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RickKilbourne~SeniorManager,SolarBusinessDevelopment

MMAAnnualMee<ngWorkshop:MakingMoneyWhiletheSunShines

© 2011. Constellation Energy Group, Inc. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Constellation Energy Group, Inc.Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

• Fortune500company(#149on2010list)Listedas#1inEnergyIndustry

• DeeprootsinMassachuseDs–Constella@onhasofficesinBoston,Lowell,andNorthAdamsandservesretailelectricitystatewide

• MunEnergyProgam–Over1/3ofMassachuseNscommuni@eshaveswitchedtoConstella@onastheMunEnergyprogrampowersupplier

• ExperienceinMassachuseDsSolar–Constella@onhasdevelopedover100MWsofsolaracross7statesincludingMassachuseNs

• 100%InternalFunding–$150millionCEGcapitalfunddedicatedfor2011solarprojectsandplantoaddanaddi@onal25‐35MW/yroverthenext3years.SRECsmone@zedinternally.

• 100%ofConstella.on’ssolarprojectshavebeencompletedonbudgetandonschedule

Constella<onEnergyKeyFacts

• Revenues:$14.3billion(2010)

• Assets:$20.0billion(2010)

• Tickersymbol:(NYSE)CEG

Noreasontobelievethatlowelectricityratestodaywon’treturnto2008levelsandhigher

Pricevola@litywillcon@nue;withpremiumsforon‐peakpower

Solarcanprovidealong‐termhedgeagainstfuturepricerisk

Solarpoweroffsetsthemostexpensivebrownpoweratthemostcostly@meoftheday

HourlyDemandCurve

4

Solar:APhysicalSolu<ontoaFinancialProblem

© 2011. Constellation Energy Group, Inc. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Constellation Energy Group, Inc.Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

HourofDay

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Solarelectricitygenera<on

Facilityload

Energynotconsumedbythefacilityiscreditedbacktothe

customeronthenextbill

1

Solarinstalla@onoutputoffsetsthemostcostlypowerprovidedfrom

thegrid.

OnPeak

?

Supplyvs.Demand–ataCustomerLevel

© 2011. Constellation Energy Group, Inc. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Constellation Energy Group, Inc.Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

Duetonetmetering,customersneverdouble‐payforenergy:– Netmetering (or net billing) is a policywhere electric customerswho generate their

ownelectricitycan“bank”electricityonthegrid.– Theu@litycreditsyouifyouproducepoweranddon’tuseit.– So when your solar system generates electricity over the weekend and you’re not

consuming any electricity, you don’t lose that – the u@lity takes your overallconsump@onanddeductsyouroverallproduc@on.

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KeyTakeaway:Billingmaybedifferentdependingonthestate.Workwithyourtechnicalsalesreptoiden@fyregionallyspecificnuances.

2/3 of the demand iscoming from the grid

1/3 of the demand isoffset by the Solar Unit

NOTransmissionNODemandNODistribu@on

↓ Transmission↓ Demand↓ Distribu@on

NetMetering

ARenewableEnergyCer@ficaterepresentstheenvironmentalaNributesofonemegawaNhour(MWh)ofelectricitygeneratedfromarenewablepowerfacili@esanddeliveredontothepowergrid.ANributesrepresentedbyaRECincludethefuelsource,actualemissionsfromthefacility,andvintageyear.

1MWhofenergyfromaSolarFacility=1SREC

*2011 NJ Solar REC

s

RECvs.SolarREC(SREC)

© 2011. Constellation Energy Group, Inc. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Constellation Energy Group, Inc.Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

PerformanceBasedIncen<ves• Statemandatedgoalof400MWby2020

• SolarRenewableEnergyCreditclearinghousehelpsenableaviablemarketforthesaleofMASRECs

• SRECmarketinMAhasbeenamongthestrongestintheUnitedStates

• SRECvaluesdeclinesignificantlyover@meassupplybuilds

TaxIncen<ves• Solarenergysystemsareexemptfromlocalpropertytaxfor20yearsifpoweris

consumedbyhost

• Equipmentforsolarenergysystemsareexemptfromstatesalestax

• FederalITCandBonusDeprecia@onbuydownprojectcosts

NetMetering• U@lityNet‐Meteringinsuresallpowerproducedbyabehindthemetersystemisu@lized

bythehost

• NetExcessGenera@onCreditallowsexcesspowernotconsumedbyahosttobemone@zedandusedtoreducegenera@oncosts

WhyDoesSolarWorkinMA?

© 2011. Constellation Energy Group, Inc. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Constellation Energy Group, Inc.Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

Roof Tops

On Ground

Parking Lots

WhereDoesSolarWork?

© 2011. Constellation Energy Group, Inc. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Constellation Energy Group, Inc.Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

IsSolarRightforYourFacility?

TherearefourmainfactorsthatdetermineifsolarPVisagoodfitforafacility:1. AvailableIncen<ves–Areadequatesolarincen@vesavailable?

2. FacilityFactor–Doyouhaveclearroofareaofatleast100,000sq.p.or6+acresofavailablegroundspace?Thiscanbeanaggregateofmul@pleroofsononecampus.

3. ElectricLoad–Isyourelectricloadlargeenoughtojus@fyacommercial‐scalesolarsystem?Isthereanearbyu@lityinterconnec@onpoint?

4. FinancialFactors–Isthetownposi@onedtoenterintoa15to20yearenergysupplycontractand/orFacility/Landlease

© 2011. Constellation Energy Group, Inc. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Constellation Energy Group, Inc.Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

1MWsystem≈$5.5million|5MWsystem≈$25.0millionSolarsystemscostapprox.$4,500‐$6,500perkW

+ AllFutureO&M

‐ Taxincen@vecredits

‐ Mone@zeSRECs

‐ Mone@zeanyotherincen@ves:Grants,LowInterestFinancing,etc

Calculate our corporate investment multiplied by our corp. rate ofreturn over 20 years

Key Customer Takeaway: The price/kWh of the solar asset avoids these costs and wouldsubsequently reduce these cost components for the remainder of your brown power price/kWh.

Factor in historical usage and load factor

ProjectCostBreakdown

© 2011. Constellation Energy Group, Inc. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Constellation Energy Group, Inc.Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

TwoPathstoObtainingSolarPowerTurnkey

Systems owned by customerPower Purchase AgreementSystem owned by third-party

Pros•System owned•Initial cost of power afunction of internalmodeling•Future power “free”

Cons•Major capital expense•Some entities unableto take advantage ofITC•Responsibility to sellRECs•Maintenanceresponsibility

Pros•No capital needed•Future power costslocked in•Allows all entities totake full advantage ofITC•Upfront monetizationof SRECs•Maintenance providedby developer•Flexibility in pricingstructure•Buy out or extensionat end of term

Cons•Commits space for20+ year•Price pre-set forcontract term

© 2011. Constellation Energy Group, Inc. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Constellation Energy Group, Inc.Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

WhatisaPPA?• APPAisalong‐termagreementof15~20yearstobuythepowergeneratedbythesolar

installa@on

• PPAsallowsolardealstobestructuredwithnoup‐frontcapital.

• TheDevelopersellsthepowergeneratedbyasolararraytohostcustomer,whilemaintainingsolarsystemownershipandopera@onalresponsibility

• EnvironmentalaNributessuchasSRECscanbeownedbytheDeveloperorbycustomer

• PPAsareaproven‐effec.vewaytostructuresolardeals–thischartshowstheincreasinguseofPPAsinthesaleofcommercial‐scalesolarsystems

Adaptedfrom:JonGuice&JohnKing,“SolarPowerServices,”GreenTechMedia,February2008,hHp://www.gtmresearch.com/report/solar‐power‐services‐how‐ppas‐are‐changing‐the‐pv‐value‐chain/

© 2011. Constellation Energy Group, Inc. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Constellation Energy Group, Inc.Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

ProjectQualifica<on• SiteAvailability&Suitability

– Aretheiden@fiedareaslargeenough?

– Isthespaceincondi@ontohandlea20yearcommitment?

– Isthereaconvenientnearbyinterconnec@onpoint

• Annualconsump<onvs.Projectproduc<on– Solarprojectsaretypicallysizedto<75%oftotalload

• TurnkeyorPPA?

• PermidngObstacles– Aretherewetlandsnearby?Whenweretheydelineated?

– HasthelandfillalreadyreceivedaPostclosurepermit?

• Procurementprocess/constraints– Canthetownexecutea20yearagreement?

– M.G.L.Chapter25or30b?

• Vendorselec<on

• ApprovalProcess– Selectman?TownAdministrator?Annualmee@ngapproval?

14

© 2011. Constellation Energy Group, Inc. The materials provided and any offerings described herein are those of Constellation NewEnergy, Inc., a subsidiary of Constellation Energy Group, Inc.Brand names and product names are trademarks or service marks of their respective holders. All rights reserved. Errors and omissions excepted.

DisclaimerThe information contained herein has been obtained from sources which ConstellationEnergy believes to be reliable. Constellation Energy does not represent or warrant as to itsaccuracy or completeness. All representations and estimates included herein constitute .Constellation Energy 's judgment as of the date of the presentation and may be subject tochange without notice. This material has been prepared solely for informational purposes. .Constellation Energy does not make and expressly disclaims, any express or impliedguaranty, representation or warranty regarding any opinions or statements set forth herein. .Constellation Energy shall not be responsible for any reliance upon any information,opinions, or statements contained herein or for any omission or error of fact. This materialshall not be reproduced (in whole or in part) to any other person without the prior writtenapproval of . Constellation Energy .