game-changer - upcoming...

Game-changer Solar Business Model Innovation

DAVID ARFIN

April 12, 2016 Lyon, France

An Unlikely Innovator

I never cared about a kilowatt or kwh rates, corporate tax credits, accelerated depreciation, utility meters

Nor had I heard about ITC, RECs or partnership flips

“Inconvenient Truth” got this entrepreneur thinking – driven to both do good and do well

Middle of home roof replacement. Received 3 Quotes for solar; best was a 33-year “simple payback”

($15k to help the environment?)

Researched: why anyone went solar?

Policy/ Investment/ Innovation

Nascent industry. Been around 30+ years.

Unknown consumer technology. Expensive. Un-

aesthetic

Immature industry - lack of investment downstream.

Policy environment – generally positive*

Core economics were sound, but not a no-brainer.

Thinking inside industry was “stale”.

In addition to lower priced panels – we needed a

“game changer”.

And – it’s only the beginning…

Residential “Solar as a Service”

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1. Qualified homeowner signs lease

Residential “Solar as a Service”

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2. Qualified installers design and complete project

Residential “Solar as a Service”

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3. Lessor receives benefit streams (ITC, rebates, SRECs, lease/ppa payments,

depreciation, etc.) & allocates efficiently among financing partners

Residential “Solar as a Service”

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Residential Solar Lease – A Game Changer

3rd Party System Ownership by Region

Sources: CSI Database, accessed 03/13/13; MA SREC Program, accessed 03/13/13; Arizona Public Services, & Salt River Project accessed 12/12/12 (APS), 03/25/13 (SRP); Maryland Energy Administration (03/12/13)

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2007 2008 2009 2010 2011 2012 2013 2014 2015

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CA

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Consequence : Staggering Growth Rates

April 22, 2016 9

Energy Technologies for “As a Service”

Lighting – improvement - Enlighted

Building efficiency – Carbon LightHouse

United Wind – solarlease for wind

Micro CHP – in NYC

Phoebus (heat exchange)

Energy Storage as a Service

Global phenomenon

It’s all About Risk

Why Does Solar Leasing* work?

Morphs the “selling process” from overcoming barrier of up-

front capital cost to offering a low-cost substitute for grid

electricity

Shifts risk / responsibility from homeowner to responsible

third-party service provider

Aligns solar electricity with traditional utility payment

lease/PPA payments structures (i.e. heat, electricity, phone,

cable)

Often a Immediate, visible reduction in bills

Lock-in rates and/or guaranteed production**

Allows homeowners to “do the right thing” without having to

write a large (or any) check upfront 14

Ener-Pacte – Shifts Risks from Farmers to Investors

Reduce Investor Risk

Ener-Pacte

Holdings

Project

SPV 2

Project

SPV 1

Senior

Debt

Project

SPV n

Junior

Debt

Diversification & Aggregation

Since we manage PV assets all over Europe, we diversify risk. There is one credit line for several projects, the default of one project doesn’t impact the payback

Process

Coverage Ratio

Since we increase the debt periods until the end of the Feed-in-tariff (typically by 5 additional years) the Coverage Ratio for Senior Debt is > 150 % and for Junior debt > 200 %

We install clear and transparent processes for the management of assets. OPEX are payed directly by holding so there is no risk of not being covered

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Rates Profile and Uncertainty

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residential tier 1

historical training data simulations

rate risk

CONFIDENTIAL

Type of Risk

Typically borne by ...

Managed by ...

Performance Risk

Will the promised amount of electricity

be delivered?

EPC

Technology, maintenance

Credit Risk

Will customer pay?

Investor Developer

Credit screen

Goal: Put risks in the hands of those most able to deal with them

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Measuring and Reducing Risks

Rate Risk

How will future electricity rates

change?

Customer

Contract

Investor

Transfer Risk

What happens if the customer moves?

Customer

Contract

CONFIDENTIAL

THANK YOU!