Maryland SREC Update

September 15, 2016

CONTENTS

• Maryland Solar Build Rates

• MD SREC Supply and Forecast

• Maryland Electricity Sales

• Supply and Demand Scenarios

• Historic Pricing

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2

MD SOLAR BUILD RATES (MW)

Registered Capacity in PJM GATS as of 8/29/2016 = 544.9MW

Source: PJM GATS, does not include DC registered capacity; note LTM and LSM data as of August 29, 2016 for systems online through May 2016

21.426.7

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Last 12 Months Avg. MW/Month

Last 6 Months Avg. MW/Month

25.0%increase

107.8

52.6

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

3 Months Ending February 2016

3 Months Ending May 2016

51.2%decrease

3

MD SREC SUPPLY AND FORECAST

Source: PJM GATS and SRECTrade Estimates.

Using GATS issuance data as of 9/9/2016• 157.4k CY2014 and CY2015 SRECs remain

• 344.8k CY2016 SRECs have already been issued

• At current TTM build rate, remaining CY2016 forecasted generation is 293.2k SRECs

• At current TTM build rate, CY2016 estimated oversupply is 363.6k SRECs or approximately 84% over the 2016 SREC compliance obligation

157,377

344,792

293,183

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

2016MD2016 ForecastIssued MD2016Existing MD2014 and MD2015

MD2016 SRECs Req.

4

MD ELECTRICITY SALES (MWh) AND SRECs REQUIRED CURRENT RPS

Recent years have declined or are flat; 2014 = 61.7 mm MWh

Source: SRECTrade Estimates and EIA Report “Sales to Ultimate Customers (Megawatthours) by State by Sector by Provider, 1990-2014”

SRECs Required (in 000s)

Year RPS Solar %

0% Growth

1.0% Growth Diff. SACP

2015 0.50% 308.4 311.5 3.1 $ 3502016 0.70% 431.8 436.1 4.3 $ 3502017 0.95% 586.0 591.9 5.9 $ 2002018 1.40% 863.6 872.2 8.6 $ 2002019 1.75% 1,079.5 1,090.3 10.8 $ 150

60.0

62.0

64.0

66.0

68.0

70.0

2009 2010 2011 2012 2013 2014

Electricity Sales (MWh in millions)

5

CURRENT VS PROPOSED RPS REQUIREMENT AND SACP

Source: SRECTradeBlog and Bill SB0921 from General Assembly of Maryland. http://mgaleg.maryland.gov/

• The following analysis includes two scenarios, the first with the RPS requirements as currently set and the second with the RPS increase as proposed under SB0921/HB1106

• The RPS increase proposed was vetoed by Governor Hogan in May of 2016. While industry stakeholders continue to advocate for an RPS increase, it is uncertain what form a new piece of legislation could take.

6

SUPPLY AND DEMAND ASSUMPTIONS

The enclosed analysis assumes the following:

• Load growth remains flat at 61.7 mm MWh per year (source: EIA as of 10/21/2015)

• Exempt load under new RPS not considered, but will impact demand

• Supply (i.e. build forecast) is based on registered projects in PJM GATS as of 8/29/2016 for those projects registered through May 2016

• Scenarios presented are derived from Trailing Twelve Month (TTM) average build rates

per month – 50% / 75% / 100% of current TTM build rates per month

• PJM queue (i.e. large scale projects) could certainly further impact the supply forecast

in the enclosed scenarios, but is not reflected in the following analysis7

SUPPLY / DEMAND SCENARIOS –LOAD SALES REMAIN FLAT, CURRENT RPS

Source: SRECTrade Estimates. Assumes MSM begins selling 2015+ vintages.

Oversupplied

346.2 592.8 715.7 776.7 837.3

1,051.9

1,420.4

354.9

684.9 968.1

1,266.4

1,641.3

2,247.0

3,083.7

363.6

776.9

1,220.5

1,756.0

2,445.2

3,442.2

4,747.0

-

1,000

2,000

3,000

4,000

5,000

2016 2017 2018 2019 2020 2021 2022

# of

SR

ECs

(in 0

00s)

Case 1 - 10.7 MW/month Case 2 - 16.0 MW/month Case 3 - 21.4 MW/monthEnergy Year 2016 2017 2018 2019 2020 2021 2022Estimated % Over (Under) SuppliedCase 1 - 10.7 MW/month 80.2% 101.2% 82.9% 71.9% 67.9% 85.3% 115.1%Case 2 - 16.0 MW/month 82.2% 116.9% 112.1% 117.3% 133.0% 182.1% 250.0%Case 3 - 21.4 MW/month 84.2% 132.6% 141.3% 162.7% 198.2% 279.0% 384.8%

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SUPPLY / DEMAND SCENARIOS –LOAD SALES REMAIN FLAT, CURRENT RPS

Source: SRECTrade Estimates

SREC Forecast vs. Estimated SRECs Required 2016 2017 2018 2019 2020 2021 2022

Case 1 - 50% of LTM Average MW Added Per Month Throughout the ForecastMD SREC Requirements 431,787 585,997 863,574 1,079,468 1,233,677 1,233,677 1,233,677 Less: Excess SRECs From Prior Period 157,377 346,182 592,776 715,708 776,661 837,320 1,051,893 Less: Case 1 Estimated SRECs Produced 620,592 832,591 986,506 1,140,421 1,294,336 1,448,251 1,602,165 # of SRECs Under / (Over) Supplied (346,182) (592,776) (715,708) (776,661) (837,320) (1,051,893) (1,420,381)

Case 2 - 75% of LTM Average MW Added Per Month Throughout the ForecastMD SREC Requirements 431,787 585,997 863,574 1,079,468 1,233,677 1,233,677 1,233,677 Less: Excess SRECs From Prior Period 157,377 354,891 684,856 968,116 1,266,354 1,641,255 2,247,029 Less: Case 2 Estimated SRECs Produced 629,301 915,962 1,146,834 1,377,706 1,608,579 1,839,451 2,070,323 # of SRECs Under / (Over) Supplied (354,891) (684,856) (968,116) (1,266,354) (1,641,255) (2,247,029) (3,083,675)

Case 3 - LTM Average MW is Added Per Month Throughout the ForecastMD SREC Requirements 431,787 585,997 863,574 1,079,468 1,233,677 1,233,677 1,233,677 Less: Excess SRECs From Prior Period 157,377 363,600 776,936 1,220,523 1,756,047 2,445,191 3,442,165 Less: Case 3 Estimated SRECs Produced 638,010 999,332 1,307,162 1,614,992 1,922,822 2,230,651 2,538,481 # of SRECs Under / (Over) Supplied (363,600) (776,936) (1,220,523) (1,756,047) (2,445,191) (3,442,165) (4,746,969)

9

SUPPLY / DEMAND SCENARIOS –LOAD SALES REMAIN FLAT, PROPOSED RPS

Source: SRECTrade Estimates. Assumes MSM begins selling 2015+ vintages.

Oversupplied

346.2 469.4 530.7 468.2 220.5 126.6 186.7

354.9 561.5

783.1 957.9 1,024.4

1,321.8

1,850.0

363.6 653.6

1,035.5

1,447.6

1,828.4

2,516.9

3,513.3

-

1,000

2,000

3,000

4,000

5,000

2016 2017 2018 2019 2020 2021 2022

# of

SR

ECs

(in 0

00s)

Case 1 - 10.7 MW/month Case 2 - 16.0 MW/month Case 3 - 21.4 MW/monthEnergy Year 2016 2017 2018 2019 2020 2021 2022Estimated % Over (Under) SuppliedCase 1 - 10.7 MW/month 80.2% 66.2% 57.4% 38.9% 14.3% 8.2% 12.1%Case 2 - 16.0 MW/month 82.2% 79.2% 84.6% 79.6% 66.4% 85.7% 120.0%Case 3 - 21.4 MW/month 84.2% 92.1% 111.9% 120.4% 118.6% 163.2% 227.8%

10

SUPPLY / DEMAND SCENARIOS –LOAD SALES REMAIN FLAT, PROPOSED RPS

Source: SRECTrade Estimates

needtonoteincommentarythatintheinstanceofundersupplyitislikelytheMSMrecscomeintothemarketSREC Forecast vs. Estimated SRECs Required 2016 2017 2018 2019 2020 2021 2022

Case 1 - 50% of LTM Average MW Added Per Month Throughout the ForecastMD SREC Requirements 431,787 709,364 925,258 1,202,835 1,542,097 1,542,097 1,542,097 Less: Excess SRECs From Prior Period 157,377 346,182 469,409 530,657 468,242 220,481 126,635 Less: Case 1 Estimated SRECs Produced 620,592 832,591 986,506 1,140,421 1,294,336 1,448,251 1,602,165 # of SRECs Under / (Over) Supplied (346,182) (469,409) (530,657) (468,242) (220,481) (126,635) (186,703)

Case 2 - 75% of LTM Average MW Added Per Month Throughout the ForecastMD SREC Requirements 431,787 709,364 925,258 1,202,835 1,542,097 1,542,097 1,542,097 Less: Excess SRECs From Prior Period 157,377 354,891 561,488 783,064 957,935 1,024,417 1,321,771 Less: Case 2 Estimated SRECs Produced 629,301 915,962 1,146,834 1,377,706 1,608,579 1,839,451 2,070,323 # of SRECs Under / (Over) Supplied (354,891) (561,488) (783,064) (957,935) (1,024,417) (1,321,771) (1,849,998)

Case 3 - LTM Average MW is Added Per Month Throughout the ForecastMD SREC Requirements 431,787 709,364 925,258 1,202,835 1,542,097 1,542,097 1,542,097 Less: Excess SRECs From Prior Period 157,377 363,600 653,568 1,035,472 1,447,628 1,828,353 2,516,907 Less: Case 3 Estimated SRECs Produced 638,010 999,332 1,307,162 1,614,992 1,922,822 2,230,651 2,538,481 # of SRECs Under / (Over) Supplied (363,600) (653,568) (1,035,472) (1,447,628) (1,828,353) (2,516,907) (3,513,292)

11

MD SREC HISTORICAL SPOT PRICING

Source: SRECTradeMarket Insights

Current MD2016 market: $20 @ $30

12