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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?
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© 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 .
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