This document discusses the investment case for solar power, outlining long term bullish factors such as projected spending of $3.7 trillion on new solar installs through 2040. It notes solar costs are falling due to improved technology and economies of scale, and grid parity is being reached in more markets. Advantages of solar include being clean, having fixed upfront costs with no fuel costs, and falling installation costs. The document recommends investing in the MAC Solar Index ETF to gain diversified exposure to the growing global solar sector.

1. The Investment Case for Solar
Tracking index for PowerShares Solar Portfolio (NYSE ARCA: TAN)
www.MACsolarindex.com

2. Long-Term Bullish Factors for Solar Sector
• Spending on new solar installs will be a massive $3.7 trillion through 2040
and solar will account for 35% of new electricity installs, according to
Bloomberg New Energy Finance.
• Room for double-digit growth for decades; solar is less than 1% of U.S. utility
electricity generation now.
• Solar panel demand has persistently surprised to the upside
• Solar costs are falling due to improved technology and lower
system/installation costs; grid parity is being reached in a progressively
larger number of markets. Lower solar cost means increased demand,
bigger target market, more unit sales, more profit.

3. Solar – Long-term Solution for Sustainable Electricity
Advantages
• Clean & Safe - Solar is a clean & safe electricity solution; unlike nuclear, coal, natural gas.
• Cost certainty -- Solar has a fixed up-front electricity-generation cost with no fuel cost risk,
unlike coal and natural gas where generation costs depend on unknown future fuel costs.
• Falling costs - Solar costs are falling steadily due to technology improvements and
manufacturing scale. Also, solar has a near-zero marginal cost once installed unlike high
fuel operating costs for coal and natural gas.
• Distributed Generation – Solar insulates electricity users from grid failures and protects
against future utility electricity price increases
• Scalable – Solar can be small or large scale; residential, commercial buildings, utility.
Disadvantages
• Day-Use Only – Solar but matches peak electricity usage times; add battery storage
• Variable solar intensity – but still economical in northern climes
• Installed Cost – Falling fast; grid parity in growing number of areas

4. Solar PV and Thermal could together become the world’s
largest electricity source by 2050 (IEA)
▪ Solar PV and Solar Thermal Electricity (STE) could together account for 27% of global energy share by
2050 (16% for PV, 11% for STE) versus current <1%, thus becoming the world’s largest electricity source.
▪ This would prevent CO2 emissions of 6 billion tonnes per year, more than today’s U.S. energy sector
emissions or world transport sector emissions.
Source: International Energy
Agency Technology Roadmaps
for Solar Electricity (2014).

5. High Growth Industry: 27% Annual Growth Last 5 Years

6. Leaders: China, U.S., Japan, India Take Over From Europe

7. Solar Pricing – Polysilicon is Mildly Above Record Low

8. Solar Pricing – Modules down by 76% over last 7 years

9. Solar Cell Costs Have Dropped 99% Since 1970s

10. Steady Percentage Solar Module Price Decline Due
to Technology Advances and Scale Manufacturing

11. Solar Scientific Research Continues at Rapid Pace
to Reduce Solar Costs and Increase Efficiency

12. MAC Solar Index - Methodology
• Global solar energy index of qualified solar stocks listed on
exchanges in developed countries.
• Passive index of qualified solar stocks – no stock picking.
• Modified market cap weighting.
• Liquidity minimums to add a stock: $150 million market cap and
$750,000 in average daily trading value.
• Exposure Factor 1.0 for pure-play solar stocks (solar revenue above
2/3); Exposure factor of 0.5 for medium-play stocks (1/3 to 2/3 solar
revenue).
• Quarterly index review on third Friday of March, June, Sep, Dec.

13. Advantages of Index/ETF Over Individual Solar Stocks
• Own the global solar sector in one trade – reduced transaction costs
• Long track record – 10+ year history (launched in April 2008)
• Dynamic Portfolio – add solar growth stocks
• Diversification – across geography, technology, value chain

14. Diversification Across Geography
By Company Headquarters:
• North America: 9 companies
• Asia: 7 companies
• Europe: 6 companies
By Stock Listing:
•North America: 12 companies
•Hong Kong: 4 companies
•Europe: 6 companies

15. For More Information
• Solar Sector Research at:
www.macsolarindex.com
• List of solar information sources at:
www.macsolarindex.com/resources