S.A.G. Solarstrom AG




                Dr Karl Kuhlmann
                     CEO
                  June 8, 2010
        ...
Agenda



   1. Facts and Data of the S.A.G. Solarstrom Group

   2. The Photovoltaics Market in Germany

   3. The Costs ...
1. Facts and Data of the S.A.G. Solarstrom Group




            Experience and strength

            Unique value chain

...
1.1 Covering the entire value chain: A major advantage for S.A.G. customers



 S.A.G. Solarstrom AG: industry pioneers a...
1.2 Group key figures: Sales and EBIT



Sales (in million €)                                                             ...
2. The Photovoltaics Market in Germany




           The Renewable Energy Act as support for photovoltaics

           Po...
2.1 The Renewable Energy Act and its goals



 Full name: Act on Granting Priority to Renewable Energy Sources (EEG)
 Go...
2.2 Development of renewable energies in Germany up to 2009


Power production (in TWh)

  120
                           ...
2.3 Development of feed-in tariff from 2002 to 2010


          Feed-in tariff (in €Cent/kWh)
              60,00
        ...
2.4 Feed-in tariff for the different PV systems in €cent/kWh



                                                          ...
2.5 Size distribution of installed photovoltaic systems in Germany in 2009

 Number of installations
                     ...
2.6 Global photovoltaic power installed by end of 2009

Power (in GWp)

    25.000
      25



                           ...
3. The Costs of Photovoltaics for the German Economy




           Electricity tariffs for private consumers continue to ...
3.1 The electricity tariff trend in Germany (private consumers)


Price (in €cent/kWh)
    30

    28

    26

    24

   ...
3.2 Composition of electricity tariff (private consumers) in Germany 2009


                                         5%

 ...
3.3 Feed-in tariff paid for solar electricity from 2002 to 2009



Support for solar electricity
       (in billion €)
  8...
3.4 Economic costs of power production have to be taken into account



Total electricity costs in 2009
        (in €cent/...
3.5 Grid-parity is determined by radiation intensity and manufacturing costs


Manufacturing costs/kWp (in thousand €)

  ...
4. The Future of the Photovoltaics Market in Germany




            Renewable energy’s share continues to increase

     ...
4.1 Share of renewable energies in energy generation up to 2020


                            6.6 %                14.4 %
...
4.2 Forecast photovoltaic power installed by 2013


      Power (in GWp)

           90000
             90                ...
4.3 Ratio of ground-mounted systems to rooftop systems in Germany


      Installed capacity
             (in %)
         ...
4.4 System prices have to decrease in line with FIT tariffs




Manufacturing costs (in %)
      100%


       90%
       ...
4.5 Forecast feed-in tariff paid for solar electricity (2010 to 2020)


Support for solar electricity (in billion €)


   ...
4.6 Conclusions



       IRRs of rooftop systems will be reduced significantly unless system costs will decline
        ...
5. Future Strategy of the S.A.G. Solarstrom Group



      International footprint to allocate individual market risks

 ...
Contact




                                     Public Relations / Investor Relations
                                   ...
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The Solar Future DE - Karl Kuhlman "Can solar PV compete with grid energy in Germany by 2013?"

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Dr. Karl Kuhlmann; CEO Solarstrom AG

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The Solar Future DE - Karl Kuhlman "Can solar PV compete with grid energy in Germany by 2013?"

  1. 1. S.A.G. Solarstrom AG Dr Karl Kuhlmann CEO June 8, 2010 Munich
  2. 2. Agenda 1. Facts and Data of the S.A.G. Solarstrom Group 2. The Photovoltaics Market in Germany 3. The Costs of Photovoltaics for the German Economy 4. The Future of the Photovoltaics Market in Germany 5. Future Strategy of the S.A.G. Solarstrom Group 2
  3. 3. 1. Facts and Data of the S.A.G. Solarstrom Group Experience and strength Unique value chain Key figures © S.A.G. Ground-mounted system Location: Brindisi, Apulia, Italy Performance: 9.7 MWp Year of grid connection: 2010 3
  4. 4. 1.1 Covering the entire value chain: A major advantage for S.A.G. customers  S.A.G. Solarstrom AG: industry pioneers and international specialists in PV  Founded in: 1998, around 160 employees, ten locations in Germany and Europe  Cover the entire value-added chain and are thus uniquely positioned  Extensive experience:  Based on more than 2,700 installed systems and 70 own PV systems with a total output of 11.8 MWp  meteocontrol GmbH:  Worldwide monitoring of around 12,500 PV systems in total over 1.4 GWp  Experience in projects with an investment of over €5 billion  The S.A.G. Group is uniquely positioned in photovoltaics 4
  5. 5. 1.2 Group key figures: Sales and EBIT Sales (in million €) EBIT (in million €) 250 25 €190 - €210 million 200 20 Sales EBIT 150 15 BBV started €8 - €11 million as main 100 shareholder 10 with approx. 10 % share 50 5 0 0 2005 2006* 2007 2008 2009 2010e * 2006 corrected in line with IFRS  Growth has been sustainably profitable since 2007 5
  6. 6. 2. The Photovoltaics Market in Germany The Renewable Energy Act as support for photovoltaics Power production from renewables increased considerably Feed-in tariff boosted photovoltaic business in Germany Germany most important photovoltaic market © S.A.G. Rooftop system Location: Rain am Lech, Germany Performance: 4.6 MWp Year of grid connection: 2009 6
  7. 7. 2.1 The Renewable Energy Act and its goals  Full name: Act on Granting Priority to Renewable Energy Sources (EEG)  Goals according to §1 of the EEG:  To facilitate a sustainable development of energy supply  To reduce the economic costs (in particular) by incorporating external factors (climate change, etc.)  To further develop and promote technologies for renewable energies  To distribute the costs fairly to all market participants by means of allocation  The legal foundation of the Act and the allocation are legally protected by the European Court of Justice  The EEG has been “exported” to 47 countries to date (such as China, France, Spain, Portugal, Brazil and the Czech Republic)  The EEG is supporting renewable energies efficiently 7
  8. 8. 2.2 Development of renewable energies in Germany up to 2009 Power production (in TWh) 120 Gross power generation in 2009: 597 TWh Portion provided by renewable energies: 15 % 100 Wind energy 40.4 % 80 60 Biomass 32.7 % 40 Hydraulic power 20 20.3 % Photovoltaics 0 6.6 % 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1991: 2000: 2004: 2009: Introduction of forerunner Introduction of 1st amendment 2nd amendment to EEG the EEG of EEG of EEG Sources: Agency for Renewable Energies, March 2010 and German Federal Association for Energy and Water, February 2010  The EEG is a success story that started 20 years ago 8
  9. 9. 2.3 Development of feed-in tariff from 2002 to 2010 Feed-in tariff (in €Cent/kWh) 60,00 60 PV-systems: Rooftops 50,00 50 Veto of Federal Assembly on 40,00 40 04/06/2010 Ground- mounted 30 30,00 ? ? Final decision in 20,00 20 07/2010 10,00 10 0,00 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 1.7.2010 MWp installed: 290 432 1,053 1,961 2,773 4,017 5,950 9,800 14,300e Sources: EEG and German Telecommunications Network Agency  Installed PV capacity grew exponentially despite decreasing FIT 9
  10. 10. 2.4 Feed-in tariff for the different PV systems in €cent/kWh 2009 January 1, 2010 July 1, 2010 Rooftop systems up to 30 kWp 43.01 39.14 32.88 own consumption (up to 29.9 kWp) 25.01 22.76 16.48/20.88* from 30 kWp 40.91 37.23 31.27 own consumption (30 – 99.9 kWp) - - 14.87/19.27* from 100 kWp 39.58 35.23 29.59 own consumption (100 – 500 kWp) - - 13.19/17.59* from 1,000 kWp 33.00 29.37 24.67 Ground-mounted systems Arable land 31.94 28.43 - Conversion land 31.94 28.43 25.3 Other land 31.94 28.43 24.17 *Up to 30 % own consumption or more than 30 % own consumption Source: EEG ?Veto of Federal Assembly on June 4th, 2010  Germany will see a massive cut in July 2010 10
  11. 11. 2.5 Size distribution of installed photovoltaic systems in Germany in 2009 Number of installations 1.666 MWp 140,000 140.000 New installations in 2009: 3,809 MWp 120,000 120.000 100.000 100,000 80.000 80,000 60.000 60,000 40,000 40.000 869 MWp 20.000 20,000 445 MWp 192 MWp 637 MWp 0 0 0…30 30...100 100…500 500…1000 >1,000 >1.000 Performance category (in kWp) Sources: German Telecommunications Network Agency  The German photovoltaics market is a rooftop installation market 11
  12. 12. 2.6 Global photovoltaic power installed by end of 2009 Power (in GWp) 25.000 25 3.1 20.6 20.000 20 1.7 0.6 15.8 0.5 15 1.2 0.3 15.000 3.4 10 10.000 9.8 5 5.000 00 Germany Spain Italy France Czech Rest of EU Total USA Rest of Total Republic EU world Source. EPIA, Global market outlook forfor photovoltaics until 2014 Source: EPIA, Global Market Outlook photovoltaics up to 2014  Germany is the largest photovoltaics market worldwide to date 12
  13. 13. 3. The Costs of Photovoltaics for the German Economy Electricity tariffs for private consumers continue to rise FIT allocation less than 5 % of electricity tariff Decreasing FIT keeps cost for EEG within limits Economic costs of photovoltaics are low Photovoltaics are foreseeable an alternative © S.A.G. Ground-mounted system Location: Stribro, Pilsen, Czech Republic Performance: 13.6 MWp Year of grid connection: 2009 13
  14. 14. 3.1 The electricity tariff trend in Germany (private consumers) Price (in €cent/kWh) 30 28 26 24 22 20 18 16 14 12 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 e 2011e 2012 e 2013 e Source: BDEW (German Federal Association for Energy and Water)  The electricity tariff for private consumers will continue to rise 14
  15. 15. 3.2 Composition of electricity tariff (private consumers) in Germany 2009 5% 8% 3% 3% Support of renewable energies Förderung EE durch das by EEG1 EEG¹ 1% 9% Messung Measurement Vertrieb Sales KWK-Umlage² 2 KWK allocation Erzeugung Generation 16 % 29 % Netzentgelt Network charges Sales tax Mehrwertsteuer Stromsteuer Electricity tax License fee3 Konzessionsabgabe³ 26 % ¹ Renewable Energy Act ² Act on Combined Heat and Power Generation ³ Fee that a public utility company has to pay to a local authority for the use of the lines and cables located in public places Source: Agency for Renewable Energies, 2009  The support for renewable energies has a share of less than 5 % of the electricity tariff 15
  16. 16. 3.3 Feed-in tariff paid for solar electricity from 2002 to 2009 Support for solar electricity (in billion €) 8 2.48 6.79 7 6 5 1.67 4 1.18 3 2 0.81 0.44 1 0.01 0.05 0.15 0 2002 2003 2004 2005 2006 2007 2008 2009 Total Sources: EEG and own calculations  Total economic cost of the PV success story less than 7 billion € up to 2009 16
  17. 17. 3.4 Economic costs of power production have to be taken into account Total electricity costs in 2009 (in €cent/kWh) 50 45 40 35 Economic costs 30 25 20 Economic costs for coal 15 and nuclear power: 10 0.20 €/kWh & around 5 100 billion EUR per year 0 Solar electricity Conventional electricity European Energy Exchange private households trade prices Sources: German Federal Association for Energy and Water, German Federal Environmental Agency and Greenpeace as well as own calculations  Today, photovoltaic electricity is less expensive than coal and nuclear power 17
  18. 18. 3.5 Grid-parity is determined by radiation intensity and manufacturing costs Manufacturing costs/kWp (in thousand €) 7 6 5 Specific yield: 1,100 kWh/kWp 4 3 850 kWh/kWp 2 1 0,23 € / kWh 0 0,10 0.10 0,15 0.15 0,20 0.20 0,25 0.25 0,30 0.30 0,35 0.35 0,40 0.40 0,45 0.45 Electricity tariff for private consumers (in €/kWh) Source: S.A.G. Solarstrom AG  Grid parity in Germany can be achieved at system prices between 3,200 and 2,500 EUR 18
  19. 19. 4. The Future of the Photovoltaics Market in Germany Renewable energy’s share continues to increase Germany can remain the most significant PV market System prices need to decline in order to adapt to the market Cost for FIT payments will decrease © S.A.G. Rooftop system Location: Rain am Lech, Germany Performance: 4.6 MWp Year of grid connection: 2009 19
  20. 20. 4.1 Share of renewable energies in energy generation up to 2020 6.6 % 14.4 % 8.9 % Photovoltaics Gross power Biomass production renewable 16.2 % Wind energy energies: 278 TWh Hydraulic power Geothermal energy 53.9 % Source: Agency for Renewable Energies, March 2010  In 2020, renewable energies will provide around 50 % of the total power consumption 20
  21. 21. 4.2 Forecast photovoltaic power installed by 2013 Power (in GWp) 90000 90 84.3 19.9 80 80000 70000 70 14.6 60 60000 2.5 5.4 49.8 50 50000 4.9 40000 7.8 40 5.9 30000 30 23.3 20 20000 10 10000 2009: 9.8 GWp 00 Sources: own assumptions, EPIA, Photon Consulting, LBBW and EuPD  According to estimates, Germany will remain the strongest PV market worldwide 21
  22. 22. 4.3 Ratio of ground-mounted systems to rooftop systems in Germany Installed capacity (in %) 100% Ground-mounted systems 80% Rooftop systems 60% 40% 20% 0% 2009 2010e 2011e 2012e 2013e Source: own calculations  S.A.G. foresee a market-share of ground-mounted systems of less than 3 % 22
  23. 23. 4.4 System prices have to decrease in line with FIT tariffs Manufacturing costs (in %) 100% 90% crystalline modules 2012e: thin-film modules Modules < 1,000 € / kWp 80% < 800 € / kWp Inverters < 160 € / kWp Precondition: < 160 € / kWp Reasonable 70% profitability for investors and system integrators 60% 50% 2009 2010e 2011e 2012e Source: own calculations  Still a long way from reaching system prices which enable profitability 23
  24. 24. 4.5 Forecast feed-in tariff paid for solar electricity (2010 to 2020) Support for solar electricity (in billion €) 70 Economic costs of conventional energy production: Promotion for PV: around 100 billion € per year 57 billion € within 20 years 60 50 40 30 20 10 0 2009 2010e 2011e 2012e 2013e 2014e 2015e 2016e 2017e 2018e 2019e 2020e Sources: EEG, Federal Government and own calculations  Decreasing FIT will flatten cost growth curve for new installations 24
  25. 25. 4.6 Conclusions  IRRs of rooftop systems will be reduced significantly unless system costs will decline massively and/or changes to EEG are only moderate  Ground-mounted systems on arable land in Germany are becoming economically unattractive. IRRs for systems on other land will be considerably reduced  Only limited capacities for conversion land, “other” land (e.g. parallel to the German Autobahn or railway tracks)  Germany can remain one of the leading photovoltaic markets depending on system cost + FIT development  Grid-parity can be achieved in the coming 5 years, depending on system cost development and the cost of private consumer electricity tariff  In our opinion, ground-mounted systems will decline to less than 3% of the market (installed capacity  Politicians should reconsider planned reduction, suppliers should adapt pricing policy 25
  26. 26. 5. Future Strategy of the S.A.G. Solarstrom Group  International footprint to allocate individual market risks  Unique value chain offers opportunities in mature markets such as Germany:  Full service value chain over the complete lifetime of PV systems guarantees a high profitability  Germany is a rooftop market – one of S.A.G.‟s strengths in project planning and development  Strong exclusive sales partner system enables easier market access and market coverage  The S.A.G. Solarstrom Group is very well equipped for a changing market environment 26
  27. 27. Contact Public Relations / Investor Relations S.A.G. Solarstrom AG Sasbacher Straße 5 79111 Freiburg i. Br. Germany Telephone: +49 761 4770 - 311 Fax: +49 761 4770 - 44 142 pr@solarstromag.com / ir@solarstromag.com This presentation contains statements concerning future developments (or “forward-looking statements“). They are based on current expectations and forecasts of future events as made by the management body of S.A.G. Solarstrom AG, as well as on certain assumptions – many of which are beyond the influence of said management body. These statements thus involve a number of risks and uncertainties that could cause the company„s actual results to deviate significantly from those the statements indicate. The assumptions that could lead to such deviations due to unforeseeable developments include, but are not limited to: demand for our products and services; the competitive environment; the development, propagation, and technical performance of photovoltaic technology, as well as the price thereof; changes in legislation, price, and the timely availability of the products and advance financing required; our ability to expand existing sales and marketing agreements and conclude new such agreements; our ability to secure further financing; and the availability of sufficiently qualified technical personnel. © S.A.G. Solarstrom AG. This presentation and the graphics it contains are – when no source is cited – protected by copyright. Any unauthorized reproduction, whether electronically or by some other means, is forbidden. Both commercial and non-commercial use is subject to the prior written consent of S.A.G. Solarstrom AG. All rights reserved. 27

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