It seems as if everyone is talking about VPPAs as the ultimate solution for companies to meet their greenhouse gas and renewable energy goals. But there is a lot of confusion in the market about this renewable energy procurement option. In this interactive session, we will cover the basics of how a VPPA works, dig into the largest risks and identifying the key value drivers. After we cut through the hype, you will leave with a holistic understanding of VPPAs to determine if it's the right tool for meeting your goals.

1. VPPAs:
The Good, The Bad & The Ugly
GreenBiz Workshop
February 15, 2017

2. 1
Agenda for Workshop
+ Welcome & Introductions
+ VPPA Level-Set
+ Biggest Drivers & Risks of VPPAs
+ Breakout Work Sessions
+ Report Back to Group with Main “Aha” Moment
+ Key Considerations and Wrap-Up
Today’s Goal:
For you to leave with a holistic view of VPPAs and better understanding of whether a VPPA
might be right for your company (and what questions you should be asking!)
VPPAs: The Good, The Bad & The Ugly

3. 1
Agenda for Workshop
+ Welcome & Introductions
+ VPPA Level-Set
+ Biggest Drivers & Risks of VPPAs
+ Breakout Work Sessions
+ Report Back to Group with Main “Aha” Moment
+ Key Considerations and Wrap-Up
Today’s Goal:
For you to leave with a holistic view of VPPAs and better understanding of whether a VPPA
might be right for your company (and what questions you should be asking!)
VPPAs: The Good, The Bad & The Ugly

4. 1
Agenda for Workshop
+ Welcome & Introductions
+ VPPA Level-Set
+ Biggest Drivers & Risks of VPPAs
+ Breakout Work Sessions
+ Report Back to Group with Main “Aha” Moment
+ Key Considerations and Wrap-Up
Today’s Goal:
For you to leave with a holistic view of VPPAs and better understanding of whether a VPPA
might be right for your company (and what questions you should be asking!)
VPPAs: The Good, The Bad & The Ugly

5. 1
Agenda for Workshop
+ Welcome & Introductions
+ VPPA Level-Set
+ Biggest Drivers & Risks of VPPAs
+ Breakout Work Sessions
+ Report Back to Group with Main “Aha” Moment
+ Key Considerations and Wrap-Up
Today’s Goal:
For you to leave with a holistic view of VPPAs and better understanding of whether a VPPA
might be right for your company (and what questions you should be asking!)
VPPAs: The Good, The Bad & The Ugly

6. 1
Agenda for Workshop
+ Welcome & Introductions
+ VPPA Level-Set
+ Biggest Drivers & Risks of VPPAs
+ Breakout Work Sessions
+ Report Back to Group with Main “Aha” Moment
+ Key Considerations and Wrap-Up
Today’s Goal:
For you to leave with a holistic view of VPPAs and better understanding of whether a VPPA
might be right for your company (and what questions you should be asking!)
VPPAs: The Good, The Bad & The Ugly

7. 1
Agenda for Workshop
+ Welcome & Introductions
+ VPPA Level-Set
+ Biggest Drivers & Risks of VPPAs
+ Breakout Work Sessions
+ Report Back to Group with Main “Aha” Moment
+ Key Considerations and Wrap-Up
Today’s Goal:
For you to leave with a holistic view of VPPAs and better understanding of whether a VPPA
might be right for your company (and what questions you should be asking!)
VPPAs: The Good, The Bad & The Ugly

8. 1
Agenda for Workshop
+ Welcome & Introductions
+ VPPA Level-Set
+ Biggest Drivers & Risks of VPPAs
+ Breakout Work Sessions
+ Report Back to Group with Main “Aha” Moment
+ Key Considerations and Wrap-Up
Today’s Goal:
For you to leave with a holistic view of VPPAs and better understanding of whether a VPPA
might be right for your company (and what questions you should be asking!)
VPPAs: The Good, The Bad & The Ugly

9. 8
VPPA Market Context: Contract vs. Power Prices
PPA Price vs. Forward Price Curves
VPPAs: The Good, The Bad & The Ugly
Case NPV
Effective REC
Value/Cost
High $32.4M $9.71
Base $4.9M $1.49
Low ($16.5M) ($4.93)

10. 9
VPPA Performance: What Could Have Happened?
VPPAs: The Good, The Bad & The Ugly

11. 10
Breakout Work Sessions: 4 Key Drivers
VPPAs: The Good, The Bad & The Ugly
Unexpected Market Conditions
Lower wholesale power prices than
expected
Harry Singh
Project Location
Correlation to load, RE penetration rates,
local policy impact
Kourtney Nelson
Transaction Complexity
Stakeholder alignment, required internal
education & approvals
Melissa Peterson
Additionality
How and whether it matters
Erin Craig

12. 11
VPPAs: The Good, The Bad & The Ugly
Unexpected Market Conditions
1. Natural Gas Prices (e.g. pipelineinfrastructure, polar vortex, fracking
restrictions)
2. Policy changes (e.g. environmentalregs, tax incentives, RPS targets)
3. Level of RE penetration (relevant for location but can sometimes can have
more widespread impact)
4. Hydro Conditions(relevant in some markets like the West)
5. Power Market Design (scarcity pricing, capacity markets, other tariff
changes)
Project Location
1. Proximity/Correlationto load (poor hedge); relevance of local impact
2. Current Resource Mix & GHG Impacts (Scope 2)
3. Level of RE Penetration (overall in market and close to project, impacting
negative covariance, congestion, curtailment) and Impact on Pricing (low or
negative pricingexposure)
4. Local Policy impact (e.g. redefinitionof reginal boundaries for CAISO and DSW
joiningSPP)
Transaction Complexity
1. Educating non-energy stakeholders & decision
makers
2. Gaining stakeholder alignment when different
priorities
3. Paper process/approval (who signs?)
Additionality
1. What does it mean?
2. Does it matter?
3. How do you achieve it?
4. What does it cost?
Breakout Work Sessions: 4 Key Drivers

13. 12
Key Considerations Require Tradeoffs
Contractstructure
•Fixed vs.
escalating PPA
price
•Tenor: How
long?
•Price caps or
collars?
•Fixed vs.
escalating PPA
price
•Tenor: How
long?
•Price caps or
collars?
Regionalmarketselection
•Proximity to
load
•REC value
•Cost to develop
•GHG intensity
•Resources
•Market stability
•Proximity to
load
•REC value
•Cost to develop
•GHG intensity
•Resources
•Market stability Settlementbasis&projectrisk
•Project busbar
vs. market hub
•Generation:
Weather
•Purchase
products to
hedge these
risks?
•Project busbar
vs. market hub
•Generation:
Weather
•Purchase
products to
hedge these
risks?
Additionality
•Existing vs. new
projects
•First buyer or
later?
•Small slice or
large?
•Keep RECs?
•Existing vs. new
projects
•First buyer or
later?
•Small slice or
large?
•Keep RECs?
VPPAs: The Good, The Bad & The Ugly

14. 13
Thank You
Kim Fiske
3Degrees
kfiske@3degreesinc.com
Kourtney Nelson
3Degrees
knelson@3degreesinc.com
Melissa Peterson
Apex Clean Energy
melissa.peterson@apexcleanenergy.com
Erin Craig
Origin Climate
erin.craig@originclimate.com
Harry Singh
Goldman Sachs
Harry.Singh@gs.com