UTILITY SCALE SOLAR IN ERCOT

AWE SOLAR ENERGY CONFERENCE

May 24, 2016

CONFIDENTIAL COMPETITIVE ELECTRIC INFORMATION

ERCOT Fuel Mix – As of May 2016

Source:ERCOT May2016GridcapacityReport:http://www.ercot.com/gridinfo/resource

Utility Solar Capacity – As of May 2016

Source:ERCOT May2016GridcapacityReport:http://www.ercot.com/gridinfo/resource

Key Drivers to Utility Scale Solar Development

• Significant Capital Cost Improvements– 2015 Utility Grade Solar PPA national cost averages: $36.6 to $38.7

Per MW. – Some suggest 20-30% cost reduction through 2018 is achievable

4

Solar Power Installed Cost Projections

5

SourcesandNotes:HistoricalPVcosts:reportedcostsfromNRELandmedianfromLBNL;Forecasts:ERCOT2016LTSABaseCase;NREL

Key Drivers to Utility Scale Solar Development

• ITC Extension and Tax Incentives– UBS projects the next “cycle” in solar procurement in 2019 timeframe

• Power Prices and PPAs– Lower natural gas prices– Demand and Supply Forecasts (Coal Retirements)– Wind penetration– Congestion/location

• Technology Advancements• DG becoming increasingly dominant• Environmental and Regulatory Changes• Solar Performance

6

Appendix

CONFIDENTIAL COMPETITIVE ELECTRIC INFORMATION

7

SolarPowerTypes

Source:UBSInvestmentResearchQReport6/3/15:DoesthefutureofsolarbelongwithUtilities? ANALYSTCERTIFICATION AND REQUIRED DISCLOSURESBEGINONPAGE 87.

SNL:SEIA:http://www.seia.org/research-resources/solar-market-insight-report-2014-q4

1. Residential/Commercial– CommonlyreferredtoasrooftoporDGsolar,generallybetween5kwand250kw,andinstalledatpointofuse

2. CommunitySolar– Loadcentralizedinstallationsbelow5MW/60kVAdistributionandisgenerallyconsideredDistributedGeneration

3. UtilityScaleSolar– Systemsabove10MWandisnotconsideredDistributedGeneration