1. CALIFORNIA PV MARKET July 2010 Prepared by: Marc Arza

2. CALIFORNIA PV MARKET US market info (1) PV installed.capacity evolution PV market by state

3. CALIFORNIA PV MARKET US market info (2) PV capacity additions per type PV installed costs evolution Source: US Solar Industry year in review 2009 (SEIA)

4. CALIFORNIA PV MARKET US market info (3) Source: Global PV market outlook until 2014 (EPIA)

5. CALIFORNIA PV MARKET Irradiation info Yearly irradiation Irradiation map

6. CALIFORNIA PV MARKET California market info (1) Renewable Portfolio Standards: 2010: Electric utilities must generate 20 percent of their electricity from renewable resources. 2020: Electric utilities must generate 33 percent of their electricity from renewable resources*. *No solar or PV minimums in California.

7. CALIFORNIA PV MARKET California market information (2)

8. CALIFORNIA PV MARKET California market info (3) Yearly PV installed capacity PV market segmentation

9. CALIFORNIA PV MARKET Utilities map California main utilities: - Pacific Gas and Electric Company (PG&E) - Southern California Edison (SCE), - San Diego Gas & Electric (SDG&E). Source: California Public Utilities Commission (CPUC)

10. CALIFORNIA PV MARKET PG&E Average Bundled Rates by Class 2000-10 18,0 17,0 16,0 h 15,0 Residential W k 14,0 Sm/Med Commercial r e 13,0 Lg Commercial/Ind p s t 12,0 Agricultural n 11,0 e Street Lighting C 10,0 System Average 9,0 8,0 7,0 6,0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Residential 10,7 12,8 13,3 13,2 12,7 12,9 14,3 15,2 15,0 16,3 16,3 Sm/Med Commercial 10,2 14,2 15,6 15,7 14,3 14,1 14,5 15,1 14,7 16,4 16,9 Lg Commercial/Ind 7,1 10,6 12,6 12,5 11,3 11,2 11,7 11,5 10,7 12,4 12,6 Agricultural 11,1 13,1 13,7 13,8 11,7 11,8 12,2 12,4 13,2 14,2 14,2 Street Lighting 12,3 16,0 17,6 17,0 15,1 15,0 15,9 17,2 15,6 16,5 16,2 System Average 9,7 12,7 14,0 14,0 12,9 12,9 13,8 14,0 13,7 15,2 15,3 Source: California Public Utilities Commission (CPUC)

11. CALIFORNIA PV MARKET SCE Average Bundled Rates by Class 2000-10 20,0 19,0 18,0 h 17,0 Residential W 16,0 k Sm/Med Commercial r 15,0 e p 14,0 Lg Commercial/Ind s t 13,0 Agricultural n 12,0 e Street Lighting C 11,0 System Average 10,0 9,0 8,0 7,0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Residential 11,5 13,0 13,5 12,8 12,5 12,9 14,8 14,8 15,0 15,5 15,9 Sm/Med Commercial 10,4 13,7 15,8 14,4 13,5 13,6 15,6 15,6 14,6 15,0 15,3 Lg Commercial/Ind 7,7 10,6 12,6 11,2 9,9 10,0 12,3 11,9 10,9 10,7 10,8 Agricultural 8,7 10,6 11,1 9,9 9,4 9,5 10,7 11,3 11,1 10,9 11,5 Street Lighting 13,9 15,8 17,3 15,5 14,7 14,0 15,4 16,9 19,5 19,2 19,2 System Average 10,0 12,5 14,0 12,9 12,2 12,4 14,3 14,3 13,8 14,0 14,3 Source: California Public Utilities Commission (CPUC)

12. CALIFORNIA PV MARKET SDG&E Average Bundled Rates by Class 2000-10 19,0 18,0 17,0 h Residential W 16,0 Small Commercial k r e 15,0 Medium & Large C&I p s t 14,0 Agricultural n Street Lighting e 13,0 C System Average 12,0 11,0 10,0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Residential 11,3 13,7 14,3 14,6 14,3 14,6 15,4 16,0 15,6 18,1 17,7 Small Commercial 11,7 14,0 16,5 16,9 17,2 16,8 15,8 16,8 16,0 18,5 17,7 Medium & Large C&I 11,8 12,1 12,6 12,3 11,8 11,7 11,8 13,2 13,6 15,4 14,2 Agricultural 16,5 15,2 15,5 14,9 14,0 13,8 14,3 15,9 15,6 17,9 17,2 Street Lighting 11,0 12,9 14,9 15,3 16,4 16,1 14,2 15,2 14,7 15,9 15,5 System Average 11,4 12,8 13,6 13,5 13,2 13,3 13,5 14,5 14,5 16,7 15,9 Source: California Public Utilities Commission (CPUC)

13. CALIFORNIA PV MARKET Forecast of electricity consumption Source: California Energy Demand 2010-2020 (California Energy Commissin)

14. CALIFORNIA PV MARKET Energy price forecast - Since 2000 prices have increased on average 6-7% a year. - Future estimations foresee a similar increase in the 2010-2020 period because of three factors: > New infraestructure development > Increase in gas & oil prices > Renewable energy requirements Source: Understanding California Enery Prices (Bloomenergy)

15. CALIFORNIA PV MARKET CAL, NJ & ONT PROMOTION PROGRAMS SUMMARY ELECTRICAL TARIFF PHOTOVOLTAICS PROMOTION PROGRAMS (Average approximation*) (United States) US FEDERAL 30% INVESTMENT 5 YEAR ACCELERATED PROGRAMS TAX CREDIT (GRANT) AMORTIZATION TIME CALIFORNIA CALIFORNIA SOLAR INITIATIVE (0,05$* per Kwh for 5 years) STATE 16,63 cents per kWh. CALIFORNIA FIT (from 0,08 to 0,10 per Kwh in 2010) PROGRAMS SALES TAX EXEMPTION PROPERTY TAX EXEMPTION NEW JERSEY REIP INCENTIVES ( Akeena Solar: http://akeena.com > Borrego Solar: http://borregosolar.com > K2 Solar: http://k2solar.com - Most strong competitors have permanent alliances with both a financial and a roofing contractor partner to boost their operations (Example: K2Solar graphic). - Two basic business models*: a) Full site-host ownership (through lease or other financial tools) c) Power Purchasing Agreement (PPA) *Tax benefits being the main issue.

33. CALIFORNIA PV MARKET Full site-host ownership model

34. CALIFORNIA PV MARKET Business model: Power Purchase Agreement (1)

35. CALIFORNIA PV MARKET Business model: Power Purchase Agreement (2)

36. CALIFORNIA PV MARKET Business model: Power Purchase Agreement (3) - The site host neither owns nor leases the PV system, but instead agrees to buy all of the electricity generated by the system for a specified term, through what is known as a power purchase agreement (PPA). - The project developer either owns (in partnership with it stax investors) or leases (from its tax investors) the system, and is responsible for operating and maintaining it throughout the entire PPA term. - The project developer (and its tax investors) take on the risk that the project does not perform as expected i.e., the site host only pays for power that is actually generated. As the owners of the project, the project developer and/or its tax investors take all of the projects tax benefits (and, in effect, pass a monetized portion of them through to the site host in the form of a lower PPA price). - From the site hosts perspective, a PPA feels very much like an operating lease: The primary difference which reportedly is a major selling point for the PPA10 is that, under a PPA, the site host is not required to operate and maintain the system, and likewise faces no performance risk. In short, the PPA model effectively provides the site host what it presumably really wants solar power at an affordable price, rather than solar equipment that it must operate and maintain.

37. CALIFORNIA PV MARKET Business model: Power Purchase Agreement (4) Source: The Solar Group

38. CALIFORNIA PV MARKET Integrated solar company: a model More info at: http://www.k2solar.com/index.php/our-partnerships.html

39. CALIFORNIA PV MARKET Contractors license - Solar contractors need a valid contractors license administered by the California Contractors State License Board. - The C-46 Solar Contractor license covers active solar water and space heating systems, solar pool heating systems, and photovoltaic systems. C-46 requirements include four years of experience and passing the business and law exam and the trade exam. Independent license schools offer courses to prepare for license exams. - Application time: Any application requiring an exam depends on exam scheduling. - A C-39 Roofing Contractor license could also be required for photovoltaic systems installed in roofs. More information: http://www.cslb.ca.gov http://www.cslb.ca.gov/Resources/GuidesAndPamphlets/BlueprintForGettingLicensed.pdf

40. CALIFORNIA PV MARKET Timeline for coming months - Contact Diego Belmonte (consultant) to lear about the market SEP - Prepare an agenda of California contacts to meet during Solar Power - Confirm assistance to Spanish networking breakfast during Solar Power - Meet with California PV market contacts during Solar Power to learn about the market - Attend Spanish networking breakfast during Solar Power OCT - Define a strategy for market penetration - Look for potential partners - Contact potential partners (PV installer/PV professional to start joint venture with) NOV - Prepare a trip to meet potential partners DEC - Visit California and meet potential partners JAN-FEB - Close agreement with partner and start landing MAR-APR - Start operations. Be successful!

41. CALIFORNIA PV MARKET PV industry associations & resources - Solar Energy Industries Association (SEIA): http://seia.org - Solar Electric Power Ass. (SEPA): http://solarelectricpower.org - California Solar Electric Industries Assoc.: http://calseia.org - California Solar Initiative (CSI): http://gosolarcalifornia.org - California Public Utilities Commission: http://cpuc.ca.gov - Database of Solar Incentives for Renewables: http://dsireusa.org - Roofing Contractors Ass. of California: http://rcacal.com