SE/BUD | 08.08.2012 | © Bosch Solar Energy AG 2012. Alle Rechte vorbehalten, auch bzgl. jeder...

SE/BUD | 08.08.2012 | © Bosch Solar Energy AG 2012. Alle Rechte vorbehalten, auch bzgl. jeder Verfügung, Verwertung, Reproduktion, Bearbeitung, Weitergabe sowie für den Fall von Schutzrechtsanmeldungen.

Solar Energy

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2012 United States Market Update

SE/BUD 08.08.2012

SE/BUD | 8/8/12 | © Robert Bosch GmbH 2012. All rights reserved, also regarding any disposal, exploitation, reproduction, editing, distribution, as well as in the event of applications for industrial property rights.

Agenda

Solar Energy

1. Market Model and Business Landscape

1.1 Market Update and Overview1.2 Subsidy Landscape1.3 Overall Market Model1.4 Market Model by

Segment1.5 Competitive

Landscape1.6 Residential System

Finance

2. State Rankings 2.1 Overview of Methodologies

and Research2.2 State Rankings for Wholesale and Retail Markets2.3 Comparison with 2009

Results2.4 Implications for Bosch

3. Public Perception of PV in US Market

3.1 Public Opinion Research

3.2 2012 Election Implications

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1.1 US Market Overview

Solar Energy

1. 2.0 GW installed by end of 2011, over 3 GW expected by end of 2012

2. 30 % Federal Cash Grant awarded over $1.8B (~1.26 GW) before expiring at end of 2012

3. Growth in all market segments from 2010-2011 – largest growth in Utility Segment (282%)

4. The rise of the utility segment has caused 3 main downstream channels to grow: module suppliers with internal installation, EPCs, and direct procurement by utilities

5. Residential leasing and PPAs are driving growth in the Residential Market

6. Market is going to be driven by 2 main segments: Distributed-generation (DG) systems below 1 MW and utility-led large scale projects

7. Big questions / Issues for future solar market – uncertainty due to ITC, 2012 election, and anti-dumping tariffsSources: SolarBuzz Q1/2’12 Report

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1.2 US Financial Incentive & Subsidy Landscape

Solar Energy

ITC (Investment Tax Credit): 30% tax credit for solar energy systems installed on or before 31/12/16. Credit reverts to 10% thereafter.

Rebate Programs: Offer subsidies for PV system installations based on capacity or size.

Feed-in-tariff: Long-term contracts where a fixed amount of money is paid to electricity generator by the utility for the amount of energy they feed into the grid.

RPS (Renewable Portfolio Standard): Require state utilities to generate a certain percentage of power utilizing renewable energy.

SRECs (Solar Renewable Energy Credits): State markets that utilize solar energy production credits so that utilities can purchase a certain amount of their electricity from solar generators.

Solar Lease: Property owners lease solar PV systems from a provider with little to no upfront costs.

PPA (Power Purchase Agreements): Financial Agreements in which one party owns the system and generates electricity which is sold to a purchasing party

Net Energy Metering: Customer-generator receives a financial credit for power that is generated by their onsite solar energy system and fed back to the utility.

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lLevel

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te a

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1.2 SREC (Solar Renewable Energy Credit)

Solar Energy

SRECs create markets for solar energy production in states with solar set-asides in their RPS

Each year, utilities must obtain a certain percentage of the electricity they sell from a solar energy source to avoid a non-compliance fee by either producing it themselves or purchasing SRECs from third parties

1 SREC = 1 MWh of solar electricity produced

Supply and Demand for each state market dictate prices of SREC credits

Demand determined by state RPS solar requirementSupply determined by amount of SRECs produced by solar energy systems within a stateNon-Compliance payment acts as SREC price ceiling

Pricing varies by state : $150/MWh (NJ) - $295/MWh (D.C.)

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Internal | SE/BUD | 8/8/12 | © Robert Bosch GmbH 2012. All rights reserved, also regarding any disposal, exploitation, reproduction, editing, distribution, as well as in the event of applications for industrial property rights.

Solar Energy

Scenarios differ based on variables affecting demand: Policy – ITC, state RPS requirements Module Supply – overall system cost Finance – investment to finance PPAs and tax equity market

Source: Solarbuzz Q2’12 ,IMS Q2’12

1.3 US Market Model 2011-2016: IMS and SolarBuzz Research

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ISE/BUD | 8/8/12 | © Robert Bosch GmbH 2012. All rights reserved, also regarding any disposal, exploitation, reproduction, editing, distribution, as well as in the event of applications for industrial property rights.

US Market Model by Segment: Solarbuzz & IMS Research

Solar Energy

DriversResidential/Commercial – solar leases/PPAsUtility - RPS solar set-asides

BarriersAll segments -Oversupply of SREC markets, Expiration of Federal Cash GrantUtility – Difficulty acquiring land/permits, transmission problems, and lack of finance from investors

Source: IMS Q2’12, Solarbuzz Q2’12

1.4 US Market Model by Segment 2012-2016: IMS & SolarBuzz

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Competing Module Manufacturers Market Share

Solar Energy

China Japan USA Germany Other

1.5 Competitive Landscape

Source: SolarBuzz 2011/2012 Annual Reports

Market doubled from 20102011Chinese market share experienced small growth in 2011, expect 2012 market share to face a small short-term decreaseHanwha, Sunpower, and SolarWorld increased market share in 2011Expect fewer manufacturers to remain in the market, but those that do will maintain a larger percentage share2011 Bosch SE Market Share was 0.3%

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1.6 Residential Finance: PPA / Solar Lease

Solar Energy

Federal / State

Government

Financial incentives to support solar energy development

3rd Party Owner / System

Integrator

Purchases system componentsDesigns and installs systemMonitors, operates, and maintains system for 15-20 years

Investors

Debt Financing

ITC, FiT, Installati

on Rebates

End Customer

Hosts PV system on their roofNo upfront cost Purchases solar electricity per kWh consumed (PPA) or at fixed monthly rate (lease)Electricity is purchased at a fixed price/rate (15-20 year contract) that is cheaper than local utility rate

Loans

PPA / Lease

Debt Repaymen

t

Monthly bill

payment

SRECs

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Solar Energy

SolarCityFully Integrated - controls entire value chain from customer acquisition to system design, installation, financing, and service Led with 12% of residential installation market share in 2011

SunRun SunRun works as an enabler for installers or dealers, who are able to offer leases/PPA to their customers with SunRun financing

SungevitySungevity focuses on acquiring customers via the web, radio, or phone and outsources the installation to approved fulfillment partner

Distributor

Installer

Customer

Distributor

Customer

Source: SolarBuzz Q2’12

1.6 Residential Finance: System Integrator Business Models

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Internal | SE/BUD | 8/8/12 | © Robert Bosch GmbH 2012. All rights reserved, also regarding any disposal, exploitation, reproduction, editing, distribution, as well as in the event of applications for industrial property rights.

Solar Energy

Installer

Consumer

Manufacturer/Distributor

Clean Power Finance

Minimize “soft costs of going solar”

B-2-B model

Auction mechanism for suppliers that connects different actors within value chain

Charges small transaction fee to suppliers and subscription fee to installers

Software also provides system design, monitoring, and support tools

Runs on a cloud network and accessible from office, laptop, or tablet

Investor / 3rd-Party System Owner

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1.6 Residential Finance: Clean Power Finance Business Model


2.1 State Rankings Introduction

Solar Energy

Overview:Navigant Consulting published state ranking report for Bosch in 2009 Similar criteria used for 2012 rankings

Methodology: Updated Navigant criteria with most recent dataSmall revisions to point scoring and weighting system applied to determine overall grades

Updates: Previous year’s energy consumption used as a determinant of PV demand for state’s RPS retail criteriaMore comprehensive and concise state incentive scoring criteria State RPS markets updated and given a more precise and accurate scoring distribution Less overall weight given to state’s solar resource, more weight given to RPS requirement

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3.1 Public Perception of PV in the United States

Solar Energy

Public Support for Solar EnergySupport for solar energy has declined over the past year, although it continues to receive the highest level of support amongst all forms of renewable energyPublic is split along party lines over support for government investment Higher public support for solar tax credits and installation rebate incentives than for loan guarantees

Solyndra’s ImpactSolyndra’s failure is seen as a “distinct and isolated case” of industry failure, however, it has fueled conservative attacks and skepticism about government support for the industry The attacks may be a larger criticism of the Obama administration’s politically influenced public spending

Poll Sources: Pew Research ‘12, Pew Research ‘12, Gallup Poll ‘12, GMU/Yale Survey ‘12, Harris Poll ‘12

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3.2 2012 Election Implications - If Romney Wins…

Solar Energy

Solar Energy RecordHas flip-flopped on the issue both publicly blasting Obama’s investment in solar, while also providing $9M in funding to solar companies as governor of MACurrent campaign literature calls solar a “failure” and “sharply uncompetitive”Energy spokesperson for Romney campaign on board of Shell Oil

Possible ConsequencesRepeal of federal ITC (currently approved through 2016) for solar

Impact on Market and Strategy ImplicationsRepeal of ITC would hurt all market segments – 30% tax credit plays important role in attractive financing for solar leases and PPAsExpect largest impact in large commercial and utility segment – would effectively kill tax equity market that attracts investment into large-scale solar projectsLook at conservative scenario for market model

Romney press conference at Solyndra HQ in May 2012 to publicly denounce Obama’s failed investment

Sources: Mittromney.com, Huffingtonpost.com

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Solar Energy

Thank you for your attentionIf you would like an extended copy of this presentation please

contact:[email protected]

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SE/BUD | 08.08.2012 | © Bosch Solar Energy AG 2012. Alle Rechte vorbehalten, auch bzgl. jeder...

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