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<div class=Section1>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><b><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana;font-weight:bold'>Costs<o:p></o:p></span></font></b></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>Solar photovoltaic or PV systems
are quoted in terms of dollars per Watt. The larger the system, the lower the
cost per Watt- be sure your contractor is quoting fully installed cost. These
costs vary widely by installer, by state and by technology implemented. Module
costs for installers run $4-5/Watt. Beware snake oil salesmen whose costs are
too close to these.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>Solar thermal is a many headed
beast with multiple applications and even more widely varying costs. That being
said, because these systems are much more efficient (60-80% verses 12-18% for
PV) they have much better payback.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>The best guide for the state
credit is at <a
href="http://www.ncsc.ncsu.edu/information_resources/fact_sheets.cfm"
title="blocked::http://www.ncsc.ncsu.edu/information_resources/fact_sheets.cfm
http://www.ncsc.ncsu.edu/information_resources/fact_sheets.cfm">http://www.ncsc.ncsu.edu/information_resources/fact_sheets.cfm</a>
(“Guidelines for NC Tax Credit”). Information for other states can
be found at <a href="http://www.dsireusa.org/"
title="blocked::http://www.dsireusa.org/">www.dsireusa.org</a>. The best guide
for the federal credit is at <a href="http://www.seia.org/taxmanualdownload.php"
title="blocked::http://www.seia.org/taxmanualdownload.php
http://www.seia.org/taxmanualdownload.php">http://www.seia.org/taxmanualdownload.php</a>.
<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><b><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana;font-weight:bold'>Benefits<o:p></o:p></span></font></b></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>There are two main drivers for
payback on solar generation equipment. Green power subsidies or the avoided
cost/expense for electricity are never at the forefront. The primary driver is
finding the best way to leverage the available tax benefits that determines how
feasible a solar project is in <st1:place w:st="on"><st1:State w:st="on">North
Carolina</st1:State></st1:place>.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>If this value is fully captured,
these are good, albeit conservative, investments. Larger systems are
“better” investments in terms of payback and internal rate of
return because of the lower cost per installed Watt of production capacity-
next to tax credits, system cost in terms of $s per Watt installed is the
biggest driver for good financials. <o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>The other types of subsidies-
avoided costs and green power premiums- are important to the long term cash
flow for a project. You are purchasing capital to create cash flow with a PV
system, just like any other piece of equipment. For estimates on potential
output, which determines the value that the installed equipment will create,
consult <a href="http://www.nrel.gov/rredc/pvwatts/"
title="blocked::http://www.nrel.gov/rredc/pvwatts/">PV Watts</a>. Using <st1:place
w:st="on"><st1:State w:st="on">North Carolina</st1:State></st1:place> for
example, 1kW of installed capacity typically produces 1,100 kWh of electricity
per year. At $.17/kWh (avoided cost or qualified facility rate plus a small
greenpower premium), that 1kW will create $187 per year in revenue, minus
metering costs.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>Another benefit of purchasing
solar equipment over greening up power by purchasing RECs is that the equipment
has real, balance-sheet value- it is an asset, verses an expense. While it is
not as cost-effective to purchase capacity verses someone else’s
production, once the system is purchased and off the balance sheet, is <o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>The other values these investment
have for your business is also comprised of the future value of this type of
progressive, carbon-conscious investment as well as any marketing, branding or
positioning value, which, while murky, does have a dollar value attached to it
at the end of the day. <o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>There will be a market in North
Carolina for solar energy within the next two years because of our new Renewables
and Efficiency Portfolio Standard, and this will create subsidies that we
believe will have to be more generous than the NC GreenPower program to
generate the supply to meet demand. <o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>National carbon regulation, which
would create additional value for this investment, is very likely with any of
the potential next <st1:place w:st="on"><st1:country-region w:st="on">US</st1:country-region></st1:place>
administrations. Even with fairly conservative cash flow projections of this
values, PV systems in NC can feasible reach payback in 9-10 years.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><b><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana;font-weight:bold'>Challenges<o:p></o:p></span></font></b></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>Other than the financial hurdles
of leveraging tax credits and projecting future value of renewable energy for
accountants, there are also technical issues, which are both regulatory and
site related.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>From a regulatory standpoint, it
is important to know rules for <a
href="http://en.wikipedia.org/wiki/Net_metering"
title="blocked::http://en.wikipedia.org/wiki/Net_metering">net metering</a> and
<a href="http://en.wikipedia.org/wiki/Interconnection"
title="blocked::http://en.wikipedia.org/wiki/Interconnection">interconnection</a>
in your state. Some of these are favorable, others are not, some states
don’t have them (and they vary from utility to utility). These are too
varied to address here- to check on the rules in your state, consult the <a
href="http://www.eere.energy.gov/greenpower/markets/netmetering.shtml"
title="blocked::http://www.eere.energy.gov/greenpower/markets/netmetering.shtml">Green
Power Network</a> and forward questions to your local <a
href="http://www.eere.energy.gov/state_energy_program/seo_contacts.cfm"
title="blocked::http://www.eere.energy.gov/state_energy_program/seo_contacts.cfm">State
Energy Office</a>.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'><o:p> </o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'>Site related issues include:<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'> Roof shading- Is your roof
shaded, either by rooftop mechanicals, false or parapet roofs or trees and
other buildings? These are all problems to overcome.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'> Membrane type- No one wants
holes in their roof; the ideal commercial situation is where a ballasted
system, with no roof penetrations. If the membrane isn’t adhered it takes
more weight to ballast the system <o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'> Roof layout- If you want PV
or solar thermal, design your roof to be flat.<o:p></o:p></span></font></p>
<p class=MsoNormal style='mso-margin-top-alt:0in;margin-right:0in;margin-bottom:
0in;margin-left:-18.75pt;margin-bottom:.0001pt'><font size=2 face=Verdana><span
style='font-size:10.0pt;font-family:Verdana'> Building Mechanicals- Many
building mechanical systems can take solar thermal input, including preheat or
direct heat from a heat exchanger that is running off thermal storage that is
primarily for domestic hot water. If this infrastructure is not built in- in
terms of space and technology- retrofits can be difficult. In addition, the
design stage can be an engineering nightmare and prohibitive for small
installation firms in the absence of approved project funding or a formal
retainer/design contract.</span></font><font size=2 color=navy face=Arial><span
style='font-size:10.0pt;font-family:Arial;color:navy'><o:p></o:p></span></font></p>
<div>
<div>
<p style='margin-bottom:0in;margin-bottom:.0001pt'><strong><b><font size=2
color=navy face=Verdana><span style='font-size:10.0pt;font-family:Verdana;
color:navy'>++++++</span></font></b></strong><font color=navy><span
style='color:navy'><o:p></o:p></span></font></p>
<p style='mso-margin-top-alt:6.0pt;margin-right:0in;margin-bottom:0in;
margin-left:0in;margin-bottom:.0001pt'><strong><b><font size=2 color=navy
face=Verdana><span style='font-size:10.0pt;font-family:Verdana;color:navy'>Christian
Stalberg</span></font></b></strong><font size=2 color=navy face=Verdana><span
style='font-size:10.0pt;font-family:Verdana;color:navy'>, Energy Modeler<br>
<img border=0 width=269 height=62 id="_x0000_i1026"
src="cid:image001.jpg@01C8B1B7.E3E02BF0" style='margin-bottom:0px;margin-left:
0px;margin-right:0px;margin-top:0px;padding-bottom:0px;padding-left:0px;
padding-right:0px;padding-top:0px' title=www.southern-energy.com><br>
Southern Energy Management<br>
(O) 919.836.0330<br>
(C) 919.801.0734<br>
<st1:address tabIndex="0"
style="BACKGROUND-POSITION: left bottom; BACKGROUND-IMAGE: url(res://ietag.dll/#34/#1001); BACKGROUND-REPEAT: repeat-x"
w:st="on"><st1:address w:st="on"><st1:Street w:st="on">101 Kitty Hawk Drive</st1:Street></st1:address><br>
<st1:place w:st="on"><st1:City w:st="on">Morrisville</st1:City>, <st1:State
w:st="on">NC</st1:State> <st1:PostalCode w:st="on">27560</st1:PostalCode></st1:place></st1:address><br>
<a href="http://www.southern-energy.com">www.southern-energy.com</a><o:p></o:p></span></font></p>
<p style='margin-top:0in'><strong><b><i><font size=5 color=green face=Webdings><span
lang=EN-GB style='font-size:18.0pt;font-family:Webdings;color:green;font-style:
italic'>P</span></font></i></b></strong><strong><b><i><font size=2 color=green
face=Verdana><span lang=EN-GB style='font-size:10.0pt;font-family:Verdana;
color:green;font-style:italic'> Please</span></font></i></b></strong><strong><b><i><font
size=1 color=green face=Verdana><span lang=EN-GB style='font-size:7.5pt;
font-family:Verdana;color:green;font-style:italic'> consider the environment
before printing this email</span></font></i></b></strong><font size=1
color=black face=Arial><span style='font-size:9.0pt;font-family:Arial;
color:black'><o:p></o:p></span></font></p>
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