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Solar3.0 Roadmap From Policy To Profitability

The document outlines the 'Solar3.0' initiative aimed at transforming the U.S. solar market by addressing challenges through a national platform for innovation in policy and business processes. It emphasizes the need for standardized practices, efficient markets, and reduced costs to enhance the solar photovoltaic (PV) sector's growth and consumer adoption. Key points include the projected growth of solar installations, the focus on soft cost reductions, and the importance of access to capital and empowering consumer choice.

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Solar3.0 - A Path from Policy to Profitability A National Platform for Process Innovation to Scale DG solar PV Intersolar N.America San Francisco, CA Making Solar Happen
About SolarTech Our Initiatives Our Board Our Partners Scalable Entire Value Collaborative Chain Consortium Local best practices Systems National Approach impact Performance` Installation Workforce Permitting Financing Interconnect 2 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Overview • Current U.S. market landscape • Solar 1.0  Solar 2.0  Solar3.0 • The Solar3.0 Platform • Tipping Points • A (proposed) path from Policy to Profitability • Q&A 3 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
U.S. Solar Market Growth Through 2015 • 2012 – We face multiple challenges with fragmented solution paths PV Installations Forecast 7000 6000 Market Uncertainty •1603 & Solyndra hangovers 5000 •Excess Capacity •Trade dispute Megawatts (MWdc) 4000 •Election year POLITICS 3000 •Confused Consumers •Fractured marketplace 2000 1000 0 2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e 2015e SEIA/GTM Research: Q3 2011 Solar Market Insight Year Q1 Solar3.0 Program Goal  Inject stability & Market Direction •Efficient local markets through standards, best practices •Provide lower prices and more predictable transactions to consumers Proprietary & Confidential www.solartech.org Intersolar 2012 4 Making Solar Happen
Average Installed System Costs Continue to Decline (many reasons) SEIA/GTM Research: Q3 2011 Solar Market Insight Greentech Media Report (Q111 vs Q112) •Drops across all sectors = $4.44/w average across markets •Res - $5.89, Commercial $4.53, Utility $2.90 / W Proprietary & Confidential www.solartech.org Intersolar 2012 5 Making Solar Happen
Tipping point - The event of a previously rare phenomenon becoming rapidly and dramatically more common - Wikipedia Making Solar Happen
What is “Main St. USA” waiting for? • Residential PV break-even • Residential PV break-even installed price in 2008 assuming installed price in 2015 assuming full retail net metering, state full retail net metering and 30% incentives and 30% ITC. ITC. Source: Denholm, Margolis, Ong, Roberts “Break-Even Cost for Residential Photovoltaics in the United States: Key Drivers and Sensitivities” NREL 12/2009 Proprietary & Confidential www.solartech.org Intersolar 2012 7 Making Solar Happen
The people who are crazy enough to think they can change the world are the ones who do. - Apple’s “Think Different” commercial, 1997 Imagine “Going Solar”? - SolarTech’s “4th Solar Leadership Summit”, 2012 Making Solar Happen
2012 Landscape: “The TOTAL PRODUCT does NOT yet Exist” • Fragmented Market – Solar is SOLD (not Bought) – Solar industry access is confusing – Customer Acquisition costs $2500+ • Lead generation sites yield 1-2% • Direct conversion rates are 10-15% – Inefficiencies across the enterprise – Few economies of scope & scale Proprietary & Confidential www.solartech.org Intersolar 2012 9 Making Solar Happen
“Solar3.0” - A pathway to industry scale Solar 1.0 Phase 3.0 Policy Innovation Business (Create Markets) Innovation Fed Policy (Scale Markets) RES/RPS Processes REC’s Productivity SB1, CSI,AB32 Scale “Total Cost of Ownership” Solar 2.0 Technical Innovation (Capture Markets) Products Technology Innovation Commercialization Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Solar 1.0 Policy Innovation http://www.dsireusa.org/ Fed Policy RES/RPS REC’s SB1, CSI,AB32 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
•Comparative benchmarking of clean-energy activities •Analysis of technology, policy, and financing trends / state Solar 2.0 •Data on which clean-tech sectors are expanding by market Technology •Insight on each state's relative strengths and weaknesses Products Technology Innovation http://cleanedge.com/research/state-index Commercialization Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
A National Platform for Process Innovation in Solar PV http://solar30.org/ Program Overview 1000+ Communities Phase 1 90+ Utilities, 500+ PV Installation Needs Analyses Companies 1600 electrical and code officials trained Phase 2 30,000 industry stakeholders Developmen 8 state target, organic adoption beyond t Phase 3 Implementati on Phase 4 Market Impact Non-Hdwr BOS 2012 2013 2014 costs as % of <30% <20% <10% Installed Costs $2.85M Funding to Reduce Non-Hardware BOS Soft Costs by 50% by 2014 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
“Solar3.0” - A pathway to industry scale Phase 3.0 Business Processes Innovation Productivity (Scale Markets) Scale “Total Cost of Ownership” 3.0 Tipping Points – High Priority Markets 2.9 Connect Private Capital & Human Capital 2.8 Mass Market products – “Plug-in-Play” 2.7 Micro-Grid proof points 2.6 Integrated Architectures: RE + NG + EE Solar 1.0 Policy 2.5 Empowering Consumer Choice Innovation 2.4 Broader Access to Lower Cost Capital Fed Policy RES/RPS 2.3 Relentless Soft Cost reduction REC’s SB1, Solar 2.0 Technology 2.2 Unified Messaging, Aggregate Demand CSI,AB32 2.1 Market driven solutions Products Technology Innovation Commercialization Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
2.1 Shift to Market driven solutions Phase 3.0 Business Innovation (Scale Markets) Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Phase 3.0 2.2 Unified Messaging, Aggregate Business Demand Innovation (Scale Markets) Solar Most Popular Energy by Far “All of Above” But Major Partisan Divide on Other Energy Solar +85.3% +93% +93% +73% Natural Gas +62% +24% +56% +94.7% Wind +62% +88% +77% +32% +29% +67% Nuclear +15% +28% Oil +24% +58% +13% +84% Biofuels +18% +31% +24% +4% Clean Coal +15.7% +38% +1% +68% Source: Lazard (2011) Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Phase 3.0 2.2 Unified Messaging, Aggregate Business Demand Innovation (Scale Markets) … Americans Are Thinking Another There is majority support for a measure to increase renewable Headlines Say One energy standards in every state. Thing … Why the Clean Tech Boom Went Bust Clean-Energy Aid Racks Up Losses *In instances where the data was split-sampled and aggregate data was not available, the sample with the higher %yes was used. Summer 2011 Economic Slowdown Challenges Renewable Energy Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Phase 3.0 2.2 Unified Messaging, Aggregate Business Demand Innovation “Clean, renewable energy” is seen very positively – that (Scale Markets) phrase tends to resonate most strongly. Phrase %80-100 Thermometer Ratings (Mean Rating) 90 Clean, renewable energy 52% 80 75 74 72 70 70 68 Clean energy 52% 60 50 Renewable energy 47% 40 30 Sustainable energy 43% 20 10 Green energy 44% Clean, Clean Renewable Sustain. Green renewable energy energy energy energy energy Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Phase 3.0 2.3 Relentless Soft Cost reduction Business •With rapid decline in hardware costs, reducing Innovation soft-cost is becoming increasingly important (Scale Markets) $24 $22 Average Module Price (2010 $/Wp) $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 What’s left? 1980 1985 1990 1995 2000 2005 2010 2005 2010 Note ASP $4.04/W $2.40/W in 2010 Avg installed system price decreased ($1.70/W) Relative module price decline = 96% of the total decline PV system price Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Phase 3.0 2.3 Relentless Soft Cost reduction Business There is more to a system than Innovation hardware (Scale Markets) 5) Monitor performance 4) Install, 3) Permit, Inspect Interconnect $$$ - 2) Finance PV system • In the U.S., the process of selecting an installer 1) Choose installer through operating a PV system can add significant time and cost to project completion. • Inefficient supply chains, O&M, and delays can also increase cost.  Need for standardization and automation Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Phase 3.0 2.3 Relentless Soft Cost reduction Business Non Hardware Balance of System Costs: Innovation Baseline and Solar 3.0 Goals by 2014 (Scale Markets) $1.60 $1.52 $1.40 Installation Installed Costs $1.20 Labor (2011$/Wdc) $1.00 $0.80 $0.80 Customer $0.60 Acquisition $0.40 System Design All Other $0.20 “Soft” Costs $- Baseline Solar 3.0 Goal Source: Ardani et al. Quantifying Non-hardware Balance of System Costs for Photovoltaic Installations in the United states Using a Combined Annual Expenditure-Labor Hour productivity Approach. National Renewable Energy Laboratory. 2012. Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen 21
Phase 3.0 2.3 Relentless Soft Cost reduction Business Q3 – Q4 Plan • 100 communities selected • Solar 3.0 Tool Kit Update 2 Innovation • Monthly webinars • Inspector/Installer workshops (Scale Markets) • Leadership event • Affiliate-led workshops • Solar 3.0 scorecard 1 Industry Partners Solar30.org States PV Developers Portal PV Installers Local/State Cities Fire Marshals Building Inspectors Code Officials Utilities Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
2.4 Broader Access to Lower Cost Capital Phase 3.0 Business Innovation (Scale Markets) Mature industry Balanced understanding of uncertainty in the performance, reliability, and safety of components/systems optimized for The appropriate risk and cost. Problem < Newer industry (ie. Solar) Uncertainties (real or perceived) can lead to an unnecessarily high assessment of risk and cost. Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Phase 3.0 Business 2.4 Broader Access to Lower Cost Capital Innovation (Scale Markets) Current State Future State • Discrete risks in traditional lending • A standardized approach to risk: verticals are known (e.g., Auto, Real-Estate) • Construction, Solar resource • Solar finance involves a unique models, Technology, O&M combination of risks in a single vertical Policy Risk • Opportunity Customer Risk • Broader participation of Development Risk lenders in Solar • Facilitate the emergence of a Construction Risk secondary market for Solar Resource Risk debt Technology Risk • Solar Securitizations, Solar Bonds Operating Risk • No standardized way to analyze solar PV Solar as an project risks, consistent methods, Asset Class standardized risk asessment • Most lenders struggle to efficiently underwrite loans in this field 24 Source: Team Analysis Making Solar Happen
Why Solar as an Asset Class? Objectives Capital Market Drivers • Coordinated strategies to increase •~30-35% CAGR to 200GW+ by 2020(GTM) confidence, decrease risk, and improve •Low cost debt fuels expansion flow of capital Today: ~$70bn/ year • Ways to accelerate commercialization (<50% is debt financed) of new technologies through validation of system performance and reliability. •2020: ~$375bn/ year • Close gaps in model guidelines re. (~70-80% debt financed) quantification of risk, capital formation, NEED - $1 trillion in cumulative debt and bankability. issuance to fuel industry growth by 2020 1:1 (Business-To-Business paradigm 2007-2012) Development Construction Wharehouse Capital Markets • Sites • Pre / Post • Insurance • Portfolio • Contract • Performance • Final due • Ratings • Partnerships • Commission diligence • Cash Flow • Structure • Risk / De-risk • Economics 25 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Why does securitization matter 2012-2020? 1:Many (Scale) Total US Banks vs US Banks actively lending to Solar • Over 6,500 banks or U.S. lending projects institutions ~6,500 • <5% are actively lending to Solar <5% projects • A “participation gap” exists Standards + • Methods, standards, resources, tools, Methods = Scale guidelines, skills or the capabilities to <300* efficiently diligence and underwrite these loans does NOT exist AT SCALE Total no. of Banks actively Banks in the lending to Solar US projects •Closing the “participation gap” means: •Lower cost of capital Source: S. Ghaemmaghami & Prof. King “The Solar Risk •Improved terms Project @ IQSS/ Harvard University “ •Lower prices for consumers •Subsidy free markets (cheaper, better, faster) 26 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Who has $1,000,000,000,000? $2.0 Cumulative Loans and Deposits for US • Solar could represent Community Banks*, 2005-Present ($T) an attractive new $1.8 vertical for many Deposits Community Banks $1.6 $1.4 • Excess cash, Loans strong(er) balance $1.2 sheets, shortage of quality, local, non- $1.0 traditional lending verticals (e.g., Real Estate) $0.8 2005 2006 2007 2008 2009 2010 2011 * Commercial Banks with assets $200m-$10bn Source: Federal Reserve Weekly H8 Report Loans excludes assets reclassified under FASB Statement 166; Team Analysis Making Solar Happen
A Holistic Approach is needed - Key Elements Performance Symposium – Intersolar NA 7/9/2012 • Program Framework - Chart a course towards ITC expiration • Ratings - Understand how project/portfolio analysis is conducted, Rating Agency’s risks stacks are evaluated, quantified, and mitigated at various points in time • Risk Stack - Facilitate the underwriting process w/consistent ways to backstop risk (policy, customer, performance, technology, construction, O&M , data analytics, and methods independent of market sectors. • Local/Regional Capital - Improve the process to access broader, Local $ lower cost capital pools through standardization • DATA - Access to system data, analytics, and methods to better quantify risk stacks: engineering performance, data collection, Operations & Maintenance, Technology, Financials • Origination - Propose risk reduction solutions to reduce perceived and real project risk across the project delivery chain • Backstop - Leverage models, analytics, data gathering efforts from National Labs to backstop ratings & risk` 28 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
2.5 Empowering Consumer Choice Phase 3.0 Business Innovation (Scale Markets) GTM Forecasts 21 GW of PV Module Capacity to Retire by 2015 Create Demand Pull < 2014!!! Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Phase 3.0 2.6 Integrated Architectures: Business Innovation Renewables + Natural Gas + EE (Scale Markets) Architecture Challenges Ahead •Grid integration challenges •Capacity factors / contribution •Interconnection •Dispatchability •Impact on power markets, economics •Central vs. DG renewable delivery 21st Century Clean Local Energy Architecture •IT enabled and automated •Integrated supply/demand models •Smart grid applications •Enterprise delivery systems •Open architectures moving energy information across consumers, industry, cities, and utilities. http://www.nrel.gov/docs/fy12osti/53732.pdf Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
2.7 Micro-Grid proof points Phase 3.0 Business Innovation (Scale Markets) Can military bases improve energy generation and transmission via a new system: Energy Surety Migrogrids™? Vision: An energy surety system that uses more small, renewable, and Trickle down energy distributed generation and storage innovation effect nearer the load (microgrid), with less reliance on generation from big power plants using a microgrid approach. “Solar Energy is now a clean enabling technology. It’s simply all about clean electrons now.” Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
2.8 Mass Market products Phase 3.0 “Plug-in-Play” Business Innovation (Scale Markets) •April 24,2012 •$5M for “plug-and-play” PV systems that can be purchased, installed and operational <1day •partnerships with universities, industry, utilities, and other stakeholders. •Part of a 5 yr program for an additional $20M ‘ask’ of Congress over the next four years Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
2.9 Connect Private Capital with Human Capital Phase 3.0 Cumulative Funding Needs Business State Capacity Based on Market Innovation (MW) Share ($M) California 1,513.4 $25.5M (Scale Markets) Where’s the $$$? New Jersey 601.7 $10.1M Arizona 383.2 $6.5M Colorado 198.6 $3.3M New Mexico 160.9 $2.7M Pennsylvania 141.9 $2.4M Nevada 141.0 $2.4M New York 114.4 $1.9M North 97.2 $1.6M Carolina Florida 87.1 $1.5M Rest of 510.60 $8.6M Nation Total 3,950 $66.5M How can we create a better match between private capital and Who will train all these new workers? human capital? Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Phase 3.0 2.9 Connect Private Capital with Human Capital Business Innovation Sustainable Business Models (suggested) (Scale Markets) Next steps – Industry vetting Key Element and Relative Weighting % Total Technical Industry Ease of Long-Term Weighted Replicable Score Model Simplicity Participation Funding Viability (7.5%) (7.5%) (35%) (30%) (20%) Public/Private Partnership 5 10 2 4 6 5.7 Revolving Fund 3 5 7 10 8 6.7 Crowd sourcing 2 5 4 9 7 5.4 Public/Private Public/Private Revolving Revolving Revolving Revolving Highest Score Partnership Partnership Fund Fund Fund Fund A joint collaboration of: Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
3.0 Tipping Point: High Priority Markets Phase 3.0 Business Innovation (Scale Markets) Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
“Solar3.0” - A Market Based approach to accelerate grid parity for 46,016,325 people Phase 3.0 Business Innovation (Scale Markets) Solar 3.0 = Better Tools | Efficient Markets | Lower Costs Processes Productivity 3.0 Tipping Points – High Priority Markets Scale “Total Cost of 2.9 Connect Private Capital & Human Capital Ownership” 2.8 Mass Market products – “Plug-in-Play” 2.7 Micro-Grid proof points 2.6 Integrated Architectures: RE + NG + EE 2.5 Empowering Consumer Choice 2.4 Broader Access to Lower Cost Capital 2.3 Relentless Soft Cost reduction 2.2 Unified Messaging, Aggregate Demand 2.1 Market driven solutions Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
Imagine “Going Solar” - SolarTech’s “4th Solar Leadership Summit”, 2012 What does the U.S. solar industry look like at scale? - Intersolar N.A, San Francisco CA 7/2012 Making Solar Happen

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Solar3.0 Roadmap From Policy To Profitability

  • 1.
    Solar3.0 - APath from Policy to Profitability A National Platform for Process Innovation to Scale DG solar PV Intersolar N.America San Francisco, CA Making Solar Happen
  • 2.
    About SolarTech Our Initiatives Our Board Our Partners Scalable Entire Value Collaborative Chain Consortium Local best practices Systems National Approach impact Performance` Installation Workforce Permitting Financing Interconnect 2 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 3.
    Overview • Current U.S. market landscape • Solar 1.0  Solar 2.0  Solar3.0 • The Solar3.0 Platform • Tipping Points • A (proposed) path from Policy to Profitability • Q&A 3 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 4.
    U.S. Solar MarketGrowth Through 2015 • 2012 – We face multiple challenges with fragmented solution paths PV Installations Forecast 7000 6000 Market Uncertainty •1603 & Solyndra hangovers 5000 •Excess Capacity •Trade dispute Megawatts (MWdc) 4000 •Election year POLITICS 3000 •Confused Consumers •Fractured marketplace 2000 1000 0 2005 2006 2007 2008 2009 2010 2011 2012e 2013e 2014e 2015e SEIA/GTM Research: Q3 2011 Solar Market Insight Year Q1 Solar3.0 Program Goal  Inject stability & Market Direction •Efficient local markets through standards, best practices •Provide lower prices and more predictable transactions to consumers Proprietary & Confidential www.solartech.org Intersolar 2012 4 Making Solar Happen
  • 5.
    Average Installed SystemCosts Continue to Decline (many reasons) SEIA/GTM Research: Q3 2011 Solar Market Insight Greentech Media Report (Q111 vs Q112) •Drops across all sectors = $4.44/w average across markets •Res - $5.89, Commercial $4.53, Utility $2.90 / W Proprietary & Confidential www.solartech.org Intersolar 2012 5 Making Solar Happen
  • 6.
    Tipping point -The event of a previously rare phenomenon becoming rapidly and dramatically more common - Wikipedia Making Solar Happen
  • 7.
    What is “MainSt. USA” waiting for? • Residential PV break-even • Residential PV break-even installed price in 2008 assuming installed price in 2015 assuming full retail net metering, state full retail net metering and 30% incentives and 30% ITC. ITC. Source: Denholm, Margolis, Ong, Roberts “Break-Even Cost for Residential Photovoltaics in the United States: Key Drivers and Sensitivities” NREL 12/2009 Proprietary & Confidential www.solartech.org Intersolar 2012 7 Making Solar Happen
  • 8.
    The people whoare crazy enough to think they can change the world are the ones who do. - Apple’s “Think Different” commercial, 1997 Imagine “Going Solar”? - SolarTech’s “4th Solar Leadership Summit”, 2012 Making Solar Happen
  • 9.
    2012 Landscape: “TheTOTAL PRODUCT does NOT yet Exist” • Fragmented Market – Solar is SOLD (not Bought) – Solar industry access is confusing – Customer Acquisition costs $2500+ • Lead generation sites yield 1-2% • Direct conversion rates are 10-15% – Inefficiencies across the enterprise – Few economies of scope & scale Proprietary & Confidential www.solartech.org Intersolar 2012 9 Making Solar Happen
  • 10.
    “Solar3.0” - Apathway to industry scale Solar 1.0 Phase 3.0 Policy Innovation Business (Create Markets) Innovation Fed Policy (Scale Markets) RES/RPS Processes REC’s Productivity SB1, CSI,AB32 Scale “Total Cost of Ownership” Solar 2.0 Technical Innovation (Capture Markets) Products Technology Innovation Commercialization Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 11.
    Solar 1.0 Policy Innovation http://www.dsireusa.org/ Fed Policy RES/RPS REC’s SB1, CSI,AB32 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 12.
    •Comparative benchmarking ofclean-energy activities •Analysis of technology, policy, and financing trends / state Solar 2.0 •Data on which clean-tech sectors are expanding by market Technology •Insight on each state's relative strengths and weaknesses Products Technology Innovation http://cleanedge.com/research/state-index Commercialization Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 13.
    A National Platformfor Process Innovation in Solar PV http://solar30.org/ Program Overview 1000+ Communities Phase 1 90+ Utilities, 500+ PV Installation Needs Analyses Companies 1600 electrical and code officials trained Phase 2 30,000 industry stakeholders Developmen 8 state target, organic adoption beyond t Phase 3 Implementati on Phase 4 Market Impact Non-Hdwr BOS 2012 2013 2014 costs as % of <30% <20% <10% Installed Costs $2.85M Funding to Reduce Non-Hardware BOS Soft Costs by 50% by 2014 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 14.
    “Solar3.0” - Apathway to industry scale Phase 3.0 Business Processes Innovation Productivity (Scale Markets) Scale “Total Cost of Ownership” 3.0 Tipping Points – High Priority Markets 2.9 Connect Private Capital & Human Capital 2.8 Mass Market products – “Plug-in-Play” 2.7 Micro-Grid proof points 2.6 Integrated Architectures: RE + NG + EE Solar 1.0 Policy 2.5 Empowering Consumer Choice Innovation 2.4 Broader Access to Lower Cost Capital Fed Policy RES/RPS 2.3 Relentless Soft Cost reduction REC’s SB1, Solar 2.0 Technology 2.2 Unified Messaging, Aggregate Demand CSI,AB32 2.1 Market driven solutions Products Technology Innovation Commercialization Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 15.
    2.1 Shift to Market driven solutions Phase 3.0 Business Innovation (Scale Markets) Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 16.
    Phase 3.0 2.2 Unified Messaging, Aggregate Business Demand Innovation (Scale Markets) Solar Most Popular Energy by Far “All of Above” But Major Partisan Divide on Other Energy Solar +85.3% +93% +93% +73% Natural Gas +62% +24% +56% +94.7% Wind +62% +88% +77% +32% +29% +67% Nuclear +15% +28% Oil +24% +58% +13% +84% Biofuels +18% +31% +24% +4% Clean Coal +15.7% +38% +1% +68% Source: Lazard (2011) Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 17.
    Phase 3.0 2.2 Unified Messaging, Aggregate Business Demand Innovation (Scale Markets) … Americans Are Thinking Another There is majority support for a measure to increase renewable Headlines Say One energy standards in every state. Thing … Why the Clean Tech Boom Went Bust Clean-Energy Aid Racks Up Losses *In instances where the data was split-sampled and aggregate data was not available, the sample with the higher %yes was used. Summer 2011 Economic Slowdown Challenges Renewable Energy Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 18.
    Phase 3.0 2.2 Unified Messaging, Aggregate Business Demand Innovation “Clean, renewable energy” is seen very positively – that (Scale Markets) phrase tends to resonate most strongly. Phrase %80-100 Thermometer Ratings (Mean Rating) 90 Clean, renewable energy 52% 80 75 74 72 70 70 68 Clean energy 52% 60 50 Renewable energy 47% 40 30 Sustainable energy 43% 20 10 Green energy 44% Clean, Clean Renewable Sustain. Green renewable energy energy energy energy energy Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 19.
    Phase 3.0 2.3 Relentless Soft Cost reduction Business •With rapid decline in hardware costs, reducing Innovation soft-cost is becoming increasingly important (Scale Markets) $24 $22 Average Module Price (2010 $/Wp) $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 What’s left? 1980 1985 1990 1995 2000 2005 2010 2005 2010 Note ASP $4.04/W $2.40/W in 2010 Avg installed system price decreased ($1.70/W) Relative module price decline = 96% of the total decline PV system price Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 20.
    Phase 3.0 2.3 Relentless Soft Cost reduction Business There is more to a system than Innovation hardware (Scale Markets) 5) Monitor performance 4) Install, 3) Permit, Inspect Interconnect $$$ - 2) Finance PV system • In the U.S., the process of selecting an installer 1) Choose installer through operating a PV system can add significant time and cost to project completion. • Inefficient supply chains, O&M, and delays can also increase cost.  Need for standardization and automation Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 21.
    Phase 3.0 2.3 Relentless Soft Cost reduction Business Non Hardware Balance of System Costs: Innovation Baseline and Solar 3.0 Goals by 2014 (Scale Markets) $1.60 $1.52 $1.40 Installation Installed Costs $1.20 Labor (2011$/Wdc) $1.00 $0.80 $0.80 Customer $0.60 Acquisition $0.40 System Design All Other $0.20 “Soft” Costs $- Baseline Solar 3.0 Goal Source: Ardani et al. Quantifying Non-hardware Balance of System Costs for Photovoltaic Installations in the United states Using a Combined Annual Expenditure-Labor Hour productivity Approach. National Renewable Energy Laboratory. 2012. Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen 21
  • 22.
    Phase 3.0 2.3 Relentless Soft Cost reduction Business Q3 – Q4 Plan • 100 communities selected • Solar 3.0 Tool Kit Update 2 Innovation • Monthly webinars • Inspector/Installer workshops (Scale Markets) • Leadership event • Affiliate-led workshops • Solar 3.0 scorecard 1 Industry Partners Solar30.org States PV Developers Portal PV Installers Local/State Cities Fire Marshals Building Inspectors Code Officials Utilities Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 23.
    2.4 Broader Access to Lower Cost Capital Phase 3.0 Business Innovation (Scale Markets) Mature industry Balanced understanding of uncertainty in the performance, reliability, and safety of components/systems optimized for The appropriate risk and cost. Problem < Newer industry (ie. Solar) Uncertainties (real or perceived) can lead to an unnecessarily high assessment of risk and cost. Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 24.
    Phase 3.0 Business 2.4 Broader Access to Lower Cost Capital Innovation (Scale Markets) Current State Future State • Discrete risks in traditional lending • A standardized approach to risk: verticals are known (e.g., Auto, Real-Estate) • Construction, Solar resource • Solar finance involves a unique models, Technology, O&M combination of risks in a single vertical Policy Risk • Opportunity Customer Risk • Broader participation of Development Risk lenders in Solar • Facilitate the emergence of a Construction Risk secondary market for Solar Resource Risk debt Technology Risk • Solar Securitizations, Solar Bonds Operating Risk • No standardized way to analyze solar PV Solar as an project risks, consistent methods, Asset Class standardized risk asessment • Most lenders struggle to efficiently underwrite loans in this field 24 Source: Team Analysis Making Solar Happen
  • 25.
    Why Solar asan Asset Class? Objectives Capital Market Drivers • Coordinated strategies to increase •~30-35% CAGR to 200GW+ by 2020(GTM) confidence, decrease risk, and improve •Low cost debt fuels expansion flow of capital Today: ~$70bn/ year • Ways to accelerate commercialization (<50% is debt financed) of new technologies through validation of system performance and reliability. •2020: ~$375bn/ year • Close gaps in model guidelines re. (~70-80% debt financed) quantification of risk, capital formation, NEED - $1 trillion in cumulative debt and bankability. issuance to fuel industry growth by 2020 1:1 (Business-To-Business paradigm 2007-2012) Development Construction Wharehouse Capital Markets • Sites • Pre / Post • Insurance • Portfolio • Contract • Performance • Final due • Ratings • Partnerships • Commission diligence • Cash Flow • Structure • Risk / De-risk • Economics 25 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 26.
    Why does securitizationmatter 2012-2020? 1:Many (Scale) Total US Banks vs US Banks actively lending to Solar • Over 6,500 banks or U.S. lending projects institutions ~6,500 • <5% are actively lending to Solar <5% projects • A “participation gap” exists Standards + • Methods, standards, resources, tools, Methods = Scale guidelines, skills or the capabilities to <300* efficiently diligence and underwrite these loans does NOT exist AT SCALE Total no. of Banks actively Banks in the lending to Solar US projects •Closing the “participation gap” means: •Lower cost of capital Source: S. Ghaemmaghami & Prof. King “The Solar Risk •Improved terms Project @ IQSS/ Harvard University “ •Lower prices for consumers •Subsidy free markets (cheaper, better, faster) 26 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 27.
    Who has $1,000,000,000,000? $2.0 Cumulative Loans and Deposits for US • Solar could represent Community Banks*, 2005-Present ($T) an attractive new $1.8 vertical for many Deposits Community Banks $1.6 $1.4 • Excess cash, Loans strong(er) balance $1.2 sheets, shortage of quality, local, non- $1.0 traditional lending verticals (e.g., Real Estate) $0.8 2005 2006 2007 2008 2009 2010 2011 * Commercial Banks with assets $200m-$10bn Source: Federal Reserve Weekly H8 Report Loans excludes assets reclassified under FASB Statement 166; Team Analysis Making Solar Happen
  • 28.
    A Holistic Approachis needed - Key Elements Performance Symposium – Intersolar NA 7/9/2012 • Program Framework - Chart a course towards ITC expiration • Ratings - Understand how project/portfolio analysis is conducted, Rating Agency’s risks stacks are evaluated, quantified, and mitigated at various points in time • Risk Stack - Facilitate the underwriting process w/consistent ways to backstop risk (policy, customer, performance, technology, construction, O&M , data analytics, and methods independent of market sectors. • Local/Regional Capital - Improve the process to access broader, Local $ lower cost capital pools through standardization • DATA - Access to system data, analytics, and methods to better quantify risk stacks: engineering performance, data collection, Operations & Maintenance, Technology, Financials • Origination - Propose risk reduction solutions to reduce perceived and real project risk across the project delivery chain • Backstop - Leverage models, analytics, data gathering efforts from National Labs to backstop ratings & risk` 28 Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 29.
    2.5 Empowering Consumer Choice Phase 3.0 Business Innovation (Scale Markets) GTM Forecasts 21 GW of PV Module Capacity to Retire by 2015 Create Demand Pull < 2014!!! Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 30.
    Phase 3.0 2.6 Integrated Architectures: Business Innovation Renewables + Natural Gas + EE (Scale Markets) Architecture Challenges Ahead •Grid integration challenges •Capacity factors / contribution •Interconnection •Dispatchability •Impact on power markets, economics •Central vs. DG renewable delivery 21st Century Clean Local Energy Architecture •IT enabled and automated •Integrated supply/demand models •Smart grid applications •Enterprise delivery systems •Open architectures moving energy information across consumers, industry, cities, and utilities. http://www.nrel.gov/docs/fy12osti/53732.pdf Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 31.
    2.7 Micro-Grid proof points Phase 3.0 Business Innovation (Scale Markets) Can military bases improve energy generation and transmission via a new system: Energy Surety Migrogrids™? Vision: An energy surety system that uses more small, renewable, and Trickle down energy distributed generation and storage innovation effect nearer the load (microgrid), with less reliance on generation from big power plants using a microgrid approach. “Solar Energy is now a clean enabling technology. It’s simply all about clean electrons now.” Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 32.
    2.8 Mass Market products Phase 3.0 “Plug-in-Play” Business Innovation (Scale Markets) •April 24,2012 •$5M for “plug-and-play” PV systems that can be purchased, installed and operational <1day •partnerships with universities, industry, utilities, and other stakeholders. •Part of a 5 yr program for an additional $20M ‘ask’ of Congress over the next four years Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 33.
    2.9 Connect PrivateCapital with Human Capital Phase 3.0 Cumulative Funding Needs Business State Capacity Based on Market Innovation (MW) Share ($M) California 1,513.4 $25.5M (Scale Markets) Where’s the $$$? New Jersey 601.7 $10.1M Arizona 383.2 $6.5M Colorado 198.6 $3.3M New Mexico 160.9 $2.7M Pennsylvania 141.9 $2.4M Nevada 141.0 $2.4M New York 114.4 $1.9M North 97.2 $1.6M Carolina Florida 87.1 $1.5M Rest of 510.60 $8.6M Nation Total 3,950 $66.5M How can we create a better match between private capital and Who will train all these new workers? human capital? Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 34.
    Phase 3.0 2.9 Connect Private Capital with Human Capital Business Innovation Sustainable Business Models (suggested) (Scale Markets) Next steps – Industry vetting Key Element and Relative Weighting % Total Technical Industry Ease of Long-Term Weighted Replicable Score Model Simplicity Participation Funding Viability (7.5%) (7.5%) (35%) (30%) (20%) Public/Private Partnership 5 10 2 4 6 5.7 Revolving Fund 3 5 7 10 8 6.7 Crowd sourcing 2 5 4 9 7 5.4 Public/Private Public/Private Revolving Revolving Revolving Revolving Highest Score Partnership Partnership Fund Fund Fund Fund A joint collaboration of: Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 35.
    3.0 Tipping Point:High Priority Markets Phase 3.0 Business Innovation (Scale Markets) Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 36.
    “Solar3.0” - AMarket Based approach to accelerate grid parity for 46,016,325 people Phase 3.0 Business Innovation (Scale Markets) Solar 3.0 = Better Tools | Efficient Markets | Lower Costs Processes Productivity 3.0 Tipping Points – High Priority Markets Scale “Total Cost of 2.9 Connect Private Capital & Human Capital Ownership” 2.8 Mass Market products – “Plug-in-Play” 2.7 Micro-Grid proof points 2.6 Integrated Architectures: RE + NG + EE 2.5 Empowering Consumer Choice 2.4 Broader Access to Lower Cost Capital 2.3 Relentless Soft Cost reduction 2.2 Unified Messaging, Aggregate Demand 2.1 Market driven solutions Proprietary & Confidential www.solartech.org Intersolar 2012 Making Solar Happen
  • 37.
    Imagine “Going Solar” - SolarTech’s “4th Solar Leadership Summit”, 2012 What does the U.S. solar industry look like at scale? - Intersolar N.A, San Francisco CA 7/2012 Making Solar Happen