Presented by Kaylynn Kim, Esq.

Managing Partner Tierra Global Advisors/Stern Brothers

There are currently 13,100 megawatts (MW) of large-scale solar projects scheduled in the US by the end of 2012, with many more smaller projects also scheduled. These projects are typically financed through project finance strategies that combine debt financing, tax equity investments (described later in this presentation), and owner/sponsor equity investments. There are currently opportunities in the US solar energy project market that could provide investment returns and tax efficiencies to US taxable corporations with stable long-term taxable income. The market for this opportunity in tax equity investments alone was estimated to be $3 billion in 2010, and growing for the next few years. Opportunities to invest at attractive projected returns may decrease as the sector grows more mature.

The US solar market grew from almost nothing in 2000 to a cumulative 2 GW (2000 MW) in grid-tied photovoltaic (PV) installations by 2010. The US solar PV market ranks #4 in the world, after Germany, Spain, and Japan. Globally, renewable energy produced 19% of the 2009 total energy consumption, of which solar energy is a very small fraction. Grid-tied solar PV, however, increased the fastest of all renewable technologies, with a 60-percent annual average growth rate for the five-year period from 2004 to 2009.

* http://www.ren21.net/Portals/97/documents/GSR/REN21_GSR_2010_full_revised%20Sept2010.pdf

Factors contributing to the growth of the US solar markets are:

Heightened awareness about global climate changes and the negative impact of fossil fuel energy. Concerns about US national security issues post-911 given reliance on oil from the Middle East. Federal /State/Local legislative (mostly in tax incentives) support for renewable energy. Establishment of Renewable Standard Portfolio at State and Local levels Job creation potential There is an established market of participants that take advantage of these favorable tax treatments tax investors that are now seeking opportunities in the solar market.

*http://irecusa.org/wp-content/uploads/2010/10/Sherwood-IREC Oct2010.pdf

The US federal government has various tax incentives: The Energy Tax Act of 1978, established the federal Investment Tax Credit (ITC) to aid the financing and build-out of renewable energy projects. The federal Production Tax Credit was enacted in 1992, and is a per/kw hour credit for electricity provided by renewable energy (solar is currently excluded). The Modified Accelerated Cost Recovery System (MACRS) enables commercial and industrial owners to accelerate the depreciation of the renewable energy equipments. The Emergency Economic Stabilization Act (2008) extended the solar ITC by 8 years to 2016. The American Recovery and Reinvestment Act (2009) and the extension law that was passed in December 2010 allow for a cash grant in lieu of the ITC for new renewable energy projects which start construction by the end of 2011. States: Some states and local municipalities provide additional incentives to investors in the form of production-based incentives (PBI), feed-in-tariffs (FIT) and/or solar renewable energy credits (SREC).
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Solar equipments produce electricity, which are then sold to utility companies or end-users, typically through a solar power purchase agreement or a sale leaseback arrangement

The solar services provider will typically establish a special purpose entity/ Delaware LLC as the Project Company. The Project Company is the legal entity which will enter into the various contracts. Capital investments are sourced and used in the following manner:

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There are three sources of revenue to the project company. (1) Revenue from sales of electricity according to the power purchase agreement. (2) Other production-based incentives (PBI) offered by state and local municipalities. (3) Sales of solar renewable energy credits (SREC).

There are two sources of tax benefits to the project company.

(1) Investment Tax Credits (ITC) that can be deducted from taxable income. The ITC is calculated as 30% of the cost of eligible solar property. (2) Accelerated depreciation (over 5-years). Depreciation is calculated on 85% of the cost of eligible solar property.

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New Markets Tax Credit (NMTC) EB-5 Immigration Visa Investments Municipal bonds (tax-exempt and non-tax exempt bonds) DOE Loans and Loan Guarantee Programs Department of Agriculture Loan Guarantee Programs under 9003

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Among the various risks to a potential solar projects and its participants are: Legislative/regulatory/tax risks Credit risk of the power purchaser Performance risk of the solar service provider and other service providers to the project company. Climate risk

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Tract Records Capitalization of the Sponsor PPA (long term contract with investment grade off taker) Long Term Contract Investment Grade Off Taker Limited Assignment Termination Clause in case non-performance Hell or high water clauses Separate SREC contracts (in New Jersey Market)

Permitting, Siting, Entitlements Equipments (quality) Project Proforma

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Kaylynn L. Kim, Esq.

Kaylynn Kim is Managing Partner of Tierra Global Advisors, LLC, a fullservice financial advisory firm specializing in renewable energy project financing and venture capital investments for innovative technologies. Ms. Kim also serves Stern Brothers & Co. as Managing Director in the Project Facilities and Municipal Finance Group in the firms Los Angeles office. Ms. Kim provides investment banking and financial advisory services to municipalities throughout California. Ms. Kims current representative matters include but not limited to utility scale solar energy projects, distributed solar energy generation facilities, advanced vehicle technologies, stateofthe art security system integration programs for major US airports and ports, and tribal energy programs with New Markets Tax Credit. In May 2011, Ms. Kim cofounded Wemagin Technology, Inc., an emerging company in the USB flash driver market with the first Operating System (OS) to the USB flash drives consisting of powerful new capabilities and innovative features (i.e., privacy projection, email, independent search engine, social network, etc).

Kaylynn L. Kim, Esq. Managing Partner

Prior to joining the Firm and Tierra Global Advisors, Ms. Kim was Senior Counsel at a law firm, Allen Matkins Leck Gamble Mallory & Natsis, where she specialized in renewable energy, land use, and real estate and finance laws. Ms. Kims accomplishments are not limited to law practice and business, she was appointed to the Los Angeles Board of Harbor Commissioners by Mayor Antonio Villaraigosa and confirmed by Los Angeles City Council on September 9, 2005. Ms. Kim resigned from the Board of Harbor Commissioners on June 30, 2011.
Ms. Kim and her fellow Los Angeles Harbor Commissioners partnered with the Long Beach Board of Harbor Commissioners and took unprecedented action by approving the landmark San Pedro Bay Ports Clean Air Action Plan in November 2006. The Clean Air Action Plan provides a comprehensive strategy for reducing air emissions from port operations by nearly 50 percent over a period of five years. Their efforts yielded the first joint meeting of the leaders of the two ports since the 1920s and the firstever public meeting of the two Boards on November 20, 2006, the day the Plan was approved. During her sixyear tenure as a Port of Los Angeles Commissioner, she served many prestigious committees including Intermodal Terminal Facility Committee, Electrification of the Port Committee, Business Development & Leasing Committee, and International Trade Committee. In the later years of her public life, Ms. Kim served a prestigious 15member advisory board, The California Climate Change Adaptation Advisory Panel, appointed by Governor Arnold Schwarzenegger in 2009. The panel completed its tasks by completing States policy guidelines which was published in January 2011.

Tierra Global Advisors, LLC Stern Brothers & Co.

Investment Banking Since 1917
515 S Flower St. 36th Floor Los Angeles, CA 90071 Ph: 323.620.4592 E-Mail: kkim@tiglobaladvisors.com kkim@sternbrothers.com

Tierra/Stern Brothers National Business Scope

Locations
Atlanta Chicago Cleveland Dallas Denver Detroit Kansas City Los Angeles Reno San Francisco St. Louis Seattle Tampa

 Tierra Global Advisor

Full Service Energy Financing Advisory and Investment Banking Services firm focusing on the structuring and placement of tax equity, private equity and debt for Renewable Energy projects.

Stern Brothers Services

The Firm specializes in the use of tax-exempt and taxable bonds to optimize the debt structure and equity returns of developers seeking non-recourse project financings. Stern Brothers & Co. has pioneered the use of tax-exempt bonds as an alternative to bank debt in the biofuels and landfill gas areas. The Firm is expanding its practice to include projects in biomass, wind, solar, waste to energy and clean coal. A current initiative is the making of a market in taxable bonds as a source of leverage for developers in all of these markets. Investment banking since 1917 Trading bonds at our firms trading desks in St Louis.

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Blue Earthenergy efficiency audit, retrofit of retail/gas stations, HVAC/co-gen systems Bio Star- Biofeul/ Envirowater1.2GW in California Solar Park Ranch100 MW on an Indian tribal land in California Grid Partners---Distributed Generation (rooftops/parking canopies) GSC-Waste to Energy Project in California UTS-Hydroplant, Biofuel/Co-gen facilities in San Jose, Ontario and NYC Xnergy-DG/Ground Mount Solar/Geothermal projects

Past Representative Matters Enerkem, Inc., INEOS, Terrabon, ZeaChem, Chemtex International, Inc., Fuel Cell Energy, Casella Waste Systems, ClearDevelopment Biogas, GEVO Development, Stormfisher, Element Markets, Sterling Planet, Greenstar, Schmack Bioenergy, Syngest, Iowa Energy Corridor, Solar Power Products, Summit Power, CH4 Biogas, Integral Power, Global Ampersand, SCC Americas, United Power, Novi Energy, Illinois Finance Authority, Finance Authority of Maine, Ohio Air Quality Development Authority

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THANK YOU

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