Battery Storage Offsetting Rising Demand Charges? June 9, 2015

1. Battery StorageOffsetting Rising Demand Charges? June 9, 2015

2. About Us Since 2009, TerraVerde has been California’s leading independent energy advisor for K-12 Schools • Recognized leader in project development consulting services: Energy Efficiency, Solar PV, Battery Storage • In house engineering, structured finance, financial modeling, energy project contracting, Owner’s Rep services, project and program management, and Asset Management Services • Serving all of California (offices in So Cal & Nor Cal) • Energy industry veteran principals are directly involved in project development, financial analysis, technical specs • Unique engagement model mitigates project risks

3. Presenters Rick Brown, PhD, President Ali Chehrehsaz, EVP Operations/Engineering

4. CA Schools Experience • Selected by 40 LEAs to assist in Prop 39 program management • Conducted investment-grade audits and financial analysis for over 150 LEAs and other public agencies • 73 K-12 energy projects completed to date; another 34 sites currently under construction • Completed over $82 Million in solar & energy efficiency projects, on time and on budget; secured over $20 Million in competitive low-interest financing (CEC Loans, Build America Bonds, QSCBs) • Comprehensive experience with solar PV, energy efficiency, battery storage, alternative financing, multi-site construction, specification driven RFP processes, public agency-centric policies and regulations, ADA, DSA, and turnkey design/build management

5. Battery Storage Projects • California Public Utilities Commission approved Battery Storage “behind the meter” last year • We currently have 12 schools under construction; Burton City Schools and Tulare City Schools • First ever over-the-counter DSA approval of K-12 Battery Storage Project at Burton City Schools • Reserved Battery Storage rebates currently under development at 59 sites • RFPs for reserved rebates to be released in July 2015

6. Demand Charges The Problem: • For many commercial customers the peak demand part of their utility bill can be 30–40% of their total electric bill. • In recent years, California Utilities have received approval to increase demand charges at alarming rates • In January SDG&E demand charges hit most San Diego County schools with 30% increases • PG&E is currently trying to get rid of A6, the only “no demand charge” commercial rate in CA Demand Charges-How They Are Calculated: • Demand charges are calculated based on the highest peak demand during the monthly billings cycle based on a 15 minute interval. • For example: if your school is on a rate structure where the demand charge is $15/kW, and it is an unusually hot day, so your HVAC units are working extra hard to keep classrooms at a reasonable comfort level, your demand may spike to 350 kW, resulting in that month's demand charge $4,500 • …even though the rest of the month your demand usually goes no higher than 200 kW; i.e., you would have otherwise been charged $3,000, except for one 15-minute demand spike

7. How Battery Storage Reduces Demand Charges Let’s first understand what’s under the hood

8. Technology Review • Battery • Inverter • Cooling System • Communication System • Safety Disconnect • Controller

9. How Battery Storage Reduces Demand Charges • Installed behind the utility meter • Monitors building demand typically every 10 sec • Discharges to limit measured demand spikes • Smart algorithms “learn” customer behavior

10. Battery Storage & Solar • While solar can significantly reduce the biggest part of an energy bill (usage), solar energy by itself doesn’t reliably reduce demand charges. • Working together, solar and battery storage offset both usage and demand charges, a “perfect combination”

11. Case Study: Burton City Schools Let’s walk through an example day in the life of a School

12. 15 min Interval Analysis

13. Original Demand Profile“Baseline” (kW) High Risk Demand Interval (i.e. expensive demand charge!) Note:Baseline is depicted before installation of solar and battery storage.

14. Expect Only Minor DemandReduction from Solar (kW) Peak demand still in place even after solar Note:Due to the intermittent nature of solar production, it is advised to assume no demand reductions in financial projections.

15. Reduced Demand Profile with Battery Storage (kW) PEAK demand reduction from Battery Storage (i.e. demand charge savings!) Desired demand cap of 75kW (i.e. “Set Point”) Battery recharges “after hours”

16. Benefits of Energy Storage • Demand Reduction – Automated control system discharges battery during periods of high demand to avoid demand charges. Advanced algorithms “learn” operating profile and respond (charge/discharge) instantaneously. • “Smooth out” solar production profile – to avoid gaps from weather variations • Back up power to critical loads during grid failure • SGIP rebate program currently provides $1.46/W (approximately 50% of total capital cost) • “No capital investment” contracts are available - similar to solar PPAs (share demand charge savings w/ investor)

17. Energy Storage Feasibility Approach • Evaluate separate scenarios for solar only, battery storage only, and solar + battery storage based on operating profiles, site-specific parameters and future conditions • Note: use15 minute electricity interval data for 1-3 years • Rank sites by cost effectiveness and savings potential • Consider different financing/contracts scenarios

18. Applicable Utility Rates & Programs • Rate Structures • Solar “friendlier” Rate Structures have lower or no demand charges • PG&E A6 & E19R; SCE Option R; SDG&E DGR • Self Generation Incentive Program (“SGIP”) • High demand for these incentives

19. CBO’s Challenge • In looking at new technology, how do you achieve verifiable cost savings, taking into account risks, that match projections and expectations • Analyze large quantities of data, variables, and site conditions across multiple facilities/sites • Evaluate many technologies and financing methods • Carefully evaluate and negotiate contract terms • Only go forward with highest value projects that can achieve net positive cash flow savings with minimal upfront expense • Alleviate burden on staff and disruption to Operations: from initial project development through implementation • Make sure there is on-going management of O&M, warranties, performance monitoring and reporting

20. Contact Information Rick Brown, PhD, President TerraVerde Renewable Partners, LLC 1100 Larkspur Landing, Suite 155 Larkspur, CA 94939 707-953-2885 Rick.Brown@TVRPLLC.com www.TVRPLLC.com

21. TerraVerde’s Experience • Projects Completed To Date: $82 Million • Projects Under Development: $45 Million • Visalia USD • Clovis USD • Burton City Schools • Inyo County • Corcoran USD • Monterey Peninsula USD • Firebaugh Las Deltas USD • Golden Valley USD • Fowler USD • Eastern Sierra CSD • Rancho CA Water District • City of Davis • City of Woodland • City of Lathrop • City of Bishop

22. What Our Clients Say “TerraVerde emphasizes education and transparency. We feel confident that they provide us an unbiased assessment of the risks and benefits.” Don Ulrich, Assistant Superintendant, Clovis USD “TerraVerde is the best partner I have ever worked with in my 28 years of school construction experience.” Eric Cederquist, Superintendent, Fowler Unified School District “TVRP paid special attention to our unique needs and requirements throughout the development and implementation process. Most importantly, they have worked as a true partner, providing information in a fully transparent manner and have worked collaboratively with us to address issues and problems that inevitably arise during the development process.” Steve Bolman, Superintendant, Petaluma City Schools “It is my pleasure to provide my highest recommendation for TerraVerde. As their name implies, they have truly become our partner in all energy matters. Every person that we have worked with at TVRP knows our particular issues and concerns and is an integral member of our team as we evaluate both solar and now Prop 39 projects.” Robert Groeber, Assistant Superintendent, Visalia USD “While we were in the process of developing our solar project, we had over ten contractors participate in the mandatory site walk. One of the contractors said to me how fortunate our district is to be working with Terra Verde. They said that there is never a question as to what is expected of the contractors and that Terra Verde is very well organized which leaves little room for mistakes or issues once the project begins.” Tracy Tucker, MOT Director, Burton City Schools

23. Best Practices: Project Development • Phase 1: Planning, Project Development, Analysis, Recommendations • Set well defined goals & objectives • Gather all relevant data, perform in-depth discovery; assess project sites for further consideration or disqualification • Prepare feasibility assessments and financial analysis for selected sites • Review finding & recommendations, finalize execution plan • Phase 2: Competitive Bidding, Contractor Selection, Contracts • Develop RFP & run competitive bid process with clear performance and construction specs; use “client side” contract form documents and instructions that yield comparable scopes/pricing • Obtain best value at lowest possible cost by conducting rigorous value engineering and contract negotiations • Phase 3: Project Management • Strong oversight of design, construction, commissioning & closeout process • Phase 5: Asset Management • Perform O&M services, daily systems performance monitoring, quarterly performance reports & Preventive Maintenances logs, and detailed annual financial reports • Note: Best Practices Webinar http://www.casbo.org/?page=Prop39Webinar&hhSearchTerms=%22Webinar+and+Bid%22

24. Best Practices: Asset Management • Monitor and Maintain Systems for Peak Performance • Monitor on continuous basis, compare to predicted output • Schedule and conduct preventive maintenance • Respond to alarms on a timely basis • Initiate warranty claims and dispatch technicians • Compare actual meter values to projected output and identify cause of any discrepancies. Report findings • Provide quarterly production/performance reports • Provide annual realized savings report and future maintenance budget forecast

25. Battery Storage Preventative Maintenance • Visual Inspection on all equipment • Damages • Torque marks • Thermal scan • Replace Consumables • Filters • Fuses • Lubricants • Testing • Battery Capacity Degradation • Inverter Efficiency • Meter Calibration

26. TerraVerde + Green Button • TerraVerde is now integrated with the PG&E Green Button Connect Program! • This integration makes it quick and painless for us to obtain 15-minute interval demand data from our clients. • It’s so quick, we can turn-around a battery storage feasibility study in no time.