Final boma may 2012 renewable energy and environmental(1)

Presented to

May 23, 2012

1 www.entechgroupinc.com © 2012 The Entech Group, Inc. All Rights Reserved. 1.800.571.8661
Please refer to the Limitations section at the end of this presentation.

Presentation Overview

Renewable Energy & Management
Update on Solar Renewable Energy
Environmental Changes in New
Jersey


The Entech Group, Inc.

Professional Services

Engineering &
Environmental Energy
Construction

Single Source or Selected Services Provider


Renewable Energy
Renewable & Alternate Energy Sources
Solar**
Geothermal**
Natural Gas**
Biomass/Landfill
Hydro Power
Wave/Tidal
Wind

Energy Conservation Programs
Energy Star Certification
Sustainable Development
Leadership Energy and Environmental Design (LEED)
Green Building Practices vs. LEED Certification


Federal Energy Laws & Policies
Energy
Improvement and
Tax Relief Unemployment
Extension Act of
Insurance Reauthorization
2008
9/17/08
and Job Creation Act of 2010
12/17/10

Current Market
American Recovery
and Reinvestment
30% ITC Credit
Act of 2009
First Year Bonus
2/19/09
Depreciation of
Small Business 50%
Jobs Act of 2010 Extended Section
179 Deduction of
9/27/10
$139,000

2008 2009 2010 2011 2012


Commercial Energy Management
How we use Energy in Commercial Buildings
Computers, Electronics, Appliances,
Water
2% 3% 9% Refrigeration,
Heating, 8%
7%
Space Other, 8%
Cooling,
10% Cooking,
2%
Lighting, 14% Adjust to
Seds, 11%

Space
Heating, 27%

Source: US Department of Energy- Buildings Energy Data Book Website, last updated March 2012


Typical Commercial Installations

Merck Tiffany & Co.
White House Station , NJ Whippany, NJ

www.entechgroupinc.com © 2012 The Entech Group, Inc. All Rights Reserved. 1.800.571.8661

How a Solar System Works

Solar Array

Electric Grid
Electrical
Distribution
Panels Utility
Meter
Inverter

Electricity from Grid

Electricity from Solar

Surplus Solar
Electricity to Grid Electricity to Facility


Net Metering
Net metering - surplus electricity is
delivered to the grid for credit.
Electric meter will run backwards.

consumption
Surplus electricity credited at

Typically at $.07/kWhr
If there is a loss of power from the grid
Solar system automatically shuts
down.

-
to $0.25/kWhr.


Incentives For Solar Renewable Energy
Federal Investment Tax Credit (ITC)
30% Tax Credit

Section 179 Deduction
Deduct up to $139K for Qualifying Equipment

First Year Bonus Depreciation Tax Benefit
50% Depreciation in Year 1 (2012 only) Total
Benefits

6 Year Depreciation Tax Benefits
(Modified Accelerated Cost Recovery System MACRS)

Solar Renewable Energy Certificate Earnings
SREC 15 Year Program

Electrical Energy Savings
25+ Years of Avoided Electrical Costs


New Jersey Clean Energy Program (NJCEP)
Solar Renewable Energy Certificate
Provides for Generation and Trading of Solar Renewable Energy
Certificates (SRECs) by Solar Owners

NJCEP requires electric utilities to supply a percentage of
their electricity from solar.
Utilities can meet requirements by purchasing SRECs from
solar electric owners.
A SREC is a Tradable Commodity with Monetary Value
If utilities do not purchase SRECs they must make an
Alternate Compliance Payment (ACP).
ACP was set at $658 for 2012; drops 3% each year
New Senate Bill S 1925 introduced May 14, 2012


The Solar Energy Advancement and Fair
Competition Act (A3520)
6000

Signed into law on January 18, 2010, Gwhrs / Energy Year
by Governor Corzine. 5000
The Act required electric suppliers to
procure a minimum of 195 Gigawatt 4000
hours (GWH) of electric power from
solar generators in 2010 and increases
to 5,316 GWH by 2026. 3000
The BPU is required to establish a 15
year Solar Alternative Compliance
2000
Payment (SACP) schedule. Prior to
this requirement, the SACP extended
out 8 years. 1000
If the average SREC price decreases
for 3 years or if the supply of SRECs
0
meets or exceeds demand for 3 years

2026
2010

2012

2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2011

2012 F
the requirement increases by 20%.

Production for EY 2012 is Forecasted to be higher than 2012 Objective
which has affected SREC Values


Introduction of New Jersey
Senate Bill S-1925 on May 14, 2012
The proposed bill addresses the current Solar market in NJ and will
attempt to stabilize the Solar Renewable Energy Certificates
(SRECs) for Solar Owners
Increases the Renewable Portfolio Standard (RPS) Beginning
in Energy Year 2014
Lower the Solar Alternate Compliance Payment (ACP)
Change the RPS to a Percent Value compared to a Fixed
Value
Limits solar farm development to 100Mw per year for 2014,
2015 & 2016 and sets BPU approval requirement thereafter
School & Municipality net metering revisions
New Projects will participate in Solar Registration Program


Solar Renewable Energy Certificates
(SRECs) in New Jersey
Estimated SREC Values:
1,000 kW hours 2011: $650
of solar production = 2012: $135
One SREC 2014: $300
2019: $260

1 SREC $78,000 for 2011
=
1 SREC
1 SREC
1 SREC
1 SREC
1 SREC1
= $16,200 for 2012
1 SREC
1 SREC
1 SREC
SREC $36,000 for 2014
Typical 100 kW system produces about About 120 SRECs per year.
120,000 kWh per year.


SREC Transactions
Currently, a 100
kW system will
earn $16,200 per
year (2012)
Every 1,000 kW
Produced = 1 SREC

1 SREC

Utility companies
purchase SRECs
to meet their
renewable Commodity
energy goals. Exchange


Solar Finance Options
Ownership Investment
Capital Outlay
Loan

Lease
Operating
Capital

Power Purchase Agreement
(PPA)


Is Solar for
Your Project?
Electrical Federal
& Inflation Benefits &
Rates Incentives

Entities Commodity
Balance Value of
Sheet SREC
Renewable
Solar Energy
System


Commercial Building 200 kW


Feasibility

Solar Pathfinder

Shade Location

Area Type


Design & Installation Process
Feasibility

Installation Design

Project Schedule

Final Project
Deliverable


2012 Cash Flow Capital Investment
Project Economic Inflow Over 15 Years 2011($655 SREC) 2012 ($225 SREC) 2012 ($135 SREC)

Electric Savings & SREC Income $2,313,732 $1,298,181 $1,086,952

Federal Incentives & Benefits $575,309 $442,368 $442,368
Potential Revenue $2,889,041 $1,740,559 $1,529,320
Project Economic Outflow
Project Investment + O&M ($994,446) ($766,627) ($766,627)
Potential Investment ($994,446) ($766,627) ($766,627)
Net Expected Income (Pre Tax) $1,894,575 $973,932 $762,693
Return on Investment 1.90x 1.27x 0.99x

3000000

2500000
Cash Amount

2000000

1500000

1000000

500000

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
-500000

Years


2012 Cash Flow Operating Lease
Project Economic Inflow Over 15 Years

Electric Savings & SREC Income $1,298,191

Potential Revenue $1,298,191
Project Economic Outflow
Solar Renewable Energy Project Payments + O&M ($872,707)
Potential Investment ($872,707)
Net Expected Income (Pre Tax) $425,484

1400000

1200000
Cash Amount

1000000

800000

600000

400000

200000

0
Years 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25


Power Purchase Agreement
A customer hosts the solar system and agrees to purchase the
electricity produced under a 15 to 20 year contract.

Benefits:
Provides a capital free
means to obtain solar
energy.
Assured of obtaining
electricity at a predictable
price for 15 to 20 years.
Electricity will be less
expensive and less
inflationary than utility
supplied electricity.
Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20


Limitations
herein are made on the basis of incomplete information and without the benefit of knowing what will
actually happen in the future with a particular matter or any other item. The Projections shall not be
relied upon as final. The ultimate project fees, costs and other financial considerations may be
different than the Projections.

27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Any
statements that express or involve discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, goals, assumptions or future events or performance are not statements
expectations, estimates and projections at the time the statements are made that involve a number of
risks and uncertainties which could cause actual results or events to differ materially from those
presently anticipated.

IRS Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. Federal tax
advice contained herein is not intended or written to be used, and cannot be used by you or any other
person, (i.) for the purpose of avoiding any penalties that may be imposed under the Internal
Revenue Code, or (ii.) in promoting, marketing or recommending any Federal tax transaction(s) or
matter(s) addressed herein.

This document contains computer enhanced images that are general in nature and provided for
demonstration purposes only and they are not intended to be relied on for any other purpose.

The information and content provided within this document is general in nature and is for
informational purposes only. It is not intended, and should not be construed, as a recommendation,
or legal, tax or investment advice, or a legal opinion. You should contact your tax advisor, lawyer
and Certified Public Accountant to help answer questions about your individual or business specific
situation or needs prior to taking any action based upon this information.


Presented to

May 23, 2012


Environmental Overview

Brief History Federal to State
Typical Environmental Concerns
Typical Scenarios
How New Environmental Changes in
New Jersey affect the process


Start of the Superfund (SARA)

Resource Conservation & Recovery Act (RCRA) of 1976,
Comprehensive Environmental Response Compensation and Liability
Act (CERCLA) 1980 & 1986 ~ Superfund Amendments and
Reauthorization Act (SARA) 1986

Former toxic waste site near Niagara Falls, NY

Residents suffered severe health problems

President Carter declared State of Emergency


New Jersey State Adoptions
Environmental Cleanup
Responsibility Act (ECRA) 1983

Industrial Site Recovery Act (ISRA)
1991(Supersede ECRA)

Site Remediation Reform Act
(SRRA) 2009


Environmental Changes in
New Jersey - SRRA
Licensed Site Remediation Program
Enacted November 2009 & Effective May 2012
Expedite Process Investigate, Delineate &
Remediate Impacted / Contaminated Soil,
Groundwater & Air Report Activities
Project Closure
No Further Action (NFA) vs.
Response Action Outcome (RAO)


Environmental Phases
Phase One Initial Due Diligence

Site Investigation Is there
Phase Two a Concern

Delineation What &
Phase Three Where is it, Direction &
Affect on Others

Remediation How to
Phase Four Clean it & Project Closure


Two Party Types

1. Potential Responsible Party
(PRP) / Responsible Party (RP)

2. Innocent Purchaser (IP)


Impacts
Air

PROJECT

Soil Groundwater


Impacts: Air

Asbestos, mold, lead,
carcinogens
Groundwater impacts
Vapor Intrusion (VI)


Impacts: Groundwater
Carcinogens
Hydro Carbons
Volatile Organics (VOCs)
Base Neutrals (BNs)
Metals / Dioxins


Impacts: Soil
Type of contaminant and location
Impact to groundwater and air
Contact and absorption


Triggers
Owner / Operator

Real Estate Buyer
Due diligence
Real Estate Seller
NAICS (1997)
SIC (1987) Code


New Jersey Procedures &
Terminology
Preliminary Assessment (PA)
Site Investigation (SI)
Remedial Investigation (RI)
Remedial Action (RA)
Remedial Action Report (RAR)
Project and Transaction Completion
Negative Declaration
Past No Further Action (NFA)
Current Response Action Outcome (RAO)

Recognized Areas of Concern (REC)

Bulk Storage Tanks and Appurenances
Storage and Staging Areas
Drainage Systems and Areas
Discharge and Disposal Areas
Building Interior Areas
Other Site-Specific Areas


Bulk Storage Tanks & Appurtenances
Aboveground Storage Tanks
Underground Storage Tanks
Silos
Rail Cars
Loading and unloading areas
Piping, pumping stations, sumps, pits


Storage and Staging Areas
Storage pads
Drum and/or waste storage
Surface impoundments
Lagoons
Dumpsters
Chemical storage cabinets or closets


Drainage Systems and Areas
Floor drains, trenches, piping,
sumps
Process area sinks and piping
Roof leaders
Drainage swales & culverts
Storm sewer collection systems
Storm water detention ponds
and fire ponds
Surface water bodies
Septic systems leachfields
Drywells and sumps


Discharge and Disposal Areas
Areas of discharge
Waste piles
Waster water collection
systems
Landfills / landfarms
Sprayfields
Incinerators
Historic Fill
Open Pipe discharges


Building Interior Areas
Loading / Transfer areas
Waste Treatment areas
Boiler rooms
Air vents and ducts
Hazardous material storage


Other Areas of Concern
Electrical transformers & capacitors
Discolored or spill areas
Areas of stressed vegetation
Compressor vent discharges
Non-contact cooling water discharges
Production wells


New Environmental Changes

Past
Environmental consultant and NJDEP Case Manager
involved to obtain No Further Action (NFA) letter
Current

Only a Licensed Site Remediation Professional (LSRP)
can issue Response Action Outcome (RAO)
Expect a decrease in NJDEP involvement, project
completion will be quicker and more efficient


Suggestions for:

Good Housekeeping with Prevention and
Rapid Response Plans
Proper Storage and Handling of Materials

Manifesting Materials


Suggestions for:

Health, Safety and Action Plans
Discharge Prevention Plan
Spill Prevention Countermeasure & Containment Plan (SPCC)
Emergency Action Plan (EAP)
Material Safety & Data Sheets (MSDS)
Environmental Training
Overall Company and Individual Health & Safety Plans
Confined Space
Lockout & Tag out Procedures
Neighborhood Awareness


Common Scenario for:
Owner / Operator and Seller

Preliminary Assessment (ISRA applicable)
Site Investigation
Based on Results -Potential additional actions:
Delineation Limits & Quantity

Remediation

Project Close Out


Seller - Project Experience
Client: Confidential Real Estate Organization
Location: North New Jersey

Professional Services:
Performed Preliminary Assessment and Site Investigation
activities to identify potential Areas of Concern
Obtained site history information
Identified Industrial Site Recovery Act (ISRA) concerns and
review of previous corporate transfer documentation
Evaluated and determined multiple previous leaseholders
Investigated / documented previous uses and processes
Performed preliminary soil sampling and analytical services
Preparation and submission of:
Phase I Environmental Site Assessment
Preliminary Assessment
Site Investigation Report
Remedial Action Work Plan
Received Negative Declaration


Owner / Operator - Project Experience
Client: Fortune 1000 Company Industrial Use
Locations:

Performed initial site investigation and remediation services of
for Areas of Concern
Remediation of contaminated areas impacted by site
operations
Excavated and removed one 8,000 gallon underground
storage tank system and one hydraulic lift
Excavated, transported and disposed of approximately:
250 tons of non-hazardous contaminated soils
3,000 gallons of hazardous liquid materials
Twenty-five 55 gallon drums
Cleaned and disposed of sediment from oil-water separators,
sumps and inlets
Installed, operated and maintained a remedial groundwater
treatment system
Performed numerous soil borings and soil sampling activities
Performed preliminary and final groundwater sampling
services
Receipt of closure documents from governing agencies


Seller - Project Experience
Client: Fortune 1000 Merger
Location: Central New Jersey

Performed Preliminary Assessment and Site
Investigation to identify Areas of Concern
Investigated / documented inventory of all hazardous
materials
Reviewed production processes including water use
Researched previous environmental permits given by
government agencies and administrative actions
against any property owners for violating
environmental laws
Performed environmental remediation activities, that
resulted in favorable site conditions.
Submitted a Remedial Action Report (RAR) and
materials to the NJDEP addressing each area of
concern
Received No Further Action (NFA) letter


Common Scenarios for:
Buyer
Environmental Due Diligence & To What
Degree
Transactional Screen
Environmental Phase One
Preliminary Assessment (PA)
Determine Recognized Environmental
Concerns (RECs)
Decision points


- Project Experience
Client: Energy Company
Location: North New Jersey

Performed Preliminary Assessment and Site Investigation
activities to identify potential Areas of Concern
Identified Industrial Site Recovery Act (ISRA) concerns and
review of previous corporate transfer documentation
Evaluated and determined multiple adjacent properties, which
documented off site impacts from previous uses by others
Investigated / documented uses and processes
Performed preliminary soil sampling and analytical services
Preparation and submission of:
Phase I Environmental Site Assessment
Preliminary Assessment
Preliminary Soil Sampling Report
Received Negative Declaration


Contact Information

1 (800) 571-8661
www.entechgroupinc.com

Thomas A. Furey, P.E., LSRP
tfurey@entechgroupinc.com
Joseph P. Colucci, E.I.T
jcolucci@entechgroupinc.com


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