"Federal Sector Market Opportunities for Solar Energy"

1. 1 PEPCO ENERGY SERVICES Federal Sector Market Opportunities for Solar Energy Renewable Projects John Dukes jdukes@pepcoenergy.com 2010

2. Agenda Market opportunities Market barriers How to make it thrive Elements of Successful Project Example Projects About Pepco Energy Services 2

3. Market Opportunities Analyze market factors that may influence the demand solar as a federal market opportunity. Executive Orders and Acts of Congress influence the demand for solar energy 3

4. Market Opportunities Location Agencies have a tremendous amount of land (BLM, USDA, Forest Service, Prisons) Contracts Government agencies can structure interagency agreements (IAA) to deploy renewable solutions. MATOC, ESPC, UESC Products The federal government manufacturers its own PV modules (prisons) 4

5. Market barriers to solar projects Personnel knowledge Critical mass of subject matter experts (What is a good deal? What is the deal?) Critical mass of contract specialists and contract officers Contract Limited authority (10-years) Land lease/ easement Funding SREC risk (pesky anti deficiency clause) Tax treatment (assignments) Interagency communication Who owns the system, land, meter (property Mngr, Tenants, Asset Mngr) 5

6. How to make the solar market thrive Government funds 100% of the project (Direct funding - ARRA, MILCON) Go alternative finance through extended authority contracts IAA through Prisons, ACE IDIQ through DOE or ACE MATOC Through the GSA Schedule (white house procurement) Bundle PV with other ECMs. Compare the annual kWh expense with and without solar to create a blended rate that may be more palatable to the agency. Rely on the experts to educate. DOE, NREL, FEMP and FPI Hold the government accountable for their mission. Support agency initiatives to provide training to contract officers, contract specialist and COTR’s. Request the experts to provide template lease/easement documents, provide guidance on SREC, taxes, ownership, etc. **Identify a government employee as the “champion” of the project. 6

7. Elements of a successful project Project must be of good design, good production, investment worthy from a qualified source. PV solution must be “near” budget neutral. Green power for less or equal cost to Brown Power Implementation accomplished within short-term window, before people retire Ensure long-term renewable resource (land use, connected load) Reduce/remove project or cash flow risk (monetize SREC, ITC and NMTC or bonds) Best-in-class commercial-off-the-shelf infrastructure Make reporting system production easy confidential confidential confidential 7

8. Example projects 8

9. 9

11. Diversified Energy Services Company (ESCO)

12. $2.4 Billion 2009 Revenue

13. 330 employees

14. Unregulated Subsidiary of Pepco Holdings, Inc. (PHI)

16. $15.1 billion Assets

17. $4.0 billion Shareholder Equity

18. $11.4 billion 2009 RevenueOver $800M in Projects since ‘95 NAESCO Re-Accredited since 2007 # 1 Rated MD DGS VA, PA Qualified ESCO Renewable Energy Commitment Over a 100-Year History 10

19. PEPCO ENERGY SERVICES 1300 N. 17th Street Arlington, VA 22209 1-703-253-1800 www.pepcoenergy.com 11