Renewable Energy: How is the

Industry Faring the Global

Recession?
Badly… but at least we´re not the automotive industry

BG-capital
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Agenda

• Introduction
• Solar PV Development
1. Brief description of Solar PV
2. Solar Development Process
• Industry to date: key statistics
1. Cleantech dealflow
2. Installed capacities; Spain, US, Germany
3. System pricing: Silicone/modules, BOS
• Going forward
1. Current Conditions
2. Stress, Contraction, and Shakeout
3. Consolidation and its Impact
4. New Services and Professionalization
5. The $100,000,000,000 question: Grid Parity
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Intro and Description

Two solar farms completed over 2007-2008:
BG-Capital developed, financed and EPC-constructed these 2 plants with our partners from Spain (Prosolia)
and the USA (SunEdison).

Azuaga 1700 kWn (Suncarrier 1-axis tracker with Canadian-Solar panels, Kaco inverters):

Zamora 3000 kWn (static structures with Suntech panels, Kaco inverters):
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Solar Development Process

ongoing 12 months 3 months 2 months ongoing
Identification Development Financing Construction Operation
- Partners -Geotechnical/Topographic/Insolation - Equity - Civil Works - Maintenance
- Political will - Grid studies - Debt - Assembly - Data and Monitoring
- Topography - Technical memos - AC - Optimization
- Grid condition - Supplier agreements - DC/MT
- Cultural/Corporate - Corporate memos
- Strategic Fit - Permits: Grid, Environmental, Zoning,
Design
- Project Memorandums
- Technical Memorandums
Engineering
- Project Delivery
- Oversight
Procurement
- EPC
- Panel supply
- Inverter supply
- Transformers / MT equipment
- BOS supply
- Logistics
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Cleantech Deal Flow

Conclusions:
- Massive investment in Cleantech through 2008
- Solar was the largest off-taker of investment
- Thin Film Module manufacturers received enormous investment
- Continuous drive to develop “lower-cost” “higher efficiency” technologies

Historical Clean Technology VC Investment By Year Five Largest Clean Technology Rounds in 2008
North America, Europe & Israel, China, India
2001 $506,780,774 NanoSolar $300 million

2002 $883,269,409 Solyndra $219 million

2003 $1,258,565,762 Solo Power $200 million

2004 $1,398,256,823 WinWin D Oy $177 million

2005 $2,077,524,074 Solar Reserve $140 million

2006 $4,520,208,949 Cleantech Group (cleantech.com)

2007 $6,087,179,844

2008 $8,414,259,610

Source: Cleantech Group (cleantech.com)

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System Pricing: Supply and Demand

Conclusions:
-We are seeing Production outstrip demand
- Silicon requirements are decreasing
- Module prices are collapsing

Source: European Photovoltaic Industry Association

Source: TRAVIS BRADFORD, the Prometheus Institute

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Installed Capacities
Conclusions:
- 2008 saw huge growth as well
- feed-in tariff markets are largest contributors
- Regulated market was the driver of growth

Source: European Photovoltaic Industry Association, 2008 report

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Current Market Conditions

Debt lenders are fortifying themselves
• Focused on existing clients
• Smaller transaction sizes
• “Collateralized” transactions (ie. Limited Project
Finance)
• Higher DSCRs
Equity is seeking a warm safe place…
• Limited investment options
• “Weathering the storm” mentality
• Govt.-backed bonds are attractive

RE legislation/subsidies are uncertain CAPEX requirements are decreasing

• Spain • Module pricing
• US • Competitive EPC offers
• Italy • Reduced Balance of System Costs

Suppliers: dude, where´s my guarantee? Project Development timing… why rush?

• Module manufacturers • Project delays
• Structure/Tracker manufacturers • Cost Cutting
• Push to alternative markets
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Adolescent Dreams Crushed/Trampled…

Stress, Contraction, and Shakeout Consolidation
- Developers and Installers
- Some Vertical Integration
- Redundancies
- Push to Alternative markets - Certain new entrants may clean-up (Honda)?
- Assembly of pipeline - Acquisition of Commercial projects
- Certain companies becoming pure equipment
- Manufacturers suppliers
- Slashing capacity and Idle lines
- New entrants may clean-up
- Manufacturers with low-cost basis (First
Solar) in better position than others

- Cleantech Investors
- Will look to technologies closer to
commercialization:
- Utility funds may get traction

…turning into Realistic Goals and Professional Businesses

New Services and Professionalization
- Energy services
- Optimizations
- The PPA model will turn Utilities into Developers (U.S.)
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The $1,000,000,000,000 question: Grid Parity?

Answer: It depends

• Location
• Component costs
• Electricity prices

Coal CCGT Nucle Hydro Onsh Offsh Solar

ar ore ore
Wind Wind
€/MW 73.2 79.2 53.4 60.0 77.2 103.1 316.7
h
Merrill Lynch
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Indicative PF deals

• Dec. 30th - AES and Riverstone raise €92mm non-recourse facility for five
photovoltaic (PV) projects in Spain.
– Debt Sponsors: UniCredit Mediocredito Centrale and Rabobank,
– Term: 18 year debt is priced at an initial margin of 255bp over Euribor.

• Sept. 08 - (FCC) Fomento de Construcciones y Contratos signed €132.15

million club deal backing acquisition of two photovoltaic power plants in
Cordoba, Spain, from Sky Global Solar.
– Debt Sponsors : Banco Popular Espanol, Banesto, Caja Madrid and
Instituto de Credito Oficial.
– Term 18 year term loan of €117.15 million and a Eu15 million VAT facility.

• Aug. 22nd - Enfinity Management concludes “project finance” for a new

photovoltaic park in the province of Foggia in Italy.
– Debt Sponsors: Interbanca, MLA - €25,5MM