MANAGEMENT’S DISCUSSION AND ANALYSIS LEGAL NOTICE Caution Regarding Forward-Looking Statements  Certain of the statements contained within this document are forward-looking and reflect management’s expectations regarding the future growth, results of operations,  performance and business of Capstone Infrastructure Corporation(the “Corporation”)based on informationcurrently available to the Corporation.Forward-lookingstatements and financial outlook areprovided forthe purpose of presentinginformationabout management’scurrentexpectations and plans relating to the future and readers are cautioned  that such statements may not be appropriate for other purposes. These statements and financial outlook use forward-looking words, such as “anticipate”,“continue”, “could”,  “expect”, “may”, “will”, “estimate”, “plan”, “believe” or other similar words, and include, among other things, statements found in the "Message to Shareholders", "Strategic Overview" and "Results of Operations". These statements and financial outlook are subject to known and unknown risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such statements and financial outlook and, accordingly,should not be read as guarantees of future performance or results. The forward-looking statements and financial outlook within this document are based on information currently available and what the Corporation currently believes  are reasonable assumptions, including the material assumptions set out in the management’s discussion and analysis of the results of operations and the financial condition of  the Corporation (“MD&A”) for the year ended December 31, 2013 under the heading “Results of Operations”, as updated in subsequently filed MD&Aof the Corporation (such documents are available under the Corporation’s profile on www.sedar.com). Other potential material factors or assumptions that were applied in formulating the forward-looking statements and financial outlook contained herein include or relate to  the following: that the business and economic conditions affecting the Corporation’s operations will continue substantially in their current state, including, with respect to  industryconditions,general levelsofeconomicactivity, regulations,weather,taxesandinterestrates;thattherewill benomaterialdelaysintheCorporation’s powerinfrastructure development projects achieving commercial operation; that the Corporation’s power infrastructure facilities will experience normal wind, hydrological and solar irradiation conditions, and ambient temperature and humidity levels; an effective TCPL gas transportation toll of approximately $1.65 per gigajoule in 2014; that there will be no material change in the level of gas mitigation revenue historically earned by the Cardinal facility; that there will be no material changes to the Corporation’s facilities, equipment or contractual arrangements, no material changes in the legislative, regulatory and operating framework for the Corporation’sbusinesses, no material delays in obtaining required  approvals and no material changes in rate orders or rate structures for the Corporation’s power infrastructure facilities, Värmevärden or Bristol Water, no material changes in environmental regulations for the power infrastructure facilities, Värmevärden or Bristol Water and no significant event occurring outside the ordinary course of business; that the amendments to the regulations governing the mechanismfor calculating the Global Adjustment (which affects the calculation of the DCR escalator under the PPA for the Cardinalfacility and price escalators under the PPAsforthe hydropower facilities located in Ontario) will continue in force;that therewill be no material change to the accounting treatment for Bristol Water’s business under International Financial Reporting Standards, particularly with respect to accounting for maintenance capital expenditures; that there will be no material change to the amount and timing of capital expenditures by Bristol Water; that there will be no material changes to the Swedish krona to Canadian dollar and UK pound sterling to Canadian dollar exchange rates; and that Bristol Water will operate and perform in a manner consistent with the regulatory assumptions underlying AMP5, including, among others: real and inflationary increases in Bristol Water’s revenue, Bristol Water’s expenses increasing in line with inflation, and capital investment, leakage, customer service standards and asset serviceability targets being achieved. Although the Corporation believes that it has a reasonable basis for the expectations reflected in these forward-looking statements and financial outlook, actual results may differ from those suggested by the forward-looking statements and financial outlook for various reasons, including: risks related to the Corporation’ssecurities (dividends on  common shares and preferred shares are not guaranteed; volatile market price for the Corporation’s securities; shareholder dilution; and convertible debentures credit risk, subordination and absence of covenant protection); risks related to the Corporation and its businesses (availability of debt and equity financing; default under credit agreements and debt instruments; geographic concentration; foreign currency exchange rates; acquisitions and development (including risks related to the integration of the business  operated by Renewable Energy Developers Inc.; environmental, health and safety; changes in legislation and administrative policy; and reliance on key personnel); risks related to the Power Infrastructure Facilities (power purchase agreements; operational performance; fuel costs and supply; contract performance; land tenure and related rights;  environmental; and regulatory environment); risks related to Bristol Water (Ofwat price determinations; failure to deliver capital investment programs; economic conditions; operationalperformance;failuretodeliver waterleakage target;SIM and the serviceabilityassessment; pension plan obligations;regulatoryenvironment;competition;seasonality  and climate change; and labour relations); and risks related to Värmevärden (operational performance; fuel costs and availability; industrial and residential contracts; environmental;regulatory environment;and labour relations). For a comprehensivedescription of these risk factors,please referto the “Risk Factors” section of the Corporation’s annual information form dated March 21, 2013, as supplemented by disclosure of riskfactors contained in any subsequent annual information form, material change reports (except confidentialmaterial changes reports), business acquisition reports, interim financial statements, interim MD&A and information circulars filed by the Corporation with  the securities commissions or similar authorities in Canada (which are available under the Corporation’s profile on profile on www.sedar.com). The assumptions, risks and uncertainties described above are not exhaustive and other events and riskfactors could cause actual results to differ materially from the results  and events discussed in the forward-looking statements and financial outlook. The forward-looking statements and financial outlook within this document reflect current  expectations of the Corporation as at the date of this document and speak only as at the date of this document. Except as may be required by applicable law, the Corporation  does not undertake any obligation to publicly update orrevise any forward-looking statements and financial outlook. This document is not an offer or invitationfor the subscription or purchase of or a recommendation of securities.It does not take into account the investment objectives,  financial situation and particular needs of any investors. Before making an investment in the Corporation, an investor or prospective investor should considerwhether such an  investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary. 20 CAPSTONE INFRASTRUCTURE CORPORATION