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Process/Financing Issues

Process/Financing Issues. PROJECT FINANCE ISSUES UNIQUE TO WORKING WITH USG: Developer creates special purpose entity (SPE) SPE responds to USG request for proposal (RFP) with respect to power purchase agreement (PPA) and land lease

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Process/Financing Issues

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  1. Process/Financing Issues PROJECT FINANCE ISSUES UNIQUE TO WORKING WITH USG: • Developer creates special purpose entity (SPE) • SPE responds to USG request for proposal (RFP) with respect to power purchase agreement (PPA) and land lease • USG awards land lease and PPA pursuant to competitive bids • Key underwriting hurdles include the following • Project level debt (Stand still provisions, Termination for convenience, etc.) Basic Partnership Flip Structure Basic Lease Pass-Through Structure Sale Leaseback Structure

  2. Basic Partnership Flip Structure 1% Pre Flip 95% Post Flip 99% Pre Flip 5% Post Flip Limited Partner (Tax Equity Investor) Project Sponsor Power Buyer (USG) Ground Lessor (USG) EPC 100% Deferred Developer Fee SPE OpCo Developer (Owns and operates facility) Partnerships for federal income tax purposes Tax paying entities Denotes an ownership interest Cash flows from non-owners

  3. Basic Lease Pass-Through Structure 100% 1% Pre Flip 95% Post Flip Limited Partner (Tax Equity Investor) Project Sponsor Power Buyer (USG) Ground Lessor (USG) 70% Deferred Developer Fee 99% Per Flip 5% Post Flip SPE “OpCo” Master Lease SPE “OwnCo” Developer 30% “Tax Credit Entity” “Depreciation Entity” Partnerships for federal income tax purposes Pass-through ITCs Tax paying entities Denotes an ownership interest Cash flows from non-owners

  4. Sale Leaseback Structure Ground Lessor and Power Buyer (USG) $ Single Member LLC (Lessor) Investor 100% interest Lease Payments Lease Agreement Constructed Project PPA/Lease Payments Purchase & Sale Agreement Power SPE - Single Member LLC (Lessee ) SPE OpCo $ Project Sponsor Lease Agreement 100% interest

  5. Contact Information Tony Grappone Novogradac & Company LLP 101 Arch Street, 10th Floor Boston, MA 02110 Tel:   617.449.3030 Fax:  617.330.1922 Tony.Grappone@novoco.com www.novoco.com

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