Alternative Energy Equipment Financing

1. Alternative Energy Equipment Financing ELFA Equipment Management Conference Miami, Florida February 11, 2008

2. Moderator Ms. Lauren Hill Senior Vice President MESIROW FINANCIAL CONSULTING

3. Panelists Paul Bent Principal The Alta Group, LLC Ms. Kristina Pekarek-Wilhite Senior Associate MESIROW FINANCIAL CONSULTING

4. Some terminology and usage • Definitions of “Alternative Energy” • Generally, electrical energy produced from renewable resources • Biofuels and biomass • Geothermal resources • Solar power • Wind power • Not including fossil fuel derivatives or additives • Ethanol or ethanol blends • Coal tar, oil shale, or oil sands • Coal gasification or liquification

5. Biofuels and biomass • Not technically “renewable” but generally categorized as such • Agricultural waste • Husks, stalks, bagasse, chaff, timber refuse, crop residue • Food processing waste and byproducts • Organic or combustible industrial waste • Biological waste • Municipal solid waste, sewage sludge • Animal or livestock waste and byproducts • Electricity generated using combustion or “digestion” of biomass or biofuel products • Largest source of non-hydropower renewable energy in the U.S.

6. Biofuels and biomass Biomass gasifier Biomass fueled CHP plant (Germany)

7. Biofuels and biomass Biomass fueled plant (Wicker, Germany) Unloading wood chips – biomass power plant (Tracy, CA)

8. Geothermal resource • Power from the center of the Earth • Power from hot liquids or hard rock formations • Electricity generated using turbine generators • Geothermal resource recycled or reinjected • Located primarily along the Pacific basin “ring of fire” • California, Nevada, Hawaii, Utah • Areas of high volcanic or tectonic activity • 90% of U.S. geothermal energy produced in California

9. Geothermal resource Geothermal field (central Turkey) Ormat Brady plant – geothermal energy (Reno, NV)

10. Geothermal resource Ormat geothermal energy plant (Krafka, Iceland) Ormat geothermal plants worldwide

11. Solar power • Electrical energy generated from the heat of the sun (“solar heat”) • Large scale installations in areas of consistent heat (e.g., deserts) • Electricity generated using turbine generators • Electrical energy generated from sunlight (“solar PV”) • Installations wherever there is consistent sunlight • Electricity generated using direct conversion through photovoltaic cells or materials • Increasing interest in new technologies and applications

12. Solar power Solar panels (Laguna Niguel, CA) Solar collectors (Graz, Austria)

13. Solar power Rooftop solar installation (St. Joseph’s) Parabolic collector field (Kramer Junction, CA)

14. Wind power • Power from the wind (and indirectly from the sun) • Electricity generated by “windmills” – wind turbine generators • Large scale installations in regions of moderately strong and predictable wind • Texas now the leader in U.S. wind energy capacity • Large windfarms (or wind parks) in California, upper Midwest, Hawaii, Pacific northwest • Recent advances in technology provide greater efficiency of WTGs

15. Wind power Whitewater Hill wind farm (San Gorgonio, CA) AB Energy wind farm (Tehachapi, CA)

16. Wind power Inside the nacelle Base of MBB 2 Mw WTG (Wilhelmshaven, Germany) Blade fabrication

17. Leasing and financing issues • Leasing or secured financing • Income tax incentives, feed-in tariffs (pricing subsidies), or a national portfolio standard (RPS) • Usefulness and monetization of state and local energy credits (RECs) • Usefulness and monetization of the electricity production tax credit • Tax equity financing • Partnership structures • Long-term extension of eligibility periods • Technological developments and opportunities • Financial and practical impediments and difficulties • Public policy initiatives (the “green century”)

18. Usefulness and monetization of state and local energy credits (RECs) • Trading and valuation of credits • Policy and political considerations • Unpredictability • Long-term usefulness or benefit • Relationship of operators with long-term financing companies

19. Transaction structuring concepts

20. Technological developments and opportunities • Continuing expansion of biomass conversion and combustion technologies • Animal tallow • Recycled vegetable oils and residue • Advanced solar PV materials • Price/capacity improvements • Expanded applications • Large capacity wind turbine generators

21. Financial and practical impediments and difficulties • Long-haul transmission capacity and availability • Siting and construction issues • NIMBY • BANANA • Coordination of public policies and incentives

22. Public policy initiatives (the “green century”) • Feed-in tariffs (energy price subsidies) • National portfolio standard • Freely tradable energy credits • Public education and attitudes

23. PV Considerations • Useful Life – 30 years + depending on technology • System Cost – Expected to continue declining for the foreseeable future • Subsidies must remain for continued growth (30% ETC, REC’s, State Rebates) • Supply of raw material – Supply of PV grade silicon still tight/expensive • Supply of PV Modules – Easing slightly with additional capacity continuing to come on-line • Varying opinions on rate of decline and duration of decline • Different rate of decline for different technologies • Modules typically 40% to 60% of system cost (installed) • Costs across the entire supply chain need to decline • Technology – Changes tend to be evolutionary, not revolutionary • Crystalline based modules still dominate market but losing share • Thin film gaining market share (less efficient, but cheaper to manufacture) • Efficiency slowly increasing for all technologies • Is the future thin-film, nano-technology, plastics, or other? • Will concentrating PV play a larger roll in the future? • Crystalline based modules expensive to manufacture

24. PV Considerations continued • Module manufacturers • Tier 1, tier 2, or tier 3 • Warranty – most are 20-25 years • Will the manufacturer be around in the future to honor warranty • Asia/China • Aggressive growth plans in place for both modules and PV grade silicon • Additional capacity expected to be the driver of future cost reductions • Current and Future Value • Cost Approach and Discounted Cash Flow Approach • Market Approach – Used market not yet established • Residual values driven by PPA, REC’s, future incentives, rate of decline in system cost (installed) • Cost to deinstall, ship, reinstall • Terms of up to 20 years

25. PV Considerations – continued • Future of PV – Critical Issues • Incentives must continue to make solar competitive until system costs decline significantly • Continued/Increased investment in R&D • Installed system costs must continue to decline to reach “grid parity” • Module efficiencies must be maximized • Standardized regulations – currently a patchwork of regulations • Education about solar’s benefits to a variety of audiences • Supply to meet demand

26. Contacts Lauren Hill Paul Bent Senior Vice President Principal Mesirow Financial Consulting, LLC The Alta Group, LLC (v) (304) 876-1358 (v) (562) 426-1000 (m) (240) 381-7493 (m) (562) 754-7744 (e) lhill@mesirowfinancial.com (e) pbent@thealtagroup.com Kristina Pekarek-Wilhite Senior Associate Mesirow Financial Consulting, LLC (v) (312) 208-0800 (e) kpekarek-wilhite@mesirowfinancial.com

27. Questions and Discussion Thanks for your participation.