1. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 1 / / / / / / / / / / / / / / / / SOLAR MARKET UPDATE MINNESOTA LEGISLATURE TESTIMONY 2 APRIL 2013, ST. PAUL, MN ETHAN ZINDLER, HEAD OF POLICY ANALYSIS

2. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 2 / / North America (39) South America (5) Europe (88) Asia Pacific (24) Africa (29) San Francisco Sao Paulo Washington New York Cape Town Sydney London Beijing New Delhi Hong Kong BLOOMBERG NEW ENERGY FINANCE: 200 STAFF IN 13 OFFICES WORLDWIDE Tokyo Singapore Zurich Objective: Be the definitive source of insight, data and news on the transformation of the energy sector.

3. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 3 / / Clean energy investment overview Global solar trends US solar trends

4. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 4 / / GLOBAL TOTAL NEW INVESTMENT IN CLEAN ENERGY 2004–12 ($BN) Source: Bloomberg New Energy Finance Note: Includes corporate and government R&D, and small distributed capacity. Adjusted for re-invested equity. Does not include proceeds from acquisition transactions

5. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 5 / / NEW INVESTMENT IN CLEAN ENERGY BY TRADE BLOCK 2004–12 ($BN) Source: Bloomberg New Energy Finance Note: Excludes corporate and government R&D

6. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 6 / / NEW INVESTMENT IN CLEAN ENERGY BY SECTOR IN 2012 AND % CHANGE ON 2011 ($BN) Source: Bloomberg New Energy Finance Note: Excludes corporate and government R&D

7. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 7 / / Clean energy investment overview Global solar market trends US solar market trends

8. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 8 / / DYNAMICS OF THE GLOBAL SOLAR SECTOR Massive supply-demand imbalance with far more capacity available than currently being demanded. Plummeting equipment prices due to technology advancements and the supply-demand imbalance. Major demand coming from the EU in recent years with strong growth in Japan (post-Fukushima) and China. Commoditization of solar equipment with China now playing a dominant role in manufacturing. Consolidation, bankruptcies, and value destruction well underway. Trade skirmishes!

9. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 9 / / DEMAND VS. HISTORICAL AND PROJECTED MODULE PRODUCTION (GW) Source: Bloomberg New Energy Finance Note: Supply scenarios based on continued 2012 utilisation rates.

10. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 10 / / PV INSTALLATION BY YEAR, HISTORICAL AND CENTRAL FORECAST, 2007-2015 (MW) Source: Grid operators, incentive programme administrators, industry associations, Bloomberg New Energy Finance Note: Few countries have yet finalised their 2012 data, hence the spread here. Table with all major countries in Appendix. The conservative forecast is the sum of the first quartiles of the spread between conservative and optimistic for each country.

11. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 11 / / INSTALLED PV PER CAPITA, END OF 2012, CONSERVATIVE SCENARIO (W/PERSON) Source: World Bank, Bloomberg New Energy Finance Note: GDP per capita adjusted for purchasing power, in 2011 $

12. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 12 / / ANNUAL COSTS OF TARIFFS AS SHARE OF GDP VS PV ELECTRICITY PRODUCTION AS SHARE OF CONSUMPTION, END OF 2011 Source: Bloomberg New Energy Finance, Eurostat, Canadian Statistics

13. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 13 / / CRYSTALLINE SILICON MODULE SPOT PRICE, 2008–12 ($/W) Source: Bloomberg New Energy Finance Solar Spot Price Index Note: Prior to 11 July 2011 the index collated module prices without differentiating between mono and multi crystalline -75% Four years

14. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 14 / / SPOT PRICE OF C-SI MODULES, 2 JANUARY 2012 – 4 MARCH 2013 ($/W) Source: Bloomberg New Energy Finance Module Spot Index Note: Dates represent first day of the week for which the price has been averaged, ie 8 August represents quote for the week 8-14 August. Data available here.here

15. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 15 / / CHINESE MULTICRYSTALLINE SILICON MODULE PRICE BUILD-UP, MARCH 2013 Source: Bloomberg New Energy Finance Note: Assumes 5.6g of silicon per watt of wafer. Processing cost based on SEC filings of quoted companies, publically available reports, various discussions and analyst estimates. SG&A represents sales, general, administration and R&D.

16. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 16 / / FORECAST COSTS FOR GROUND MOUNTED PV PROJECTS, 2010-2020 (2012 $/W) Source: Bloomberg New Energy Finance Note: Based on experience curves for each component. Methodology here http://bnef.com/Insight/1954 though charts updated January 2013 http://bnef.com/Insight/1954

17. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 17 / / FORECAST COSTS FOR RESIDENTIAL PV PROJECTS, 2010-2020 (2012 $/W) Source: Bloomberg New Energy Finance Note: Based on experience curves for each component. Methodology here http://bnef.com/Insight/1954 though charts updated January 2013 http://bnef.com/Insight/1954

18. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 18 / / SMALL PV SYSTEM COST IN JAPAN, GERMANY AND CALIFORNIA, $/W Source: BSW-Solar, California Solar Initiative filings, JPEA, Bloomberg New Energy Finance

19. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 19 / / GLOBAL CRYSTALLINE SILICON CELL MANUFACTURING CAPACITY (MW/YEAR) Source: Bloomberg New Energy Finance

20. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 20 / / PV MODULE PRODUCTION BY COUNTRY, 2010-12 (%, GW) Source: Company reports, Bloomberg New Energy Finance estimates and enquiries Note: Geography calculated by company headquarters, not manufacturing capacity location

21. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 21 / / c-Si CELL PRODUCTION BY COUNTRY, 2010-12 (%, GW) Source: Company reports, Bloomberg New Energy Finance estimates and enquiries Note: Geography calculated by company headquarters, not manufacturing capacity location

22. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 22 / / POLYSILICON PRODUCTION BY COUNTRY, 2010-12 (%, TONNES) Source: Company reports, Bloomberg New Energy Finance estimates and enquiries Note: Geography calculated by company headquarters, not manufacturing capacity location

23. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 23 / / INVERTER PRODUCTION BY GEOGRAPHY, 2010-12 (%, GW AC) Source: Company reports, Bloomberg New Energy Finance estimates and enquiries Note: here DC-DC optimiser production has been converted into AC, which is estimated to be 85% of DC, Geography calculated by company headquarters, not manufacturing capacity location

24. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 24 / / Q4 2012 LEVELIZED COST OF ENERGY FOR SELECT TECHNOLOGIES Source: Bloomberg New Energy Finance, EIA

25. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 25 / / Clean energy investment overview Global solar market trends US solar market trends

26. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 26 / / TOTAL NEW US INVESTMENT IN CLEAN ENERGY, 2004-12 ($BN) Source: Bloomberg New Energy Finance Note: Shows total clean investment in the US across all asset classes (asset finance, public markets, venture capital/private equity), as well as corporate and government R&D and small distributed capacity. Values include estimates for undisclosed deals and are adjusted to account for re-invested equity.

27. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 27 / / US CUMULATIVE RENEWABLE CAPACITY (GW) Source: Bloomberg New Energy Finance, EIA 2X

28. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 28 / / US ELECTRICITY GENERATION BY FUEL TYPE, 2007-12 (%) Source: Bloomberg New Energy Finance, EIA Note: Contribution from ‘Other’ is minimal and consists of miscellaneous technologies including hydrogen and waste. Values for 2012 are projected, accounting for seasonality, based on latest monthly values from EIA (actual data available through October 2012).

29. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 29 / / PRIMARY ENERGY CONSUMPTION VS. GDP, 1990-2012 Source: Bloomberg New Energy Finance, Bureau of Economic Analysis, US EIA Note: Values for 2012 are projected, accounting for seasonality, based on latest monthly values from EIA (actual data available through September 2012). GDP is real and changed; 2012 value is based on economic forecasts from Bloomberg Terminal. Quadrillion BtuGDP ($bn)

30. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 30 / / SHALE GAS EXTRACTION BREAK-EVEN PRICE, BY US PLAY ($/MMBTU) Source: Bloomberg New Energy Finance; Various Note: Assumes 15% equity IRR. UK assumes $8m Drilling & Completion cost; 2000-4250 mcfd dry production (per Marcellus and Eagle Ford); 20% royalty rate; usual tax treatment 1 April 2013 Henry Hub $4.03/MMBTU

31. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 31 / / AVERAGE WIND PPA PRICE RELATIVE TO WHOLESALE REGIONAL PRICES, 2004–SEPT 2012 ($/MWH) Source: Bloomberg New Energy Finance, FERC Note: Price indices are calculated by averaging the hourly price at ISO hubs throughout a 24-hour day. Quarterly rolling averages are used to eliminate outliers. Small sample size accounts for some variation in PPA prices in 2011 and 2012.

32. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 32 / / MIDWEST RPS SUPPLY-DEMAND (TWH) Source: Bloomberg New Energy Finance Notes: Demand is split into regions in the Midwest with binding RPS programmes (Iowa, Minnesota, Missouri) and regions with non-binding programmes (North and South Dakota, Oklahoma). Supply is based purely on wind capacity in these states, comprised of capacity commissioned (or having secured financing) as of July 2012.

33. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 33 / / AVERAGE PURCHASING PRICE BY OFFTAKER, ALL PROJECTS 2011–H1 2012 ($/MWH) Source: Bloomberg New Energy Finance, FERC Note: Includes wind, biomass and geothermal PPAs. Does not include solar PPAs. Only includes offtakers purchasing energy from two or more projects

34. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 34 / / SOLAR PPA PRICES BY SIGNING DATE, H2 2008–2011 ($/MWH) Source: Bloomberg New Energy Finance, FERC Note: Does not include PPAs under 5MW. ‘Banded’ PPA prices are pegged at the average price over the period of project operation. The California RFP resulted in 7.5TWh of shortlisted generation, of which about half was PV. California RFP price estimates are sourced from developers. Topaz PPA price estimate based on first-year total PPA revenues ($198.8m).

35. MINNESOTA STATE LEGISLATURE, 2 APRIL 2013 35 / / COPYRIGHT AND DISCLAIMER 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.

36. / / / / / / / / / / / / / / Subscription-based news, data and analysis to support your decisions in clean energy, power and water and the carbon markets sales.bnef@bloomberg.net MARKETS Renewable Energy Carbon Markets Energy Smart Technologies Renewable Energy Certificates Carbon Capture & Storage Power Water Nuclear SERVICES Insight: research, analysis & forecasting Industry Intelligence: data & analytics News & Briefing: daily, weekly & monthly Applied Research: custom research & data mining Knowledge Services: Summit, Leadership Forums, Executive Briefings & workshops THANKS! ETHAN ZINDLER, EZINDLER@BLOOMBERG.NETEZINDLER@BLOOMBERG.NET TWITTERS: @ETHANALL