The document discusses transitioning to a clean energy economy in the United States through four main approaches: 1) Reducing emissions from the electric power sector by closing coal plants, 2) Replacing closed coal plants with natural gas, renewables, and energy efficiency, 3) Increasing energy efficiency in buildings, and 4) Increasing deployment of clean energy through low-cost financing to drive costs down. It argues that establishing "green banks" that provide low-cost financing could help address barriers and leverage private investment to bring clean energy and efficiency to large scale.

1. Transitioning to a Clean Energy Economy Coalition for Green Capital Kenneth Berlin, General Counsel (202) 371-7350 Kenneth.Berlin@Skadden.com) www.coalitionforgreencapital.com Presented to: Washington Clean Technology Alliance Seattle – July 14, 2011

5. The Context – CO2 Emissions by Sector and Source

7. Step 1 – Reducing Electric Power Sector Emissions - Closing Coal Plants Many coal fired plants lack pollution control equipment :

14. Step 4 – Increasing Deployment of Clean Energy -making alternative energy suitable for marketplace competition, by cutting its costs __________________________________________________________________ This line represents the cost of coal generation without the effect of a cap or RES Purpose of low-cost financing = Drive delivered cost down

16. Current commercial debt rates limit the size of the clean energy market --The boxed area of table displays commonly encountered Net Capacity Factors (NCF) across the country and the required pricing ($/MWh) for wind generation. (East region NCF values are closer to 35%, Plains region NCF reach 44% and above, and West region NCF varies from 35-41% --The shaded scenarios (in green) show the limits of current commercial investment (10% Internal Rate of Return, is considered the minimum for leveraged project finance). Prepared by investment firm specializing in wind energy transactions based on data from independent wind development companies and public sources Note: Net Capacity Factor is a measure of the actual amount of power produced during a year. Calculated by dividing total net energy production by the maximum theoretical possible annual production from the nameplate capacity 2012 Price [$/MWh] with 2% annual escalation IRR table for an example wind project using Commercial Bank Financing at $1,963/kW installed cost and current tax policy: financing terms of 6.75% interest rate at 20% leverage

17. Energy Independence Trust long term, low cost debt expands the size of the clean energy market for private investment --The use of the EIF to provide additional debt financing to wind projects results in a reduction of electricity price of approximately ~15-20% to provide the same investor returns at a given capacity factor; for example, 38% NCF wind projects can sell energy at values of $50/MWh, compared to $60/MWh without the EIF --The larger scope of the shaded scenarios significantly increases the economically-attractive wind generation that can compete with new build fossil-fuel power plants to provide energy for incremental demand growth; by some estimates, approximately 120 GWs of lower-NCF wind resource become competitive with new conventional generation. Prepared by investment firm specializing in wind energy transactions based on data from independent wind development companies and public sources Note: Net Capacity Factor is a measure of the actual amount of power produced during a year. Calculated by dividing total net energy production by the maximum theoretical possible annual production from the nameplate capacity 2012 Price [$/MWh] with 2% annual escalation IRR table for an example wind project using EIT Financing at $1,963/kW installed cost and current tax policy: financing terms of 4.50% interest rate at 34% leverage

24. The Green Bank could create incentives for willing consumers or utilities to pay for retrofits….without up-front capital from the borrower 1. The Green Bank loans 100% of the cost of an energy efficiency project to a utility or other source at a low rate. 2. The utility disperses the funds to install energy efficiency measures in homes and small businesses, creating jobs in the local community. Residential property/ Small business Utility/Co-op Green Bank Energy Bill 5. After the loan is repaid, the consumer sees the full benefit of the efficiency measures, the utility has saved money and created local jobs, and the taxpayer has been repaid in full. 4. Through on-bill financing, a portion of the savings shows up on the consumer’s bill, and the rest is transferred to the utility, which uses the money to repay the initial loan from the Green Bank over an extended tenor. (For example, if there is a savings of $100/month, the consumer receives a $25 discount on the bill and the utility charges $75 for electricity that is not being provided in order to re-pay the loan). The utility will also have the right to place a lien on the property in order to obtain payment. 3. The owner of the residence/small business pays no up-front cost to have their building retrofitted, and sees a reduced energy bill.