Essential Insights for Developing a Clean Energy Business Plan

1. Business Plan Fundamentals Presented At 2011 East Coast Academy • June 28, 2011

2. Introduction » Navigant Energy Practice • Our Energy Practice specializes in Clean Energy Advisory work. • Energy Practice » • 260 Consultants • Clean Energy Advisory » ENERGY POLICY & REGULATION • Carbon market structures, emissions analysis, policy support GREENHOUSE GAS BUSINESS STRATEGY • Carbon market risk and opportunities, carbon reduction strategy, regulatory response, investment opportunity assessment ENERGY EFFICIENCY • Strategy, marketing and implementation, regulatory analysis/support,program evaluation RENEWABLE& CONVENTIONAL GENERATION STRATEGY • Business planning, performance improvement, technology assessments, project due diligence, M&A TRANSMISSION & DISTRIBUTION • Smart grid strategies, storage,transmission planning, grid integration support NATURAL GAS • Market risks and assessments, transport strategies, process improvements, price forecasting

3. Business Plan Areas of Focus • A typical investment due diligence would focus on five major areas outlined below. Areas of Focus • Market and Competitive Analysis • Product and Technology Plan • Business Model • Financial Analysis • Management and Staffing Plan

4. Market Analysis Best Practices • Market analyses typically fall short when market forecasts are overly optimistic and competitive environment has not been well studied. Market Analysis Best Practices • Identify target market with appropriate clarity. • Develop forecasts from multiple sources that adequately capture various scenarios (upper end and lower end). • Identify customer needs and other stakeholders/influencers in the market. • Identify major competitors and their associated product and/or service offerings. • Identify emerging players and how they plan to position their product and/or service offerings. • Conduct a five forces analysis to define competitive intensity and barriers to entry.

5. Product and Technology Plan Best Practices • Credible technology development plans are a cornerstone of any robust business plan. Product and Technology Plan Best Practices • Define what the product/service is and what customer needs it addresses. • Create a credible technology maturation plan that clearly identifies risks and mitigation strategies. • Identify price points based for competing offerings and other market information.

6. Business Model Best Practices • Defining a sustainable business model is important in creating a credible financial model. Business Model Best Practices • Identify the prevailing business models in the market place for various investor types. • Define the proposed business model/models for the company. • Justify why the proposed business model is sustainable and what the exit strategy is for investors.

7. Financial Analysis Best Practices • Financial models should avoid hard coded numbers. Financial Analysis Best Practices • Build up CAPEX, OPEX and revenue estimates from the bottoms up. • Run sensitivity analyses on IRRs, DSCRs based on various market penetration scenarios for the product/service. • Use metrics for optimal business cases to set milestone targets for development plan.

8. Management and Staffing Plan Best Practices • Management team should have sufficient expertise operating in the proposed market. Management Team Best Practices • Identify experience and key competencies required in C-level executives. • Assure that compensation and incentives for management are competitive with the market and aligned with major company milestones. • Build a staffing and compensation plan that is connected to the financial analysis.

9. Rakesh Radhakrishnan | Associate Director Navigant Consulting, Inc. rakesh.radhakrishnan@navigant.com 860.508.1489 direct