The  informa,on  contained  in  this  presenta,on  is  confiden,al  and  proprietary.    It  is  meant  solely  for  the  intended  recipient.    Access  to  this  presenta5on  by  anyone  else  is  unauthorized.    If  you  are  not  the  intended  recipient,  any  disclosure,  copying,  distribu5on,  or  any  ac5on  taken  or  omi<ed  in  reliance  on  this,  is  prohibited  and  may  be  unlawful.  

August  2012  

Market  Overview    

Freedom Solar is an industry-leading full service solar installation company. We provide our customers with a turnkey solution including free site evaluation, consulting, designing, permitting, financing, installation, and ongoing monitoring. Freedom Solar will design a system that is right for your home or business and determine the optimal utility rate structure for your remaining needs.

About us

Encompassing residential, commercial, and government sectors. Our installation team is NABCEP certified and has over 10 years of solar installation experience and completed over 7 megawatts of projects to date.

Experience

We handle every aspect of solar power installations—including technology evaluation, engineering and design, construction, monitoring, and ongoing maintenance and support—to ensure the most efficient and reliable solution for the lifetime of the system.

Customer Service

In addition to our technical aptitude, Freedom Solar guarantees standards of the highest level in residential and commercial construction. We specialize in roof mounts, ground mounts, pole mounts, and carports/parking structures.

Quality

Freedom  Solar  at  a  Glance  

Bret  Biggart,  Managing  Partner    Prior  to  joining  Freedom  Solar,  Mr.  Biggart  was  Director  of  Business  Development  for  WaterStreet  Investment  Consultants  &  EklekHkos  Capital  Management.      Prior  to  WaterStreet,    he  was  Vice  President  of  Business  Development  at  Saracen  Energy  Advisors.  In  that  role,  he  managed  investor  relaHons  with  prior,  current,  and  prospecHve  investors,  which  included  domesHc  and  internaHonal  high  net  worth  individuals,  hedge  fund  of  funds,  endowments,  foundaHons,  and  public  pensions,  represenHng  over  $1.4  billion  in  assets  under  management.    Prior  to  Saracen,  Mr.  Biggart's  investment  background  consisted  of  over  four  years  with  two  private  equity  firms.  First,  as  a  senior  analyst  at  Pacific  Corporate  Group,  a  private  equity  management  and  consulHng  firm  and,  most  recently,  as  an  Associate  at  Genesis  Park,  a  Texas  based  private  equity  firm.    Mr.  Biggart    received  an  MBA  from  the  Jones  School  of  Business  at  Rice  University  and  earned  a  B.A.  from  the  University  of  Texas  at  AusHn.  

Adrian  Buck,  Chief  Installa,on  Officer  Mr.  Buck  is  a  pioneer  in  the  Texas  solar  market,  with  over  ten  years  of  solar  installaHon  experience  to  date.      Prior  to  founding  Freedom  Solar  in  2007,  he  was  the  Lead  Installer  for  Texas  Solar  Power  Company.      Mr.  Buck  has  worked  with  many  of  the  Renewable  Energy  companies  in  central  Texas  and  has  installed  a  wide  variety  of  systems  ranging  in  type  and  size.    He  has  installed  Solar  Thermal,  Wind  and  Hybrid  systems,  and  specializes  in  Commercial  PV.    Types  of  systems  include  Roof  mounts,  Ground  mounts,  Pole  mounts,  and  Carport  structures.    Prior  to  beginning  his  career  in  renewable  energy  in  2002,  Mr.  Buck  managed  producHon  lines  for  Applied  Materials  since  1997.    Mr.  Buck  is  a  journeyman  electrician  and  was  one  of  the  first  100  people  in  the  country  to  receive  the  NABCEP  cerHficate  and  be  recognized  by  the  North  American  Board  of  CerHfied  Energy  PracHHoners,  as  a  Professional  PV  installer.      

Chad  Preece,  Chief  Opera,ng  Officer  Mr.  Preece  brings  over  six  years  of  PV,  solar  thermal,  and  wind  power  system  installaHon  and  design  experience,  ranging  from  small  scale  residenHal  to  large  scale  commercial  projects  across  the  state  of  Texas.  As  an  installer  at  Texas  Solar  Power  Company,  Mr.  Preece  was  responsible  for  leading  mulHple  crews,  installing  and  designing  over  180KW  at  the  Mueller  Megawa_  project  in  AusHn.  Mr.  Preece  has  also  assisted  in  the  installaHon  of  over  5MW  of  solar  in  his  career.  As  co-­‐founder  and  Chief  OperaHng  Officer  at  Freedom  Solar,  he  is  responsible  for  managing  projects  as  well  as  supplier  and  customer  relaHonships.  

Management  Team  

U8lity  1MW+  

Commercial  25kW  –  500kW  

Residen8al  3kW  -­‐  15kW    

Freedom  Solar  sa8sfied  clients  include:  

•     U.S.  Army  •     U.S.  Air  Force  •     NaHonal  Guard  •     State  of  Texas  •     Texas  Parks  and  Wildlife  •     Department  of  Defense    •     City  of  AusHn  •     University  of  Texas  •     Office  Depot  •     Alori  ProperHes  •     Coahoma  Independent  School  District  •     Electronic  Power  Design  Inc  •     General  Services  AdministraHon  •     AusHn  Community  College  •     Whole  Foods  •     Lake  Flato  •     Alamo  Architects  •     OCO  Architects    •     Overland  Partners  

Commercial  market  

underserved  

Target  Market  

Project:    AusHn  Community  College  Type:    Roof  Mount  

Size:    180kW  

InstallaHon  Examples  

Project:    Whole  Foods  Arbor  Trails  Type:    Ballasted  Roof  Mount  

Size:    15kW  

Project:    UT  JJ  Pickle  Research  Center  Type:    Ground  Mount  

Size:    340kW  

InstallaHon  Examples  

Project:    Camp  Mabry    Type:    Carport  Structure    

Size:    150kW  

Project:    Demeo  Residence  Type:    Roof  Mount    

Size:    10kW  

Project:    Mueller  Development  Type:    Pole  Mount  (sunflower  array)    

Size:    15kW  

InstallaHon  Examples  

Global  Solar  RadiaHon  

Global  Solar  Radia8on  

Enough  sunlight  falls  on  the  earth’s  surface  every  hour  to  meet  the  en8re  worlds  energy  needs  for  one  year.      

US  Solar  RadiaHon  

US  Solar  Radia8on  

Poten8al:    100  square  mile  plot  in  the  Southwest  could  generate  enough  power  for  the  enHre  United  States.        Challenge:    Efficiently  distribuHng  that  power  customers  and  storage  of  that  power  to  be  used  at  night  

Falling  PV  Prices  

PV  Module  Pricing  Trend  Over  Time  (1985-­‐2011)  

total  manufacturing  cost  for  PV  panels  is  approximately  .55  cents  

Growing  PV  Installs  

US  PV  Installa8ons,  1Q10  –  1Q12  

Due  to  expira,on  of  100%  year  1  bonus  deprecia,on  aDer  2011  

Revenue  in  the  global  solar  industry  has  increased  from  $17  billion  in  2007  to  $93  billion  in  2011.  

Texas  UHliHes  

Texas  Electricity  Service  Territories  AUSTIN  ENERGY  

ResidenHal:        $2.00/W  rebate,  up  to  $15k  Commercial:        $0.14/kWh,  10-­‐year  PBI    

ONCOR  

ResidenHal:        $2.00/W,  up  to  $20k  Commercial:        $1.50/W,  up  to  $150k  

CPS  

ResidenHal:        $2.00/W  rebate,  up  to  25kW  Commercial:        $2.00/W  rebate  for  first  25kW,  

         then  $1.30/W  up  to  $100k  

EL  PASO  ELECTRIC  

ResidenHal:        $2.00/W,  up  to  $20k  Commercial:        $1.75/W,  up  to  $87.5k  

Power  GeneraHon  Stack  

TIME  OF  DAY  

ENERGY  DEMAND  

Real  Time  Market  

Nat.  Gas  Peaker  Turbines  

Nat.  Gas  Combined  

Cycle  

Coal  

Nuke  /  Wind  

$0.04-­‐0.05  

$0.04-­‐0.05  

$0.02-­‐0.04  

$0.12-­‐0.14  

Current  cap:  $4.50  June  2013  cap:  $7.00-­‐7.50  

PRICE/KWH  

SOLAR  PRODUCTION  

Texas  Solar  PenetraHon  

Texas  Renewable  Electricity  Sta8s8cs,  2010  

Source:  United  States  Energy  Informa5on  Agency  

Solar  comprised  less  than  0.05%  of  total  electricity  genera8on  in  Texas  in  2010.  

NaHonal  ResidenHal  Electricity  Rates  

Source:  US  Energy  Informa5on  Agency,  May  2012  

Texas  Electricity  Rate  

Texas  Residen8al  Electricity  Rates  vs.  Natural  Gas  

Sources:  United  States  Energy  Informa5on  Agency,  Bloomberg,  Natural  Gas  Week  

The  price  of  electricity  is  highly  correlated  with  the  price  of  natural  gas.  The  precipitous  drop  in  natural  gas  prices  is  a  headwind  for  solar.  

Purchase   Lease  PPA  

A  third-­‐party  financier  owns  the  system  and  pays  for  most,  if  not  all,  of  the  system’s  capital  costs.    In  return,  the  financier  receives  all  solar  incenHves  and  bills  the  off-­‐taker  a  set  rate  for  the  electricity  produced.    A  typical  PPA  term  is  15  -­‐20  years.  

Solar  off-­‐taker  receives  all  incenHves,  but  bears  full  capital  costs  associated  with  the  solar  equipment  and  installaHon.        

Similar  to  a  PPA,  but  the  off-­‐taker  is  billed  a  set  total  dollar  amount  unrelated  to  the  amount  of  electricity  produced  by  the  system.    A  typical  lease  term  is  15  years.  

Financing  Structures  Third  Party  Ownership  

The  advent  of  third-­‐party  ownership  structures  has  increased  compe88on  and  helped  lower  the  cost  of  solar.  Unfortunately,  third-­‐party  ownership  is  currently  not  allowed  in  municipally-­‐owned  uHliHes  (AE  &  CPS),  thus  limiHng  the  growth  potenHal  of  solar  in  Texas.  

California  &  Third  Party  Financing  

California  Residen8al  Solar  Market  

All  growth  in  the  California  residen8al  solar  market  has  come  from  third-­‐party  financing.  Cash  purchases  of  solar  systems  has  actually  fallen  year-­‐over-­‐year.  

AE  260kW  Commercial  

Project  Assump8ons  

Size              260  kW  Price  per  Wa_    $3.20  Panel  Wa_s      250  W  #  of  Panels      1040  

PV  Wa_s  Output    369,799  kWh  

AusHn  Energy  PBI    $0.14  /  kWh  for  10  yrs.  

DepreciaHon    5Y  MACRS  w/  50%  bonus  in  Y1  Electricity  Rate    $0.097  /  kWh    Rate  InflaHon    5.0%  

Total  Project  Cost          $832,000  Fed  Tax  Credit  (30%)    ($249,600)  Y1  DepreciaHon    ($148,512)  Y1  AusHn  Energy  PBI      ($51,722)  Y1  Energy  Savings        ($35,870)  Fed  Income  Tax  (35%)          $30,675  Year  1  Net  Cost          $376,920  

AE  Financials  

Returns  

10  Year  IRR      9.3%  25  Year  IRR      13.5%  25  Year  ROI    134%  Payback          5.5  years  

! ($832,000) !"#$%&'''( !"#$%&'''( "#$%&'!!!(

) $51,772 $35,870 "#)&*+%, ($30,675) $249,600 $148,512 "+--&'#', "#%*+',&!(

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+ $51,772 $45,781 ".)&--$, ($34,143) $7,129 ")'&-$#, #&.'+&&

* $51,772 $48,070 "..&#+%, ($34,945) "*+&#.), #,!'.),

$ $51,772 $50,473 "/'%&%+-, ($35,786) "**&+-., #).+',*,

, $51,772 $52,997 "/'+&)*., ($36,669) "*#&/'', #&&.'!*,

)! $51,772 $55,647 "/')&+/., ($37,597) "*.&#%%, #&,-',!)

)) $58,429 "-#&+%., ($20,450) "$)&.)., #%%&'$$!

)& $61,351 "*/&$-/, ($21,473) "$.&#)#, #%*&'*.$

)% $64,418 "*+&+/#, ($22,546) "+/&#)%, #-)-'+&,

)- $67,639 "*)&*$., ($23,674) "+$&.*-, #-.$'.,.

). $71,021 ")/&'%/, ($24,857) "+*&/*+, #.!-'*.,

)+ $74,572 ")+&-)%, ($26,100) "+#&+)%, #..%'&%)

)* $78,301 ")#&$'/, ($27,405) "-'&#.-, #+!-')&+

)$ $82,216 "#%&%/*, ($28,776) "-$&++', #+.*'.++

), $86,327 "#*&$%), ($30,214) "-*&//%, #*)%'+*,

&! $90,643 ".'&*+$, ($31,725) "-#&./#, #**&'.,+

&) $95,175 ".-&/)-, ($33,311) "*/&#*+, #$%-'-+!

&& $99,934 "..&.$+, ($34,977) "*+&.-), #$,,'-)*

&% $104,931 "/'+&.$/, ($36,726) "*#&%'-, #,+*'+&&

&- $110,177 "//'&/)), ($38,562) ")/&*/-, #)'!%,'&%*

&. $115,686 "//-&*#*, ($40,490) ")-&/.*, #)'))-'-%%

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AE  Return  Analysis  

!

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System size (kW) 26025 Year IRR 13.48%25 Year NPV** $446,810Property Value Increase*** $717,410

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CPS  75kW  Commercial  

Project  Assump8ons  

Size              75  kW  Price  per  Wa_    $3.20  Panel  Wa_s      250  W  #  of  Panels      300  

PV  Wa_s  Output    106,673  kWh  DepreciaHon    5Y  MACRS  w/  50%  bonus  in  Y1  Electricity  Rate    $0.097  /  kWh    Rate  InflaHon    5.0%  

Total  Project  Cost          $240,000  CPS  Rebate        ($100,000)  Fed  Tax  Credit  (30%)        ($72,000)  Y1  DepreciaHon        ($42,840)  Y1  Energy  Savings        ($10,347)  Fed  Income  Tax  (35%)              $3,622  Year  1  Net  Cost              $18,434  

CPS  Commercial  Rebate:  $2.00/W  rebate  for  first  25kW,  then  $1.30/W  up  to  $100k  

CPS  Financials  

! ($240,000) $100,000 !"#$%&%%%' !"#$%&%%%' "#$%!&!!!'

$ $10,347 "#%&($)* ($3,622) $72,000 $42,840 "#+#&,--* "#$(&%)%'

* $10,865 "#%&.-,* ($3,803) $11,424 "#.&$.-* #+*

) $11,408 "##&$%.* ($3,993) $6,854 "#$&+)%* #$%&)*$

% $11,978 "##&/).* ($4,192) $4,113 "##&./.* #*,&**!

+ $12,577 "#+&,))* ($4,402) $4,113 "#+&+..* #)(&+!(

, $13,206 "#(&+%-* ($4,622) $2,056 "#%&-$%* #%-&$%(

. $13,866 "#(&.--* ($4,853) "/&%#(* #+(&$,$

( $14,560 "#$&,-%* ($5,096) "/&$-$* #,.&,*+

- $15,288 "#,&+..* ($5,351) "/&/()* #..&+,*

$! $16,052 "#-&%,+* ($5,618) "#%&$($* #(.&--+

$$ $16,855 "#-&.,,* ($5,899) "#%&/,,* #-(&-+$

$* $17,697 "#)&-/)* ($6,194) "##&,%(* #$$!&%+%

$) $18,582 "#.&,.+* ($6,504) "#+&%).* #$**&+)*

$% $19,511 "#/&,##* ($6,829) "#+&-.+* #$)+&*$+

$+ $20,487 "+%&$.)* ($7,170) "#(&(#-* #$%(&+)$

$, $21,511 "+#&,##* ($7,529) "#(&/.+* #$,*&+$%

$. $22,587 "++&,.)* ($7,905) "#$&-.#* #$..&$-+

$( $23,716 "+(&)#-* ($8,301) "#,&$#,* #$-*&,$!

$- $24,902 "+$&/%+* ($8,716) "#-&#.-* #*!(&.-.

*! $26,147 "+-&#$)* ($9,151) "#-&//-* #**+&.-*

*$ $27,454 "+)&$,$* ($9,609) "#)&.$,* #*%)&,)(

** $28,827 "+.&.+)* ($10,089) "#.&)(.* #*,*&).+

*) $30,268 "(%&+-.* ($10,594) "#/&-)$* #*(*&!+!

*% $31,782 "(#&).+* ($11,124) "+%&-,.* #)!*&.!(

*+ $33,371 "((&()#* ($11,680) "+#&-/#* #)*%&)--

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A;BReturns  

10  Year  IRR      22.2%  25  Year  IRR      24.8%  25  Year  ROI    232%  Payback          2  years  

CPS  Return  Analysis  

!

System**Assuming a 5% discount rate***This is an estimate based on a study published in the Appraisal Journal which showed that, on average, properties which made energy efficiency or renewable energy improvements increased in value at a rate of approximately twenty times (20x) the average annual savings that resulted from the property improvements. For a conservative estimate, the Year 1 Energy Savings is used in this calculation.

System size (kW) 7525 Year IRR 24.80%25 Year NPV** $153,931Property Value Increase*** $206,945

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Summary  

  Solar  equipment  and  construcHon  costs  associated  with  solar  are  declining  

  Development  of  innovaHve  financing  techniques  (third  party  ownership,  etc.)  

  Entrance  of  large  insHtuHonal  investors    

  Heavily  subsidized  –  investment  tax  credit,    5-­‐year  MACRS  depreciaHon,  local  incenHves  

  Proven  technology  

  Low  natural  gas  prices  

  Low  electricity  prices  in  Texas  

  Limited  capacity  for  local  incenHves  

  Backlash  of  Solyndra    

  Investment  tax  credit  set  to  expire  arer  2016  

Growth  Drivers   Challenges/Obstacles