Mr. John Joshi jjoshi@capitalfusionpartners 818-294-3381

1. Mr. John Joshi jjoshi@capitalfusionpartners.com 818-294-3381 Renewable Energy Financing and Securitization SECOND ANNUAL FARE CONFERENCE Orlando, Florida March 26th, 2010

2. John Joshi: Firm: CapitalFusion Partners Phone: 818.294.3381 Email jjoshi@capitalfusionpartners.com Contact Information

3. Disclaimer Notice This confidential presentation has been prepared for informational purposes only and is not an offer to buy or sell any security or instrument or to participate in any particular trading strategy. This presentation is based on information that is believed to be reliable. No representation is made that it is accurate or complete. Certain assumptions have been made arriving at any returns detailed herein. No representation is made that any of the returns indicated will be achieved. Changes to the assumptions may have a material impact on any returns detailed. Past performance is not necessarily indicative of future returns. Price and availability are subject to change without notice. CapitalFusion Partners, (“CFP”), will provide additional information if available on request.

4. Overview • A Potential New Asset Class : Renewable Energy Structures • Potential for Securitization in the Solar, Wind and other energy sectors

5. Challenges • Developing a new market creates numerous challenges • Standardizing documents • Origination of assets • Servicing of assets • Loan file documentation standards • Performance data • Systems and technology issues • Lien registration, assignment, enforcement • Bankruptcy protection vehicles • Tax and accounting guidelines for securitization • Rating methodologies • Development of investor base

6. Challenges • Lenders – Do they need capital markets funding? • Capital relief – do lenders need off-balance sheet financing? • Liquidity – do lenders need liquidity? • Cost effective – is the capital markets solution too expensive? • Investors – Is this asset class attractive to investors? • Opportunity – is it a long-term investment opportunity? • Pricing – can the risks be managed? • Regulatory – is there an appropriate regulatory treatment? • Credit – are there credible sources of credit enhancement? • Liquidity – will there be a viable secondary market?

7. Credit Process • Quantitative cashflow and scenario analysis using internally developed models: • Cashflow and waterfall modeling • Analyzing regulatory policy, historic and market implied loss profiles • Portfolio diversity and correlation among projects • A key goal is to minimize portfolio concentration and correlation while optimizing the portfolios with regard to credit, policy and market risks

8. Renewable Energy Finance – Securitization Rational • Capital markets provide a large, long term and liquid source of finance for infrastructure • Capital markets can be flexible and offer more flexible covenants than commercial bank debt • Longer tenors • Fixed and / or indexed rates • Third-party credit enhancement • Softer covenants • Green credentials allow structures to be more innovative • Minimum transaction size for public markets is $100 - $200+ million allowing a portfolio approach

9. Incentives are effectively backed by the US Government Static asset pool, no active management is required Scalable infrastructure, proven lease origination model Dependable technology with low cost insurance available Targeting high credit score customers Low variability natural resource with over 40 year observation history Resilient market for electricity even in uncertain economic times Credit transparency of involved public utility companies Dominance of federal monetary and tax incentives over system leasing cash flows Interconnection risks are small Fully utilize all cash and tax incentives available for customers thereby eliminating the high-cost/long-payback Potential to incorporate solar with little or no upfront cost Lower their monthly cost compared to grid power by running meter backwards Hedge against future electricity cost Solar lease company provides a turnkey system, including engineering, design, installation, monitoring, full maintenance and performance guarantee Investors can utilize tax incentives to achieve a healthy return on investments Benefits of Solar Securitization

10. Renewable Energy Finance – Securitization Basics ? • Debt and Equity financing • Portfolio of assets • Low correlation • Increased diversity • Credit enhancement • More efficient structure for Equity investors • Special Purpose Vehicle (SPV) with bankruptcy remoteness • De-linking of credit risk from asset originators • Time and Risk tranched securities • Potential for increased liquidity for investors • Efficient balance sheet financing • Financial return and Social Dividends (Carbon / Emission Credits)‏ • Potential to qualify as RECs under RGGI or VER under CCX

11. Renewable Energy Finance– A StructuredProject Capital Markets (Financial Institutions, Private Equity, Hedge Funds...)‏ Equity and/or Debt Ownership + Dividend and/or Principle + Interest Power Purchase Agreement ERUs / SRECs Global Carbon Market Cash Cash By-product: ERUs / SRECs Main product: Electricity Source : Fortis “Combining Project Finance with Trading ERU's

12. Renewable Energy Financing – Portfolio Approach to Financing • Portfolio of Wind, Geothermal and Solar farms Cash Cash Equity and/or Debt ERUs / SRECS Power Purchase Agreement Pooled Cash flow Global Carbon Market Class A Bond Class B Bond Equity By-product: ERUs / SRECS

13. Conduit Flowchart Solar Leasing Cos. Sell Leases* Leases Solar Projects Banks Conduit Securitization Market Loans/ Leases Sell Loans/Leases* Convert Construction to Permanent Loans Issueand Sell ABS** Sell as Whole Loans/Leases Sell Loans* Loans Specialty Finance Cos./Brokers Whole Loan Secondary Market *Mayormaynotretainservicing **Periodicseparateissuancesasaggregationlevelswarrant

14. Lease Lease $ Lease Payments $ Lease Payments Securitization Diagram – Stylized U.S. $Grant Lease Residential Host 1 $Proceeds $ Loan $ Lease Payments Securitization Vehicle (SPE) Indenture Trustee Owner SPE Issue ABS Note Residential Host 2 Pledge Lease Payments* Pledge Notes & Lease Payments* Residential Host N Tax Investor $ Equity Electric Power ABS $ Proceeds Tax Benefits & Profits** Lease Commercial Host 1 $ PPA Payments $ Lease Payments* Electric Power Strategic Investor Investors $ Equity Lease Utilities Commercial Host 2 $ PPA Payments Profits** $ Lease Payments* Electric Power 100% Owned Lease $ PPA Payments Commercial Host N $ Lease Payments* Operating Company Operating & Maintenance Contract *Includes PPA Payments **Subject to flip after tax benefits received b y Tax Investor

15. Conduit Management Trustee / Custodian Solar ServicerServices Leases Solar Customer CapitalFusionPartners as Manager of Conduit and Securitization Solar Customer Conduit InvestorProvides Capital Conduit AffiliatedSolar Operating CompanyOriginates, Buys and Manages Leases and Equipment InvestorProvides Capital Solar Customer Solar Leasing Cos.Originates Leases Solar Customer Securitization Markets Sell as Whole Lease/Loan toSecondary Markets Banks / ThriftsOriginates Loans / Leases Specialty FinanceCos./BrokersOriginates Loans / Leases DLA Serves as Legal Counsel for the Conduit and Securitization

16. Traditional Forms of Renewable Energy Project Financing • Corporate Balance Sheet • A growing number of companies are entering renewable energy business through acquisitions, joint development agreements and as independent developers • Structure Involving Institutional tax equity investors • If you have an investor with significant tax appetite, the tax equity is a relatively low cost financing option

17. How about Debt? • Debt has been a great source of leverage in wind deals, representing approx. 60% of the capital structure DSCR ratio of approx. 1.45 • Problem: getting debt investor on board The niche was most recently claimed by European commercial banks looking for diversification and more “green” exposure Current state of the markets raises questions about viability of this source of financing for new deals

18. Structural Incentives • Tax benefits (PTC, depreciation, ITC, Grant)‏ • RECs / SRECs • Price of Energy Senior Debt Energy Sales,PTC REC sales Equity - TAX Tax Benefits Equity - Strategic

19. RECs Prospects for trading REC arguably relate to the RPS policies in each given state

20. Upside potential through SREC sales • In compliance markets, prices range from $2 in TX to $55 in MA and $600+ in NJ • NJ solar projects cash flow components from SREC approaches 60% of the total cash flow available from a project March SREC Auction Prices Washington DC $290.00 Pennsylvania $250.00 Maryland $390.09 New Jersey $665.00

21. Equity Investors Timing of cash flows reflects different investment objectives

22. Model Parameters

23. Policy – Summary of Common International Renewable Energy Tax Incentives Used • Investment Tax Incentives : Large-scale applications: Provide income tax deductions or credits for some fraction of the capital investment made in renewable energy projects. • Investment tax incentives: customer-sited applications: Tax deductions or credits are offered for some fraction of the costs of renewable energy systems or equipment installed on residences and businesses. • Production tax incentives: Provide income tax deductions or credits at a set rate per kilowatt-hour produced by renewable energy facilities. • Property tax reductions: Owners of land or real property used for renewable energy production facilities can have their property taxes reduced or eliminated. • Value-added tax (VAT) reductions: Exempts producers of renewable energy from taxes on up to 100 percent of the value added by an enterprise between purchase of inputs and sale of outputs. • Excise (sales) tax reductions: Exempts renewable energy equipment purchasers from up to 100 percent of excise (sales) tax for the purchase of renewable energy or related equipment. • Import duty reductions: Reduces or eliminates import duties on imported equipment and materials used for renewable energy production • Accelerated depreciation: Allows investors in renewable energy facilities to depreciate plant and equipment at a faster rate than typically allowed, thereby reducing stated income for purposes of income taxes. • Research, development, demonstration, and equipment manufacturing tax credits: Tax credits are offered for up to 100 percent of the money invested by a corporation in renewable energy technology development, including the manufacturing processes • Tax holidays: Reduces or eliminates income, VAT, or property taxes for a temporary period of up to 10 years • Taxes on conventional fuels: Some countries tax the consumption of nonrenewable energy (this is most often a fossil fuels or carbon tax). The absence of this tax on renewable energy can act as an incentive to consumers to use or buy renewable energy (e.g. instead of energy from fossil fuels).

24. Policy – Effectiveness of Tax Policies • Must be of sufficient size, scope, and length to be effective in influencing renewable energy investment and consumption decisions • Should be tailored according to the stage of renewable energy industry development in a country • Must be carefully designed to account for interactions with other government policies and energy market conditions • May require other supportive policy initiatives to create and sustain a healthy renewable energy sector

27. Summary Key Elements for Long-Term Renewable Energy Portfolio • National Policy and Targets for Renewable Energy Portfolio Standards (RPS), Feed-in-Tariff (FIT) • Legislation flexibility • Long term mandatory targets • Stability of the policy framework • Flexibility in target setting across sectors • Ensure cost effective policies • Consideration of environmental and social aspects • Market Mechanisms • Fair Cost Sharing • Incentives for entrepreneurship among developers and providers • Incentives for financiers • Tradable Allowance / Renewable Certificates • Remove barriers to renewable energies deployment • Energy security

29. John Joshi CapitalFusion Partners LLC 818-294-3381 jjoshi@capitalfusionpartners.com Contact Us