Solar Energy in Inland Southern California: The Future is Now The University of California, Riverside Solar Project Financing Commercial Power Purchase Agreements (PPAs) & PPA Market Rates for SCE Territory Kevin Ross February 6, 2013
SolarCity Company Overview The national leader in clean energy services 4,000+ Employees Publically Traded (SCTY) Serving 14 states: AZ, CA, CO, CT, DE, HI, MA, MD, NJ, NM, NY, OR, PA, TX, WA and Washington DC 40+ Regional Operations Centers (26 in CA) Riverside ROC: 200 employees $3.4B PPA project financing, 28 PPA Funds 82,000+ customers 1,000+ commercial solar projects installed 470+ MW deployed ACWA s Exclusive Solar Systems Preferred Provider Pubic & Private Sectors SolarCity Confidential Slide 2
Benefits of SolarCity s Integrated Approach SolarCity provides a single source for solar project financing, engineering & design, installation, asset ownership, performance monitoring, operation and maintenance Better customer experience with single point of contact Reduced financing risk Access to market-leading, most appropriate and cost-effective PV technologies In-house system design for comprehensive QA/QC programs Proprietary monitoring technology SolarCity Confidential Slide 3
"Walmart has reduced energy expenses by millions of dollars through our solar program allowing us to pass these savings on to our customers in the form of everyday low prices." -Kim Saylors-Laster Walmart Vice President of Energy Walmart 150+ Locations in CA, AZ, CO, MD, OH, OR, NY Ground Mounts, Rooftops and Carports SolarCity Confidential Slide 4
Las Virgenes Municipal Water District Ground Mount - Tracker SolarCity Confidential Slide 5
East Bay Municipal Utility District Ground Mounts and Covered Reservoir Roof Mount SolarCity Confidential Slide 6
Commercial Project Financing Public/Private partnership (Win/Win) Power Purchase Agreements (PPA) Private investment supporting Public Sector to implement renewable energy projects Benefits: Renewable energy self generation w/o capital investment Pay for 100% renewable energy at a lower rate than Utility rates Immediate positive cash flow and substantial energy cost savings over the term of the PPA Environmental benefits Carbon offset, GHG reduction, RECs Positive investor ROI with manageable risk SolarCity Confidential Slide 7
Cash Purchase vs. Power Purchase Agreement Cash Purchase PPA Financial Considerations Capital Cost Monthly Solar Energy Cost Full Price $0 $0 Pay for power generated by system Government Incentives Federal Tax Credit State, Local, Utility rebates Depreciation benefit 30% of capital cost Paid to owner 5 year to MACRS All incentives utilized by system owner/project financier reduces PPA rate System Services Monitoring service Repairs under warranty O&M responsibility 5 years 10 years Self perform 20 years 20 years SolarCity System Considerations System ownership Option to upgrade later Performance Guarantee Own for 30+ years No Added cost Host for 20 years Yes, plus system Buyout options Typically included SolarCity Confidential Slide 8
PPA Financing Structure SolarCity forms PPA investment Funds with financial institutions and other banking partners and investors Each Fund is a separate legal entity SolarCity and the investor(s) hold ownership interest in the Fund The Fund provides project financing (capital) to design/build the solar PV system Buyer (Site Host) enters into the PPA with SolarCity, agreeing to purchase all energy generated by the system for the term of the PPA (20yrs) SolarCity design/builds the system, which is purchased (or leased) by the Fund. The PPA is assigned to the Fund, and the Fund becomes counterparty to the PPA. SolarCity operates and maintains the system under a separate O&M agreement with the Fund for the term of the PPA A 100% Performance Guarantee helps protect the Buyer and Fund SolarCity Confidential Slide 9
Structured Financing Raised to Date Investment Funds Raised ($mm of project value) $3,412 Select Investors $1,100 $2,312 $1,024 $1,289 $709 $580 $49 $351 $302 $358 2008 2009 2010 2011 2012 2013 Note: Blue denotes new investment funds raised in the period. Green represents cumulative fund raising from prior years. Financing amounts denoted in $ millions of project value. SolarCity Confidential Slide 10
PPA Terms & Conditions The Fund s ROI Revenues and Cash Flows: Tax Credits and Accelerated Depreciation Cash incentives, grants, REC s, etc. Payments from Buyer for electricity produced by the system Balance of Risk: Protection of the Fund s status as system owner Protection for no disruptions in payments based on the system s operation Protection to minimize risks and costs that could impact ROI SolarCity Confidential Slide 11
Local Commercial Market Overview Inland Empire Components of viable/attractive PPA rates Southern California Edison Territory Commercial TOU rates annual avg cost: $0.09/kWh to $0.15/kWh Annual SCE cost escalation: 3% to 5% CSI PBI: Step 9 (~59MWs remaining in step) Tax paying entities: $0.032/kWh for 5yrs Non-profit / Gov t agencies: $0.114/kWh for 5yrs Represents 10 to 15% of system design/build cost Federal 30% Investment Tax Credit & Accelerated Depreciation 2014 PPA rates $0.085/kWh to $0.125/kWh with 0% annual escalation Assumptions: 1MW NEM ground-mount project, buyer with IG Credit rating, no challenging land use or interconnection issues. Energy Cost Savings Potential $2M to $6M over the 20yr PPA term SolarCity Confidential Slide 12
Contact Information: Kevin Ross 310-968-6290 kcross@solarcity.com 1755-B Iowa Ave., Riverside, CA Thank You SolarCity Confidential Slide 13