OVERVIEW OF ALTERNATIVE TECHNOLOGY EXPANSION, FUNDING

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OVERVIEW OF ALTERNATIVE TECHNOLOGY EXPANSION,
FUNDING STIMULATING INVESTMENT IN CLEAN
TECHNOLOGY

• UNIVERSITY OF CAMBRIDGE 22nd September 2008

Solar Market Outlook
Filipe Almeida Santos
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SOLAR MARKET OUTLOOK

• AGENDA
• 1. Value Chain of the Solar Industry
• 2. Start-up Industry Booming
• 3. Threats and Trends
• 4. Emerging Markets

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1. Value Chain of the Solar Industry
Polysilicon companies have the most power in
the solar chain
High Vertical Integration and Higher Scale of
Production
Gross Margins
24-32
10-15
20-25
5-15
40-60
REC Sharp Qcells Suntech Power Kyocera Motech Sany
o
REC Sharp Solarfun Suntech Power Kyocera Yingli Sa
nyo
REC Hemlock Wacker MEMC Tokuyama
REC LDK Green Energy MEMC Yingli Deutsche Solar
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1. Value Chain of the Solar Industry
Poly Silicon shortage may last into 2010
Over Demand
Source EPIA, 2008 - estimation
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2. Start-up Industry Booming
World PV Application Segmentation
Investment in Renewable Energies 2007
Source EPIA, 2008
Investments (public and private) in clean energy
reach in 2007 USD 117 bn, namely in the
following Sectors Solar, 2nd generation
biofuels, wind and energy efficiency. Bank
Sarasin expects growth percentages of 20- 30
per year for the PV market for the next 10 Years.
Source New energy Finance, 2008
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2. Start-up Industry Booming

• In 2007, accumulated installed capacity reaches
  9,2 Gw
• Clean Technology IPO wave since 2006 mostly
  related with Solar China Sunergy, Yingli Green
  Energy, LDK Solar, GT Solar among others
• PPVX, photovoltaic index that includes 30 solar
  stocks, increased 145 in the year 2007.
• LARGE AMOUNT OF FINANCIAL RESOURCES INVESTED
  IN SOLAR
• Market Migration

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2. Start-up Industry Booming

• CHINA has an explosive PV Industry but so far
  without domestic market
• Higher market share for alternative technology
  Thin Film and Concentration
• Potential market share of 30 in 2015 (UBS
  Survey)
• Main Advantages less poly silicon, low cost, low
  weight and able to operate with low light
  conditions

Source EPIA, Solar Generation V, 2008
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3. Threats and Trends
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3. Threats and Trends

• CONSEQUENCES
• Rush in 2008 in order to obtain gains from the
  actual feed-in-tariffs
• System prices will have to come down
  compression of costs and/or margins
• High Investment in Solar Industry
• TURNING POINT PV Market expects to be SUPPLY
  DRIVEN.

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3. Threats and Trends

• According a recent Research Note published by New
  Energy Finance (14/08/08)

Fig 2 Median forward price of poly silicon for
delivery 2008-2015 2007 2008 USD/Kg
Fig 1 Estimated past and future new silicon
production for the solar industry,
2006-2011 tonnes
Fig 3 Expected Behaviour of spot silicon Prices
in 2009
Tier 1 factories planed by the current silicon
producers for which most of the capacity has
already been contracted
Tier 2 factories planed by new entrants using
established technology

• Tier 3 factories are
• Those which will employ upgraded metallurgic
  silicon processes
• Those planed by new entrants about which little
  is known , without
• known contracts or
• Those planned by experienced and highly reputed
  companies, but for
• construction beyond 2009 for which the capacity
  has not yet been
• contracted

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3. Threats and Trends

• A Delicate Equilibrium Support Levels decreasing
  and Market Growth
• Therefore
• Decreasing ASP of PV Systems
• Everyone in the value chain will face some margin
  compression
• PV-systems owner will see a reduction in
  annualized returns
• High Vertical Integration and Higher Scale in low
  cost regions
• Increasing penetration of all technologies of
  Thin Film
• After 2010, Analysts expect delivered PV
  electricity prices
• lt 10 cents /Kwh in best locations
• lt 5 cents /Kwh after subsidies

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3. Threats and Trends
Source EPIA, Solar Generation V, 2008
Estimated Peak Grid Parity
2013
2014
2015
2016
2011
2012
2017
2018
2019
2020
2021
2022
Denmark
Spain
Germany Netherlands
Austria Norway
Italy
Portugal
France Slovakia Belgium Sweden
Hungary Ireland
Poland UK
Greece Romania Czech Rep
Finland
Bulgaria
Source Merrill Lynch, Solar Industry, 2008
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4. EMERGING MARKETS

• EUROPE Should continue to be the main market
  for solar

Regional Distribution of Global PV Markets
(Policy Driven Scenario)
Source EPIA, Solar Generation V, 2008
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4. EMERGING MARKETS

• need stronger focus on emerging countries and
  rural electrification
• 1,6 bn of people do not have access to
  electricity
• Regions very vulnerable to rising energy prices
• Suitable option to supply electricity in
  fragmented areas or at certain distances from the
  grid stand alone systems
• Even now PV systems may have comparative
  advantages
• - Low operation and maintenance costs
• - Increased reliability and life span
• Potential market of 3 bn

Source Alliance for Rural Electrification (ARE)
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• THANK YOU
• Martifer Solar, SA
• Zona Industrial, Apartado 17
• 3684-001 Oliveira de Frades Portugal
• Contact
• Filipe Santos
• Mobile [phone]
• Fax [phone]