Clean Energy Financing Workshop: Solar Power Purchase ......• Once the PPA is executed, the “Project Owner/Solar Developer” is responsible for the permitting, financing, construction

Greene

Hurlo

cker,PLC

CleanEnergyFinancingWorkshop:SolarPowerPurchaseAgreementsforLocalGovernments

September7,2018

EricW.HurlockerGREENEHURLOCKER,PLCRichmond,Virginia

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Greene

Hurlo

cker,PLC

Whatisa“PPA”

• A Solar Power Purchase Agreement (“PPA”) is a “services contract,” whereby a Host Customer (in this case, a Local Government) agrees to purchase solar generated energy at an agreed-upon rate over the term (the “Term”) of the PPA • Rate can be fixed or escalate over time • These are typically long-term transactions (at least 15 years) to support the Solar

Project financing • Host Customer may elect to purchase Solar Renewable Energy Credits (SRECs)

• Once the PPA is executed, the “Project Owner/Solar Developer” is responsible for the permitting, financing, construction and other risks/obligations associated with energy project development and ownership

• Project Owner will operate and maintain the Solar Project for the entire Term of the PPA – typically without additional cost to Host Customer

• At the end of the Term, the PPA typically will include options for the Host Customer to: • extend the PPA, • have the PPA end, in which case the Project Owner would remove the Solar

Project from the Host Customer’s Site, or • purchase the Solar Project (in place) for fair market value

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Source:SecureFutures

Owner/Operator

Power Purchase Agreement

Solar-Generated Electricity

Customer (Tax Exempt) Third Party Owner (For Profit)• Hosts system • Leases roof • Purchases output • No capital expenditure • Net operational savings

• Finances • Accesses tax-based incentives • Builds, Owns, Operates, Maintains • Sells output and/or services • Guarantees performance

Solar PowerPurchaseAgreement

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Greene

Hurlo

cker,PLC

WhyuseaPPA?• PPAprovidesamoreattractivefinancialdecisionforacustomerdesiringtoinstallsolargenerationthanadirectpurchaseofasolargenerationSolarProject• Particularlytrueforatax-exemptentity,likelocalgovernments,thatcannotutilizethetaxcreditsandothertaxbenefitsoftheSolarProject

• ITCremainsatfull30%levelforprojectscommencingconstructionby12/31/2019

• WhyPPA’smakesenseforLocalGovernments:• Nocapitaloutlay• Effectiveutilizationoftaxincentivesorgrants• Nocommodityrisk• OpportunitytoprocureSolarRenewableEnergyCredits(SRECs)• Shortenedbreak-evenpoint

• AllowsLocalGovernmenttofocusoncorefunctions,whileparticipatinginbenefitsofrenewableenergyprojects

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Greene

Hurlo

cker,PLC

Questions

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