SOLAR OPERATIONS & MAINTENANCE BEST PRACTICES. RISK MANAGEMENT March 1-2, 2016 Hyatt Regency - Phoenix, Arizona

SOLAR OPERATIONS & MAINTENANCE BEST PRACTICES March 1-2, 2016 Hyatt Regency - Phoenix, Arizona

SOLAR OPERATIONS & MAINTENANCE BEST PRACTICES Presenters K. Dixon Wright Senior Vice President Wells Fargo Insurance Services 45 Fremont Street, Suite 800 San Francisco California 94105 415-717-1092 Dixon.Wright@wellsfargo.com www.wellsfargo.com Douglas V. Fant Attorney 3655 W. Anthem Way Suite A-109 PMB 411 Anthem, Arizona 85086 602-770-5098 dfantlaw@earthlink.net Matthias Heinze TÜV Rheinland Group Am Grauen Stein, 51105 Köln 925-699-3248 mheinze@us.tuv.com www.tuv.com/solarenergy www.xbrl-cet.com/euci---solar-o-m-best-practice.html Joseph Cunningham Director of Operations Sunny Energy 2720 South Hardy Drive Suite # 4 Tempe, Arizona 85282 480-257-3283 www.sunnyenergy.solar Dr. John R. Balfour MEP, Ph.D., LEED AP PV Systems Cosmologist President and CTO High Performance PV 9436 N. Arroya Vista Drive East Phoenix, Arizona 85028 602-510-6360 john@highperformancepv.com www.highperformancepv.com

Overview Solar Bankability - The External Impact of Risk Management XBRL-CET / Building The Taxonomy Data Convergence and Management Techniques IECRE 61724 System Performance - Background IECRE 61724 System Performance Risk Management IECRE 61xxx Operational Case Study Q&A Panel Discussion

Solar Bankability Data Data for Individual Panel and Panel Array Performance What we knew Yesterday What we will know tomorrow Not Working Working Question: Which Panel Array of Tomorrow Will Get Better Financial Terms

XBRL-CET Working Group Mission Statement Promote the establishment of multi-industry adoption of specific Data Sets to enable data interoperability between systems Work on Hand Progress Payments Energy Interconnection IECRE 61724 Company Profile

Surety Broker or Banker Bank or Surety Underwriter Bank or Surety Underwriting System Work on Hand Progress Payments Energy Interconnection IECRE 61724 Company Profile Photo Creative Commons copyright license

Whoever Wherever Whatever System Work on Hand Progress Payments Energy Interconnection IECRE 61724 Company Profile Photo Creative Commons copyright license

Solar System Construction - Smart Grid Bank Disbursement Reinsurance Surety Industry System Closed exports loop of information construction exchanged progress manually data in by XBRL paper EPC Contractor Solar Developer Financial Investors and/or Utility Company Partners Banks Lenders Manually Easily imported entered into stakeholders proprietary custom systems, securely software and applications error free Progress Payments Performance Measurement Dashboard Regulatory State / Federal Regulatory Basel 239 Progress Payments Energy Interconnection

Solar System Construction - Smart Grid 3 Bank Disbursement 8 Reinsurance Surety Industry 5 System Closed exports loop of information construction exchanged progress manually data in by XBRL paper 1 EPC Contractor 13 2 4 Solar Developer 3 Utility Company 10 Regulatory State / Federal Financial Investors Partners Banks Lenders 6 7 Regulatory Basel 239 9 and/or Manually Easily imported entered into stakeholders proprietary custom systems, securely software and applications error free Progress Payments Performance Measurement Dashboard 12 11 Progress Payments Energy Interconnection

Solar System Operations and Maintenance Solar Developer Utility Company Regulatory State / Federal Reinsurance Surety Industry Financial Investors Partners Banks Lenders Regulatory Basel 239 Closed loop of information exchanged manually by paper and/or Manually entered into proprietary custom software applications Progress Payments Performance Measurement Dashboard IECRE 61724 Solar System Operation

Solar System Construction Risk Management Bank Disbursement Operations and Maintenance Risk Management Surety Industry EPC Contractor Solar Developer Financial Investors Utility Company Banks Lenders Work on Hand Progress Payments Solar System Construction Energy Interconnection IECRE 61724 Solar System Operation

Best Practices Risk Management Coordinated and Aligned Potential Default Response Enabled by Data Standards like IECRE 61724 Operations and Maintenance Risk Management Surety Industry Financial Investors Utility Company Banks Lenders Power Purchase Agreement Inter-Creditor Agreement Security Interest in Plant and Facility Decommissioning PPA Letter of Credit PPA Surety Bond Project Financing Photo Creative Commons copyright license

External Risk Management The One Whose Data Can Demonstrate Predictable Performance Will Get Better Financial Terms Not Working Working The One Whose Data Demonstrates Poor Performance Will Likely Get: Proactive Internal Risk Mitigation External Pressure to Improve Operations Default Prevention Activity Preemptive Default Mitigation Possible take over of PPA to Protect Project Stakeholders Surety Industry Financial Investors Banks Lenders Utility Company IECRE 61724 The Ability to Monitor System Performance Enables Risk Management Internal and External

External Risk Management Data that can allow a stakeholder, like a surety or bank, to mitigate default risk Will Get Better Financial Terms A Surety, Bank or investor that effects default mitigation and loss prevention through External Risk Management protects the Utility and Ratepayers Possible take over of PPA to Protect Project Stakeholders Surety Industry Financial Investors Banks Lenders Utility Company IECRE 61724 The Ability to Monitor System Performance Enables Risk Management Internal and External

Whoever Wherever Whatever System Work on Hand Progress Payments Energy Interconnection IECRE 61724 Company Profile Photo Creative Commons copyright license

December 2, 2015 Work on Hand

January 7, 2016 Work on Hand

Whoever Wherever Whatever System Work on Hand IECRE 61724 Photo Creative Commons copyright license

Data Convergence and Management Techniques The convergence of data and data communication devices now makes it possible to bring Process Safety Style management techniques right down into your data. Raises the standard of care as to how one manages one's data and conducts one's operations (legal liability) Enhances control and quality of your output (cash flow implications), Makes financial products which assure a free flow of output, i.e. surety, preferable over any transactional backstop arrangements such as letters of credit, which function more in the form of trying to fix a problem after the process breaks, rather than attempting too maintain the free flow of the production process while any problems are simultaneously resolved.

SunSpec white paper 2014 PV System Performance Assessment Identified many inconsistencies in common PV system performance metrics Recommended standardized metrics for commissioning and long term evaluation System Performance Assessment Performance Guarantees Actuarial Data for Insurance and Financing Energy Loss Analysis Model Verification System Degradation Measurement Technology Assessment Assessment of O&M Services Fault Analysis DG, Storage, Load and Grid Interaction

PV PERFORMANCE METRIC VARIANCE WHICH SYSTEM IS PERFORMING BETTER? PR Phoenix, AZ PR Newark, NJ 1.10 1.10 1.05 1.05 1.00 1.00 0.95 0.95 0.90 0.90 0.85 0.80 PR 0.85 0.80 PR 0.75 0.75 0.70 0.70 0.65 0.65 0.60 0.60 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Performance Ratio Yield vs. Reference Yield irradiation only Geographic, Climatic, Seasonal Variances System Specific variances due to other system parameters

PV PERFORMANCE METRIC VARIANCE WHICH SYSTEM IS PERFORMING BETTER? PR, PR-STC Phoenix, AZ PR, PR-STC Newark, NJ 1.10 1.10 1.05 1.05 1.00 1.00 0.95 0.95 0.90 0.90 0.85 PR 0.85 PR 0.80 PR-STC 0.80 PR-STC 0.75 0.75 0.70 0.70 0.65 0.65 0.60 0.60 Performance Ratio Temperature Corrected Corrected for Temperature System Specific Variances Value always less than 1.0 Reduced geographic, climatic and seasonal variances Adequate for system specific annual baseline comparison

PV PERFORMANCE METRIC VARIANCE WHICH SYSTEM IS PERFORMING BETTER? EPI, PR, PR-STC Phoenix, AZ EPI, PR, PR-STC Newark, NJ 1.10 1.10 1.05 1.05 1.00 1.00 0.95 0.95 0.90 0.85 0.80 0.75 PR PR-STC EPI 0.90 0.85 0.80 0.75 PR PR-STC EPI 0.70 0.70 0.65 0.65 0.60 0.60 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Performance Index Energy or Power Compares Energy Produced to Expected Energy Ideal Value = 1.0 Requires use of a Model Original Design Model Preferred Requires Greater Data Collection, Smaller Time Intervals Irradiation, Weather, Shade, Soiling etc.

PV PERFORMANCE METRIC VARIANCE TODAY S STATE OF THE ART PV System Performance Data Lacks Standardization Multiple methods of data collection and reporting 4 definitions of Performance Ratio (PR) Lacks Consistency and History Occasional data from a few months or a year sometimes available Correlation to Design, Site, Equipment, Installation, LCOE Missing Closely Guarded Secrets Private Companies Private Data Comparisons Difficult to Make 33

PV SYSTEM PERFORMANCE METRICS REVISED STANDARDS Currently in Final Draft, IEC 61724 PV System Performance Part 1 Monitoring Part 2 Capacity Evaluation Method Part 3 Energy Evaluation Method These PV system performance standards address Methods of data collection Performance metric calculation Reporting Finance, insurance and owners require standardized data IEC RE PV System Certification includes data derived from IEC 61724 methods IEC RE adds Independent Engineer Verification/Validation

PV SYSTEM PERFORMANCE METRICS REVISED STANDARDS PV System Capacity the measured capacity of the system in Watts or kw, reported as constrained or unconstrained, where constrained is determined by times when the inverter is operating at peak output. Power Performance Index the measured capacity divided by the expected capacity, reported as constrained or unconstrained. Measured Energy the measured energy production of the system in kwh Performance Ratio calculated for an entire year, for times when the system is available Energy Performance Index measured energy divided by expected energy of the available system Energy Unavailability the expected energy during the time the system was not available divided by the expected energy during the entire test period Energy Availability 1 minus Energy Unavailability

Standards and Data Development IEC 61724 PV System Performance, Capacity & Energy Evaluation Revised, ready to publish shortly Standardized Method of PV System Performance Data Collection, Metric Calculation and Reporting Asset Transfer Annual Certification 30+ Years Specification & Site Qualification PV System Certification Design Qualification Plan Qualification IEC RE PV System Certification Includes IEC 61724 Data IE Certified to Standards Includes Local Codes Includes Best Practices Data Feedback in All Phases Financing or Re-financing 1 Year Final Commissioning Commissioning & Provisional Construction Qualification

THE FINANCIAL INDUSTRY AND THE IECRE International Electrotechnical Commission RISK REDUCTION WITH BETTER DATA

IECRE Constituency Marketing determines what constituency needs Equity Investors Technology/Performance Debt Investors Legal/contractual Audience/stakeholders Insurance Public markets Operators Asset holder IEC Standards IECRE PROCESS (WG401) Financial Results Data/Communication EHS/Compliance Performance/Production DATA OUT (WG404) Consumer& government Timelines/Milestones

Investors Want 0 Risk The independent Engineer (IECRE CB) ensures hurdles are cleared. IEC RE sets height by mediating want and capability Many runners clearing hurdles side by side How to get a project done? How to obtain better terms?

IE Assessment Reports and Milestone Certificates OD s A B C D E Final certification F G H I Inception Design Planning Construct commission Operations xfer Disposal 1 Product Testing & IECEE Certification 3 Site Analysis and Energy Yield Assessment 1 Tech Consulting& Benchmarking 3 4 5 Yield Assessment Annual Certification yearly for Yield Assessment G plant life duration (30 y) 1 Plan Checking 1 Installation Supervision 1 Component Qualification 3 5 Warranty assistance 1 Shipment Inspections 1 Commissioning & Plant Certification 2 5 Performance Management, Maintenance & Monitoring 1 Completion Risk 2 Operation Risk 3 Revenue Risk - Volume 4 Revenue Risk - Price 5 Debt Service 2 Recurring Inspections 5 EACH MILESTONE A THROUGH I LEADS TO DATA BURST [1] ratings categories as defined by Fitch Criteria for Solar Power Plants, Feb 21, 2013

SERVICES PERSPECTIVE SAMPLES Engineering Requirements for a successful PV plant Independent energy yield prediction Design review and plant optimization Components check regarding efficiency, quality and safety Review of the technical project documentation regarding engineering and designing of the PV plant, safety and technical specifications Review of interconnection design and facilities Independent owner s and lender s engineering Construction Due diligence inspection and construction monitoring Review of EPC contract Review of the execution project documentation Check of technical execution and construction Quality control Conformity inspection Standard compliance evaluation Acceptance test AC power & PR verification, EPC contract conformity check Review of EPC contract regarding Performance ratio warranty Performance Ratio (PR) investigation and evaluation for the entire PV power plant Hot Spots determination with IR camera, thermography, multispectral overflight Review of the commissioning reports Development Procurement Commissioning Operation Monitoring Feasibly study, the first step to a successful project Basic design Independent consulting Site condition evaluation Energy yield assessment Product and vendor qualification for risks minimization Buyer services Factory inspections Inspection during production Review of purchase agreements Pre-shipment testing and inspections Post-shipment testing and inspections On site mobile lab test Module quality tests in TÜV laboratory Safety, quality and DC power control before grid connection Review of EPC contract Safety related inspection DC string power verification Voc and polarity check Electroluminescence inspection Inspection of the solar monitoring system Functional check of the entire PV plant Completeness of the technical documentation Secure highest performance and IRR Review of O & M contract Continuous PR assessment Review of O&M reports Training & seminars for O&M companies Periodic power and warranty inspections

IEC RE PV Assessment Bodies Data Security IEC RE CB ASSESSMENT BODIES Accreditation Independence Impartiality Confidentiality Competence & Capability Consistency/ Transparency DATA Legal Accounting STAKEHOLDERS

Getting to the True DC Side Health Solar Operations & Maintenance (O&M) Best Practices PV Power Plant Data - IEC 61724 Ensuring the data is correct, consistent and defensible Equipment is calibrated and cross-checked Environment is suitable for measurement Measurement procedures are solid Data analysis and reduction are solid Assumptions are not made Reproducibility, repeatability is confirmed

IEC RE PV DATA IEC RE Body II IEC RE Body I IECRE CB II DATA Dependable Dependable IECRE CENTRAL DATA Scrubbed & Anonymized Reliable Reliable IECRE CB I DATA STAKEHOLDERS Compatible Compatible Timely/Continuous Timely/Continuous Secure & Anonymous Secure

Matthias Heinze TÜV Rheinland Group Am Grauen Stein, 51105 Köln mheinze@us.tuv.com 925-699-3248 www.tuv.com/solarenergy

Preempting Recurring Systemic Challenges & Risks, The Challenge to Delivering Effective PV Energy Generation SOLAR OPERATIONS & MAINTENANCE (O&M) BEST PRACTICES Phoenix, Arizona February 2, 2016 John R. Balfour MEP, Ph.D., President, CTO, PV Cosmologist an Energy Doctor LLC Company since 1977 602-510-6360, John@HighPerformancePV.com 9436 N. Arroya Vista Drive East, Phoenix, AZ 85028, High Performance PV and Energy Analytic Solutions (EAS) All Materials In this Presentation are Copy Righted By High Performance PV, 2016

Three Key Risk Reduction Strategies Project Cost and Risk Reduction & Control Best Practice If not clearly detailed in the system specification, Prior to Design, it will not be in the final product, therefore Should Not Be Expected! Reliability, Availability, Maintainability, Safety & Viability PV systems are not simple and should not be treated as such. Treated as PV as a complete system by the application of a PV systems engineering process. All stakeholders must communicate effectively, continually and accurately Consistent definitions, language to eliminate undocumented and undefined expectations. High Performance PV and Energy Analytic Solutions (EAS) All Materials In this Presentation are Copy Righted By High Performance PV, 2016

Risk & Repeating Avoidable Complications Critical Organizational Patterns of Concern: Continual Organizational Stress Firefighting Mode Uncertainty Regarding Data and Plant Condition A Continual Parade of Reorganization Too Many Unanticipated Hours, Team Never Catches Up Contentious relation between Owners, Asset Managers and O&M A Lack of Effective Results PV Triage Where Is the Missing Energy? Growing Industry Organization and Project Defaults High Performance PV and Energy Analytic Solutions (EAS) All Materials In this Presentation are Copy Righted By High Performance PV, 2016

Siloing Versus Bridging Siloing (Handoff) is About Separation & Disconnection: Risk reduction & consistency are rare Isolated information Bridging (Cooperative Systems Delivery Process) Is about Linkage, Integration and Continuity: Communications Cooperation Data and Accuracy Commiseration Risk Reduction Project Success Readily Adjustable High Performance PV and Energy Analytic Solutions (EAS) All Materials In this Presentation are Copy Righted By High Performance PV, 2016

Masking Causes for System Condition Clipping Inverter Saturation High DC to AC ratios Shouldering Plant Overbuild 5-15% waste Lack of Awareness of the MPPT Window Sweet Spot Poor Data Quality & Consistency in SCADA/DAS Reconstruction of Data - Synthetically Produced with Non Standardized Proprietary Algorithms Poor Methodology / Metrics Inability it Address Existing and Evolving Anomalies, Faults & Failures Insufficient Granular Visual, Multi-EM, Spectral and Other Comparative Data Collection High Performance PV and Energy Analytic Solutions (EAS) All Materials In this Presentation are Copy Righted By High Performance PV, 2016

Preemptive Analytical Maintenance Part 1) Concept 2) Specification (Prior To Design) Part 3) Design / 4) Installation/Construction Part 5) Third Party Quality Assurance Commissioning, (QAC) 6) Operations and Maintenance, (O&M) 7) Site Restoration High Performance PV and Energy Analytic Solutions (EAS) All Materials In this Presentation are Copy Righted By High Performance PV, 2016

The Basics of PAM include: Systems engineering process Universal real time documentation (URTD) Non siloed communications Specification prior to design O&M feedback loop feeding lessons learned back into plant specification prior to design PVROM type of industry data base Emphasis on remote sensing Use of remote sensing for all PV system delivery elements, concept through site restoration Total plant rating system from concept through site restoration Indepth training, education and experience High Performance PV and Energy Analytic Solutions (EAS) All Materials In this Presentation are Copy Righted By High Performance PV, 2016

PV System Relationships Mapping Three Primary Sections: Best Practice Service Life Driven Limiting Factors (Seven Segments) 1. Specification Prior to Design 2. Site Environmental 3. Maintenance 4. Components 5. Scope of Work 6. Other 7. Energy Storage System Component Conditions, Performance & Revenue Twelve Distinct Plant/System Levels Includes PAM Model Performance Based: Actual Vs. Expected High Performance PV and Energy Analytic Solutions (EAS) All Materials In this Presentation are Copy Righted By High Performance PV, 2016

PV Availability & System Delivery Relationship Mapping Best Practice Specification Prior to Design With Limiting Factors What Questions Do We Need to Answer? Requirements What Are the Quantifiable Metrics? How are the Metrics Being Measured Today? What Does Conformance/Compliance Verification Entail? How Do These Factors Impact Availability Index (i.e. rating system beginning with a module RPN, Presently developing a Plant Rating System- PRS) Independent / Certified Plant Risk Assessment (0-100) What Are the Known GAPS (Does not indicate unknown gaps!) High Performance PV and Energy Analytic Solutions (EAS) All Materials In this Presentation are Copy Righted By High Performance PV, 2016

TUV Rheinland Study in 2012/2013 & 2014/2015 100+ Systems Inspected,.1 30 MW 30% Had Particularly Serious & Serious Defects PV System Defects 5% 1% 5% 9% Installation Documentation & Planning Product Performance and Safety Related Over 90% are Non-Product Issues Small Sample - Short Period of Time 25% 55% Maintenance Environmental Where Do We Begin? Miscellaneous High Performance PV and Energy Analytic Solutions (EAS) All Materials In this Presentation are Copy Righted By High Performance PV, 2016 57

Conclusion and Next Steps Focus on Effective PV System Engineering & Delivery Systems Process Link O&M Directly to Specification Prior to Design Move from Siloed to Cooperative Model Require Module (RPN) and Plant Rating Systems (PRS) to Determine the True Asset Value Balance Cost With Reliability, Availability, Maintainability & Safety (RAMS) Call to Action: Utility Working Group Focused on Long Term Goals and Objectives to Develop a Gold Standard Start With Finance and Insurance Underwriters High Performance PV and Energy Analytic Solutions (EAS) All Materials In this Presentation are Copy Righted By High Performance PV, 2016

Case Study

Q&A Panel Discussion

SOLAR OPERATIONS & MAINTENANCE BEST PRACTICES Thank You March 1-2, 2016 Hyatt Regency - Phoenix, Arizona