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Solar PV as an Investment Grade Asset PV Plant Conference 2014 – Istanbul, 9th April 2014 Increase IRR and reduce risk in large scale PV plants Thomas.

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Presentation on theme: "Solar PV as an Investment Grade Asset PV Plant Conference 2014 – Istanbul, 9th April 2014 Increase IRR and reduce risk in large scale PV plants Thomas."— Presentation transcript:

1 Solar PV as an Investment Grade Asset PV Plant Conference 2014 – Istanbul, 9th April 2014 Increase IRR and reduce risk in large scale PV plants Thomas Götz

2 SMA Solar Technology AG IMPORTANT LEGAL NOTICE This presentation does not constitute or form part of, and should not be construed as, an offer or invitation to subscribe for, underwrite or otherwise acquire, any securities of SMA Solar Technology AG (the "Company") or any present or future subsidiary of the Company (together with the Company, the "SMA Group") nor should it or any part of it form the basis of, or be relied upon in connection with, any contract to purchase or subscribe for any securities in the Company or any member of the SMA Group or commitment whatsoever. All information contained herein has been carefully prepared. Nevertheless, we do not guarantee its accuracy or completeness and nothing herein shall be construed to be a representation of such guarantee. The information contained in this presentation is subject to amendment, revision and updating. Certain statements contained in this presentation may be statements of future expectations and other forward-looking statements that are based on the management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those in such statements as a result of, among others, factors, changing business or other market conditions and the prospects for growth anticipated by the management of the Company. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements which speak only as of the date of this presentation. This presentation is for information purposes only and may not be further distributed or passed on to any party which is not the addressee of this presentation. No part of this presentation must be copied, reproduced or cited by the addressees hereof other than for the purpose for which it has been provided to the addressee. This document is not an offer of securities for sale in the United States of America. Securities may not be offered or sold in the United States of America absent registration or an exemption from registration under the U.S. Securities Act of 1933 as amended. Disclaimer 2

3 SMA Solar Technology AG Agenda 3 1 Overview SMA 2 What makes an Investment Grade PV project 3 Main factors determining the financial success of a large PV Asset

4 SMA Solar Technology AG 4 SMA is the global market and technology leader for solar inverters Facts & Figures Founded: 1981 Sales 2012: EUR 1.5 billion Installed global capacity : > 35 GW Employees: + 5.500 worldwide R&D Professionals: >1.000 Invest R&D 2012: > 100 Mio. Comprehensive Product Range On-grid Residential 2 – 30 kW Industrial > 1 MW Backup Off-grid Residential < 2 kW Commercial 30 – 500 kW All PV applications All performance ranges Global Presence Canad a Chile USA Germany Belgium Czech Republic France Greece Italy Poland Portugal Spain United Kingdom Australia China India Japan South Korea Thailand United Arab Emirates South Africa 21 Subsidiaries Worldwide SMA Facts & Figures

5 SMA Solar Technology AG Agenda 5 1 Overview SMA 2 What makes an Investment Grade PV project 3 Main factors determining the financial success of a large PV Asset

6 SMA Solar Technology AG Example of an Investment Grade PV Project Many are bankable,… SMA is INVESTMENT GRADE! 6 Equity$ 850 Mio. (BBB-) First Investment Grade PV-Plant in history

7 SMA Solar Technology AG What makes a Solar Project Investment Grade? Example Fitch 7 Completion Risk: Probability to achieve commercial operation date Experienced Contractor Completion Risk: Probability to achieve commercial operation date Experienced Contractor Operation Risk: Stability and adequacy of plant performance Qualified operator comprehensive maintenance reliable technology Operation Risk: Stability and adequacy of plant performance Qualified operator comprehensive maintenance reliable technology Solar Resource: Scope, Quality and reliability of projects energy production forecast Solar Resource: Scope, Quality and reliability of projects energy production forecast Revenue Risk: Strength, duration and flexibilty of power purchase agreement. Stability of regulatory framework. Revenue Risk: Strength, duration and flexibilty of power purchase agreement. Stability of regulatory framework. Debt Structure: Terms and conditions of debt payment Debt Structure: Terms and conditions of debt payment Debt Service: Free Cashflow to pay debt Debt Service: Free Cashflow to pay debt Operation Risk: Stability and adequacy of plant performance Qualified operator comprehensive maintenance reliable technology Operation Risk: Stability and adequacy of plant performance Qualified operator comprehensive maintenance reliable technology Debt Service: Free Cashflow to pay debt Debt Service: Free Cashflow to pay debt Completion Risk: Probability to achieve commercial operation date Experienced Contractor Completion Risk: Probability to achieve commercial operation date Experienced Contractor

8 SMA Solar Technology AG Agenda 8 1 Overview SMA 2 What makes an Investment Grade PV project 3 Main factors determining the financial success of a large PV Asset

9 SMA Solar Technology AG The brain of a PV Plant Difference between great and a distressed asset RELEVANT CATEGORIES Experience Quality Service Technology Grid Mgmt. Experience Quality Service Technology Grid Mgmt. PERFORMANCE & RELIABILITY PERFORMANCE & RELIABILITY Inverter = only 10% of Project Value … Inverter = only 10% of Project Value … … BUT MOST VITAL ! INCREASE THE CASHFLOW LOWER INVESTMENT RISK 9

10 SMA Solar Technology AG Experience: how much? / how big? /where? Real life Experience is a vital selection criteria 10 Germany [38 MW] Italy [85 MW] United Arab Emirates [10 MW] USA [16 MW]

11 SMA Solar Technology AG Routine Tests 11 Endurance Tests > Optical inspection / Wiring test > Protective conductor inspection > High-voltage test / Function test > 1000-h endurance test at max. temperature and full power > Powercycle: 1000 cycles start-operation-stop Quality - increased availability + long life -> higher cashflow + reduced risk Advanced Tests Seismic Humidity Electromagnetic Climate Dust Lightning

12 SMA Solar Technology AG Dangerous Condensation 12 Fall-Down-Test Quality - Small details make a huge difference Detailed Measurements (> 120 sensors) Fuses need to last 20Years or more Tests beyond Standard >50C (Standard 25C) 60C over 3h (50C – 3h) Several fuses (1 fuse)

13 SMA Solar Technology AG 13 1. Longterm spare parts strategy: 2. Predictive Maintenance > Optimal quantity > Right quality > Fixed price > Remote Monitoring > Comprehensive Data Collection > Data Analysis (complex Algorisms/Experience) > Planned Maintenance possible (e.g. at night) Service - increased cash flow – reduced risk

14 SMA Solar Technology AG Technology - Efficiency and Selfconsumption Topic: Inverters with similar performance (efficiency) show strong difference in self consumption. Problem: 1.Higher Costs 2.Higher thermal strain on components = shorter life !! Comparable product of a competitor

15 SMA Solar Technology AG 15 Technology and Money cheaper can be more expensive !

16 SMA Solar Technology AG 16 Financial simulation: Higher efficiency Efficiency 98,4%

17 SMA Solar Technology AG 17 Financial simulation: Lower self consumption Efficiency 98,4% Self consumption 1.900 W

18 SMA Solar Technology AG 18 Financial simulation: Higher availabilty Efficiency 98,4% Self consumption 1.900 W Availability 99,3%

19 SMA Solar Technology AG 19 PV poses huge threat to grid stability -> big challenges to utilities >Growing PV penetration -> tougher regulations >In new markets frequent changes and introduction of new requirements Important to understand utilities >Grid Stability = highest priority >Potential for additional revenue streams Reactive Power at night (optional !!) Utility supporting services Future proof Projects >Investment Grade inverters possess comprehensive grid management functions >Easy Software upgrades possible if required Grid Stability / Grid Management - reduced risk + potentially new revenue streams

20 SMA Solar Technology AG Summary - Selection Criteria Inverter Experience Quality Service Technology Grid Mgmt. Experience Quality Service Technology Grid Mgmt. -> Project Size -> Harsh Conditions -> Project Size -> Harsh Conditions INCREASE THE CASHFLOW LOWER INVESTMENT RISK -> Relevant Certificates -> Modern Test Equipment -> Relevant Certificates -> Modern Test Equipment -> Local Footprint / Experience -> Spare Parts Supply (longterm !) -> Predictive Maintenance -> Local Footprint / Experience -> Spare Parts Supply (longterm !) -> Predictive Maintenance -> Efficiency -> Self consumption -> Temperature Behaviour -> Efficiency -> Self consumption -> Temperature Behaviour -> Grid Code Compliance -> Future Proof -> Grid Code Compliance -> Future Proof 20

21 SMA Solar Technology AG Thank You 21 1. Inverter = brain of a PV Installation 2. Determines performance and risk 3. Difference between great and distressed 4. Just converting DC to AC is not enough GREAT Asset DISTRESSED Asset Thomas Götz Vice President Sales Power Plant Solutions Tel. +49 561 9522-421431 Mob. +49 151 44623121 E-Mail: Thomas.Goetz@sma.deThomas.Goetz@sma.de


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