Agreement, Interconnection Agreement Negotiating Key Provisions, - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A Renewable Energy Projects: Structuring REC Purchase and Sale Agreement, Interconnection Agreement Negotiating Key Provisions, Navigating Regulatory Timelines and Requirements THURSDAY, OCTOBER 13, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Stephen J. Humes, Partner, Holland & Knight , New York Kristen Thall Peters, Partner, Cooper White & Cooper , San Francisco and Walnut Creek, Calif. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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STRUCTURING REC PURCHASE AGREEMENTS October 13, 2016 KRISTEN THALL PETERS STEPHEN J. HUMES Cooper, White & Cooper LLP Holland & Knight

Kristen Thall Peters • Kristen Thall Peters is Chair of the Green Practice Group at Cooper, White & Cooper LLP. She is also a member of CWC’s Energy, Real Estate and Environmental practice groups. • This past year, Kristen aided her clients in acquiring, developing and expanding 50+ renewable energy facilities, including securing real property interests for the land on which the facilities operate, drafting host and royalty agreements, ensuring environmental compliance and compliance with renewable portfolio standards, resolving land use and permitting issues, and negotiating power purchase and interconnection agreements, construction contracts, and agreements for the purchase and sale of environmental attributes, including RECs, carbon credits, RINs, LCFS credits. She has also been successful in closing several financing transactions for these projects located throughout the United States. • Kristen holds a B.A. in Environmental Sciences from the University of California, Berkeley and a J.D. from Santa Clara University. 6

Steve Humes • Steve Humes practices environmental, energy, public utility and infrastructure law at Holland & Knight. • Steve advises clients on renewable energy regulatory, project finance and development issues, including environmental issues and project contracts. He represents project developers and sponsors of solar PV, biomass, geothermal and energy storage, among other technologies, and represents the Connecticut Green Bank and New York Green Bank along with project owners and developers from New Jersey to California and New York to Nicaragua. He also assists clients with state and federal environmental and energy regulatory compliance and enforcement proceedings. He counsels clients on energy and environmental issues in corporate M&A transactions, including acquisitions, development and divestitures of fossil and renewable power plants. • Steve is based in Holland & Knight’s New York City office. 7

Program Agenda • Introduction to REC Purchase and Sale Agreements • Regulatory Considerations (state created, net metering, size limits, mandatory vs. voluntary, compliance issues) • Interconnection agreements and related PURPA QF considerations • Best practices for negotiating and structuring REC agreements 8

Introduction to REC Purchase and Sale Agreements • A Renewable Energy Credit (REC) is an “environmental attribute” • A single REC provides evidence that one megawatt-hour (MWh) of electricity was generated from a renewable energy resource • RECs are state created, may be part of Renewable Portfolio Standard (RPS) • Sample Master REC Purchase Agreement available from ABA at: http://apps.americanbar.org/environ/committees/renewableenergy/RECMasterContr act.pdf 9

Not to be confused with… • Carbon Credits • RINs • LCFS Credits • Emission Reduction Credits • Other Environmental Attributes 10

Possible sources of RECs • Wind • Solar • Biomass • Geothermal • Hydro • Waste to Energy • Energy Storage • Energy Efficiency • Nuclear? 11

Regulatory Considerations: Renewable Energy Incentives • Renewable Portfolio Standards (RPS) • 29 states have RPS; 8 states have renewables goals • REC market value based on state mandates, such as RPS, and alternative compliance penalties • RECs may qualify for another state’s compliance program; can’t be double counted 12

Renewable Portfolio Standard Policies www.dsireusa.org / August 2016 ME: 40% x 2017 WA: 15% x 2020* NH: 24.8%x 2025 ND: 10% x 2015 MT: 15% x 2015 MN: 26.5% VT: 75% x 2032 x 2025 (IOUs) OR: 50%x 2040* MA: 15% x 2020( new resources) 31.5% x 2020 (Xcel) (large utilities) 6.03% x 2016 (existing resources) MI: 10% x SD: 10% x 2015 NY: 50% x 2030 WI: 10% 2015* † RI: 38.5% x 2035 2015 CT: 27% x 2020 IA: 105 MW OH: 12.5% IN: NJ: 20.38% RE x 2020 10% x x 2026 NV: 25% x + 4.1% solar by 2027 IL: 25% UT: 20% x 2025 † 2025* PA: 18% x 2021† CO: 30% x 2020 x 2026 2025* † VA: 15% (IOUs) *† KS: 20% x 2020 DE: 25% x 2026* CA: 50% MO: 15% x x 2025 † DC x 2030 2021 MD: 20% x 2022 NC: 12.5% x 2021 (IOUs) DC: 20% x 2020 OK: 15% x NM: 20%x 2020 AZ: 15% x 2015 SC: 2% 2021 (IOUs) 2025* TX: 5,880 MW x 2015* 29 States + Washington DC + 3 territories have a U.S. Territories Renewable Portfolio HI : 100% x 2045 NMI : 20% x 2016 Guam: 25% x 2035 Standard PR: 20% x 2035 USVI : 30% x 2025 (8 states and 1 territory have renewable portfolio goals) * Renewable portfolio standard Extra credit for solar or customer-sited renewables † Renewable portfolio goal Includes non-renewable alternative resources 13

Customer Credits for Monthly Net Excess Generation (NEG) Under Net Metering www.dsireusa.org / July 2016 DC NEG credited at retail rate; credits do not expire NEG credited at retail rate at first, then credits expire or are reduced (e.g., to the avoided cost rate at the end of year) NEG credited at less than retail rate (e.g., avoided cost rate) NOTE: The map shows NEG credits under statewide policies for investor-owned utilities (IOUs); other utilities may offer different NEG credit amounts. IOUs in HI, NV, NEG is not compensated MS, and GA have other policies for compensating self-generators. Some IOUs in TX and ID offer net metering, but there is no statewide policy. IOUs in WI differ in their No statewide mandatory net metering rules 14 treatment of NEG.

Regulatory Considerations: Net Metering and RPS Programs State Requirements for RECs Vary Significantly • Distributed Generation : Project is “inside the fence” and interconnected to host behind utility meter. • Net Metering: Revenue meter tracks electric usage both ways. When host uses less electricity than intermittent source system generates, surplus flows to local electric utility – the issue is who gets the credit for surplus power generated and for how much (at wholesale or retail rate)? Some states use net metering as quid pro quo for transferring REC ownership to utility. • DG Size Limits: Could be 2 MW or less, 6 MW or less, or less than the host’s annual consumption needs. States allow utility’s interconnection tariff to limit project size. 15

Overview of Typical Revenue Model Supporting Renewable Energy Project REC $ Project Co. PPA Tax $ $ 16

REC Purchase Agreement • An offtake contract between Seller that generates electricity and Buyer, typically a load-serving entity with a compliance obligation or desire to show green power in portfolio. • RECs usually are state-created and state- issued instruments certifying that energy was generated pursuant to certain requirements, such as a renewable portfolio standard. RECs can be bundled with related electricity or unbundled (disaggregated) and sold independently of electricity. • If RECs are sold separately, electricity is no longer called “renewable energy” because renewable property disaggregated. 17