.

PANC Annual ConferenceMay 16, 2012

Progress on the California RPS

2First Solar Confidential & Proprietary 5/8/2010 | © Copyright 2010, First Solar, Inc.

Progress on the California Renewable Performance Standard

• Utilities confident about meeting 33%

• Renewable prices have dropped dramatically

• Transmission is being constructed

• The Large Generator Interconnection Process has been reformed – again

• The grid is accommodating utility-scale solar

3First Solar Confidential & Proprietary 5/8/2010 | © Copyright 2010, First Solar, Inc.

Historical Renewable Procurement by CA IOUs

Renewable Procurement Has Increased Substantially

Source: CPUC filings. Note: 2001-2010 are historical, 2011 and on are projections based on March 2012 CPUC Compliance Filings. 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

17.921.7 22.5 22.4 22.5 22.1 23.6

26.928.8

34.035.7

45.0

52.4

57.759.9

62.559.5

57.555.5

TotalSDG&ESCECompliance at 20%Compliance at 33%

Rene

wab

le P

rocu

rem

ent (

TWh)

4First Solar Confidential & Proprietary 5/8/2010 | © Copyright 2010, First Solar, Inc.

Historical MPR and Solar Contract Signing By Solicitation Year

Renewable Energy Prices Have Decreased Substantially

Source: MPR values from CPUC through 2011 MPR. Percentage of PV contracts above and below MPR, by solicitation year, from April 2012 CEC. Note: MPR reflects the next year’s MPR (i.e. 2011 MPR value reflects MPR for a project with a 2012 COD). Represents both CSP and PV.(1) 2004 MPR value reflects peaking MPR.

2004 2005 2006 2007 2008 2009 2010 2011 20120%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0.06

0.07

0.08

0.09

0.10

0.11

0.12

% Contracts Above MPRMPR Reference Not Disclosed% Contracts Below MPR20 Year MPR

$/KW

h

(1)

300 726 8 1,736 3,563 2,668 2,262 1,109 63 MW Solar Solicited

5First Solar Confidential & Proprietary 5/8/2010 | © Copyright 2010, First Solar, Inc.

Transmission upgradeApproval status Renewable Potential

OnlineISO CPUC MW TWh/Yr

1 Carrizo-Midway LGIA NOC effective 900 2.1 2012

2 Sunrise Powerlink Approved Approved 1,700 4.1 2012

3 Eldorado-Ivanpah LGIA Approved 1,400 3.6 2013

4 Pisgah-Lugo LGIA Not yet filed* 1,750 4.1 2017

5 Valley-Colorado River Approved Approved**

4,700 8.62013

6 West of Devers LGIA Not yet filed 2018

7 Tehachapi Approved Approved 4,500 15.2 2015

8 Tehachapi Wind/Solar Diversity N/A N/A 1,000 3.0 2015

9 Cool Water-Lugo LGIA Not yet filed 600 1.4 2018

10 South Contra Costa LGIA Not yet filed 300 0.8 2015

11 Borden-Gregg LGIA Not yet filed 800 2.0 2015

12 Path 42 Approved Not yet filed 1,400 3.5 2015

Other-Outside of ISO Grid N/A N/A 3,300 8.4

Total 22,350 56.8

TWh/year needed in ISO area to meet 33% goal:

- reflected in 2010/2011 Transmission Plan 44 * Large Generator Interconnection Agreement ** Petition to modify CPCN pending.

Transmission underway to meet 33% RPS in 2020

Total cost = $7.2 billion

Page 5

6First Solar Confidential & Proprietary 5/8/2010 | © Copyright 2010, First Solar, Inc.

2008: Generator Interconnection Process (GIP) Reform 1– Increased cost to apply and stay in process– Network Upgrade costs & timing studied in cluster rather than serial process – Only large projects (>20 MW) can achieve Full Capacity Deliverability

2010: GIP Reform 2– Combined SGIP & LGIP into a single interconnection procedure– Introduced CAISO deliverability options for all projects, including Small and previously Energy Only projects– Coordinated with the Transmission Planning Process (TPP) for 33% Renewable Procurement Goals

2012: TPP-GIP and GIP Reform 3– Holistic GIP and TPP to approve upgrades with ratepayer funding– Aligning the interconnection process with the TPP resource portfolios– Structure GIP study process to produce realistic results even with extreme interconnection queue volume– Full Capacity Deliverability would be awarded to projects with environmental permits, PPAs and financing, or

willing to pay for major upgrades without reimbursement.

Progress on Transmission Interconnection Reform

7First Solar Confidential & Proprietary 5/8/2010 | © Copyright 2010, First Solar, Inc.

Agua Caliente – Supporting Grid IntegrationQuote from the North American Electric Reliability Corporation’s Integration of Variable Generation Task Force (IVGTF):

“As VERs [Variable Energy Resources] increasingly augment and/or supplant conventional generation, the reliable operation of the grid will depend increasingly on the reactive power control, active power control and other contributions from VERs. The new reliability standards should require that VERs adequately mimic or replace the capabilities that are lost when VERS supplant conventional generation.”

Agua Caliente Controls include– Reactive Power and Voltage Control– Low Voltage Ride-Through– Low/High frequency Ride Through– Active Power Control

Additional features such as frequency regulation and inertial response possible, but require production curtailments

IVGTF Draft Report: Special Reliability Assessment: Interconnection Requirements for Variable Generation, March 2012. (p 15)

8First Solar Confidential & Proprietary 5/8/2010 | © Copyright 2010, First Solar, Inc.

Obstacles to a Successful RPS Program

• Too many sub-programs: RAM, FiT, Small PV, UOG

• Is integration a problem?

• Are rates a problem?

• California going it alone