GTM Research: The State and Future of U.S. Solar

The Next Wave of U.S. Solar!!!!

Shayle Kann!Senior Vice President, Research!

Greentech Media!!!

U.S. Solar Market Insight 2014!San Diego, California!

Fifteen Years of Growth…

Source: GTM Research/SEIA U.S. Solar Market Insight 4  

4 11 23 45 58 79 105 160 298 382 852

1,919

3,369

4,776

6,476

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E

Ann

ual P

V In

stal

latio

ns (M

W)

Residential Non-Residential Utility

…And an Increasingly Diverse Landscape…

Source: GTM Research/SEIA U.S. Solar Market Insight 4  

Pre-ITC 1%

30% ITC-Driven 99%

No State Incentive

8%

State Incentive

92%

…Driven by One Paradigm

Source: GTM Research

State Incentive Federal Incentive

+

Fortunately, Solar is Cheaper to Install Than Ever

Source: GTM Research/SEIA U.S. Solar Market Insight

$3.60

$2.27

$1.68

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

Residential Commercial Utility

Q3

2014

Bot

tom

-Up

Aver

age

Sys

tem

Pric

e ($

/W)

Modules Inverters and AC Subsystem DC Electrical BOS Structural BOS Direct Labor Engineering and PII

Best-in-Class

Traditional Grid Parity Analysis Ignores Rate Structures Connecticut Proves Why That Matters

Source: GTM Research

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

2013 2014 2015 2016 2017 2018 2019 2020 Con

nect

icut

Res

iden

tial -

Yea

r One

Bill

Im

pact

from

PV

Net Bill Impact Due to Solar (%) - Full Retail Net Bill Impact Due to Solar (%) - Actual Rate

False Parity

Grid Parity

Here’s How We Calculate Grid Parity

Source: GTM Research

1. Solar Cost! 2. Electricity Bill Impact! 3. Forecasting!

Solar Cost (LCOE) Modeling

Irradiation Levels

Hourly Customer Load Profile

Hourly PV Production Profile

Solar Avoided Cost Modeling

Solar Input Forecasts

Electricity Price Forecasts

The Tipping Point:"

Can You Offer a Customer 10% Year-One Net Savings?

A Caveat:

We Assume No State Incentives

But They Do, And Will, Exist

2014: Three States Already at the Tipping Point

Source: GTM Research 2014 regional system price inputs range from $3.28/W-$3.72/W; WACC 9.6%

FL

0%-10% Savings 0%-5% Loss

>10% Savings

>5% Loss

AZ

CA

HI

NV

NJ

NM SC

2014: Three States Already at the Tipping Point

Source: GTM ResearchAZ and CA Data Reflect Year-to-Date Residential Installations (Q1-Q3)

FL AZ

CA

HI

NV

NJ

NM SC

CSI Funded

27% Non-CSI

Funded 73%

State Incentive

44% No State Incentive

56%

0

20

40

60

80

100

120

Q1 2010

Q4 2010

Q3 2011

Q2 2012

Q1 2013

Q4 2013

Q3 2014

(MW

dc)

Residential Commercial

2014: Three States Already at the Tipping Point

FL

0%-10% Savings 0%-5% Loss

>10% Savings

>5% Loss

AZ

CA

HI

NV

NJ

NM SC

Source: GTM Research 2014 regional system price inputs range from $3.28/W-$3.72/W; WACC 9.6%

2016: The Market Begins to Blossom

FL

0%-10% Savings 0%-5% Loss

>10% Savings

>5% Loss

AZ

CA

HI

NV

NJ

NH

NM

PA

SC

VT

CO

CT

GA

ME

MD

MA MI

RI

TX

UT

WY WI

Source: GTM Research 2016 regional system price inputs range from $2.80/W-$3.17/W; WACC 9.6%

2017: ITC Reduction Kills Marginal Markets

FL

0%-10% Savings 0%-5% Loss

>10% Savings

>5% Loss

AZ

CA

HI

NV

NJ

NH

NM

PA

SC

VT

Source: GTM Research 2017 regional system price inputs range from $2.59/W-$2.87/W; WACC 8.2%

ITC Expiration: The Utility Market Feels the Most Pain

Source: GTM Research/SEIA U.S. Solar Market Insight

5,267

7,236

791

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2015 2016 2017

MW

dc

Contracted Utility PV Pipeline by Planned Operation Date

1.3 GW with a Post-2016 PPA

Despite PPA Prices (With the ITC) Consistently Around $50/MWh-$70/MWh

Source: GTM Research U.S. Utility PV Market Tracker

$0

$25

$50

$75

$100

$125

$150

$175

$200

2008 2009 2010 2011 2012 2013 2014 2015

Util

ity P

V P

PA P

rice

($/M

Wh)

Contract Execution Date

2017: Retreat to the Southwest!

FL

0%-10% Savings 0%-5% Loss

>10% Savings

>5% Loss

AZ

CA

HI

NV

NJ

NH

NM

PA

SC

VT

Source: GTM Research 2017 regional system price inputs range from $2.59/W-$2.87/W; WACC 8.2%

2020: The Real Fun Begins

FL

0%-10% Savings 0%-5% Loss

>10% Savings

>5% Loss

AZ

CA

HI

NV

NJ

NH

NM

PA

SC

VT

CO

CT

GA

ME

MD

MA MI

RI

TX

UT

WY

AL AR

DE

FL

LA

MN

MS

MO

NE

NY

NC

OH

SD

VA

WI

Source: GTM Research 2020 regional system price inputs range from $2.09/W-$2.35/W; WACC 8.2%

Rate Structures Pose the Biggest Risk to Solar CompetitivenessExample: Just-Approved Fixed Charge Increases in Wisconsin

Source: GTM Research

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

2013 2014 2015 2016 2017 2018 2019 2020

Wis

cons

in R

esid

entia

l - Y

ear O

ne B

ill Im

pact

from

PV

Net Bill Impact Due to Solar (%) - $9 fixed charge Net Bill Impact Due to Solar (%) - $16 fixed charge

New Rate Structures Put Wisconsin Solar Market Back

Five Years!

Grid Parity

28 States “In the Money” by 2020, and 14 at the Tipping Point

Source: GTM Research

1 3 4

8 4

7

14 14

2

3 4

6

4

6

8

14

2013 2014 2015 2016 2017 2018 2019 2020

# of

Sta

tes

At o

r Bel

ow P

arity

- R

esid

entia

l

0%-10% Savings >10% Savings

Solar: Meet the Connected Home

Source: GTM Research

Thank You!!!

Shayle Kann!Senior Vice President, Research!

Greentech Media!!

Questions? Visit www.gtmresearch.com!Or contact [email protected]!