11 April 2013

1. Clean Local Energy in California Policy Landscape Ted Ko Associate Executive Director Clean Coalition ted@clean-coalition.org John Howe Director of Public Affairs FloDesign Wind Turbine Corp. jhowe@fdwt.com John Pimentel President Foundation Windpower john.pimentel@foundationwindpower.com 11 April 2013

2. Clean Coalition – Mission and Advisors MissionTo accelerate the transition to local energy systems through innovative policies and programs that deliver cost-effective renewable energy, strengthen local economies, foster environmental sustainability, and provide energy resilience Clean Coalition – Mission and Advisors Board of Advisors Jeff AndersonCo-founder and Former ED, Clean Economy Network Josh BeckerGeneral Partner and Co-founder, New Cycle Capital Jeff BrothersCEO, Sol Orchard Jeffrey ByronVice Chairman National Board of Directors, Cleantech Open; Former California Energy Commissioner (2006-2011) Rick DeGoliaSenior Business Advisor, InVisM, Inc. Mark FultonManaging Director, Global Head of Climate Change Investment Research, DB Climate Change Advisors, a member of the Deutsche Bank Group John GeesmanFormer Commissioner, California Energy Commission Ramamoorthy RameshFounding Director, U.S. Department of Energy SunShot Initiative Governor Bill RitterDirector, Colorado State University’s Center for the New Energy Economy, and Former Colorado Governor Terry TamminenFormer Secretary of the California EPA and Special Advisor to CA Governor Arnold Schwarzenegger Jim WeldonCEO, Solar Junction R. James WoolseyChairman, Foundation for the Defense of Democracies;Former Director of Central Intelligence (1993-1995) Kurt YeagerVice Chairman, Galvin Electricity Initiative; Former CEO, Electric Power Research Institute Patricia GlazaPrincipal, Arsenal Venture Partners; Former Executive Director, Clean Technology and Sustainable Industries Organization Dan KammenDirector of the Renewable and Appropriate Energy Laboratory at UC Berkeley; Former Chief Technical Specialist for Renewable Energy and Energy Efficiency, World Bank Fred KeeleyTreasurer, Santa Cruz County, and Former Speaker pro Tempore of the California State Assembly Felix KramerFounder, California Cars Initiative Amory B. LovinsChairman and Chief Scientist, Rocky Mountain Institute L. Hunter LovinsPresident, Natural Capitalism Solutions

3. Agenda • Energy Generation Markets • The Case for Distributed Generation • Ultimate Vision: Distributed Generation + Intelligent Grid (DG+IG) • Policy Review: RPS, Auctions, CLEAN, Interconnection • Current Policy Activity: Regulatory and Legislative progress • Tech Highlight: FloDesign Wind Turbine Corp. • Complements: Solar and Wind production • DG Policy Ideas / Recommendations • Development Highlight: Foundation Windpower Sponsor:

4. Energy Generation Market Segments Central Generation Serves Remote Loads Project Size Wholesale DG Serves Local Loads Retail DG Serves Onsite Loads Behind the Meter Distribution Grid Transmission Grid

5. Rules Make Markets

6. Why Clean Local Energy? • The Many Demands for Clean Local Energy • Consumer Demand: I want my energy to be clean • It’s the Economy: I want good jobs in my community • It’s the Economy Too: I want the cleantech industry to drive growth • Saving Money Long-Term: I want a long-term efficient and cost-effective energy system • Power System Resilience: I want the lights to stay on even when there are problems, storms, or attacks • Social Justice: I want the most impacted communities to benefit from clean energy • Environmental Impact: I want to protect pristine or arable land • A Warming Planet: I want to de-carbonize society

7. Avoided Transmission in CA = $80 Billion over 20 yrs Business as Usual Year-20 TAC (TAC20 ) = 2.7 2.7 Business As Usual TAC Growth Current TAC Rate (TAC0) = 1.2 TAC0 O&M Level Business as Usual TAC Growth TAC0 Depreciation + O&M Avoided TAC Opportunity from DG

8. Wholesale DG has Superior Value Total Ratepayer Cost of Solar Sources: CAISO, CEC, and Clean Coalition, Nov2012; see full original analysis from Jul2011 at www.clean-coalition.org/studies The most cost-effective solar is large WDG, not central station as commonly thought, due to the significance of hidden T&D costs

9. Value of Resilience “We’ve got 18 critical infrastructures in the US – 17 of them depend on electricity” - James Woolsey, Former Director of Central Intelligence • San Diego blackout caused $100 million in economic damages • San Onofre Nuclear Generating Station (SONGS) costing $54 million per month • New York’s 2003 blackout cost $1.1 billion • New Jersey is investing $4 Billion to protect infrastructure “Had these investments already been in place before Sandy, outages would have been cut in half and restorations would have gone faster for those that did lose power.”

10. DG+IG: Intelligent Grid=DR+ES+EV+MC2

11. Procurement: Current CA Programs Insufficient

12. Policy Review: RPS & Auctions

13. Policy Review: CLEAN / FIT • Clean Local Energy Accessible Now (CLEAN) • Standard offer contract + streamlined interconnection • Original: AB 1969 (250 MW water/wastewater), SB 380 (500 MW, all) • 2009 update: SB 32 (750 MW) • 2012 updates: SB 1332 (SB 32 fixes), SB 1122 (250 MW biopower) • Status Check • Renewable Market Adjusting Tariff (Re-MAT) launch late 2013 • Total of 1 GW is nowhere close to Governor’s 12 GW goal • Projects online maybe 2014 (7 years after initial legislation) • Power Purchase Agreement (PPA) is badly designed • Interconnection remains major barrier

14. Policy Review: Interconnection • Rule 21 and WDAT • Wholesale Distribution Access Tariff (WDAT) – Federal Jurisdiction • Rule 21 – “Tariff” for connection to distribution grid • Rule 21 used for > 100,000 retail DG interconnections in CA • For wholesale DG, process was expensive, unpredictable, and broken • Phase 1 of Rule 21 reform done in September 2012 • Status Check • Success of reform still unknown • Process still not transparent enough • Major issues remain around costs, fees, business practices • Still does not help to direct DG to the best places or maximize value of DG deployment

15. Policy Review: Integration & Grid Planning

16. Policy Progress: Procurement • RPS Implementation • Least Cost, Best Fit (LCBF) – potential for full-cost and value accounting • “DG” Auctions • Still evaluating success but early results expose weaknesses of current auction designs • Statewide CLEAN • SB 32 (Re-MAT) will quickly run out, exposing need for next program • SB 1122 (Biopower) – Opportunity to improve contracts • CPUC considering locational value • POU CLEAN Programs • LADWP CLEAN • Palo Alto CLEAN • SB 1332: Several utilities are working on a new program

17. Policy Progress: Interconnection & Grid Planning • Rule 21 Phase 2 • Critical issues being discussed – including Cost Certainty • Clean Coalition Model Interconnection Procedures • Locational Value • Evaluating better locations can expedite interconnection, unclog processes • Transmission Planning • Highlighting consideration of alternatives • General Rate Case (GRC) • PG&E Reporting • SCE Settlement

18. Selected Active DG Related Legislation • Procurement and Financing • AB 177 (Perez) – demand side, clean energy resources • SB 43 (Wolk) / AB 1014 (Williams) – Shared Renewable • SB 37 (deLeon) – On-bill Repayment • AB 1131 (Skinner) – extends funding and removes one limit on PACE • Planning and Integration • SB 699 (Hill) – Distribution Grid Transparency • AB 448 (Quirk) – RPS cost and reliability • SB 674 (Corbett) – Compensating for storage value with DG • Access • AB 1295 (Hernandez) – Shared renewable option added to CLEAN projects • AB 217 (Bradford) – Extends MASH and SASH • Proposition 39 Bills • Primary bills focused on energy efficiency • Other bills also allow for DG on schools

20. Next-Generation Wind Energy Technology • Much lower hub height than standard utility turbines (36.5m vs. 80m) • Much shorter rotor blades (5.5m vs. 50+m) • Lower total height (<160’, well below FAA threshold for marking lights) • Static shroud inherently suppresses shadow flicker • Siting profile enables distribution-level applications closer to load First California Commercial Project Expected to Enter Construction in Late 2013

21. Performance and Siting Advantages Conventional Turbines Conventional Turbines FloDesign Turbines FloDesign Turbines The Benefits • Cost/Performance • ≥50% increase in capacity factor • ≈50% lower lifetime O&M costs • Less turbulent = closer spacing = smaller overall project land footprint • Continuing access to 30% federal ITC • Siting and Environmental • Much quieter operation • More visible to wildlife • Much lower hub height (< FAA limit) • Modular – simpler delivery logistics AndLower LCOE

22. Effect of Solar on Daily Load Shape 2012

23. Shifting Peak Load Favors FloDesign Load Shape Credit: Energy+Environment Economics, April 2013

24. Matching Utility Loads with Wind and Solar Credit: Institute for Energy and Environmental Research

25. Wholesale Distributed Wind Potential in California Average Wind Speed Population Density Diversified types of RE resources at diversified locations required for maximum system benefit

26. Why Clean Local Energy? • The Many Demands for Clean Local Energy • Consumer Demand: I want my energy to be clean • It’s the Economy: I want good jobs in my community • It’s the Economy Too: I want the cleantech industry to drive growth • Saving Money Long-Term: I want a long-term efficient and cost-effective energy system • Power System Resilience: I want the lights to stay on even when there are problems, storms, or attacks • Social Justice: I want the most impacted communities to benefit from clean energy • Environmental Impact: I want to protect pristine or arable land • A Warming Planet: I want to de-carbonize society

27. Policy Recommendations • Add MW to existing DG procurement programs • Practically no market for small-scale wholesale DG • Expand and improve SB 32 CLEAN Program • Set higher RPS Targets • Complementary technologies enable higher penetrations and mitigate ramping, intermittency • Markets need certainty past 2020 • Planning windows already past 2020 • 33% target is “done” but current talk of 40% in 2030 is far too weak • Require Transparent and Proactive Grid Planning • Full cost and value accounting for procurement, grid investments • Proactive consideration of non-transmission alternatives • Establish Markets for Intelligent Grid Solutions

28. Distributed Wind Generation OverviewApril 11, 2013

29. Company Overview • Founded 2008 to pursue distributed wind projects • Industrial, commercial, municipal - energy niche • Design, develop, permit, finance, build, operate • Long-term power purchase agreement model • World-class equipment suppliers 11 sites 16 turbines 22 MW of generating capacity Benefits to Customer • Energy cost savings and stabilization • Zero emissions • Small footprint (esp. compared to solar) • Visible symbol of environmental stewardship ~$80 m deployed Foundation Windpower General Electric SLE 1.5MW wind turbine Vernalis, CA Foundation Windpower LLC – Confidential / Proprietary 29 4/25/13

30. Benefits to Customer Cost savings (no capital expense) and cost predictability Creates “green jobs” Small footprint 1.0 MW of solar PV = 6 to 8 acres 1.5 MW of wind = 50 sq. ft. Every 1500 MWh of renewable energy produced Could power 250 average sized homes Equals planting almost 300 acres of trees Eliminates over 2,600,000 lbs of CO2 Saves over 2,000 barrels of oil A visible symbol of environmental stewardship Solar PV – 1.0 MW Wind – 1.5 MW PV solar requires ~9 football fields Wind turbine could fit in ½ of an end zone = 5 to 7 acres = ~ 800 sq. ft. Foundation Windpower LLC – Confidential / Proprietary 30 4/25/13

31. California Footprint, 22 MW (and growing) Cemex 1.0 MW Madison, CA Walmart 1.0 MW Red Bluff, CA Superior Farms 1.0 MW Dixon, CA Safeway 2.0 MW Tracy, CA Seeking permits Anheuser Busch 1.5 MW Fairfield, CA Teichert 1.5MW Vernalis, CA Cemex Black Mountain 3.2 MW Victorville, CA Seeking permits Cemex River Plant 3.0 MW Victorville, CA IEUA 1.0MW Rancho Cucamonga, CA Robertson’s Ready Mix 2.0 MW Cabazon, CA Nestle Waters 3.2 MW Cabazon, CA

32. Fleet size/diversity increases revenue certainty • 16 turbines, 11 total projects in 8 distinct wind zones • Spring / Summer generally more consistent wind resource in California • Within 3% of projected production fleetwide

33. Distributed Wind is a Peaking Resource in CA •  Wind power is more available during certain seasons because climatic conditions affect wind speed. In California, wind speeds are highest in the hot summer months, and approximately three-fourths of all annual wind power output is produced during the spring and summer. • California Energy Commission • Seasonal and diurnal wind varies site by site, but Foundation’s actual production profile fleetwide is consistent with the CEC assessment: • the fleet averages a higher output during peak demand periods than during other periods.

34. Challenge #1 = CEQA • Complex, lengthy process(6 to 24 months) • High degree of uncertainty (CDF&W, local land use) • $50k to $500k for planning, permits, mitigation May result in no project and total loss Foundation Windpower LLC – Confidential / Proprietary 34 4/25/13

35. Challenge #2 = Perceived v. Actual Impacts Noise level = to your kitchen refridgerator House cats kill 1000x more birds than wind turbines Foundation Windpower LLC – Confidential / Proprietary 35 4/25/13

36. Challenge #3 = Window Constantly Closing Current market conditions enable Foundation Windpower to offer renewable energy at a small discount to traditional power • Federal tax incentives SUNSET -- concern regarding federal debt • Wind tax credits (PTC/ITC) recently extended • Only valid for project starting construction before Dec. 31, 2013 • Self Generation Incentive Program is FINITE and COMPETITIVE • No new funding past 2014 • Tax equity and credit (esp. project finance) markets CHANGE • Limited tax equity available (costly) • Debt markets nervous and fickle, interest rates poised to rise • Equipment availability VOLATILE, driven by policy uncertainty • Equipment often not available for one-turbine projects Policy uncertainty = lost opportunities Foundation Windpower LLC – Confidential / Proprietary 36 4/25/13

37. Policy considerations to encourage distributed wind • RECs from Distributed Wind Projects should be Bucket 1 for RPS • Net Metering adjustments • Enable 2 MW per project • Facilitate multi-tenant projects (industrial park, shopping center) • Solar-Wind Gardens • SGIP extension and reform • Extend program now through 2016 • Increase grant for distributed wind projects to $1.50/watt (up from $1.19/watt) • Waive 10% declining grant amount for mature technologies including wind • Increase grant for turbines <100kw generating capacity to $2.50/watt • Backup commitment for Federal ITC expiration • Minimum 250 kW load threshold • Focus AB 32 funds on distributed generation • Backup commitment for Federal ITC expiration • DG grants outside IOU service territories • Subvention to locals for waiving property/sales taxes on distributed wind projects Continued… Foundation Windpower LLC – Confidential / Proprietary 37 4/25/13

38. Policy considerations to encourage distributed wind • Option R reform • Extend Option R in SCE, Create equivalent in PG&E, SDG&E • Create reserve process for Option R funds • Rule 21 reform • Simplify Direct Transfer Trip requirements and study process • Allow developer to self-perform work • Pre-certify equipment regarding grid protection • BIP reform • Useful demand management program • Ensure on-site generation is exempt from load calculations in calculating BIP rates • CEQA Reform • Last minute comment letters from CDFW with vague concerns • Refusal to consider limited impact of distributed wind projects at disturbed locations Policy uncertainty = lost opportunities Foundation Windpower LLC – Confidential / Proprietary 38 4/25/13

39. Cumulative Annual Fossil Fuel Equivalent (Diesel Burn): ~3.5 Million gallons of diesel burn avoided (Annually through 2033) • One Tanker == 8500 gallons. Assumed 33% efficiency diesel/electricity conversion Proprietary and Confidential

40. Clean Local Energy in California Policy Landscape Ted Ko Associate Executive Director Clean Coalition ted@clean-coalition.org John Howe Director of Public Affairs FloDesign Wind Turbine Corp. jhowe@fdwt.com John Pimentel President Foundation Windpower john.pimentel@foundationwindpower.com 11 April 2013