Implications of Financial Turmoil for High Capital Projects

July 2009
John D. Clapp Managing Director Global Power Sector Specialist 388 Greenwich Street, 34th Floor New York, NY 10013 Tel - 212-816-8588 Fax - 646-291-1879

Executive Summary
Capital markets remain challenged for large projects (>$500mm) despite tightening credit spreads. Some US project developers now waiting on the release of the Stimulus Act (ARRA) US DOE loan guarantee program rules before accessing the capital markets with large projects
Market capacity remains an issue for large projects:
Withdrawal of many banks from project bank market Project finance bank market universe is considerably smaller than 24 months ago Some European banks retrenching in home markets Capital allocation remains a major constraint Relationships and returns driving deal selection Capital constraints reducing hold positions, requiring more banks to syndicate large projects Ticket sizes more typically in the $30-$50mm range, not the $80-$100mm clubs of the past More lenders = potentially greater execution risk, extended time to close Corporate bond market has stabilized after a spike in spreads at the end of 08 Remains an attractive market for utility level finance of major CAPEX programs Potential rating agency concerns if anticipated debt metrics deteriorate due to projected CAPEX spend Private placements remain open as an option to project sponsors, but project size is limited DOE loan guarantee program could relieve some of the capacity issues in the market and allow a larger number of conventional projects to go forward than would otherwise occur particularly those of size

Trans-Allegheny Interstate Line Company

Transaction Overview

US$ 530 Million Senior Secured Construction Facility US$ 20 Million Senior Secured Revolving Facility Borrower: Trans-Allegheny Interstate Line Company (TrAILCo), a special purpose entity created by Allegheny Energy to develop, construct, own and finance a 215 mile 550 kV transmission line spanning Pennsylvania, West Virginia and Virginia $530 million Senior Secured Construction Facility $20 million Senior Secured Revolving Facility Sponsor: Maturity: Amortization Pricing: Commitment Fee Security: Closing Date: Citis Roles: Allegheny Energy, Inc 7 Years Bullet L + 187.5 bps (Yr 1-5); L+ 200bps (Yr 6-7) 50bps per annum; 37.5bps if more than 50% of the Credit Facilities are drawn A first priority perfected security interest in all equity interests in TrAILCo Aug 15, 2008 Coordinating Bank Joint Bookrunner and Joint Lead Arranger Administrative Agent

The Project is divided into five segments, each of which can be independently constructed, energized and placed into service, with the exception of two segments located in Virginia; total cost is estimated at $1,079 million The Project receives stable and predictable cash flow during and post construction; asset is entitled to earn a rate of return for 50 years after construction while O&M, taxes and depreciation are fully recoverable as per FERC declaratory orders

Facilities:

During construction, project costs are funded 1/3 from equity contributions and 2/3 from the Credit Facilities; at completion, equity contributions are required from the Sponsor to establish a debt to equity ratio of 50:50
The Credit Facilities benefit from structural features such as limited availability on a per-segment basis prior to state sitting permits being issued and flexibility to abandon certain segments if state permits cannot be obtained

Investment Highlights Strong and experienced sponsorship in Allegheny Energy with liquidity of more than $760 million as of March 31, 2008 A valuable and strategic transmission asset with strong federal and regional support Substantial free cash flow of $205 million during the construction period from 2008 to 2011; avg/min DSCR over the term of the Credit Facilities is 3.72x/2.40x Low construction and operation risk A strong credit counter party in PJM, one of the largest and most established markets in the US Conservative capital structure post completion, TrAILCo will have 50% leverage and Debt to EBITDA ratio of 3.4x

Syndication The Credit Facilities were oversubscribed with approximately $750 million in total commitments 9 banks participated at the Agent (>55 million) and Co Agent level (>50 million) while another 8 participated at the Manager (>35 million) and Lender level (>20 million)

Noble Environmental Power - New York 08

2008 Americas Renewables Deal of the Year
-Project Finance International and Project Finance Magazine

Transaction Overview Noble New York 08 Projects comprise three separate wind parks with an aggregate generating capacity of 330 MW, utilizing 220 General Electric 1.5 MW SLE wind turbines. Total project costs were approximately $835 mm NY 08 Projects are located in Chateaugay, Altona and Wethersfield, New York, in close proximity to Nobles existing NY 07 wind parks

US$ 632 mm Senior Secured Construction & Term Loan Facility US$ 109 mm Letters of Credit & Cash Collateral Loan Facility Borrower: Facilities: Noble Environmental Power 2008 Hold Co, LLC $632 mm Sr Sec Construction & Term Loan Facility (converted to $412 mm Term Loan at COD) $109 mm Letters of Credit & Cash Collateral Loans Sponsor: Maturity: Amortization Pricing: Commitment Fee Security: Financial Close: COD: Distributions: DSR Account: Citis Roles: Noble Environmental Power (majority owned by CCMP Capital Advisors and Canada Pension Plan) Construction + 15 Years 15-year sculpted amortization post-COD with a Target DSCR of 1.00x based on 1-year P-99 wind L+175 (Yr 1-4); L+187.5 (Yr 5-8); L+200 (Yr 9-10); L+225 (Yr 11-12); L+250 bps (Yr 13-15) 50 bps per annum First lien on all assets, accounts, and equity interests of the Borrower & the Project Companies June 30, 2008 April 3, 2009 1.2x DSCR Yrs 1-10. 1.4x DSCR Yrs 11-15 6 mos Yrs 1-10. 12 mos Yrs 11-15. Administrative Agent and Joint Bookrunner Energy Hedge Provider (Citigroup Energy Inc.) Wind Study / IE:
3

Tax Equity: GE invested $222 mm Class A Equity at Term Conversion. In addition, GE will make additional equity contributions (PAYGO payments) over the first ten years as the wind parks generate Production Tax Credits (PTCs)
Energy Hedge: Citigroup Energy Inc. entered into a 10-year Energy Hedge with the Borrower, fixing the price on the 1-year P95 energy production of the NY 08 Projects, approx 79% of P50 volume REC Contracts: NYSERDA (NY state agency) entered into 10-year fixed price contracts to purchase 95% of the Renewable Energy Credits (RECs) produced by the NY 08 Projects 100% of projected cash flows are un-contracted in Years 11-15

Investment Highlights Largest wind financing ($741 mm) completed in U.S. to date Integrated financing and commodity hedging transaction, with Citi leading the financing as Admin Agent and Jt Bookrunner and providing 100% of the 10-Yr fixed-for-floating Energy Hedge

Merchant tail in Yrs 11-15 provided Noble with incremental leverage. Approx 55% debt-to-cap, $1,283 per kW at COD
Construction delay risk during a PTC expiry year was mitigated through a flexible Class A Equity agreement and with incremental contingent equity and sponsor support Transaction successfully syndicated during ongoing civil inquiry conducted by the New York State Attorney General regarding business practices of wind developers in upstate New York

Garrad Hassan America, Inc.

Capital Markets Overview - Then & Now

Summary Observations Interbank lending rates (LIBOR) continue to fall as interbank credit concerns diminish Treasury rates rising from historic lows High grade bond market continues its strong start to 2009, reflecting investor demand for low-risk assets High yield bond market has also improved from Oct/Nov, with BB credits now seeing market access Equity markets remain depressed, complicating capital raising for corporates and financials needing to recapitalize Gas and oil decoupling Low gas depressing peak power prices, affecting new project economics Credit Market Indicators February 1, 2008 3 Month LIBOR 10 Year US Treasury 5 Year Swap Spread High Yield Index (Yield) Investment Grade CDX Index Investment Grade Debt Issuance (Monthly)1 3.10% 3.59% 75 bps 10.0% 107 bps $55.0B December 1, 2008 2.22% 2.73%. 87 bps 19.6% 260 bps $19.5B June 29, 2009 0.595% 3.48% 37.7 bps 9.91% 89 bps $36.1B

VIX Volatility Index

Dow Jones Industrial Average S&P Index

24.0
12,743 1,395

68.5
8,149 816

27.0
8,529 927

Crude Oil ($/barrel)

Natural Gas

$88.96
$8.75

$49.28
$6.64

$71.49
$3.94

(1) February 1-28, 2008 vs. December 1-31, 2008 vs. June 1-26, 2009

Project Finance Market Update

The market remains selectively open, but conditions are challenging. Bank Market
Many project lenders have significantly scaled back lending activities or exited the market
Many non-US lenders have suspended North American activity and are focusing on home markets

Bond Market
Investors are selectively open to transactions in defensive sectors, including toll roads and utilities
Market receptivity to private equity-sponsored transactions challenging compared to corporates

Increased cost-of-funding and return-on-capital hurdles L+[350] bps area represents current market pricing for middleof-the-fairway deals (tighter for renewables)

5-6 bps per $1 mm of commitment on long-tenor deals

Given the supply overhang in the investment grade corporate market, demand for project paper likely to come more from the traditional long-term, buy-and-hold investors, such as the life insurance companies and pension funds and less from money managers and hedge funds Investors remain risk-averse and prefer plain-vanilla transactions to more highly structured financings BBB-/Baa3 is being treated with skepticism, with BBB/Baa2 receiving significantly better reception

Shorter tenors, to meet return-on-capital requirements 5-7 years, or shorter (e.g. 1-year construction loans) Amortization schedule can be on 15 yr + basis

Limited appetite for credit stories Banks are in a position to be choosy, given supply-demand balance for capital

U.S. Private Placement (USPP) market more receptive to project deals compared to the public markets The USPP market has demonstrated resilience in this market turmoil USPP investors comparatively more skilled in analyzing project structures As with the loan market, USPP investors have become more stringent on covenants and leverage

Focus on existing client relationships

Limited underwriting appetite Virtually all sizable deals being executed on a club basis. Minimal retail demand Transactions greater than ~$350 mm encountering market capacity issues

Uncertainty on cost-of-funding index rate LIBOR floors not uncommon

Given limited capacity, we expect to see more multi-tranche deals targeting two or more markets simultaneously General concern on overall environment, focus on high grade credit quality Crisis in financial sector has put focus on counterparty risks

Targeted Project Finance Lenders

Even as some major players exit the Project Finance market, there are still several large banks that are still active in providing bank debt financing.
French banks remain relatively well-capitalized relative to many of their European counterparts Broad focus on power & energy, infrastructure, and renewables Top 3 (BNP, Calyon, SocGen) active, but maintain focus on lead arranger roles Japanese banking sector remains among the strongest in the global financial community Increased focus on Project Finance from largest Japanese lenders BoTM, Mizuho, and Sumitomo Mitsui Canadian banks also remain well capitalized and active Scotia remains an active top-tier lender with a focus on power & renewables with an increased focus on relationships EDC has the ability to participate in size ($100 mm) for deals with Canadian content. Canadian sponsorship also supports ability to participate, though Canadian content is a key driver German banks have a primary focus on renewables, particularly among landesbanks HVB, Deka, KfW, NordLB, and LBBW remain relatively well capitalized and expect active PF participation in 09, though on tighter terms, wider pricing, and with greater scrutiny on credit and relationship returns Continued activity among largest Spanish lenders BBVA and Santander with increased focus on arranging roles, pricing and credit ING is relatively well-capitalized relative to Benelux counterparts Very active in 08; expecting to be major PF participant in 09, with greater focus on pricing, credit and relationships Dexia regaining momentum in the project finance space In the US, Union Bank of California and Co-Bank remain active in project finance along with Citi

Recent Comparables
Despite the challenging environment in the credit markets, there are several project finance energy transactions that have recently closed or are currently in the market.
Sponsor/Project Date Facility
Senior Secured Term Loan

Size ($mm)
$275.0

Tenor

Spread

Tier

Upfront Fees

In Market

5 yrs

Not disclosed

A Wind Deal

In Market Closed 6/26/09 Closed 5/29/09 Closed 5/28/09 Closed 5/20/09 Closed 4/27/09

Senior Credit Facilities

$230.0

10 yrs

300 bps (drawn) 100 bps (undrawn)

387.5 bps

Joint Lead Arranger (50mm)

300 bps

EME

Senior Credit Facilities

$207.2

8 yrs

enXco

Senior Credit Facilities

$100.0

Midland Cogeneration Venture

NextEra

Senior Credit Facility A Senior Credit Facility B (non-amortizing)

Senior Credit Facilities Senior Credit Facilities Equity Bridge Loans

$275.0 $140.0

7 yrs 9 yrs

350 bps (Tranche A) 400 bps (Tranche B) 300 bps (drawn) 100 bps (undrawn)

Tickets of $15, $25, and $50 million

150-225 bps

$343.0 $295.0 $240.0

8 yrs

TBD 40mm 25mm Joint Lead Arranger (50mm) Senior Managing Agent (40mm) Lender (25mm)

TBD 250 bps 200 bps 300 bps 200 bps 150 bps

GennConn

5 7 yrs 350 bps (drawn) 2.25 yrs 75 bps (undrawn)

First Wind

Closed 4/22/09

Senior Construction Facility

$376.4

1 yr

325 bps (drawn) 75 bps (undrawn)

State of the Corporate Bond Market

Issuance Pace remains brisk
75 59 55 62 56 46 2008 2009
Jan - Nov 2008: $201.7 bn Jan - Nov 2009: $263.9 bn

And Market Access for BBBs is Strong

28 26 24 22 20 18 16 14 12 10 8 6 4 2 0
1 -Dec

'BBB'-rated 'A'-rated or better

60

45 36 30 27 23 31 20 29 22 21 11 11 20 27 21

15

0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
*Issue total through June 19, 2009; Source: SDC

IG Corporate Volume ($Bn)

Amount ($bn)

29-Dec

26-Jan

23-Feb

23-M ar

20-A pr

1 8-M ay

1 5-Jun

Week Beginning

10YR A Industrial Cost-of-Funds Have Remained Flat

9.00 10-yr UST 8.00 7.00 6.00
Yield (%)

Secondary Trading Liquidity Has Began To Normalized

45.0 40.0 35.0 Average Weekly Trading Volume Per Day Quarterly Moving Average

A Rated All-in Cost

Volume ($ Billions)

30.0 25.0 20.0 15.0 10.0 5.0 0.0 Jul-01

Reflect Year-end

5.00 4.00 3.00 2.00 1.00 0.00 Jan-06

Jul-06

Dec-06

Jun-07

Dec-07

Jun-08

Dec-08

Jun-09

Jul-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Jun-08

Jun-09

Source: Citi Syndicate

Source: Bloomberg (Primary Dealer Trading Volume); as of June. 17, 2009

Private Placement Market Update

Following the upheaval in the global credit markets experienced in 4Q 2008, the private placement market has returned to normalcy amid a host of issuers seeking to raise capital to satisfy funding needs and to bolster liquidity.
Traditional Private Placement Issuance ($ in millions)
Q2 2009 New Issue Volume US Volume (%) International Volume (%) Number of Issues Unrated Issues (%) $4,680 36% 64% 31 55% Q1 2009 $5,467 54% 46% 29 62% Q4 2008 $1,113 87% 13% 17 53% Q3 2008 $9,692 69% 31% 39 68% Q2 2008 $10,858 59% 41% 53 65% Q1 2008 $4,909 72% 28% 31 70% FY 2008 $26,572 66% 34% 140 66%

2008 2009 YTD Volume Breakdown ($ in billions)

4.5 4.0 3.5 3.0
2.5 3.2 3.1 2.7 2.3 1.9 1.3 1.1 3.2 4.2 4.2 4.2

2.5 2.0 1.5 1.0 0.5

0.4 0.5

0.4

0.4

0.3

Average Deal Size

$151

$189

$65

$249

$205

$158

$190

0.0 Jan Feb Mar Apr May Jun 2009 Jul Aug 2008 Sep Oct Nov Dec

Source: Private Placement Monitor & Citi. Data as of June 22, 2009

Current Private Placement Market Developments & Analysis Following the temporary pull-back experienced by the majority of the investors in late 2008, the market is presently open with approximately 80% of institutions actively pursuing new investment opportunities Most institutions have cash available and have returned to the traditional areas of focus, namely credit quality, covenant structure and pricing, as the major drivers of investment decision-making A normal transaction flow has re-emerged, with attention focused on solid credits With the renewed demand from the bulk of the market, a favorable imbalance has surfaced whereby the considerable but modest transaction flow thus far in 2009 is contributing to an undersupply of issuance Investor activity is expected to remain meaningful but nonetheless somewhat tempered from historical levels Private placement investment programs are, on average, expected to remain flat to the previous year Following the trend in the public market, credit spreads have rallied materially from the peak experienced earlier in the year, although remain relatively wide when compared with historical levels Notwithstanding the improving tone, issuers are encouraged to tap the market when access is available, due to the looming supply awaiting to approach the public and private markets

Current Conditions in 2009

Outlook for 2009

DOE Loan Guarantee Program

Original DOE Loan Guarantee Program

The original DOE Loan Guarantee Program (Section 1703) was created by the Energy Policy Act of 2005 and authorized the Secretary of Energy to issue guarantees for certain qualifying projects.
Original DOE Loan Guarantee Program The focus of the original program was and continues to be providing government-backed financing for energy projects that avoid, reduce or sequester air pollutants and employ new or significantly improved technologies such as Coal Gasification, Carbon Sequestration, and Nuclear Enrichment The emphasis on innovative technologies significantly limited the universe of applicants The Final Rule regarding the policies, procedures and requirements for this program were not officially published until 2007

The decision to process applications via target date solicitations, as opposed to processing applications as received is recognized as one of the inefficiencies in the original program
A Credit Subsidy Cost, calculated as the NPV of the DOEs estimated losses on the loan minus the fees it receives is paid by the Project before receiving the loan(1) Projects whose applications are accepted are offered government guaranteed financing from the Federal Financing Bank (FFB) at a rate of approximately T+[25-50] bps

To date, only one major project has received a loan guarantee under the original guidelines Solyndra Inc. solar panel manufacturing facility $535MM loan guarantee March 20, 2009

(1) In February, the Secretary of Energy announced plans to restructure this fee so that it is payable over the life of the guarantee.
10

DOE Loan Guarantee Program as Amended

The American Recovery and Reinvestment Act of 2009 (ARRA) greatly expands the DOE Loan Guarantee Program through the addition of Section 1705 to help finance upcoming alternative energy projects.
Updated DOE Loan Guarantee Program (EPAct Section 1705)
Eligible Projects Credit Subsidy Cost Both commercial and advanced renewable energy systems including, Wind, Solar, Geothermal, and Incremental Hydroelectric Electric power transmission projects Advanced biofuels technologies (cellulosic ethanol, etc.) $6 Billion allocated under the ARRA to cover the Credit Subsidy Cost for qualifying projects Loans to be reviewed and guarantees to be issued on a rolling basis once program regulations are finalized and approved by the OMB (anticipated to occur in mid July) Credit Subsidy Cost reflects expected losses to the DOE, so if the DOE assumes a 10% loss (which may be a high assumption for commercially viable projects), $60 billion $100 billion of guaranteed loans can be issued For commercial renewable energy projects and small transmission projects, the DOE intends on using a Delegated Lender approach in order to expedite the implementation of the program (outlined on the following page) For advanced renewable, large scale transmission, and advanced biofuel projects, the DOE intends to review the projects themselves and issue guaranteed loans through the Federal Financing Bank

Original DOE Loan Guarantee Program (EPAct Section 1703)

Multiple solicitations for various innovative technologies that employ new or significantly improved technologies including carbon sequestration, nuclear enrichment, and advanced transmission technologies

Requirement that the technology is not a Commercial Technology

Credit Subsidy Cost to be paid by Borrower prior to loan issuance(1) Various application deadlines depending on solicitation and project type Generally, length of application process has been greater than one year Approximately $42.5 billion in funds authorized through five solicitations

Timing

Program Size

Guarantee Process

Applicants complete Part I and Part II applications and DOE reviews applicants, conducts due diligence, and issues guaranteed loans through the Federal Financing Bank

(1) In February, the Secretary of Energy announced plans to restructure this fee so that it is payable over the life of the guarantee.
11

Backbone Transmission Solicitation

As a part of the EPAct 1703 and 1705 Programs, the DOE plans on issuing three new solicitations in the coming weeks. The first of these solicitations is expected to target backbone transmission projects.
Backbone Transmission (end of June 2009) 1705 Program (Stimulus Act) DOE intends to launch a solicitation under the new 1705 Program to target backbone transmission (backbone transmission to be defined in the solicitation) Projects do not have to be innovative, but must be able to start construction by September 30, 2011 While this solicitation is under the 1705 Program, the backbone transmission projects will have access to 100% loan guarantees using the Federal Financing Bank (FFB) similar to the current 1703 loan guarantee program, but Credit Subsidy Cost (CSC) will be covered by DOE Similar to the current 1703 program, applications will need to be submitted by the sponsor to DOE as will be specified in the solicitation

Solicitation will be open ended with new application filing periods staggered every 45 days DOE intends to create some semblance of competition with set filing periods, but maintain overall rolling application process Applications are intended to be more summary in nature, but final applications will still require: Letter rating from one rating agency IE report

Financial model Other reports and documentation as specified in solicitation While open ended, DOE believes there is a practical deadline of December 31, 2009 Under the 1705 program projects must begin construction by Sept. 30, 2011 DOE believes that backbone transmission applicants will need to conduct an Environmental Impact Statement (EIS) as part of the NEPA process, which may take up to 18 months to complete Backbone transmission projects will need to begin the EIS process by end of 2009 to complete the process in time to meet the construction deadline in 2011

12

Re-Issue of Innovative Renewables/Transmission Solicitation

The DOE is expected to expand its Innovative Renewables/Transmission Solicitation under the 1703 Program.
Re-Issue of Innovative Renewables/Transmission Solicitation (mid-July 2009) 1703 Program DOE intends to re-issue the current 1703 Renewable/Transmission solicitation to allow applicants to take advantage of the Stimulus Act loan guarantee benefits, specifically DOE coverage of the CSC DOE is increasing the size of the program per Congressional mandate from $10B to $18.5B Congressional increase to make renewables program equal in size to nuclear reactor program Increased funding available for all current and new solicitation applicants As a 1703 program: Projects must include innovative technologies

Can be renewable power generation, industrial facilities, or transmission 100% loan guarantees available if funding through the FFB Application requirements similar to current Innovative Renewables/Transmission Solicitation: Letter rating from one rating agency IE report Financial model Other reports and documentation as specified in solicitation Similar to the backbone transmission solicitation, the re-issued innovative renewable/transmission solicitation will be open ended with new application filing periods staggered every 45 days NEPA review requirements: DOE believes that an Environmental Assessment may be sufficient for most projects rather than the more extensive EIS. Unlike the 1705 programs, there is no construction start deadline, meaning that the solicitation will be open until closed by DOE
DOE also expects to work with State and Local Development Agencies to co-lend to smaller renewable and industrial projects under this solicitation and will begin a separate process to identify those agencies and their capabilities/pipelines
13

Conventional Renewables Solicitation

The DOE is expected to issue a Conventional Renewables solicitation under the 1705 Program in mid July.
Conventional Renewables solicitation (mid-July 2009) 1705 Program (Stimulus Act) DOE intends to launch a solicitation under the new 1705 Program to target conventional renewables and non backbone transmission projects (to be defined in the solicitation) Projects do not have to be innovative, but must be able to start construction by September 30, 2011 Under the 1705 Program, the DOE intends to utilize the private capital markets and the existing banking infrastructure to streamline the application process and tap into the guaranteed (and unguaranteed) debt markets to finance conventional renewable and non-backbone transmission projects Credit Subsidy Cost (CSC) will be covered by DOE 100% loan guarantees using the Federal Financing Bank (FFB) will not be available to conventional projects, loan guarantees expected to be limited to 80% of eligible project debt (with maximum debt to cap of 80%) Eligible Lenders (to be defined) will be responsible for originating projects with sponsors, structuring the transactions to market, and applying to DOE for a loan guarantee on behalf of the sponsor prior to financial close Citi fully expects to be an eligible lender A Program Manager at DOE will be assigned to each transaction to log the deal and interface with the lender and sponsor as the process moves forward DOE is relying on the lender for the majority of the necessary diligence and credit approval work prior to submitting the loan guarantee application to the DOE Credit Review Board (CRB) for a loan guarantee commitment Applications will be accepted on a rolling basis (no 45 day periods as in other solicitations), however, the CRB only meets monthly to make loan guarantee decisions Once a transactions is ready for DOE review and CRB submission the process to receive a committed loan guarantee is expected to take 45-60 days to complete

14

Delegated Lender Approach

In order to quickly and efficiently implement the new Loan Guarantee Program, the DOE has expressed its intent to use a delegated lender approach for the projects seeking guarantees that implement commercial renewable energy technologies.
Under a delegated lender approach, the DOE would leverage bank experience and due diligence capabilities in the project finance space ultimately creating a public/private risk sharing arrangement
Qualifying projects would work with Eligible Lenders, which have been pre-approved by the DOE, to apply for a guarantee The sponsoring financial institution would analyze the projects credit, structure the financing, conduct required due diligence, and apply for a loan guarantee on behalf of the project and sponsor If the DOE chooses to accept an application, it would guarantee a portion (Covered portion) of the total project debt leaving a non-guaranteed portion (Uncovered portion) to be held by the financial institution to ensure and alignment of interests and that the credit analysis is conducted thoroughly The amount of the Covered debt relative to the total project debt is still under consideration but is expected to be approximately [80]%
Project Capital Structure Project Debt
Non-Guaranteed Portion (Uncovered)

Project Level Debt

Uncovered portion expected to be held by sponsoring financial institution on market terms

Sponsor Equity and Tax Equity

DOE Guaranteed Portion (Covered) Up to [80]%

Covered portion expected to be held by sponsoring financial institution or sold to investors in the private market (bank or bond) on market project financing terms and rates similar to other government guaranteed debt

15

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