What is Renewable Energy?

1. What is Renewable Energy? Electric power supplied by energy sources that are naturally and continually replenished such as wind, solar power, geothermal, small hydropower, and various forms of biomass.

2. Where our Energy Comes From: Fossil fuels make up 86% of US Energy Supply. Solar only contributes .06% Wind only contributes 2% *Source: Energy Information Administration. Part of US Department of Energy

3. How is Electric Power Measured? Kilowatt (kW): a unit of electrical power equal to 1,000 watts which constitutes the basic unit of electrical demand. The watt is a metric measurement of power (not energy) and is the rate (not duration) electricity is used. 1 kilowatt (kW) = 1,000 watts Megawatt (MW): Unit of electrical power equal to one million watts; also equals 1,000 kW. 1 megawatt (MW) = 1,000 kilowatts (KW) Gigawatt (GW): 1 gigawatt (GW) = 1,000 megawatts (MW)

4. How is Electric Power Measured? 40 watts = 1 light bulb 10,656 kilowatt-hours (kWh) = average US home annual electricity usage 1 megawatt (MW) power plant = powers 822 homes

5. Renewable Energy Terminology and Definitions Distributed Generation: Electricity generated at or near its point of use Electrical Distribution “Grid”: A network of power stations, transmission circuits, and substations conducting electricity Interconnection Agreement: A legal document authorizing the flow of electricity between the facilities of two electric systems. Typically the system must be Interconnected and operating in parallel to the electrical distribution grid of the utility servicing the customer’s electrical load Net Metering: An agreement with the local utility which allows customers to reduce their electric bill by exchanging surplus electricity generated by certain renewable energy systems. The utility bills customers only for the net electricity used during each billing period. Photovoltaic (PV): Also known as solar, is a technology that uses a semiconductor to convert sunlight directly into electricity Power Purchase Agreement (PPA): An agreement for the sale of electricity from one party to another Renewable Portfolio Standards (RPS): Requires utilities to acquire a certain quantity of energy from renewable energy sources, such as solar and wind, in incremental targets which increase over time.

6. Renewable Energy Markets Drivers • Federal and State Policies • Job Creation • Federal and State economic development • Electrical supply cost stability for decades • Popular with consumers • Modularity of deployment • Climate / Environmental benefits • National Security through Energy Independence

7. Renewable Energy Market Opportunities • In 2008 the credit crisis froze capital markets creating an opportunity to deploy capital, no consistent source of capital for small to medium size Renewable Energy transactions. • Large financial institutions prefer the larger Renewable Energy transactions leaving transactions $25 million or less underserved • By 2030 over $20 trillion will be invested in energy infrastructure worldwide. It is estimated that $1.5 trillion will be invested in the US power sector. • In 2008 the Annual US PV installed capacity grew by 63% • In 2008 US led the world by adding 8.3 GW of wind power • US currently ranks 5th overall in world PV cell production

8. Renewable Energy Market Challenges • Uncertain Federal policies • Inconsistent State policies • Some consider renewable energy and clean energy the same thing • Transmission constraints throughout areas of the country • Lack of uniform interconnection standards • Cost allocation and cost recovery issues for transmission between states • Environmental and wildlife issues in certain areas

9. State Programs / Incentives • Renewable Portfolio Standards (RPS) • Renewable Energy Credits (REC’s) • State Energy Tax Credits • State Grant Programs • State Loan Programs • Feed-In Tariff

10. State Renewable Energy Credits – REC’s A tradable financial certificate, which represents proof that 1 megawatt-hour (MWh) of renewable electricity was generated from an eligible renewable energy source. RECs can be sold separately from the electricity and can be used to satisfy regulatory compliance. 1 REC = 1 MWh or 1,000 kWh

11. Solar / Photovoltaic System Photovoltaic (PV) Systems are comprised of photovoltaic (PV) cells, devices that convert light energy directly into electricity. Because the source of light is usually the sun, these systems are also known as solar systems. They produce electricity in a clean, quiet, and reliable way.

12. Types of Solar Systems Utility Scale • Large projects: 5MW or greater • System is tied into the grid • Built by utility companies or by Independent Power Producers Middle-Level Solar Arrays (Solar Farms) • Medium size projects: 1.5 MW – 5MW • System is usually tied into grid, can be tied into customer’s meter • Built by Independent Power Producers Distributed Generation • Smaller projects: up to 1.5 MW • System is tied into customer’s meter (net metering) • Off sets on site load

13. Solar System Components Solar / PV modules (Panels) • Proven Technology (Silicon based solar cells) • Crystalline Silicon is market leader Inverter • Brains of a solar electric system • Device that converts direct current (DC) electricity produced by modules into alternating current (AC) Racking • Holds module in place • Designed for a 30 year lifetime • Aluminum or Hot Dipped Galvanized • Fixed or Tracking

14. PV System Overview

15. Wind Systems Wind Turbines use the wind’s energy to generate electricity. The wind turbines are mounted on a tower to capture the wind energy with its blades. The 2-3 blades are mounted on a shaft to form a rotor. The combination of lift and drag from the wind causes the rotor to spin like a propeller, and the turning shaft spins a generator to make electricity.

16. Types of Wind Systems Utility Scale Wind Farm • Large projects: 10MW or greater • System is tied into the grid • Built by utility companies or by Independent Power Producers Community Wind • Medium size projects: 1.5MW – 10MW • System is usually tied into grid, can be tied into customer’s meter • Built by Independent Power Producers Small Wind • Smaller projects: up to 1MW • System is tied into customer’s meter (net metering) • Off sets on site load

17. Wind Turbine System Components • Rotor • Nacelle • Tower • Foundation • Grid Connection

18. Anatomy of a 1.5 MW Wind Turbine

19. Renewable Energy Business Approach SFS and Renewable Energy Finance - Provide construction / interim financing for Renewable Energy Transactions under $25 million - Industry Leading, unparalleled focus on customers’ needs and customer service - Further Develop Renewable Energy Finance Tools (permanent debt?)

20. Renewable Energy Project Phases Phase I Phase II Phase III Phase IV Phase V Site Review and Selection Completing and Commissioning Ongoing Operations Design and Planning Installation Phase I

21. Renewable Energy Transaction Profile • Renewable Energy Transactions ranging from $2 million to $25 million • Proven Technologies with established track record • Experienced High Quality Developers • Experienced Engineering Procurement Construction (EPC) providers • Power Purchase Agreement with credit worthy off-taker • Interconnection Agreement • Loan to Cost (LTC): 70% loan to cost with ITC included because it is an automatic allocation once the project is completed • Utilize ITC Grant or ITC Syndication

22. Risk Elements & Considerations Technology: Suppliers / track record Warranty Revenue: PPA structure (i.e., Security of revenue Stream) Merchant component Tradeable credits O&M / Asset Management: Contractor / track record Spare parts Transmission Term Regulatory: Change in law Developer: • Track record • Credibility • Risk profile Sponsorship: • Commitments • Track record • Risk profile Construction: • EPC / turnkey (i.e., structure) • Contractor / track record Renewable Energy resources: • Data • Uncertainty • Verification

23. Questions? Chris Diaz Senior Vice President Seminole Financial Services Phone: 727-331-8453