G R E E N B A N K ( GB ) — Presentation to Stakeholders

S T R I C T L Y   P R I V A T E   A N D   C O N F I D E N T I A L

This document is confidential and is intended solely for the use and
information of the individual to whom it is addressed
The Coalition for a Green Bank members
Coalition co-chairs:
 Reed Hundt
 Todd Filsinger (PA Consulting Group
Steering Committee
 Monty Humble (Mesa Power Group, LLC),
 Phillip P Generalli (Cavallo Energy),
 Kenneth Marks
 Alan Fleishman
 Harrison Wellford (Terrawell Energy)
 Michael Hoffman (Riverstone Holdings LLC)
 Mike Gergen (Latham & Watkins)
 William Gleason (Chinook Energy)
 Gilbert Barnes (Greencore Capital)
Coalition Members
 Ben Rogers (Grid Storage Technologies)
 Bruce Thompson (US Mainstream Renewable Power
Inc.)
 Dave Chen (Equilibrium Capital Group)
 Harold Borden (Cavallo/Cross Hudson)
 Howard R. Berke (Konarka Technologies, Inc.)
 Jason Scott (EKO Asset Management Partners)
 Jeanine Hull (Strategic Energy Advisors, Inc.)
 Jeffrey King (Clean Economy Network)
 John E. Mullen (AMB International Finance, LLC),
 Josh Becker (New Cycle Capital)
 Joshua Greene (Patton Boggs)
GREEN INVESTMENT BANK
Coalition Members
 Kristian Hanelt (Tioga Energy)
 Larry Leete (Kanepi Innovations)
 Larry Rayman (Gas Turbines International, LLC)
 Mark Patkunas (Higher Power Energy, LLC)
 Michael Bruce (Manifest Energy Group)
 Michael Peck (MAPA Group)
 Michael Telford (Greencore Capital)
 Mitchell Dong (Mohave Sun Power LLC)
 Preston Read (RecycleBank)
 Raymond J. Albright (AMB International Finance, LLC)
 Robert Marsh (Mohave Sun Power LLC)
 Scott E. Jorgensen (Solarsa, Inc.)
 Steve Boyd (Boyd Strategies)
 Steve Taub (GE Energy Financial Service)
 Thomas R. Rosén (Green Amperage Partners, LLC)
 Tom Casey (CURRENT Group, LLC)
 Paul Kaplan (Senior Advisor to the Secretary of Finance and
Administration, Commonwealth of Kentucky)
 Bob Jones (Alston & Bird)
 William G. Morin (Applied Materials)
 Kevin Scannell (Tessera Solar)
 Ken Emma (Helix Electric, Inc)
 Joshua Weinstein (AMSOLAR Corporation)
 Karen Williams (Lane Powell)
 Marc Porat (Serious Materials, CalStar, ZETA)
 Matt Golden (Sustainable Spaces
 Michael Eckhart (American Council On Renewable Energy
CGB C O A L I T I O N T E A M
(ACORE))
The Green Bank will spur clean energy development

Through funding renewable generation and other clean energy initiatives, the Green Bank will:

 Create new, clean generation without raising consumer rates or impairing shareholder value

 Create job growth

 Reduce CO2 emissions

 Decrease foreign oil dependence

Limited
consumer
impact
New jobs

Clean
Energy
Reduced
CO2
emissions
Decreased
foreign oil
dependence

GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M

By supporting projects across the value chain

Current financing challenges:

 Renewable energy is relatively new
-Many prospective project investors and lenders are reluctant to bear the risks of these unfamiliar technologies and resources.
 Require large amounts of capital
-“First of a kind” projects that require large amounts of capital to prove a new technology at commercial scale are particularly
difficult to finance, even for the most experienced renewable energy investors.
 Some projects require aggregate financing
-Project financings start at around $20 million per deal, but solar or biogas projects can cost $500,000 or less. Aggregation can
help overcome this issue in the same way it has streamlined the residential mortgage market but it requires commonly-
accepted underwriting standards.

The Green Bank will address these challenges and support projects across the value chain resulting
in a balanced investment with limited impact to the consumer.

Transmission to Substation to
Fuel Power Generating Supply Substation Distribution Customer/Demand

Favorable financing
Investment in smart
Creates Investment in Investment in terms limits the
grid and other
fuel diversity clean energy aging infrastructure impact on retail
efficiency projects
electricity rates

GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M

Green Bank is needed today to jumpstart renewable development
which has slowed tremendously due to lack of financing

 Clean energy financing has fallen off at a dramatic rate leaving projects stalled or in
various stages of development
 Banks and other financial institutions are offering smaller loans at higher interest
rates.
Renewable Investment
Over the Past Year
Headlines $6

Billions
“Funds delay takes wind out of
$5
renewable energy’s sails” May 4, 2009

$4
“United Solar Ovonic to furlough
Greenville workers for four weeks, delay $3
expansion” May 6, 2009
$2
“Noble shelves 2nd phase of Chateaugay
$1
wind farm, cuts staff” Jan 13, 2009
$0
Q1 2008 Q4 2008 Q1 2009

Source: New Energy Finance - Asset

finance of new-build renewable energy
projects in the US

GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M

There are currently proposals in the House and Senate proposing a
Green Bank in one form or the other
 There are two proposals in Congress right now which intend to provide financial
assistance for clean energy through a portfolio approach to lending.
Green Energy Bank of 2009
Author: Congressman Van Hollen
Major Differences •Independent (not within DOE)
•Defines ‘qualified clean energy projects’
(listing specific, potentially qualified
energies/technologies, such as solar and even
nuclear)
•Funded from treasury with $10B in Green
Bonds and treasury will provide up to $50B in
Bonds at any one time
GREEN INVESTMENT BANK
21st Century Energy Technology Deployment
Act
Companion bills by:
Author: Congressman Inslee
Author: Senator Bingaman
•Within DOE (called Clean Energy Deployment
Administration) by reforming DOE loan
guarantee program
•Puts emphasis on technologies are those
‘perceived as too risky by commercial lenders’
or ‘breakthrough technologies.’ Inslee caps
financial support for any one technology at
20%.
•Funded from treasury with $10B seed money
and then intended to self fund through
revolving loan using Treasury Funds and
costs/payments from the existing DOE Loan
Guarantee Program .
CGB C O A L I T I O N T E A M
The Green Bank will support up to$1T in investment in clean
energy

 Treasury can issue up to $50B at one time of Green Bonds which will support
investment in up to 20-30 GW of renewable generation and new transmission per
year for 20 years.

Funding
up to a
total of
$
$50B

$ Supports up
Loan
guarantees to 20-30 GW
Combined of renewable
Support up with equity, projects
to $500B in can support annually for
GREEN
loans over up to $1T in 20 years
BANK
20 years investment
in clean
Loan energy
guarantees
$
GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M
The clean energy projects will be critical in meeting renewable
and CO2 targets set forth by the administration

 Generation built through Green Bank has the potential to reduce carbon emissions
by an estimated 25-65 MM short tons per year.

Target Emission Levels versus Forecasted Emission Levels

Electricity Sector
3500
Green Bank emission reducing potential
3000 Target
Forecasted incremental emissions
reduction
2500
needed
2000
MM Short Tons

1500
Target Emission Levels
1000

500

0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M

Hold consumers harmless

 The Green Bank will allow for more favorable financing of renewable resources.
— Lower cost of debt
— Higher leverage
— Potential for longer debt maturity

 By doing so, renewable resources can be added without an increase in retail rates.

Power Price Required to Support

Renewable
Hurdle Investment
Rate ($/MWh)($/MWh)
$75 National Average Retail Rate for Generation

$70 Based on 2007 U.S. average

retail rates, the price of
generation was $60/MWh in
$65 the U.S. A wind plant
financed with Green Bank ,
$60 would not cause an increase
to that price. Without Green
Bank, given current
$55 financing conditions in the
private markets, prices
$50 could rise approximately
With Green Bank Without Green
$10/MWh.
Bank

GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M

This is accomplished through lower cost of debt provided by Green
Bank

 The financing model assumes higher leverage and lower cost of debt under the
Green Bank scenario.

Financing with Financing without

Green Bank Green Bank
Capital Cost $2200 $2200
Because Green Bank Class IV Wind
will provide a lower Cost of Debt 4.5% 8.5%
cost of debt, projects
can still provide 15% Return on Equity 15.0% 15.0%
return on equity, and
meet debt coverage Leverage Ratio 47% 43%
ratios without an
increase in rates.1 Debt Maturity 16 16
Required increase $0 $9.50
in current rates1

1
Assumes 2007 national average wholesale generation electricity rate of $60/MWh ($2007).

GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M

Clean energy investment will create up to 1 million new jobs for
$50B of investment per year

$50 billion invested in clean energy would create and maintain :

 1 million new jobs, with a significant proportion in the struggling construction and
manufacturing sectors1

 4x times more jobs than spending the same amount of money within the oil industry,
- Triple the number of good jobs—paying at least $16 dollars an hour—as spending
the same amount of money within the oil industry1

 150,000 more jobs than a similar amount of spending directed toward household
consumption1
Job Creation per $50 B Investment

Oil Industry 250,000

Household
850,000
Consumption

Clean Energy 1,000,000

0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 Source: Center for American Progress
1

The Green Bank would lead to a steady and reliable creation of these good jobs, so that human
capital can be upgraded, and wages can rise with productivity gains and on the job training.
GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M
The Green Bank is also a critical element to energy independence

 Renewable generation created through Green Bank could:

— Provide enough electricity to power approximately 22.9 M car/year1
— Decrease gasoline consumption by an incremental 12.6B gallons/year2
— Decrease oil consumption by an incremental 642 million barrels/year or
1.8M barrels/day3

Crude Oil and Petroleum Products

― The US consumed 19.5 million barrels per
8
7 Consumption day of petroleum products during 2008.
Billions of Barrels

6
5 ― 58% of petroleum products were imported.
4
3
Imports
― Oil provides 97% of the fuel used by
2 America’s enormous fleet of trucks,
1
0
trains, planes, ships, buses and cars.
81

83

87

89

91

93

97

99

01

03

05

07
85

95
19

19

19

19

20
19

19

19

19

19

19

20

20

20
Source: EIA

1
Assumes 20 GW of renewable generation produces 63,000 GWh. Electric car can go 40 miles/8kwh and standard
gas sedan goes 25 miles/gallon. Current average gallon usage/year/car is 550 gallons. Using an electric car, this is
equivalent to 2,750 kwh/year/car.
2
Assuming it replaces 550 gallons/year/car.
Assumes that 19.6 gallons of gasoline are produced from one barrel of oil.
3

GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M

However, due to the drop in output for the whole economy, new
investment will require stimulus

 The output gap is predicted to be 6 ppts of GDP by 2009Q4 (in log terms)

 The Congressional Budget Office (CBO) projects output under current

law and potential out to 2019 and based on that output does not revert to potential
until 2014.


GDP and CBO estimate of potential GDP

2000-2019
Trillions of 2000 Dollars

2014
G DP
ia l
nt
te
Po P
GD

SOURCE: CBO
GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M
In particular, the energy markets do not need new capacity until
the 2015-2016 time frame --unless compelled by RES and GBank

 There is a currently an oversupply of generation in the U.S. needed to meet demand, as measured
by reserve margin ((Supply – Demand)/Demand))
 Based on supply projections and economic growth, new generating capacity is not needed until
2015-2016, on average across the U.S.1

U.S Reserve Margins 21%

16%

31% 35%
21%
15% 15% 2009 2021-
2023

8% NEPOOL
25%
2009 2017- 2009 2014- 17%
2009 2021- 2019 2016
2023 21%
MRO MISO 15%
Northwest 13% 14%
2009 2012-
28% 2014
31%
18% 15% 2009 2013- PJM 2009 2020-
2015 15% 2022
14%
CO-WY 20% New York
15%
18% 48%
2009 2012- 14% 2009 2018-
2014 2009 2017- 2020
2019
California TVA 2009 2013-
2009 2012- SPP 2015
2014 15%
25% VACAR
AZ-NM-NV 19%
13% 15%
2009 2019- 35%
2021
Reserve Margin (%)= (Supply-Demand/Demand) 19%
2009 2015-
2017 Entergy 2009 2014-
2016
2009 Reserve Margin ERCOT
Southern
2014-
2009
Equilibrium: Period when new capacity is needed to 2016

meet target reserve margins required for reliability FRCC

Source: PA Consulting Group and copyrighted material excerpted 1
Does not represent particular areas where transmission constraints may cause
from Ventyx’s Velocity Suite Energy Map
load pockets that may require generation earlier.
GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M
Private investment spurred by Green Bank in clean energy could
have similar impacts as FCC strategies on telecom investment

 FCC regulatory strategies in the 1990s spurred more than $850 Billion in private
sector investment over 10 years, with no federal appropriations

14,612

$000s, 1997-2007
18,359 16,065

10,624
25,961
10,722

5,611 14,532
Cable 6,810 11,368 13,233
14,485 9,509
13,484 10,243 9,043
Wireless 95,126 22,880
25,977 25,272
26,436
73,569 71,776 19,916 22,482

48,447
43,285
Wireline 34,594
26,260 26,619 29,363 28,188
24,588

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: CIBC; SG Cowen; Kagan; CTIA
GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M
Funding Options for Green Bank

1. EESA/TARP
Treasury issues $50b in Green Bonds pursuant to Green Bank Act (2009) and issues Green Bonds under TARP (available until October 3, 2010), Emergency
Economic Stabilization Act of 2008,…..OR
Treasury uses Capital Purchase Program and/or Term Asset-Backed Lending Facility to purchase $10b - $50b in capital stock issued by Green Bank (Treasury
Secretary is already authorized to act after consultation with Chairman of the Board of Governors of the Federal Reserve System)
2. NEW APPROPRIATION
The mechanism apparently implied by Bingaman Bill
3. ALLOCATION OF CAP REVENUE
Distant in time, uncertain, contemplated initially by Cong Inslee

GREEN INVESTMENT BANK CGB C O A L I T I O N T E A M