New York State Energy Research and Development Authority

New York State Energy Research and Development Authority - Value of Distributed Energy Resource Informational Presentation Thursday, April 6, 2017

2 NYSERDA VDER Next Steps 1. NY-Sun Program • Transition to VDER • Market cost reductions 2. Low-income CDG participation 3. Storage 4. Greenbank finance support

3 NY-Sun Program - Transition to VDER Stakeholder participation/feedback 1. Adapt MW Block Program • • System size PBI Cashflow Adders Unused funds & attrition 2. Transparency – interconnection costs

4 NY-Sun Program - Market cost reductions 1. Soft Cost Working Group – Much like IPWG 2. Soft Cost Solution Development and Deployment • Product development • Guidebook • PILOT calculator • SEQR guideline • • 3. Outreach and education • Marketing CDG Technical assistance for municipalities • Provide consultative resource Funding Opportunities • Soft cost reduction incentive grants • Soft Cost Innovation Fund – RFP opportunities

5 Key Upcoming Deadlines Utilities will file Implementation Proposals, including value stack calculations Deadline for projects with CESIR completed more than 60 days pay 25% construction payment Deadline for non-Mass Market projects to submit 25% construction payment or interconnection agreement to receive Phase 1 NEM Utilities will publish the revised queue Deadline for projects with CESIR completed less than 60 days pay 25% construction payment First group of projects with prelim review pay for CESIR 90 -day window NY-Sun MW Block review and stakeholder engagement process Today 4/19 5/1 7 6/1 7/12 7/17 10/31

6 LMI Community Solar Initiative Concept • Approximately $24 million Clean Energy Fund investment to be proposed to establish market for LMI community solar and achieve significant LMI participation in early community solar market • Use NYSERDA’s purchasing power to reduce costs and risks for both LMI customers and community solar developers – Program goals for low income and moderate income segments • Customer outreach, education, and enrollment through ongoing LMI programs, community partnerships, and/or project sponsors

7 Storage "Staff shall work with NYSERDA and market participants to develop an Energy Storage Roadmap that identifies current and anticipated electric system needs that storage is uniquely suited to address, levels of energy storage that provide net benefit to ratepayers, and market backed-policies, consistent with REV objectives, to build energy storage in NY. "

8 Value of Distributed Energy Resources: Technical Peter Costello, Managing Director, Legal & Regulatory Affairs Conference April 6, 2017 8

9 Agenda 1. NY Green Bank Overview & Update 2. CDG & Financing Opportunities 3. Working with Us

10 NY Green Bank Overview & Update

11 NY Green Bank Overview $1 billion State-sponsored investment fund that works with the private sector to alleviate financing gaps in New York’s clean energy markets Minimum Investment Requirements Additional Considerations § Capital will be repaid and will earn § Market transformation: Operate in appropriate market rate § Project will result in reduced GHG emissions § Transaction involves one or more private sector financial parties wholesale (not retail) markets § Additionality: Unique NY Green Bank role in addressing a specific market barrier § Scalability: Transaction can be replicated in the private market

12 The Case is Compelling: Growing Momentum Over the past two years, NY Green Bank has made significant contributions to the Governor’s clean energy initiatives and NY’s clean energy financing market* STIMULATING NEW CLEAN ENERGY PROPOSALS IN THE STATE Proposals received for $1. 8 billion in NYGB investment, representing total proposed clean energy investment in NYS exceeding $5. 0 billion STRONG ACTIVE PIPELINE Active pipeline of transactions moving towards closing is ~$597. 0 million PORTFOLIO DRIVING MATERIAL CLEAN ENERGY INVESTMENTS ACROSS NY Investments support total clean energy project costs of $1. 3 billion, with a current NYGB portfolio of $304. 7 million across technologies, end-users and geographies *All data reflected above for period ending December 31, 2016. MOBILIZING PRIVATE CAPITAL NYGB’s current portfolio represents expected mobilization ratio of ~5: 1 in private sector dollars REVENUE GROWTH PAVING THE WAY TO SELF-SUFFICIENCY Over $9. 6 million in revenues generated CONTRIBUTING TO REV & THE CES Estimated lifetime greenhouse gas reductions up to 5. 4 million metric tons, equivalent to removing over 60, 000 cars for 19 years

13 Diverse Clients & Counterparties

14 CDG & Financing Opportunities

15 Community Distributed Generation & NY Green Bank As an organization NY Green Bank is: • Forward looking and forward leaning in terms of where the market will be when objectives around a particular transaction type are met; and • Supportive of new business models and new precedents where there is not yet scale. As such, NY Green Bank develops financing structures to support those business models and does so in a manner that is consistent with where we expect markets to be following precedent, seasoning, and scale. • This is where we will strive to act as relates to CDG involving VDER NY Green Bank is putting significant resources into taking a leading role as to how to efficiently approach and participate in this market

16 Community Distributed Generation & NY Green Bank Financing NY Green Bank is actively engaged in discussions with stakeholders to develop and advance NYS CDG markets. Eight separate CDG financing proposals have been received from various parties to date, and each has made significant progress in project development and subscriber acquisition plans Transaction Structures Lending Approach Considerations § Construction financing § Borrowing base tied to NPV of cash flows § Term financing, including tax equity back- § Cash flows to consider projects that are in leverage § Tax equity guarantees various tranches under VDER

17 Financing Costs re: VDER NY Green Bank will offer terms and conditions for financial products that ultimately result in a reasonable return on capital and reasonable expectation of repayment, consistent with our mandate Focus and Desired Outcome Transition from NEM to Phase One: § Ideally investors will receive appropriate § Forecasting variables in Value Stack will returns while customers save on utility bills § NYGB will work to develop methodologies to monitor and forecast the Value Stack – esp. those which are market and capacity related § NYGB will monitor value of credits vs. actual metered rates be challenging and NYGB will work w/ developers on financial structures that take these values into account, including: § Energy Value (LBMP) § Capacity Value § Environmental Value § Demand Reduction Value

18 Working with Us

19 Open Solicitation Visit greenbank. ny. gov for open solicitation and instructions for online submission § Open solicitation seeks financing arrangements meeting the NY Green Bank mandate and investment criteria § Proposals evaluated on a rolling basis § NY Green Bank team is available to discuss potential investment ideas. Please reach us at info@greenbank. ny. gov

20 Elements of a Strong Proposal § § § Capable experienced management team Quality counterparties Interested and engaged private sector capital providers Identified and well articulated role for NY Green Bank Traditional project finance / ‘bankability’ concerns have been evaluated u. Construction u. Operating u. Offtaker Risk / Demand Risk u. Regulatory Risk u. Commodity u. Refinancing & Rate Risk § A financial model with realistic assumptions

21 NY Green Bank | 1359 Broadway, 19 th Floor New York, NY 10018 | (212) 379 -6260 | greenbank. ny. gov