copyright and disclaimer...4 global pv nameplate capacity, q1 2016 and expected by year end...

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This publication is the copyright of Bloomberg New Energy Finance. No portion of this document may be photocopied, reproduced, scanned into an electronic system or transmitted, forwarded or distributed in any way without prior consent of Bloomberg New Energy Finance. The information contained in this publication is derived from carefully selected sources we believe are reasonable. We do not guarantee its accuracy or completeness and nothing in this document shall be construed to be a representation of such a guarantee. Any opinions expressed reflect the current judgment of the author of the relevant article or features, and does not necessarily reflect the opinion of Bloomberg New Energy Finance, Bloomberg Finance L.P., Bloomberg L.P. or any of their affiliates ("Bloomberg"). The opinions presented are subject to change without notice. Bloomberg accepts no responsibility for any liability arising from use of this document or its contents. Nothing herein shall constitute or be construed as an offering of financial instruments, or as investment advice or recommendations by Bloomberg of an investment strategy or whether or not to "buy," "sell" or "hold" an investment.

COPYRIGHT AND DISCLAIMER

13 September 2016, SPI, Las Vegas

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Note: A conservative and optimistic forecast has been developed for each country. It is unlikely that all countries will come in at the conservative or optimistic end, so for the global forecast, conservative is sum of conservative country forecasts + 25%*(sum of optimistic minus conservative forecasts). Global optimistic forecast is sum of conservative country forecasts + 75%*(sum of optimistic minus conservative forecasts).

Source: Bloomberg New Energy Finance, grid operators, industry associations, incentive programme managers.

PV NEW BUILD, 2009-2015 -- CONSERVATIVE FORECAST

7.7GW

18.2GW

28.4GW29.8GW

41.7GW45.0GW

56.0GW

68.3GW73.2GW

82.2GW

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Western Europe Eastern Europe Japan USA China India Rest of World


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Note: A conservative and optimistic forecast has been developed for each country. It is unlikely that all countries will come in at the conservative or optimistic end, so for the global forecast, conservative is sum of conservative country forecasts + 25%*(sum of optimistic minus conservative forecasts). Global optimistic forecast is sum of conservative country forecasts + 75%*(sum of optimistic minus conservative forecasts).

Source: Bloomberg New Energy Finance, grid operators, industry associations, incentive programme managers.

PV NEW BUILD, 2009-2015 -- OPTIMISTIC FORECAST

7.7GW

18.2GW

28.4GW29.8GW

41.7GW45.0GW

56.0GW

72.0GW79.2GW

89.7GW

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Western Europe Eastern Europe Japan USA China India Rest of World


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GLOBAL PV NAMEPLATE CAPACITY, Q1 2016 AND EXPECTED BY YEAR END (GW/YEAR)

9179 80

90

136

98 94 96109

160

Polysilicon Ingot Wafer C-Si cell C-Si module

Q1 2016 Q4 2016

Source: Bloomberg New Energy Finance

Approximate global 2016 module demand


5

Source: Bloomberg New Energy Finance

BENCHMARK CAPEX OF 1MW GROUND-MOUNTED FIXED-AXIS PV PROJECT, 2010-2015 AND FORECAST TO 2025 (2015 $/W (DC)

1.85

0.580.37 0.28

3.24

1.310.97

0.79

2010 2015 2020 2025Module Inverter Balance of plant EPC Other


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AVERAGE 2015 OFFTAKE PRICE FOR WIND AND SOLAR PPAS BY SIGNING DATE, 2010-Q1 2016

Source: Bloomberg New Energy Finance, FERC EQRs


7

US SOLAR BUILD, HISTORICAL AND FORECAST (GW)

Source: Bloomberg New Energy Finance Notes: Further details on methodology are provided in Appendix A. (1) For more net metering changes in California, see our 22 December 2015 Analyst Reaction, California net metering rules survive (mostly) intact

1.9 3.2 4.1 4.4

8.0 7.1 7.3 8.0 8.0 8.1 8.2 1.0 1.1

1.3 1.3 1.5

1.7 1.8 1.8 1.5

1.3 2.2

2.6 2.6 3.1

3.6 3.8 4.0 3.4

3.2 4.9

6.3 7.6

12.0 11.1

11.9 13.2 13.5 13.8

13.2

0

2

4

6

8

10

12

14

16

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Utility Commercial & industrial Residential


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Note: Sunrun cost includes outsourced installation, which is more expensive. Source: BSW-Solar, JPVEA, Solarchoice.au, company filings, Bloomberg New Energy Finance

CAPEX FOR RESIDENTIAL SYSTEMS IN DIFFERENT COUNTRIES, NOMINAL $/W

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016

Germany California Japan Chinese multi module Australia (3kW) Vivint SolarCity Sunrun


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Source: Bloomberg New Energy Finance, EIA

CHANGE IN AVERAGE PRICE OF ELECTRICITY (C/KWH) FOR RESIDENTIAL CUSTOMERS, APRIL 2015-APRIL 2016

NV

H

I M

S

NM

RI

ME

TX

FL

NH

C

T MA IL

M

O

TN

NC

S

C

NJ

OK

N

Y IA

CO

K

Y OR

G

A CA AR

LA

W

I IN

N

E

AZ

ID

AL MT

WY

DE

U

T O

H

VT DC

KS

M

N

ND

S

D

MD

PA

VA

A

K

WA MI

WV

-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%

Typical escalator within a residential PV lease or PPA

Solar contracts increased at a higher rate than retail power in over 30 states


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Source: Bloomberg New Energy Finance, Company filings

QUARTERLY INSTALLATIONS OF TOP THREE RESIDENTIAL PV VENDORS, Q1 2014-Q2 2016 (MW)

67 90 120 149 139 168 203 221 184 201 20

37 49

50 46 66

61 59 55 61

35 34

37 37 42

56 68

60 65

21%

32%

40% 37%

34%

42% 47% 44% 46%

0

100

200

300

400

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2014 2015 2016

SolarCity Vivint Sunrun Market share of top 3 vendors


Unique analysis, tools and data for decision-makers driving change in the energy system

[email protected]

MARKETS Renewable Energy Energy Smart Technologies Advanced Transport Gas Carbon and RECs

SERVICES Americas Service Asia Pacific Service EMEA Service Applied Research Events and Workshops

Ethan Zindler [email protected] Twitter: @EthanAll [email protected]

1 Confidential

Financing the Resource Revolution

All Hands Meeting April 2016

CONFIDENTIAL

GENERATECAPITAL

BACKGROUND ON THE RESOURCE REVOLUTION UNDERWAY

3 Confidential

The emergence of 3 billion new middle-class consumers will fuel future demand.

Global middle class1 (Billions of people)

2010 2020 2030

4 Confidential

Commodity prices have increased sharply since 2000, erasing all of the declines of the 20th century.

2012 2012 2012

5 Confidential

Demand for most resources has grown strongly since 2000, a trend that is likely to continue to 2030.

6 Confidential

Resource price volatility is at an all time high, with the exception of energy in the 1970s.

Annual price volatility1 (Percent)

7 Confidential

The world’s critical resources are inextricably linked

ENERGY

WATER

FOOD LAND

MATERIALS

8 Confidential

The Resource Revolution opportunity is measured in the trillions of dollars

9 Confidential

Resources are delivered via infrastructure, and technology has changed how we build it

UTI

LITY

CA

PITA

L

• $500M+ projects • Government regulated monopolies •  Socialized costs • Guaranteed capital recovery rates • 10 years for permitting, construction,

commissioning

•  Large scale loan from major banks • Government guaranteed equity return

• $50K+ projects •  Small to medium sized players that are a mix

of regulated and unregulated • Performance based recovery rates • 1 years for permitting, construction,

commissioning

• Project finance or asset backed lending from specialty finance firms

•  Increasing interest from traditional capital sources

OLD WORLD Monolithic, centralized, regulated, big, inflexible

NEW WORLD Decentralized, networked, modular, flexible

TECH

• Commodity output • Established technology

• Commodity output • Established technology, but players have less

experience and scale – not yet “bankable”

INTRODUCTION TO GENERATE CAPITAL

11 Confidential

Capital markets remain shallow for middle market infrastructure despite established successful models, meaning outsized returns

Venture CapitalHigh growth focus,

proprietary differentiation, high

loss rate, idiosynchratic success

Traditional Bank FinancingKnown economic benefits,“commodity” markets,highly replicable

Low

High

High

Project FinanceSolutions producing proven economic benefits across multiple sectors over long

time periods

Return

Funding gap

Risk

12 Confidential

Developers need a different type of capital partner from most who are in the market today

We provide long-term, value-added partnerships with developers based on standardization, trust and domain expertise 1.  FLEXIBILITY – developers need different types of capital at different times, and we are uniquely

able to provide capital across that lifecycle

2.  TRANSPARENCY – developers need to know what it takes to get capital, so our standardized process and developers’ visibility into it creates trust and value-added relationships while reducing risk

3.  EFFICIENCY – developers need a quick “yes” or a quick “no” in order to continue with their businesses, so a standardized process and domain expertise in the capital partner is critical

13 Confidential

Customers don’t want to evaluate, buy, or manage technology; they want to use it

CUSTOMERS DON‘T KNOW HOW TO MANAGE TECH

CUSTOMERS DON‘T TRUST THE ROI

CUSTOMERS DON‘T SEE THE OPPORTUNITY

AS “CORE”

CUSTOMERS DON‘T KNOW HOW TO

EVALUATE THE TECH

CUSTOMERS DON‘T HAVE CAPITAL

20 POSSIBLE DEALS

BARRIERS

REMAIN WITH THE UTILITY 19 (PAYING AS THEY GO)

DEAL GETS THROUGH 1 CUSTOMER

VENDORS & DEVELOPERS SELLING A BUNCH OF GEAR

Infrastructure-as-a-ServiceTM resolves the common sales barriers and competes effectively with a utility

INSERT GENERATE CAPITAL

Infrastructure-as-a-ServiceTM

NO MONEY DOWN

PAY AS YOU GO

STANDARD CONTRACTS

STANDARD PROCESSES

STANDARD TECHNOLOGIES

MORE DEALS 3-10x

CUSTOMER

VENDORS & DEVELOPERS SELLING A BUNCH OF GEAR

15 Confidential

Many technologies will see the same trajectory that solar PV has had thanks to

standardization, repeatability and bankability (e.g., SunEdison and SolarCity)

Mature Programs (Standardized, repeatable,

scalable)

Frontier Categories (Proactive origination,

opportunistic deal-making)

Expe

cted

Cas

h-on

-Cas

h Re

turn

s (le

vere

d w

hen

avai

labl

e)

8%

15%

Origination & Underwriting

Emerging Programs (High standardization potential)

X

X

X

SOLAR PV 2005

SOLAR PV 2010

SOLAR PV 2015

16 Confidential

Generate Capital finances three large and growing themes of the Resource Revolution

Solar PV, wind energy, solar water heating Renewable Generation

Battery storage, building automation controls, HVAC, lighting, pumps

Resource Efficiency

Anaerobic digestion, biomass to energy, recycling Waste-to-Value

$

Subsectors

17 Confidential

Diversified portfolio of individual assets with financing,

securitization, and scaling flexibility

We underwrite with a disciplined focus on low-risk, high-yield opportunities in energy and resources

1.  Contracted, fixed cash flows

2.  High-credit counterparties

3.  Delivering economic benefit to customers

4.  Structured to manage risks we understand better than others

UNDERWRITING CRITERIA OUTCOME

18 Confidential

We systematically manage multiple types of risk

Performance Risk Mitigation

1. Maturity of technology At least 1-3 yrs of commercial deployment

2. Similarity between projects Preference for products vs. projects

3. Predictability of revenue Revenue not governed by externalities (e.g. weather)

4. Vendor viability Vendor is not sole source for parts of maintenance

5. Vendor geography Focus on US and to a lesser degree EU

Collection Risk Mitigation

6. End customer viability Aligned with investment period and return profile

7. Vendor credibility Reference checks and due diligence

8. Measurability of value Sensors, online access, clear reference case

9. End customer geography Price it in or hedge it out

10. Recovery in case of failure Transferable product with ability to redeploy

Market Insights & Opportunities Solar Power International September 13, 2016 Alex Klein GE Power Jigar Shah Generate Capital Ethan Zindler Bloomberg New Energy Finance Tanuj Deora Smart Electric Power Alliance

www.sepapower.org

Solar has grown, and utilities respond

MainstreamU,litySolarStrategies:•  LargeScale

SolarPVinIRPs

•  RedesigningRateStructures

•  ExploringCommunitySolar

www.sepapower.org

All-in turn-key costs for solar PV in the US, 2015

Sources:SEPA“2015UBlitySolarMarketplaceSnapshot,”DatafromEnergySage&Mercatus

US prcing varies significantly by state, and is generally higher than many countries by as much as 50% in the residential market

•  ResidenBalpricinghasbeenquotedaslowas$2.50/W

•  FirstSolarexpects$1/Wforlargescaleby2017

www.sepapower.org

Primary utility response to NEM is fixed charges

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www.sepapower.org

Community solar programs across the US

Solar Markets Overview Ethan Zindler Head of Americas Bloomberg New Energy Finance

Market Insights & Opportunities Ethan Zindler Head of Americas Bloomberg New Energy Finance Alex Klein Lead, Demand Creation GE Power Jigar Shah Co-Founder Generate Capital

copyright and disclaimer...4 global pv nameplate capacity, q1 2016 and expected by year end...

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