the evolution from regulated to natural pv markets...

Bangkok, June 6th, 2012

The evolution from regulated to natural PV markets

Renewable Energy Asia 2012 Alexander Lenz - President Asia & Middle East

Introduction to Conergy A PV Market: Regulated vs. natural B

AGENDA

2

Conergy’s is a PV solution provider, focused on B2B and Turn-Key Project business – with a wide range of associated value add services PV System vs. PV Solution

Source: Corporate Business Development

PV SYSTEM PV SOLUTION – degree of system integration & services

B2B

PRO

JEC

TS

| Modules | Inverter | Mounting Systems Branded Quality Focus Component Fit

Insurance & Guarantee

After Sales + +

Monitoring Tool

Operations & Maintenance

& & Planning

Ordering (Kitting)

Delivery & Warehousing

&

&

EPC – Engineering / Procurement / Construction

Project (Co)-Development

Financing

+ +

+

Hardware / Software Service

Pre-Sales & Marketing services

+

A Introduction to Conergy

3

Module Production in Frankfurt / Oder 5 Module production lines

280 Megawatt capacity

3,100 Modules/Day

35,000 m² Manufacturing area

Conergy produces own premium modules in Germany reckoned in the market for their quality, reliability and yield Conergy Power Plus modules

Source: Conergy


4

Claim rate only 0.0045%

Source: Conergy

Conergy’s Power Plus modules guarantee stringent quality control and outstanding warranties – backed by the best warranty in the world

Conergy Power Plus Modules and Premium Plus Warranty


Acceptance of independent institutes

Acceptance of claim costs

Delivery of identical modules

12 year product warranty

25 year linear power warranty

Transfer to 3rd party

5

SLOPING ROOF ROOF-INTEGRATED FLAT ROOF FREE-FIELD

Mounting Systems Production in Rangsdorf and Sacramento 750Megawatt capacity 18,000m² Manufacturing and logistics area

Conergy produces mounting systems for all solar applications in Germany / Rangsdorf and USA / Sacramento

Conergy Mounting Systems

Source: Conergy


6

INVERTERS MONITORING SYSTEMS

Inverter supply through former Voltwerk entity sold to Bosch over 500 Megawatts produced solutions from 3 - 1,200Kilowatt for all-size installations

Conergy’s electronic components business was sold to German Bosch Group in 2012 and will be sourced from there in the future

Inverters and monitoring systems

Source: Conergy


7

Conergy offers the whole premium service portfolio – a worry-free package for private and commercial roof tops as well as for solar parks

14 Years of experience 7 Service areas 1 Total worry-free offer

Conergy System Services

| >600 MWp implemented | Installations in Europe, America, APAC | Spain: Parks on average 5% above the

calculated performance

EXAMPLE: EPC-SERVICE EXAMPLE: MONITORING

| 150 MWp at 120 locations | About 100 operating companies | About 80 private customers | Ten years of service experience

Planning Finance Installation Monitoring Operations Maintenance Insurance

Source: Conergy


9

Conergy has a longstanding experience in Asia and Middle East – Thai LE will be reopened in Summer 2012

Overview of markets in APAC served by Conergy

Source: Conergy

Middle East

Countries with own CGY-entity

Countries with EPC business driven by Singapore

Prospective Markets for EPC driven by Singapore

APAC & Middle East markets REMARKS

Singapore


| Growth in Asia Pacific markets since 2005

| Teams with global experience and local knowledge

| Regional Headquarters in Singapore serving surrounding markets – regional engineering center of excellence

| Offices in Thailand, UEA, Australia, India

| Strategic partners in Thailand, Indonesia, Malaysia, the Philippines and the Middle East

10

In Thailand, Conergy operates in a proven consortium approach – two experienced partners available to maximize execution capacity

Conergy – Local Partner Consortium

Consortium Member

General role in project

Tasks

Engineering Engineering Procurement Construction Procurement

PROJECT ENGINEERING PROJECT MANAGEMENT

• Conceptual design

• Main components supply

• Commissioning support

• Warranties

• Civil design • Mechanical design • Electrical design

• Local components supply

• Installation • Commissioning

• O&M


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Conergy’s first large-scale power plant in Ayutthaya, built in Partnership with Annex Power for Yanhee Solar


12

Conergy’s first project in Thailand equipped with 100% own system technology – built in Partnership with Annex Power for Indorama


13

Conergy’s second project in Thailand equipped with 100% own system technology – built with Annex Power for Yanhee/Ratchaburi


14

Conergy’s 4th project in Thailand, built in Partnership with Ensys for Chor Karnchang


Introduction to Conergy A PV Market: Regulated vs. natural B

AGENDA

16

Regulatory regimes in PV markets create a very positive growth pattern but also lead to market distortions

Effects of market regulation on market development in PV

16

B PV Market: Regulated vs. natural

Market regulation policies have brought market growth …

| Market regulation through FIT leads to growth but can also lead to market distortions

| Setting of appropriate subsidy levels is very difficult due to rapidly changing system prices and following FIT cuts

| This results in either too high or too low subsidies, both influencing decision-making on investor’s side

2008 2012

Government’s targets | Change energy supply from

fossil-based to clean and sustainable sources

| Long term focus

Customer’s / Investor’s targets | Investment with optimized and

safe returns | Fast payback / short term

focus

… but main actors in this market have diverging interests

17

Decision criteria for system selection always satisfy short-term objectives but sometimes jeopardize overall long-term goals

Effects of market regulation on decision criteria

B

| Long-term investment | Stable and reliable

power generation

Rational decision criteria

| High Quality in

| System Components

| Design

| Execution

| O&M

| Long and qualified experience of the EPC-Contractor

| Proven track record in both, EPC and O&M

| Competitive costs in terms of Price per kwh of Output over the lifetime

Actual decision criteria

| Price / Wp installed capacity

PV Market: Regulated vs. natural

18

PV can reach grid parity in Thailand in 2013 or earlier @8% IRR expectation – relatively low residential power price main factor

Path to grid parity for a 10 MWp PV System in Thailand

ASSUMPTIONS / REMARKS

| 15% system price reduction per year

| 2% installation costs decrease per year with installation time reduction

| Moderate 2.5% increase in residential power price p.a.

| Subsidies for today’s power mix not taken into account

| Debt financing will decrease as lenders lower risk premium

0.00

0.10

0.20

0.30

0.40

2008 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f 2017f 2018f 2019f

Elec

tric

ity ra

te

in U

SD/k

Wh

Year

LCOE @ 8% Equity IRR Residential power cost per kWh

LCOE @ 12% Equity IRR Grid Parity 8% IRR

Grid-Parity 12% IRR


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“kWh” instead of “kWp” will change the PV Market; understanding first attractive niches in Market is key

System price: 1400 EUR/kWp, specific yield: 900 kWh/kWp, O&M costs 1.5% of system costs with 2% annual increase, 100% own capital funding, WACC 5,5 % (Source: Deutsche Bundesbank), SY Degradation: 2% first year then 0.5%/a

CONERGY LCOE CALCULATIONS FOR PV 1) DETAILS

| Due to FIT cuts investments in PV systems will amortize faster by economization of self-produced and consumed kWh instead of fed-in kWh

| Todays LCOE of PV systems with an operating time of 25 years are producing a kWh between 16 and 19 €cent/ kWh when addressing the right application

| Driver of LCOE costs | System price | System efficiency | System life time | Reliability | Own consumption rate

Calculation for GER


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New opportunities ahead: PV market will become part of an overall electricity market – what does that mean for the PV industry ?

Tomorrow’s opportunities: | The world wants clean & affordable kw/h | PV will become mainstream | New business models are emerging

(cheap electricity instead of high profit) | New target groups become relevant | New products and services will appear

Electricity market (natural) Today’s challenges:

| Overcapacity | Decreasing prices | Ongoing cost reductions | Products becoming more similar | Politically driven markets

PV market (feed-in driven)

B

Evolution from regulated to natural market

PV Market: Regulated vs. natural

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the evolution from regulated to natural pv markets...

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