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ClearSky Advisors Ontario PV market outlook 2011

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My presentation at the Solar Canada conference in 2011

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ClearSky Advisors Ontario PV market outlook 2011

  1. 1. ©  2011    ClearSky  Advisors  Inc.   Ontario  PV  Market  Outlook   Demand,  Market  Forecast,  LTEP,  Supply,  Outlook  
  2. 2. ©  2011    ClearSky  Advisors  Inc.   Disclaimer   The   materials   ClearSky   Advisors   Inc.   provides   in   this   publication   will   reflect   ClearSky  Advisors’   judgment   based   upon   the   information   available   to  ClearSky   Advisors.   ClearSky   Advisors   disclaims   any   other   representations   or   warranties,   express   or   implied,   including   without   limitation   any   implied   warranties   of   merchantability,  fitness  for  a  particular  purpose  or  non-­‐infringement.  This  report   is  based  on  sources  believed  to  be  reliable,  but  no  independent  verification  has   been  made  nor  is  its  accuracy  or  completeness  guaranteed.  ClearSky  Advisors  is   an   independent   research   firm   that   does   and   seeks   to   do   business   with   all   stakeholders   within   the   industries   covered   in   ClearSky   Advisors’   research.   Investors  and  decision-­‐makers  should  consider  ClearSky  Advisors’  research  as  only   a  single  factor  in  making  their  key  decisions.  
  3. 3. ©  2011    ClearSky  Advisors  Inc.   Key  Points   LTEP  &  Ontario’s  Electricity  Supply   Ontario  PV  Market  Forecast   Supply  Situation   Issues  to  Consider  
  4. 4. ©  2011    ClearSky  Advisors  Inc.   Ontario  Electricity  Demand   0   20   40   60   80   100   120   140   160   180   2010   2011   2012   2013   2014   2015   2016   2017   2018   Electricity  (TWh)   Year   Ontario's  Electricity  Generation  Forecast  2010-­‐2018   Biomass  Generation   Solar  Generation   Wind  Generation   Coal  Generation   Natural  Gas  Generation   Hydroelectric  Generation   Nuclear  Generation   Required  Generation   Sources:  ClearSky  Advisors  Inc.  2011;  OPA,  IPSP  Planning  and  Consultation  Overview  2011;     OPA,  Ontario’s  Long  Term  Energy  Plan  2010;  IESO,  18  Month  Outlook  December  2011  
  5. 5. ©  2011    ClearSky  Advisors  Inc.   Generation  Capacity  2010-­‐2018   2010  (MWac)   2018  (MWac)   %  change   Solar   185   2,580   1,295%   Wind   1,428   7,302   411%   Bio  energy   174   818   370%   Coal   4,484   0   N/A   Nuclear   11,446   8,507   -­‐25.7%  
  6. 6. ©  2011    ClearSky  Advisors  Inc.   Status  for  solar   2010  (cum-­‐dc)   2011e  (cum-­‐dc)   Remaining   contracted   LTEP  (dc)   RESOP   189   384   126   N/A   FIT/mFIT   24   133   1,653   N/A   Total   213   517   1,778   2,967  
  7. 7. ©  2011    ClearSky  Advisors  Inc.   Our  Scenarios   •  Solar  PV  given  larger  role  within  LTEP   •  Increased  grid  capacity   •  FIT  rates  attractive   High  Case   •  Solar  PV  target  as  per  LTEP   •  Modestly  improved  build-­‐out  rates   •  FIT  program  rules/rates  design  to  meet  LTEP   Expected   Case   •  Continued  grid  constraints   •  Reduction  in  new  contract  awards   •  Less  political  support   Low  Case  
  8. 8. ©  2011    ClearSky  Advisors  Inc.   Seven  Year  Outlook  2011-­‐2018   0   100   200   300   400   500   600   700   800   2011   2012   2013   2014   2015   2016   2017   2018   MW  dc   Ontario  PV  Installation  Volume  (2011-­‐2018)   High  Case   Low  Case   2011:  299  -­‐  326     2012:  418  -­‐  610    
  9. 9. ©  2011    ClearSky  Advisors  Inc.   2012  Equipment  Demand  (dc)   By  Program   RESOP   58   FIT   377   microFIT 76   By  Domestic  Content   None   58   40-­‐50%   52   60%   401   2012  Volume   511MW  
  10. 10. ©  2011    ClearSky  Advisors  Inc.   So,  a  lot  remains  to  be   built  –  what  about  supply?  
  11. 11. ©  2011    ClearSky  Advisors  Inc.   2011  in  a  Nutshell   World-­‐Wide   Overcapacity   Falling  Prices   Casualties   Ontario   Overcapacity   Falling  Prices   Casualties?  
  12. 12. ©  2011    ClearSky  Advisors  Inc.   Suppliers   Module  Manufacturers   ON  facility   13-­‐14   3rd  Party   9-­‐10   ON  Silicon   2-­‐3   Total   24-­‐27   Inverter  Manufacturing   ON  facility   7-­‐8   3rd  Party   5-­‐6   ON  Silicon   N/A   Total   12-­‐14   No  Supply  Shortage  Expected    
  13. 13. ©  2011    ClearSky  Advisors  Inc.   Will  manufacturers  stay?  
  14. 14. ©  2011    ClearSky  Advisors  Inc.   Policy  determines   1.  Policy  in   support  of   domestic  supply   2.  A  market   beyond  LTEP  is   visible    
  15. 15. ©  2011    ClearSky  Advisors  Inc.   Drivers  and  constraints   beyond  LTEP     Reality  Drives  Policy  
  16. 16. ©  2011    ClearSky  Advisors  Inc.   “Uncontrollable”  Factors     • Biggest  driver  of  electricity  demand   • Current  LTEP  based  on  modest  growth   Economic   Growth   • Refurbishment  of  existing  generators   delayed   • May  lead  to  to  increased  demand  for  PV   Nuclear   Delays   • If  US  imposes  anti-­‐dumping  measures   against  Chinese  made  products   • Canada  seen  as  possible  base  for  US  market     Trade   Complaints  
  17. 17. ©  2011    ClearSky  Advisors  Inc.   Controllable  Factors   • Cost  of  a  nuclear  reactor  may  not  be  in  ratepayer  interest     • Increased  role  for  PV  in  LTEP   • 2.5  GW  nuclear  =  1.85  GW  PV  +  5.2GW  Wind  +  0.6GW  Bio   No  New   Nuclear   • Government  decides  reduced  role  for  wind  in  LTEP   • Increased  role  for  PV   • 1GW  wind  =  2.37GW  PV   Less  Wind     • Government  has  a  goal  of  500,000  EVs  by  2020   • EV  charging  will  drive  electricity  demand   • 500,000  EV  =    1.2  GW  PV   Addition  of  EVs   to  grid   • Cost-­‐effective  from  ratepayer  perspective   • Will  require  transmission   • 7  year  to  plan-­‐build   Procurement  of   hydro  from  QC  
  18. 18. ©  2011    ClearSky  Advisors  Inc.   Final  word   Manufacturers,  Developers  
  19. 19. ©  2011    ClearSky  Advisors  Inc.   Recommendations   •  Upstream:  Explore  ways  of  cutting  cost  in   the  silicon  value-­‐chain   •  Downstream:  Collaborate  to  help  customers   find  ways  of  cutting  logistics  &  labour  cost   •   Taylor  organization  and  offering  to  the   distinct  segment  preferences  in  Ontario   Manufacturers   •  Make  the  most  out  of  your  existing   contracts   •  Explore  acquisitions  and    alternative   business  models  that  give  access  to   additional  pipeline   •  Collaborate  with  suppliers  to  help  reduce   installed  cost   Developers/ Investors  
  20. 20. ©  2011    ClearSky  Advisors  Inc.   Thank  You   Jon  E  Worren   877-­‐333-­‐5821  x502   jon@clearskyadvisors.com     ClearSky  Advisors  Inc.   215  Spadina  Ave,  Suite  419   Toronto,  ON  M5T  2C7  

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