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Craig Lawrence, VP Marketing APEC 2013

GRID PARITY: ARE WE THERE YET?

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ABOUT SOLARBRIDGE

• Founded by world-renowned power electronics experts at the University of Illinois. Headquarters in Austin, TX

• Design, manufacture, and sell microinverters and monitoring solutions used in residential and commercial PV

• OEM Partner to leading solar module manufactures globally

SolarBridge is the leading supplier of microinverter technology used in AC PV Modules

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THE SOLARBRIDGE AC MODULE SOLUTION

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A complete ACPV solution including inverter and monitoring solution, designed as a “white label” solution for module OEMs.

POWER PORTAL

POWER MANAGER

AC MODULES

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GLOBAL DEMAND FOR ENERGY IS GROWING

Source: IEA, World Energy Outlook 2012

Global energy demand rises by 35% in the period to from 2010 - 2035, underpinned by rising living standards in China, India & the Middle East

Source: EIA, International Energy Outlook 2011

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OUR FUTURE SUPPLY DEPENDS ON RENEWABLES

Renewable energy sources are expected to account for over half of new global electricity capacity

Source: IEA World Energy Outlook 2012

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THE PRICE OF SOLAR IS DROPPING RAPIDLY

• The price of PV modules has dropped, rapidly accelerating the past 2 years • From 1985 to today, we have seen a 100X reduction in PV module prices • Price drops have been fueled by manufacturing process advances, and by a

massive investment in production in China

Source: GreenTech Media Source: Yingli Green Energy and Maxim Group

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THE INDUSTRY IS CONSOLIDATING

• Many PV Module companies focused on new technology innovation (e.g. thin film) have failed due to cost reductions of traditional crystalline-silicon technology

• European and American module companies have not been able to keep pace with the Chinese

• This pain felt by the “upstream” suppliers has resulted in a market boom “downstream” to other parts of the value chain who benefit from oversupply and lower costs

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LOWER PRICES HAVE FUELED DEMAND

• Demand for PV expected to grow 20% annually through 2016, fueled by falling prices, increased electricity rates, and government incentives

• Incumbent leading markets in Europe (Germany, Italy, Spain) are no longer driving growth.

• Future growth to come from the U.S., China, Japan, India, and the developing world, following their increased demand

Source: IMS, World Market for PV Inverters 2012

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• “Grid Parity” is a term used to describe the point at which PV is cost competitive with incumbent sources of electricity without any subsidies

• Grid Parity is a local phenomenon – depends heavily on the local cost of electricity and PV. There is no one point in time that we hit parity.

• We are already at Grid Parity today in many parts of the world (CA, HI, Australia, Japan) • By 2022, it is expected that 38 million homes and businesses in the US will be able to

get solar cheaper than the grid without any subsidies

FROM SUBSIDIES TO GRID PARITY

Source: Stephen O’Rourke/Deutsche Bank

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• 3rd party financing of solar pioneered by SunEdison for commercial customers, is now available to homeowners across the country by multiple vendors

• You get solar for $0 down, and a monthly lease or energy payment designed to be less then the amount you save on your bill. This is “grid parity” today for home and business owners without any capital investment.

• This type of financing is the major driver for growth of PV in the United States, and is now spreading to other countries

THIRD-PARTY FINANCING DRIVING DEMAND

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• With low module prices, the majority of PV system costs are now “soft” costs – customer acquisition, design, permitting, installation labor, etc.

• Mature markets, such as Germany, are much more efficient when it comes to soft costs, although they still represent a majority of the system cost

• Power electronics play a unique role, as they have the ability to influence soft costs in a positive or negative way

THE FOCUS IS SHIFTING TO “SOFT” COSTS

Source: Lawrence Berkeley Lab

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• Power electronics have unique leverage in impacting overall system costs. • Innovations in power electronics can influence multiple hard and “soft” cost factors

and drive the industry to grid parity faster

THE LEVERAGE OF POWER ELECTRONICS

Improved Energy Harvest

Simplified Architecture

Increased System Integration

Improved Safety

Improved Reliability

Improved Monitoring

Lower Equipment Cost

Lower LCOE

Lower Installation Costs

Reduced BOS Costs

Reduced Permitting Costs

Lower O&M Costs

Innovation Benefit

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• Significant innovations addressing energy harvest, system architecture, safety, reliability, monitoring, etc. are occurring in the industry today

• Driven by both incumbent power electronics companies, and new start-ups, these are having a real, measurable impact on the drive to grid parity

MANY INNOVATIONS ARE HAPPENING

DC Optimizers Microinverters AC Modules

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MICROINVERTER MARKET TRACTION

Motivation for adoption:

→ Higher energy production

→ Simplified design and installation

→ No single point of failure

→ Module-level diagnostics reduce operations and maintenance costs

→ Safer, no high-voltage DC

Source: California Solar Initiative (CSI) Data, 2013

Microinverters have seen rapid adoption in markets where they have been introduced. In the US, they have captured 30% market share of DG

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• Solar energy is an intermittent source of energy. As the penetration of solar increases, the impacts on the grid will become significant, and will ultimately increase the cost to grid operations (which get passed to consumers)

• As the only “intelligent” portion of the PV system, power electronics can and will play a key role in helping integrate more PV to the grid without increasing it’s cost

• Utilities may need or require several new capabilities from PV systems Remote on/off and Power limiting Voltage and frequency ride-through limits Support local grid voltage (transition voltage control mode) Reactive Power, VAR control Short- and Long-term energy forecasting

POWER ELECTRONICS - LINK TO THE “SMART” GRID

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Craig Lawrence, VP Marketing APEC 2013

THANK YOU