Solar without Limits Overcoming Market Constraints to Unleash Distributed Solar Arno Harris, CEO Recurrent Energy 16 July 2008
Recurrent Energy: Solar as a Service SM "The innovative approach to developing these projects is another example of our efforts to dramatically accelerate and expand solar power and other renewable energy sources for San Francisco. - Mayor Gavin Newsom SFPUC Sunset Reservoir 5MW Rendering 16 July 2008 2
A Developer s View: Year of Transition Projects getting bigger New markets emerging An industry evolving and maturing A changing regulatory climate >What development strategies will drive success? >Which are robust in the face of dynamic change? 16 July 2008 3
We re Dealing with a Global Market 16 July 2008 4
Emerging Market Growth: Beyond Spain & Germany Regional Distribution of Global PV Markets Source: EPIA 16 July 2008 5
In A Global Market, Every Market is Local 16 July 2008 6
North America: Gigawatts of Commercial Rooftops US Commercial/Industrial Rooftops 49B sf Large Commercial/Industrial Roofs 17B sf High Value Energy Profile* 7.7B sf PV Suitable 5B sf Solar States Recurrent Energy 2012 Target 2% 5% Solar States 2B sf 15,000 MW Solar potential Source: CBEC 2003 Survey of Energy Usage; PV Grid Connected Market Potential in 2010, Navigant Consulting, 2004; Recurrent Energy Analysis 16 July 2008 7
North America: Rise of the PPA Source: GreenTech Media 16 July 2008 8
North America: WDG Emerging to Fill the Gap Policy Effectiveness Onsite DG Incentives (i.e. CSI) The Gap 1-20MW Wholesale DG (WDG) RPS Programs 0 1 10 20 Project Size (MW) 16 July 2008 9
How Does it All Add Up? The big opportunity in downstream solar is not > A solar installation business > The PPA provider industry > A technology startup business PV technology solves two key problems > Demand for clean energy > Need for generation close to the load A new category of power development : clean DG > Requires competency in developing, owning, and operating generating assets that are close to the load 16 July 2008 10
DG Power Development Ecosystem is Maturing System Integrator (EPC) Contractors whose primary skill set is to build and manage solar projects Make money via construction contractor margin from labor and materials Players range from install shops doing contract work for developers to those that originate projects and partner with developers as a way to enhance margins. Developer Project development shops with the transactional skill set to identify and build solar projects Primary revenue from development fees by selling assets to a permanent owner Category ranges from simple asset flippers to more sophisticated players who can structure sales to get a piece of the upside. DG IPP Long term accumulator of DG assets as a way to capture growth in retail green power markets Franchise value from recurring green power sales and asset appreciation enhanced by strong growth multiple Broad developer skill set with access to financial markets, strong credit, and bargaining power. High Franchise Value Low Franchise Value 16 July 2008 11
What is Solar without Limits? Opportunity: Build a big, efficient, DG developer > Capture rapid growth from emerging markets > Accumulate a portfolio of profitable assets Market focus > North America + emerging international markets > Onsite DG & Wholesale DG > Commercial, government, utility segments Development strategies that deliver scale while retaining profitability > Identify and solve market constraints to yield differentiation > Business model innovations that lever access to capital, site control, technology control, and policy utilization 16 July 2008 12
Development Strategy Assessment Framework Technology Access Feedstock Control Electricity Markets Fuel Control Site Control Regulatory Incentives Access to Capital 16 July 2008 13
Business Model Innovation: Leased Properties Control of Solar-Friendly Rooftops Market Constraint: Solar industry has largely focused on owner-occupied properties. But 60% of commercial roofs are on leased properties Disincentives between owners and tenants have been a barrier Development Strategy: Innovation: structured solution that overcomes lease barrier Accelerant: Access to capital enables us to work with large REITs Result: site control advantage opens up a massive and unaddressed segment with a highly differentiated service offering. Source: NAREIT, PREA, Recurrent Energy Analysis 16 July 2008 14
InterSolar News Recurrent Energy Secures $75MM to Expand Solar as a Service Offering Financing from Hudson Clean Energy Partners We re combining the two key ingredients that are necessary to bring solar power to scale: access to capital and the expertise to put it to use. 16 July 2008 15
Thank You Arno Harris CEO Recurrent Energy arno@recurrentenergy.com 16 July 2008 16