An Overview of the Development of a Renewable Energy Project

1. An Overview of the Development of a Renewable Energy Project And the 5 Major Milestones to Achieve Financing By Robert Hunter Director of Operations, Green Coast Energy Phone: 386-747-3741 rhunter@greencoastenergy.org

2. Milestone 1: The Concept • What technology, what fuel type? • Biomass, wind, solar, waste heat, etc • What State/County/City? • Choice of state will be contingent upon state renewable policies & permitting requirements • The Business Model/Pro Formas • How much will it cost? Is it cost-feasible?

3. Milestone 2: The Location • Local support • Zoning--generally Heavy Industrial • Rail and/or highway access • Size • Interconnection with local utility • Permitting--DEP, EPA, FERC, etc

4. Milestone 3: The Purchased Power Agreement • Primary source of revenues, most important part of a successful project -And the part that the PSC has the most ability to make a difference • Term • Capacity payments • Energy payments • Fixed energy payments -Mitigates fuel price volatility to customers -Makes financing more feasible due to less uncertainty in revenue • PSC Approval

5. Milestone 4: The Fuel Supply • Heat rate of fuel type, in BTU's per ton • Tons required per day to operate plant • Tipping fees from fuel suppliers • Cost of fuel preparation (cleaning, etc) Note: This primarily describes an example biomass/waste-to-energy project. A solar or wind project would not face these same issues; either the resource is or is not there, and no contracts must be signed to utilize the sun or wind.

6. Milestone 5: The EPC Contract • Sign turnkey agreement with engineering firm that specializes in EPC • Or, a very experienced Developer's Engineer could purchase all the equipment from different manufacturers (a boiler from Vendor A, a turbine from Vendor B, etc) • Total cost to install per KW • Construction time frame

7. The 5 Steps are Completed: Now What? • To obtain financing, the renewable project must demonstrate • Enough revenues to meet a debt coverage ratio • An Internal Rate of Return that is satisfactory to equity investors • Debt vs Equity: The Financing Mix • High level of competition for equity funding from other states…required rate of return often 12%-30%, higher when more projects competing

8. What Can the Public Do to Help Bring Renewables to Florida? • Understand the full costs of NOT having renewable energy (pollution, dependency, upward-trend price volatility) • Understand the value that renewable energy brings in future price stability and environmental conservation • Keep these in mind if the price/kwh of renewables is initially higher than fossil fuels

9. Gas Prices Illustrated

10. What Can the PSC Do to Help Bring Renewables to Florida? • The PSC has great influence over the most key part of the renewable project: the Power Purchase Agreement. • Staff and Commission has been working diligently for some time, and has recently adopted a rule that makes great progress. • Now, it is up to the PSC to enforce this rule and require Standard Offer Contracts to fairly compensate renewable providers. • Contracts must provide enough revenues to cover expenses, and offer sufficient return to equity investors.

11. The Bottom Line • If the PSC requires and approves Standard Offer Contracts from the IOU’s as previously mentioned, then renewable energy will blossom and thrive in Florida. • This will encourage financiers to bring their investment money to FL, and provide environmentally-friendly, price-stable electricity to the customers. • Florida becomes a national LEADER in renewable energy, and a paradigm for other states.

12. Questions?