- Review of key current CSP financial incentives and their stability going forward - Demonstration/case study of how incentives impact a CSP plant’s levelized cost of electricity (LCOE) Jay Paidipati, Managing Consultant, NAVIGANT

1. Impact of State Level Financial
Incentives on CSP Plant
Economics
Prepared for
Concentrating Solar Thermal Power 2009
June 4, 2009
©2009 Navigant Consulting, Inc. All rights Reserved

2. Content of Report
This report was prepared by Navigant Consulting, Inc.[1] for Concentrating Solar
Thermal Power 2009. The work presented in this report represents our best efforts and
judgments based on the information available at the time this report was prepared.
Navigant Consulting, Inc. is not responsible for the reader’s use of, or reliance upon, the
report, nor any decisions based on the report.
NAVIGANT CONSULTING, INC. MAKES NO REPRESENTATIONS OR
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Readers of the report are advised that they assume all liabilities incurred by them, or
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and opinions contained in the report.
[1] “Navigant” is a service mark of Navigant International, Inc. Navigant Consulting,
Inc. (NCI) is not affiliated, associated, or in any way connected with Navigant
International, Inc. and NCI’s use of “Navigant” is made under license from Navigant
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©2009 Navigant Consulting, Inc. All rights Reserved

3. Table of Contents
1 Introduction
2 Incentive Review
3 Case Study
2
©2009 Navigant Consulting, Inc. All rights Reserved

4. Table of Contents
1 Introduction
2 Incentive Review
3 Case Study
3
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5. Introduction » Purpose
Purpose
• This presentation’s purposes are to:
- Review state level CSP incentives
- Assess their stability in the mid- and long-term
- Examine how they impact plant economics
4
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6. Table of Contents
1 Introduction
2 Incentive Review
3 Case Study
5
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7. Incentive Review » California
California’s property tax exemption results in annual savings.
Property Tax Exemption
• Law: Section 73 of CA tax code allows for a
property tax exclusion for solar energy
systems.
• Stability: Valid through 12/31/2016
Sacramento
• Value: CA property taxes are annual payments
San Francisco Oakland of ~1% of assessed value.
San Jose
Fresno • Other Rules: Dual-use equipment (e.g. pipes
that carry steam from solar field or natural gas
boiler) only qualify for 75% exclusion.
Source: California Board of Equalization, May, 2009
Los Angeles
San Diego
Source: U.S. Geological Survey, Department of the Interior/USGS
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8. Incentive Review » Arizona
Arizona’s property tax reduction is stable in the mid- and long-term
through an extension passed in July of 2008.
Reduced Property Tax Assessment
• Law: Solar energy systems are assessed at 20%
of their depreciated value.
• Stability: Was set to expire in 2011, but
extended through 12/31/2040.
• Value: Arizona property taxes are typically 1%
to 2% of depreciated value.
Phoenix Source: Arizona Department of Revenue May, 2009
Yuma Mesa
Tucson Arizona also has a sales tax exemption
for solar energy systems, but my
Source: U.S. Geological Survey, Department of the
Interior/USGS
interactions with the Department of
Revenue have produced unclear results
as to whether large scale CSP systems
qualify.
7
©2009 Navigant Consulting, Inc. All rights Reserved

9. Incentive Review » New Mexico
New Mexico’s incentives require in-state tax liability.
Production Tax Credit
• Law: Solar energy systems greater than 1 MW are
eligible for a production tax credit against NM taxes
for 10 years.
• Stability: Systems may sign up until 1/1/2018
Santa Fe • Value: Over the 10 year period, the credit ranges from
$0.01/kWh to $0.04/kWh
• Other Rules: Each solar energy systems capped at
Albuquerque 200,000 MWh/Yr of credits and whole program
(including biomass and wind) is capped at 2,000,000
MWh/Yr and solar is eligible for 500,000 MWh/yr
Roswell more. However, the 2,000,000 MWh are already
reserved.
Source: State of New Mexico Department of Taxation and Revenue, May 2009
Las Cruces Advanced Energy Tax Credit
Source: U.S. Geological Survey, Department of the Interior/USGS
• Law: CSP systems greater than 1 MW can receive a
6% tax credit against in-state gross receipts
tax, withholding tax or compensating tax liabilities.
• Stability: Construction must start before 12/31/2015
• Other Rules: Credit capped at $60M per facility.
Source: New Mexico State Legislation, reviewed May 2009
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10. Incentive Review » Nevada
Nevada’s current incentives are were set to expire this month, but the
Nevada governor just signed new incentives into law.
Sales Tax Abatement
• Law: Sales taxes after the first 2.6% are abated for equipment
purchases for three years.
• Stability: Expires 6/30/2049
Elko • Value: NV sales tax rates vary from 6.5% to 7.75%
• Other Rules: Facility must operate in state for at least 5 years.
Facility has minimum capital requirements and must create a
Sparks certain number of full-time jobs (both depend on size of the
Reno city where the facility is).
Carson City
Source: Nevada Commission on Economic Development May, 2009
Property Tax Abatement
• Law: CSP facilities qualify for up to 55% property tax
abatement for 20 years.
• Stability: Expires 6/30/2049
Las Vegas • Value: NV property tax rates are ~2% to 3% of assessed value.
Henderson • Other Rules: Facility must operate in state for at least 5 years.
Facility has minimum capital requirements must create a
Source: Nevada Bureau of Land Management, certain number of full-time jobs (both depend on size of the
Department of the Interior/BLM city where the facility is) and provide a certain hourly wage.
Source: Nevada Commission on Economic Development May, 2009
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11. Incentive Review » Colorado
Colorado’s property tax law values solar facilities at the same level as
comparably sized non-renewable facilities.
Property Tax Assessment
• Law: Solar energy systems are valued at the level of
comparably size non-renewable facilities.
• Stability: Permanent
• Value: Colorado property taxes are ~1% per year and
the state assesses renewable energy property at the
values shown below (between $421 and
$1128/kW), rather than a facilities actual installed
value ($4,000 to $6,000/kW)
Source: Colorado Department of Local Affairs and Colorado Division of
Property Taxation May, 2009
Assessed Value for CSP Facilities
1500
Assessed Value
1000
[$/kW]
Source: U.S. Geological Survey, Department of the Interior/USGS 500
0
0 10 20 30 40 50 60 70 80 90 100
Nameplate Capacity [MW]
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12. Incentive Review » Utah
Utah’s sales tax exemption reduces installed costs.
Sales Tax Exemption
Ogden
Salt Lake City
• Law: Utah exempts the purchase or lease of
Provo equipment from sales tax for a variety of
renewable energy technologies, including CSP
systems.
• Stability: Valid through 6/30/2019
• Value: Sales taxes range from 5.95% to 7.95%
(depending on county and city).
• Other Rules: Leases must be for at least seven
years. Does not include tools or equipment for
construction.
Source: Utah State Tax Commission May, 2009
St. George
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13. Table of Contents
1 Introduction
2 Incentive Review
3 Case Study
12
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14. Case Study » Technical Assumptions
A parabolic trough plant was chosen for the case study because the
most public data exists on parabolic trough performance.
Technical Assumptions New Mexico DNI Map
Technology Parabolic Trough
Plant Size [MW] 150
Southwestern New
Location
Mexico
First Year Production [GWh] ~420
Storage? No
Natural Gas Back Up? No
Cooling Technology Wet Tower
National Renewable
Production Model Software Energy Laboratory’s
Solar Advisor Model
Approximate
Source: National Renewable Energy Laboratory at
Location Chosen http://www.nrel.gov/csp/maps.html#nm
13

15. Case Study » Economic Assumptions
Economic Assumptions
Installed Cost1,2 [$/kW] $4,750
Construction Time [Months] 24
Construction Loan Rate 8%
Term Loan Rate 7%
Cost of Equity 9%
Project Debt/Equity Split 60%/40%
Assumed NM Gross Receipts Tax Rate3 6.375%
Annual Fixed O&M [$/kW-Yr] 63
Variable O&M [$/MWh] 0.8
1. Installed costs include Interest During Construction and Escalation During Construction.
2. Installed cost does not include any potential transmission upgrades or long-distance transmission. It only includes
transmission required to get to reach a substation.
3. New Mexico has a gross receipts tax in lieu of a sales tax
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16. Case Study » LCOE Impacts
New Mexico’s state level incentives can impact LCOE up to 13% on
top of federal incentives.
Impact of State Level Incentives
25
% Reduction After Federal Incentives
Levlized Cost Of Electricity [¢/kWh]
20
15
5% 8% 13%
10
5
0
1 = LCOE W/O 2 = 1 - Federal ITC 3 = 2 - Accelerated 4 = 3 - Advanced 5 = 3 - State 6 = 3 - State
Incentives Depreciation Energy Tax Credit Production Tax Production Tax
Credit Credit and
Advanced Energy
Tax Credit*
* The New Mexico Energy, Minerals and Natural Resources Department is still investigating if a facility can take both the
production tax credit and the advanced energy tax credit. 15

17. Key Takeaways
• State level incentives appear to be stable
over the near- and mid-term.
• State level incentives can have an
appreciable (>5%) impact on a CSP
plant’s economics.
Jay Paidipati
Managing Consultant
San Francisco, CA 94105
415-399-2191
jpaidipati@navigantconsulting.com
Any
Questions?

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