Investment Banking Perspective: Solar PV

June 2010

Authorised and regulated by the Financial Services Authority Jefferies International Limited

Bruce Huber, Managing Director Global Head Cleantech Investment Banking

bhuber@jefferies.com +44 20 7029 8020

June 2010

Overview Of Jefferies

Key Points

 New York Stock Exchange Listed “JEF”

 Founded 47 years ago

 One of the great success stories on Wall Street

 $28 billion in assets

 2,700 employees, high employee productivity

 International headquarters in London; worldwide headquarters in New York

 35% owned by employees and directors

 No government involvement in any form

 Primary Dealer for Federal Reserve, UK Debt Management Office and German Debt Management Agency

LTM Net Revenue / Number of Employees ($Thousands/Employee)

1.466

884

665 494 485 457 434 408 342 309

Goldman Sachs Jefferies Credit Suisse Deutsche JPMorgan Morgan Stanley UBS BofA Barclays Citi Source: As of latest earnings announcements, except of Barclays as of 12/31/09

Principal Offices

Source: Stock price from Capital IQ, as of 04/30/10

Jefferies stock price has consistently outperformed peers Since 01/01/00 Since 01/01/02 Since 01/01/04 Since 01/01/06 Since 01/01/08

Bank %

Change Rank %

Change Rank %

Change Rank %

Change Rank %

Change Rank Jefferies 395% 1 157% 1 65% 1 21% 1 18% 1 Goldman Sachs 54% 2 57% 2 47% 2 14% 2 (32%) 4 JPMorgan (18%) 3 17% 3 16% 3 7% 3 (2%) 2 Barclays (24%) 4 (41%) 6 (32%) 6 (45%) 6 (33%) 5 Banc of America (29%) 5 (43%) 7 (56%) 8 (61%) 8 (57%) 8 Credit Suisse (37%) 6 (30%) 4 10% 4 (26%) 4 (27%) 3 Deutsche Bank (38%) 7 (35%) 5 (22%) 5 (37%) 5 (42%) 6 Morgan Stanley (58%) 8 (46%) 8 (48%) 7 (47%) 7 (43%) 7 Merrill Lynch (72%) 9 (78%) 10 (80%) 10 (71%) 9 (78%) 10 Bear Stearns (78%) 10 (84%) 11 (88%) 11 (77%) 11 (89%) 12 Citigroup (90%) 11 (91%) 12 (91%) 12 (91%) 12 (85%) 11 UBS (92%) 12 (60%) 9 (60%) 9 (73%) 10 (66%) 9 Lehman Brothers (100%) 13 (100%) 13 (100%) 13 (100%) 13 (100%) 13

United States Atlanta Boston Charlotte Chicago Dallas Houston Los Angeles Nashville New York San Francisco Silicon Valley Stamford Washington DC

Europe Frankfurt London Paris Zurich

Asia Hong Kong Mumbai Shanghai Singapore Tokyo

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June 2010

Cleantech Investment Banking

 Jefferies is one of the few international investment banks with an integrated global Cleantech investment banking practice – covering renewable energy and sustainable technologies

 25+ professionals working across Europe, North America and Asia

 Industry-focused top-rated research targeting the global Cleantech sector – covering the entire value chain for solar, wind power, water, advanced batteries, efficient lighting/LEDs, fuel cells, biofuels and biomaterials

 Global Cleantech industry conferences (2x per year, Europe and North America) represent one of the largest growth-equities platforms for investors and issuers today

 Jefferies has the leading track record in financing emerging technologies

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June 2010

Power Management/ Power Storage/ Infrastructure

Solar/Wind Clean Fuels/ Renewable Resources

Jefferies Has Raised In Excess Of $4Bn For Cleantech Clients Globally Since ‘05

3

June 2010

Equity Research: We Maintain Leadership In Solar (And Broader Cleantech)

% of Companies Covered by Market Cap

 101 research professionals

 Over 610 companies covered

 33 research professionals

 17 senior research analysts

 Over 150 companies covered

2009  Research has sponsored 18

investor conferences in Europe and US

 Non-deal roadshows for 239 companies over 351 days

Sources: Bloomberg and Autex. Includes Follow-Ons and IPOs from 1 July 2007 to 30 June 2009. Autex ranking is from pricing to 30 June 2009. Excludes bought deals.

Jefferies has the best track record in providing ongoing research for clients

Broad Research Coverage Of The Solar Sector Globally Coordinated Sector Research

Jefferies Long-term Research Commitment for Bookrun Equity Offerings

Rank Bank % covered Avg. Autex Ranking Rank Bank % covered Avg. Autex

Ranking 1 Jefferies 100.0% 3.3 1 Jefferies 100.0% 4.6 2 JP Morgan 96.4% 3.8 2 Barclays 80.6% 11.6 3 Citigroup 84.0% 4.0 3 JP Morgan 78.9% 6.0 4 Deutsche Bank 83.3% 5.1 4 Deutsche Bank 73.6% 5.9 5 Credit Suisse 82.1% 2.9 5 Citigroup 72.1% 2.9 6 Barclays 77.3% 17.1 6 Credit Suisse 68.3% 3.1 7 UBS 75.0% 1.7 7 Bank of America 68.0% 2.7 8 Morgan Stanley 74.3% 1.9 8 UBS 66.1% 2.0 9 Bank of America 73.5% 16.9 9 Goldman Sachs 61.5% 7.3 10 Goldman Sachs 72.4% 6.2 10 Morgan Stanley 50.0% 2.8

IPOs: Follow-ons

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June 2010

While Europe continues to dominate end market installation, global annual PV projections show gradual shift toward US, China and India (1)

38%

3% 12%

4% 1% 3%

4%

35% Germany

Spain

Italy

France

UK

Czech Republic

Rest of Europe

RoW

Solar poised for strong growth (GW) (1) PV module prices are declining towards retail grid parity (2)

8

14 14

16

0

2

4

6

8

10

12

14

16

18

2009 2010 2011 2012

2009: ~8GW 2012: ~16GW

GW

3,77

3,84

2,47 2,37 1,92

1,69

0,00

0,50

1,00

1,50

2,00

2,50

3,00

3,50

4,00

4,50

2007 2008 2009 2010 c-Si Europe

2010 c-Si China

2010 Thin-Film

a-Si

APP $/Wp

Strong Fundamental Drivers Continue To Propel Solar’s Growth

(1) Source: Jefferies estimates; Bloomberg New Energy Finance (2) Source: Jefferies. Average purchase price for end buyers of solar modules

52%

3% 10%

3% 0% 5%

5%

22%

5

June 2010

Solar Components

150%

15%

(18%)

(24%)

(4%)

FTSE 100

Downstream

Solar Cells/Modules

Integrated Solar

Trading Performance Of Solar Since ’09 Shows High Volatility …Except For Component Suppliers Who Represent Bottlenecks In The Supply Chain!

Integrated Solar: REC, SolarWorld, First Solar, SunPower, Yingli Green. Solar Cells/Modules: Canadian Solar, Suntech Power Holdings, Q-Cells, ReneSola, JA Solar, Solon, Evergreen Solar. Downstream: Centrosolar, Conergy, Solaria Energía y Medio Ambiente, Phönix Solar. Solar Components: SMA, STR Holding.

As of 18/06/2010.

0

50

100

150

200

250

300

jan 09 feb 09 mrt 09 mei 09 jun 09 aug 09 sep 09 nov 09 dec 09 feb 10 mrt 10 apr 10 jun 10

Integrated Solar Solar Cells / Modules Downstream Solar Components FTSE 100 Index - Share Pricing

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June 2010

‘Solar 2.0’ is about:

The Solar Market Is Shifting Downstream: ‘Solar 2.0’

 Customer access and strong distribution models

 Offerings that deliver competitive costs for customers – whether measured in $/Wp, cost per kWh, or attractive IRRs

 High brand value

Delivering end customer solutions

Robust business models

Well established companies

 Scale

 Asset-light with outsourced manufacturing and agnostic to the capital intensive upstream business

 Focused on operating leverage and cash generation

 Established track record

 Low technology risk

 Practical product innovation (evolution vs. revolution)

German market growth still dominates for 2010, but this market is becoming more saturated…

…Bringing other European markets into focus

0

2.000

4.000

2010 2011 2012

Germany – Annual installations (MW)

7%

47 104

261

0

100

200

300

2010 2011 2012

UK – Annual installations (MW)

1.225 1.386 1.595

0 500

1.000 1.500 2.000

2010 2011 2012

Italy – Annual installations (MW)

270 420

554

0

200

400

600

2010 2011 2012

France – Annual installations (MW)

 Major focus of the global solar industry until FiT reduction that should become effective in July ‘10

 Attractive FiT (41.5p/kWh) since Apr ‘10

 2010-2012 CAGR: 136%

 One of the hottest PV markets, with the highest FiT for BIPV (up to 0.58 €/kWh)

 Extremely favourable FiT scheme (up to 0.46 €/kWh)

 2010 will be a record year, with high PV demand continuing in 2011 and 2012

122% 151%

56% 32%

13% 15%

Source: Bloomberg New Energy Finance

?

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June 2010

There Are Surprisingly Few Downstream Rooftop Installers With Scale

Company Domicile Country End Markets Key Characteristics

Germany  Strong downstream distribution network.  ~150MW sold in 2009.

Germany  Offering standardised solutions for residential rooftops.  > 90MW integrated systems sold in 2009

Germany  One-stop shop and fully-serviced solution for private homes.  Will install ca. 65-70MW in Germany in 2010.

United Kingdom

 Offering both highly customised premium BIPV installations and standardised kits for rooftops.

 Over 780 commercial and public sector installations completed since 1999; also an active distributor.

United States

 Created SolarLease®, a way for homeowners to set up their own solar system without any upfront cost.

 More than 500 workers operating in Arizona, Colorado, Oregon and Texas, in addition to California.

Netherlands

 Offering residential and commercial customers a fully-serviced system, including financing.

 Around 15,000 installations completed across Europe; will install ca. 100MW in 2010.

United States  Offering commercial solar rooftop systems at no capital outlay.  >52MW of hands-on installation experience and over 31MW

under management.

Germany  Offers rooftop leasing solutions to customers.  >85MW completed to date in 3,600 installations.

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June 2010

UK FiT Are Amongst The Most Attractive In Europe (For Rooftops)

Country First Introduction Current FiT (EUR/kWh) Latest Gov’t Proposed FIT Change New FiT Effective From:

Average Irradiation kWh/m2/day

UK

April 2010

0.43* (< 4kW new built residential and >4-10kW)

Just implemented April 2010 Apr 2010 2.61 (London)

3.00 (Southampton) 0.50* (< 4kW retrofit)

0.38* (>10-100kW)

0.35* (>100kW – 5MW)

Germany

January 2000 (amended in 2004, 2008, new revision pending Jul 2010)

0.25 – 0.33 -16% rooftop Jul 2010

2.52 (Hamburg)

3.12 (Munich)

0.25 -11% conversion land free field Jul 2010

0.24 -15% non-agricultural free field Jul 2010

0.21 No longer subsidies for agricultural land Jul 2010

0.21 Growth corridor -9%; -3% each GW above 3.5GW Jan 2011

Spain

January 2007, new revision pending

0.34 (BIPV <20kW) FIT modification expected in 2010 (in any event no later than 2012)

Cuts expected by up to 25%

Gov' t initiated industry contacts

Cap likely to be revised

2010, but no later than Jan 2012 4.61 (Barcelona) 0.31 (>20kW and <2MW)

0.32 (Non BIPV <10MW)

Italy

September 2005

By Sept. ’11: 0.257 -25% ground >1MW Three quarterly steps from Q1 through Q3 2011

6% yoy reduction by 2012 - 13

3.33 (Milan)

0.266 -22% ground < 1MW

0.323 -6% rooftop <200 KW

0.314 -8% rooftop <1MW

0.295 -14% rooftop >1MW

France January 2008

0.42 – 0.58 (BIPV) -3% to -30% on rooftop Jan 2010

3.34 (Paris) 0.31 + bonus -5% free field, but up to 20% bonus Jan 2010

10% digression in 2012

* GBPEUR exchange rate: 1.20 Source: Jefferies’ research

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June 2010

Date Target Acquirer Transaction Value ($m)

EV / Revenu

e

EV / EBITDA Segment Rationale

May-10 140 Est.~3x NA Downstream Components

Unirac’s PV solar mounting solutions complement Hilti’s offering for solar parks and rooftops

Apr-10 285 NA 3.6x Downstream Pipeline

NextLight provides First Solar with over 1.1GW of development pipeline in the US

Mar-10 327 NA NA Components Solutia becomes the world’s only one-stop source for solar encapsulant solutions

Feb-10 277 NA NA Downstream Pipeline

SunRay has 1.2GW development pipeline in Southern Europe and the Middle East

Jan-10 Konca Solar Cell 125 NA NA Cells/Modules GCL expanded its ingots and wafer business

Nov-09 64 NA NA Downstream Pipeline

Concentrix acquisition represents a natural expansion for Soitec into the solar market

Nov-09 318 NA NA Downstream Distribution

SunEdison’s has a strong solar rooftop distribution network in the US

Nov-09 282 0.5x 10.4x Downstream Distribution

Aleo’s broad sales and distribution network in Germany represents a complement to Bosch’s acquisition of Ersol

The Strategic M&A Markets For Solar Have Been Active

Source: Bloomberg NEF, Thomson, Capital IQ. All values in USDm.

Jefferies advised

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June 2010

Key Take-Aways

  Solar is a massive growth market – 16GW in 2012 ($40-50 Billion market in today’s currency)

  The UK offers attractive fundamentals  Good solar irradiation – comparable to Germany, the world’s largest solar market

(approaching 10GW in 2010!)

 Attractive feed-in-tariff structure for rooftops – although not ideally suited for solar parks given space/planning constraints

 Strong government support (at least through 2013)  Substantial growth (from a small base)

  ‘Solar 2.0’ is all about downstream execution and innovation  Upstream manufacturing mainly concentrated in China/Asia - although volatile

currency movements may provide European suppliers with a ‘stay of execution’  Regional leaders provide efficient installation (<€3/Wp), scale, O&M services,

energy re-sale, tolling, other services?  IRRs are significantly impacted by low installation costs!

  Innovative financing is becoming an important area of focus  Finance vehicles an important facilitator, noting that scale matters in financing –

IRRs can double with leverage  Project finance is available, but time consuming and restricted  Capital markets structures for scale deployments

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