Solar Power 2004

1. Solar Power 2004 Glenn Hamer Director of Government Affairs & Business Development First Solar 4050 E. Cotton Center, Building 6, Suite 68 Phoenix, Arizona 85040 ghamer@firstsolar.com 602-414-9314 602-350-0923 (cell)

2. World: Installed PV Grid-Connected Market 2004 • Germany: 320+ MW • Japan: 250 MW • US: 65 MW (mostly California)

3. How do we change this dynamic and develop a real US market? • Must demonstrate and wherever possible quantify the value of PV. • Consumer friendly interconnection and net metering (with certainty) • Low interest financing. • Focus on DISTRIBUTED attributes of PV. Certainly, insist on distributed prong for any effort to promote renewables. • Develop competitive markets where solar is available to electricity consumers of all classes at attractive prices. • If bridging subsidy is required to make solar attractive to consumers design it so as to realize the “PV Dividend” at the earliest possible date. • Focus on region where policy changes can yield significant sustainable markets. • Conclusion: the West – over 80 percent of the US market today.

4. Integrating Solar • Solar electricity strategically distributed throughout the community generates substantial public benefits – particularly in fast growing regions. • Shaves peak power. California Governor latched on to this attribute in unveiling his plan. Estimated that deploying 2.7 GW of PV would eliminate the need to build 36 natural gas peakers. • Reduces emissions – climate change. 2.7 GW displaces 50 million tons of CO2. • Healthy way to generate power. • Reduces natural gas price volatility. • Excellent way to generate power in urban and suburban areas. • Reduces chances of grid failure. • Sufficiently and properly deployed reduces or eliminates need for new T & D. • No water used in generation.

5. “PLEASE” • 50 values for distributed generation evaluated. • 48 positive, two neutral and zero negative

6. (Limited) Derivation of Value Premium of Commercial PV Generated Electricity: Southern California

7. Conclusion of quantifying three of 48 benefits • Net metering is a “subsidy” to ratepayers. In other words, solar exceeds value of retail rate – particularly strong case for commercial installations. • Critical to quantify as many of other benefits as possible. • “Solar Electricity Rate” – let’s determine value • This is not the “S” word.

8. Market Structure Required to develop PV • Determine true value of PV – PLEASE • Develop Solar Electricity Rate – incentivizes performance (retail rate net metering as the floor). • Develop competitive market. • Low interest financing – at least what is available to utilities. • Consumer friendly interconnection and net metering. • If there is a bridge, properly design a temporary incentive program. Could be modeled after Japan or Germany. Make price attractive to consumers of all rate classes to purchase solar.

9. Market Competition • Country is built on this principle. It does not exist for the electricity market although it does for almost every other product. • For PV to flourish it must be available to electricity consumers.

10. Long term, low cost financing • Objective: same low interest financing that is currently available to utilities. • Wringing out financing costs of capital intensive PV projects the easiest way to reduce the cost of solar to consumers. • Variety of ways to achieve. • Accelerated depreciation lowers payback. • Role of labs? Technology validation. • Get financial community involved!

11. Consumer friendly interconnection and net metering • “Civil rights” issue for distributed resources. • Guarantee net metering rate for at least 20 years.

12. Temporary Incentives -- Design • Incentives should phase to zero over time. • Decline in a steady and predictable fashion. • Incentives should all point in direction to squeeze costs and generate most kWh. • This means, decline in incentive, no cap. • Bring in financial community to help drive down financing costs. • Permit some room to adjust. • Long-term PBI spreads out cost to ratepayers – would allow for more MWs today and accelerate permanent cost reductions.

13. Temporary Incentives -- Design • 10 year time period is ideal – five years is the bare minimum. • Program should be of sufficient size to realize public benefits of a distributed solar infrastructure. • Unlimited: no constraint on activity. Moves technology along the learning curve the fastest.

14. Temporary Incentives -- Design • One-size fits all RPSs’ are not friendly. • Incentive program should be specific to distributed solar generation.

15. Distributed

16. Temporary Incentives -- Design • All should be eligible for solar generation – no rooftop discrimination.

17. WGA • 30 GW of clean energy by 2015. • Solar can be relevant in US faster than even the strongest advocates believe. • Solar champions on WGA. • No better place for the industry to focus its efforts.

18. Is Big Market on the Way in the West? • CA: 2.7 GW on the table – an even more comprehensive plan may soon be unleashed. • AZ: EPS – moving towards, customer-friendly distributed program. • NV: 2.4 multiplier for distributed PV, SolarGenerations. • NM: RPS may be adjusted to promote distributed PV. • HI: High electricity prices; dependent on oil; tax credit. • CO: Ballot initiative. • TX: Austin Energy – 100 MW – Big State. • OR: Favorable political climate.

19. Summary • Value solar appropriately – focus on distributed elements. • Competitive markets. • Low interest financing. • Consumer friendly interconnection and net metering with at least 20- year term. • Design “bridge subsidy” to maximize cost reductions. • Focus on where efforts will make the greatest difference – West. • Sustainable market!