Welcome 1

CONFIDENTIAL

8 MIT STUDY ON THE FUTURE OF SOLAR ENERGY

PV technology is discussed in detail in Chapter 2. The fi rst modern solar cells were produced in 1954 and deployed in 1958 on a U.S. satellite. Those early cells relied on the silicon-wafer-based approach that continues to dominate the industry today. Manufacturing techniques have progressed enormously since then, and the price of solar cells and modules (which consist of multiple connected solar cells) has fallen dramatically. As Figure 1.3 suggests, PV genera-tors have no moving parts: when sunlight strikes a solar cell connected to an external circuit, a direct electric current (dc) fl ows. PV generating facilities include solar modules and inverters that convert direct current into grid-compatible alternating current (ac), as well as other electrical and structural components, such as wires and brackets. One key advantage of solar PV over conventional fossil-fueled or nuclear generation is its modularity: solar-to-electric power conversion effi ciency is unaffected by scale, though cost per unit of

generating capacity is signifi cantly lower for utility-scale installations (which generally have capacities measured in megawatts) than for residential systems (which typically have capacities measured in kilowatts).

While most PV cells made today are based on crystalline silicon, active research is underway to explore alternative designs and materials capable of reaching cost targets that are much more favorable than those anticipated for existing commercial technologies.xxii In Chapter 2, we provide a classifi cation scheme for new and existing PV technologies based on the complexity of their primary light-absorbing material. We further identify three characteristics that will almost certainly be shared by successful future PV technologies: higher effi ciency, lower materials use, and improved manufacturability.

CSP technology, discussed in detail in Chapter 3, is much less widely deployed, even though the fi rst CSP power station was built in Egypt in 1912–13 to run an irrigation system. Figure 1.4 shows the two CSP designs that have

The fi rst modern solar cells were produced in 1954 and deployed in 1958 on a U.S. satellite.

Figure 1.3 Solar PV

xxiiIn addition to silicon-based solar cells, cells based on thin-fi lm technologies are now commercially deployed. However, as we discuss below, it is unlikely that these commercial thin-fi lm technologies can make a signifi cant contribution to global electricity generation in the future because of materials scaling considerations.

8 MIT STUDY ON THE FUTURE OF SOLAR ENERGY

PV technology is discussed in detail in Chapter 2. The fi rst modern solar cells were produced in 1954 and deployed in 1958 on a U.S. satellite. Those early cells relied on the silicon-wafer-based approach that continues to dominate the industry today. Manufacturing techniques have progressed enormously since then, and the price of solar cells and modules (which consist of multiple connected solar cells) has fallen dramatically. As Figure 1.3 suggests, PV genera-tors have no moving parts: when sunlight strikes a solar cell connected to an external circuit, a direct electric current (dc) fl ows. PV generating facilities include solar modules and inverters that convert direct current into grid-compatible alternating current (ac), as well as other electrical and structural components, such as wires and brackets. One key advantage of solar PV over conventional fossil-fueled or nuclear generation is its modularity: solar-to-electric power conversion effi ciency is unaffected by scale, though cost per unit of

generating capacity is signifi cantly lower for utility-scale installations (which generally have capacities measured in megawatts) than for residential systems (which typically have capacities measured in kilowatts).

While most PV cells made today are based on crystalline silicon, active research is underway to explore alternative designs and materials capable of reaching cost targets that are much more favorable than those anticipated for existing commercial technologies.xxii In Chapter 2, we provide a classifi cation scheme for new and existing PV technologies based on the complexity of their primary light-absorbing material. We further identify three characteristics that will almost certainly be shared by successful future PV technologies: higher effi ciency, lower materials use, and improved manufacturability.

CSP technology, discussed in detail in Chapter 3, is much less widely deployed, even though the fi rst CSP power station was built in Egypt in 1912–13 to run an irrigation system. Figure 1.4 shows the two CSP designs that have

The fi rst modern solar cells were produced in 1954 and deployed in 1958 on a U.S. satellite.

Figure 1.3 Solar PV

xxiiIn addition to silicon-based solar cells, cells based on thin-fi lm technologies are now commercially deployed. However, as we discuss below, it is unlikely that these commercial thin-fi lm technologies can make a signifi cant contribution to global electricity generation in the future because of materials scaling considerations.

Chapter 1 – Introduction and Overview 9

been deployed at commercial scale to date. In the older parabolic trough design, mirrors focus solar radiation on a pipe through which a fl uid such as oil or a molten salt is pumped. The heated fl uid is then used to produce steam that drives a turbine connected to a generator. In the power-tower design, a fi eld of mirrors focuses solar radiation on the top of a tower through which a fl uid is pumped. Power-tower plants can operate at a higher fl uid temperature than parabolic trough plants, which increases overall effi ciency. In either design, the output of the generator at any point in time depends on the temperature of the fl uid, which is relatively insensitive to short-term changes in solar irradiance.

As a practical matter, these two CSP technologies can only be used at large scale. In addition, because CSP systems can only use direct sun-light, not sunlight diffused by haze or cloud cover, their performance is more sensitive to cloudiness and haze than the performance of PV systems. On the other hand, CSP facilities can economically provide hours of (thermal) energy storage, thereby producing power in hours with little or no sunlight, and they can be economically designed to use natural gas to

supplement solar energy in a fully dispatchable hybrid confi guration. Research on CSP is exploring ways to increase effi ciency by attaining higher temperatures and by converting more of the incident solar energy into thermal energy.

BUSINESS MODELS & ECONOMICS

Chapters 4 and 5 of this study consider the factors that determine the cost and value of solar electricity. Chapter 4 discusses the determinants of capital costs for PV generating facilities and describes the business models being used to support PV installations in the United States, while Chapter 5 explores how facility capital costs, insolation, and other factors affect the cost of electricity generated by PV and CSP systems. We then go on to consider the value of solar electricity and its determinants.

PV modules are commodity products; current production is concentrated in China and Taiwan but is supported by a global supply chain.34,35 Inverters are also a commodity product, traded internationally. PV system prices at all scales have declined considerably in recent years mainly because of reductions in module and inverter prices. As Chapter 4 notes, there is

Parabolic Trough Concentrating Solar Collector at Kramer Junction, CaliforniaSource: NREL 2012a

Gemasolar Solar Thermal Plant, owned by Torresol Energy©SENER

Figure 1.4 Solar CSP

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GM Energy Energy Efficiency

1. What is ESCO? 2. ESCO Services 3. ESCO Opportunity 4. Consideration Factors 5. Sample Projects

Contents 2

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3

CONFIDENTIAL

8 MIT STUDY ON THE FUTURE OF SOLAR ENERGY

PV technology is discussed in detail in Chapter 2. The fi rst modern solar cells were produced in 1954 and deployed in 1958 on a U.S. satellite. Those early cells relied on the silicon-wafer-based approach that continues to dominate the industry today. Manufacturing techniques have progressed enormously since then, and the price of solar cells and modules (which consist of multiple connected solar cells) has fallen dramatically. As Figure 1.3 suggests, PV genera-tors have no moving parts: when sunlight strikes a solar cell connected to an external circuit, a direct electric current (dc) fl ows. PV generating facilities include solar modules and inverters that convert direct current into grid-compatible alternating current (ac), as well as other electrical and structural components, such as wires and brackets. One key advantage of solar PV over conventional fossil-fueled or nuclear generation is its modularity: solar-to-electric power conversion effi ciency is unaffected by scale, though cost per unit of

generating capacity is signifi cantly lower for utility-scale installations (which generally have capacities measured in megawatts) than for residential systems (which typically have capacities measured in kilowatts).

While most PV cells made today are based on crystalline silicon, active research is underway to explore alternative designs and materials capable of reaching cost targets that are much more favorable than those anticipated for existing commercial technologies.xxii In Chapter 2, we provide a classifi cation scheme for new and existing PV technologies based on the complexity of their primary light-absorbing material. We further identify three characteristics that will almost certainly be shared by successful future PV technologies: higher effi ciency, lower materials use, and improved manufacturability.

CSP technology, discussed in detail in Chapter 3, is much less widely deployed, even though the fi rst CSP power station was built in Egypt in 1912–13 to run an irrigation system. Figure 1.4 shows the two CSP designs that have

The fi rst modern solar cells were produced in 1954 and deployed in 1958 on a U.S. satellite.

Figure 1.3 Solar PV

xxiiIn addition to silicon-based solar cells, cells based on thin-fi lm technologies are now commercially deployed. However, as we discuss below, it is unlikely that these commercial thin-fi lm technologies can make a signifi cant contribution to global electricity generation in the future because of materials scaling considerations.

8 MIT STUDY ON THE FUTURE OF SOLAR ENERGY

PV technology is discussed in detail in Chapter 2. The fi rst modern solar cells were produced in 1954 and deployed in 1958 on a U.S. satellite. Those early cells relied on the silicon-wafer-based approach that continues to dominate the industry today. Manufacturing techniques have progressed enormously since then, and the price of solar cells and modules (which consist of multiple connected solar cells) has fallen dramatically. As Figure 1.3 suggests, PV genera-tors have no moving parts: when sunlight strikes a solar cell connected to an external circuit, a direct electric current (dc) fl ows. PV generating facilities include solar modules and inverters that convert direct current into grid-compatible alternating current (ac), as well as other electrical and structural components, such as wires and brackets. One key advantage of solar PV over conventional fossil-fueled or nuclear generation is its modularity: solar-to-electric power conversion effi ciency is unaffected by scale, though cost per unit of

generating capacity is signifi cantly lower for utility-scale installations (which generally have capacities measured in megawatts) than for residential systems (which typically have capacities measured in kilowatts).

While most PV cells made today are based on crystalline silicon, active research is underway to explore alternative designs and materials capable of reaching cost targets that are much more favorable than those anticipated for existing commercial technologies.xxii In Chapter 2, we provide a classifi cation scheme for new and existing PV technologies based on the complexity of their primary light-absorbing material. We further identify three characteristics that will almost certainly be shared by successful future PV technologies: higher effi ciency, lower materials use, and improved manufacturability.

CSP technology, discussed in detail in Chapter 3, is much less widely deployed, even though the fi rst CSP power station was built in Egypt in 1912–13 to run an irrigation system. Figure 1.4 shows the two CSP designs that have

The fi rst modern solar cells were produced in 1954 and deployed in 1958 on a U.S. satellite.

Figure 1.3 Solar PV

xxiiIn addition to silicon-based solar cells, cells based on thin-fi lm technologies are now commercially deployed. However, as we discuss below, it is unlikely that these commercial thin-fi lm technologies can make a signifi cant contribution to global electricity generation in the future because of materials scaling considerations.

Chapter 1 – Introduction and Overview 9

been deployed at commercial scale to date. In the older parabolic trough design, mirrors focus solar radiation on a pipe through which a fl uid such as oil or a molten salt is pumped. The heated fl uid is then used to produce steam that drives a turbine connected to a generator. In the power-tower design, a fi eld of mirrors focuses solar radiation on the top of a tower through which a fl uid is pumped. Power-tower plants can operate at a higher fl uid temperature than parabolic trough plants, which increases overall effi ciency. In either design, the output of the generator at any point in time depends on the temperature of the fl uid, which is relatively insensitive to short-term changes in solar irradiance.

As a practical matter, these two CSP technologies can only be used at large scale. In addition, because CSP systems can only use direct sun-light, not sunlight diffused by haze or cloud cover, their performance is more sensitive to cloudiness and haze than the performance of PV systems. On the other hand, CSP facilities can economically provide hours of (thermal) energy storage, thereby producing power in hours with little or no sunlight, and they can be economically designed to use natural gas to

supplement solar energy in a fully dispatchable hybrid confi guration. Research on CSP is exploring ways to increase effi ciency by attaining higher temperatures and by converting more of the incident solar energy into thermal energy.

BUSINESS MODELS & ECONOMICS

Chapters 4 and 5 of this study consider the factors that determine the cost and value of solar electricity. Chapter 4 discusses the determinants of capital costs for PV generating facilities and describes the business models being used to support PV installations in the United States, while Chapter 5 explores how facility capital costs, insolation, and other factors affect the cost of electricity generated by PV and CSP systems. We then go on to consider the value of solar electricity and its determinants.

PV modules are commodity products; current production is concentrated in China and Taiwan but is supported by a global supply chain.34,35 Inverters are also a commodity product, traded internationally. PV system prices at all scales have declined considerably in recent years mainly because of reductions in module and inverter prices. As Chapter 4 notes, there is

Parabolic Trough Concentrating Solar Collector at Kramer Junction, CaliforniaSource: NREL 2012a

Gemasolar Solar Thermal Plant, owned by Torresol Energy©SENER

Figure 1.4 Solar CSP

What is ESCO?

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Energy Service Company Investment Partner in Energy Efficiency Consult to Customers (Audit) Identify Savings Fund Investment Implement Project Guarantee Savings Additional Benefits for Customers

What is ESCO? 4

Laos  

Thailand  

Vietnam  

Cambodia  

Myanmar  

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1. What is ESCO? 2. ESCO Services 3. ESCO Opportunity 4. Consideration Factors 5. Sample Projects

Contents 5

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Energy Audit Identify Savings Potential Feasibility Study Present Options Project Planning

Step 1: Consulting Services 6

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Engineering Consulting

Services

Present Options - BOT, Self, ESCO, Co-invest Performance Guarantee - Present Targeted Savings - If < Savings, ESCO Pays - If > Savings, Share Excess Finalize Contract & Start

Step 2: Present & Discuss “Options” 7

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Guaranteed Savings

1. What is ESCO? 2. ESCO Services 3. ESCO Opportunity 4. Consideration Factors 5. Sample Projects

Contents 8

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High Energy Savings Rising Energy Price Increased Profitability Incentives (BOI) Govt. & Finance Support

Opportunity 9

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Positive Economic

Factors

Addressable Market – ESCO 10

25 Billion

Total Spend ASEAN 2014-2035

10 B

Thailand Serviceable Available

Market

1 B

Target Share 10% of Market

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Savings On Energy

Business Model 11

40%

Estimated Savings (Overall)

20%

Our Share (Savings)

25m

Revenue Per Annum

(20% Market Share)

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1. What is ESCO? 2. ESCO Services 3. ESCO Opportunity 4. Consideration Factors 5. Sample Projects

Contents 12

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Limited Technical Knowledge No Confidence In Savings Understanding Other Benefits (BOI, Etc.) Resources to Implement Bottom Line Benefit Financial

Customer Issues 13

m GEducation

Educate & Show Results Performance Based Contract Presenting Overall Savings Make it “Easy” for Client Funding Solutions Immediate Savings

Strategy 14

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Simplify

Demonstrate Real Savings Be Practical Transparency to Client Strong Measurement Systems Efficient Project Management Deliver On Time

Success Factors 14

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1. What is ESCO? 2. ESCO Services 3. ESCO Opportunity 4. Consideration Factors 5. Sample Projects

Contents 15

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Highlights: Investment Cost = 5 M USD Energy Cost Savings = 1.5 M / Year Payback Period = 3.2 Years Project IRR = 20.5% (15 Years) Guaranteed Period = 6 Years

#1 – Large Factory Replacement of Main Power Consumption Equipment

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Highlights: Investment Cost = 440 K USD Energy Cost Savings = 172 K / Year Payback Period = 4.7 Years Project IRR = 39% (10 Years) Guaranteed Period = 3.5 Years

#2 – Small Factory Energy Management System, LED, Air Conditioning Control

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Highlights: Investment Cost = 212 K USD Energy Cost Savings = 60 K / Year Payback Period = 3.5 Years Project IRR = 29% (10 Years) Guaranteed Period = 5.2 Years

#3 – Hotel Chiller & Heating Pump, Shared Savings Plan

18

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Pipeline Summary 19

Type # Avg  Size  (USD  M)

IRR Status

Small  Immediate 25 .1 15% Basic 1st Savings Project Medium  Retrofit 14 .5 17% Multiple Element Total  System 7  2 21% Medium & Solar Projects Sub-­‐Totals 49 -­‐ 17.6% (Sample)

2015-2016

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Thank You!

20 Deutsche Bank Markets Research

Industry

Solar

Date

27 February 2015 North America

United States

Industrials

Clean Technology

F.I.T.T. for investors

Crossing the Chasm

Solar Grid Parity in a Low Oil Price Era Despite the recent drop in oil price, we expect solar electricity to become competitive with retail electricity in an increasing number of markets globally due to declining solar panel costs as well as improving financing and customer acquisition costs. Unsubsidized rooftop solar electricity costs between $0.08-$0.13/kWh, 30-40% below retail price of electricity in many markets globally. In markets heavily dependent on coal for electricity generation, the ratio of coal based wholesale electricity to solar electricity cost was 7:1 four years ago. This ratio is now less than 2:1 and could likely approach 1:1 over the next 12-18 months.

Vishal Shah

Research Analyst

(+1) 212 250-0028

vish.shah@db.com

Jerimiah Booream-Phelps

Research Associate

(+1) 212 250-3037

jerimiah.booream-phelps@db.com

________________________________________________________________________________________________________________

Deutsche Bank Securities Inc.

Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 148/04/2014.

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Guaranteed Concept

20

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Appendix: Guaranteed Concept