Renewable and Low Carbon Energy in CornwallFriday 4th June 2010

Photovoltaics in CornwallSeán Murphy, Chief Technology Strategist, SunRay Renewable Energy – a subsidiary of SunPower CorporationTel: 020-7284-6000Email: sean.murphy@sunrayrenewable.com

Agenda

Goal of solar photovoltaicsWhat it takes to develop a solar projectIntroduction to SunRay and to SunPowerCase study: Montalto, Italy

What is the goal of solar photovoltaics?

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Solar is the most abundant of all renewable energy sources

Current global energy demand =

1.0

Solar energy can supply almost 4 times total current global energy demand(including only solar energy that is practical to harness)

“Practical” solar energy = 3.8

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Solar could account for over 50% of global energy supply

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e.g. Intergovernmental Panel on Climate Change, a1T scenario

Once grid parity is achieved, solar could become the majority global energy source by the end of the

century

Predictive cost economics

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It’s not about what it costs today – it’s about what it will cost in the future

Crystalline Silicon is the dominant and field-proven technology

PV modules – major classes of technology

Snapshot of the global solar industry today

A reliable source of energy generation– Ample natural resource– Proven components – 25 years or more field proven generation– Crystalline Silicon is the mainstream technology choice

Incentives are designed to accelerate volume deployment– Supporting EU and UK incentives are driving demand– As volumes are rising, prices are falling

Solar has now become a global industry– Investment returns are attractive (if you have enough sunshine)– Banks are happy to finance professional PV projects

What it takes to develop a solar project

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Cutting through the clutter in early-stage PV markets

Everyone thinks that they can develop a PV projectTypical participants include:– Real estate developers– Land owners, private or community– “Spin-offs” – former financiers, new departments in construction firms– Technical experts – architects, engineers, consultants, systems integrators– Equipment providers, grid operators– Wealthy investors – private groups, entrepreneurial, institutional– Influencers – those with access to permit bureaucrats

All these players can tell a good story and all make extravagantpromises – but whom can you trust?

The critical question in an early-stage PV market:“What is the value of a promise?”

Making life easier for your partners

Developers and financiers are just two perspectives– What about your project partners?

In a win-win situation, your partners also need to succeed– Politicians and bureaucrats

• Interested in backing successful high-profile projects with happy investors

– Local community• Want an opportunity to be engaged in shaping the project and to share locally in the benefits

– Equipment suppliers and construction partners• Desperately want to engage with credible customers who have finance to build• Hate wasting time and valuable resources on high maintenance sales prospects with project

plans of unknown credibility, or on the high friction costs of dealing with new customers

Credibility counts in winning and keeping the trust of these partners

These partners learn - quickly - the true value of a promise(and all want partners who deliver repeatedly, not just once-off)

Full PV project execution requires diverse skills

Multiple activities: to generate revenues, all bricks in the wall must be removedValue at risk rises sharply once construction begins

5MW UK projects require £17m+ in financing

Introduction to SunRay and to SunPower

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- Recent history of the company

A young, fast-moving agile solar developerTurnkey PV power plant development: conception thru construction– Site development, including permitting and interconnection– Design, engineering, project finance, Operations & Maintenance – We use SunPower, proven, high-performance technology – Bankable development/EPC due to proven performance

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Source: Šúri M., Huld T.A., Dunlop E.D. Ossenbrink H.A., 2007. Potential of solar electricity

generation in the European Union member states and candidate

countries. Solar Energy, 81, 1295–1305, http://re.jrc.ec.europa.eu/pvgis

SunPower – acquired SunRay in 2010>1 GW solar PV deployed

~1000 dealers and growing rapidly

2009 revenue of $1.5B

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Commercial Power PlantsResidential

5,000+ Employees; 100% solar

550 MW 2010 production

Diversified portfolio: roofs to power plants

4+ GW power plant pipeline Publicly listed NASDAQ: SPWRA, SPWRB

PV Project Development is a JourneyEarly projects navigate between islands of local expertise:– Land scouts– Grid connection– Securing a permit

Then the journey gets serious:– Selecting reliable suppliers– Estimating your costs and

project timetableFinally comes the ocean voyage:– Financing and building the PV plant

SunRay has done the journey before, knows the timetable and delivers a bankable PV projectIn Spain, over 95% of projects failed one of the hurdles

Partners Share In SunRay’s Success

There are two fundamental approaches to the PV business:– “One-off” projects – the speculative approach– “Repeat business” – understand the space deeply, learn the lessons then

apply these across multiple projects

Repeat business rewards SunRay’s partners:– An efficient development platform that generates high volumes of projects

• Apply (and refine) the same expertise multiple times

– SunRay is experienced in:• Working through local country teams – the only way to execute successfully• Addressing PV-specific development issues quickly• Securing ample investment capital at competitive rates

Trust – SunRay succeeds in converting opportunities into returns

Quality Rewarded in Sophisticated PV Markets

SunRay offers quality control across the development cycle– Development of permits

• Community support, sites, permits and grid connection, project finance• Leads to professionally validated permits on high-quality sites

– System design, technology and PV plant construction• Highly efficient modules and trackers minimise land use• Field proven long term system performance

We build cost-effective PV systems of premier quality– Communities and partners get a reliable long-term energy asset– Financiers and investors recognise the quality and support our business

goal to build utility-scale PV parks across multiple countries

Case study: Montalto, Italy

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Montalto 24: Euromoney Project FinanceEuropean Solar Deal of the Year 2009

Project statisticsLand area 80 hectaresPower 24 MWp d.c.

80,000 PV modulesSunPower panels and trackersSingle-axis horizontal trackers

Construction project:300+ workers on site at one time (of which 250 were local)Project completed in 8 months

Delivered plant:Completed on time, on budgetSheep friendly environment

24 MW project – views during construction

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What are we looking for in Cornwall?

Agricultural land grade 2 to 5.

Minimum size 10 to 30 hectares per lot.

Flat land (< 5% slope).

Proximity to the national distribution grid (< 1.5 Km)

We will take an option on the land for 24- 32 months. This will allow us enough time to obtain the required building permits andauthorizations.

After this time we will buy or lease the land for 25 to 35 years on the basis of the terms agreed in the option contract.

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Summary

Utility-scale PV projects are:– Complex and require a broad set of skills– Expensive thus require lots of capital– Profitable long-lived energy generation assets

(if the right choices are made during the development cycle)

Key lessons from a large successful project:– The reality of execution is more complex, expensive and

unpredictable than many uncommitted observers believe– Confusion during development loses time and costs money– Strong partners enable you to move quickly– Demonstrable quality of execution is what unlocks project finance

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