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IPED Financing Solar Energy Conference May 21 & 22, 2009 The Hotel Monaco in Alexandria, VA.

CASE STUDY. IPED Financing Solar Energy Conference May 21 & 22, 2009 The Hotel Monaco in Alexandria, VA. Pure Power Distribution, Inc. Agenda. About Pure Power Distribution Opportunity: Solar Energy Market Analysis Product: Mobile Solar Power Systems™ (Case Study) How It Works

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IPED Financing Solar Energy Conference May 21 & 22, 2009 The Hotel Monaco in Alexandria, VA.

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  1. CASE STUDY IPEDFinancing Solar Energy Conference May 21 & 22, 2009 The Hotel Monaco in Alexandria, VA. Pure Power Distribution, Inc.

  2. Agenda • About Pure Power Distribution • Opportunity: Solar Energy Market Analysis • Product: Mobile Solar Power Systems™ (Case Study) • How It Works • Financing Strategies • Bringing Product to Market

  3. Agenda • About Pure Power Distribution • Opportunity: Solar Energy Market Analysis • Product: Mobile Solar Power Systems™ (Case Study) • How It Works • Financing Strategies • Bringing Product to Market

  4. Who We Are • Pure Power Distribution (PPD) delivers a ruggedized mobile solar generator to the marketplace via a robust marketing, sales, manufacturing, distribution and financing platform • Our mission: Help business De-carbonize by providing clean energy alternatives to fossil fuel-burning products • Our promise: We supply reliable, clean power at cost parity to your current carbon-based fueled power supply. Close-up of poly-crystalline solar panels

  5. PPD Values: Triple Bottom LineCase Study – Unmet need – what do we need to deliver for a clean or hybrid power system to be received by market • Must deliver these bottom lines for market penetrations: • Financial benefits • Social benefits • Environmental benefits

  6. Financial Bottom LineUnmet need must be met in a cost competitive fashion • Must be costs competitive with fossil fuel alternatives---cost parity is key market penetration factor • Challenges---design and assembly costs high/ solar panels take a lot of real estate for power generated • Potential Cost equalizers • Sec. 48 Tax Credits • Bonus Depreciation and short life depreciation • Grants in Lieu of ITC under ARRA (2009) • No fueling costs • Less maintenance

  7. Social Bottom Line • Solar helps expand the green economy by: • Providing green collar jobs – engineering, manufacturing, sales, finance, etc. • Improving job site conditions • Encouraging energy reductions • Grid • Foreign oil Powering construction at Wildlife Care Center Society for the Prevention of Cruelty to Animals (SPCA), San Luis Obispo, CA

  8. Environmental Bottom Line(our product goals:) • Assist business in “De-carbonizing ” activities • No emissions, GHG • No fuel or lubricant spillage • No drilling or transporting of foreign oil • No fumes • No noise • “Reducing emissions from diesel engines is one of the most important air quality challenges facing the country.” • US Environmental • Protection Agency

  9. Team World Agricultural Expo“Tulare, CA

  10. Board of Directors Norris Lozano CEO and President, PPD Over 25 years experience in building and leading businesses, syndicating over $1 billion in tax credit transactions, large commercial lending transactions, business financing, and running manufacturing companies. Board of ecoAmerica. Chris Wheaton CFO and COO, PPD CPA. Founded Knightsbridge Solutions leading its financial services practice grow to over $100mm in revenue.  The firm was acquired by Hewlett-Packard Corporation in 2007. Price Waterhouse in both auditing and consulting Capacities. Scott Chaplan Executive Chair,PPD A pioneer in developing environmentally sustainable real estate projects in the inner city. Created Urban Group of Companies, an integrated multi-service firm with over $1 billion in real estate transactions and lines of affiliated businesses. Bill Hayward, CEO, Hayward Corporation CEO of one of the largest privately held construction supply companies in the US. Under Bill’s leadership, Hayward was first supplier to provide FSC products, first to mainstream FSC, and first to build a LEED Gold manufacturing facility in the US. Board Chair for Forest Stewardship Council (FSC).

  11. Senior Management Team Norris Lozano CEO and President • Over 25 years experience in tax credit finance, business law, and entrepreneurial activities • Over $1 billion in tax credit transactions, large commercial lending transactions, business financing, and running manufacturing companies • Gap financing for over $650.0 million in green buildings from LEED Silver to Platinum, • ~$500.1 million in tax credit investment funds, • Consulted on $645.5 million in New Markets Tax Credits allocation • Closed first mobile solar power Investment Tax Credit fund in less than 30 days • JD; Southern Methodist University School of Law • BA, Political Science; University of Texas • Member, Texas State Bar • Licensed to practice before U.S. Tax Court • Board member: ecoAmerica, Hayward Corporation, Environmental Media Association.

  12. Senior Management Team Tom Schnugg EVP Strategy and Products 22 years of experience in global sales, marketing and product management. Introduced over 20 products titles including those in utilities, telecommunications, water and wastewater. Morgan Hunt, EVP Operations Morgan Hunt manages Operations for Pure Power Distribution including product development and internal process flow. Mr. Hunt has over fifteen years of experience in data warehousing, financial management, accounting, and accounting systems for core and supporting financial processes Steven J. Spielberg VP, Compliance MBA. Tax credit affordable housing development, Loan Officer with E*TRADE Financial and a Consultant in IBM Global Mid-Market Business Consulting group.  Norris Lozano CEO and President Over 25 years experience in building and leading businesses, syndicating over $1 billion in tax credit transactions, large commercial lending transactions, business financing, and running manufacturing companies. Scott Chaplan Executive Chairman A pioneer in developing environmentally sustainable real estate projects in the inner city, Created Urban Group of Companies, an integrated multi-service firm with over $1 billion in real estate transactions and lines of affiliated businesses. Chris Wheaton CFO and COO CPA. Founded Knightsbridge Solutions leading its financial services practice grow to over $100mm in revenue.  The firm was acquired by Hewlett-Packard Corporation in 2007. Price Waterhouse in both auditing and consulting capacities.

  13. Team- continued David Watson - VP Sales 15 years experience, senior sales positions at ASI International, British Telecom, Hitachi Data Systems and MetaGroup. Mike Kalweit - Sales Engineer Lead sales engineer with 12 years experience of design and practical engineering experience in the solar energy and telecommunications industries. Steven Brunk - VP, Investor Relations 17 years experience in corporate finance, venture and hedge funds, corporate development, and real estate syndication, having raised tens of millions of dollars in highly successful projects across the spectrum. Jeff Allenstein, Sales Director Over 20 years experience in sales and sales management. Focused on securing and building new markets. Christopher Smith VP, Marketing 6 years in tax credits, 12 years in Marketing. Co-creator, Community Impact Reports, a comprehensive financial, social and environmental study of New Markets Tax Credits projects. Leif Regvall - VP, Tax Credits Over 20 years in tax credit finance, managed project transactions valued at over $300 million. Focused on rooftop solar Stephanie Cohen- VP Development, General Counsel Lawyer with 10 years legal and business development experience in entertainment industry. Danielle Collins – TransportationLogistics Comes to Pure Power with background in logistics management, policy compliance and problem solving for large entertainment transportation and logistics company, managing fleet of 65 vehicles.

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  15. Agenda • About Pure Power Distribution • Opportunity: Solar Energy Market Analysis • Product: Mobile Solar Power Systems™ (Case Study) • How It Works • Financing Strategies • Bringing Product to Market

  16. Abundant Power Source • “Silicon is the second-most-abundant element in the earth’s crust.” • Fast Company • “Scientists have confirmed that enough solar energy falls on the surface of the earth every 40 minutes to meet 100 percent of the entire world's energy needs for a full year.” • Al Gore

  17. Renewable Energy Use Predictions Between 2008 and 2030, renewable electricity generation is expected to experience a 4.4 percent compound annual growth rate, compared to 1.2 percent for overall electricity consumption. – The State of Green Business 2008; Makower, Joel, et al, Greener World Media

  18. Explosive Industry Growth • “Solar is a $13 billion industry today. It will hit $40 billion by 2012, unless it continues to exceed forecasts, as it has over the past five years.” • Fast Company, December 2008

  19. Size of Off-Grid Renewable Energy Market Top Down: • The current world-wide off-grid energy market is 10,000 megawatts per year • Only 500 megawatts is provided by clean sources (PV 3%, Wind/Water 2%) • Off-grid growing 2x Grid • The remaining 9,500 megawatts is provided by diesel generators

  20. Market Size (continued) Two Mobile Solar Power Systems provided all power for the inaugural event for EnXco wind farm, Solano County, CA February 2008 Bottom up: • ~100,000 portable diesel gen-sets are sold in the US annually • Average diesel gen-set cost is $5,000 • Current US Market Size is $5.5+ billion annually: • > purchase price $500M+ annually • > Fuel cost > $5.0B+ spent on fossil fuel of 5 years

  21. Market TimingCase Study AnalysisWho is the market….what are there perceptions and needs?How do we identify these needs…who do we work with to understand individual and business perceptions?What are the market place drivers….values, needs and government……

  22. American Environmental Values • Over 80% of Americans worry about the environment • Specifically: • Poisons in the environment • Asthma • Health in general • The well-being of future generations • 66% of Americans believe global warming will affect them in their lifetimes • 45% believe global warming is a bigger threat than terrorism Source: American Environmental Values Survey 2006

  23. ecoAmerica An environmental non-profit that uses psychographic research, strategic partnerships and engagement marketing to shift personal and civic choices of environmentally agnostic Americans. Identifies underlying concerns, and develops programs to engage people on environmental and climate change solutions with measureable results incubates, launches and manages programs that engage Americans and connect them to the environment.

  24. Environmental Media Association Coordinated effort to effect environmental change through television, film and music Green Seal Guidelines and Awards Greening Plotlines and Characters Corporate World Eco Salons, Seminars and Educational Briefings Celebrity Role Modeling Green Light Newsletter

  25. Product Cycle= Ahead of the Curve *

  26. Renewable Energy IncentivesLocal, State and Federal Incentives Governor Arnold Schwarzenegger, visiting with inventor of the Mobile Solar Power System at the Women’s Conference, Los Angeles, 2008

  27. Renewable Energy Incentives Federal: IRC Section 48 Solar Investment Tax Credits (ITC) ARRA Grants in Lieu of Tax Credits ARRA: multiple renewable energy stimulus programs

  28. IRC Section 48 Investment Tax Credits October 2008 extended for 7 years Solar Investment Tax Credits Against passive income for most, all income for certain taxpayer types (change in AMT rules) 30% of basis of solar property As soon as the unit is placed in service the tax credit is triggered Accelerated depreciation: 100% depreciation 5 years

  29. H.R. 1603 American Recovery and Reinvestment Act (ARRA) February 2009 Grants-in-lieu of tax credits 30% of basis Grants to solar products already in service Accelerated depreciation still applies (100% in 5 years) Grants in 60 days after application

  30. Incentives (continued) State of California (e.g.) California Solar Initiative AB 32 Western Regional Climate Initiative Regional Emissions Markets Renewable Portfolio Standards in 25 states Voluntary RECs

  31. A.B. 32 Source: Element Markets.com Requires CA to reduce greenhouse gas emissions (GHG‘s) to 1990 levels by 2020 Requires the Air Resources Board (ARB) to take an economy-wide approach to reducing emissions Is anticipated to regulate all major emitting sectors using a cap-and-trade system. 20% by 2010 33% by 2020

  32. Western Regional Climate Initiative Utah, New Mexico, Arizona, Washington, Oregon and British Columbia to form the Western Regional Climate Action Initiative. The partnership aims to reduce aggregate emissions 15 percent below 2005 levels by 2020

  33. Regional Emissions Markets • “…when a facility reduces emissions or shuts down, ERCs can be created.” • Companies looking to build new facilities with the potential to emit above certain thresholds must secure ERCs from the market prior to receiving a permit to construct. Arose from federal New Source Review. Enforced by the EPA Any firm building or expanding a facility emitting criteria pollutants above a pre-defined threshold in certain regions of the country must purchase ERCs.

  34. Voluntary RECs Have been traded as an alternative methodology for reducing carbon dioxide (CO2) emissions. Where utilities are not already obligated to purchase RECs under an RPS or are not offering green energy, RECs are being sold to willing buyers. e.g.: EPA’s Green Power Purchasing Program Participants include Fortune 500 companies, federal, state and local government agencies, and universities Have offset from 4% to 100% of their conventional electricity usage In the July 2007 report, the top 25 members of the Green Power Partnership offset 5,906,432,631 kWh of conventional electricity.

  35. Agenda • About Pure Power Distribution • Opportunity: Solar Energy Market Analysis • Product: Mobile Solar Power Systems™ (Case Study) • How It Works • Financing Strategies • Bringing Product to Market

  36. Mobile Solar Power System National Wildlife Federation “Chillout” shoot; Big Vision Studios, Burbank CA

  37. Market TimingCase Study Analysis---conclusionsWho is the market….what are there perceptions and needs?----Market needs clean or hybrid off grid solutionsHow do we identify these needs…who do we work with to understand individual and business perceptions?Perception is not cost affordable…design to leasing model.What are the market place drivers….values, needs and government……Government drivers are rapidly increasing

  38. The PPD Mobile SolutionResponse to Unmeet Market Needs • A ruggedized, reliable, superior design portable solar generator available in 5kW, 10kW and 18kW power ranges. • Makes clean energy available to the marketplace at a off-grid cost parity to current fossil fuel solutions. • Mitigates new product risk by including product maintenance, service and technology updates at no additional cost. Powering refreshment stand Sierra Nevada Brewing Co, Chico, CA

  39. Mobile Solar Power Systems • Portable solar power generators in 5 kW, 10 kW, 18 kW systems • A significant alternative to traditional diesel generators • Significant benefits compared to diesel • No fumes/odor • No noise • No consumption of fossil fuels • Limited maintenance • Lower long-term cost • Easy to use • Simply tow to site, deploy panels and plug in

  40. What is the Business Problem Solved? Many organizations rely on off- grid portable power, but fossil fuel generators come at a high social, environmental and financial cost (pollution, noise, etc.) Demand • Businesses currently seeking a portable and reliable clean energy solution include: • Movie and TV production • Event Production • Agriculture • Construction • Military/Emergency Response • Current demand drivers include: • Government regulation (i.e., AB32) • California Air Resources Board • Expanding Noise Regulation • Barriers to Purchase • Portable renewable energy solutions are a new innovation. • Capital outlay of solar vs. carbon solutions (diesel gen-set) are significantly higher. • Field reliability includes a new set of technologies • Government tax incentives are not well understood or utilized. • Grants are new • Solution: Leasing model

  41. Market Opportunities • Clean Energy • Our secondary competitors are those currently selling mobile solar products. Based upon our research, this provider market consists of small regional manufactures with low visibility and consumer awareness. A sampling of the competitive products:  • Carbon Based Our primary competitors are those currently selling, renting and leasing fossil-fuel-based, 5 – 20KW generators to commercial entities The top five brands of all generators sold through a dealer/distributor channel are: • Cummins Onan (27%) • Kohler (22%) • Generac (18%) • Caterpillar (15%) • Honda (15%) Source: Power Systems Research, 2003

  42. Market Differentiators for PPD PPD battery technology allows storage of power and many hours of use after dark Patent pending on all trailer models;---Leasing of systems with services Tax credit syndication model; Stimulus Package - Grant Process; Vendor alliance with GE; participant in GE Innovation program; Vendor alliance with Environmental Media Association (EMA): MSPS is the only EMA certified green portable energy product.

  43. Agenda • About Pure Power Distribution • Opportunity: Solar Energy Market Analysis • Product: Mobile Solar Power Systems™ (Case Study) • How It Works • Financing Strategies • Bringing Product to Market

  44. How It Works- Solar Fuel 1. 2 1. 3 Solar Energy (DC) strikes solar panels (1), creates electric current DC current is brought through the Charge Controller (2) Current flows from Charge Controller to Battery (3) and is stored as DC

  45. How It Works- Fuel to Power 4 5 Battery power is drawn through the Inverter to convert it from DC to AC power User plugs into AC power outlets and uses from 5 kW to 18kW of pure sine wave power for up to 18 hours depending on load

  46. Target Vertical Markets

  47. Target Vertical Markets Equipment Rental Companies Construction Entertainment/Events Agriculture Disaster/Emergency Equipment Leasing - Long term

  48. System in Applied Use: Construction • Construction of 17,000 sq/ft building • One 10kW unit powering a remote building site including: • 2 masonry saws • 2 spider boxes with multiple compressors and tools • 8 to 10 hours per day, 6 days per week • Key Benefits: • No generator refill requirement for this remote location • Fuel cost savings • More productive work environment • Compliant with local noise restrictions • Green energy used to build green building

  49. Construction Clint Eastwood’s new house Northern CA 2009 Habitat for Humanity, Earth Day event Oakland, CA 2009

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