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Federal Sector Market Opportunities for Solar Energy Renewable Projects

2010

John Dukesjdukes@pepcoenergy.com

PEPCO ENERGY SERVICES

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Agenda

• Market opportunities• Market barriers• How to make it thrive• Elements of Successful Project• Example Projects• About Pepco Energy Services

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Market Opportunities

Analyze market factors that may influence the demand solar as a federal market opportunity.

Executive Orders and Acts of Congress influence the demand for solar energy

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Market Opportunities

1. Location1. Agencies have a tremendous amount of land

(BLM, USDA, Forest Service, Prisons)

2. Contracts1. Government agencies can structure interagency

agreements (IAA) to deploy renewable solutions.

2. MATOC, ESPC, UESC

3. Products1. The federal government manufacturers its own

PV modules (prisons)

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Market barriers to solar projects

1. Personnel knowledge1. Critical mass of subject matter experts (What is a good deal? What is the deal?)2. Critical mass of contract specialists and contract officers

2. Contract1. Limited authority (10-years)2. Land lease/ easement

3. Funding1. SREC risk (pesky anti deficiency clause)2. Tax treatment (assignments)

4. Interagency communication1. Who owns the system, land, meter (property Mngr, Tenants, Asset Mngr)

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How to make the solar market thrive

1. Government funds 100% of the project (Direct funding - ARRA, MILCON)

2. Go alternative finance through extended authority contracts1. IAA through Prisons, ACE2. IDIQ through DOE or ACE3. MATOC4. Through the GSA Schedule (white house procurement)

3. Bundle PV with other ECMs. Compare the annual kWh expense with and without solar to create a blended rate that may be more palatable to the agency.

4. Rely on the experts to educate. DOE, NREL, FEMP and FPI 1. Hold the government accountable for their mission. Support agency initiatives to provide

training to contract officers, contract specialist and COTR’s. Request the experts to provide template lease/easement documents, provide guidance on SREC, taxes, ownership, etc.

**Identify a government employee as the “champion” of the project.

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Elements of a successful project

1. Project must be of good design, good production, investment worthy from a qualified source.

2. PV solution must be “near” budget neutral. Green power for less or equal cost to Brown Power

3. Implementation accomplished within short-term window, before people retire

4. Ensure long-term renewable resource (land use, connected load)

5. Reduce/remove project or cash flow risk (monetize SREC, ITC and NMTC or bonds)

6. Best-in-class commercial-off-the-shelf infrastructure

7. Make reporting system production easy

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Example projects

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Pepco Energy Services

Over $800M in Projects since ‘95

NAESCO Re-Accredited since 2007

Pepco Energy Services, Inc. Diversified Energy Services Company (ESCO) $2.4 Billion 2009 Revenue 330 employees Unregulated Subsidiary of Pepco Holdings, Inc. (PHI) PHI also owns; Pepco, Atlantic City Electric and

Delmarva Power

• Pepco Holdings, Inc. Investment grade rating $15.1 billion Assets $4.0 billion Shareholder Equity $11.4 billion 2009 Revenue

# 1 Rated MD DGS

Over a 100-Year History

VA, PA Qualified ESCO

Renewable Energy Commitment

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1300 N. 17th StreetArlington, VA 22209

1-703-253-1800www.pepcoenergy.com

PEPCO ENERGY SERVICES