Following the Policy Flow:Where’s the Money?

Presentation Outline

• Overview of Westar

• Programs Affecting Bioenergy Industry

• Policy Outlook

• Policy Recommendations

• Question & Answer Session

Mission Statement

Westar Trade Resources is committed to assisting clients to develop sustainable businesses in three ways:

Sustainable Ecology - Providing solutions that protect, preserve and enhance the environment for the needs of today without detracting from the capability to provide for the needs of future generations.

Sustainable Technology - Developing new and improved sustainable technologies that can provide technical solutions for a wide range of problems and also create new opportunities.

Sustainable Profitability - Creating long-term financial stability by developing and executing cost-effective financing solutions, risk strategies, and an adequate capital base.

Business Development Services Include:

Planning

Feasibility StudiesBusiness PlansSite SelectionFeedstock SourcingRisk AssessmentBusiness DevelopmentStudies

Developing

Marketing DevelopmentOff-take ContractsProduct DevelopmentInternational Marketing, Development & Financing

Financing

Traditional Financing Non-Traditional Financing USDA & DOE Loan Guarantees Government Grants OPIC and Ex-Im Bank Financing Governmental Liaisons

Key Client Sectors

• State & Federally Charted Banks

• Investment Banks• Equity Providers• Family Offices &

Hedge Funds• International

Development Banks

• Traditional & Investment Banks

• Venture Capital Companies• Multinational Corporation• Family Office & Hedge

Funds• Oil & Gas Companies• Food Production

Companies• Air Transport Companies• Air, Land, & Water Fuel

Users

• Biofuels & Bioproducts• Renewable Power• Value-Added Agriculture• Water Production & Recycling• Smart Grid Technologies• Sustainable Fiber Production• Energy Efficiency

Technologies• Transformational Technologies

Technology Providers & Stakeholders

Investors & Industry

Stakeholders

Banking & Finance

Stakeholders

Westar Bioenergy Clients

*Westar has assisted clients in obtaining over $900 Million in total financing.

4

$54 million USDA Loan Guarantee

$250 million USDA Loan Guarantee$99 million USDA Loan Guarantee

$105 million USDA Loan Guarantee

$232 million USDA Loan Guarantee $88 million USDA Loan Guarantee

Programs Affecting Bioenergy Industry

CurrentLegislation

ARRA2009

EISAof

2007

      

2008 Farm Bill Programs

    Section305, RuralElectrifica tion Act of1936; 7U.S.C.

904, 935

DOEBudget

Appropria tions

Type 1603 TaxGrant

RFS2 USDA9003Loan 

Progra m

USDA9007Grant

& Loans

USDA9011BCAP Grants

USDA9008BRDI 

Grants

Value-Added

Producer Grant 

Program

B & ILoan

Guarant ee 

Program

USDARuralUtilityService

DOEGrants

Pellets X     x   x   x x   x

Power X     x   x   x x x x

Thermal X     x   x   x x x x

Biogas X     x   x   x x x x

AdvancedBiofuels

  x x x x x   x x   x

Chemicals           x   x x   x

1603 Tax Grant - $11.6 Billion

• As of May 8, 2012, the 1603 Program had awarded $11.6 billion to almost 38,000 projects and $38.6 billion in total investments.

• Awards under the program have been made to all 50 states. Eight states have received over $350 million in 1603 program awards.

Source: NREL: 1603 Treasury Grant Expiration: Industry Insight on Financing and Market Implications

USDA 9007 Renewable Energy for America Program (REAP) - $800 million (2003-2012)

• The REAP Program has assisted rural producers and small businesses in developing thousands of renewable energy and energy efficiency projects, and created or saved thousands of jobs.

• REAP loans and grants allow for a longer- term loan for these type of investments that can be paid for with the energy savings or profits from the investment.

• Since 2003, REAP has funded more than 1,000 solar projects and over 560 wind projects.

USDA 9003 Biorefinery Loan Guarantee Program – $1.08 billion

• Program has been very successful at assisting in the construction of advanced biofuels projects. Currently, nine projects have been awarded with a combined total loan guarantee value of over $1 billion.

• Another $1 billion leveraged in equity and provided a bridge for technology risk for a first of a kind commercial facility.

• This program has been instrumental in bridging the technology risk gap for financing, and getting some steel in the ground as well as establishing commercial production targets for RFS2.

RFS2

• With long development timeline and barriers to entry for advanced biofuels, the RFS has stood as the best worldwide development policy platform.

• Stability and strength of a long-term policy like the RFS has encouraged investors to make these long-term investments with the goal of an assured, long-term market in the future.

• Total private sector investments surpassed $10 billion in 2011 of which $3.8 billion was in new biofuels financing or in advancing early-stage companies. The U.S. leads the world as the leader in new investment, with 22 transactions totaling $1.104B (Source: Biofuels Digest, “Biofuels DealFlow”).

• If the RFS were to be modified or eliminated, investment dollars would be quickly diverted into other sectors.

USDA Business and Industry Guaranteed Loan Program - $1 billion for 2013

• Strong program with mandatory appropriations each year, and can be used for a wide variety of projects in rural areas, including all of the types of renewable energy projects that we are examining.

• Recent drawbacks included the lowering of the lending limit from $25 million to $10 million. As most renewable energy and biochemical projects are usually over this limit, the B & I program will have a diminished ability to commercialize the industry in the near term.

USDA Rural Utilities Service - $263 million in 2012

• As recently reported in Biomass Magazine, the Rural Utilities Service (RUS) recently awarded $263 million in loan guarantees to three biomass power plant projects.

• As other sources of financing are drying up or changing the in the renewable electricity space, this program is a good one to consider for future funding if a company is committed to walking through the process and can live with a slow approval process.

• Funds are available as the RUS has been a fixture at USDA since 1936, and funding for this program is provided by interest and principal payments from other loans made over the years to fund most of the rural electric and telephone cooperatives.

Policy Outlook for Bioenergy Industry

Policy Recommendations

• Expedited review process for the USDA 9003 program: Because the review

process is shared by USDA, DOE, and OMB, a more seamless, transparent, and customer service-oriented approach would assist in implementing the process of approval and allow for the evaluation and review process to proceed in a more timely manner.

• Increased Research and Development Dollars: This is important to establishing lower cost technologies, better feedstocks, and more efficiency in the marketplace. However, the majority of these dollars need to be directly tied to commercialization performance in the short term as opposed to basic research and development.

For more information, contact:

Cindy Thyfault, Founder and CEO

Westar Trade Resources2030 Main Street, Suite 410

Dallas, TX 75252

214-320-0900

www.westartrade.com