Solar Financing Solutions for The City of Napa Gopal Shanker December 12, 2008

1. Solar Financing Solutions for The City of Napa Gopal Shanker December 12, 2008

2. Outline of Presentation • Global Energy Issues and Implications • The City of Napa's Energy Situation • The City of Napa's Energy Solution • Next Steps

3. Global Energy Issues Climate Change Security Demand Petropolitics “Foreign Oil” Black / Brown outs BRIC Nations AB 32 Kyoto Protocol Carbon Tax/Trading On its own, each issue increases the costs of fossil fuels or of using fossil fuels Asthma Cancer Smog Monoculture Soil Depletion Fertilizer Runoff Peak Oil Peak Natural Gas Agricultural / Ecological Consequences Supply Health Effects

4. Who we are determines what we focus on Climate Change Security Demand “New Environmentalist” “Patriot” “Businessman” “Medical Professional” “Old Environmentalist” “Oil-man” Agricultural / Ecological Consequences Supply Health Effects

5. Solutionsfor these Energy Issues Climate Change Security Demand All renewable energy, coal… Nuclear, Renewable Energy, “Clean” Coal… Energy from all sources, wars… All renewable energy except large scale hydro… Energy from all sources, wars… All renewable energy except biomass… Agricultural / Ecological Consequences Supply Health Effects

6. These Issues are Converging! Climate Change Security Demand We can no longer develop/afford solutions that solve one problem but exacerbate others Only renewable energy fits in the intersection of these circles Agricultural / Ecological Consequences Supply Health Effects

7. As the convergence accelerates Security Climate Change Demand Renewable energy replaces fossil fuels The problems merge into a single issue ENERGY TRANSITION Agricultural / Ecological Consequences Supply Health Effects

8. We have made energy transitions before • Whale blubber  kerosene • Kerosene  electricity • Warships: wind  wood  coal  oil • Electricity from coal  electricity from natural gas • And now…fossil fuels to alternatives

9. Why not make the transition now? • Our biases prevent us from recognizing this as a problem of energy transition • Until we eliminate these biases, we will engage in ineffectual arguments and develop ineffective solutions • Is Climate Change anthropogenic or not? • Food or fuel? • Drill, baby, drill!

10. Implications • The transition is not just for a dedicated few, but for all • If we don’t make the transition, we will be at serious local and global, economic, environmental, and social risk • We need to accelerate the transition, because the convergence is accelerating

11. We are on the right track in Napa County but need to accelerate • Goal: Energy Independence by 2012 • Napa Valley wineries have adopted solar (PV) at an extraordinary rate • They have done so because the COMBINATIONof federal, state, and utility incentives made solar affordable • Non-tax paying entities can also benefit from these incentives now

12. Client’s Perspective on Solar High Risk / High Return Low Risk / Low Return Can use tax credits and/or depreciation Cannot use tax credits and/or depreciation • Until now, the PPA was the only viable solar financing option for non-tax paying clients. But it provides little more than a hedge against inflation, because the benefits of going solar have to be shared with the PPA provider.

13. Recent developments benefiting local governments and schools • 30% Investment Tax Credit for solar photovoltaics has been extended for 8 years • California AB 2466 • Local governments and schools can receive a bill credit (based on the TOU electricity generation component only) for electricity produced off-site • National Development Council has pioneered, using The Gasser Foundation as a pilot, a solar financing solution for non-tax paying entities

14. Outline of Presentation • Global Energy Issues and Implications • The City of Napa's Energy Situation • The City of Napa's Energy Solution • Next Steps

15. Electricity Benchmark forThe City of Napa • Annual Usage (kWh): 2,645,926 • Annual Bill: $393,958 • Average Rate (per kWh): $0.15

16. Electricity Projections Period Cost of Electricity • Last 12 Months (~) $393,958 • In 25th year $1,595,110 • Over 25 years $21,614,313 Assumptions 6% annual escalation rate

17. Annual Energy Bill

18. Cumulative Energy Bill

19. Outline of Presentation • Global Energy Issues and Implications • The City of Napa's Energy Situation • The City of Napa's Energy Solution • Next Steps

20. PV System Metrics

21. NDC Proposals

22. Cumulative Energy Bill

23. Cumulative Energy Bill(NDC Proposal @ 22 cents/kWh)

24. Cumulative Energy Savings(NDC Proposal @ 22 cents/kWh)

25. Cumulative Energy Savings (NDC Proposal @ 15 cents/kWh)

26. Cumulative Energy Savings(Both NDC Proposals)

27. National Development Council Proposal

28. Outline of Presentation • Global Energy Issues and Implications • The City of Napa's Energy Situation • The City of Napa's Energy Solution • Next Steps

29. Next Steps • Sign Letter of Intent with NDC / Récolte to develop turnkey solar installation and financing solutions • File solar rebate applications (Récolte) • Study sites/bills to determine whether on-site or off-site generation makes more sense • Compensation at full retail versus TOU generation • Get pre-qualified for financing

30. California Solar Initiative Trigger Tracker (http://sgip-ca.com)