Solar Summit keynote

1. 0Kann - State of the Market
Shayle Kann
Head of GTM Research
@shaylekann
The State Of Solar

2. 1Kann - State of the Market
Public Solar Companies Have Taken A Beating
Source: Google Finance
Guggenheim Solar ETF (Jan 2016-Present)
-50.0%
-45.0%
-40.0%
-35.0%
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%

3. 2Kann - State of the Market
$0.35
$0.40
$0.45
$0.50
$0.55
$0.60
$0.65
2H 2016
And Module Prices Have Crashed, Along With Manufacturer Margins
Global Multi c-Si Module Spot Price ($/W)
Prices
-38% in
2016
2015 1H 2016
H1 2016 H2 2016
-
20
40
60
80
China United States of America
India Japan
ROW Available Module Capacity
Global Demand vs. Available Module Capacity (GW)
Global
Demand
-16%
Available
Module
Capacity
+10 %
Source: GTM Research

4. 3Kann - State of the Market
Residential Solar is Slowing Down, Especially in California
Source: GTM Research/SEIA U.S. Solar Market Insight
Residential PV Installations (MWdc)
0
50
100
150
200
250
300
350
400
450
Q1
2010
Q3
2010
Q1
2011
Q3
2011
Q1
2012
Q3
2012
Q1
2013
Q3
2013
Q1
2014
Q3
2014
Q1
2015
Q3
2015
Q1
2016
Q3
2016
Q1
2017
California
Rest of U.S.

5. 4Kann - State of the Market
Keep Calm and Carry On

6. 5Kann - State of the Market
Global Solar Installations Grew 53% in 2016
Source: GTM Research
Global PV Installations (GWdc)
0.3 0.3 0.5 1.1 1.4 1.5 2.5
6.1 7.1
16.2
29.2 29.9
39.5
41.9
50.9
78.0
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

7. 6Kann - State of the Market
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2000 2002 2004 2006 2008 2010 2012 2014 2016
Residential Non-Residential Utility
2016 Was A Banner Year For U.S. Solar Capacity Additions
Source: GTM Research
4% 8% 9%
27% 27% 30%
39%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016
Solar Natural Gas Coal Wind Other
Annual U.S. Solar PV Installations (MWdc) Share of New U.S. Generation Capacity (%)
+95% in 2016

8. 7Kann - State of the Market
The Solar Market Is Diversifying
2016 U.S. Solar Installations
2.2 2.6
1.1
1.6
4.3
10.6
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Installations(GWdc)
Residential Non-Residential Utility
Source: GTM Research

9. 8Kann - State of the Market
The Solar Market Is Diversifying
Major Market Segments Circa 2014
2.2 2.6
1.1
1.6
4.3
10.6
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Installations(GWdc)
Source: GTM Research

10. 9Kann - State of the Market
Solar Is Now Often The Cheapest Source of New Generation
U.S. Levelized Cost of Energy, 2010 ($/MWh)
Source: Wood Mackenzie, GTM Research
$156
$110
$66
$38
$71
$111
$286
$203
$185
$75
$135
$141
$0 $50 $100 $150 $200 $250 $300
Utility-Scale Solar - No Incentives
Utility-Scale Solar
Onshore Wind
Gas CCGT
Coal
Nuclear

11. 10Kann - State of the Market
Solar Is Now Often The Cheapest Source of New Generation
U.S. Levelized Cost of Energy, 2017 ($/MWh)
Source: Wood Mackenzie, GTM Research
$54
$39
$18
$36
$69
$107
$100
$72
$76
$70
$130
$136
$0 $50 $100 $150 $200 $250 $300
Utility-Scale Solar - No Incentives
Utility-Scale Solar
Onshore Wind
Gas CCGT
Coal
Nuclear

12. 11Kann - State of the Market
949
4,118
2016 IRP - No CPP 2017 IRP - No CPP
Third-Party Owned Solar Utility-Owned Solar
Don’t Believe it? Look at Dominion’s 2016 and 2017 Integrated Resource Plans
Source: Dominion 2016 and 2017 Integrated Resource Plans, GTM Research
MT
WY
ID
WA
OR
N
V UTCA
AZ
ND
SD
NE
CO
NM
TX
OK
KS
AR
LA
MO
IA
MN
WI
IL IN
KY
TN
MS AL GA
FL
SC
NC
VAWV
OH
MI
NY
PA
MD
DE
NJ
CTRI
MA
ME
VT
NH
Dominion Integrated Resource Plans Through 2031
No Clean Power Plan Scenario
“The 2017 Plan includes a considerable amount of solar
resources…due to their optimal economics, low or zero emission
characteristics, and the fact that the installed cost of solar PV
generation has decreased by approx. 24% between the filing of
the 2016 plan and the 2017 plan”

13. 12Kann - State of the Market
Dominion Is Not Alone
WY
ID
UT
AZ
CO
TX
TN
AL GA
FL
NC
VA
WV
OH
780 MW
1.7 GW
1.4 GW
520 MW
974 MW
520 MW
680 MW
5.5 GW
1.0 GW
650 MW
3.0 GW
2.7 GW
MW in Resource Plan
 500 – 1,000
 1,000 – 2,000
 > 2,000
Utilities With >500 MW of Solar In Most Recent IRP (MWdc)

14. 13Kann - State of the Market
Globally, Projects Are Growing and Prices are Falling
Global Tendered Solar Projects by Bid Price ($/MWh) and Capacity (MWdc)
Source: GTM Research
$0
$50
$100
$150
$200
$250
Jan-13 Jul-13 Feb-14 Aug-14 Mar-15 Sep-15 Apr-16 Nov-16
North America Latin America Europe Middle East, North Africa and Turkey Sub-Saharan Africa Asia
Source: GTM Research Global Solar Demand Monitor Q1 2017
Note: Bubble size denotes auctioned capacity (MWdc)
Feb-2017 – India
750 MW
$43/MWh
Oct-2016 – Mexico`
2.4 GW
$31/MWh
Sep-2016 – UAE
1.2 GW
$29/MWh

15. 14Kann - State of the Market
Competitive Reverse Auctions Are The Driving Force For Global Solar
Tendering or Auction Scheme in
Place
Tendering or Auction Scheme
Discussed or Planned
Source: GTM Research Global Solar Demand Monitor Q1 2017
Global Markets With Tendering or Auction Schemes
Source: GTM Research

16. 15Kann - State of the Market
But There is Still A Mountain To Climb
U.S. share of monthly electricity generation (%)
Source: EIA, GTM Research
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Jan-01 Feb-02 Mar-03 Apr-04 May-05 Jun-06 Jul-07 Aug-08 Sep-09 Oct-10 Nov-11 Dec-12 Jan-14 Feb-15 Mar-16
Solar Wind All Other Sources

17. 16Kann - State of the Market
What Comes Next?

18. 17Kann - State of the Market
A Trade War? Suniva Section 201 Petition Creates Uncertainty
Source: GTM Research, U.S. Customs
21% 16% 16% 14% 13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015 2016
Domestic Production China Imports
Taiwan Imports Rest of Asia Imports
Rest of World Imports
$0.30
$0.35
$0.40
$0.45
$0.50
$0.55
$0.60
$0.65
$0.70
$0.75
$0.80
Actual Spot Prices
Suniva’s Requested
Minimum Price
U.S. Solar Module Sources (%) U.S. Spot Module Pricing ($/W)

19. 18Kann - State of the Market Source: CAISO, Wood Mackenzie
-
5,000
10,000
15,000
20,000
25,000
30,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Daily Hour
2012
2013
2014
2015
2016
2017
2026
Yes, I’m Showing The Duck Curve
California – Average April Daily Net Load (MW)

20. 19Kann - State of the Market Source: CAISO, Wood Mackenzie
-
5,000
10,000
15,000
20,000
25,000
30,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Daily Hour
Because It’s Really Beginning To Look Ducky
California – Average April Daily Net Load (MW)

21. 20Kann - State of the Market
And It Represents A Coming Set Of Challenges
California – Average April Daily Net Load (MW)
Source: CAISO, Wood Mackenzie
-
5,000
10,000
15,000
20,000
25,000
30,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Daily Hour
Overgeneration,
Curtailment,
Depressed Pricing
2012
2013
2014
2015
2016
2017
2026
Major Evening Ramp
Requirement

22. 21Kann - State of the Market
Source: CAISO
California Grid – Average March (MW)
Source: Wood Mackenzie
Texas Grid – Demand for Flexible Capacity (MW)
Forget Baseload, Focus on Flexibility.
8,367
9,473
15,067
16,145
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
3-Hr Upward Ramp Flexible Capacity Need
2015 2016 2017 2018 2019
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Source: CAISO, Wood Mackenzie

23. 22Kann - State of the Market
Most Of The U.S. Has A Lot Of Headroom Before Facing The Duck
Source: GTM Research, Wood Mackenzie
Solar Penetration (% of Load), 2016
5%-10%
10%-20%
20%-30%
<5%

24. 23Kann - State of the Market
But California Won’t Be Alone For Long
Source: GTM Research, Wood Mackenzie
Solar Penetration (% of Load), 2022
10%-20%
20%-30%
1.9%
2.5%
2.9%
3.4%
4.0%
4.7%
5.4%
2016 2017 2018 2019 2020 2021 2022
National Solar Penetration (% of Load)
5%-10%
<5%

25. 24Kann - State of the Market
Continual Cost Declines
Long-Term Growth Will Require Multiple Developments

26. 25Kann - State of the Market
Much Cheaper Solar Is Possible, But Requires Sustained Innovation
DOE SunShot 2030 Goal
Source: U.S. Department of Energy
$0.070
$0.030
$0.000
$0.010
$0.020
$0.030
$0.040
$0.050
$0.060
$0.070
$0.080
2016 Benchmark $0.30/W Module
Price
Balance of System
Costs $0.85/W-
$0.55/W
Increased Lifetime
(50 yrs) and Lower
Degradation Rate
(0.2%/yr)
Lower O&M Cost:
$14 to $4/kW-yr
SunShot 2030 Goal
UtilitySolarLevelizedCost($/kWh)

27. 26Kann - State of the Market
Continual Solar Cost Declines
Lots More Traditional Flexible Capacity: Natural Gas, Advanced Nuclear, or Carbon Capture
Next-Gen Flexibility: Energy Storage, Electric Vehicles, and Demand Response
Multiple Pathways To High Penetration Solar
Expanded Grids: Regional Networks and High-Voltage Transmission

28. 27Kann - State of the Market
Energy Storage May Soon Start To Displace Gas, Especially Peakers, For Flexibility
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Imports Gas CC Gas Peaking Wind Onshore Solar Utility Solar Distributed Net Load
High priced imports and gas peaking
requirements during evening peak hours
4.6 GW Wind
1.4 GW Solar
Example: South Australia Grid, February 2025 (GWh)
Source: GTM Research, Wood Mackenzie

29. 28Kann - State of the Market
0.0
0.5
1.0
1.5
2.0
2.5
3.0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Imports Gas CC Gas Peaking Wind Onshore
Solar Utility Solar Distributed Energy Storage Net Load
400 MW/1,700 MWh
Energy Storage
Energy Storage May Soon Start To Displace Gas, Especially Peakers, For Flexibility
Example: South Australia Grid, February 2025 (GWh)
Charging Energy Storage
With Curtailed Wind;
No Gas Peakers or Imports
Source: GTM Research, Wood Mackenzie

30. 29Kann - State of the Market
Next Up: Flexible Demand
Residential Commercial

31. 30Kann - State of the Market
Distributed Energy Resources Valuation Is Evolving And Essential
Value of Solar/DG
Energy
Capacity
Ancillary Services
Grid Services
T&D Losses
Risk Hedge
Environmental
Benefits
Economic
Development
Locational Value of DERs
4
6
Energy
Capacity
Ancillary Services
Planned
Distribution
Upgrade
Replacement
Locational T&D Losses
Risk Hedge
Environmental Benefits
Economic Development
Asset
Replacement
Reliability
Improvements
Power Quality
Improvement
Capacity
Expansion
Grid/Distribution Services
Quantitative Benefits
Soft Benefits
Legend
Traditional Generation Valuation
Energy
Capacity
Ancillary
Services
Revenue Generating Value
Cost Mitigation Value
Risk Reduction Value
Non-Revenue Value
Source: Pacific Gas and Electric, GTM Research
Source: GTM Research

32. 31Kann - State of the Market
What Might Long-Term Growth Look Like?
Source: GTM Research, Wood Mackenzie
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
$0
$50
$100
$150
$200
$250
$300
2016 Avg. 2010-
2016
Avg. 2017-
2020
Avg. 2021-
2025
Avg. 2026-
2030
Avg. 2031-
2035
2035
Annual Capital Investment ($B) Solar Penetration (Global)
2017-2035:
$2.8 Trillion Invested
3,000 GW Constructed

33. 32Kann - State of the Market
Shayle Kann
Head of GTM Research
Kann@gtmresearch.com
Thank You