A New Model For Solar Manufacturing Roger G. Little Spire Corporation

A New ModelFor Solar Manufacturing

Roger G. LittleSpire Corporation

“USA to become the world’s largest solar energy market.”

- SolarPlaza April 1, 2009

April 1, 2009

Opportunity

US Market Drivers

• ARRA to jump start the market.• Utility arrays growing in size to 100 MW +• State incentives being implemented.

---250GW in 10 years. • RPS 40 states—National?• FIT Emerging.• FTC extended 8 years.• Job creation goal.

America Reinvestment and Recovery Act – ARRA

• PV systems receive 30% grant.• PV manufacturing investments receive

30% tax credit.• State initiatives available• Can double dip.• ITC also available.• Focus on America job creation.

ARRA Supports Increased Manufacturing

• “Buy American” factory equipment requirement.

• Tax Credits – 30% of investment.• Available to expanding US companies.• Foreign firms entitled for factories

built in US with US equipment.

State PV Opportunities by 2011

32

891

36

246

483

669

11077

25 35 38

193

38 47

377

122132161

19

641

0

100

200

300

400

500

600

700

800

900

1000

HI TX DC NJ NY CA CT NV RI NH DE MA ME NM NC CO OR AZ VT FL

States

Total Cumulative= 4.4 GW

MW

Barclay Capital Solar Energy, Feb. 4, 2009

US Market Projections

3

0.40.7

1.5

2.1

0

0.5

1

1.5

2

2.5

3

3.5

2008 2009 2010 2011 2012

GW

Solarbuzz/Prometheus/Lazard - 2009

xSi Will Dominate

• Si poly costs down to $60/kg.• Means lower cost of modules. • xSi high efficiency drives down cost.• xSi demonstrates 20 year life span.• PPA Market will demand xSi.• Manufacturing scales easily.• Distributed manufacturing is cost effective.

US PV Manufacturing

MW -- Current & Announced  2008 2009 2010 2011 2012

Solarworld 100   100    

Sharp 100        

Schott 15        

Evergreen 17 90 90    

GE 35 ?      

BP 50 ?       

Sunwize 25        

Annual 342 90 190    

Cumulative 342 432 622 622 622

US Market xSi Manufacturing Short Fall

GW

0.00

0.50

1.00

1.50

2.00

2.50

2008 2009 2010 2011 2012

Mfg Shortfall

Mfg Capacity

xSi Module Value Stream

Sand

Polysilicon

Polycrystalline Ingot

Wafers

Cells

Modules

US xSi Distributed Module Manufacturing

• Modules assembled from solar cells.• Module assembly is relatively standard.• IP is retained in the cell.• Modest levels of production are cost

effective.• Cost savings achieved through shipping

& handling and inventory reduction.• Local markets are stimulated.• Local jobs are created.

USA Manufacturing Opportunity

• 50 MW/year production lines • Production shortfall 2.5 GW• 50 factories each 50 MW/year • One per state?• Use state + ARRA subsidies.

Module Cost Assumptions

• 50 MW/year production. • Automated assembly line.• 219 Watt module.• 15.5% cell.• Cell cost = $1.80/Watt.• 7 year depreciation.• Factory 20K ft2 at $10/ft2/yr.• Investment line + building = $20M

Non-Cell Module Cost

$0.54/wAdded Cost to Cell

Labor, $0.04

Overhead, $0.02

Cell Yield Loss, $0.05

Non-Cell Materials,

$0.41

Op/Maint, $0.02

Module Cost vs. Cell Cost

0.49

1.01

1.52

2.04

2.55

3.07

3.58

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

0.00 0.50 1.00 1.50 2.00 2.50 3.00

Module$/W

Cell $/W

$2.34

$1.80

50W/YearModule Cost

Cell Cost

Investment for 50MW Module Line

Investment $10,000,000

ARRA - ITC $3,000,000

State Credit (e.g. Oregon) $5,000,000

Cost $2,000,000

Annual P/L For Module Factory

Revenue (2.80/w) $140,000,000

COGS $119,500,000

SG&A $5,600,000

EBITDA $14,900,000

DOE – Critical Mandate

“To ensure accountability, the Department of Energy will provide guidance to and require grant recipients to report on the number of jobs created or retained, energy saved, renewable energy capacity installed, greenhouse gas emissions reduced and funds leveraged.”

Funding Agencies Creating Critical Feedback

Job Creation – Module Related

# ofJobs

0

2000

4000

6000

8000

10000

12000

2008 2009 2010 2011 2012

Module Production

Module Equipment

Utility Solar Farm Factory

Brightfield

Super Sized Utility Module

• Super size modules for max system cost reduction.

• Deployed on the edge of a solar field.• Cost reduction due to:

• Labor• Materials• BOS• Shipping

Super Sized Area Module

1-kW Module

Utility System Cost

Module$2.11

BOS$0.65

$0.20

Total $2.96

Summary

• US Market huge opportunity – 3GW• 2.5GW of new capacity needed• xSi will dominate• 50MW/yr distributed module

manufacturing• Stimulus $ reduces investment• 3000 manufacturing jobs created

Module Manufacturing Jobs

# ofJobs

171

465

1411

1749

2232

0

500

1000

1500

2000

2500

2008 2009 2010 2011 2012

Equipment Manufacturing Jobs

# ofJobs

67

183

554

687

877

0

100

200

300

400

500

600

700

800

900

2008 2009 2010 2011 2012

Quick Overview of Stimulus Estimates

Previously, State and Federal Monies were NOT allowed to Overlap (compounded).

The NEW ARRA allows for State and Federal Incentives to be INDEPENDENT factors.helps assure Customers benefit with accelerated 50% depreciation.

American based Customers have an opportunity: LARGE Portions of Capital Investment

PAID FOR!!!!!!!!!

If done correctly…subsidies and allowed accelerated Depreciation pays for Factory/Equipment capital cost

ARRA PV System Grants

• ARRA supports extensive PV system expansion.

• “Buy American” systems requirement.• Applicants receive 30% rebate on system

costs when placed in service.• Project must begin by 12/31.2010 and be

complete by 1/1/2017.

US xSi Module Capacity - MW

• BP – No more US manufacturing.• Sharp – Expanding.• GE – Downsizing.• Solar World – Expanding.

Cost Effective Factory Size

Factory Investment

U.S. Based Capacity Shortfall

GW

00.1

0.5

1.1

1.8

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2008 2009 2010 2011 2012