with intention ofpurchasing or renewing at the end

� PPAs - Power Purchase Agreements -

Paying for just the energy if/when delivered



Power Purchase Agreement - PPA

� A Type of Offering or Proposal

� Contract for the sale of energy (kWh)

� Not sale of a PV system

� A financing alternative to leasing

� Recently very popular



Parties to the Transaction

� Agreement between

� PPA Provider / Vendor

� End User of Energy

� Building Owner (might be End User)

� System Vendor / Installer

� 3rd Party Investor (might be installer)



PPA “Flow”PPA Provider

/ Vendor

System

Vendor/Installer

Occupant /

Energy User

PPA

Financier

Building

Owner

PV System

Purchase

Payment

ROI

Investment Cash

kWh

Energy

Monthly

Energy

PaymentsBuildingAccess /

Maintenance

Permission

16



Party Responsibilities

� 3rd Party Investor (might be installer)

� Owns the System

� Responsible for maintenance & performance

� End-User

� Receives energy from system

� Makes predetermined payments for energy

if produced



End-User Benefits

� No up-front costs, down payment or depositrequired

� Lower initial energy costs

� Potentially lower long term energy costs

� Future discount purchase of system

� Reduced PV cost even if no tax appetite



Energy Expense Comparison

2007 2017 2027

Year

CostPerkWh

PPA Electric Rate includingcontracted escalation at 3%

Utility Electric Rate

including estimated escalation at 5%15¢

14¢



Investor/Owner Benefits

� Guaranteed stream of income from energysold

� Tax benefits

� No inflation/escalation risk

� Keep / sell Green Tags



End User Risks

2007 2017 2027

Year

CostPerkWh

PPA Electric Rate includingcontracted escalation at 3%

Utility Electric Rates may not rise or stayabove PPA Contract Rate

15¢

14¢

� Inverse of Electricity Escalation

� If rates don’t rise, might cost more

� Might not get Green Tags

� Additional cost if desired



Investor/Owner Risks

� System Performance

� Maintenance over 15+ years

� End-User default

� Good credit end-users desirable

�Lowers cost

� Transaction Costs - aggregating towards

$40 Million +

17



Complications

� Long contracts - 40-60 pages

� High initial transaction costs

� Reduce with standardization

� Building access / maintenance costs

� Repossession / aftermarket value

� Termination tax issues? - terminal price?



Complications Cont’d

� Power Contract Form:

� Selling kWh?�At what price?�TOU & Demand saving / costs�Who takes remaining utility bill?

� Simpler but vague sales presentation

� May leave lots on table in customer’s

benefit



Complications Cont’d

� Guaranteed Savings Contract:

� Selling promise to reduce bill by $X ifcustomer continues to user energy in aspecified manner (time/quantity)

� Complicated but precise



PPA Typical Terms

� $2.5Million+ (>350kW+)

� 15-20 yr commitment

� End of term:

� Renew PPA

� Purchase of system

� Pay termination & have system removed

� Significant due diligence - Most of all formsof financing



PPA Vendors / Providers

Offer PPAs to 3rd Parties (looking for partners to bring deals):� Solar Power Partners: 20kW-500kW

� Sun Run Generation: Residential

� MMA Renewable Ventures: 500kW+

� Tioga Energy

� Conergy under 500kW / Epuron over 500kW

� Many others available & more coming

Uses PPAs on their own projects only:� Sun Edison: 500kW+

� Vertically integrated on sales, installation & ownership

� Powerlight / SunPower: 500kW+

� Solar Technologies



Comments

� PPAs & Leases are only likely to be viable

options if the system is attractive on a stand-

alone basis assuming full commercial tax

appetite

� Allow creative finance where tax status or

customer preferences otherwise block a sale

� They don’t save “lost causes”

18



Money on the Table

� PPAs are selling fast

� Appears the customers are getting excellent

deals - medium+ savings

� Not clear how investors will make out

� Lots of risk

� Who bears it over the long term?

� Will it work?

Return Fall 2007 - SLIFinancing & Advanced Financial Analysis for PV


PPA Partners are Ideal Customers

� Effectively are “Repeat” customers

� Just need to find “Host” sites

� Have $, ready to move

� Understand installer’s business & cash needs

� Eliminate most of the sales hurdles

� Simply helping Host select best offer



Agenda




� OnGrid Tool Overview


� Break?



The OnGrid Solar FinancialAnalysis Tool

� A Sales & Design Tool

� Proves the Payback

� Produces Proposals

� Produces Sales Paperwork

� Adding CRM & Project Planning Tools &links/interfaces with Lead Generation website

� Adding Energy Efficiency Audit/Analysis



OnGrid Tool Factors In:

� System Costs

� Incentive Programs

�CA EPBB, PBI

�Federal Tax Credit & Depreciation

� Inflation

� Electric Rates

� System Performance



System Performance

� Data from shading devices

� Site performance variables

� Tilt, Orientation

� Dust, Mismatch, Wire

� PTC & Inverter Efficiency

� Estimates kWh Performance

19



Proves the Payback:Financial Analysis Methods

� Simple Payback

� Total Lifecycle Payback

� Rate of Return analysis

� Cash Flow when financing

� Increase in Appraisal Valuation

� Provides spreadsheet of numbers forproof

Power Purchase Agreements

Grant Applications

Annual Savings Before and After Payback

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Year

An

nu

al S

avin

gs

Annual Savings Before Payback

Payback Year (Occurs at 9.7 Years)

Annual Savings After Payback

$-

$50,000

$100,000

$150,000

$200,000

$250,000

1 3 5 7 9 11 13 15 17 19 21 23 25Years

Res

ale

Val

ue

Effective Resale Value (lesser of 20x annual or remaining 25yr savings)

20 times Annual Savings

Remaining savings within 25 years

$(4,000)

$(2,000)

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

1 3 5 7 9 11 13 15 17 19 21 23 25

Years

An

nu

al S

avin

gs



Quotation & Contractfor a Renewable Energy Power System

OnGrid Solar Salesperson: Andy Black

4175 Renaissance Dr #4 Phone: (408) 428-0808San Jose, CA 95134 Email: [email protected]

Contractor's License Number: Cont. Lic. # July 4, 2006Contractor's License Type: Cont Lic Type

Client: Site Address: 117 So Mary Ave, #30

Mr. Sunny Customer and Ms. Happy Buyer Sunnyvale, CA 94087

Solar User Inc.(408) 111 1111H, (408) 222 2222C, (408) 333 3333x333W Mailing Address: 117 So Mary Ave, #[email protected] Sunnyvale, CA 94087

PROJECT DESCRIPTION and MAJOR COMPONENTS: System Size (kW DC, STC) 12.272 kW

A 10.2 kW PV System, with turn-key installation at customer's site address stated above. System Size (kW AC, CEC) 10.220 kWMounting type: Composite roof.

Major System Components: System Pricing Details

91,433$Module STC rating: 208W

(26,572)$

64,861$

Payment Schedule:

Inverter rating: 3800W each Event (%) Amount Approximate Date

1,000$ July 17, 2006

44,717$ July 31, 2006

Standard Components: 36,573$ October 23, 2006

-$

-$

9,143$ November 6, 2006Total Sale Price**: 91,433$

Time for Completion:Additional Components:

October 23, 2006November 6, 2006

Monitoring: Construction Commencement Schedule:Standard monitor/display built into inverter

X Delivery of material to site, or____ __________________________________________________________

Standard Labor:Design system and secure basic building or electrical permit

(Architectural, planning commission or other reviews are extra)Install specified system in good workman like manner

Complete and submit utility interconnection documents Additional Contract Provisions:Coordinate building, electrical and utility inspections 1. All payments are due Net 10 days. 1% interest per month carrying charge.

Additional Work:3. **Installer will refund rebate to customer within 3 days of receipt from the State4. Quoted price includes electric utility fees, but not permit fees

ALLOWANCES:The following items or specific prices as indicated are included in the contract price as allowances.

The contract price shall be adjusted based upon actual amounts rather than estimated amounts herein:_X_ none or (1) _____________________________________________(2) ________________________________________________________(3) ________________________________________________________

This quotation price is valid for 14 days from the above date, quoted schedule is valid for 3 days.Salesperson Signature: Date:

Customer Acceptance Signature: Date:(to be signed when customer decides to purchase)

5. This PV system includes a\the 5-year warranty required by the California Energy Commission.

2. *System Completion occurs upon building or electrical inspectors permit signoff. Utility inspection typically occurs 4 to 14 days after permit signoff.

Initial Deposit (10% or $1,000)

Upon ordering of materials (49%)

Installed System Price including Sales Tax & Shipping (before Rebate)

and shall be substantially completed within 14 days or approximately on:

Commencement of work shall be defined as

Upon municipal building/electrical inspection* (10%)

The work to be performed by Contractor pursuant to this Agreement shall be commenced

within ________ days from this date or approximately on:

If the customer decides to purchase the goods and services outlined above, this document shall become part of the Agreement for Supply and Installationof a Renewable Energy Power System which specifies additional terms and boilerplate consumer rights as part of a Home Improvement Contract.

Estimated Buy-Down Program Rebate at $2.60/W**to be paid to the installer

Contract Price Net to Customer

Roofing sealant or flashings as needed

AC and DC disconnects per National Electric Code and Utility

Contractor's failure to substantially commence work without lawful excuse, within twenty

Upon delivery of materials to the jobsite (40%)

(20) days from the date specified above is a violation of the Contractors License Law.

Wiring, conduit, and overcurrent protection per National Electric Code

59 Sharp Corporation ND-208U1 modules.

3 SMA America SB3800U (240V) inverters.

Racking and mounting components per Uniform Building Code

Your Logo HereP.S. State incentives will decline at the

� Sales Docs Prepared:

� 3 Varieties of Proposal

� Contract/Quote

� CSI 2 & 3 Step Applications

� 3rd Party Authorization

� Interconnection Agreements

� Data entered once

� Accuracy & Time Savings

SUBMITTED TO THE FOLLOWING.

Please check all that apply:

� PG&E � SoCalGas

� SCE � SDG&E

THIS IS A LEGALLY BINDING CONTRACT _ READ IT CAREFULLY

(Please Print or Type)

I, Mr. Sunny Customer ownerNAME TITLE (IF APPLICABLE

of Mr. Sunny Customer (Customer) have the following mailing addressNAME OF CUSTOMER OF RECORD

117 So Mary Ave, #30 Sunnyvale CA 94087 , and do hereby appointMAILING ADDRESS CITY STATE ZIP

California Energy Commission of 1516 Ninth St. MS-45NAME OF THIRD PARTY MAILING ADDRESS

Sacramento CA 95814CITY STATE ZIP

to act as my agent and consultant (Agent) for the listed account(s) and in the categories indicated below:

ACCOUNTS INCLUDED IN THIS AUTHORIZATION:

1. 117 So Mary Ave, #30 Sunnyvale Util Acct #SERVICE ADDRESS CITY SERVICE ACCOUNT NUMBER

2.SERVICE ADDRESS CITY SERVICE ACCOUNT NUMBER

3.SERVICE ADDRESS CITY SERVICE ACCOUNT NUMBER

(For more than three accounts, please list additional accounts on a separate sheet and attaceh it to this form)

INFORMATION, ACTS AND FUNCTIONS AUTHORIZED-This authorization provides authority to the Agent. The Agent must thereafterprovide specific written instructions/requests (e-mail is acceptable) about the particular account(s) before any information is released oraction is taken. In certain instances, the requested act or function may result in cost to you, the customer. Requests for information maybe limited to the most recent 12 month period.

I (Customer) authorize my Agent to act on my behalf to perform the following specific acts and functions (initial all applicable boxes):

> 1. Request and receive billing records, billing history and all meter usage data used for bill caclulation fo all of my account(s), as specified herein,

regarding utiltiy services furnished by the Utility1.

> 2. Request and receive copies of correspondence in connection with my account(s) concerning (initial all that apply):

> a. Verification of rate, date of rate change, and related information;

> b. Contracts and Service Agreements;

c. Previous or proposed issuance of adjustments/credits; or

d. Other previously issued or unresolved/disputed billing adjustments

3. Request investigation of my utility bill(s).

4. Request special metering, and the right to access interval usage and other metering data onmy account(s).

5. Request rate analysis.

6. Request rate changes.

7. Request and receive verification of balances on my accounts(s) anddiscontinuance notices.

1The Utility will provide standard customer information without charge up to two times in a 12 month period per service account. After two requests in a year, I undertstand I may be

responsible for charges that may be incurred to process this request.

Revised 1/11/00 Page 1 of 2

AUTHORIZATION TO: RECEIVE CUSTOMER INFORMATION

OR ACT ON A CUSTOMER'S BEHALF

Pacific Gas and Electric Company DISTRIBUTIONBilling

INTERCONNECTION AGREEMENT FOR Customer-Generator

NET ENERGY METERING FOR Business Customer Center

RESIDENTIAL AND SMALL

COMMERCIAL SOLAR OR WIND REFERENCE

ELECTRIC GENERATING FACILITIES OF

10 KILOWATTS OR LESS Current Acct No. ______________________

DECLARATIONS

Mr. Sunny Customer ("Customer-Generator") and Pacific Gas and

Electric Company, also referred to as “Utility”, referred to collectively as "Parties" and individually as "Party,"

consistent with, and in order to effectuate, the provisions of Sections 2827 and 2827.7 of the California Public Utilities

Code and Pacific Gas and Electric Company’s electric rate Schedule E-NET (“E-NET”), enter into this “Interconnection

Agreement for Net Energy Metering For Residential and Small Commercial Solar or Wind Electric Generating Facilities

of 10 Kilowatts or Less” (“Agreement”)1. This Agreement applies to the Customer-Generator’s generating facilities

identified below with the specified characteristics and generating capacity, and does not allow interconnection or

operation of facilities different than those described. Accordingly, the Parties agree as follows:

1. DESCRIPTION OF CUSTOMER-GENERATOR’S SOLAR OR WIND ELECTRIC GENERATING

FACILITY (“Facility”)

Project Identification Number: __________________________ (Utility Log Number)

Interconnected Equipment:

Table 1. - List of generating equipment interconnecting with Pacific Gas and Electric Company’s Distribution

System with, or without, an inverter. (For those generators interconnecting without an inverter, write in “N/A”

in the right three columns. If an inverter is shared by more than one generator, write “shared” on the same line

as that generator under the manufacturer column and do not enter the inverter rating. Attach list of additional

equipment if applicable.)

Type of Generator Generator Manufacturer for Inverter Inverter Rating

(Solar / Wind / Rating Inverter used with Model (watts)2

Hybrid) (watts) Generator Number

1

2

1 Additional forms are available upon request by telephoning 415-972-5676 or on PG&E’s website at

http://www.pge.com/gen).

2 The inverter rating equals: (the CEC efficiency for each installed inverter) TIMES (the nameplate rating, in kW, of each inverter). The CEC efficiency is obtained on the CEC website at

http://www.consumerenergycenter.org/erprebate/eligible_inverters.html as listed on the date the

application is reviewed. Enter the total of all inverter ratings for multiple inverter installations in the Table

above.

Page 1 of 9

Form 79-854 Tariffs and Compliance

Revised November 6, 2003 Effective January 1, 2003

Advice 2373-E-B

SMA America SB3800U (240V)

- W

Solar 11,400 W 10,773 W

- W

OnGrid Tool Outputs



Scenario Options� Pre-programmed w/ PG&E, SCE &

SDG&E, NJ, CO, HI, & CT rates� Agricultural, Commercial, Residential

� Apply to Any Situation:

� Residential, Commercial, Government &Non-Profit

� Any Rate Structure

� Any Incentive: Rebate, PBI, REC, TaxCredits & Depreciation

� Any Insolation Location

� Excel-based: Fast, Portable, non-web



Use OnGrid CredibilityWith Your Customers

� >8 years of study of Solar Financial Analysis & Finance

� Peer Reviewed Papers (>8)

� Published Articles (>10)

� Classes Coast to Coast (dozens) at PEC, SLI, SEI, NCSC, dealerevents, etc

� Linked on CSI GoSolarCalifornia website

� >100 customers in CA

� SEI Graduate, now instructor

� M.S. Electrical Engineering

� Marketing Certificate with emphasis in Finance

� Newspaper, Radio, & TV appearances & interviews



Results with OnGrid

� Faster, Easier, More Accurate Selling

� Credible Financial Analysis

� Effective Selling

� Faster & Easier Paperwork Completion

= More Sales Closed, Less Effort

Free Demo Available - License Agreement:

www.ongrid.net/payback



Before the Demo

� Wrap-up Formal Presentation

� Questions

� Feedback Forms

20



Conclusion - Review

� Discussed Demand & TOU variables in more

depth

� Understood the issues around PBI vs Rebate

� Looked at Leases & PPAs to pay for it



Conclusion

On Grid Solar Electric Systems can:

� Be an attractive financial investmentDemonstrably increase property value

� Hedge against inflation spikes

� Oh, it’s kinda nice environmentally &socially too…



Conclusion

� An Attractive & Legal investment…



Learn More

� Please see SLI for full day & multi-day

classes on other Solar topics

� OnGrid website: www.ongrid.net

�Articles

�Papers

�PowerPoint presentation PDFs

�Classes



Conclusion

� Thanks very much for being here today

� Solar Living Institute: Lindsay Dailey & Jamie Eldrett

� Solar Power 2007

� Contact me with any questions or concerns

� Please turn in your feedback forms

� What did you like?

� What didn’t you like / want changed?

� Thanks again for coming!

� Stick around for the interactive session next!



Andy BlackSolar Financial Analysis

& Sales Software

(408) [email protected]

www.ongrid.net - Tools, Articles & Papers available

21



Break?

Interactive Examples(for those that wish to stay)



Residential Interactive Example

� Give me the parameters and we’ll

look at the results in Excel model

�Usage, system size, price, rebate

�Tax bracket, inflation

�Starting & ending rate schedule

�% on-peak usage



Residential Interactive Example

� Notice sensitivity to variables:

� Inflation

� Tax bracket

� Usage & system size

� Price, rebate, tax credit

� Rate schedule

� % on-peak usage



Commercial & MuniInteractive Examples

� Repeat interactive manipulations for

each



Andy BlackSolar Financial Analysis

& Sales Software

(408) [email protected]

www.ongrid.net - Tools, Articles & Papers available

The OnGrid Solar Financial Analysis & Sales Tool

Simplify Solar Sales: Qualify and Close in

Less Than a Day!

Andy Black, CEO Solar Financial Consultant

(408) 428-0808

[email protected]

www.ongrid.net

Show Your Customers

! Their internal rate of return (solar vs. stock market or interest-based investment)

! Their cash flow for financed systems (positive and increasing over time)

! System’s total lifecycle payback and savings (show how much they save over time)

! Their increased resale value (often is more than system cost & increases over time)

Simplify Your Sales

! Identify and screen hot leads (guides salespeople through the entire sales process)

! Size PV systems accurately (time of use, shading, tilt, orientation, incentives and more)

! Price systems considering all factors (e.g., tile roof, custom mounting, etc.)

! Create proposals, price quotes quickly, onsite (one button form generation, documentation, includes CSI)

Use customer data to paint them a picture. Example Output*:

*See website for detailed description and comprehensive list of customizable outputs and displays.

Example Sales Call

FREE Demo / Examples: www.ongrid.net/payback! 2007 OnGrid Solar

9:00 a.m.

Receive

Incoming Sales Call

9:30 a.m.

Qualify,

Gather Data, Email

Estimate

11:00 a.m.

Site Visit

12:00 p.m.

Update

Estimate Print All Docs

(on site)

12:30 p.m.

Present Bid,

Contract & Docs

1:00 p.m.

Close

the Sale

1:30 p.m.

Turn in

Closed Sale

Cash Flow: Annual Costs: Solar with Loan vs. No Solar

Loan cost, Maintenance, Inverter Replacement, & new small electric bill

Lifecycle Payback: Annual Savings Before & After Payback

Utility Bill w/o Solar at 5% rate

escalation

Lifetime savings are typically 2-3.5 times system cost

Payb

ack

Resale: Resale Value Over Time

Resale Value increases due to increasing annual savings

Re

sa

le V

alu

e

Cash Flow: Net Annual Savings When Financed

Net Annual Savings

A

nn

ua

l S

avin

gs

! 2007 OnGrid Solar

The OnGrid Solar Financial Analysis & Sales Tool

A Time-Saving, Comprehensive

Tool for Solar Sales

Andy Black, CEO Solar Financial Consultant

(408) 428-0808

[email protected]

www.ongrid.net

Helps Create & Close More Sales Calculates TOU Value with Shading

Proves Payback for the Customer Prepares Rebate & Utility Docs Easily

The OnGrid Solar Sales Tool Helps Salespeople:

(See www.ongrid.net for comprehensive lists of all details and options)

Identify and Screen Hot Leads,

guide them successfully thru

the entire sales process

Perform Multiple Solar Financial

Analyses, option to generate a

Variety Of Proposals

Fill out Closing Sales Paperwork

and Documents (including CSI)

with the touch of a button

Size PV systems based on

customer needs, incentive

programs and site data

Upload shading device data for

accurate Time-of-Use value analysis

Develop Accurate Price Quotes,

including all material,

regulatory and job-site factors

Demonstrate the financial benefits of a solar electric system to your customer with customized calculations.

Tailor and brand your printouts. Use them for direct presentations as your sales materials.

! PV System Size & Production

! Current & Future Electric Bills

! Cost, Rebate & Tax breakdowns

! Financing & Cash Flow

! Resale Calculations & Graphics

! Rate of Return Calculations

The OnGrid Tool is offered on a subscription basis and is updated frequently with current Rate Schedules, Incentive, Tax and Product information, and periodically with new tool features and benefits. Download the

free demo. Then, contact Andy Black at [email protected] or (408) 428-0808 to start closing more sales.

FREE Demo / Examples: www.ongrid.net/payback

Solar Pathfinder® SunEye®

Net Annual

Savings