Solar / Renewable Energy Options

Solar Industry Panel DiscussionSVLG Energy Summit 2008

July 11, 2008

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Solar & Renewable Energy Options

Tom McCalmont – CEO, Regrid Power / Chair, SolarTech– SolarTech Progress Report since Energy Summit 2007

Bill Scott – EVP, Sales Operations, Akeena Solar– Current Industry & Regulatory Climate

Preston Roper – EVP, Corp. Devel. & Operations, Tioga Energy– Financing Trends and the Influence of Declining Rebates & ITC

Risk

Steven White – President & CEO, SV Solar– Changing Technology Dynamics in the Distributed Grid-Tied Market

Problem Solutions

SolarTech Progress ReportTom McCalmontPresident & CEO

Panel: Solar & Renewable Energy Options

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SolarTech’s Six Founding Objectives

Performance MetricsInstallation StandardsUtility Interconnections & Rebate ProcessesBuilding PermitsEducation & TrainingFinancing Tools

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Performance Standards

Problem:– No local testing facility for solar products– Slow pace of existing testing resources– Slows down product innovation for SV solar companies

Solution:– SolarTech signed LOI with UL in November 2007– Through RFP process, facility identified and outfitted– Dedication ceremony on Monday, July 14th!

• 2191 Zanker Rd., San Jose, 11AM

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Building Permits

Problem:– Solar permits reqt’s & costs vary from one city to the next– Existing processes are not scalable as market grows– Higher costs are being passed on to solar customers

Solution:– SolarTech has developed proposed standard for solar permits– Lowers costs – both to cities & to solar customers

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Solar Workforce

Problem:– Huge need for workers/jobs over next decade– No local training facilities– Process is not scalable & increases customer costs

Solution:– Local market survey identified jobs potential– 6 local CC’s collaborated / Awarded IDRC Grant by the state– Created training curriculum for solar installers– First interns have graduated / some already employed

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SolarTech Accomplishments

SolarTech launched – Energy Summit 2007Offices open in partnership with San Jose – 1290 Parkmoor Ave.Formed as non-profit corporation in Spring 2008Initial Board of Directors formingMembership drive activeCEC Grant awarded – $750K thru 2010– Focused on projects and best practices

National & global outreach – U.S. DOE, Intersolar/GermanyGet involved! Benefits accrue to members…

Solar Industry Legislative & Regulatory Overview

Bill ScottEVP, Sales Operations

Panel: Solar & Renewable Energy Options

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Federal Investment Tax Credit

30% FITC, which originated in the Energy Policy Act of 2005, sunsets on December 31, 20085 attempts in 2008 to enact legislation containing extenders did not succeedHR6049 – Passed in the House in May 2008, twice failed cloture votes in Senate– 6-year extensions of commercial and residential investment

tax credits (ITC) for solar energy – Issues: PAYGO/offsets, AMT exemption, legislative

‘bundling’ with other incentivesMedium size projects commencing immediately can still be accomplished in 2008. FITC extension is likely in early 2009.

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CA Global Warming Solutions Act of 2006 (AB32)

By 2020, reduce greenhouse gas (GHG) emissions statewide to 1990 levelsCalifornia’s GHG strategies will also:– Protect and improve public health– Promote the development of clean energy– Foster opportunities for economic growth– Provide a model for regional, federal, and international

programs– Put State on a path to 2050 goal

CA Air Resources Board chartered to adopt:– Emissions targets (limits)– Monitoring, verification and attainment policies– Enforcement & incentive mechanisms (market-based

programs & fees)

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Draft Scoping Plan Recommendations

Mix of strategies that combine market mechanisms, regulations, voluntary measures, fees, and other programsKey elements:– Energy efficiency programs– 33 percent Renewables Portfolio Standard – may also raise

PV target from 3000MW to 5000MW– California cap-and-trade program linked to Western Climate

Initiative– Existing laws and policies, including California’s clean car

standards, goods movement measures, and the Low Carbon Fuel Standard

– Targeted fees to fund implementationDraft Scoping Plan in discussion phase now, Plan release expected in 2009; see: www.arb.ca.gov

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CA Feed-in Tariff (FiT) Legislation

Incentives can come in many forms: RECs, FiTs, production-based incentives (PBI), capital rebates, tax creditsFiT is a fixed-price contract over a specified length of time with specified operating conditions

– Eligible to renewable energy generators– Provides payment or negotiated rate for their generation. – Generally offered by utility toward RPS attainment goals.

Currently pending legislation (AB1714 & SB380) may enhance and extend an existing FiT (AB1969)Exploit market for wholesale generation inside of distribution networks Unresolved issues of FiT legislation:

– Incentive level – determining Market Price Referent– Differential FiT rates depending on system size?– Locational benefit adjustment– System size limitation – 1.5MW, 3MW or 20MW?

Desirable as incentive source separate from CSI/Net Metering

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CSI Energy Efficiency Requirements

For solar energy systems to be eligible for incentives after January 1, 2009:Newly constructed commercial buildings must achieve– Tier I – 15% reduction in combined space heating, space cooling,

lighting and water heating energy compared to the 2005 Title 24 Standards. (minimal attainment level for participation)

– Tier II – 30% reduction in combined space heating, space cooling, lighting and water heating energy compared to the 2005 Title 24 Standards. (preferred attainment level for alignment w/2030 goals)

Existing commercial buildings > 100,000 sq ft and with a benchmark rating of less than 75 (EUI) – retro-commissioning required– If a building is improved to exceed a rating of 75, further energy

efficiency measures are not required. – Measures shall either be completed prior to or in conjunction with

the installation of the solar energy system.

Financing Trends, Influence of Declining Rebates & ITC risk

Preston RoperEVP, Corporate Development & Operations

Panel: Solar & Renewable Energy Options

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Incentives – state, federal, local

Investment Tax Credit ?

Panel Prices ↓

Oil $

Natural Gas $

Credit ?

Grid parity?

Cap & Trade

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“Con Ed Wins Approval for a Big One-Time Increase in Rates for Electric Service”

--March 20, 2008

The Facts: Energy Rates Are The Facts: Energy Rates Are Going UpGoing Up……

“When asked where US energy prices are going, R. Skip Horvath, president and CEO of the Natural Gas Supply Association, offers two directions: "up" or "up and up."--June 4, 2008 “Electricity rates will go down for

[California] Edison customers by about 1.5% this year as the utility returns about $430 million it over-collected.

“The rate reprieve will be temporary, though. [Rates] could jump as much as 12% in 2009….” --March 13, 2008

“The U.S. Energy Information Administration forecast that electricity prices will climb an average of 9.8% in 2009”

--July 8, 2008

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Bottom line: Energy prices are Bottom line: Energy prices are soaring FASTER than incentives soaring FASTER than incentives are decliningare declining

Price IncreaseCommercial Electricity in California

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

1970 1975 1980 1985 1990 1995 2000 2005

Year

% P

rice

Cha

nge

77% 77% Percentage of years Percentage of years

with increased with increased energy prices. energy prices.

Percentage of years Percentage of years with price spikes with price spikes exceeding 10%.exceeding 10%.

31% 31%

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Declining CA IncentivesDeclining CA Incentives

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Module Pricing Going DownModule Pricing Going Down……

Source: U.S. DOE

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Finance TrendsFinance Trends……PPA PPA –– Driving Market GrowthDriving Market Growth

Source: SOLAR POWER SERVICES:HOW PPAS ARE CHANGING THE PV VALUE CHAIN, Greentech Media

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PPA SolutionPPA Solution

Solar without risksSolar without risksNo capital outlayNo capital outlayNo risk of failure to perform over time No risk of failure to perform over time No hassles trying to collect incentivesNo hassles trying to collect incentivesNo distractions from core business No distractions from core business

Price stability, affordabilityPrice stability, affordabilityEnvironmental benefitsEnvironmental benefits

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Want to Learn More?Want to Learn More?

The New Energy EconomySteven D. White

President and CEOswhite@sv-solar.com

Panel: Solar & Renewable Energy Options

267/10/2008

Grid Parity: Only a Matter of Time

Source: Cornelius --U.S. DOE /

SAI

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The “Moore’s Law” of Solar

Cumulative Production (MW)1 10 100 1,000 10,000 100,000 1,000,000

PV M

odul

e Pr

ice

($/W

p)

1

10

100

1st Generation: Crystalline Si• Thinner wafers, improved processing and improved efficiency

2nd Generation: Thin Film• Reduced silicon content, continuous manufacturing, a-Si, CdTe, and CIGS

Solar Learning Curve: PV module prices decrease by 20% for every doubling of cumulative production

3rd Generation: Nanotechnology• Quantum dots, tandem cells, improved bandgap and much higher efficiency

Source: Arvizu NREL

12-16%

6-10%

30%+

2005

1975

Module Efficiency

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Technology Generations

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Cos

t to

Man

ufac

ture

($/W

p)

Time and Market Adoption

1st Generation:Crystalline Si

3rd Generation:Nanotechnology

Reduce cost, accelerates

market acceptance

Reduce cost, accelerates

market acceptance

SV Solar provides innovative packaging

Specialized fit & function,

i.e., tracking and BIPV

Specialized fit & function,

i.e., tracking and BIPV

Cost Go Down and Efficiency Goes Up

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Replace Expensive Silicon Cells with Inexpensive Optics

4 Wp 4 Wp

+

Source: Photon Consulting4 Wp

8.4 Wp

=

* =

8 Wp

Sol-X2+ OpticsAccelerates market adoption

new and expensive technology

Estimated cost to produce an incremental Wp

307/10/2008

Low Concentration PV

Only concentrator PV product that combines:– Large acceptance angle: does not require tracking– Performs well in diffuse light: access to all geographic markets– Excellent thermal characteristics: ambient cooling

1. High concentration PV2. Concentrating solar power3. Low concentration PV

Sol-X2+ flat plate concentration

Advantages

Leverages benefits of concentration to compete in largest market segments.

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SVLG: SolarTech

Collaboration throughout the value chain– Cell and module providers, integrators, installers, PPAs,

educators and government leaders– Mutual interest in lowering the cost per kW hour– Strength in numbers and a free-flow of ideas

Brings innovative products to market faster – Standardization– Underwriters Laboratories PV Center located in San Jose

7/10/2008

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Questions?