This document discusses approaches to improving water and energy independence. It notes that food, water and energy security are linked, as agriculture and power plants are large water users and producing energy and water both require large amounts of energy. Rising energy prices and water restrictions hamper solutions. It evaluates various energy sources for their suitability and impacts water usage. It provides tips on financing options like net metering and meter aggregation to develop solar power. It stresses planning now to take advantage of policy windows and incentives. It also discusses assessing operations, improving efficiencies, and protecting investments.

1. Make it Rain!
Courtesy of:
New approaches to
Water and Energy Independence

2. • Energy
• Water
• PACE Financing
• Q&A
Overview

3. • Food, Water & Energy security are inextricably linked
o Two greatest users of freshwater are agriculture and power plants
o We consume massive quantities of energy to deliver clean water
o We consume massive quantities of water to generate energy
o Rising energy prices are curtailing efforts to supply more clean water
o Water restrictions are hampering solutions for generating more energy
The Food–Water–Energy Nexus

4. Coal – cheap, but California won’t buy it
Natural Gas – unsustainably low prices, competes for water
Nuclear – Mothballed reactors, competes for water
Hydro – aging dams, permitting, climate change, competes for water
Failing Infrastructure - future costs
Energy - Utilities face rising & deferred costs

5. Energy – Growers face rising, volatile retail prices
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
2006 2007 2008 2009 2010 2011 2012 2013 CAGR
Large Ag Pricing
% change vs YAGO
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
2005 2010 2015 2020 2025 2030 2035
$/kWh
Forecast Large Ag
Pricing
$/kWh - optimistic
$/kWh -
pessimistic

6. Energy - Diesel: An Unnecessary Evil?
Characteristics
 Reliable, on-demand
 High fuel costs
 High NOx Emissions
Tips & Traps
 Ongoing fuel costs
 NOx
 Limit usage to on-peak
 Plan on changing!

7. Energy - Natural Gas Engines
Characteristics
 Reliable, on-demand
 Cheap fuel cost
 Accessibility
 NOx Emissions
Tips & Traps
? Nice work if you can get it
 Emissions regs
 Rising fuel costs
Electricity
Natural Gas
Diesel
Propane
Relative Irrigation
Fuel Costs

8. Energy - Solar PV is the Long Term Winner
Characteristics
 Sustainable, no fuel
 Low ownership costs
 Incentives, financing
 Large capital investment
 Not “power-dense”
Tips & Traps
• Finance & Policy are as
important as engineering
 Got Taxes?
 PACE
 Net Meter: Buy low, sell high
 Meter Aggregation: Got space!

9. • Net Metering – Permits you to “bank” and
utilize 100% of solar production and
investment. Benefits decline for projects
completed after 7/1/17
• Meter Aggregation – Permits system owner
to allocate solar energy to various loads on
existing or adjacent parcels… whether leased
or owned.
Energy – Policy Wins

10. 2014
• Meter Aggregation Implemented
• Contract by June for 30% 2014 Tax Credit
• Include in Fiscal Year budget for 2015 completion
2015
• Contract by June for 30% 2015 Tax Credit
• Include in Fiscal Year budget for 2016 completion
2016
• Net Metering Cap risk – benefits may decline
• Tax Credits will decline by 20% on Dec 31
• Expect a Utility backlog for inspections & interconnections
2017
• Net Metering benefits will decline on July 1
Energy – Policy Window: Plan now

11. • Consistent & stable long-term return on Assets & Invested Capital.
o Equal or better than alternative investments
• Annual Income + LT capital appreciation
• Grow the balance sheet
• Manage risk
Goals for the Ag Enterprise

12. • Quality
• High production
• Lowest cost / unit of production
• Operational efficiencies
• Low debt service
• Branding & Marketing
What is Your Long-Term Competitive Advantage?

13. Current Scenario:
$3,500 / ac – Annual Net $ BT
Future Scenario:
o Almond Price: $2.10/lb
o Bees: + $100/ac
o Energy: + 50/ac
o Water: + 400/ac
Sensitivity Analysis
(changes in revenue – production costs – additional capital)

14. Double-Line PC Drip Micro-Jets
Limited Water: How do you select an emission device?

15. Manage moisture & fertilizers in root zone

16. Distribution Uniformity
Every plants gets the same amount of water & fertilizers

17. Irrigation System Distribution Uniformity (DU)

18. Tools for measuring soil moisture

19. Monitor crop growing conditions

23. System Design: Know what is inside the black PE tubing

24. System Design: Match up irrigation zones & soils

25. Water Quality & Treatment Program

26. Build in well capacity now……..

27. • Manage risks – protect the capital investment
• Measure every aspect of the enterprise & benchmark - Improve
• Achieve Operational efficiencies
• Solidify your LT competitive advantages
“Take Home” Messages

28. Tulare County PACE
• PACE, property assessed clean energy, was passed into law in California in 2008
and approved by Tulare County in the Fall of 2013
• Financing is in the form of a property assessment
• Provides 100% non-recourse term, (no personal or corporate guaranty)
financing
• Terms are for up to 20 years and fixed rates of interest

29. PACE Improvements
100% Financing for:
Water – Sprinklers, pumps, weather stations, software,
controls – any type of water conservation
technology
Renewable Energy – Solar, fuel cell, micro turbine

30. Tulare County PACE Description
Security: PACE is a tax assessment; payment is made with
the property taxes. There is no deed of trust or
UCC-1 filing.
Term: Up to 20 years
Rate: Rate depends on quality of property and the
ownership
Accounting Treatment: PACE is off-balance sheet financing.

31. Tulare County PACE Description
Recourse: PACE is non-recourse and looks only to the
value of the property. No guaranty
Sale or
Transfer: PACE transfers with the property. There is no
prepayment or approval of the buyer.
Underwriting: 80% LTV; 1.25x debt service coverage

32. Benefits – Tulare County PACE
• Property acquires capital improvements and reduces
operating expenses. (No cost to the owner - 100% financing)
• Increase in operating income and cash flow net of cost of
PACE
• PACE financing is non-recourse – no guaranty
• PACE is off balance sheet – Does not affect future
borrowing
• PACE transfers with the sale of the property. Owner only
pays for the improvements during ownership period.
Reduced Operating Expenses – Increase in Cash Flow

33. Tom Millhoff – Ag/Food Practice Leader, HelioPower
E: TMillhoff@HelioPower.com C: 775.830.0448
Twitter: @tmillhoff www.LinkedIn.com/in/FoodEnergy
Jeff Bradshaw – District Sales Manager, RainBird
E: JeffBradshaw@RainBird.com C: 559.593.9814
Jean Dunn – CEO, Structured Finance
E: LJDunn@strucfinance.com P: 760.304.4371
Thank You!