California Electric Rates: 30 Years

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1 Solar User Inc H, C, (408) x3W (408) kw Commercial PV System Site Address: 1 Cust Street, Building Cust Sunnyvale, CA 9xxxc Mailing Address: 2005 All Rights Reserved 1 Cust Street, Building Cust Sunnyvale, CA 9xxxc November 20, 2005 ELECTRICAL ENERGY USAGE, BILLING & TAX INPUTS & ASSUMPTIONS 1100 kwh Average Winter Monthly Historic Usage 1100 kwh Average Summer Monthly Historic Usage kwh Total Annual Historic Usage Rate Schedule: PG&E A1 Recommended New Rate Schedule: PG&E A kwh Total Annual Estimated Usage with lifestyle/occupancy changes About 100% of Historic Usage kwh Total Annual Estimated Usage factoring in Energy Efficiency gains (excluding solar) About 100% of Lifestyle Adjusted Usage 35% Federal Income Tax Rate 8.8% State Income Tax Rate 43.8% Combined Fed & State Income Tax Rate 5.0% Assumed General Inflation (maintenance, etc) The CPI has increased 5.1% annually since % Assumed Electric Rate Inflation, except 10.8% next year and 10% in 2 years Average California Electric Rates have increased 6.7% annually since cents 10 8 per 6 kwh California Electric Rates: 30 Years Residential Small Bus Rates have increased an average of 6.7% per year for 30 years. Source: CPUC "Electric Rate Compendium" Nov SOLAR ELECTRIC SYSTEM kw PV system size (CEC AC Rating) Comprising 60 Sharp NDN2ECU modules and 3 Xantrex GT inverters PV Array is 22 up from horizontal, and facing SW 0 square feet, approximate roof area required Module dimensions are '' by '' 5.3 Hours of equivalent full noontime sun occurs at Sunnyvale, CA This is based on 30 year annual average data for nearby San Francisco, CA (SFO Airport) found in the NREL Redbook (rredc.nrel.gov/solar/pubs/redbook) This level of sunshine can vary +/ 9% year to year due to weather 69% Total system efficiency factor, accounting for: inverter, module heating, wire losses, dust & dirt, and module mismatch factors Normal per CEC guidebook is about 71% This does not include shading or array orientation factors 5.2 Hours of effective full noontime sun, factoring in shading & orientation 11,173 kwh/year estimated production (1,585 kwh per year per kw CEC AC Capacity Rating) Offsets about 85% of estimated/adjusted future usage 0.5% Annual Module Degradation Rate (normally 0% to 1%) Affects future energy production due to module aging Disclaimer: This information is provided as an illustration of potential financial benefits stemming from ownership of a renewable energy power system. This is not a production guarantee. These estimates should be confirmed by a professional accountant or tax advisor. Neither nor any authorized user warrants the applicability of these estimates for particular business cases, and both disclaim all liability SFA A6

2 (408) All Rights Reserved ENERGY COSTS/SAVINGS HISTORIC ENERGY COSTS WITHOUT SOLAR: 169 Historic Average Monthly Charges ESTIMATED FUTURE ENERGY COSTS WITH ADJUSTMENTS IN USAGE (BEFORE SOLAR) 169 Average Monthly Charges accounting for adjustments in usage ESTIMATED FUTURE ENERGY COSTS WITH SOLAR AND ADJUSTMENTS 8 Average Monthly Charges with Solar SAVINGS USING SOLAR: 161 Savings in 1st month due to solar (with usage adjustments) Savings will increase over time as electric rates rise 1,928 First year savings due to solar SYSTEM PRICING 59,925 Total System Cost (includes full service, parts, delivery, installation, warranty, sales tax) 59,925 Gross Top Line Cost (8.50 per CEC AC Watt) (19,740) Rebate Incentive at 2.80 per Watt 40,185 System Price after Rebate (typically, the net contract amount) 671 Estimated Permit Fees NOT included in system contract price 443 Utility Fees NOT included in system contract price 41,299 Cost After Rebate & Fees (may be the Tax Creditable Amount, see Tax Advisor) (12,390) Federal Tax Credit (20,821) Depreciation value accelerated to present (depends on new fed rules on % depreciation allowed) 8,088 Net System Cost with Tax Benefits 8,088 TOTAL NET AFTERTAXES COST OF SYSTEM FINANCING 8.0% Loan Rate 10 years Loan Term 100% Loan % of TOTAL NET AFTERTAX COST 8,088 Loan Amount Net Cash Required 33,211 Short Term Cash Required Until Tax Benefits are received SFA A6

3 (408) All Rights Reserved ENVIRONMENTAL BENEFITS: 11,173 kwh/year estimated system production of electricity Over 25 years, this solar system is estimated to offset: 438,165 lbs of CO 2, the leading greenhouse gas 1,406 lbs of NO x, which creates smog 1,273 lbs of S0 2, which causes acid rain 87 lbs of particulates which cause asthma 712,938 miles driven in an average car, or 28,518 miles a year It's like taking 2.3 cars off the road for 25 years. Or planting 3.8 acres of trees. This solar system will offset about 85% of the estimated future usage <graphics coming> RETURN ON INVESTMENT SUMMARY (see following pages for detail) CASH FLOW 223 Electric Bill Savings in 1st Month (before electric rate inflation) (74) 1st Month Net Cost of a 8%, 10 year loan 148 NET SAVINGS / CASH FLOW IN FIRST MONTH Net monthly savings will increase due to electricity inflation, but decrease due to reduced interest (tax deduction) portion of loan repayment. Savings get larger, because inflation works faster than reduction in interest. ANNUAL RATE OF RETURN 10.6% Effective AfterTax Rate of Return For comparison with other investments Additional value as a hedge against future electric rate increases CUMULATIVE ELECTRIC BILL SAVINGS OVER 25 YEARS (including system expenses) 99,678 equals 1,232% return on initial system cost of 8,088 PAYBACK 7.8 Years to Cash PAYBACK EQUITY / PROPERTY VALUE INCREASE: 53,435 Appraisal Journal Estimated Immdediate Increase in Property Value or 661% of the system's cost Based on 20 x First Year's Net Savings of 2,672 Equity increases 20 for every 1 saved in annual utility expenses ref: The Appraisal Journal, Oct 98 see This Resale Value will continue to increase as electric bill savings increase due to inflation This increase is limited by the total remaining savings expected within 25 years 78,343 Maximum resale value based on estimated remaining savings to 25 years, Occurs at year 11 SFA A6

4 (408) All Rights Reserved CASH FLOW: 223 Electric Bill Savings in 1st Month (before electric rate inflation), plus REC & PBI income (74) 1st Month Net Cost of a 8%, 10 year loan 148 NET SAVINGS / CASH FLOW IN FIRST MONTH Net monthly savings will increase due to electricity inflation, but decrease due to reduced interest (tax deduction) portion of loan repayment. Savings get larger, because inflation works faster than reduction in interest. 8,000 7,000 6,000 5,000 4,000 3,000 2,000 Cash Flow when Financed (incl. Inverter Replacement & Maintenance) Utility Bill w/o Solar at 5.0% inflation 1,000 Loan plus New Bill, 0 Maintenance, etc 1,000 Utility Bill w/o Solar at 5.0% inflation Loan plus New Bill, Maintenance, etc 6,000 5,000 4,000 Net Annual Savings Net Annual Savings The difference between "Utility Bill w/o Solar" and the projected total cost of "Loan plus New Bill" 3,000 2,000 Net Annual Savings 1,000 Year 0 1, ,000 90,000 80,000 70,000 Accumulated Net Savings with Loan, Maintenance, Inverter Replacement and New Bill 60,000 50,000 40,000 30,000 20,000 10,000 Accumulated Savings 0 Year SFA A6

5 (408) All Rights Reserved EQUITY / PROPERTY VALUE INCREASE: 53,435 Appraisal Journal Estimated Immdediate Increase in Property Value or 661% of the system's cost Based on 20 x First Year's Net Savings of 2,672 Equity increases 20 for every 1 saved in annual utility expenses ref: The Appraisal Journal, Oct 98 see This Resale Value will continue to increase as electric bill savings increase due to inflation This increase is limited by the total remaining savings expected within 25 years 73,388 Maximum resale value based on estimated remaining savings to 25 years occurs at year 9 120,000 Resale Value Increases Over Time Due To Solar Until Limited By Remaining System Lifetime Savings 100,000 80,000 Resale Value 60,000 40,000 20,000 0 Year Resale Value Increase Remaining System Lifetime Savings SFA A6

6 (408) All Rights Reserved Commercial AfterTax Analysis Year: Operating Savings: Avoided electricity Purchases 1,928 2,126 2,328 2,433 2,543 2,657 2,777 2,901 3,032 3,168 3,311 3,460 REC (Green Tag) Income. Assumed Taxable Performance Based Incentive. Assumed Taxable Heating & Air Conditioning Savings Roof Maintenance Savings Operating Expenses: System Maintenance at 0.25% of gross system cost p (150) (157) (165) (173) (182) (191) (201) (211) (221) (232) (244) (256) System Capital Cost after Rebates & Fees (41,299) Inverter Replacement at 700 per kw in Year 15 Energy Efficiency Net Expense Operating profit (loss): (41,299) 2,672 2,858 3,048 3,140 3,237 3,337 3,443 3,554 3,669 3,790 3,917 4,050 Federal & State Tax benefits Fed Tax Creditable Basis: 41,299 30% Federal Investment Tax Credit in ,390 No CA State Tax Credit Available No CA State Tax Credit Available Federal Depr Basis: Fed Tax Credit Basis minus 1/2 the Fed Credit 35,104 < This may not be accurate. It depends on what the new IRS rules are regarding the new federal tax credit MACRS 5 year Accelerated Federal Depreciation (%) 20.0% 32.0% 19.2% 11.5% 11.5% 5.8% MACRS 5 year Accelerated State Depreciation (%) 20.0% 32.0% 19.2% 11.5% 11.5% 5.8% MACRS 5 year Accelerated Federal Depreciation 2,457 3,932 2,359 1,413 1, MACRS 5 year Accelerated State Depreciation Fed income tax on state depreciation (217) (348) (209) (125) (125) (63) Total Depr Value: 2,861 4,577 2,746 1,645 1, Value of lost Federal tax deduction of electricity expense (935) (1,000) (1,067) (1,099) (1,133) (1,168) (1,205) (1,244) (1,284) (1,327) (1,371) (1,417) Value of lost State tax deduction of electricity expense (236) (253) (269) (278) (286) (295) (304) (314) (324) (335) (346) (358) Fed Tax Benefit on State deduction loss of electricity expense AfterTax Net Annual Profit/Loss for IRR (28,909) 4,444 6,271 4,552 3,506 3,563 2,807 2,040 2,106 2,174 2,246 2,321 2,400 AfterTax Cash Flow, Cumulative (28,909) (24,465) (18,194) (13,642) (10,137) (6,574) (3,767) (1,727) 379 2,553 4,799 7,121 9,520 v < < < next 13 years follow below < < < < < < < Year: Operating Savings: Avoided electricity Purchases 3,616 3,778 3,949 4,126 4,312 4,506 4,709 4,921 5,142 5,373 5,615 5,868 6,132 REC (Green Tag) Income. Assumed Taxable Performance Based Incentive. Assumed Taxable Heating & Air Conditioning Savings Roof Maintenance Savings Operating Expenses: System Maintenance at 0.25% of gross system cost p (269) (282) (297) (311) (327) (343) (361) (379) (397) (417) (438) (460) (483) System Capital Cost after Rebates & Fees Inverter Replacement at 700 per kw in Year 15 (4,935) Operating profit (loss): 4,188 4,333 (450) 4,644 4,810 4,983 5,165 5,355 4,745 4,956 5,177 5,408 5,649 Federal & State Tax benefits 30% Federal Investment Tax Credit in 2006 No CA State Tax Credit Available Federal Depr Basis: Fed Tax Credit Basis minus 1/2 the Fed Credit Value of lost Federal tax deduction of electricity expen (1,466) (1,517) 157 (1,625) (1,683) (1,744) (1,808) (1,874) (1,661) (1,735) (1,812) (1,893) (1,977) Value of lost State tax deduction of electricity expense (370) (383) 40 (411) (425) (441) (457) (473) (419) (438) (458) (478) (499) Fed Tax Benefit on State deduction loss of electricity (14) AfterTax Net Annual Profit/Loss for IRR 2,482 2,568 (267) 2,752 2,850 2,953 3,060 3,173 2,811 2,937 3,068 3,204 3,347 AfterTax Cash Flow, Cumulative 12,002 14,570 14,303 17,055 19,905 22,858 25,918 29,091 31,902 34,839 37,906 41,111 44,458 ANNUAL RATE OF RETURN Effective AfterTax Rate of Return 10.6% IRR (AfterTax Rate of Return) For comparison with other investments Additional value as a hedge against future electric rate increases SFA A6