CleanPath Ventures

Solar Future II – Vision and Strategy Conference

Munich June 2010

June 2010

The Solar Industry in 2013

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Renewable Ventures Experience and Expertise

Accomplishments include:

•  Financed, owned, and operated over $300 MM in solar energy assets

•  Syndicated the first solar tax equity fund in the U.S.

•  Raised and managed 5 solar tax equity funds in the past four years

•  In 2007, financed and built the largest solar photovoltaic power plant in North America (largest up to Q4 2009)

•  Introduced the Power Purchase Agreement (PPA) to the U.S. solar retail market in 2001

•  First to finance amorphous, CIGS, CadTel thin film silicon projects in the North America with leveraged partnership structure, non-recourse

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Reference to Experience – Nellis

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The Solar PV Industry in 2010���

The European Market Today: Current Trends in the Europe:

  Greece, Spain, Portugal, Hungary, Ireland – who’s next?

  Copenhagen was a flop, and the carbon markets are stagnating

  $430+ BN allocated to green worldwide -- most left unspent (>10%)

  Economic pressures will impact PV incentive policies forward and back, with the oldest richest incentives being reviewed and potentially recalc’d

  Revalued currencies in EU and China may improve EU companies that haven’t yet moved manufacturing offshore – most have moved already

  PV Parity has arrived at certain areas in the US, so why not in some of Europe now, much less by 2013? Excessive value stripped out?

  Reserve capacities are tightening in 2009, and energy pricing rising, particularly due to RPS drivers – will continue beyond super FITs

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The Solar PV Industry in 2010���

The U.S. Market Today:

  World of losses – so much for tax incentives

  Stimulus programs not working, or on track for failure – Federal Loan Guarantee Programs have orphaned the commercial PV space

  Even the most qualified can’t predict tax or public policy as administered by the IRS and OMB, etc.

  Energy Bill can help and is needed more than ever, lots of clean-up req’d, key extensions needed (Fed Cash Grant & Depreciation)

  Pricing has improved such that parity in sight with stable incentives

  Transmission (lack thereof) is major constraint – 300,000 MWs of wind in interconnection in queue

  Lack of carbon policy is causing confusion leading to delay/waiting

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The Solar PV Industry in 2013

  General feel is R&D in U.S./Europe and OEM in Asia

  Still, consolidation (by 2013) will likely produce long-term winners who will focus on market share, customer relationships, and full service and integrated offerings

  Commercialized new PV tech can change game if we can bridge technology to capital markets, while managing risks along the way

  Insurance will have emerged to convert balance sheet coverage (self insurance) to actuarial methods – it may cost more, but trustworthy – insurance today (Munich RE, etc.) is not seen as enough, but a start

  Policy will impact manufacturing strategies – local content requirements to dominate (jobs, jobs, jobs)

  Firm power, with dispatchability and power conditioning capacities, will be in demand and will demand a premium to complement a smarter grid

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The Solar PV Industry in 2013 cont.

  U.S. Carbon policy by 2013 – renewable + nuclear win big

  U.S. Power pools will begin to re-organize in favor of big regional markets, most likely as a point of national security – who needs 120+ balancing authorities anyway!

  U.S. – 3,250 electric utilities will begin to consolidate, and will all be customers of solar

  Solar Industry now seen as a threat to conventional power interests which is now using lobbying resources to shape the discussion – AB 32 example

  2013 Markets, include India, where they are around 10% deficit at peak & baseload. China market is larger. Asia and South America also interesting.

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Bottom Line – Demand is On the Rise

Increased Demand

Public Concern

Energy Security

Policy and Regulation

Long term Fuel Price

Risk

Macro trends are increasing demand for Renewable Energy:

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Supply Constrained By Capital Intensity Barrier

Capital New projects slow or stop due to lack “last mile” dev & construction financing

Expertise

Capital constraints drive out experienced personnel

leaving less development and technology expertise

Technology

Without experts or capital, new tech that reduce costs - increase performance remain “risky” and are not deployed

Project development is often caught in a counter productive cycle of capital intensity – frustrates demand

Constrained Supply

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Emerging Business Strategy ���

Problem: Capital Intensity Wall or Trap at Late Stage Solar Development

Demand is rising, late-stage capital is constrained, while early stage developers focus resources on expanding their portfolios – no capacity to carry thru to COD

Solution: Mezzanine Capital and Expertise

New sources of capital managed by development experts can break the cycle of constraints that is hold the industry back – every project is seen as a distressed asset, requiring a boost to COD

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A New Large Scale Solar Initiative – Cont.���

What We Are Doing: CleanPath Ventures Manages The Workout:

Founded by pioneers of PPA model in US with over 150 MW of solar completed and 1 GW+ pipeline – the team close and built over 50 commercial and large scale projects in the last 2 years

How We Are Doing it: Six Key Strategies

  Roll up “distressed” assets facing a capital intensity barrier to COD   Place “last mile” financing & expertise to mid-to-late stage projects   Workout to COD – bridge and warehouse for long-term owners   Steer project development to emerging and underserved markets   Add commercialization of new technologies – upstream advisory

services to downstream placement to fields of proven tech   Manage risks throughout

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Fund invests development equity before projects are construction ready. Some projects are sold at NTP, or before construction.

If not sold at NAT – Fund arranges construction financing and invests equity

Projects are sold at COD to Asset Investor class – Option: May hold asset thru tax credit recapture as a paid service

Balance of Plant and

Installation

Equipment Procurement Power & REC

Sales Agreement

Interconnection and Transmission

Agreements

Permits

Resource Assessment

Site Control

Long Term Debt

Tax Equity

Sponsor/ Developer Equity

Stage 1: Development Funding 2: Construction

~ 30 Year Owner ~ 12 to 36 Months (CleanPath)

3: Operations

Project Development Cycle

Project Value

~ Development Company

Projects eligible for roll-up/JV Fund adds dev $$ & expertise

NTP COD

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CleanPath Ventures will Break the Cycle

Finance Provide mezzanine and “last mile” capital for stuck projects (otherwise

essentially distressed assets)

Develop Work viable projects to NTP or COD

and sell to owner-operators (may hold thru tax credit recapture period)

Commercialize Manage risks preventing the

implementation of new technologies, and reduce overall system costs

CleanPath has the skilled developers and project financiers to break the cycle of constraints through:

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Research & Development

Early Stage Venture Capital

>X%

Manufacturing

Late Stage VC or Private Equity

>X%

Commercial-ization

Project Development/ Construction

Project Ownership and O&M

Tax Equity Fund

7-12%

Phase

CleanPath Ventures primarily focuses on the Technology Commercialization and Project Development/Construction Phases of the Value Chain, drawing on

its vast experience in the Project Ownership & Operation phase

CleanPath in the Renewables Value Chain

Risk and Reward Diminish Moving Down the Chain

CleanPath Ventures

>X%

Capital

Projected IRR

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Matt Cheney, Managing Director CleanPath Ventures LLC

mcheney@cleanpathventures.com 415-244-6787���

Contact Information

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