Developing RNG Projects for Economic Success Jessica Giffey Senior Consultant

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1 Developing RNG Projects for Economic Success Jessica Giffey Senior Consultant Baker Tilly refers to Baker Tilly Virchow Krause, LLP, an independently owned and managed member of Baker Tilly International.

2 Baker Tilly > Ranked as one of the top 12 largest accounting and consulting firms in the U.S. with over 2,500 professionals > Energy Consulting team with offices in Madison, Chicago, and Austin

3 Diverse Clients Served We serve our clients through our industry teams Energy and Utilities > Nationwide energy practice: More than 40 years experience and over 400 energy and utility clients nationwide - electric, water, waste water, storm water, and gas utilities > Dedicated Renewable Energy Group: Focused on development and financial solutions to get projects to the finish line in a way that maximizes client value and minimizes risk. We work with more than 40 active projects representing over 1,000 MW. Manufacturers and Food & Beverage > Seventy-five years serving manufacturers: We serve more than 2,300 manufacturers and wholesale/distributors with over 230 in the Food and Beverage industry. State and Local Government > Work closely with municipalities and other non profits: Experience with municipal/government leaders allows us to understand diverse perspectives. We work with more than 150 higher education and research institutions across the United States. Baker Tilly Capital > Licensed broker dealer to raise debt and equity on behalf of client needs.

4 Biogas Experience We have been involved with 15+ biogas projects that are either operating or under construction involving more than $220 million of funding with roles in: > Development Support Design basis and business model creation Feedstock agreements, energy purchase agreements, solids agreements EPC, O&M and technology procurement agreements > Accessing State & Federal Incentives > Financial Advisory and Capital Procurement

5 Developing RNG Projects for Economic Success Common Project Development Themes: > Not easy to bridge varying perspectives between engineering, energy, financial and industry > Without clearly defined goals for each party, predevelopment expenses can become very costly > RNG is new for lenders relative to traditional electrical power purchase agreements

6 Developing RNG Projects for Economic Success Understand current state Digester Capacity > No single solution > Project success depends on site and circumstances Future Growth Existing Biogas Use Biogas Flow Variation

7 Developing RNG Projects for Economic Success Build the business case > Goal to find highest and best use of biogas Revenue generation (RNG sales) or cost avoidance (CHP) strategy? > Understand your circumstances Electrical generation limits Direct injection opportunities > Understand the market Growth or coordination opportunities

8 Case Study Municipal Water Reclamation Authority Serving 500,000 at 60 MGD 575,000 CF biogas produced annually Looking for best use of biogas

9 Understand Current State Biogas Electricity Heat 60% 40% 100% > 60% of available biogas used > Remaining gas is flared > Generation produces 40% electrical needs > Waste heat satisfies 100% of natural gas needs

10 Biogas Production (cfm) Understand Current State 2000 Biogas production over one year Borderline Returns +8% +14% cfm 1750 capacity cfm 1750 capacity cfm 1500 capacity cfm capacity Available 1500 cfm capacity Biogas 1250 cfm Available capactiy Available Biogas Available Biogas Biogas

11 Build the Business Case Best financial performance: condition all available biogas for injection into natural gas pipeline Purchase electricity to replace generated loads Purchase natural gas for heat Avoid expenses related to generator O&M

12 Capital Expenditure Biogas Conditioning Equipment 36% Construction 41% Installation 12% Pipeline Interconnect 11%

13 Net Revenue RIN Broker Payment -15% Brown Gas Sales 11% D3 RIN Sales 74%

14 Operating Expenses Biogas Conditioning Energy Parasitic 24% Electricity & Natural Gas Purchase 63% O&M 5% RNG Transport 6% EPA Registration 2%

15 Financial Analysis 100% RNG Case Study Case $0.15/kWh Simple Payback years 3.6 years Average Cash Unlevered Flow Cash Flow $ 4,700,000 $ 3,200,000 Unlevered IRR (5 Year) 28.8% 11.5% 80% RNG with generation Case Study Simple $0.15/kWh with generation 3.4 years Average Unlevered Cash Flow $ 3,300,000 Unlevered IRR (5 Year) 13.7%

16 Developing RNG Projects for Economic Success Understand current state Define project goals Build the business case

17 Contact Jessica Giffey Senior Consultant Specializes in economic use case analysis for process and utility intensive projects Capital and operational expense budgeting Detailed business case modelling With eight years experience in engineering and project management, Jessica knows it s not easy to bridge the varied perspectives that exist between engineers, energy, financial, and industrial professionals. Her work brings together technical and financial perspectives through research, data analysis, and detailed modelling to help clients ask the right questions, define their project needs, and develop feasible solutions. Prior to joining the firm, Jessica worked for Nexant, Inc. where she managed the implementation of Commercial and Industrial energy efficiency programs for several Fortune 500 and 1000 Investor Owned Utilities. Before joining Nexant, she developed new products as a Design Engineer for SubZero Inc. Jessica holds a degree in Physics from the University of Wisconsin. 17

18 Disclosure Pursuant to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose. No one, without our express prior written permission, may use or refer to any tax advice in this communication in promoting, marketing, or recommending a partnership or other entity, investment plan, or arrangement to any other party. Baker Tilly refers to Baker Tilly Virchow Krause, LLP, an independently owned and managed member of Baker Tilly International. The information provided here is of a general nature and is not intended to address specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought Baker Tilly Virchow Krause, LLP