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Wind Project Cash Flow Summary 2010
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11/09/201015:09:48 texas30mwwindptcvsgrantfinal08262009r0-12893153459389-phpapp01.xls
PRELIMINARY UNDERWRITING ANALYSISVestas V90 - 30 MW Wind Project
Confidential
PROPERTY DESCRIPTION LOAN SIZING ASSUMPTIONS
Property Name Vestas V90 - 30 MW Wind Project As-Is Value Estimate $67,101,855
Address Cap Rate / Return on Cost 11.00% 10.89% City Rolling Red Plains Region Construction Cost $62,300,000 State TX Property Type Wind Farm LOAN SIZINGS Use(s) 30 Megawatt Wind Facility Requested Loan $52,500,000 Off-Taker / Credit ERCOT; Developer is A3 Moody's Request After Paydown 34,700,000 Loan Purpose Development DSCR @ 1.05x 47,700,000
LTV @ 100.0% 67,100,000 LOAN TERMS LTC @ 100.0% 62,300,000
Requested Loan $52,500,000 Loan Override $0 Max Loan After Paydown w/ 30% Grant $36,750,000 Term 25 CONCLUDED LOANS Amortization 25 PTC Loan Loan w/ Treas. Grant Full Loan Index Type 20-yr UST, Interp. Loan Amount $35,900,000 $34,700,000 $52,500,000 Index Rate 4.5000% Coupon 8.0000% 8.0000% 8.0000% Spread 3.5000% Constant 9.2618% 9.2618% 9.2618% Note Rate 8.0000% Annual Debt Service $3,324,984 $3,213,843 $4,862,442 Constant 9.2618% Monthly Debt Service $277,082 $267,820 $405,204 Minimum DSCR 1.05x DSCR 1.40x 1.44x 0.95x Maximum LTV 100.0% LTV 53.5% 51.7% 78.2% Maximum LTC 100.0% LTC 57.6% 55.7% 84.3%
PTC Loan Loan Paid Down
REVENUES Underwriting w/ Treasury Grant Notes
Total Energy Sales $6,022,250 $6,022,250 Other Underwritable Income (RECs) $460,000 $460,000 EFFECTIVE GROSS INCOME $6,482,250 $6,482,250
OPERATING EXPENSES
WTG Maintenance & G/A $625,000 $625,000 9.6% of EGI WKN Management Fee 100,000 100,000 1.5% of EGI Insurance 120,000 120,000 1.9% of EGI Property Taxes 509,400 509,400 7.9% of EGI Forecasting Services 10,000 10,000 0.2% of EGI Spare Parts Inventory 75,000 75,000 0.1% of Cost Land Lease 271,001 271,001 4.2% of EGI Lender's Gross Distribution 129,645 129,645 2.0% of EGI Operations Reserve - -
TOTAL EXPENSES $1,840,046 $1,840,046 % of EGI 28.4% 28.4%
NET CASH FLOW BEFORE DEBT SERVICE $4,642,204 $4,642,204
Debt Service Coverage Ratio 1.40x 1.44x
Minus Debt Service $3,324,984 $3,213,843 Cash Flow After Debt Service $1,317,220 $1,428,361
11/09/201015:09:48 texas30mwwindptcvsgrantfinal08262009r0-12893153459389-phpapp01.xls
PRELIMINARY CASH FLOW ANALYSIS - PTCVestas V90 - 30 MW Wind Project
Confidential
PROPERTY DESCRIPTION
Property Name Vestas V90 - 30 MW Wind Project
Address City Rolling Red Plains Region State TX Property Type Wind Farm Use(s) 30 Megawatt Wind Facility Off-Taker / Credit ERCOT; Developer is A3 Moody's Loan Purpose Development
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year10 Year 11
REVENUES 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Notes Inflate Rate
Total Energy Sales 2.5% $6,022,250 $6,172,806 $6,327,126 $6,485,305 $6,647,437 $6,813,623 $6,983,964 $7,158,563 $7,337,527 $7,520,965 $7,708,989 Other Underwritable Income (RECs) 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 EFFECTIVE GROSS INCOME $6,482,250 $6,632,806 $6,787,126 $6,945,305 $7,107,437 $7,273,623 $7,443,964 $7,618,563 $7,797,527 $7,980,965 $8,168,989
OPERATING EXPENSESInflate Rate
WTG Maintenance & G/A 2.0% $625,000 $637,500 $650,250 $663,255 $676,520 $690,051 $703,852 $717,929 $732,287 $746,933 $761,872 WKN Management Fee 0.0% 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 Insurance 2.0% 120,000 122,400 124,848 127,345 129,892 132,490 135,139 137,842 140,599 143,411 146,279 Property Taxes 0.0% 509,400 473,742 50,000 50,000 50,000 50,000 50,000 50,000 50,000 245,000 227,850 Forecasting Services 2.0% 10,000 10,200 10,404 10,612 10,824 11,041 11,262 11,487 11,717 11,951 12,190 Spare Parts Inventory 2.0% 75,000 76,500 78,030 79,591 81,182 82,806 84,462 86,151 87,874 89,632 91,425 Land Lease 2.5% 271,001 277,776 284,720 291,838 299,134 306,613 314,278 322,135 330,188 338,443 346,904 Lender's Gross Distribution 129,645 129,645 129,645 129,645 129,645 129,645 129,645 129,645 129,645 129,645 129,645 Operations Reserve 2.0% - - 34,333 35,020 35,720 36,434 37,163 37,906 38,665 39,438 40,227
TOTAL EXPENSES $1,840,046 $1,827,763 $1,462,230 $1,487,306 $1,512,918 $1,539,079 $1,565,801 $1,593,096 $1,620,975 $1,844,453 $1,856,391 % of EGI 28.4% 27.6% 21.5% 21.4% 21.3% 21.2% 21.0% 20.9% 20.8% 23.1% 22.7%
NET CASH FLOW BEFORE DEBT SERVICE $4,642,204 $4,805,043 $5,324,896 $5,457,999 $5,594,519 $5,734,544 $5,878,163 $6,025,467 $6,176,552 $6,136,512 $6,312,598
Less: Debt Service (Principal & Interest) $3,324,984 $3,324,984 $3,324,984 $3,324,984 $3,324,984 $3,324,984 $3,324,984 $3,324,984 $3,324,984 $3,324,984 $3,324,984
NET CASH FLOW AFTER DEBT SERVICE $1,317,220 $1,480,059 $1,999,912 $2,133,015 $2,269,535 $2,409,560 $2,553,178 $2,700,483 $2,851,567 $2,811,528 $2,987,614
EQUITY PARTICIPANT RETURNS Equity Potential Discount RateDepreciation 11,376,000 18,201,600 10,920,960 6,552,576 6,552,576 3,276,288 - - - - -
Interest Expense 3,324,984 3,324,984 3,324,984 3,324,984 3,324,984 3,324,984 3,324,984 3,324,984 3,324,984 3,324,984 3,324,984 Profit (loss) Tax (10,058,780) (16,721,541) (8,921,048) (4,419,561) (4,283,041) (866,728) 2,553,178 2,700,483 2,851,567 2,811,528 2,987,614 Tax Benefit or (Liability) $12,300,000 11.0% 3,520,573 5,852,539 3,122,367 1,546,847 1,499,064 303,355 (893,612) (945,169) (998,049) (984,035) (1,045,665)
Total Tax Credits - PTC $12,600,000 11.0% 1,945,650 2,038,300 2,038,300 2,130,950 2,130,950 2,223,600 2,223,600 2,316,250 2,408,900 2,408,900 - Equity Cash After Debt Service 1,317,220 1,480,059 1,999,912 2,133,015 2,269,535 2,409,560 2,553,178 2,700,483 2,851,567 2,811,528 2,987,614 Return on Investment after Tax and Debt Service $(24,900,000) 6,783,443 9,370,898 7,160,579 5,810,811 5,899,549 4,936,515 3,883,166 4,071,564 4,262,419 4,236,393 1,941,949
IRR, 10 yrs Total Investment $24,900,000 22.4%
NPV, 5 yrs
$26,281,451
Plant kWh / Year 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000
PTC $/kWh $0.02100 $0.02200 $0.02200 $0.02300 $0.02300 $0.02400 $0.02400 $0.02500 $0.02600 $0.02600 $-
Depreciable Value $56,880,000 $56,880,000 $56,880,000 $56,880,000 $56,880,000 $56,880,000 % Depreciated 20.00% 32.00% 19.20% 11.52% 11.52% 5.76%
11/09/201015:09:48 texas30mwwindptcvsgrantfinal08262009r0-12893153459389-phpapp01.xls
PRELIMINARY CASH FLOW ANALYSIS - Treasury GrantVestas V90 - 30 MW Wind Project
Confidential
PROPERTY DESCRIPTION
Property Name
Address City Rolling Red Plains Region State TX Property Type Wind Farm Use(s) 30 Megawatt Wind Facility Off-Taker / Credit ERCOT; Developer is A3 Moody's Loan Purpose Development
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year10 Year 11
REVENUES 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Notes Inflate Rate
Total Energy Sales 2.5% $6,022,250 $6,172,806 $6,327,126 $6,485,305 $6,647,437 $6,813,623 $6,983,964 $7,158,563 $7,337,527 $7,520,965 $7,708,989 Other Underwritable Income (RECs) 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 EFFECTIVE GROSS INCOME $6,482,250 $6,632,806 $6,787,126 $6,945,305 $7,107,437 $7,273,623 $7,443,964 $7,618,563 $7,797,527 $7,980,965 $8,168,989
OPERATING EXPENSESInflate Rate
WTG Maintenance & G/A 2.0% $625,000 $637,500 $650,250 $663,255 $676,520 $690,051 $703,852 $717,929 $732,287 $746,933 $761,872 WKN Management Fee 0.0% 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 100,000 Insurance 2.0% 120,000 122,400 124,848 127,345 129,892 132,490 135,139 137,842 140,599 143,411 146,279 Property Taxes 0.0% 509,400 473,742 50,000 50,000 50,000 50,000 50,000 50,000 50,000 245,000 227,850 Forecasting Services 2.0% 10,000 10,200 10,404 10,612 10,824 11,041 11,262 11,487 11,717 11,951 12,190 Spare Parts Inventory 2.0% 75,000 76,500 78,030 79,591 81,182 82,806 84,462 86,151 87,874 89,632 91,425 Land Lease 2.5% 271,001 277,776 284,720 291,838 299,134 306,613 314,278 322,135 330,188 338,443 346,904 Lender's Gross Distribution 129,645 129,645 129,645 129,645 129,645 129,645 129,645 129,645 129,645 129,645 129,645 Operations Reserve 2.0% - - 34,333 35,020 35,720 36,434 37,163 37,906 38,665 39,438 40,227
TOTAL EXPENSES $1,840,046 $1,827,763 $1,462,230 $1,487,306 $1,512,918 $1,539,079 $1,565,801 $1,593,096 $1,620,975 $1,844,453 $1,856,391 % of EGI 28.4% 27.6% 21.5% 21.4% 21.3% 21.2% 21.0% 20.9% 20.8% 23.1% 22.7%
NET CASH FLOW BEFORE DEBT SERVICE $4,642,204 $4,805,043 $5,324,896 $5,457,999 $5,594,519 $5,734,544 $5,878,163 $6,025,467 $6,176,552 $6,136,512 $6,312,598
Less: Debt Service (Principal & Interest) $3,213,843 $3,213,843 $3,213,843 $3,213,843 $3,213,843 $3,213,843 $3,213,843 $3,213,843 $3,213,843 $3,213,843 $3,213,843
NET CASH FLOW AFTER DEBT SERVICE $1,428,361 $1,591,200 $2,111,053 $2,244,156 $2,380,676 $2,520,701 $2,664,320 $2,811,625 $2,962,709 $2,922,670 $3,098,755
EQUITY PARTICIPANT RETURNS Equity Potential Discount RateDepreciation 85% total dep 9,669,600 15,471,360 9,282,816 5,569,690 5,569,690 2,784,845 - - - - -
Interest Expense $3,213,843 3,204,581 3,204,581 3,204,581 3,204,581 3,204,581 3,204,581 3,204,581 3,204,581 3,204,581 3,204,581 Profit (loss) Tax (8,241,239) (13,870,898) (7,162,501) (3,316,272) (3,179,752) (254,882) 2,673,582 2,820,886 2,971,971 2,931,931 3,108,017 Tax Benefit or (Liability) $9,800,000 11.0% 2,884,434 4,854,814 2,506,875 1,160,695 1,112,913 89,209 (935,754) (987,310) (1,040,190) (1,026,176) (1,087,806)
Total Tax Credits - PTC $- 11.0% - - - - - - - - - - - Equity Cash After Debt Service 1,428,361 1,591,200 2,111,053 2,244,156 2,380,676 2,520,701 2,664,320 2,811,625 2,962,709 2,922,670 3,098,755 Return on Investment after Tax and Debt Service $(9,800,000) 4,312,795 6,446,015 4,617,929 3,404,851 3,493,589 2,609,910 1,728,566 1,824,314 1,922,519 1,896,494 2,010,949
IRR, 10 yrs IRR, 5 yrsTotal Investment $9,800,000 43.2% 38.6%
NPV, 5 yrs
$16,809,877
Plant kWh / Year 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000 92,650,000
PTC $/kWh $0.02100 $0.02200 $0.02200 $0.02300 $0.02300 $0.02400 $0.02400 $0.02500 $0.02600 $0.02600 $-
Depreciable Value $48,348,000 $48,348,000 $48,348,000 $48,348,000 $48,348,000 $48,348,000 % Depreciated 20.00% 32.00% 19.20% 11.52% 11.52% 5.76%
Vestas V90 - 30 MW Wind Project
Vestas V90 - 30 MW Wind Project
Sources and Uses - assumes PTC Credits and Capacity Payment Financing
Sources Uses
First Mortgage 35,900,000 Tower $12,500,000 Treasury Grant 0 Rotor Blade $11,900,000 Total Debt 35,900,000 Gear Box $6,800,000
Power Converter $2,800,000 Equity - MACRS 12,300,000 Transformer $2,200,000 Equity - PTC 12,600,000 Generator $2,200,000 Total Equity 24,900,000 Other - EPC Installation, O&M, Insurance $18,400,000
Interest During Construction $1,412,000 Lender Financing Cost $1,765,000 Ongoing Debt Service Reserve $801,145 Subtotal First Funding $60,778,145
Subtotal: 60,800,000 Total Funding, Rounded $60,800,000
Tax Benefits 24,900,000
Vestas V90 - 30 MW Wind Project
Sources and Uses - assumes Treasury Grant and Capacity Payment Financing
Sources Uses
First Mortgage 34,700,000 Tower $12,500,000 Treasury Grant 17,800,000 Rotor Blade $11,900,000 Total Debt 52,500,000 Gear Box $6,800,000
Power Converter $2,800,000 Equity - MACRS 9,800,000 Transformer $2,200,000 Equity - PTC 0 Generator $2,200,000 Total Equity 9,800,000 Other - EPC Installation, O&M, Insurance $18,400,000
Interest During Construction $2,070,000 Lender Financing Cost $2,580,000 Ongoing Debt Service Reserve $790,000 Subtotal First Funding $62,240,000
Subtotal: 62,300,000 Total Funding, Rounded $62,300,000
Tax Benefits 27,600,000 Construction Cost To Qualify For Grant $59,185,000
Treasury Grant PTC
Equity Requirement $9,800,000 $24,900,000 Year 1 Return On Investment $4,312,795 $6,783,443 IRR - 10 Years 43.2% 22.4%Capacity Payment Day 1 $405,204 $277,082 Capacity Payment On Completion $267,820 $277,082
Positives Negatives Positives Negatives
Tax Equity Benefits From MACRS Only From PTC and MACRSEquity Infusion Relatively Low Higher than GrantReturn On Investment % Relatively High Lower than GrantGrant Risk Developer shoulders risk NoneCapacity Payment High until project completion Same day 1 as at completionVesting Period 5 yearsUpside with Energy Production None PTC increases with more production