Coalition for Green Capital

1. Coalition for Green Capital September, 2013 Contact Reed Hundt or the Coalition for Green Capital at coalitionforgreencapital@gmail.com 202-777-7700 www.coalitionforgreencapital.com

2. Energy investors profit from consumer payments Lower Required Profit Means Lower Payment Upfront Investment • Investors recover capital and make profit from customer payments for electricity • Investors seeking lower profits charge lower interest rates • Lower interest rates mean Lower customer payments • If payments are below retail price of electricity , consumer will demand clean energy Consumer Payment Provides Profit to Investors 2

3. Green Bank can make consumer payments lower than retail electricity rates, which are rising steadily Source: EIA Electricity Data Browser, Average Retail Price of Electricity, Monthly. Trendline is linear.

4. Because Green Bank expects low profits, consumers make lower payments Typical Capital Structure of Clean Energy Investment Capital Structure of Clean Energy Investment With Green Bank

5. A 20% investment by Green Bank is enough to lower clean energy price by nearly a quarter • Assuming Green Bank debt offered at 2% for 15 years. • Example figures represent solar project in Connecticut with Connecticut REC price and state incentives. • Rooftop Solar PV “Green Bank” Financing Model, Sponsored by The Connecticut Clean Energy Finance and Investment Authority and the Coalition for Green Capital, Developed by the Brattle Group. Available for download from: http://www.coalitionforgreencapital.com/the-model.html

6. If Green bank provides enough investment, clean energy projects require lower electricity prices than now charged Retail Electricity Price ($/kWh) as a Function of Green Bank Debt1 and Installed Cost Key Assumptions • Developer Equity Return • Tax Equity Return • Total Leverage • Commercial Debt Rate • 15-Yr REC Price • 6-Yr State Incentives 15% 12% 40% 6% $0.030/kWh $0.225/kWh % of GB Capital in Structure Solar Install Cost ($/Watt) Highlighted prices are below current retail electricity price in Connecticut If solar installation costs drop to $3.5/watt, and 30% of investment comes from Green Bank, the consumer needs only to pay 8.5 cents per kWh to pay back investors with adequate profit…If solar costs are higher, add more green bank capital to keep electricity rates down. • Assuming Green Bank debt offered at 2% for 15 years. • Rooftop Solar PV “Green Bank” Financing Model, Sponsored by The Connecticut Clean Energy Finance and Investment Authority and the Coalition for Green Capital, Developed by the Brattle Group. Available for download from: http://www.coalitionforgreencapital.com/the-model.html

7. If Green Bank provides enough investment, private sector investors will add money to share in consumer payments Developer Return (%) as a Function of Green Bank Debt1 and Retail Price Key Assumptions • Installed Cost • Tax Equity Return • Total Leverage • Commercial Debt Rate • 15-Yr REC Price • 6-Yr State Incentives $4.50/w 12% 40% 6% $0.030/kWh $0.225/kWh % of GB Capital in Structure Price of Clean Electricity ($/kWh) Highlighted returns exceed target developer return of 15% Green Banks attract private investors who still achieve required returns, even with clean electricity prices at or below retail rates • Assuming Green Bank debt offered at 2% for 15 years. • Rooftop Solar PV “Green Bank” Financing Model, Sponsored by The Connecticut Clean Energy Finance and Investment Authority and the Coalition for Green Capital, Developed by the Brattle Group. Available for download from: http://www.coalitionforgreencapital.com/the-model.html

8. Green Bank can tap large amount of private investment that is presently not used for clean energy • Green Bank goal is to attract more private investment to clean energy sector • More private investors want low risk, low return than seek high risk, high return • Green Bank can lower risk for private investors in clean energy and assure adequate return Treasury rates from U.S. Treasury Department. Clean Energy Debt rate based on assumptions used in NREL paper, “The Impact of Financial Structure on the Cost of Solar Energy. March 2012. Tax Equity rate based on NREL paper, Bloomberg New Energy Finance Paper, “The return – and returns – of tax equity to US renewable projects,” November 2011, and USPREF paper, “Tax Credits, Tax Equity and Alternatives to Spur Clean Energy Investing,” September 2011.

9. Green Bank investment + Private investment leads to more clean energy projects Technically Feasible Projects High Capital Costs Push Consumer Payments Above Retail Electricity Price Typical Capital Structure Economical Projects Lower Capital Costs Reduce Consumer Payments Below Retail Rates Green Bank Capital Structure Green Bank investment attracts private investors and increases size of clean energy market.

10. As Green Bank gets paid back, it re-uses its money to expand clean energy investing Illustrative Example of Green Bank Recycling Original Investment • Same Green Bank dollars invested multiple times, re-leveraging private dollars • Recycling multiplying total clean energy investment • Illustration is conservative, as loan repayments occur constantly and cash can be redeployed throughout period Year 0: Initial investment attracts private capital Year 10: Investment is fully repaid First Recycling Year 10: Funds are recycled into a new investment, attracting more private capital Year 20: Investment is fully repaid Second Recycling Year 30: Investment is fully repaid Year 20: Funds are recycled into a new investment, attracting more private capital Public funds are lent Public funds are repaid Based on CGC research in New York for the New York Green Bank in conjunction with Booz & Co.

11. Green Bank investing expands total clean energy investing more than government cash hand-outs Public Capital Deployed Under Subsidy Scheme This simplistic model of a subsidy scheme is intended to illustrate the one-time deployment of capital, which in reality might occur in stages In example, total clean energy investment with Green Bank is more than three times greater than with subsidies Public Capital Deployed Years Public Capital Deployed Under Green Bank Mechanism - Simplified Initial Capital Deployment This simplistic model of a Green Bank scheme is intended to illustrate capital preservation; several simplifying assumptions are made, such as a non-staged recycle time of 6 years Public Capital Deployed Years Based on CGC research in New York for the New York Green Bank in conjunction with Booz & Co.

12. Coalition for Green Capital September, 2013 Contact Reed Hundt or the Coalition for Green Capital at coalitionforgreencapital@gmail.com 202-777-7700 www.coalitionforgreencapital.com