2012 Reenergize the Americas 1A: Richard Gruber

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2012 Reenergize the Americas 1A: Richard Gruber

  1. 1. Bringing Low Cost/High Value Solar Energy to All Texas ConsumersRichard Gruber, Senior Vice PresidentLincoln Renewable EnergyOctober, 17, 2012
  2. 2. Lincoln Renewable Energy• U.S. based developer of utility scale solar PV and wind projects across the United States. Offices in Austin, Chicago, and Denver.• Highly experienced management team with deep experience (3000 + MW’s) in renewable energy development: Greenfield development to project acquisition, project finance, power sales, construction and operation.• Recently completed development and construction of NJ Oak Solar, a 10 megawatt solar project in Southern New Jersey.• Monument Power, LLC - 50/50 joint venture between Samsung C&T and LRE, entered into March 2012.
  3. 3. Trends – Falling Costs, Evolving Role• Annual solar MW’s installed is accelerating• Technology advances and scale have rapidly driven system costs lower – PV efficiency advancements – Supply chains continue to mature – System level standardization/optimization• Utility scale solar PV a viable competitor to more established technologies – thought “impossible” 5 years ago• Policy drivers and constraints
  4. 4. U.S. PV Demand Forecast to Grew 89% in 2011 to Nearly 1.7 GW PV Installations Forecast 7000 6000 5000Megawatts (MWdc) 4000 3200* 3000 2000 1000 0 2005 2006 2007 2008 Year Q12009 Q2 Q32010Q4 2011 Forecast 2012e 2013e 2014e 2015e Source: SEIA *Source: GTM Research, est. of 2012 install
  5. 5. Average PV Installed System Costs Continue to Decline in all Sectors $5.46 $4.38 Q2 2012 update $2.60Source: SEIA
  6. 6. How did system costs fall so fast?Module level – Lower cost technology solution appeared – Scaling manufacturing and supply chains – Increased model efficiencyBalance of System and EPC level – Increased module conversion efficiency - shrinking footprints – Standardized system solutions – Scale effects on system-level supply chain – Construction learning cycles and innovationFinance – Speed to install – Falling operating risk premiums – More institutional investors enter the market – Innovation
  7. 7. Select events contributing to growing markets and falling costs GER establishes FiT GER amends FiT$5.00/w FSLR IPO – 11/06 $4.50/w FSLR buys DT Solar - Germany amends FiT FSLR buys Optisolar – 550 MW sites $2.00./w FSLR sells 550 MW project To Berkshire Hathaway Unit CA establishes RPS at 20% $1.10/w FSLR announces 2016 $1.15w CA expands RPS to 33% $0.50/w system cost 2000 2004 2008 2012 2016
  8. 8. What matters in utility scale solar?Base case: 12.31.14 COD, west TX, 50 MW, 7% unleveredIRR, EPC at $1.75/DCw, ITC @ 30%20 Yr. Flat PPA Price = $76.50 MWh Solar resource: If sited in Dallas: $91.75 (+15.25/MWh or +17%) Scale: If sized at 2 MW’s: $138.50 Tax policy: If ITC reverts back to 10%: $99.50 Required Return: If unlevered return at 5%: $62.00 Source: market data driven estimates/assumptions
  9. 9. What Matters in Utility Scale Solar• Access to the “best in market” renewable resource• Favorable development conditions • Land, permitting, access to transmission, local support, balanced tax policy,…• Deliver a cost/risk solution that is beneficial to consumers, can create a sustainable market• Provide returns required to attract capital to develop assets • build power plants, add jobs, increase local tax base, attract manufacturing
  10. 10. Property Value Analysis Thank you Questions10

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