Risk Factors. Development of Solar Thermal Electric, Multi-Fuel, Utility-Scale Power Plants

Ecosystem Solar Electric Corp. (ESE), Designer and Solar MW Energy Inc. (SME), Developer

Risk Factors

Ecosystem Solar Electric Corp. (ESE) and Solar MW Energy, Inc. (SME) are special purpose entities, striving to succeed by brainstorming and developing one of the most viable and profitable solar thermal electric, multi-fuel, utility-scale power plants, based upon the Designers' copyrighted prototype designs. ESE and SME are the initial investors, indicative of confidence in the success of their undertakings, as well as stewards, by initially taking one of the highest risks. The Energy Industry is a unique industry, with a substantial inherent risk. ESE and SME are established based upon these principles and does not partner with participants who will not tolerate risk. ESE's and SME's methodology in risk taking are deeply embedded into their corporate structure, as well as personality. Virtually all stakeholders, not in the masses, within the Energy's industry are positioned to tolerate Risks, invest accordingly and timely.

Risk management principles
Risk management in SME and ESE is a continuous process of analyzing and managing all the opportunities, threats and risks faced by the companies to achieve its goals and to ensure the Company remains a going concern. The basis for risk management is the viability of ESE prototype designs, development of power plants at the most competitive price, and the continuous, systematic loss-prevention work at all the levels on the principle that "everybody is responsible". In the long term this is the only way to reduce the total risk costs.

Operational risks
ESE and SME are responsible for their operational risks and for mitigating and covering them, by pledging all of their equities and assets in one basket. The risk management policy is endorsed by the Board of Directors. ESE and SME are structured only as the developers and Operators of power plants and do not own such, creating a unique opportunity to equity participants since inception. Risk assessment is performed at all stages and milestones, as well as carefully projected.

Competitive situation
On the Solar Electric Hybrid Plants side, the main competitors are only these few companies mentioned by the news media, as well as their distinct technology designs. ESE has created copyrighted prototype designs for power plants, which are to foster the lowest development cost, as well as one of the most profitable with the lowest operation and maintenance costs, thus maintaining substantial control of the price risk factor. On the other hand, SME goes beyond being an electric power plant developer, by performing manufacturing and assembly of certain power plant components, also based upon ESE prototype designs, including sub-grids trunk lines.

Substantially improved tried-and-true technology risk
Launching substantially improved tried-and-true technology always involves risk. ESE and SME seeks to control this risk by designing, developing, manufacturing, assembling, constructing and operating electric power plants with all due care. Tight and timely schedules are inherent in this industry.

Political and legislative risks
Political developments and changes in legislation can have a significant impact on ESE and SME business. ESE and SME actively monitor political and legal developments in its markets, and engages in dialogue with various official bodies in projects of importance to operations. Much of this engagement takes place through interest groups and trade organizations. The company monitors legislative changes at both corporate and affiliate levels. ESE prototype designs are not based upon the uncertainties and longevity of the production tax credit and tax incentives, nor subsidy, a hedge against political risk.

Electricity Wholesale Price Risk
Electricity prices have no substantial impact on ESE and SME, particularly, when their prototype design for multi-fuel electric power plants is implemented, which does not rely on any kind of Government subsidy and tax incentives, and therefore can win bilateral contracts from utility companies at price above market price referent.

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