PowerPoint Presentation

Solar Equipment ManufacturingSustaining Growth

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AgendaIndustry OverviewMain PlayersAction PlanOpportunities1234

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Industry Overview

PolysiliconUsers of Solar PV systems

Commercial / IndustrialUtility ScaleResidentialWafersCellsPanelsProject DevelopmentSolar PV Value Chain

Solar PV vs fuel based electricity

Solar PV competes directly with fuel based electricity

Advantages

No reliance on / exposure to fuel costsMore environmentally friendlySimple installation and operation

Disadvantages

More expensive levelelized costDoes not provide continuous or consistent powerRequires significantly more land

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Industry EvolutionCumulative Installed Capacity (2014)The solar energy industry took off in the 2000s when European governments began to aggressively subsidize the sectorIndustry size (GW) & cost per MW (MUSD) Newly Installed Capacity (2014) Contributed to market growth of 45% per annum Cost decrease of 11% per annumIndustry Size (GW)Cost per MW (MUSD)6.62.623.199.7219.78.07.46.93.52.02.0

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Industry DynamicsSeveral factors have driven rapid growth in the sector and will affect it going forward Economic GrowthTechnologyGovernment SupportHaving reached a more mature stage, the industry is now highly competitiveBuyersCompetitionSubstitutesLooking forward, the sector will grow at a relatively modest rate of 6-12% over the coming 5 yearsRapid economic growth in 2000s drove energy demand growth. More modest expectations ahead.Technology improvements played a key role in reducing costs and improving efficiency. Main source of competitive advantage.Government support promoted investment in sector, but is gradually disappearing.Buyers possess serious power and favor lowest cost, as little differentiation is possible.Fragmented market with 1000s of competitors. Oversupply and decreasing prices are threatening many. Solar power has many substitutes including other renewables and conventional energy sources.

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OpportunitiesWhich areas can we invest in to create value?Organic GrowthDiversificationM&AStrategic AlliancesDo we hold resources or capabilities that will allow us to outperform competitors? Will this transaction create economies of scale and scope? Are there synergies?Are there opportunities to join forces with other sectors?Increased vertical integrationDiversify into wind, geothermal, biomass, etc.Focus on R&D to reduce production cost or improve technologyExpand into different segments (geographies or customers)Acquire a competitor to achieve scale economies or acquire R&D expertiseMerge with large player to become market leaderPartner with a utility operator in protected market to be the preferred choice of governmentApply solar technology into mainstream industry (automotive, aeronautic, )Identify new technology capable of disrupting the industry

Partner with renowned universities to identify new trends and start upsCorporate VCWill investing in start ups bring financial return and strategic hedge?12345

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Value Proposition ProductsCorporate Strategy1st Rank:1997Created :Geographic FootprintCorporate headquarter and factory: Changzhou, Jiangsu, ChinaManufacturing facilities in China, Malaysia, and Thailand Projects in 30 countries

Financial Results (millions of $)Vertically integrated capabilities and environmental stewardshipUpstream (manufacturing of ingots to PV modules) and downstream (design, planning, and execution, plus solutions and services business)

Trina Solar

Partners with leading PV research institutes to advance solar technology, monitoring, and standards Holds 575 patents, 480 waiting to be approvedEmphasises sustainability in a highly efficient production line and commitment to responsible manufacturing

Manufacturing and sale of solar monocrystalline and multicrystalline PV modulesDevelopment, construction and sale of PV projectsOn and off-grid solutionsEnergy storage for all segments

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Yingli SolarValue Proposition ProductsManufacturing and sale of solar PV modules

Manufacture and sale of solar PV modules (off-grid)Corporate StrategyFocused on Joint ventures as a means to influence other parts of the value chainAcquired cyber power in 20092nd Rank:1999Created :Pioneer in China PV market with deep understanding of local market since 2002Strong track record for supplying modules of superior quality for major projects across the worldAbundant reserve for PV projects pipeline of 1.4 GW at different approval stages across ChinaVersatile business models such as EPC, JV with local companies and fund management companiesGeographic FootprintMarket leader in China and Asia PacificSignificant Market share in the USHas a presence in all growth markets such as Mexico, China and BrazilCompetes in EuropeHQ in Cayman Islands

Financial Results (millions of $)

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Value Proposition ProductsRank:Created :Canadian Solar

Vertically integratedDifferentiated their business model by successfully growing their downstream, total solutions business Production in China and CanadaOnly non-Chinese company in the top 53rd 2001Manufacturing and sale of solar PV modules

Manufacture and sale of solar PV ingots, wafers & cells

Development, construction and sale of PV projects

Management of power plants once builtCorporate StrategyUntil 2012, used JVs with project builders to grow globallyStarted project development in 2012JV with IKEA in 2014Purchased Recurrent Energy from Sharp Corporation in 2015Plans to spin off its asset management (yieldco) division

Financial Results (millions of $)Geographic FootprintWorldwide projects:North AmericaAustraliaIndiaEuropeLATAMProduction in China and Canada

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Value Proposition ProductsCorporate Strategy8th Rank:1999Created :Geographic FootprintNorth AmericaEuropeIndiaMalaysiaChileAustraliaMiddle East

Financial Results (millions of $)Integrating technologies and expertise across the entire solar value chainSolar power plant solutionsFinancial strength, $2 billion of cash on the balance sheetWorld-class research and development team

First SolarInvest more in R&D than any of our competitorsEstablish strategic partnerships Agreement with Apple Strategic investment in Clean Energy Collective (CEC)Diesel-PV hybrid solution. Powering a mineJV with Belectric (UK)

ModulesModule PlusAC Power BlockPV Power PlantPV ProjectsOperations & Management

Integrating technologies and expertise across the entire solar value chainPlant Construction, Panel and grid setupsFinancial strength, $2 billion of cash on the balance sheetInteresting partnerships such as Apple, Investment in Clean Energy Collective and JV with Belectric (UK)10

2009201020112012201320141st 3rd 4th 5th 6th 8th 9th 2nd 7th First SolarSuntechSharpYingliSunpowerKyoceraTrina SolarCanadian SolarHanwha SolarSuntechFirst SolarSharpYingliTrina SolarCanadian SolarHanwha SolarKyoceraSunpowerSuntechFirst SolarYingliTrina SolarCanadian SolarSharpSunpowerJinko SolarHanwha SolarYingliSuntechTrina SolarCanadian SolarFirst SolarSharpJA SolarJinko SolarSunpowerYingliTrina SolarCanadian SolarSharpJinko SolarRenesolaFirst SolarHanwha SolarKyoceraTrina SolarYingliCanadian SolarJinko SolarJA SolarSharpRenesolaFirst SolarHanwha SolarEvolution of Market Leaders2009201020112012201320141st 3rd 4th 5th 6th 8th 9th 2nd 7th First SolarSuntechSharpYingliSunpowerKyoceraTrina SolarCanadian SolarHanwha SolarSuntechFirst SolarSharpYingliTrina SolarCanadian SolarHanwha SolarKyoceraSunpowerSuntechFirst SolarYingliTrina SolarCanadian SolarSharpSunpowerJinko SolarHanwha SolarYingliSuntechTrina SolarCanadian SolarFirst SolarSharpJA SolarJinko SolarSunpowerYingliTrina SolarCanadian SolarSharpJinko SolarRenesolaFirst SolarHanwha SolarKyoceraTrina SolarYingliCanadian SolarJinko SolarJA SolarSharpRenesolaFirst SolarHanwha Solar2009201020112012201320141st 3rd 4th 5th 6th 8th 9th 2nd 7th First SolarSuntechSharpYingliSunpowerKyoceraTrina SolarCanadian SolarHanwha SolarSuntechFirst SolarSharpYingliTrina SolarCanadian SolarHanwha SolarKyoceraSunpowerSuntechFirst SolarYingliTrina SolarCanadian SolarSharpSunpowerJinko SolarHanwha SolarYingliSuntechTrina SolarCanadian SolarFirst SolarSharpJA SolarJinko SolarSunpowerYingliTrina SolarCanadian SolarSharpJinko SolarRenesolaFirst SolarHanwha SolarKyoceraTrina SolarYingliCanadian SolarJinko SolarJA SolarSharpRenesolaFirst SolarHanwha Solar2009201020112012201320141st 3rd 4th 5th 6th 8th 9th 2nd 7th First SolarSuntechSharpYingliSunpowerKyoceraTrina SolarCanadian SolarHanwha SolarSuntechFirst SolarSharpYingliTrina SolarCanadian SolarHanwha SolarKyoceraSunpowerSuntechFirst SolarYingliTrina SolarCanadian SolarSharpSunpowerJinko SolarHanwha SolarYingliSuntechTrina SolarCanadian SolarFirst SolarSharpJA SolarJinko SolarSunpowerYingliTrina SolarCanadian SolarSharpJinko SolarRenesolaFirst SolarHanwha SolarKyoceraTrina SolarYingliCanadian SolarJinko SolarJA SolarSharpRenesolaFirst SolarHanwha Solar

Recommendation: Merger or AcquisitionBased on the dynamics and stage of the industry, we believe that there is significant value to be realized through a merger or acquisitionFragmentationIntensity of competition supports need to build scale to ensure steady project pipeline and mitigate cyclicality1New market access2New markets provide best growth opportunities and a means to diversify; difficult to enter organicallyPressure to reduce costCommoditized, competitive industry means cost reduction, through scale, is imperative3Importance of Innovation4Given need for innovation, merging is justified to share expertise & knowledge to expedite R&D processNumber of solar energy M&A transactionsAs the industry approaches maturity, fragmented competitors are consolidating to improve competitivenessRationale for executing a deal

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Recommendation: Strategic MergerSOLUTION: Merger of North American players that will create a strong market leader better positioned to defend against Chinese threat

BenefitRationaleSource of valueComplementing Geographies312Value Chain SynergiesComplementary StrengthsFirst Solar = primarily US market; Canadian Solar = well balanced global portfolioBoth companies manufacture panels, Canadian Solar is highly present in previous steps of value chain while First Solar is a big player in developing projectsCanadian Solars focus is reducing cost of production while First Solar is a leader in improving panel efficiencyGlobal player with strong bargaining power and balanced portfolio of mature & high growth marketsImproved margins and asset utilization, while shorter lead time improves competitive advantageImprove competitiveness offering and bring combine expertise to quickly bring new products to market

Defensive move against the Chinese.Bring new solutions larger Better bargaining power with suppliersSize entails better lobbying power with government

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Risks & MitigationThe following are the main risks associated with the deal and our proposed mitigation measuresRiskMitigation1234Post-Merger IntegrationProduct Cannibalization Anti-trust IssuesRetaliation From CompetitionFocus inwardly and ignore reactions; resist urge to make more deals to gain size, which could destroy valueLow Risk given the relatively small market shares. Sell the deal to government as a means to combat Chinese threatFirst Solar and Canadian solar specializes in different technology, hence minimizing the risk. In case of overlaps the nature of the product will facilitate the choiceThe deal focuses on two North American players in order to facilitate the integration

Anti-trust issues; Sell the deal as a combat to the ChineseRetaliation from the Chinese. We will focus on getting the best out of the dealProduct Cannibalization (overlap of product offering). Post Merger Integration.

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Thank You!

Team 6

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LambadaKaoma204864.42A great heat