Solar Energy in Inland Southern California: The Future is NowThe University of California, Riverside

Solar Project Financing – Commercial Power Purchase Agreements (PPAs) & PPA Market Rates for SCE Territory

Kevin Ross February 6, 2013

SolarCity Confidential Slide 2

The national leader in clean energy services‒ 4,000+ Employees‒ Publically Traded (SCTY)‒ Serving 14 states: AZ, CA, CO,

CT, DE, HI, MA, MD, NJ, NM, NY, OR, PA, TX, WA and Washington DC

‒ 40+ Regional Operations Centers (26 in CA)‒ Riverside ROC: 200 employees

‒ $3.4B PPA project financing, 28 PPA Funds

‒ 82,000+ customers‒ 1,000+ commercial solar projects

installed‒ 470+ MW deployed‒ ACWA’s Exclusive Solar Systems

Preferred Provider

Pubic & Private Sectors

SolarCity Company Overview

SolarCity Confidential Slide 3

SolarCity provides a single source for solar project financing, engineering & design, installation, asset ownership, performance monitoring, operation and maintenance

Better customer experience with single point of contact– Reduced financing risk– Access to market-leading, most appropriate and cost-effective PV technologies– In-house system design for comprehensive QA/QC programs– Proprietary monitoring technology

Benefits of SolarCity’s Integrated Approach

SolarCity Confidential Slide 4

Walmart 150+ Locations in CA, AZ, CO, MD, OH, OR, NY

Ground Mounts, Rooftops and Carports

"Walmart has reduced energy expenses by millions of dollars through our solar program allowing us to pass these savings on to our customers in the form of everyday low prices."

-Kim Saylors-LasterWalmart Vice President of Energy

SolarCity Confidential Slide 5

Las Virgenes Municipal Water DistrictGround Mount - Tracker

SolarCity Confidential Slide 6

East Bay Municipal Utility District Ground Mounts and Covered Reservoir Roof Mount

SolarCity Confidential Slide 7

Power Purchase Agreements (PPA) ‒ Private investment supporting Public Sector to implement

renewable energy projects

Benefits:‒ Renewable energy self generation w/o capital investment‒ Pay for 100% renewable energy at a lower rate than Utility rates‒ Immediate positive cash flow and substantial energy cost savings

over the term of the PPA‒ Environmental benefits – Carbon offset, GHG reduction, RECs‒ Positive investor ROI with manageable risk

Commercial Project Financing – Public/Private partnership (Win/Win)

SolarCity Confidential Slide 8

Cash Purchase vs. Power Purchase Agreement

Cash Purchase PPA

Financial ConsiderationsCapital CostMonthly Solar Energy Cost

Full Price $0

$0Pay for power generated by system

Government IncentivesFederal Tax CreditState, Local, Utility rebatesDepreciation benefit

30% of capital costPaid to owner5 year to MACRS

All incentives utilized by system owner/project financier – reduces PPA rate

System ServicesMonitoring serviceRepairs under warrantyO&M responsibility

5 years10 yearsSelf perform

20 years20 years SolarCity

System ConsiderationsSystem ownershipOption to upgrade laterPerformance Guarantee

Own for 30+ yearsNoAdded cost

“Host” for 20 yearsYes, plus system Buyout optionsTypically included

SolarCity Confidential Slide 9

SolarCity forms PPA investment “Funds” with financial institutions and other banking partners and investors

Each Fund is a separate legal entity SolarCity and the investor(s) hold ownership interest in the Fund The Fund provides project financing (capital) to design/build the solar

PV system Buyer (Site Host) enters into the PPA with SolarCity, agreeing to

purchase all energy generated by the system for the term of the PPA (20yrs)

SolarCity design/builds the system, which is purchased (or leased) by the Fund.

The PPA is assigned to the Fund, and the Fund becomes counterparty to the PPA.

SolarCity operates and maintains the system under a separate O&M agreement with the Fund for the term of the PPA

A 100% Performance Guarantee helps protect the Buyer and Fund

PPA Financing Structure

SolarCity Confidential Slide 10

$302

$358

$580

$1,024

$1,100

2008 2009 2010 2011 2012 2013

Note: Blue denotes new investment funds raised in the period. Green represents cumulative fund raising from prior years. Financing amounts denoted in $ millions of project value.

Select Investors

Structured Financing Raised to Date

$49

$351

$709

$1,289

$2,312

$3,412

Investment Funds Raised ($mm of project value)

SolarCity Confidential Slide 11

The Fund’s ROI‒Revenues and Cash Flows:‒ Tax Credits and Accelerated Depreciation ‒ Cash incentives, grants, REC’s , etc.‒ Payments from Buyer for electricity produced by the system

‒Balance of Risk:‒ Protection of the Fund’s status as system owner‒ Protection for no disruptions in payments based on the system’s

operation‒ Protection to minimize risks and costs that could impact ROI

PPA Terms & Conditions

SolarCity Confidential Slide 12

Components of viable/attractive PPA rates‒ Southern California Edison Territory‒ Commercial TOU rates annual avg cost: $0.09/kWh to $0.15/kWh‒ Annual SCE cost escalation: 3% to 5%‒ CSI PBI: Step 9 (~59MWs remaining in step)

‒ Tax paying entities: $0.032/kWh for 5yrs‒ Non-profit / Gov’t agencies: $0.114/kWh for 5yrs‒ Represents 10 to 15% of system design/build cost

‒ Federal 30% Investment Tax Credit & Accelerated Depreciation 2014 PPA rates ‒ $0.085/kWh to $0.125/kWh with 0% annual escalation

‒ Assumptions: 1MW NEM ground-mount project, buyer with IG Credit rating, no challenging land use or interconnection issues.

Energy Cost Savings Potential‒ $2M to $6M over the 20yr PPA term

Local Commercial Market Overview – Inland Empire

SolarCity Confidential Slide 13

Contact Information:Kevin Ross310-968-6290kcross@solarcity.com1755-B Iowa Ave., Riverside, CA

Thank You