Latin America PV Playbook

Executive Summary

Q2 2016 Market Update

May 2016

1

Deep insights on an emerging market

Latin America is at the global frontier of emerging solar markets. Countries like Mexico and Chile are providing regulatory frameworks for competitive PV

development while Brazil along with countries in Central America, the Caribbean and the Rest of South America is supporting gigawatts of deployment through

solar-specific auctions and more direct government support. The region is at an early stage but offers a significant opportunity due to its sizable long-term

potential and world-leading growth rates. To enable players to make the most of the region’s potential, GTM Research’s Latin America PV Playbook is the

industry's most insightful analysis of the market.

What’s in the Playbook?

• Quarterly Market Updates - The Playbook is published quarterly, providing insights into the major developments of the previous quarter. With an eye on the

future, it offers an assessment of the trajectory of the market by forecasting demand and analyzing the projects and players that will make it happen.

Recognizing that the market has numerous upside and downside risks, the Playbook also provides a scenario-based assessment of the market’s future

• Comprehensive Coverage - The Playbook’s analysis spans across market segments – residential, commercial, industrial and utility-scale, and includes a deep

focus on the major markets of Brazil, Chile and Mexico while covering countries in Central America, the Caribbean and the Rest of South America

• In-depth Project Database1 - Every quarter, the Playbook is accompanied by the Latin America PV Project Tracker which is a spreadsheet-based database of

over 1,100 projects across all the countries in the region with details on project developers, project sizes, locations, off-takers, PPA values and more

About the Latin America PV Playbook

1. Available only as part of the annual subscription

2

Mohit Anand is a Senior Analyst at GTM Research covering global solar markets. With previous experience covering demand

dynamics and business strategies in emerging markets like India, Mohit analyzes the market fundamentals, government

policies, risks, and competitive strategies that determine the success of solar players globally. Before joining GTM Research,

he participated in the early stages of growth of the Indian solar industry by setting up a solar market intelligence team,

advising project developers on new solar business models, and consulting for international solar companies on their market

success strategies. Mohit holds a bachelor’s degree in economics from St. Xavier’s College, Mumbai, a master’s degree in

international studies from the National University of Singapore, and a master’s degree in public administration from the

Kennedy School of Government at Harvard University.

1. Available only as part of the annual subscription

The research team

Manan Parikh is a Research Associate at GTM Research covering global downstream markets. Prior to GTM, his work has been

extensively research based, centering upon alternative fuels infrastructure development and Low Carbon Fuels Standard

(LCFS) policy models for the Schatz Energy Research Center and UC Berkeley in Northern California. In California, he was also

an ambassador to start-up teams within the Clean Tech Open accelerator as well as a consultant to DOE SunShot Catalyst

Award winner, PVComplete. In Washington, DC he worked on biomass policy at the American Council On Renewable Energy.

He is an alumnus of The University of Texas at Austin, where he graduated with a B.S. in Biochemistry, as well as the DC-based

Clean Energy Leadership Institute in its inaugural class.

Executive Summary – Q2 2016 Market Update

4

1,416

2,198

7,723

2.6%3.4%

9.3%

8.1%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

0

2,000

4,000

6,000

8,000

10,000

2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E

MW

Annual Installed PV Global Demand Share

• Latin America had a record year in

2015 installing 1.4GW, 813MW more

than in 2014

• 2016 is set to be another record year

for solar in the region with the

market growing 55% to 2.2GW

• The strengthening of the market is

reflected in the fact that the region’s

share of global demand will increase

year-on-year to peak at 9.3% in 2018

• Utility-scale auctions in Brazil, Chile,

and Mexico in which solar is out-

competing other clean technologies

are the key driver behind its strong

growth in the region

Executive Summary: Auction-led demand continues to strengthen prospects for solar in Latin America

Source: GTM Research Global Solar Demand Monitor Q2 2016

Latin America PV Demand 2010-2020E

Cumulative Forecast 2016-2020 = 27GW

2016-2020 CAGR = 37%

5

• Chile was the largest market in 2015

with 37% share of regional demand

and will remain in the lead in 2016:

The market has been driven by

merchant projects

• Mexico will be close to Chile in 2016

with 29% of regional demand share

as several grandfathered projects are

under construction now that there’s

more certainty in the market

• Brazil has a 3GW pipeline driven by

auctions but few installations: This

will change in 2016/2017 as several

projects face completion deadlines

• An auction in Peru and one planned

in Argentina position them as

markets on the rise in Latin America

Executive Summary: Chile leads regional demand but will soon give way to Mexico and Brazil

Source: GTM Research Latin America PV Playbook: Q2 2016

Latin American Markets’ Share of Regional Demand 2015-2020E

3%

14%23%

49%

28% 25%

37%

30% 12%

7%

16%18%

7%

29% 47%

28%

34% 33%

2%

1%

3%4%

7% 8%

4%

1%

2%1%

2% 1%

39%

9%

5% 4%4% 4%

3%

6%

5% 4% 6% 8%6% 9%

4% 4% 4% 4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016E 2017E 2018E 2019E 2020E

Shar

e o

f R

egio

nal

Dem

and

Brazil Chile Mexico Argentina Peru Central America The Caribbean The Rest of South America

6

Brazil

Outlook: Weak• Significant downside risks from political

uncertainty and a very weak macro-economic environment make conditions weak

• Falling electricity demand and cancellation of several transmission projects needed for solar generation further weaken fundamentals

• Solar installations remain stuck because of a severe lack of financing and drastic depreciation of the Real

Executive Summary: Brazil’s outlook is weak whereas Mexico’s has significantly strengthened

Source: GTM Research Latin America PV Playbook: Q2 2016

Latin America Major Markets’ PV Outlook

Chile

Outlook: Neutral• Low spot prices have suppressed

demand: They are at their historical lowest and often negative due to high congestion at the SIC-SING interconnection point and will not recover until the new 753km Cardones-Polpaico transmission line opens

• A crash in global copper prices has contracted mining demand but copper prices are showing early signs of a turnaround and demand from the sector could rise again

Mexico

Outlook: Strong• Solar’s strong win of 74% of energy

offered in the country’s first clean energy auction held in March 2016 has boosted market sentiment and demand

• Another auction with 9TWh of energy on offer is scheduled for Sept. 2016 and solar could win 60-70% of the energy offered

• 400-500MW of additional grandfathered projects will execute given better certainty in the market from the energy transition law

7

• Auction-led demand is skewing the

market towards the utility-scale

segment as governments prefer rapid

solar competitiveness through

economies of scale

• Brazil, Chile and Mexico each have

predominantly utility-scale markets

• New markets Peru and Argentina too

are pushing utility-scale projects

• Brazil and Mexico have early stage

distributed generation markets that

will grow and push that segment’s

share of demand in the region

• Chile is the only major market that is

conspicuous in its lack of a viable

incentive for distributed generation

Executive Summary: The utility-scale segment dominates demand but the distributed generation segment will strengthen over the next years

Source: GTM Research Latin America PV Playbook: Q2 2016

Latin America Market Segmentation 2015-2020E

3% 3% 3% 3% 6% 7%5% 5% 5% 5%

8% 10%2% 2% 1% 1%

2%3%

90% 90% 91% 91%84% 81%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015E 2016E 2017E 2018E 2019E 2020E

Mar

ket

Segm

enta

tio

n

Residential (<20kW) Commercial (20kW - 1MW) Industrial (1MW - 5MW) Utility (>5MW)

8

Source: GTM Research Latin America PV Project Tracker

Regional Project Pipelines (MWdc)

Executive Summary: Chile continues to soar above the pack for installed capacity in Latin America; Brazil and Mexico make strides in projects under construction

180533

2960

Mexico

40

550

2100

Brazil

1323

3232

1500

Chile

500

128

350

Central America

100148

Peru

54 100214

Carribbean

16277

400

Rest of South America

9

Executive Summary: Enel Green Power leads the way in Latin America with over 700MWdcunder construction in key regional markets

Source: GTM Research Latin America PV Project Tracker

131

140

231

329

403

0 100 200 300 400 500

SunPower

Pattern Energy

SunEdison

Acciona

Enel Green Power

Capacity (MWdc)

Chile

27

150

350

0 200 400

Buenavista Renewables

Eosol

Fisterra Energy

Capacity (MWdc)

Mexico

270

280

0 100 200 300 400

Enel Green Power

Canadian Solar

Capacity (MWdc)

Brazil

75

0 100 200

TerraFormGlobal/SunEdison

Capacity (MWdc)

Uruguay

Top Developers with under construction pipelines in select markets

About the Report

11

Contents of the Report

1. Executive Summary 3

2. Brazil 10

3. Chile 20

4. Mexico 32

5. Market on the Rise – Argentina 44

6. Market on the Rise – Peru 48

7. Central America 51

8. The Caribbean 54

9. The Rest of South America 56

12

List of Figures From the Report

Executive Summary

• Latin America PV Demand 2010-2020E

• Latin American Markets’ Share of Regional Demand 2015-

2020E

• Latin America Major Markets’ PV Outlook

• Latin America Market Segmentation 2015-2020E

• Regional Project Pipelines (MWdc)

• Top Developers with under construction pipelines in select

markets

Brazil

• Brazil Overall PV Demand 2015-2020E

• Brazil Market Segmentation 2015-2020E

• Brazil Utility Scale (projects >5 MW) PV Demand 2015-2020E

• Brazil Utility-scale Developer Rankings Q2 2016

• Developments taking place within Brazil’s PV market

• Falling value of PPA prices and rising ceiling prices in Brazil

• Brazil Distributed Generation (<20 kW-5 MW) PV Demand

2015-2020E

• Brazil Overall PV Demand Scenarios 2016E-2020E

• Brazil Residential (<20 kW) PV Demand Scenarios 2016-2020E

• Brazil Commercial (20 kW-1 MW) PV Demand Scenarios 2016-

2020E

• Brazil Industrial (1-5 MW) PV Demand Scenarios 2016-2020E

• Brazil Utility-Scale (>5 MW) PV Demand Scenarios 2016-2020E

Chile

• Chile Overall PV Demand 2015-2020E

• Chile Market Segmentation 2015-2020E

• Chile Utility Scale (projects >5 MW) PV Demand 2015-2020E

• Chile Utility-scale Developer Rankings Q2 2016

• Sistema Interconectado del Norte Grande (SING) Grid PV

Highlights

• Sistema Interconectado Central (SIC) Grid PV Highlights

• Difference in capacity awarded between the last CNE auction

and the next one

• Spot prices in Chile in SIC and SING grids

• Change in expected SING territory PV Pipeline

• Chile Distributed Generation (<20 kW-5 MW) PV Demand

2015-2020E

• Chile Overall PV Demand Scenarios 2016E-2020E

• Chile Residential (<20 kW) PV Demand Scenarios 2016E-2020E

• Chile Commercial (20 kW-1 MW) PV Demand Scenarios 2016E-

2020E

• Chile Industrial (1-5 MW) PV Demand Scenarios 2016E-2020E

• Chile Utility-Scale (>5 MW) PV Demand Scenarios 2016E-

2020E

Mexico

• Mexico Overall PV Demand 2015-2020E

• Mexico Market Segmentation 2015-2020E

• Mexico Utility Scale (projects >5 MW) PV Demand 2015-2020E

• Mexico Utility-scale Developer Rankings Q2 2016

• Total capacity of auctioned projects by developer

• Total capacity of auctioned projects by state

• IRR Estimates Relative to PPA Prices with fixed GTM Research

Assumptions

• State-level Status of Grandfathered Pipelines

• Where CENACE will award projects in the next auction

• Mexico Distributed Generation (<20 kW-5 MW) PV Demand

2015-2020E

• Mexico Overall PV Demand Scenarios 2016E-2020E

• Mexico Residential (<20 kW) PV Demand Scenarios 2016E-

2020E

• Mexico Commercial (20 kW-1 MW) PV Demand Scenarios

2016E-2020E

• Mexico Industrial (1-5 MW) PV Demand Scenarios 201E-2020E

• Mexico Utility-Scale (>5 MW) PV Demand Scenarios 2016E-

2020E

Market on the Rise: Argentina

• Argentina Overall PV Demand 2015-2020E

• Argentina Policy Evolution in Favor of Solar

• Insolation Levels in Argentina

Market on the Rise: Peru

• Peru Overall PV Demand 2015-2020E

• Auctioned capacity versus operational capacity in Peru

Central America

• Central America Overall PV Demand 2015-2020E

• Central America Market Segmentation 2015-2020E

The Caribbean

• The Caribbean Overall PV Demand 2015-2020E

The Caribbean

• The Rest of South America Overall PV Demand 2015-2020E

13

Accompanying Latin America PV Project Tracker

Current Announced

27,780 MWCurrent Contracted

6,990 MW

Number of Projects

1,125Number of Countries

30

Total Operational

1,812 MWUnder Construction

4,803 MW

Source: <Insert source>

Project Tracker Sample

Source: <Insert source>

Project Tracker Summary, Q1 2016

Purchasing Information

15

Individual Quarterly Report: $1,995

Annual Subscription - 5 reports and project database: $5,995

To purchase, visit www.latampvplaybook.com or contact:

Matthew Casey, Manager Solar Research Sales – casey@gtmresearch.com +1 617 500 6502

Zack Munsell, Research Sales Associate – zmunsell@gtmresearch.com +1 617 500 0257

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May 2016