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Michael Eckhart
Managing Director
Global Head of Environmental Finance
Citigroup, Inc.
“Update on Solar Energy Financing” Intersolar East
New York City
April 2018
’s Deep Renewable Energy Expertise Citi has developed industry leading global alternative energy capabilities with a broad range and depth of
expertise and execution capability.
Citi is the most global bank
220,000 employees
98 countries with Citi offices
Doing business in 160 countries
$2 trillion assets
$4 trillion / day funds flow
Renewable Energy:
Corporate banking
Investment banking
Capital markets
Global Presence of Solar Banking
2017
$1.6bn sale to
Joint Advisor to sPower and Fir Tree
Sydney
Hong Kong
London
New YorkSan Francisco
Mumbai
Sao Paulo
Largest Independent
Solar Developer
Comprehensive
Advisory Role to NRG
First North American
Offshore Wind Project
2016
Block Island Offshore Wind Project
Construction Lender / Tax Equity Investor
World’s only fully-
integrated sustainable
energy company
2016
$2.6bn sale to
Advisor to SolarCity
2017
Business Review Committee /
Transformational Plan
Advisor to BRC
Ongoing
Sale of ~33% stake in 1.7 GW solar portfolio
Sellside Advisor
Operating utility scale
solar portfolio
2
2015
US
$420mm IPO
Active Bookrunner and Structuring Agent
Global Leadership in Renewable Energy at +/- $25 billion / year
Citi is a consistent leader in Alternative Energy transactions across sectors, geographies and products.
2015
US
$800mm High Yield Senior Notes
Joint Bookrunner
2015
US
$351mm Follow-On Offering
Joint Bookrunner
2015
France €200mm Sale of 95%
stake to
Advisor to Solairedirect
2015
US
$670mm PIPE
Lead Placement Agent
2015
US
$200mm IPO
Joint Bookrunner
2015
US
$1bn Warehouse Facility
Joint Lead Arranger, Joint Bookrunner, and Co-Syndication Agent
2015
US
$300mm Senior Unsecured Notes for
Invenergy Wind Portfolio acquisition
Lead Left Bookrunner
2015
U.K. Sale of 49.9% interest
in Baltic 2 offshore windfarm
Sole Advisor to EnBW
2015
US
Sale to Energy Capital Partners
Sole Advisor to Terra-
Gen
2015
US
$2.2bn acquisition of Vivint Solar
Joint Financial Advisor
2016
U.K. Sale of 50% interest in Burbo Bank Extension
wind project
Advisor to Dong Energy
2015
US
$159mm Senior Secured Notes for
Solar Portfolio
Joint Lead Placement Agent
2015
US
$675mm IPO
Active Bookrunner and Structuring Agent
2015
US $394mm Construction Loan, $73mm Letter of
Credit Facilities for South Plains II Wind
Project Lead Arranger and Sole Bookrunner
2016
US $246mm Construction
Loan, $210mm Tax Equity Commitment
and Energy Hedge for Mariah Wind Project
Joint Bookrunner, Mandated Lead
Arranger
2016
US
$218mm Senior Secured Notes for
Solar Portfolio
Joint Lead Placement Agent
2015
US
$500mm ProjectCo Term Loan A
Joint Lead Placement
Agent
2016
Europe
Sale of 49% stake in onshore wind portfolio
to
Advisor to EDP
2016
US
$95mm 4(a)(2) Private Placement for Solar
Portfolio
Joint Lead Placement Agent
2016
$2.6bn acquisition of
Financial Advisor
to SolarCity
2016
US
$270mm Follow-On Offering
Joint Bookrunner
2016
US
$350mm Senior Unsecured Notes
Joint Bookrunner
2016
US
$103mm Follow-On Offering
Joint Bookrunner
2017
UK
$580mm acquisition of 365 MW solar portfolio
from
Sole Financial Advisor to TerraForm Power
2017
Indonesia/Philippines
Sale of geothermal assets to
Advisor to Chevron
2017
US
$350mm Senior Unsecured Notes
Joint Bookrunner
2016
US
Block Island Offshore Wind Project
Construction Lender / Tax Equity Investor
2017
US
Rattlesnake Wind Project
Energy Hedge and Tax Equity Provider
Ongoing
Canada / LatAm / Europe
Sale of renewable
energy developer and 805 MW portfolio
Sellside Advisor
2017
US
$1.5bn 4(a)(2) Private Placement for AES Southland Project
Joint Lead Placement
Agent
2017
US
Completed strategic review and announced
Transformation Plan
Financial Advisor
Ongoing
US
Sale of ~33% stake in 1.7 GW solar portfolio
Sellside Advisor
Ongoing
Sale of Majority Stake in
and Renewables Business
Sellside Advisor
2017
$421mm Private Placement
Sole Ratings Advisor, Sole
Structuring Agent, Sole Lead Placement Agent, and Sole Lead
Hedge Advisor
2017
US
$1.6bn sale to
Joint Advisor to sPower and Fir Tree
3
Pursuing Energy Technology-Driven Markets 1978 - 2018
0
10
20
30
40
50
60
$70
1975 1980 1985 1990 1995 2000 2005 2010 2015
1
10
100
1,000
10,000
100,000
MW
Insta
lled
Crystalline Silicon PV Module Price (2015 $/W (DC))—LH Scale
Volume Installed (MW)—RH Scale
Historical Learning Rate: 23%
Solar Cost Declines with Volume
Cost Reductions and Market Growth
Source: Maycock, Bloomberg New Energy Finance.
The historical solar learning rate is 23%, which means that solar module costs decline by 23% every time
cumulative installations double. Lithium ion batteries have so far demonstrated a learning rate of 19%.
5
1978 Call for
99% cost reduction
0
10
20
30
40
50
60
$70
1975 1980 1985 1990 1995 2000 2005 2010 2015
1
10
100
1,000
10,000
100,000
MW
Insta
lled
Crystalline Silicon PV Module Price (2015 $/W (DC))—LH Scale
Volume Installed (MW)—RH Scale
Historical Learning Rate: 23%
Solar Cost Declines with Volume
Cost Reductions and Market Growth
Source: Maycock, Bloomberg New Energy Finance.
The historical solar learning rate is 23%, which means that solar module costs decline by 23% every time
cumulative installations double. Lithium ion batteries have so far demonstrated a learning rate of 19%.
5
1978 Call for a
99% cost reduction
99.3%
Cost Reduction
In 2016
0
100
200
300
400
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
Glo
bal V
olu
mes (G
Wh)
EV
Batt
ery
Pack C
osts
($/k
Wh)
Global EV Li-ion Battery Production
Observed Values
Moderate Scenario: 15% learning rate
Aggressive Scenario: 22% learning rate
Historical Learning Rate: 19%
0
10
20
30
40
50
60
$70
1975 1980 1985 1990 1995 2000 2005 2010 2015
1
10
100
1,000
10,000
100,000
MW
Insta
lled
Crystalline Silicon PV Module Price (2015 $/W (DC))—LH Scale
Volume Installed (MW)—RH Scale
Historical Learning Rate: 23%
Solar Cost Declines with Volume
Cost Reductions for Solar AND Storage
Source: Maycock, Bloomberg New Energy Finance.
The historical solar learning rate is 23%, which means that solar module costs decline by 23% every time
cumulative installations double. Lithium ion batteries have so far demonstrated a learning rate of 19%.
Energy Storage Cost Declines with Volume
Long-term
Cost Range
5
99.3%
Reduction since
1978
Renewables Development Landscape is Strong
Discussion
“Develop and sell” business models are
transitioning to IPP models and looking to raise
more permanent capital
Significant interest in development platforms with
influx of new market entrants
Shell investment into Silicon Valley Ranch
Continuing strong demand from institutional
investors to deploy capital to solar
AES and AIMCo acquire sPower
Development track record / team are major drivers
of developer valuations
Development funding has never been stronger and better.
Select Developers
Renewable Investments
27
Utility-Scale Solar Bidding Trends in the US 2008 – 2017
California
New York
Northwest
PJM
Southeast
Southwest
$ / MWH
Sources: Compiled by Citi from Bloomberg New Energy Finance, GreenTech Media, CleanTechnica.
Tax benefits:
– Accelerated Depreciation (“MACRS”)
– Investment Tax Credits (“ITCs”)(solar)
Solar ITC competes with wind power
Production Tax Credits (“PTCs”)
Tax Equity investors include:
– Banks (e.g., Citi)
– Insurance Companies (e.g., MetLife)
– Finance Companies (e.g., GE)
– U.S. Corporations (e.g., Google)
– Utilities (e.g., Berkshire Hathaway)
– Co-investment arrangements
ITC and PTC will be ramping down over
the next five years
Tax Equity is Mature and Competitive – about $10-12 billion/year Major Tax Equity Investors
Other Tax Equity Investors
49
Commercial Solar Market is Growing PLUS Corporate Off-Take
The U.S. commercial solar market is considerably more fragmented than the utility scale solar industry.
Top Corporate Offtakers of Solar Projects1
(MW)
494
469
337
220
210
141
124
100
80
75
72
71
68
59
56
52
50
47
40
40
Apple Inc
US Department of Defense
Amazon
Kaiser Permanente
Switch SuperNAP
Wal-Mart Stores Inc
Equinix
Target Corp
University of California
US General Services Administration
Google Inc
Massachusetts Institute of Technology,…
Stanford University
Corning Inc
Virginia State Corp Commission
George Washington University…
Ikea Group Corp
City of Pasadena CA ; City of Riverside…
Ecolab Inc ; Macalester College
Arizona State University
Source: BNEF, GTM Research.
1. Ranking as of August 2017.
2017 YTD Top Commercial Solar Installers
National Market Share %
Tesla
SunPower
REC Solar
Borrego Solar Systems
Geronimo Energy
EnterSolar
Innovative PowerSystemsSafari Energy
Coldwell Solar
Vanguard EnergyPartnersSunDurance Energy
PFMG Solar
CalCom Solar
Ameresco
NRG Solar
Other
~1 GW
34
Residential Solar Industry is Highly Competitive
Illustrative Industry Segmentation
Installation
Sales
Financing
39
Resi-Rooftop Financing:
• End-user methods – standard docs
• PPA
• Lease
• Loan
• Tax equity driven
• Securitization of the cash flows
Community Solar is Emerging with IPP and Utility Potential
Source: Company Websites, SEIA, SEPA.
Leading Community Solar Developers
38
Energy Storage is a Strategic Landscape
Stationary Battery Suppliers
Integrators
Power Companies Invested in
Storage
Power Companies Invested in
Storage
Energy Management / Distributed
Solar Providers
Battery & Integrator
System Integrators
46
Global Markets - Experiencing the Same Solar Cost Reductions
$ / Kilowatt
Global Results of Competitive Bid Pricing 2010-2017
Source: IRENA
Renewable Energy Growth in Phase III: 2025 – 2050
Cumulative GW of Clean Energy Installed Globally
Cu
mu
lati
ve
Glo
bal
GW
In
sta
lle
d
Base Case:
$300bn / year
Upside Case:
$600bn / year
Downside Case:
$150bn / year
Phase III
Population
Growth
Economic
Growth
Electrification
Climate Policy
System
Economics
Grid Integration
& Storage
Source: History: U.S. Energy Information Administration, Bloomberg New Energy Finance. Forecasts: Citigroup.
6
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1975 2000 2025 2050
2018
Phase II Phase I
Michael Eckhart
Managing Director
Global Head of Environmental Finance
Citigroup, Inc.
“Thank You”
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