Overview of Rooftop Solar PV Model 11713v2

Overview of Rooftop Solar PV
Green Bank Financing Model

Sponsored by
The Connecticut Clean Energy
Finance and Investment Authority
and
The Coalition for Green Capital
Developed by
Bob Mudge & Ann Murray, The Brattle Group
January 17, 2013
Copyright 2011 The Brattle Group, Inc.
www.brattle.com
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Disclaimer
Disclaimer:
Asfurtherdescribedintheexplanatorynotes,thisExcelfinancialmodel(theModel)wasdevelopedbyTheBrattle
Group,Inc. undertheauspicesoftheConnecticutCleanEnergyFinanceandInvestmentAuthority(CEFIA)tohighlightthe
potentialimpactofcapitalinputsandpublicincentivesonthecostofbehindthemetersolarphotovoltaicinstallationsat
aconceptuallevel.TheModelisbeingreleasedtothirdpartyusers(Users)tofacilitatecalculationsbysuchUsersbased
strictlyontheirownstipulatedassumptions.
TheModelisprovidedasiswithoutwarrantyofanykind,eitherexpressorimplied,includingbutnotlimitedtothe
impliedwarrantiesofmerchantabilityandfitnessforaparticularpurpose,andshallbeusedbyUsersattheirownrisk.
AlthoughtheModelpresentsaframeworkforperformingUserscalculations,itisnotintended,andshouldnotbeusedas
thebasisforinvestmentdecisions.NoUsershouldrelyontheModelsresultsasapredictionoffutureoutcomes;actual
eventsmaydiffersignificantlyfromthoseproducedbytheModel.
NeitherCEFIAorTheBrattleGroup,Inc. acceptanydutyofcaretoUsers,includinganyresponsibilityforanyUsersuseof
theModel.AlthoughneitherCEFIAnorTheBrattleGroup,Inc. areunderanyobligationtoprovideupdatestotheModel,
CEFIAretainstherighttochange/amendtheModelwithoutnoticetoUsers.
InnoeventshallCGC,CEFIAand/orTheBrattleGroup,Inc. beliableforanydamageswhatsoever,includingbutnotlimited
todirect,indirect,incidentalconsequential,lossofbusinessprofits,orspecialdamages,regardlessoftheformofaction,
whetherincontract,tort,orotherwise.
Contents
1. Background
2. Illustrative Base Case
3. Model Mechanics
4. Potential Impact of Green Bank Debt
1. Background
Focus on incremental benefits of Green Bank funding at project level
Based on illustrative specifications provided by CT Clean Energy

Finance and Investment Authority (CEFIA) and the Coalition for
Green Capital (CGC)
Model derives key metrics for behind-the-meter solar:

Specifications including:
Key metrics:
Installed costs
Retail cost [b]
Regional capacity factors [a]
Equity returns
State policies and incentives [a]
Capital structure including Green

Bank Debt
Installed capacity per dollar of

Green Bank Debt
[a] Initially shown for Connecticut.
[b] In the form of a 2013 levelized cost of electricity,

net of state incentives and RECs.
1. Background (Contd.)
2. Illustrative Base Case

Key Assumptions:
Aggregate portfolio of 20MW
Installed cost of $4.5/ Watt
25-year underlying project life
Regional capacity factors applied per NREL data
Operating costs modeled @ $27/ kW-Year
Annual degradation modeled at 0.5%
State incentives modeled at $0.225/ kWh for 6 years
Renewable Energy Credits (RECs) modeled at $0.030/ kWh under
financeable 15-year contract
6
2. Illustrative Base Case (Contd.)

3rdparty
ownership
CAPITALIZATION
Utility
(targetreturn=
15%)
Relianceon
TaxEquity
(targetreturn=
12%)
REC
Market
Behindthe
MeterHost(s)
ProjectOwner
(Fund)
Precedentof
CTSolar
Lease
Program
Federal
Govt.
Tax
incentives,
grants*
Commercial
Lenders
(emerging)
TaxEquity
Investors
Expectation
ofdebt
securitization
(interestmodeled
at6%)
StateGovt.
Equity
ProjectSponsor
*Subjecttofunding,legislation
* Assumed Structure Before Green Bank Loans

7
Potential
Backleverage
ITC

PercentageCostComponents
%ofCapitalCosts
100%
80%
40%
42%
60%
13%
40%
48%
GreenBankLoans
TaxEquity
44%
20%
0%
CommercialDebt
12%
Upfront
LifetimeCost
Capitalization (25Years)
8
DeveloperEquity

OPERATIONS
Utility
Behindthe
MeterHost(s)
StateGovt.
PPA/Lease
REC
Market
Performance
Based
Incentives
ProjectOwner
(Fund)
1.O&M
Federal
Govt.
Debtservice
2.DebtService
3. Capex/Rsvs.
Commercial
Lenders
(emerging)
4. TaxEquity
Allocation
TaxEquity
Investors
5. CashEquity
Allocation
ProjectSponsor
9
Potential
Backleverage
ITCand
accelerated
depreciation

Under above
assumptions,
reliance on:
State
Incentives
RECs
would hold
retail costs at
$0.210/ kWh
(without Green
Bank Debt)
(over25YearLife)
0.350
$perkWh(2013$)
Tax Equity
DerivationofRetailCost
0.300
Operations
CommercialDebt
0.250
StateIncent.
0.200
RECs
0.150
GreenBankLoans
TaxEquity
DeveloperEquity
0.100
NetRetailCost
0.050
AvgResidentialPrice
(CT)
AvgCommercialPrice
(CT)
10
3. Model Mechanics
Users can stipulate financing cost assumptions
Base Case before adding Green Bank Debt is shown below:
ProjectCapitalStructure
KEY FINANCING INPUTS
Maturity
KEY OUTPUTS
Target
Returns
(AT)
TotalDSCR
9.0%
Min
State Subsidies
Levelized
Costs
Avg
($/kWh)
2013$
0%
Debt
Commercial (not < 0)
40%
6.0%
1.35
Green Bank:
Subordinated
0.121
0%
15
0.0%
1.37
-
Tax Equity
48%
12.0%
0.037
Developer Equity
12%
15.0%
0.127
Total
100%
0.286
11
3. Model Mechanics (Contd.)

Users can stipulate revenue source assumptions:
ProjectRevenueSources($/MWh)
%
2013$/MWh Escalation
Levelized
Costs
($/kWh)
2013$
Capital
0.286
Operations
0.025
Gross
0.311
Less State Incentives
225.0
0.082
Less RECs
30.0
0.020
Net PPA/ Lease
210.1
0.210
Basic model calculation sets net PPA/ Lease rate sufficient to satisfy
capital cost requirements.
12

Base Case Cash Flow Summary
($M; Nominal Basis)
To Year 25
IRR Invest.
10
11
12
13
14
15
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
1.025
1.051
1.077
1.104
1.131
1.160
1.189
1.218
1.249
1.280
1.312
1.345
1.379
1.413
1.448
0.215
0.221
0.226
0.232
0.238
0.244
0.250
0.256
0.262
0.269
0.276
0.283
0.290
0.297
0.304
22.4
22.3
22.2
22.1
22.0
21.9
21.8
21.6
21.5
21.4
21.3
21.2
21.1
21.0
20.9
4 PPA/ Lease Revs. $M
4.8
4.9
5.0
5.1
5.2
5.3
5.4
5.5
5.7
5.8
5.9
6.0
6.1
6.2
6.4
5 State Incentives
$M
5.0
5.0
5.0
5.0
4.9
4.9
6 RECs
$M
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
7 Total Revenues
$M
10.5
10.6
10.7
10.8
10.8
10.9
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.9
7.0
8 Operations
$M
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.7
0.7
0.7
0.7
0.7
0.7
0.8
0.8
9 EBITDA
$M
10.0
10.0
10.1
10.2
10.2
10.3
5.4
5.5
5.6
5.7
5.8
5.9
6.0
6.1
6.2
10 Debt Service
$M
(36.4)
7.4
7.4
7.4
7.4
7.4
7.4
1 Inflation Index
2 PPA/ Lease
$/kWh
3 Elec. Sales
GWh
6%
11 Tax Equity
12
Pre-Tax
$M
(43.7)
2.1
2.2
2.2
2.2
2.3
0.1
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
0.3
13
Tax Impact
$M
27.1
3.0
6.6
2.5
(0.0)
(0.2)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
14
After tax
$M
(16.7)
5.1
8.7
4.7
2.2
2.1
0.0
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
12%
15 Developer Equity
16
Pre-Tax
$M
(10.9)
0.5
0.5
0.5
0.5
0.5
2.7
5.2
5.3
5.3
5.4
5.5
5.6
5.7
5.8
5.9
17
Tax Impact
$M
(1.7)
(2.1)
(2.1)
(2.1)
(2.2)
(2.2)
(2.2)
(2.3)
(2.3)
(2.4)
18
After tax
$M
(10.9)
0.5
0.5
0.5
0.5
0.5
1.1
3.1
3.2
3.2
3.3
3.3
3.4
3.4
3.5
3.5
15%
13

Under forgoing assumptions, Green Bank Debt could complement
commercial debt
ProjectCapitalStructure
KEY FINANCING INPUTS
Maturity
KEY OUTPUTS
Target
Returns
(AT)
TotalDSCR
9.0%
Min
State Subsidies
Levelized
Costs
Avg
($/kWh)
2013$
0%
Debt
Commercial (not < 0)
20%
6.0%
1.75
Green Bank:
Subordinated
0.060
20%
15
2.44
2.0%
0.042
Tax Equity
48%
12.0%
0.035
Developer Equity
12%
15.0%
0.102
Total
100%
0.239
14

with significant reduction in retail cost:
ProjectRevenueSources($/MWh)
%
2013$/MWh Escalation
Levelized
Costs
($/kWh)
2013$
Capital
0.239
Operations
0.025
Gross
0.265
Less State Incentives
225.0
0.082
Less RECs
30.0
0.020
Net PPA/ Lease
163.5
0.163
15

20% Green Bank Debt Case Cash Flow Summary
($M; Nominal Basis)
IRR Invest.
To Year 25
10
11
12
13
14
15
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
1.025
1.051
1.077
1.104
1.131
1.160
1.189
1.218
1.249
1.280
1.312
1.345
1.379
1.413
1.448
0.168
0.172
0.176
0.180
0.185
0.190
0.194
0.199
0.204
0.209
0.214
0.220
0.225
0.231
0.237
22.4
22.3
22.2
22.1
22.0
21.9
21.8
21.6
21.5
21.4
21.3
21.2
21.1
21.0
20.9
4 PPA/ Lease Revs. $M
3.8
3.8
3.9
4.0
4.1
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.9
5 State Incentives
$M
5.0
5.0
5.0
5.0
4.9
4.9
6 RECs
$M
0.7
0.7
0.7
0.7
0.7
0.7
0.7
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.6
7 Total Revenues
$M
9.5
9.5
9.6
9.6
9.7
9.7
4.9
5.0
5.0
5.1
5.2
5.3
5.4
5.5
5.6
8 Operations
$M
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.7
0.7
0.7
0.7
0.7
0.7
0.8
0.8
9 EBITDA
$M
8.9
8.9
9.0
9.0
9.1
9.1
4.2
4.3
4.4
4.4
4.5
4.6
4.6
4.7
4.8
10 Debt Service
$M
(18.1)
5.1
5.1
5.1
5.1
5.1
5.1
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1.4
1 Inflation Index
2 PPA/ Lease
$/kWh
3 Elec. Sales
GWh
3%
11 Tax Equity
12
Pre-Tax
$M
(43.6)
2.1
2.1
2.2
2.2
2.2
0.2
0.1
0.1
0.1
0.2
0.2
0.2
0.2
0.2
0.2
13
Tax Impact
$M
26.9
3.0
6.6
2.6
0.2
0.1
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
14
After tax
$M
(16.6)
5.1
8.7
4.8
2.4
2.3
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
12%
15 Developer Equity
16
Pre-Tax
$M
(10.9)
1.7
1.7
1.7
1.7
1.8
3.8
2.7
2.7
2.8
2.9
2.9
3.0
3.1
3.1
3.2
17
Tax Impact
$M
(1.3)
(1.6)
(1.6)
(1.7)
(1.7)
(1.7)
(1.7)
(1.8)
(1.8)
(1.8)
18
After tax
$M
(10.9)
1.7
1.7
1.7
1.7
1.8
2.5
1.1
1.1
1.1
1.2
1.2
1.3
1.3
1.3
1.4
15%
16
4. Potential Impact of Green Bank Debt

For Illustration, Green Bank Scenarios defined per capital structure
scenarios shown below:
CapitalStructure
PercentofCapital
120%
100%
Commercial
Debt
GreenBank
Debt
TaxEquity
80%
60%
40%
Developer
Equity
20%
0%
0%
10% 20% 30% 40%
GreenBankDebtasaPercentageofCapital
17
4. Potential Impact of Green Bank Debt (Contd.)
Base Case $0.210/ kWh retail cost shown at upper left in table
below
Alone, or with help from reductions in installed costs, Green Bank

Debt could achieve parity with retail rates:
Retail Cost ($/kWh) as a Function of Green Bank Debt and Installed Cost
% Green Bank Debt in Capital Structure
Installed
Cost ($/W)
Other Assumptions:
0%
10%
20%
30%
40%
Developer equity return:
15%
4.5
0.210
0.187
0.163
0.140
0.117
Tax equity return:
12%
4.0
0.174
0.154
0.133
0.112
NA
Total leverage:
40%
3.5
0.139
0.121
0.103
0.085
NA
Commercial debt int.:
6%
3.0
0.103
0.088
0.072
0.057
NA
15-Year RECs:
$0.030/ kWh
6-Year State incentives:
$0.225/ kWh
Cells with retail cost < average 2011 CT retail price escalated to 2013 ($0.190/ kWh) are shaded
18
Green Bank Debt could help take pressure off State incentives
Retail Cost ($/kWh) as a Function of Green Bank Debt and State Incentives
Other Assumptions:
State
Incentives
per kWh
Installed cost:
$4.5/W
15%
0.117
Tax equity return:
12%
0.177
0.155
Total leverage:
40%
0.215
0.192
6%
15-Year RECs:
$0.030/ kWh
0%
10%
20%
30%
40%
0.300
0.172
0.149
0.126
0.103
NA
0.225
0.210
0.187
0.163
0.140
0.150
NA
0.224
0.201
0.075
NA
NA
0.238
19
as well as REC prices:

Retail Cost ($/kWh) as a Function of Green Bank Debt and REC Prices
Other Assumptions:
REC Prices
per kWh
0%
10%
20%
30%
40%
Installed cost:
$4.5/W
0.045
0.199
0.175
0.152
0.129
0.106
15%
0.030
0.210
0.187
0.163
0.140
0.117
Tax equity return:
12%
0.015
0.221
0.198
0.175
0.152
0.129
Total leverage:
40%
0.233
0.209
0.186
0.163
0.140
6%
$0.225/ kWh
20
At given levels of retail cost, Green Bank Debt can help developers
achieve target returns:
Developer Return (%) as a Function of Green Bank Debt and Retail Cost
0%
Retail Cost
per kWh
Other Assumptions:
10%
20%
30%
40%
Installed cost:
$4.5/W
0.230
17.0%
20.2%
24.7%
30.8%
38.6%
Tax equity return:
12%
0.180
12.0%
14.2%
17.4%
22.4%
29.5%
Total leverage:
40%
6%
15-Year RECs:
$0.030/ kWh
$0.225/ kWh
0.130
NA
8.1%
9.9%
12.9%
18.5%
0.080
NA
NA
NA
NA
NA
Cells with developer return > assumed target (15%) are shaded
21
Depending on dollars deployed and role in capital structure, Green

Bank Debt could support significant MWs of solar pv installation:
MWs Installed as a Function of Green Bank Debt Deployed
Other Assumptions:
Retail Cost
Green
Bank Debt
Deployed
($M)
0%
10%
20%
30%
40%
Installed cost:
$4.5/W
0.210
0.187
0.163
0.140
0.117
15%
100
220
110
74
55
Tax equity return:
12%
75
165
83
55
41
Total leverage:
40%
50
110
55
37
28
6%
25
55
28
18
14
15-Year RECs:
$0.030/ kWh
$0.225/ kWh
22

Overview of Rooftop Solar PV Model 11713v2

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Overview of Rooftop Solar PV

Green Bank Financing Model

Focus on incremental benefits of Green Bank funding at project level

Based on illustrative specifications provided by CT Clean Energy

Model derives key metrics for behind-the-meter solar:

Retail cost [b]

Regional capacity factors [a]

State policies and incentives [a]

Capital structure including Green

Installed capacity per dollar of

[a] Initially shown for Connecticut.

[b] In the form of a 2013 levelized cost of electricity,

2. Illustrative Base Case

2. Illustrative Base Case (Contd.)

* Assumed Structure Before Green Bank Loans

2. Illustrative Base Case (Contd.)

2. Illustrative Base Case (Contd.)

2. Illustrative Base Case (Contd.)

Users can stipulate financing cost assumptions

Base Case before adding Green Bank Debt is shown below:

3. Model Mechanics (Contd.)

Less State Incentives

Net PPA/ Lease

3. Model Mechanics (Contd.)

4 PPA/ Lease Revs. $M

3. Model Mechanics (Contd.)

3. Model Mechanics (Contd.)

Less State Incentives

Net PPA/ Lease

3. Model Mechanics (Contd.)

4 PPA/ Lease Revs. $M

4. Potential Impact of Green Bank Debt

10% 20% 30% 40%

4. Potential Impact of Green Bank Debt (Contd.)

Alone, or with help from reductions in installed costs, Green Bank

Developer equity return:

Tax equity return:

Commercial debt int.:

6-Year State incentives:

4. Potential Impact of Green Bank Debt (Contd.)

% Green Bank Debt in Capital Structure

Developer equity return:

Tax equity return:

Commercial debt int.:

4. Potential Impact of Green Bank Debt (Contd.)

as well as REC prices:

% Green Bank Debt in Capital Structure

Developer equity return:

Tax equity return:

Commercial debt int.:

6-Year State incentives:

4. Potential Impact of Green Bank Debt (Contd.)

Tax equity return:

Commercial debt int.:

6-Year State incentives:

4. Potential Impact of Green Bank Debt (Contd.)

Depending on dollars deployed and role in capital structure, Green

% Green Bank Debt in Capital Structure

Developer equity return:

Tax equity return:

Commercial debt int.:

6-Year State incentives:

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