Presented by:Jeffrey Baratta, Piper Jaffray & Co.Sam Youneszadeh, SunEdison

General Obligation BondsCertificates of Participation/Lease Revenue BondsTax‐Exempt Lease Purchase (TELP)Power Purchase Agreement (PPA)Prepaid Power Purchase Agreement (PPPA)Proposition 39

Voter ApprovalTax backed, no general fund requirementTax Rate DrivenCompetition with other Facility ProjectsLonger Lead TimeOwn the Project

No Voter ApprovalRequires a site to be used as the leasePayment source is typically the general fundRepayment structure limitationsCompetition with other general fund expendituresOwn the Project

No Voter ApprovalPayment source is typically the general fundRepayment structure limitationsLimited TermCompetition with other general fund expendituresOwn the Project

PPA: Power Purchase AgreementITC: Federal Tax Credit (30% of system cost)

The Section 48 Investment Tax Credit is not available for solar systems owned by tax-exempt entities.

MACRS: Modified Accelerated Cost Recovery SystemExpires in 2013Projects that are commercially operational this year would save roughly $0.005/kWh

Utility Escalator: % increase in base utility rate per annum

Historical escalator for SCE is 3.5%SCE: 5% in 2012, 6.3% in 2013, 5.9% in 2014

PPA Escalator: % increase in PPA rate per annum

• Prepaid PPA: Utilize bond funds available reduce effective PPA Rate, and take ownership of system after year 25

• NPV (Net Present Value): NPV compares the value of a dollar today to the value of that same dollar in the future, taking inflation and returns into account.

• Offset: % of energy needs that the solar system will cover

• SPSA: Solar Power & Services Agreement

• CSI: California Solar Initiative• Provides production based incentive

(PBI) for first 5 years of solar contract• Currently in final tranches of program

• Rebate of $0.032/kWh for 3rd party owners (i.e. SunEdison)• Rebate of $0.114/kWh for government/non-profit owners

• O+M: Operating and maintenance costs for solar systems (cleanings, maintenance, etc…)

PPA vs. Cash Sale

Ownership

Cash SaleSolar PPA

Solar hostSolar developer

Operational Risk

Solar hostSolar developer –customer only pays for power delivered

Federal ITC Available No*Yes

PPA provides low risk way to achieve electricity cost savings

With cash sale, public sector institutions cannot monetize tax credit-based incentives

Pay for system upfront

NoneCapital Outlay

* The Section 48 Investment Tax Credit is not available for solar systems owned by tax-exempt entities.

Non‐residential Solar in California by Ownership Model

0.0

50.0

100.0

150.0

200.0

250.0

2010 2011 2012

MW In

stalled

Direct Ownership

Third‐Party Owned

Year Utility Rate

Proposal APPA Rate (3.9% escalator for 15 

years)Proposal A:Savings

Proposal B (3% escalator) 

Proposal B:Savings

1 $0.146  $0.142  $3,690  $0.142  $3,690 2 $0.152  $0.148  $3,949  $0.146  $5,122 3 $0.158  $0.153  $4,221  $0.151  $6,636 4 $0.164  $0.159  $4,507  $0.155  $8,235 5 $0.171  $0.165  $4,808  $0.160  $9,925 6 $0.178  $0.172  $5,124  $0.165  $11,708 7 $0.185  $0.179  $5,456  $0.170  $13,589 8 $0.192  $0.186  $5,805  $0.175  $15,572 9 $0.200  $0.193  $6,172  $0.180  $17,662 10 $0.208  $0.200  $6,557  $0.185  $19,863 11 $0.216  $0.208  $6,960  $0.191  $22,180 12 $0.225  $0.216  $7,384  $0.197  $24,617 13 $0.234  $0.225  $7,829  $0.202  $27,181 

Evaluating PPAs: Compounding Interest

Year Utility Rate

Proposal APPA Rate (3.9% escalator for 15 years)

Other Proposal:Savings

Proposal B (3% escalator) 

Proposal B:Savings

14 $0.243  $0.234  $8,296  $0.209  $29,877 

15 $0.253  $0.243  $8,786  $0.215  $32,710 

16 $0.263  $0.255  $7,162  $0.221  $35,686 

17 $0.273  $0.255  $16,080  $0.228  $38,812 

18 $0.284  $0.255  $25,266  $0.235  $42,093 

19 $0.296  $0.255  $34,728  $0.242  $45,536 

20 $0.308  $0.255  $44,476  $0.249  $49,148 

21 $0.320  $0.255  $54,521  $0.256  $52,936 

22 $0.333  $0.255  $64,873  $0.264  $56,908 

23 $0.346  $0.255  $75,543  $0.272  $61,070 

24 $0.360  $0.255  $86,543  $0.280  $65,432 

25 $0.374  $0.255  $97,883  $0.289  $70,001 

Total $596,619  $766,189 

Evaluating PPAs: Compounding Interest

Allows the School District to prepay for a portion of the electricity that will be generated by the Solar array• The remainder of the electricity delivered is paid for by the School over‐

time, as with a traditional Power Purchase Agreement (PPA)

• Enables Developer to offer a lower effective PPA rate to the School District, thereby increasing savings above and beyond PPA and/or direct ownership 

• School Districts can utilize available bond funds to lower the operating costs of the school for 20 years• Potential use for Prop 39 loan program (Would reduce the amount of bond 

funding needed)

• From a contractual standpoint, the Prepaid PPA contract is very similar to a traditional PPA

Hybrid Approach: Prepaid PPA

Flexibility on the dollar level of prepay (staying within tax rules; cannot prepay for 100%)• 10%, 20%, 50%, 70%

Prepayment funds are applied to each year’s PPA payments due and reduces the annual operating expense of the school

The following shows an example of the School District prepaying for 60% of the first 10 years of power• The remaining 40% of power delivered is paid out of pocket monthly as 

the invoice is received (same as traditional PPA)

Assuming a 5% cost of capital on debt, and a 53% prepayment it would be the equivalent of a cash purchase at 1.3%

Mechanics of a Prepaid PPA

Q+A

Jeffrey A. BarattaManaging Director

Piper Jaffray & Co.Public Finance Investment Banking345 California Street, Suite 2400San Francisco, California 94104Jeffrey.A.Baratta@pjc.com415.616.1617 office 415.616.1620 fax415.407.7884 mobile

Contact Information

SamYouneszadehDirector of Sales

SunEdison600 Clipper Drive, 3rd FloorBelmont, California 94002syouneszadeh@sunedison.commobile: 949.892.7594www.sunedison.com