The China Solar Energy Market

The China Solar Energy Market
Fact Book Prepared as Context for the Key Findings of the Renewable Energy Sector Team

Contents Overview of the China Solar Power Industry Segment Definition
Market Context Regulatory Environment Existing and Emerging Standards Technology Innovation and Alternative Solutions Competition and Industry Structure Financial Investment China Solar Energy Fact Book 2 2

Solar Energy – overview
China’s solar energy industry is poised to make a major impact on the worldwide solar energy market There are four major types of solar energy technologies currently being used in China: Solar Photovoltaic (PV) is the main technology used in China for the generation of solar electric power Concentrating Solar Power (CSP) is a technology that is new to China Building-Integrated Photovoltaic (BIPV) is a relatively under-developed technology branch expecting rapid growth in China Solar Thermal Water Heaters (SWH) in which China is a world leader in terms of both production and installed capacity The Chinese market for solar components is export oriented: Currently, over 90% of Chinese made PV cells and PV modules are exported to overseas markets Based on government targets for China’s domestic market for accumulated PV installation is expected to reach 300MW by 2010, up from only 10MW installed in 2006 – although government targets are currently being revised upwards China is a leader in the production of solar components: Since 2004, China’s solar cell production capacity has reached growth rates ranging from % per year contributing to the world’s shortage of poly-silicon feedstock In 2008, cell capacity of 4 Gigawatts (GW) was announced and, after growing a projected 40% in 2009, China’s solar wafer capacity will also reach 4GW Chinese solar technology is less sophisticated compared to the applications employed by overseas competitors: The average efficiency of Chinese c-Si PV technology is approximately 16–17% Chinese solar industry enterprises are still at a disadvantage when competing with global technology leaders, especially in terms of new Thin Film PV technologies Source: XYZ. China Solar Energy Fact Book

Types of Solar Technologies
Solar Energy – definition – overview There are four major types of solar technologies currently produced and used in China, or with high growth potential Types of Solar Technologies Solar Thermal Water Heater The most common types of thermal water heaters include evacuated tube collectors (44%), glazed flat plate collectors (34%) generally used for domestic hot water heaters and unglazed plastic collectors (21%) used mainly to heat swimming pools Generation of Heat Energy Generation of Electricity Solar Photovoltaic (Solar PV) Concentrating Solar Power (CSP) A solar cell, or photovoltaic cell (PV), is a device that converts light into direct current using the photoelectric effect Solar PV is the main technology used in China for the generation of electric solar power Concentrating solar power (CSP) technologies use lenses or mirrors and tracking systems to focus a large area of sunlight into a small beam, then convert the concentrated light to heat for power turbines to generate electricity Building-Integrated Photovoltaic (BIPV) Building-Integrated Photovoltaic (BIPV) technologies integrate photovoltaic cells into buildings to generate electricity as a distributed energy solution BIPV technologies are relatively new in China, but growth in applications is expected under new MOF & MOHURD subsidy Source: Wikipedia; XYZ. China Solar Energy Fact Book 5 5 5

Solar Energy – definition – value chain – Solar PV
The Solar PV value chain includes silicon suppliers, wafer, cell and module manufacturers, system installation and end use Photovoltaic (PV) Energy Value Chain and Participants Crystalline Silicon (c-Si) Approach Material Manufacturing Services Energy Sales Poly-silicon Wafer/Ingot PV Cell PV Module PV System Integration End Use End Use IIIustrative Industry Activities: Poly-silicon sorting Poly-silicon type check Poly-silicon Etch Solar Grade Poly-silicon manufacturing Polysilicon feedstock is crystallized into ingot Ingot shaping and sizing Ingots are cut and shaped then sliced into wafers Entails etching, doping, coating of wafers and applying electrical contacts to form a PV cell The assembly and array of multiple cells on a solar panel, along with electrical connections Power conditioning equipment to convert generated electricity for home use / transmission Installation equipment to mounting racks, wiring Installation labour Solar power farm BIPV LED Solar Battery New Financing and Partnering1 Manufacturing Equipments Ancillary Equipments Thin Film Approach PV Cell PV Module PV System Integration End Use Source: UBS Asia Solar Report 2007; XYZ Note1: Based on Deutsche Bank Solar Photovoltaic Industry report, Jan 2009 China Solar Energy Fact Book 6 6

Concentrating Solar Power (CSP) Definition
Solar Energy – definition – CSP CSP systems use mirrors to concentrate sunlight onto receivers and convert it to heat to power traditional steam turbines Concentrating Solar Power (CSP) Definition Concentrating solar power (CSP) systems use lenses or mirrors and tracking systems to focus a large area of sunlight into a small beam Concentrated light is then used as a heat source for a conventional power plant or is concentrated onto photovoltaic surfaces Claimed to be better than photovoltaic for large scale (50-200Mw) power plants, whilst PV applications are much better suited to smaller, decentralised applications Concentrating solar power systems are divided into concentrated solar thermal (CST) and concentrated photovoltaics (CPV) Schematic of an Active Concentrating Solar Power System Concentrated solar thermal (CST) Used to produce renewable heat or electricity (generally, in the latter case, through steam) Uses lenses or mirrors and tracking systems to focus a large area of sunlight into a small beam Concentrated light is then used as heat or as a heat source for a conventional power plant (solar thermoelectricity) Concentrated photovoltaics (CPV) Employ sunlight concentrated onto photovoltaic surfaces for the purpose of electrical power production Solar concentrators of all varieties may be used, and these are often mounted on a solar tracker in order to keep the focal point upon the cell as the Sun moves across the sky Source: Wikipedia; XYZ. China Solar Energy Fact Book

Concentrating Solar Power (CSP) Value Chain
Solar Energy – definition – value chain – CSP The CSP value chain includes five stages, but can vary significantly by technology and project Concentrating Solar Power (CSP) Value Chain Materials Components Finished Products Distribution End Use Industry Activities: Materials include steel, copper, brass, concrete, plastic, silica, synthetic oil and molten salt Components include collectors, mirrors, heat collection elements, steam generators, heat storage and central controls The finished products including solar technology and plant development Distribution is via ownership and operation of the CSP plant The end users are utility companies Selected Companies: Boeing, Chicago, IL 3M Company, Siemens Luz/Solel Alanod Luz Acciona Abengoa Solar Carrizo Energy BrightSource Sunray Energy Florida Power&Light Arizona Public Southern California Edison Nevada Power Co Sierra Pacific Power Co Pacific Gas & Electric Co Florida Power & Light San Diego Gas & Electric Note: CSP is a new industry, and the roles and actors in the value chain vary significantly by technology and project. In addition, the value chain structure is still evolving; R&D is an integral part of the value chain and conducted by a single company or by closely related companies; there is significant vertical integration across the five stages of the value chain; CSP is very new to China and there are very few domestic players (Himin, a key Chinese component provider, is an exception). Source: Center on Global Governance & Competitiveness, company annual reports, individual interviews, and company websites. China Solar Energy Fact Book 8 8 8

Solar Thermal Water Heater (SWH) Definition
Solar Energy – definition – SWH Solar water heaters (SWH) technologies transform solar energy into heat, and are now widely applied worldwide Solar Thermal Water Heater (SWH) Definition Solar heating systems are generally composed of solar thermal collectors and a fluid system to move the heat from the collector to its point of usage May use electricity for pumping the fluid, and have a reservoir or tank for heat storage and subsequent use May be used to heat water for a wide variety of uses, including home, business and industrial uses Three types of solar thermal water heaters are being widely applied Schematic of an Active Solar Heating System Formed plastic collector Formed plastic collectors (such as polypropylene, EPDM or PET plastics) consist of tubes or formed panels through which water is circulated and heated by the Sun's radiation Often used for extending the swimming season in swimming pools Flat plate collector A flat plate collector consists of a thin absorber sheet (of thermally stable polymers, aluminum, steel or copper, to which a black or selective coating is applied) backed by a grid or coil of fluid tubing and placed in an insulated casing with a glass or polycarbonate cover Vacuum tube Made of a series of modular tubes, mounted in parallel, whose number can be added to or reduced as hot water delivery needs change Source: Wikipedia; XYZ. China Solar Energy Fact Book

Solar Water Heater (SWH) Value Chain Manufacturing Equipments
Solar Energy – definition – value chain – SWH The Solar Water Heater (SWH) industry is characterized by a highly fragmented manufacturing base throughout the value chain Solar Water Heater (SWH) Value Chain Materials Components Finished Products Distribution End Use Industry Activities: Materials include aluminum, steel, copper, fibreglass, plastic, polyutherane foam Components include collectors, storage tanks, valves and central pumps and controls The finished products, including add-on product manufacturers Independent sales representatives Wholesale distributors Retailers Builders and developers Contractors and plumbers Homeowners Manufacturing Equipments Building Integration Selected Companies: Consol Changzhou Changzhou Flying Water Heater Co. Huayang Solar Energy Beijing Tsinghua Solar Systems Sunrain Hi-min Solar Solahart (Australia) Sunshore Linuo Paradigma Sangle Solar Energy Mondial Energy (Canada) Given the relatively low technology requirements and barriers to entry for SWH manufacturers, the industry is extremely fragmented with over 5,000 players – of these, only a few stand out based on product quality and technological innovation Source: Company annual reports, individual interviews, and company websites China Solar Energy Fact Book 10 10 10

Market Context Overview
Solar Energy - market context - overview Solar energy’s potential application in China exceeds existing government targets, with high long-term growth expected Market Context Overview Resources China has abundant solar resources; two-thirds of the country enjoys over 2,200 radiation hours annually, and 70% of the country has solar resources in excess of 500KJ/square cm/year (in contrast, solar market leader Germany averages only 400KJ/square cm/year The Chinese government has set a solar target of 5% total energy consumption by 2050; however, the potential of solar energy is much greater Market Size D R I V E S Energy Security Provides an alternative electricity and heat energy source, suitable for both utility scale (electricity supplied through the grid) and as a distributed energy solution Could reduce China’s dependency on world energy imports, and inherent vulnerability to world energy price fluctuations Limitless Renewable Provides a limitless natural resource that is not depleted like conventional energy sources of oil and coal Solar energy will contribute over 2% and 5% of the nation’s total energy consumption in 2010 and 2020 respectively Solar PV Supply: China is ranked number one worldwide in PV cell production In 2007, China’s PV cell production was 1189 MW*, which accounted for approximately 29% of worldwide installation. By 2008 cell production capacity was 4GW Over 90% of China’s Solar PV cells and PV modules are exported Demand: China’s domestic market consumption is limited; accumulated PV installation is expected to reach 300MW by 2010 (up from only 80MW accumulated and 10MW yearly installation in 2006) The Chinese government is boosting its domestic market demand – from only 4% of total PV installations SWH China is the world’s leader in the solar hot water market and over 95% of the core technology is held by Chinese companies As of 2007, the global capacity of solar hot water systems was approximately 154 GW China is the world’s largest solar thermal water heater market; it installed 70 GW and 107GW of capacity in 2006 and 2007 respectively, or about two-thirds of the world’s total capacity China’s long term goal is 210GW by 2020 CSP: Supply U.S., Germany and Spain are leaders in this technology Chinese companies have been investing in R&D Estimated that worldwide installed CSP capacity will reach 6,400 MW in 2012 Development is still at an early stage in China, with government targets of 300MW installations by 2010 Socio-economics The development of the solar energy industry may generate millions of direct and indirect employment opportunities and social and economic benefits In China, over 150,000 jobs are linked to the Solar Photovoltaic (PV) sector - over RMB150 billion revenue is generated per year with a CAGR over 20%, with significant ongoing growth potential Carbon Regulation Various forms of carbon regulations facilitating “cleaner” energy industries are gradually taking place In March 2009 MOF and MOHURD announced a RMB20/Watt subsidy for Building Integrated PV (BIPV) applications Source: XYZ Renewable Energy Final Deliverables 12 12

Market Context Overview
Solar Energy – market context – overview Solar Energy – market context – overview China is abundant in solar resources and leads in manufacturing, but solar energy remains a government-driven market Market Context Overview Solar Photovoltaics (PV): China is the world’s largest PV cell/module producer, but domestic installation levels are comparatively small China’s government is seeking to stimulate domestic market demand China’s abundant solar resources, economic considerations and national energy strategies make Solar PV an attractive market Solar Water Heater (SWH): China is the world’s largest market for solar thermal water heaters, accounting for almost two-thirds of total production and installation capacity Even though solar thermal water heaters are widely utilized in China, average usage per capita is still very low Concentrating Solar Power (CSP) Market: Dormant since the early 1990s, solar CSP technology is undergoing a re-evaluation in the solar-rich areas of the world The U.S., Germany and Spain are leaders in CSP projects, with China still at an early stage of development Source: XYZ. China Solar Energy Fact Book

Primary Energy Mix – China Versus Global
Solar Energy – market context – background Solar energy accounts for a tiny fraction of both the Chinese and global energy mix Primary Energy Mix – China Versus Global Primary Energy Mix in the World (2006) Primary Energy Mix in China (2006) The International Energy Association has indicated that solar power generation currently accounts for less than 1% of the world’s total electricity output, but that the proportion is expected to increase to approximately 20% by 2040 Source: European Photovoltaic Industry Association; China Solar PV Report – 2007; China Environmental Science Press. China Solar Energy Fact Book 14 14

Solar Energy – market context – resources
China is abundant in solar resources and has great potential for solar energy development Solar Energy Resources in China China lies between 20N and 40N, and the North and West are almost completely cloudless Two-thirds of the country enjoys over 2,200 radiation hours annually 70% of the country has solar resources in excess of 500KJ/square cm/year (by comparison, Germany and Japan average only 400KJ/square cm/year and 450KJ/square cm/year respectively) Distribution of Solar Energy Resource in China Unit:： MJ/Square Meter Source: Chinese Academy of Meteorological Science, China Solar Energy Fact Book 15 15

China’s Solar Energy Market – Production and Installation
Solar Energy - market context – market size China has the world’s largest solar PV and SWH production capacity, but domestic demand is still under-developed China’s Solar Energy Market – Production and Installation Solar Photovoltaic (Solar PV) Solar Thermal Water Heater (SWH) Concentrating Solar Power (CSP) China is ranked number one worldwide in PV cell production In 2007, China’s PV cell production was 1189 MW*, which accounted for approximately 29% of worldwide installation. By 2008 cell production capacity was 4GW Over 90% of China’s Solar PV cells and PV modules are exported China is the world’s leader in the solar hot water market and over 95% of the core technology is held by Chinese companies As of 2007, the global capacity of solar hot water systems was approximately 154 GW U.S., Germany and Spain are leaders in this technology Chinese companies like Himin have been investing in R&D Supply China’s domestic demand accounts for only 4% of total global PV installations Government targets are seeking to stimulate domestic demand – target is 300MW, and ,800MW target will likely be upgraded to over 10,000MW China is the world’s largest solar thermal water heater market; it installed 70 GW and 107GW of capacity in 2006 and respectively, or about two-thirds of the world’s total capacity China’s long term goal is 210GW by 2020 Estimated that worldwide installed CSP capacity will reach 6,400 MW in 2012 Development is still at an early stage in China, with a stronger PV manufacturing base Demand Note: Megawatts - 25 MW solar cell with a conversion rate of 7% can light up 10,000 LED lamps. Source: XYZ based on China Daily news. China Solar Energy Fact Book 16 16 16

Global PV Capacity and Installations
Solar Energy – market context– growth – solar PV In terms of installed capacity, the global solar PV industry has grown rapidly with an average annual growth rate over 30% Global PV Capacity and Installations Global Cumulative Solar PV Installed Capacity Cumulative Solar PV Installations by Regional Share (2007) MW Growth Rate % 25,000 45 40 20,000 35 30 15,000 25 20 10,000 15 5,000 10 5 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2010E Global PV capacity is projected to increase to approximately 21.9 GW by 2010 Technology improvement and government subsidies also effectively reduce the cost of solar energy Increasing oil and coal prices bring solar energy good opportunities to expand more market share as an alternative energy source China is still a small market for PV systems and installation with domestic demand accounting for only 1% of the total market in 2007 Source: European Photovoltaic Industry Association. China Solar Energy Fact Book 17 17

Solar Energy– market context – demand forecast – solar PV
Due to global solar PV industry troubles analysts have dampened growth forecasts for 2009, but long term outlook remains positive Annual Global Solar Installation, MW Annual China Solar Installation, MW 6177 4307 4177 2826 2007 2008E 2009E Base 2009E Low Germany Spain Japan USA South Korea China Rest of world In July 2008, Morgan Stanley believed the solar PV industry well insulated against recession, predicting sustained medium-term growth at 27% CAGR: they have dampened solar PV industry growth forecasts for 2009, but long term outlook remains positive Analysts believe that with re-instatement of incremental financing, coupled with lower silicon prices, and driven by new regulations and incentives in US and China, there is pent-up demand that will be realised with high growth predicted for 2010 Solarbuzz projects that by 2011 Germany will account for 28-30% of total global market demand while the U.S. will likely account for 16-23% of the total – Spain’s annual solar installation capacity is predicted to decline rapidly in line with reduced incentive schemes, reflecting a policy-driven market Market projections suggest that China will exceed original 2020 target of 1800MW installed capacity – a new target is expected to be announced in excess of 10,000MW Source: Solar Buzz 2008, Green World Scenario, CICC, Morgan Stanley; Barclays Capital estimates, China Solar Energy Fact Book 18 18

Solar Energy – market context – size – solar PV
The global solar PV market is predicted to double or triple revenue of US$ 10 billion within five years Solar PV Market Growth Scenarios – Demand Optimistic Scenario Conservative Scenario Global Solar PV Annual Installation (Volume) Global Solar PV Annual Installation (Volume) 9000 Unit: MW Unit: MW 7,630 4,177 8000 4500 7000 4000 3500 6000 CAGR: 34% CAGR: 19% 3000 5000 2500 4000 1,744 2000 3000 1,744 1500 2000 1000 1000 500 2006 2007E 2008E 2009E 2010E 2011E 2006 2007E 2008E 2009E 2010E 2011E Global Solar PV Annual Revenue (Value) Global Solar PV Annual Revenue (Value) Unit: USD in million Unit: USD in million 18,619 35000 30,463 20000 18000 30000 CAGR: 12% 16000 25000 CAGR: 24% 14000 10,589 12000 20000 10000 15000 10,589 8000 10000 6000 5000 4000 2000 2006 2007E 2008E 2009E 2010E 2011E 2006 2007E 2008E 2009E 2010E 2011E Source: Solarbuzz annual world PV Market Review, 2007 China Solar Energy Fact Book 19 19

Solar Energy – market context – size – solar PV
China’s PV installation levels are small even though China’s PV cell manufacturing sector is the world’s largest China Solar PV Production and Demand World Solar PV Cell Production (2007) Unit: MW China Solar PV Cumulative Installation (1990 – 2007) Unit: MW World Total: 9200MW 200 400 600 800 1000 1200 1400 USA Germany Japan China Africa & Middle East India Australia Rest of Asia Taiwan Rest of Europe 100 90 80 CAGR: 27% 70 60 50 40 30 20 10 1990 1995 2000 2002 2004 2005 2006 2007 Annual Installed Capacity Cumulative installed Capacity During the last five years, China’s PV cell production has increased at between 100%-300% In 2007, China’s PV cell production amounted to 1,189 MW accounting for approximately 29% of worldwide installation, followed by Germany and Japan In 2007, China’s cumulative solar PV installation reached 100 MW, which accounted for less than 4% of the worldwide installation capacity Dependent on coal consumption and petroleum imports to meet its energy needs, China is actively providing incentives to boost solar PV installation Source: European Photovoltaic Industry Association; China Solar PV report 2007; PwC Research. China Solar Energy Fact Book 20

Solar PV Value China Components
Solar Energy – market context – solar PV - value chain components Our Solar PV market context analysis examines market characteristics by value chain components Solar PV Value China Components Polysilicon Wafer/Ingot Manufacturers PV Panel Manufacturers PV System & installation Cell Manufacturers The following slides will analyze the key components of the solar PV value chain, focusing on the following market characteristics: Historical market size and growth Forecasted market size estimates Market dynamics Market trends Source: XYZ. China Solar Energy Fact Book 21 21

Solar Energy – market context – solar PV - value chain component – poly-silicon
By late 2008, the polysilicon market experienced overcapacity and subsequent price erosion Polysilicon Production Worldwide Polysilicon Demand and Production Unit: MT Highly Pure Polysilicon Production in China Unit: MT 35000 30,000 30000 25000 20000 15000 10,000 10000 4,110 5000 1,130 2007 2008 2009(E) 2010(E) As a result of polysilicon shortages and high-surging ASP, aggressive capacity expansion occurred during and resulted in excess output It is estimated that there will be around 30% overcapacity during 2009 resulting in decreasing prices When the cost per KW of solar PV generated electricity falls below the average retail price of grid supplied electricity, the industry will likely absorb this excess capacity Source: Hongyuan Securities Co.,Ltd.; XYZ. China Solar Energy Fact Book 22 22

Solar Energy – market context – solar PV - value chain component – poly-silicon
Despite poly-silicon prices falling more than predicted, global solar demand growth has been smaller than analysts expected Poly-silicon and PV Wafer Price Outlook Supply and Demand Dynamic Cell and Module Price Outlook Precipitated by global financial crisis, poly-silicon prices have dropped precipitously since 4Q08, matriculating down the solar PV value chain, affecting cell and module prices February 2008 SunTech estimated 10-15% drop in crystalline silicon module ASPs in 2009 while Deutsche Bank estimated 20%+ drop in ASP Elasticity of demand in the near term has been much lower than expected due to: Project financing constraints Slower grid electricity price CAGR In January 2009 Deutsche Bank forecast 4.6GWp global demand growth in followed by 6.6GWp in 2010 As a result there has been demand and supply mismatch In January 2009 Deutsche Bank reforecast demand growth (MWp installed) in for solar PV down from 38% to 10%. Source: Lazard Report, 2008, Suntech Interview in May 2009, DB, PV Industry Looking through the storm, Feb China Solar Energy Fact Book 23 23

Solar Energy – market context – solar PV - value chain component – dynamic – poly-silicon
Rapid capacity expansion is likely to continue driving down polysilicon solar prices in the near term Polysilicon Capacity – History and Forecasts Description Worldwide tight supply Silicon supply constraint s were the most important hurdle during this period as the tight silicon market created significant disadvantages for many players that lacked the capability to secure feedstock suppliers Smaller solar firms found conditions particularly difficult as they tended to be less successful in obtaining silicon supply , a fact that contributed to lower utilization rates, lower profit margins and missing growth plan targets Rapid capacity expansion A breakthrough in high quality polysilicon production technology occurred as nearly 40 enterprises developed high quality polysilicon projects Over 3000 tons of high quality products were expected in 2008, with production to reach as high as 20,000 tons by the end of 2009 Forecast Overcapacity and decreasing ASP An oversupply dynamic likely will emerge in 2009 resulting from the rapid expansion of capacity between 2006 and 2008 Demand increase from system manufacturers may slow due to the economic downturn as well as the changing subsidy policies in major PV markets such as Spain and Italy The production of polysilicon is forecasted to reach 125,000mt, with 97,000mt destined for solar energy applications (the realistic demand for polysilicon for solar may only be 83,000 in 2010) Source: XYZ. China Solar Energy Fact Book 24 24

Price Implications on Downstream Integration
Solar Energy – market context – solar PV - value chain component – poly-silicon As polysilicon accounts for the largest portion of PV module costs, price erosion will pave the way for downstream integration Price Implications on Downstream Integration Polysilicon Capacity and Production Forecast Price Erosion: Fundamentally, polysilicon material currently comprises 20-25% of solar PV system cost, or 40-50% of PV module cost, or 70-80% of PV cell cost, and so comprises the largest lever for cost reductions Historically, polysilicon was available at US$40-50/kg, but rapid growth in the solar sector resulted in supply constraints that led to poly costs reaching as high as US$400/kg(spot) and US$ /kg(contract) in 2Q08 As polysilicon oversupply sets in, it is estimated that spot prices will fall about 70% over 3Q08-4Q10F Factoring in contracted polysilicon (assuming 50% for the industry buys on contract basis), it is estimated that blended polysilicon costs will fall by about 57% Impact on downstream: Adequate polysilicon supply will enable module production to precipitate an oversupply situation Consequently, the present supply shortage will revert to a module overcapacity dynamic for a few years beginning in 2009 The oversupply dynamic will initiate a short-term shakeout within the solar PV industry among public and private companies However, consolidation will be a strong long-term positive for the industry as companies are forced to be more efficient and accelerate the march to grid parity Over time, commodity parts of the value chain (modules) will be less attractive and the return on selling energy under a distributed model will be more attractive Impact on business model: Critical for solar companies to realign business modules with industry reality For solar PV module manufacturers, being low cost is crucial (i.e., Thin Film is imperative) Control the value chain to the end user and energy provisioning at commercial level will be desired in order to enhance competitiveness An oversupply dynamic in the poly-silicon would lead to falling prices which would matriculate down the value chain, resulting in an industry shake-out Source: Deutsche Bank 2009 China Solar Energy Fact Book 25 25

China was the world’s largest producer of PV cells in 2007
Solar Energy – market context – solar PV - value chain component – size – PV cell China was the world’s largest producer of PV cells in 2007 PV Market Share by Region/Country Regional and National Shares of Global PV Cell Production (2007) China ranks number one in PV cell production and capacity, accounting for almost one-third of the world’s total production Source: European Photovoltaic Industry Association. China Solar Energy Fact Book 26 26

Solar Energy – market context – solar PV - value chain component – size – PV cell
The worldwide production of PV cells is predicted to reach 7.2 GW in 2009 Worldwide Polysilicon Cell Production and Thin Film Cell production Worldwide Annual PV cell Production Global Production of Thin-film PV Cells Growth Rate % MW MW Growth Rate% 400 90 350 80 300 70 60 250 50 200 40 150 30 100 20 50 10 2002 2003 2004 2005 2006 2007 Solar PV cell production capacity increased significantly In 2007, China’s solar PV cell production exceeded 1 GW, and 97.5% of the total output was exported to overseas markets China accounted for 29% of global PV cell production in 2007 Estimated that thin-film market share will reach about 20% of the total production of PV cells by 2010 and around 30% by 2015 Among thin-film PV technologies, amorphous silicon (a-Si) development is most significant in terms of technology maturity, production, application scales and installation capacity (approximately 5.2% of the total market in 2007) Compared with the average conversion rate of crystalline silicon- based (c-Si) PV cell (15-20%), thin-film PV cell’s average conversion rate (5-10%) still needs to be improved greatly Source: Hongyuan Securities Co., Ltd. Report on the development of the Photovoltaic Industry in China ( ). China Solar Energy Fact Book 27 27 27

Solar PV Module Dynamics Retail Price Per Watt Peak
Solar Energy – market context – solar PV - value chain component – trend – PV module Solar PV modules are expected to decrease in price during 2009, partly due to the new passive policy adopted by EU countries Solar PV Module Dynamics Since demand for the major solar energy products produced in China is driven by exports, U.S. and European retail prices are more relevant to domestic suppliers JP Morgan estimates that by 2009 module ASPs will likely decline by 14-26%, depending largely on the terms of a new Spanish subsidy In 2007, China’s PV solar module production exceeded 1.7GW, while the total generation capacity installed was much less (only 100MW in 2007 and MW in 2008) The solar PV domestic market will scale up continuously: Solar PV rooftop system demonstration projects are being implemented BIPV has been installed at commercial buildings, Olympic facilities and the Beijing Airport RMB20/watt subsidy from government Retail Price Per Watt Peak Unit USA:USD/Watt; Europe: Euro/Watt 2005 2006 2007 2008 2009 Source: Solarbuzz, 2008. China Solar Energy Fact Book 28

Cost Curves of c-Si and CdTe Modules
Solar Energy – market context – solar PV - value chain component – trend – PV module Different Solar PV modules compete primarily for lowest LCOE, but high conversion efficiencies are also a consideration Cost Curves of c-Si and CdTe Modules Crystalline Silicon (c-Si) Thin Film Highest power per area Requires less racking and support material Fewer modules mean lower shipping costs Large number of module choices Greater inverter flexibility Output less affected by temperature Less manufacturing materials used Lower cost per watt Good aesthetics for building-integrated applications Faster energy payback Non-glass substrates possible More shade tolerant High cost per watt High temperatures impact output more Low shade tolerance Individual cell visibility Lower power per area Takes months to stabilize output Twice as much rack material required More modules mean higher shipping costs Lower series-string capacity Less suitable for battery charging Requires more combiner boxes Limited inverter flexibility Fewer module manufacturer choices Deutsche Bank’s View: c-Si cannot challenge CdTe at the module level: although the gap will narrow, CdTe module cost and ASP leadership will not be effectively challenged by average conversion efficiency c-Si modules, even as c-Si module ASP begins to approach $2.00/Wp and installed system approach $4.00/Wp High efficiency c-Si will be the only volume technology able to compete with CdTe in terms of Levelized Cost Of Electricity (LCOE) C-Si module market is likely to become a commodity market with gross margins under 15% compared with 40% for CdTe Modules Source: DB, PV Industry Looking through the storm, Feb, Company Data China Solar Energy Fact Book 29 29

Sub-Assembly Cost Of c-Si, US$/Watt produced
Solar Energy – market context – solar PV - value chain component – trend – PV module In the near-term CdTe Thin Film technology holds a significant LCOE advantage over c-Si Sub-Assembly Cost Of c-Si, US$/Watt produced LCOE Inputs (2009) Poly Ingot Wafter Cell Module Total Industry Average US $/Watt produced 0.7 0.2 0.25 0.35 0.45 1.95 Target for 2011 US $/Watt produced 0.39 0.15 0.3 1.24 Poly-Si Price $/KG (Processing Cost $1.25) 1.25 50 60 70 100 125 150 175 200 6.60 1.58 1.65 1.71 1.91 2.08 2.24 2.41 2.57 6.70 1.59 1.72 1.92 2.09 2.26 2.42 2.59 6.80 1.66 1.73 1.93 2.10 2.27 2.44 2.61 6.90 1.60 1.94 2.11 2.29 2.46 2.63 7.00 1.67 1.74 1.95 2.13 2.30 2.48 2.65 7.10 1.61 1.68 1.75 1.96 2.14 2.32 2.49 2.67 7.20 1.97 2.15 2.33 2.51 2.69 7.30 1.62 1.69 1.76 1.98 2.16 2.35 2.53 2.71 7.40 1.77 1.99 2.18 2.36 2.55 2.73 Grams of /Wp The current cost of PV system installation is $3.20, the direct cost is $2.25 (including BOS, Inverter, labors and others, excluding land costs) - according Deutsche Bank, the direct cost could fall to $1.69 Source: 1. DB, PV Industry Looking through the storm, Feb, Company Data 2. MorganStanley Research, Sempra Energy, FSLR, NREL China Solar Energy Fact Book 30

Leading Thin Film Companies
Solar Energy – market context – solar PV - value chain component – trend – PV module However, new Thin Film technologies and core equipments are dominated by American, Japanese and European companies Leading Thin Film Companies Company Year Founded Location Technology Production Equipment Cell Efficiency Module Efficiency Costs/Wp Capacity 2008 Expansion Goal Finances Solyndra Jan .2005 USA CICG on glass cylinders Proprietary development 12-14% 7.6-10% $3.5 to $4 per Wp 110 MW 520 MW in next few years Investors includes argonaut Private Equity, ARTIS, CMEA VC, Masdar NanoSolar May 2002 Printed CIGS cells % N/A The goal is 35¢ per W *0MW 430 MW Benchmark, MDV VC, etc, $420 million Solibro End of 2006 Germany CIGS on glass 16% 8-12% 30MW 45 MW; 90MW Qcell Miasole 2003 CIGS on steel 10.20% 50MW KPCB GlobalSolar Energy 1996 CIGS on Flexible materials 65MW 85MW Privately held Wurth Solar 1999 CIS 13% Wholly-owned subsidiary of the Würth Group Flexcell 2000 Switzerland Amorphous silicon 10.90% 3% 60 euro cents (76.2¢) 25MW A second line with another 25MW Nesxpower tech 2005 Taiwan Amorphous-Si ULVAC 7% 100MW in 2010 Founded by UMC Group Kaneka 1998 Japan Micromorphous silicon 9-10% $1 per W after 2010 40MW (plus 30 MW a-si) 240MW by 2011 Ommon stock traded: Tokyo, Osaka Nagoya Sontor 2007 Applied Films Up to 12% 7-8% 120MW Inventux Tech Oerlikon Solar AG 8.50% Goal:<€1($1.27) 33MW 100MW by 2010 Financial secure until 2010, Oerlikon, BEOS, Berlin Partner AVA Solar Cadmium telluride 10.50% (Expected) Less than $1 per W Pilot line with 3MW 200MW in 2009 $150 million DCM, GLG Partners, Tchnology Partner, Invus etc. Calyxo Up to 16% 6% A second line with 60MW CSG 1995 as Pacific Solar Crystalline thin-film silicon on glass 10.40% 6.10% 20MW No plans First Solar $.93/watt 735MW 1.1 GW end of 2009 NASDAQ listed Source: Company data and public reported China Solar Energy Fact Book 31

Thin Film Companies in China
Solar Energy – market context – solar PV - value chain component – trend – PV module Chinese players have invested in a-Si R&D and manufacturing, but lag in CdTe and CIGS Thin Film production and development Thin Film Companies in China Company Year Founded Location Technology Production Equipment Recent progress Expansion Goal Finances Shenzhen ChuangYi 1993 Shenzhen Guangdong a-Si Domestic or Proprietary development 5-6%; 50MW-100MW; produce 25MW in 2007 1000MW by 2013 Intel 20M M S JinTaiYang a-Si, uc-Si/tandem 6-7%; 200MW around IDGVC PuLe 2006 Bengbu Anhui 12-18MW; 5-6% 200MW by 2012 SAIF not Close XinAo 1995 Langfang Hebei uc-Si/tandem AMAT (5.72m²) Small batch production, they will produce at the end of this month 500MW by 2010 IFC 15M M S ZhengTai Hangzhou Zhejiang Oerlikon (1.43m²) Equipment just arrived and in the process of debugging 380MW by 2010 50M M S? SaiBoLe investment together Hangzhou LongYan 2008 CdTe In the process of debugging of 30CM*30CM Lenovo, morning star,GSR; 10M M S around Hangzhou ShengTong Just set up, complete the debugging at the end of the year Private enterprises in Zhejiang province. 4M M S University of SiChuan Chengdu Sichuan In the process of debugging 0.3MW of 60CM*30CM Wuxi ShangDe Suzhou FST Suzhou Jiangsu CIGS Optorun & Proprietary development 10CM already complete, 13% change frequency and in the process of debugging of 3MW 40MW by 2010 8.6M M S; individual investor NUVO Solar Proprietary development 9%, in the process of 3-5MW 2.7M M S; in financing Source: company data and public report and interview China Solar Energy Fact Book 32

Solar Energy – market context – solar PV - value chain component – trend – PV module
CIGS technology is currently untested at commercial scale, but has low LCOE and high conversion efficiency potential Status Challenges There are more than 30 companies which use their own technical roadmap, coating, printing, vapor deposition or sputtering and different bottom material The laboratory data has shown 19.9% conversion efficiency, but only Global Solar, Wurth, Showa Shell have industrial-scale production Venture capital has backed it excessively, keen to find the next First Solar: Nano Solar, 420mms They want to control the cost to within $1Watt It is believed that AMAT have just established a group which research and develop the equipment of CIGS Technology Control of multi-layer coating Unavailable of the standard process and tools Home made equipment Cost The output of Indium was only 510 tons in 2007, 84% of it used to the coating of display and 13% used to do the additives and catalysts At present, all the costs are estimated Large-scale Production Compared with the production of the a-si and CdTe, this process is much more complex At present, whilst a-Si companies are looking at ramping production, key players in CIGS development are still looking at how to industrialize the technology, and very few Chinese companies are actively engaged Source: Deutsche Bank Solar Photovoltaic Industry report, Jan 2009 China Solar Energy Fact Book 33

Oversupply of Polysilicon is Expected Across 2009
Solar Energy – market context – solar PV - value chain component – China overview The overall positioning of Chinese companies upstream in the value chain leave them vulnerable to current industry shake-out Oversupply of Polysilicon is Expected Across 2009 Polysilicon oversupply dynamic: As a result of polysilicon shortages and high-surging ASP, aggressive capacity expansion occurred during and resulted in excess output and falling prices Excess capacity expected to be absorbed when the cost per KW of solar PV generated electricity falls below the average retail price of grid supplied electricity Poly-silicon Wafer Cell Module Downstream Chinese companies are disproportionately positioned upstream in supply chain, leaving many vulnerable: Chinese companies are major producers of solar-grade polysilicon, as this graph demonstrates The oversupply dynamic has significant impact downstream on other Chinese solar companies: China has around 140 solar-grade crystalline silicon wafer makers who are expected to be adversely affected China was the world’s largest producer of solar PV cells in 2007, accounting for 29% of production Lazard estimate a 30% drop in module ASPs this year1, Deutsche Bank believe module market will become a commodity market It is estimated that between 50% and 80% of Chinese module manufacturers have closed their factories since February 2009 Overall Chinese solar companies are suffering: Chinese solar stocks plummeted from $23/share in Sept 2008 to $3.45/share March 2009, compared to an equivalent fall of 45% in US stocks2 Highly Pure Polysilicon Production in China Unit: MT 1,130 4,110 10,000 30,000 5000 10000 15000 20000 25000 30000 35000 2007 2008 2009(E) 2010(E) Source: Hongyuan Securities Co.,Ltd.; XYZ. 1 Lazard Solar report Jan 2009, 2 Barclays Solar Report, May 2009 China Solar Energy Fact Book 34 34

Solar Energy – market context – solar PV – China’s competitive overview
Overall, China’s solar industry lacks some competitive advantages, especially in new technology areas Evaluation of China’s Solar Production Capacity and Inhibitors Production resource China’s competitive position Manufacturing equipment Quantity vs. quality: China a world leader in production capacity, but questions exist about the quality of production Oversupply dynamic: position of Chinese companies upstream in supply chain is negative Technological comparisons Cell conversion rates are lower on average than companies in other countries. Concerns over silicon quality and development of new high technologies New market entrant in high technologies like CdTe and CIGS, and also a new market entrant to CSP and BIPV technologies Government incentives in the form of feed-in tariffs can act as an annuity stream for project investors, similar to interest earned on a government bond – although investors faith in government commitment is central Financing Suitable companies Position in value stream leans heavily towards cell-level and upstream Chinese companies are net manufacturers: 2007 cell production represented 29% global installations, but installed capacity was only 4%1 Major Chinese firms focus on a-Si and c-Si – leaders in new technologies Human resource shortfall in downstream parts of value chain like installation Source: XYZ 1 China Greentech Analysis based on China Daily news China Solar Energy Fact Book 35 35

Global CSP Pipeline by Country
Solar Energy – market context – size – CPS The Global Concentrated Solar Power (CSP) industry is expected to grow rapidly in the next few years Global CSP market Global CSP Pipeline by Country Unit: MW Dormant since the early 1990s, solar CSP technology is being re-evaluated in the solar-rich areas of the world 2007 was a pivotal year for solar CSP development as both Acciona and Abengoa inaugurated 65 MW of parabolic trough and 11 MW of central receiver technologies respectively There are over 5,800 MW of solar CSP projects in the planning stages worldwide with Spain and California taking the lead – although only financially sound players are moving forwards with projects With close to 130 projects under development in Spain and over 50 projects in the U.S., the CSP sector may require as much as US$80 billion of investment over the next decade Cannot edit since we do not have the data. MangoStrategy colors should be used. Note: More specificity to source info? Source: Emerging Energy Research. China Solar Energy Fact Book 36 36

Key Trends in Global Concentrated Solar Power (CSP) Development
Solar Energy – market context – market dynamics – CPS Global Concentrated Solar Power (CSP) implementers are continuing cautiously amidst the global economic downturn Key Trends in Global Concentrated Solar Power (CSP) Development Funding requirements: With close to 130 projects under development in Spain and over 50 projects in the U.S., the CSP sector will demand as much as US$80 billion of investment over the next decade Global CSP Players altering their strategies amidst the backdrop of a troubled global economy: Financially sound players are moving forward with their 3,000 MW of planned projects as emerging players revaluate their strategies to utilize the US$420 million in capital raised in 2008 Development in Spain is key to industry success as U.S. market remains questionable: Spain’s 130-Project 5,700MW pipeline is taking on greater significance amidst the U.S. economic downturn and the lagging U.S. permitting process CSP supply chain build-out creates opportunity for new entrants: A new group of CSP technology providers are emerging to meet the 23 GW global capacity that has been proposed Source: Emerging Energy Research. China Solar Energy Fact Book 37 37

Solar Energy – market context – Solar PV – trend – BIPV
The Building-Integrated Photovoltaics (“BIPV”) market is forecasted to expand rapidly in the future BIPV Historical Growth – Future Market Size and Cost Structure According to Frost & Sullivan market research, the emerging building-integrated photovoltaic (BIPV) market sales amounted to US$199 million in 2007, representing an annual growth rate of 33% According to the NanoMarkets report "Building Integrated Photovoltaics Markets 2008”: By 2013, there will be an installed capacity of 10.8GW peak of BIPV, of which 4.6GW peak will come from Europe and 3.7 GW peak will come from the U.S. BIPV market is estimated to exceed US$4 billion in revenues by 2013 and surpass US$8 billion in 2015 About 7 GW peak of total BIPV capacity by 2013 will be from residential applications Rooftop installations will continue to dominate the market Facade BIPV will reach 1.1 GW peak in five years Cost Structure for Large Commercial BIPV Installation Source: Frost & Sullivan Market Research; NanoMarket Report “Building Integrated Photovoltaic Markets 2008”; United Solar. China Solar Energy Fact Book 38

Solar Energy – market context – size – solar thermal water heater
Chinese companies account for two-thirds of SWH global production, and dominate leading technologies China Solar Thermal Water Heater (SWH) Production China Solar Water Heater Production ( ) Unit: square meters in million 6.4 13.4 15 18 23.4 2000 2004 2005 2006 2007 China is now the number one solar thermal water heater producer in the world accounting for over 50% of total production Over 95% of the core technology for production is held by Chinese companies Some leading firms, such as Huang Ming, have already improved technology transfer rates from 35% (the average) to 38% or higher China Solar Thermal Water Heater Export ( ) Unit: USD in million Source: National Development and Reform Commission’s (NDRC) comments; XYZ. China Solar Energy Fact Book 39 39 39

China, as the world largest market for solar thermal water heaters, also accounts for two-thirds of installed systems Global Solar Thermal Water Heater (SWH) Market Solar Thermal Water Heater Market Installation Size by Country (2006) Market Demand: China accounts for about 65% of world total installed capacity Europe is the second largest market for solar thermal water heaters with Spain and Germany the most important individual countries Japan’s penetration rate reached its peak in the mid-1980s with installation of over 110,000 sets Other solar rich countries and regions such as Australia and Brazil show increasing market demand Impact of Government Policy on Demand: Israel’s penetration rate of solar water heater exceeds 90% with the highest use of one square meter per capita due to compulsory laws on using solar water heaters Since 2000, the usable area of solar water heaters in Germany has grown rapidly due to subsidies on solar energy and other beneficial policies for renewable energy Spain became the second country (after Israel in 2005) to regulate the installation of solar hot water systems Japan’s growth lags as a result of government policy Source: Renewable Energy Policy Network for the 21st Century. China Solar Energy Fact Book 40 40 40

However, although government targets will be met, average usage per capita is still much lower than in the EU China Solar Thermal Water Heater Installation China Solar Thermal Water Heater Accumulative Installation ( E) Unit: Square Meters in million As the world largest market for solar thermal water heaters, China’s total accumulative installation was over 100 million square meters (m3) in 2007, an amount that may reach 150 million m3 in 2010 and 300 million m3 by 2020 if government targets are met However, even though solar thermal water heaters are widely used in China, the average usage square per capita is only compared to an EU average of According to the National Development and Reform Committee’s Medium-Long Term Plan, China’s target is to reach a 20%-30% household penetration rate by 2010, with solar energy consumption to be over 2% and 5% of the nation’s total energy consumption in 2010 and 2020 respectively Latest figures show Chinese industry meeting government targets: in 2008, accumulative installation reached 125 million m3, and production capacity reached 40 million m3 Source: National Development and Reform Commission’s (NDRC) comments; XYZ; China Custom; Renewable Energy Policy Network for the 21st Century; People’s Daily Online, 15 April 2009 China Solar Energy Fact Book 41 41 41

Solar Energy – market context – demand driver
The overall attractiveness of solar implementation in China is mostly driven by national energy strategies Cloudless Weather Long Sunshine Hours Rich in Solar resource Resource considerations China lies between 20N and 40N,and the North and West are almost completely cloudless Two-thirds of the country enjoys over 2,200 radiation hours annually 70% of territory has solar resources in excess of 500KJ/square cm/ year China’s Target for Solar Energy Job Creation Value Added Rural Market Potential By 2050, attain 5% of total electricity generation capacity Economic considerations Over 150,000 jobs linked to the sector Over RMB150 billion revenue per year with a CAGR over 20% Suitable for stand-alone power stations in rural areas without easy access to other traditional energy sources 2010 Solar Power Installation: 300MW 2050 Solar Power Installation: 1000MW Dependency on Imported Petroleum Dependency on Coal Environment Protection Energy security considerations Current high petroleum import dependency (over 50%) should decrease to a reasonable degree Current coal consumption dependency (over 70%) China’s CO2 emissions account for 15.1% of the world’s total, the largest of any country Source: National Development and Reform Commission National Energy bureau XYZ and individual interviews. China Solar Energy Fact Book 42 42

Market Context Implications Market Context and Implications
Solar Energy – market context – implications Solar Energy – market context – implications China’s solar energy market is expected to expand rapidly in the next few years, influenced by market and regulatory drivers Market Context Implications Market Context and Implications Solar PV: The solar PV market in China is currently driven by government subsidies; however, significant cost reductions will create price-elastic demand and replace subsidies as the main market driver Solar Thermal Water Heaters: The lower than average usage per capita of solar thermal water heaters in China implies that there is still large room left for market participants CSP: Improving technologies create more opportunities in CSP markets which also results in a high demand for investment in the market BIPV: As a new technology in the solar PV industry, BIPV may contribute to the creation of a dynamic new market “The solar industry is entering a new era. The main demand driver so far has been government subsidies. We expect significant cost reductions will set the stage for price-elastic demand creation that will replace subsidies as the main driver”1 Source: XYZ. 1. Solar Technology, Asia Pacific, 24 Nov 2008 China Solar Energy Fact Book 43 43 43

Market Context Regulatory Environment Existing and Emerging Standards Technologies Innovation and Alternative Solutions Competition and Industry Structure Financial Investment China Solar Energy Fact Book 44 44

Solar Energy – regulatory environment – overview
Incentives and privileges have been allotted by the Chinese government to boost China's solar industry Overview Given that solar energy is one of China’s key renewable energy sources, ambitious targets have been established: The national targets for solar PV of 300MW by 2010 and 1.8 GW by 2020 are currently being revised upwards – the new 2020 target is likely to exceed 10,000 MW Existing SWH uptake targets of 150 and 300 million square meters by 2010 and 2020 respectively may be re- examined as China is expecting to beat targets – some estimates expect 800 million square meters by 20301 If the two proposed Gigawatt-sized solar power plants located in the western plateau provinces of Qinghai and Yunnan are completed, China will have the world’s largest solar power stations A number of regulatory agencies oversee China’s solar energy market: National Development and Reform Commission (“NDRC”) Ministry of Environment Protection (“MEP”) Ministry of Commerce and Ministry of Science & Technology (“MST”) A long awaited “Measurement of Financial Subsidy for Photovoltaic Building Construction” was recently announced and is expected to substantially boost the solar power industry Source: National Development and Reform Commission XYZ China Solar Energy Fact Book 45 45

Institutional Arrangements for Renewable Energy
Solar Energy – regulatory environment – regulatory entities Numerous regulatory agencies are involved in the management of China’s renewable energy resources Institutional Arrangements for Renewable Energy National Direct oversight National People’s Congress Indirect oversight State Council (SC) National Development and Reform Commission (NDRC) Ministry of Finance (MOF) Ministry of Housing & Rural-Urban Development (MOHRUD) Ministry of Land and Resources (MOLR) National Energy Bureau Price Bureau (PB) Ministry of Environment Protection (MEP) Ministry of Science and Technology (MOST) Ministry of Agriculture (MOA) State Electricity Regulatory Commission (SERC) Sub-national Provincial Government Environmental Protection Bureaus (EPBs) Local Bureau of Finance (BF) Urban Construction Commission (UCC) Provincial Offices of the State Administration of Taxation Local Price Bureaus (PBs) Government organized bodies Grid Companies China General Certification Center (CGC) Chinese Wind Energy Association (CWEA) Photovoltaic Subcommittee of Chinese Renewable Energy Society (CRES) Source: XYZ China Solar Energy Fact Book 46 46 46

Solar Energy – regulatory environment – targets
As the largest emitter of carbon dioxide worldwide, China has established targets to reduce its coal consumption Energy Consumption Targets Related to the Solar Energy Industry National Energy Consumption Goals Use Renewable Energy Sources The Chinese government envisions that 10% and 15% of China’s total energy needs will be met by renewable energy by 2010 and 2020a Energy Efficiency Regulations have been set to reduce energy consumption per GDP by 20% by 2010b Laws and Regulations Enacted to Support These Targets Include:b The Renewable Energy Law Medium and Long-Term Development Plan for Renewable Energy ( ) Medium and Long-Term Energy Conservation Plan ( ) National Promotion Plan for the Use of Solar Energy Measures of Financial Subsidy for Photovoltaic Building Construction National Climate Change Program Program of Action for Sustainable Development Source: a. “China Passes Renewable Energy Law,” RenewableEnergyWorld.com, b. Ivan Lee and Evan Li, Global Equity Research: Climate Change in China, Lehman Brothers, 2008. China Solar Energy Fact Book 47

The Renewable Energy Law
Solar Energy – regulatory environment – policies and incentives The Renewable Energy Law seeks to have 15% of China’s energy mix by 2020 be comprised of renewable energy Constitution of PRC The Renewable Energy Law Effective January 1, 2006, the objectives of the law are: Develop and utilize renewable energy Improve the energy structure Diversify energy supplies Safeguard energy security Protect the environment Realize the sustainable development of the economy The general provisions of the law extend to: Resource Survey and Development Plan Industry Guidance and Technology Support Promotion and Application Price Management and Fee Sharing Economic Incentives and Supervisory Measures Legal Responsibilities Medium and Long-Term Development Plans and National Promotion Plan Source: The Renewable Energy Law – The People’s Republic of China document, January 1, 2006. Measures and Programs China Solar Energy Fact Book 48

The Renewable Energy Law
Solar Energy – regulatory environment – regulations and incentives Provisions of the Renewable Energy Law display the government’s support of the renewable energy industry The Renewable Energy Law Investment Pricing Rural Area Planning Financial institutions may offer preferential loans with financial interest subsidies to renewable energy development and utilization projects The grid power price of renewable energy power generation projects shall be determined by the price authorities from the State Council Energy authorities of various local governments above the county level shall – on the basis of local economic and social development requirements and ecological protection and health needs – prepare renewable energy development plans for rural areas to promote biomass energy, household solar, small-scale wind energy and small-scale hydraulic energy use The government will establish a renewable energy development fund to support research, development and promotion of renewable energy The excess costs associated with the purchase of renewable power (compared to the purchase of power generated by conventional sources) will be factored into the selling price Encouragement and support for the development and utilization of renewable energy in rural areas is stressed The government will grant tax benefits to projects listed in the renewable energy industrial development guidance catalog Grid connection expenses paid by grid enterprises for the purchase of renewable power and other reasonable expenses may be included in grid enterprise power transmission costs and recouped from the selling price Governments above the county level shall provide financial support for renewable energy utilization projects in rural areas Source: The Renewable Energy Law – The People’s Republic of China document, January 1, 2006. China Solar Energy Fact Book 49 49

The Medium and Long-Term Development Plan is aimed
Solar Energy – regulatory environment – policies and incentives The Medium and Long-Term Development Plan is aimed at increasing the use of renewable energy Constitution of PRC The Renewable Energy Law Medium and Long Term Development Plans and National Promotion Plan 1 Medium and Long-Term Development Plan For Renewable Energy ( ) Establish sustainable and stable market demand by means of favorable price policies, Mandated Market Share (MMS) policies, government investment, and concession programs Improve the market environment by formulating regulations that encourage the use of renewable energy The renewable power tariff and cost-sharing policies are based on renewable energy development and sound economic principles Increase fiscal inputs and tax incentives to activities related to research and development of renewable energy Accelerate technology improvement and industry development through the integration of various renewable energy technology resources, the improvement of the technology and industry service systems, speeding up of human resource development, and increasing all aspects of technical innovation capabilities and service levels Source: Ivan Lee and Evan Li, Global Equity Research: Climate Change in China, Lehman Brothers, 2008. Measures and Programs China Solar Energy Fact Book 50

Solar Energy – regulatory environment – policies and incentives
The Energy Conservation Plan supports China’s goal of reducing energy consumption per capita by 20% by 2010 Constitution of PRC The Renewable Energy Law Medium and Long-Term Development Plans and National Promotion Plan 2 Medium and Long-Term Energy Conservation Plan ( ) The law is comprised of the following steps: Assess the current situation with respect to energy utilization in China Create tasks for energy conservation Prepare the way forward for energy conservation, principles and objectives Formulate key energy conservation projects Implement measures Encourages the utilization of different types of renewable energy in various industries such as solar power Designed to monitor the energy utilization efficiency using advanced countries as a model Geared toward reducing the annual emission of sulfur dioxide and other harmful substances that are catalysts for greenhouse gases and environmental pollution Positioned to stimulate a sustainable, rapid and sound development of the national economy Source: “China Medium and Long Term Energy Conservation Plan,” World Resources Institute, Measures and Programs China Solar Energy Fact Book 51

The National Promotion Plan for the Use of Solar Energy
Solar Energy – regulatory environment – policies and incentives The National Promotion Plan for the Use of Solar Energy provides guidance to China’s solar energy industry Constitution of PRC The Renewable Energy Law Medium and Long-Term Development Plans and National Promotion Plan 3 National Promotion Plan for the Use of Solar Energy Section 1: Promote the application of solar power utilization technologies via mandatory policy measures Section 2: Promote the use of solar power applications Section 3: Strengthen the use of solar thermal management Section 4: Establish and improve the use of solar thermal technology and promote economic development by issuing incentive policies Section 5: Match projects with subsidies based on several conditions that aim to promote efficiency and effectiveness in the sector Section 6: For 2009, the subsidy will be 20 RMB/Watt with specific criteria to be adjusted based on the integrity of construction and the degree of technical sophistication of photovoltaic projects Source: Jeff Osborne, “New Subsidy Announced - Can The Chinese Government Prevent The Solar Industry From Seeing Red?,” Thomas Weisel Partners, March 26, 2009. Measures and Programs China Solar Energy Fact Book 52

The Chinese Renewable Energy Fund aims to promote
Solar Energy – regulatory environment – policies and incentives The program is being supported by the Chinese Renewable Energy Fund The Chinese Renewable Energy Fund aims to promote the efficiency of the domestic solar industry Constitution of PRC The Renewable Energy Law Medium and Long-Term Development Plans and National Promotion Plan Measures and Programs Measurement of Financial Subsidy for Photovoltaic Building Construction 1 2 National Climate Change Program Introduced by the Ministry of Finance and the Ministry of Construction: Section 3: Subsidies supporting projects should meet the following conditions: Solar photovoltaic products installed capacity for single projects must be not less than 50kWp Sc-Si products must be more than 16%, the efficiency of polisilicon products must be more than 14%, and the efficiency of non-crystalline silicon PV products must be more than 6% The projects that combine and integrate solar electricity PV components and buildings will be prioritized Grid-connected solar photovoltaic building projects will be prioritized Building projects related to schools, hospitals, government offices and other public utilities will be prioritized Section 6: Subsidy will be 20 RMB/Watt in 2009 China formulated policies to substantially decrease its greenhouse gas emissions in order to help mitigate climate change Some of these policies and measures are related to the solar power industry: Continuous support for the development and utilization of wind, solar, geothermal and tidal energy, including popularizing family-use photovoltaic power systems or small-scale photovoltaic power plants in remote areas; disseminating integrated solar energy buildings, solar energy-based hot water supply, space heating and cooling pilot projects in urban areas and popularizing household solar water heaters, solar greenhouses and solar stoves in rural areas Prioritize the development of low-cost and scale exploitation and utilization technologies, including the development of large-scale wind-power generation equipment, high-performance and low-cost PV battery technology, solar thermal power generation, integrated solar energy building technology, and biomass and geothermal energy development and utilization technologies Source: “China’s National Climate Change Programme,” Embassy of the People’s Republic of China in the Islamic Republic of Pakistan, . China Solar Energy Fact Book 53

Selected Photovoltaic – International Regulations
Solar Energy – regulatory environment – international State policies and regulations also contribute to the development of the U.S., Japanese and European PV industry Selected Photovoltaic – International Regulations United States Japan France Spain Germany Italy The Investment Tax Credit (ITC) policy is a tax refund of up to 30% of the total investment (or up to US$2,000 for residential solar energy projects) Expired at the end of 2008 In 2008, a subsidy for PV systems installed (>50kw) in small to mid-sized enterprises designed to provide one-third of the total investment costs was implemented; a subsidy for home use PV systems of up to JPY(ca. US$715) was also established The fixed rate price of PV electricity was modified: the uniform fixed price 0.45 EUR/W (the price before 2009: BIPV 0.55 EUR/W, roof project and power generation station 0.45 EUR/W) Fixed rate of price reduced to as much as roof project equivalent (0.33 EUR/W, ground project 0.29 EUR/W) Gradual price deduction for small- sized, large sized and ground PV project to as much as 10% in , and 9% in Fixed price rate cut down: 2% in 2009 and 2010 The fixed rate price will be discussed and modified in 2010 Since 2009, ITC policy extensions of eight years for commercial PV projects and two year extensions for residential PV projects are allowed; the upper limit of US$2,000 can be exceeded Since April 2008, the subsidy to school/hospital/rail station PV projects has been increased to one half of the total investment Source: XYZ. China Solar Energy Fact Book

Concentrated Solar Power – International Regulations
Solar Energy – CSP – regulatory environment – international Several countries have issued tariffs to regulate the circulation of concentrated solar power products Concentrated Solar Power – International Regulations United States Spain Italy The government gives preferential tax treatment to concentrated solar power users A guaranteed tariff of 0.27 EUR per kWh Source: S. Sakakura,“Sunshine project of the Japanese Government,” The Smithsonian/NASA Astrophysics Data System, China Solar Energy Fact Book

Regulatory Environment
Solar Energy – regulatory environment – implications China is implementing regulations and various value-added incentives in order to guide the solar power industry Regulatory Environment Subsidies and incentives are granted by the Chinese government to certain companies that enter the domestic solar power industry market Various strategic plans and programs have been established by the Chinese government to regulate and monitor movement in the solar power industry Policies and measures should give full play to the solar power industry and use economic, legal and necessary administrative means to actively promote the use of solar thermal technology and the development of solar power industries Other tax, tariff and fiscal incentives will probably be needed to drive the green transformation of China’s solar power industry further Aside from China, other countries also stimulate their solar industry by establishing regulations and fiscal policies Source: XYZ. China Solar Energy Fact Book 56

Breakdown of ¥4 Trillion Stimulus Package1
Solar Energy – regulatory environment – stimulus package The NDRC stimulus package is the largest green stimulus in the world, but it’s effectiveness is dependent on the detail Breakdown of ¥4 Trillion Stimulus Package1 Analysis of Package Infrastructure 1.5 trillion yuan Rural civilian projects 1.5 trillion yuan Civilian projects 400 billion yuan Sustainable environment 210 billion yuan Technology advances/ industry restructuring billion yuan Post-earthquake reconstruction trillion yuan Social welfare 150 billion yuan 38% 9% 10% 5% 25% 4% Overview of Commitment2 Of the ¥4 Trillion ($586 million) package only ¥210 billion ($30 billion) is directly earmerked for green investments However, HSBC estimate that $221 billion has green features, including grid and infrastructure investments, making it the largest green stimulus package in the world America’s green stimulus package stands at only $112 billion, although the economy is 1.5 times larger Qualitative Considerations3 As with the Renewable Energy Law, the effectiveness of measures will depend on ensuring sufficient detail and transparency to remove uncertainties and improve spending quality The finalized package will be locked in later this year and is expected to favor SOEs, limiting opportunities for foreign companies Source: 1 NDRC press converence, March 2009, XYZ China Solar Energy Fact Book 57 57

Solar Energy – standards – solar PV - international
Internationally standards have been set for installation of both on- and off-grid solar PV systems International Standards on Solar PV Installation of Grid Connect PV Systems Stand Alone PV Systems (Off-grid systems) Module AS Grid connection of energy systems via inverters Part 1: Installation requirement AS Grid connection of energy systems via inverters Part 2: Inverter requirements AS : Grid connection of energy systems via inverters Part 3: Grid protection requirements MS : Installation of Grid-Connected Photovoltaic (PV) System AS : Stand-alone power systems Part 1. Safety requirements AS : Stand-alone power systems Part 2. System Design Guideline AS : Stand-alone power systems Part 3. Installation and Maintenance AS : Secondary batteries for use with stand-alone power systems National Electrical Code (NEC) 2005 Article 690 NF C Direct transformation of Solar energy into electrical energy; Photovoltaic pumping system NF P Solar Energy Solar collectors Methods of measurement of optical characteristics NF C Direct transformation of solar energy into electrical energy, terrestrial photovoltaic modules Source: China Solar Energy Fact Book 59 59

Domestic Solar PV Standards
Solar Energy – standards – Solar PV China has established key standards designed to manage Solar PV sector components Domestic Solar PV Standards GB/T Solar home system specifications and test procedures GB/T Determination of light transmittance, solar direct transmittance, total solar energy transmittance and ultraviolet transmittance for glass in building and related glazing factors NF C Covers photovoltaic devices and requirements for reference solar modules Source: China Solar Energy Fact Book

Domestic Solar PV Standards – Panels and Generating Systems
Solar power – standards Industry standards have been structured to ensure the quality of solar-related products Domestic Solar PV Standards – Panels and Generating Systems GB2297－89 :Terminology of solar photovoltaic energy system GB2296－2001: Designation method of solar cells (PV device) GB12632－90: General specification of single silicon solar cells GB6497－1986: The general rules of terrestrial solar cell calibration GB6495－86: Measurement procedures for electrical characteristics of terrestrial solar cells IEEE : Recommended practice for qualification of photovoltaic (PV) modules GB/T : General specification for terrestrial-use solar cell modules GB/T 14009－92: Measurement procedures for parameters of solar cell modules GB : Environmental test methods for terrestrial silicon solar cell module GB/T : General specification for sea-use solar cell modules GB11011－89: General rules for measurements of electrical characteristics of amorphous silicon solar cells GB/T6495.1－1996: PV devices Part 1:Measurement of PV current-voltage characteristics GB/T6495.2－1996: Photovoltaic devices Part 2: Requirements for reference solar cells GB/T6495.3－1996 : Photovoltaic devices Part 3:Measurement principles for terrestrial PV solar devices with reference spectral irradiance data GB/T6495.4－1996: Procedures for temperature and irradiance corrections to measured I-V characteristics of crystalline silicon photovoltaic devices SJ/T : Overvoltage protection for PV power generating systems GB/T : Crystalline silicon terrestrial PV modules-design qualification and type approval GB/T : Crystalline silicon photovoltaic（PV）array ─ On-site measurement of I-V characteristics GB/T : Terrestrial photovoltaic(PV)power generating systems GB/T : Solar home system specifications and test procedures Source: China Solar Energy Fact Book 61

Domestic Solar PV Standards - Batteries
Solar power – standards These standards cover a wide array of operating systems, including batteries Domestic Solar PV Standards - Batteries GB Stationary acid spray-proof lead-acid batteries Technical conditions GB Lead-acid starter batteries Technical requirements and methods of test GB Nickel-cadmium alkaline secondary cells GB/T Sampling procedures and tables for product quality audit (Apply to inspection by attributes for nonconformities per hundred units) Source: China Solar Energy Fact Book 62

Domestic Concentrating Solar Energy Standards
Solar Energy – standards – domestic - CSP Although it is a new technology in China, the Concentrating Solar Power (CSP) sector is also being standardized Domestic Concentrating Solar Energy Standards NF P Thermal solar systems and components - Solar collectors - Part 2: test methods NF C Photovoltaic devices. Part 3: measurement principles for terrestrial photovoltaic (PV) solar devices with reference spectral irradiance data NF C Photovoltaic devices. Part 2: requirements for reference solar cells Source: China Solar Energy Fact Book

International Standards for Solar Thermal Water Heaters
Solar Energy – standards – international - SWH Leading countries in the solar energy industry have also developed standards for solar water heating (SWH) International Standards for Solar Thermal Water Heaters AS/NZS 2712:2002 Solar and heat pump water heaters – design and construction CAN/CSA Solar domestic hot water systems E Standard practice for installation and service of solar domestic water heating systems for one- and two-family dwellings CNS 12555 Solar water heater for dwellings NF P /A1-1998 DTU Building works - plain solar collector installations using heat transfer liquid (used for heating and the production of domestic hot water) NF P DTU Building works, private contracts, plain solar collectors (uses heat transfer liquid for heating and production of hot water) JIS A 4111: 1997 Source: Note: More specificity to source info? China Solar Energy Fact Book

Domestic Solar Thermal Water Heater Standards
Solar Energy – standards – domestic - SWH The revision and integration of national standards can help accommodate the evolving SWH market Domestic Solar Thermal Water Heater Standards GB/T Solar energy—Thermal applications—Terminology part 2 GB/T Solar energy—Thermal applications—Terminology part 1 The solar thermal water heater (SWH) industry is handicapped by decentralized production and inconsistent product quality To ensure the continued growth of China's SWH industry, the government has established a series of national SWH standards and three national testing centers The China General Certification Centre (CGC) has developed the “Golden Sun” product certification and labelling system in order to: Help manufacturers meet explicit and consistent quality requirements and to identify and fix deficiencies Improve quality control in order to contribute to the creation of reputable Chinese solar water heating products and brands Source: China Solar Energy Fact Book

Standards – Implications
Solar power – standards – implications China needs to establish a set of national solar energy standards in order to support the proper development of the sector Standards – Implications Although China has developed certain standards for solar water heaters over the course of the last 20 years, these standards have not been developed in a systematic manner National standards that need to be urgently developed in the near future include: Technical specifications for the design, installation, checking and accepting for solar water heating systems Technical specifications for flat type solar water heaters Testing methods for the performance of flat type solar water heaters Testing methods for the reliable and enduring ability of vacuum tube solar water heaters Testing methods for the performance of vacuum tube solar water heaters Technical specifications for vacuum tube solar water heaters Testing methods for the quality and safety requirements of solar water heater components (mainly water tanks) China should also consider the establishment of a national quality testing and inspection center which is fair, impartial and independent Note: SWH – Solar Water Heater. Source: “Standards for Solar Water Heaters Orientation Workshop.” Capacity Building for the Rapid Commercialization of Renewable Energy in China, Beijing September 14th-15th 2000. China Solar Energy Fact Book 66

Crystalline Silicon Versus Thin Film Crystalline Silicon (c-Si)
Solar Energy – technology and innovation – solar PV C-Si PV technologies compete with Thin Film based on cost per watt and conversion efficiencies under different conditions Crystalline Silicon Versus Thin Film Crystalline Silicon (c-Si) Thin Film Advantages Highest power per area Requires less racking and support material Fewer modules mean lower shipping costs Large number of module choices Greater inverter flexibility Output less affected by temperature Less manufacturing materials used Lower cost per watt Good aesthetics for building-integrated applications Faster energy payback Non-glass substrates possible More shade tolerant Disadvantages High cost per watt High temperatures impact output more Low shade tolerance Individual cell visibility Lower power per area Takes months to stabilize output Twice as much rack material required More modules mean higher shipping costs Lower series-string capacity Less suitable for battery charging Requires more combiner boxes Limited inverter flexibility Fewer module manufacturer choices Source: Erika Weliczko, “Solar-Electric Options: Crystalline vs. Thin-Film,” Home power website, October/November 2008, China Solar Energy Fact Book

Polycrystalline Versus Monocrystalline
Solar Energy – technology and innovation – solar PV Polysilicon cells are far more efficient and cost effective compared with other classes of crystalline silicon cells Polycrystalline Versus Monocrystalline Polycrystalline (Polysilicon) Monocrystalline (Monosilicon) Application Most common (and cheapest) application Typically used in telecommunications applications In use for over 20 years Efficiency Conversion efficiency of sunlight to electricity is %, meaning that one square meter of panels exposed to the full sun will generate 120W-125W of electricity Conversion efficiency of sunlight to electricity is similar to the efficiency levels of polycrystalline cells Price Retails at between US$ per watt Retails at between US$ per watt Selected Companies BP SX (formerly Solarex), Sharp and Kyocera BP and Siemens Source: “Solar Panels,” Planetary power website China Solar Energy Fact Book

Solar Energy – technology innovation and alternative solutions – drivers
As dependence on silicon is gradually reduced over time, PV retail prices will tend to decrease as well Less Silicon Dependency of Solar Cell Manufacturers Price Decreasing Trend of Solar Energy Cells USD/Wp In a market characterized by low-level concentration rates, the intense competition among solar cell manufacturers inevitably results in price erosion Some leading manufacturers implemented technology innovations in order to improve the efficiency rate of wafers and reduce their thickness, actions which greatly reduced the cost of silicon and the attendant risks from silicon/wafer supply variations The reduction in the use of silicon raw material in solar cell manufacturing will likely enhance the downstream bargaining power of manufacturers and also increase their profit margins Source: Sino-link Securities Co., Ltd. China Solar Energy Fact Book

Advantages of Various Solar PV Technologies
Solar Energy – technology innovation and alternative solutions – Thin Film Different Thin Film PV technologies are emerging as serious competitors within the solar energy industry Advantages of Various Solar PV Technologies Crystalline Silicon High module efficiency Low BOS cost No degradation Polysilicon Wafer/Ignot PV Cell PV Module PV System & Installation E.g. Nanowin 12% CIGS Solar Module Raw Materials Copper Indium Gallium Selenium Glass Material CIGS powder onto sputtering target Thin Film Cell CIGS Solar Cell Thin Film Low manufacturing cost Higher accumulated electricity generation Lower $/KWh costs Attractive physical appearance Light weight modules Potential production cost of US$1/watt E.g. CIGS (pictured) CIGS No degradation Highest efficiency Flexible substrate Amorphous Proven technology Flexible substrate CdTe Low production cost Source: NanoWin Technology Co.,Ltd China Solar Energy Fact Book 71 71

Solar Energy – technology innovation and alternative solutions – Thin Film
Thin Film technology is less reliant on silicon than its crystalline silicon competition Description Pros & Cons Amorphous silicon (a-Si), A Si PV cells can be used with glass (or other materials as substrates) The use of glass as a substrate for conventional glass walls with plated membrane is used for making PV curtain walls Most developed Thin Film technology to date Can achieve further development by combining the stable high efficiency of Si technology with the simpler and cheaper large area deposition technology of amorphous silicon Cadmium telluride (CdTe) Utilizes long flat mirrors at different angles that focus sunlight on one or more pipes containing heat-collecting fluid High efficiency Easier to deposit and more suitable for large-scale production Toxicity (still being debated) Copper-indium-gallium-diselenide (CIGS) Made by depositing several layers of metal compounds on semi-conductive films (with a thickness of about 2-3 microns) CIGS has demonstrated the highest laboratory efficiency rates Stable performance Non-polluting High anti-radiation capacity Long service life Thin Film PV uses Thin Film coating technologies similar to those used for putting metallic and transparent coatings on plastics and glass for food processing, architectural glass, mirrors, eyewear, etc. A temporary shortage of silicon has given the Thin Film sector an opportunity to increase its market share The European Photovoltaic Industry Association expects Thin Film applications to represent approximately 20% of total PV cell production by 2010 Source: “Solar Panels,” NanoWin Technology Co.,Ltd., China Solar Energy Fact Book

Cadmium telluride (CdTe) will define Thin Film module production volumes over the near-term Description Value Proposition: An excellent semiconductor for solar cells because its band-gap of 1.4 electron-volts is matched nearly perfectly to the solar spectrum The device structure also includes a very thin layer of cadmium sulfide that allows most sunlight to pass through to the CdTe layer Current research is geared towards: Boosting efficiencies by, among other things, exploring innovative transparent conducting oxides that allow more light into the cell to be absorbed and that more efficiently collect the electrical current generated by the cell Studying mechanisms such as grain boundaries that can limit the voltage of the cell Understanding the degradation that some CdTe devices exhibit at contacts and then redesigning devices to minimize this phenomenon Designing module packages that minimize any outdoor exposure to moisture Engaging aggressively in both indoor and outdoor cell and module stress testing (e.g., tests for thin-film modules in hot and humid climates) Commercialization: NREL currently holds the world-record conversion efficiency for CdTe of 16.5% Utilizes long flat mirrors at different angles in order to focus sunlight on one or more pipes containing heat-collecting fluid which are mounted above mirrors Selected Actors First Solar (U.S.) PrimeStar (U.S.) AVA (U.S.) Sichuan Apollo Solar Science & Technology Co., Ltd. Sichuan Xinju Mineral Resource Development Co. Source: “Solar Panels,” Planetary power website, 73

Amorphous silicon (a-Si) is expected to establish a presence in the market given the strong backing of several major companies Description Value Proposition: Amorphous silicon is full of natural defects, but said defects do not affect the overall characteristics of the material too drastically Current research is geared towards: Improving the stability and conversion efficiency of a-Si modules in actual use (in a detrimental phenomenon called the Staebler-Wronski effect, the conversion efficiency of an a-Si module decreases when the module is first exposed to sunlight) Reducing the capital equipment costs for manufacturing a-Si panels by improved manufacturing processes that include increasing the rates of depositing material Improving module-packaging designs to make them more resilient in outdoor environments and less susceptible to glass breakage or moisture ingress Developing new module designs for building-integrated applications Commercialization: Amorphous silicon is expanding its market share as a result of increasing efficiencies, proven manufacturability, and innovative products Cost-Benefit Analysis: With an efficiency of sunlight to electricity rate of 6.3% (about half that of polycrystalline or monocrystalline panels), an array of amorphous panels will require about twice as much roof space as an array with a similar rating using other types of panels, thereby presenting a challenge when the amount of unobstructed roof space is limited A Si PV cells can be used with glass (or other materials) as substrates The use of glass as a substrate for conventional glass walls with plated membrane is used for making PV curtain walls Selected Actors Sharp Applied Unisolar (retails at US$ per watt) China Solar Energy Holdings Ltd. (has a thin-film panel turn- key production line) Sinonor Corporation – Hsichu, Taiwan, 3MW Tianjin Jinneng Solar Cell Co. Ltd. (produces a-Si, multi- junction, glass or SS substrate) Source: “Solar Panels,” Planetary power website, China's Solar Power Industry Fact Book

Copper-Indium-Gallium-diSelenide (CIGS) has great potential, but very little is currently being produced Description Value Proposition: After two decades of R&D and with prototype modules reaching efficiencies greater than 11%, CIGS is being introduced to the market CIGS is also enjoying success in the laboratory, with cell efficiencies climbing to a world-record rating of 19.2% Current research is geared towards: Pushing efficiencies even higher by exploring the chemistry and physics of the junction formation and by examining concepts to allow more of the high-energy parts of the solar spectrum to reach the absorber layer Dropping costs and facilitating the transition to commercial production by increasing the yield of CIS modules, a stage which requires increasing the percentage of modules and cells that make it intact through the manufacturing process Decreasing manufacturing complexity and cost and improving module packaging Commercialization: Production volume was only 5MW in 2006 Production capacity is estimated to reach 213MW by end of 2009 Cost-Benefit Analysis: A production cost US$1/watt was achieved by Nanowin Technology Co.Ltd (although CIGS technology is untested at commercial scale) CIGS is made by depositing several layers of metal compounds on semi-conductive film (with a thickness of about 2- 3 microns) Selected Actors International Solar Electric Technology GSF GroupSat Solar Nanowin Technology Source: Sun & Wind Energy

Thin Film manufacturing capacity is expected to increase to about 4GW in 2010, close to one-third of total PV production capacity Thin Film Manufacturing Capacity Announced 2007 Manufacturing Capacity Announced Expected Manufacturing Capacity in 2010 Source: Street Research

Second and Third Generation Solar Cell Development
Solar Energy – technology innovation and alternative solutions – Thin Film Improvements in solar cell technology are aimed at reducing manufacturing costs and increasing overall efficiency Second and Third Generation Solar Cell Development Third generation technologies aim to enhance the poor electrical performance of second generation (thin-film) technologies while maintaining very low production costs Current research is targeting conversion efficiencies of 30-60% while retaining low cost materials and manufacturing techniques, a move that should allow producers to exceed the theoretical solar conversion efficiency limits for a single energy threshold material of 31% under 1 sun illumination and 40.8% under maximal concentration of sunlight In 2007 CdTe production represented 4.7% of total market share, thin-film silicon 5.2% and CIGS 0.5% While there is a trend among major manufacturers towards implementing second generation technologies, commercialization of these technologies has proven difficult Description First Solar (2007) Produced 200 MW of CdTe solar cells making it the fifth largest producer of solar cells in 2007 and the first ever to reach the top 10 from production of second generation technologies alone Wurth Solar (2007) Commercialized its CIS technology in 2007 producing 15 MW in the process Honda Soltec Co., Ltd., (2008) Began to commercialize its CIGS base solar panel in 2008 Nanosolar ( ) Commercialized its CIGS technology in 2007 and reached a production capacity of 430 MW for 2008 in the U.S. and Germany Source: Company Annual Reports and Presentations; XYZ. China Solar Energy Fact Book

Dish/Stirling-engine systems and concentrating PV(CPV)
Solar Energy – technology innovation and alternative solutions – CSP Each of the four CSP technologies have relative advantages and risks in various areas of application Description Pros and Cons Parabolic Trough Parabolic Trough power plants consist of large parallel arrays of parabolic trough solar collectors which constitute the solar field Currently the technology with the strongest track record and cost efficiencies (costs are to US$0.10/kwh or less) Heat storage by melted salt and hybridization with gas firing allows the system to work during the night and cloudy days Fresnel Mirror Instead of using trough-shaped mirrors that track the Sun, Fresnel Mirrors utilize long flat mirrors at different angles that have the effect of focusing sunlight on one or more pipes containing heat-collecting fluid which are mounted above the mirrors Relatively cheap to manufacture Easy integration into buildings Shaded areas under the mirror provide a suitable environment for plants Power Towers Power towers are towers surrounded by a large array of heliostats (mirrors that track the sun and reflect its rays onto the receiver at the top of the tower) Higher conversion efficiency Lack of a commercial track record High financial risks Dish/Stirling-engine systems and concentrating PV(CPV) Solar dish systems consist of a dish-shaped concentrator (like a satellite dish) that reflects solar radiation onto a receiver mounted at the focal point Smaller PV area is needed Not well suited to hybridization with gas firing and cannot be stored by melted salt meaning that its operations are subject to weather conditions Less able to provide dispatchable power Note: CSP – Concentrating Solar Power. Source: XYZ. China Solar Energy Fact Book 78

Hi-Min Solar Energy Group Ltd.
Solar Energy – technology innovation and alternative solutions – CSP Hi-Min has taken the lead in developing CSP technologies for applications in China Hi-Min Solar Energy Group Ltd. Hi-Min Solar Energy Group Ltd. was the first manufacturer to discover new applications for CSP infrastructure technologies, beginning R&D into CSP technologies in 20001 These new technologies/applications have strong advantages over earlier versions: The investment and operating costs of Fresnel power generation systems are much lower The life span of the system is longer than comparable alternatives Maintenance is easier given the absence of moving parts in the collector apparatus Hi-Min Solar Energy Group Ltd.’s competitiveness in both thermal water heater technologies and CSP applications are core advantages that should allow the company to weather the current economic downturn Source: XYZ, 1. China Solar Energy Fact Book 79 79

Solar Energy – technology innovation and alternative solutions – BIPV
Section 3 – Value Chain Different types of modules can be integrated into various Building Integrated Photovoltaic (BIPV) applications BIPV Applications BIPV Advantages Building Integrated Photovoltaic (BIPV) systems incorporate solar PV materials (whether crystalline or thin-film) into the building structure itself and can integrate with windows, or can be laminated onto a low-slope industrial roofs Highly reliable in the long-term with a life span of years Maintenance-free panels Cost-saving for building owners No extra space is taken up No extra supporting structure is necessary for installation The burden on electricity supply can be reduced The deterioration level of grid-line network can be reduced Conventional building material can be replaced by BIPV Can be integrated with the other building systems including protection, control and operation BIPV Sub-Categories The most widely installed version to date is a thin-film cell integrated to a flexible polymer roofing membrane Modules shaped like multiple roof tiles Solar shingles are modules designed to look and act like regular shingles, while incorporating a flexible Thin Film cell Modules mounted on exterior faces of buildings can provide additional weatherproofing or simply be used as a style element (Semi) transparent modules can be used to replace a number of architectural elements commonly made with glass or similar materials such as windows and skylights Flat roofs BIPV Disadvantages Limited cost-down potential Low manufacturing yield and higher risk related to product safety and durability leads to high installation costs As modules account for over 50% of system cost, cost-down potential is limited for both crystalline-based modules and Thin Film modules due to material price hikes for the former and lower efficiency for the latter While cost reductions can be achieved by improvements in efficiency, optimized design and economies of scale, the potential is quite limited on the BOS (Balance-of-System) front, especially for thin-film-based systems given their lower efficiency and operating voltage Higher energy generation costs would require higher subsidies to boost demand While Thin Film modules are superior to standard roof mounted systems in terms of aesthetics and transparency, low efficiency and questionable scalability are problems Pitched roofs Facades Glazing Source: XYZ. China Solar Energy Fact Book

Alternative Solutions and Technologies
Solar Energy – technology and innovation – solar PV implications Various PV technologies are consistently being developed to stimulate interest in efficient and effective renewable energy Alternative Solutions and Technologies Though Crystalline Silicon PV units yield the highest output per area, they also have the highest cost per watt Thin Film PV, on the other hand, has a lower cost per watt but also provides lower power per area With over 90% of the solar industry market share, Crystalline Silicon PV technology is bound to face intense competition as Thin Film PV emerges as a less silicon-dependent technology Consistent improvements in the PV industry are geared toward reducing manufacturing costs and heightening overall quality of PV units Various CSP technologies provide simple solar structures that can be utilized to fit potential PV locations wherever they are available Source: XYZ. China Solar Energy Fact Book 81 81

China’s Solar Energy Sector in Transition
Solar Energy - competition - overview China’s solar energy industry faces a shakeout among both public and private companies China’s Solar Energy Sector in Transition China’s solar PV production capacity is mainly exported due to the small size of domestic market demand The competitive landscape within China is also undergoing a transition: The degree of consolidation is increasing along the value chain of solar PV, with decreasing profit margins in each sector It is estimated that between 50% and 80% of Chinese module manufacturers have closed their factories since February 2009 CSP will become increasingly attractive to investors as prices fall with refinements in the technology and economies of scale China’s solar water heater sector is a highly fragmented market A wide range of state-owned and private companies, both domestic and foreign, are involved in China’s solar energy market: Many of the largest players in China’s solar energy industry are listed on the Shanghai, Hong Kong or international stock exchanges The manufacturers in different market segments (e.g., solar PV, thermal water heater and CSP) face various challenges and opportunities China Solar Energy Fact Book 83 83

Illustrative Global Solar PV Landscape
Solar Energy – competition – solar PV Core components in the Solar PV industry are generally controlled by companies outside China Illustrative Global Solar PV Landscape Source: Clean Tech Overview, Morgan Stanley, 21 July 2008. China Solar Energy Fact Book

Solar PV Competition Landscape
Solar Energy – competition – solar PV Several Chinese firms specializing in Solar PV have successfully listed on international and domestic stock exchanges Solar PV Competition Landscape Selected Companies Listed Market Capacity (2008) Unit: MW Polysilicon Ingot/ Wafer PV Cell Module System Integration Application c-Si Thin Film Mono-Si Poly-Si a-Si Cd-Te CIGS BIPV Suntech NYSE 1000 Renesola AIM 580 Trina NWSE 350 CSI Changsu NAS 1500tons JASolar 500 Solarfun 360 CEEG 600 Yingli LDK Solargiga HKSE 2000tons Topray SHSE 55 Source: Company Annual Reports and news clips; XYZ. China Solar Energy Fact Book Notes: BIPV=building-integrated photovoltaic

Sustainable Cost Competitiveness
Solar Energy – competition – solar PV Chinese solar PV companies are generally perceived as not being technology leaders Solar PV Companies Leading Technology Sustainable Cost Competitiveness Branding Financial Strength Profitability Revenue Growth REC Sunpower LDK MEMC Q-Cells Suntech Solarworld Yingli Trina Ersol Renesola JA Solar Sino American Conergy Evergreen Solar Motech E-ton Canadian Solar Solarfun Aleo Solar Solon Akeena Solar Phoneix SS Solar-Fabrik Reinecke+Pohl High Medium Low Source: Asia Solar, UBS, September 7, 2007. China Solar Energy Fact Book

Competitive Variables Across China’s Solar PV Value Chain
Solar Energy – competition – solar PV Analysis of the relative competitiveness and market size for sub-sectors of the value chain reveal some clear trends Competitive Variables Across China’s Solar PV Value Chain High Polysilicon Wafer/Ingot PV Cell PV Module PV System & Installation Low Key Observations High entry barriers to upstream characterized by only a few silicon suppliers Numerous players and markets with highly dispersed structure and intense competition High quality polysilicon for solar energy cells is still dependent on overseas suppliers Over 90% of PV cell/module/system produced in China are exported to overseas markets Under pressure from decreasing profit margins, the degree of consolidation is increasing along the value chain 1 Degree of fragmentation Import Export Profitability Historic growth 2 3 4 Source: XYZ. China Solar Energy Fact Book 87 87

Challenges and Opportunities for Poly-silicon Suppliers
Solar Energy – competition – solar PV – poly-silicon Poly-silicon margins are compressed significantly by oversupply, a factor that will likely contribute to a decrease in gross margins Challenges and Opportunities for Poly-silicon Suppliers Competitive Forces Trends Status Opportunities Threat of new entrants High entry barriers High entry barriers due to the high cost for product line construction and economies of scale (initial investment for a 1000-ton-capacity facility exceeds RMB1 billion) Downstream firms enter the market in order to avoid further dependency on silicon supply Upstream vertical integration Semi-conductor polysilicon enter PV polysilicon production competitors Overseas competitors with incumbent advantages Sophisticated technology ensures high quality production Realized economy of scale with production over 2500 tons Low unit cost: less than US$30/kg, while most Chinese manufacturers’ average cost per unit exceeds US$50/kg China’s polysilicon producers apply less advanced technology which consumes 2-3 times the energy to produce the same amount of raw material than overseas competitors do Expand capacity through horizontal integration Technology improvement Bargaining power of suppliers Tight supply on raw materials The supply of industrial silicon: China’s average annual production of industrial silicon is 700,000 tons, of which two-thirds is exported to overseas markets Increasing demand from solar energy polysilicon production results in increasing price Location selection: close to silicon resources customers Excess supply, price erosion Supply (estimated as around 30%) will result in ASP falling from US$400 (in 2008) to US$150 ( early 2009) per ton The expected polysilicon price erosion makes cell/module vendors cautious in placing poly/wafer orders and upstream companies can no longer collect cash pre-payment to meet their capex needs Source: XYZ China Solar Energy Fact Book

Challenges and Opportunities for Domestic Ingot/Wafer Manufacturers
Solar Energy – competition – solar PV – ingot/wafer Challenges for ingot/wafer manufacturers include low entry barriers, historical supply shortages, and price erosion Challenges and Opportunities for Domestic Ingot/Wafer Manufacturers Competitive Forces Trends Status Opportunities Threat of new entrants Low entry barriers Low entry barriers result in numerous players and markets with highly dispersed market structures Intense competition but less sophisticated technology applied Unsteady quality Profit margin will continuously decrease as more and more silicon makers and cell makers enter the market Heightened downstream integration, Realization of advantages in economies of scale/more efficient production Increasing market concentration substitutes Technique bottleneck: low conversion rate Thin Film: less dependent on silicon price, with higher cost per unit and less than 10% of the domestic market Technology innovation Investment in R&D Bargaining power of suppliers Shortage of supply Shortage of supply during Due to the unsophisticated technology of domestic suppliers, the price and production of silicon wafers are still highly dependent on overseas suppliers Downstream integration by silicon makers customers Excess supply, price erosion Rapid increasing capacity compared with steady increasing demand from cell/module makers Upstream vertical integration (including silicon suppliers) by cell makers Source: XYZ China Solar Energy Fact Book

Chinese PV cell manufacturers supply over 35% of the world market
Solar Energy – competition – PV cell Chinese PV cell manufacturers supply over 35% of the world market Challenges and Opportunities for PV Cell Manufacturers Competitive Forces Trends Status Opportunities Threat of new entrants Few barriers to entry other than cost and risk appetite Higher profit margins attracted some semi-conductor firms to transfer to solar silicon cell production Decreasing price of polysilicon will continue to reduce the cost and increase the gross margins of silicon-based PV cell makers Industry shake out and consolidation Threat of overseas competitors Imperative to retain cost advantages Big firms such as Q-cells use long-term purchasing agreements to ensure the future cost of silicon since they can promise considerably larger acquisitions The current silicon price is lower than the predicted long-term future price Leverage low labor costs over foreign competitors Upstream integration to grasp the profit margin on silicon supply side Threat of substitutes Technique bottleneck: low transfer rate Thin Film: less dependent on silicon price, with higher cost per unit, low technology transfer rate as technical bottleneck Improved transfer rate increasingly makes Thin Film a good alternative to silicon-based techniques Technology improvement needed to maintain the higher transfer rate advantage over alternative solutions Thin-film cell maker can take chances to become more competitive Bargaining power of customers Oversupply dynamic Oversupply since the 2Q 2008 resulted in the sharply decreasing price of poly-silicon; the current price is lower than the predicted long-term future price Polysilicon accounts for 70%-80% of the total cost in cell production meaning that its decreasing price effectively cuts down costs Upstream integration Technology innovation to continue reducing the average amount of silicon used in cell production Source: XYZ. China Solar Energy Fact Book

Challenges and Opportunities for Domestic Module Manufacturers
Solar Energy – competition – PV Module China’s production capacity is mainly exported due to the small size of domestic market demand Challenges and Opportunities for Domestic Module Manufacturers Competitive Forces Trends Status Opportunities Threat of new entrants High entry barriers High entry barriers due the high cost of product line construction and economies of scale Less sophisticated technology compared with overseas incumbents High production costs and low efficiency Downstream integration initiated by PV cell makers Threat of substitutes Technique bottleneck: breakthroughs Recent advanced technology greatly enhanced the Thin Film PV module’s conversion rate (the highest efficiency recorded at 19.5%) and made it more competitive as an alternative solution available for commercialization The physical characteristics of Thin Film make it more suitable for BIPV installation Time for entering thin-film module sector with more sophisticated technology Bargaining power of suppliers Shortage of supply Increasing demand for polysilicon due to the release of expanded capacity Upstream integration by module makers customers Excess supply/price erosion Slower demand predicted compared with , due to policy changes in Spain, a major market Solar energy sector experienced cuts in subsidies Decreasing module prices due to policy changes in major markets like Spain No expectation for a “gold rush” in terms of emerging market demand TBD Source: XYZ. China Solar Energy Fact Book

Challenges and Opportunities in the Solar Water Heater Sector
Solar Energy – competition – solar thermal water heater With a low concentration rate, China’s solar water heater sector is a highly fragmented market Challenges and Opportunities in the Solar Water Heater Sector Competitive Forces Trends Status Opportunities Threat of new entrants Low entry barrier A large number of entrants rushed into the market during the last decades Market leaders can increase their market share and realize economies of scale by horizontal integration substitutes Sophisticated markets of gas/electricity water heater As the first mover, gas water heaters hold the biggest share of accumulated installed market while electricity water heaters account for 70% of the annual installation in the Chinese market Compared with solar water heaters, gas/electricity have advantages on unit price and adaptability to weather changes, which make them easier to be applied in most regions of China Solar water heaters account for less than 10% of market share in China Bargaining power of consumers Market to be explored Aesthetic considerations became an important hurdle; many apartments forbid the installation solar water heaters on their roofs Supportive policies are called for to get rid of the restriction on installation of solar water heaters in some residential areas Source: XYZ. China Solar Energy Fact Book

Challenges and Opportunities in the BIPV Market
BIPV – competition landscape While there are few domestic companies active in the BIPV arena, the sector has considerable market potential Challenges and Opportunities in the BIPV Market Competitive Forces Trends Status Opportunities Threat of new entrants High entry barriers Promising market outlook attracted some construction firms to enter the market Threat of overseas competitors Design sophistication Most Chinese players are less competitive in aesthetic design Outbound acquisitions or strategic alliances Bargaining power of suppliers Dependency on module supply As PV modules account for over 50% of the total cost for BIPV, the sector is sensitive to any fluctuations in module price trends Encourage module makers to add new business on BIPV customers Policy driven The regulation published by China's Ministry of Finance provides a subsidy for BIPV of 20 RMB (about US$2.90) per watt The "Measures Regarding Subsidies for Solar BIPV Applications" contain the following provisions: 1. BIPV applications are eligible for the subsidy 2. No single BIPV project should be less than 50KW 3. Monosilicon BIPV modules should have conversion rates higher than 16%, multicrystalline modules need a conversion rate higher than 14% and thin-film BIPV products need to have a conversion rate higher than 6% 4. Preference for products integrated into the building 5. Preference for grid-connectivity Source: XYZ. China Solar Energy Fact Book

Major listed poly-silicon suppliers
Solar Energy – competition – companies – Solar PV – poly-Si Major listed poly-silicon suppliers Major Polysilicon Suppliers 32.01 Polysilicon PV System & Installation Wafer/Ignot PV Cell PV Module Selected International Companies Key Multiples Company Name Country Market Cap Enterprise Value Revenue Net Income Price (Feb 13) Gross Margin Rate Price/ Earning EV/ EBITDA EBIT MEMC ELEC MATER US 3,194.0 2,124.3 2,004.5 390.3 14.23 50.13 7.95 6.73 2.49 TOKUYAMA CORP JAPAN 1,563.3 2,047.7 3,378.8 207.6 5.67 32.01 7.89 3.65 6.26 MITSUB MATERIALS 3,317.1 11,442.6 18,235.1 816.2 2.59 14.09 5.44 9.18 13.65 WACKER CHEMIE AG GERMANY 4,257.8 4,034.2 4,868.4 543.3 81.64 30.47 6.16 2.83 6.43 Average 3,083.0 4,912.2 7,121.7 489.3 26.0 31.7 6.9 5.6 7.2 Median 3,255.5 3,079.2 4,123.6 466.8 10.0 31.2 7.0 5.2 6.3 Source: Bloomberg; XYZ China Solar Energy Fact Book 94 94

Silicon Suppliers in China
Solar Energy – competition – Solar PV – key players – Poly-Si Polysilicon production capacity in China is predicted to reach 60,000 metric tons (MT) in 2010 Silicon Suppliers in China LDK（江西赛维） 6000MT(2009) to 15,000(2010) Emei（东汽峨嵋） 1500MT(2009) Xinguang（新光硅业） 6000MT(2010) Zhongneng（中能光伏） Shunda（顺大） 1,500 (2009) Tianhe（天和光能） 10,000MT(2009) Shennanbo（深南玻） 1500MT(2009) to 5,000(2010) Mudanjiang（牡丹江） 3,000MT(2010) Jingxin（益阳晶鑫） 5,000MT(2010) Zhonggui（洛阳中硅） 2,000MT(2009) Xuntianyu（迅天宇） Aixinjia（曲靖爱信多） 10，000MT(2010) Asian Silicon 2000MT(2010) Jinzhou Chem（锦化） 1,000MT(2009) Jinglong（晶龙） Source: Company websites and news clips; XYZ. China Solar Energy Fact Book

Comparable listed companies: Wafer/Ingot Suppliers
Solar Energy – competition – Key players – Wafer Comparable listed companies: Wafer/Ingot Suppliers Note: Fix header to reflect style rules. Major Wafer/Ingot Suppliers Polysilicon PV System & Installation Wafer/Ingot PV Cell PV Module Selected Chinese Companies Company Name Country Market Cap Enterprise Value Revenue Net Income Price (Feb 13) Gross Margin Rate Price/ Earning EV/ EBITDA EBIT LDK SOLAR CO-ADR CHINA 1,222.7 1,886.4 524.0 144.1 10.81 32.49 3.66 5.31 13.22 SOLARGIGA ENERGY 338.2 228.2 131.0 37.7 0.20 31.82 2.35 4.06 N/A JA SOLAR HOL-ADR 505.3 142.4 354.0 52.6 3.01 22.31 68.22 3.29 11.37 Average 688.7 752.3 336.3 78.1 4.7 28.9 24.7 4.2 12.3 Median 52.0 3.0 31.8 3.7 4.1 Source: Bloomberg; XYZ. China Solar Energy Fact Book 96

Comparable listed companies: PV Cell Manufacturers (non-integrated)
Solar Energy – competition – Key players – PV cell Comparable listed companies: PV Cell Manufacturers (non-integrated) Note: Fix header to reflect style rules. Single/Multi-sector PV Cell Manufacturers PV System & Installation Polysilicon Wafer/Ignot PV Cell PV Module Single-sector PV Cell Manufacturers (only focus on PV cell manufacturing) Company Name Country Market Cap Enterprise Value Revenue Net Income Price (Feb 13) Gross Margin Rate Price/ Earning EV/ EBITDA EBIT Q-CELLS SE GERMANY 2,636.2 3,030.2 1,105.8 191.1 23.28 N/A 10.39 9.18 29.58 ERSOL SOLAR ENER 1,417.9 1,328.6 206.2 11.2 132.23 36.68 11.17 21.32 SUNWAYS AG 32.2 44.8 274.9 1.6 2.78 21.60 3.88 25.24 SUNTECH POWE-ADR CHINA 1,4732.2 2,727.1 1,348.3 171.3 9.57 20.33 7.14 10.91 24.71 MOTECH INDUSTRIES TAIWAN 582.4 545.5 458.0 71.8 2.33 18.98 7.59 5.46 24.56 EVERGREEN SOLAR U.S. 268.7 465.0 112.0 -84.9 1.63 16.87 15.60 Average 1,068.4 1,356.9 584.2 60.3 28.6 18.7 16.7 9.4 25.1 Median 1,000.2 937.1 366.4 41.5 6.2 19.0 10.4 10.0 24.7 Source: Bloomberg; XYZ. China Solar Energy Fact Book 97

Comparable listed companies: PV Cell Manufacturers (non-integrated)
Solar Energy – competition – Key players – PV cell Comparable listed companies: PV Cell Manufacturers (non-integrated) Note: Fix header to reflect style rules. Single/Multi-sector PV Cell Manufacturers Polysilicon PV System & Installation Wafer/Ignot PV Cell PV Module Multi-sector PV Cell Manufacturers (with some core business in other industrial sector such as consumer electrics) Company Name Country Market Cap Enterprise Value Revenue Net Income Price (Feb 13) Gross Margin Rate Price/ Earning EV/ EBITDA EBIT SHAP CORP JAPAN 8,947.2 13,454.6 37,560.0 1,120.1 8.06 22.09 9.29 4.29 9.89 KYOCERA CORP 12,110.1 1,328.6 14,181.6 1,178.6 63.30 31.51 10.72 5.46 6.95 SANYO ELECTRIC 2,798.4 8,541.8 22,175.4 315.4 1.49 15.82 33.39 7.06 9.94 MITSUB ELEC CORP 9,037.7 13,230.5 44,506.4 1,736.1 4.21 26.98 5.64 4.02 6.34 KANEKA CORP 1,761.7 2,319.6 5,527.5 206.8 5.03 25.24 11.38 6.03 8.59 Average 6,242.2 8,999.4 24,354.4 812.1 13.9 22.9 17.3 5.7 8.6 Median 5,872.8 717.8 4.6 23.7 11.1 9.2 Source: Bloomberg; XYZ. China Solar Energy Fact Book 98 98

Comparable listed companies: PV Cell Manufacturers (Integrated)
Solar Energy – competition – Solar PV – key players – PV cell Comparable listed companies: PV Cell Manufacturers (Integrated) Note: Fix header to reflect style rules. PV Cell Manufacturers Polysilicon PV System & Installation Wafer/Ignot PV Cell PV Module Company Name Country Market Cap Enterprise Value Revenue Net Income Price (Feb 13) Gross Margin Rate Price/ Earning EV/ EBITDA EBIT SOLARWORLD AG GERMANY 2,485.5 2,336.4 887.8 145.8 22.25 N/A 18.89 5.52 12.13 RENEWABLE ENERGY NORWAY NORWAY 5,300.7 5,718.5 970.4 194.8 10.72 15.29 11.84 21.74 Average 3,893.1 4,027.4 929.1 170.3 16.5 17.1 8.7 16.9 Median Source: Bloomberg; XYZ. China Solar Energy Fact Book 99

Comparable listed companies: Thin Film PV Cell Manufacturers
Solar Energy – competition – Solar PV – key players – Thin Film PV cell Comparable listed companies: Thin Film PV Cell Manufacturers Note: Fix header to reflect style rules. Thin Film PV Cell Manufacturers PV System & Installation Polysilicon Wafer/Ignot PV Cell PV Module Company Name Country Market Cap Enterprise Value Revenue Net Income Price (Feb 13) Gross Margin Rate Price/ Earning EV/ EBITDA EBIT FIRST SOLAR INC U.S. 11,908.9 11,361.2 504.0 158.4 146.86 49.88 43.32 23.94 45.73 RENESOLA LTD-ADR CHINA 245.6 N/A 3.62 Average 6,077.2 75.2 49.9 43.3 23.9 45.7 Median Source: Bloomberg; XYZ. China Solar Energy Fact Book 100

Comparable listed companies: PV Cell Module Manufacturers
Solar Energy – competition – Solar PV – key players – PV Module Comparable listed companies: PV Cell Module Manufacturers Note: Fix header to reflect style rules. PV Cell Module Manufacturers PV System & Installation Policilicon Wafer/Ignot PV Cell PV Module Company Name Country Market Cap Enterprise Value Revenue Net Income Price (Feb 13) Gross Margin Rate Price/ Earning EV/ EBITDA EBIT SUNTECH POWE-ADR CHINA 1,473.2 2,727.1 1,348.3 171.3 9.57 20.33 7.14 10.91 24.71 TRINA SOLAR-ADR 242.1 541.7 301.8 35.7 8.23 22.41 2.69 4.57 7.79 SOLARFUN POW-ADR 251.3 528.9 328.3 20.3 4.67 16.61 7.51 14.63 17.21 CANADIAN SOLAR I 181.0 263.5 302.8 -0.2 5.08 7.85 2.70 3.75 10.23 SUNERG-ADR 96.5 209.7 234.9 -4.9 2.44 7.67 61.00 13.64 26.16 YINGLI GREEN-ADR N/A 1,107.1 100.0 21.58 5.66 Average 448.6 854.2 603.9 53.7 6.0 16.1 16.2 8.9 15.7 Median 241.1 315.6 28.0 5.1 18.5 7.1 8.3 13.7 Source: Bloomberg; XYZ. China Solar Energy Fact Book 101

Sichuan Chuantou Energy Co. Ltd Shareholder Structure
Solar PV – competition – key players profile – Poly-Si supplier Sichuan Chuantou Energy Company Limited mainly focuses on electricity and solar energy Sichuan Chuantou Energy Co. Ltd Company Profile Company history Sichuan Chuantou was previously known as Sichuan Emei Ferroalloy (Group) Holdings Ltd Company Leadership Chairman: Mr. Huang Shunfu; CFO: Amy Yi Zhang Company Ownership Listed on Shanghai Stock Exchange in 1993 Financial Overview Revenue 2007: RMB363 million By business segment: Electricity : RMB252 million Solar PV: RMB91 million Other production and services: RMB20 million Growth Net Revenue ( ): 8.1% Business Overview . Primary Product and Service Lines Developing, managing and providing hydroelectricity and investing in electrical power Other activities include provision of repair services and car transportation The group also develops automatic transport systems and provides Internet information servicing of communication items including software, photoelectron and microelectronics Company Geographical Presence The company operates mainly in Sichuan province Principal shareholders Sichuan Province Investment Group Limited Shareholder Structure Source: Sichuan Chuantou Energy Company Limited, Corporate Website. China Solar Energy Fact Book 102

Leshan Electric Power Co.,Ltd Shareholder Structure
Solar PV – competition – key players profile – Poly-Si supplier Leshan Electric Power Company Limited is China’s first electricity shareholding enterprise Leshan Electric Power Co.,Ltd Company Profile Company history Founded in 1988, Leshan Electric Power Co.,Ltd., which was established by Leshan Ministry of Finance and nine electric power companies, is China’s first electricity shareholding enterprise Company Leadership Chairman: Mr. Liao Zhengquan; Chief Accountant: Sun Zhiyuan Company Ownership Listed on Shanghai Stock Exchange in 1993 Financial Overview Revenue 2007: RMB660 million By business segment: Electricity : RMB473 million Water supply: RMB41 million Gas: RMB97 million Coal: RMB19 million Hotel services: RMB25 million Others: RMB6 million Growth Net Revenue CAGR ( ): 11.5% . Primary Product and Service Lines The development, supply and management of electric power Production and supply of coal gas, communication equipment and electrical transmission equipment Hotel services, supply of tap water and development of real estate Company Geographical Presence The business mainly operates in Sichuan province Business Overview Principal shareholders Leshan Assets Operation Co.,Ltd Sichuan Electricity Power Co.,Ltd Meishan Assets Operation Co.,Ltd Shareholder Structure Source: Leshan Electric Power Co.,Ltd , Corporate Website. China Solar Energy Fact Book 103 103

Suntech Power Holdings Shareholder Structure
Solar PV – competition – key players profile – PV cell and module manufacturer Suntech Power is a worldwide leader in the design and manufacture of innovative solar energy solutions Suntech Power Holdings Company Profile Company history Founded in 2001, Suntech is one of the largest solar module providers worldwide Company Leadership CEO: Dr. Zhengrong Shi (also Chairman), CFO: Amy Yi Zhang Company Ownership Listed on the New York Stock Exchange (NYSE: STP) Financial Overview Revenue 2007:US$1,348 million By business segment: PV modules :US$1,332 million PV cells: US$13 million PV system integration: US$3 million Growth Net Revenue CAGR ( ): 125% By geographical segment: Europe: US$1,196 million U.S.: US$87million China: US$26 million South Africa: US$1 million Japan: US$8 million Others:US$30 million Business Overview . Primary Product and Service Lines Suntech designs, develops, manufactures, and markets various photovoltaic (PV) cells and modules to provide electric power for residential, commercial, industrial, and public utility applications worldwide It offers various monocrystalline and multicrystalline silicon PV cells, PV modules and a range of BIPV products and systems Suntech is the second largest PV cell manufacturer globally, with over 500MW annual capacity Company Geographical Presence The company has five production Sites in Wuxi, Luoyang, Qinghai Nagano, Japan, and Shanghai (under construction). Principal Shareholders Directors and executive officers D&M Technologies Limited FMR LLC As of March 25, 2008, approximately 65.5% of the ordinary shares were held in the U.S. Shareholder Structure Source: Suntech Power, Corporate Website. China Solar Energy Fact Book 104 104

China Sunergy is a pure-play cell manufacturer
Solar PV – competition – key players profile – PV cell and module manufacturer China Sunergy is a pure-play cell manufacturer China Sunergy Co., Ltd Company Profile Company history Commencing business operations in August 2004, China Sunergy is a leading manufacturer of solar cell products in China as measured by production capacity. It is also a pure-play cell manufacturer focusing on the highest value segment of the solar value chain Company Leadership CEO: Dr. Allen Wang, Chairman: Mr. Tingxiu Lu, CFO: Mr. Kenneth Luk Company Ownership Listed on the Nasdaq Stock Market (NASDAQ: CSUN) Financial Overview Net Revenue 2008:US$350.9 million By business segment: solar cells :US$333.4 million modules: US$10.9 million cells processed : US$2.8 million Others: US$3.8 million Growth Net Revenue CAGR ( ): 49.4% By Related Party& Non related party: Third Parties: US$297.3 million Related Parties: US$53.6million Business Overview . Primary Product and Service Lines China Sunergy Co., Ltd., together with its subsidiaries, engages in the design, development, manufacture, and marketing of solar cells in China and overseas It manufactures solar cells from silicon wafers utilizing crystalline silicon solar cell technology to convert sunlight directly into electricity through a process known as the photovoltaic effect Company Geographical Presence Head office: Nanjing, China Branch: Munich, Germany Principal Shareholders All directors and executive officers Elite Shine Group Limited Smooth King Investments Limited Brightest Power Holdings Limited Exuberance Investment Limited PraxCapital Fund II, L.P. Luck Great Investments Limited Shareholder Structure Source: China Sunergy, Corporate Website. China Solar Energy Fact Book 105 105

Shareholder Structure
Solar PV – competition – key players profile – PV cell and module manufacturer Trina Solar Limited is an internationally recognized manufacturer of mono and multicrystalline PV modules Trina Solar Limited Company Profile Company history Established in 1997, Trina Solar is committed to improving the competitiveness and efficiency of solar energy and developing a sustainable PV industry Company Leadership CEO: Jifan Gao (also Chairman), CFO: Terry Wang Company Ownership Listed on the New York Stock Exchange Financial Overview Net Revenue 2008: US$831.9 million 2007: US$301.8 million By geographical segment in 2007: Europe: US$291.3 million China: US$6.4 million Mongolia: US$1.5 million Others: US$2.6 million Growth Net Revenue CAGR ( ): % Business Overview . Primary Product and Service Lines Trina Solar Limited, through its subsidiary, Changzhou Trina Solar Energy Co., Ltd., engages in the manufacture and sale of solar power products primarily in China. The company manufactures ingots, wafers, and solar cells for use in its solar module production, provides silicon wafers to toll manufacturers and purchases solar cells from toll manufacturers Trina Solar Limited sells its products to distributors, wholesalers, and PV system integrators Company Geographical Presence Trina Solar's increasingly global presence includes offices in China, Germany, Spain and the U.S. Principal shareholders Topower International Limited South Great Investment Limited Divine Land International Investment Sino Base Investment Co., Ltd Perseverance International Invetment Limited Changzhou Tianhe Investment Co., Ltd Changzhou Wujin Nanfang Bearing Co., Ltd Wai Tat (Hong Kong) Limited Sino Super Investment Limited Sun Era Industries Limited Shareholder Structure Source: Trina Solar Limited, Corporate Website. China Solar Energy Fact Book 106 106

Solarfun Power Holding Shareholder Structure
Solar PV – competition – key players profile – PV cell and module manufacturer Solarfun Power is founded on a strong tradition in electronic manufacturing Solarfun Power Holding Company Profile Company history Established by leading electricity meter manufacturer Lingyang Electronics in August 2004, Solarfun Power is a leading global manufacturer of photovoltaic (PV) cells and modules Company Leadership CEO: Dr. Sven M. Hansen, Chairman: Mr. Yonghua Lu, CFO: Ms. Amy Liu Company Ownership Listed on the Nasdaq Stock Market (NASDAQ: SOLF) Financial Overview Net Revenue 2008: US$725.4 million By business segment: Photovoltaic modules:US$678 million Photovoltaic cells: US$37 million PV cells processing: US$0.4 million Raw materials:US$10 million Growth Net Revenue CAGR ( ): % Business Overview . Primary Product and Service Lines Solarfun Power Holdings Co., Ltd., through its subsidiaries, engages in the development, manufacture, and sale of photovoltaic (PV) cells and PV modules It offers monocrystalline and multicrystalline silicon cells and modules, monocrystalline ingots, and raw materials The company sells its products directly and through third party distributors to solar power system integrators and distributors Company Geographical Presence Solarfun Power Holdings operates primarily in China, Germany, Spain, and Italy Principal shareholders Lingyang Electronics Citigroup Venture Capital Hony Capital Legend Capital Good Energies Shareholder Structure Source: Solarfun Power, Corporate Website. China Solar Energy Fact Book 107 107

Yingli Green Energy Holding Shareholder Structure
Solar PV – competition – key players profile – PV cell and module manufacturer Yingli Green Energy is one of the leading vertically-integrated PV product manufacturers in China Yingli Green Energy Holding Company Profile Company history Founded in 1998, Yingli, through its principal operating subsidiary in China, Baoding Tianwei Yingli New Energy Resources Co., Ltd., designs, manufactures and sells PV modules and designs, assembles, sells and installs PV systems that are connected to electricity transmission grids or those that operate on a stand-alone basis Company Leadership CEO: Mr. Liansheng Miao (also Chairman), CFO: Mr. Zongwei Li Company Ownership Listed on the New York Stock Exchange Financial Overview Net Revenue 2007: US$556.5 million By business segment: PV modules : US$550.5 million PV system: US$0.3 million Other: US$5.7 million Growth Net Revenue CAGR ( ): % By geographical segment: Europe: US$520.2million U.S.: US$5 million China: US$8.4 million HK: US$14.2 million Others:US$ 8.7 million Business Overview . Primary Product and Service Lines Yingli Green Energy Holding Company Limited and its subsidiaries engage in the design, development, marketing, manufacturing, installation, and sale of photovoltaic (PV) products Its products include PV modules, integrated PV systems, multicrystalline polysilicon ingots and wafers, and PV cells The company sells its PV modules under the Yingli brand name primarily to installers, PV system integrators, property developers, distributors, and other value-added resellers Company Geographical Presence Principally in China, as well as in Europe, particularly the U.K. and Germany Principal Shareholders Public shareholders Financial investors and other Shareholders Yingli Power Holding Company Limited (British Virgin Island) Shareholder Structure Source: Yingli Green Energy, Corporate Website. China Solar Energy Fact Book 108 108

Canadian Solar is a major manufacturer of solar components
Solar PV – competition – key players profile – PV cell and module manufacturer Canadian Solar is a major manufacturer of solar components Canadian Solar Company Profile Company History Founded in Canada in 2001, Canadian Solar Inc. is a vertically-integrated manufacturer of silicon, ingots, wafers, cells, solar modules (panels) and custom-designed solar power applications Company Leadership CEO: Shawn (Xiaohua) Qu (also Chairman), CFO: Arthur Chien Company Ownership Listed on the Nasdaq Stock Market (NASDAQ: CSIQ) Financial Overview Net Revenue 2008: US$303 million Growth Net Revenue CAGR ( ): 344% By geographical segment: Europe: US$287million Asia: US$13 million US: US$3 million Business Overview . Primary Product and Service Lines Products include a range of standard solar modules built to general specifications for use in various residential, commercial, and industrial solar power generation systems Specialty solar modules and products consist of customized modules that customers incorporate into their own products, such as solar-powered bus stop lighting, and complete specialty products such as solar-powered car battery chargers Company Geographical Presence Canadian Solar has successfully established seven wholly-owned manufacturing subsidiaries in China manufacturing ingots, wafers, solar cells and solar modules Principal Shareholders All directors and Executive Officers as a Group Columbia Wanger Asset Management, L.P Shareholder Structure Source: Canadian solar, Corporate Website. China Solar Energy Fact Book 109 109

Shareholder Structure
Solar PV – competition – key players profile – PV cell and module manufacturer ReneSola, Ltd operates upstream in the value chain, focusing on manufacturing wafers ReneSola, Ltd Company Profile Company history Founded in 2003 and based in Jiashan, China, the company is a leading manufacturer of wafers and one of the fastest growing companies in the photovoltaic (PV) industry Company Leadership CEO: Xianshou Li, Chairman: Martin Bloom, CFO: Charles Xiaoshu Bai Company Ownership Listed on the New York Stock Exchange (NYSE: SOL) Listed on the New York Stock Exchange (Ticker: SOLA.L) Financial Overview Revenue 2008: US$670.4 million 2007: US$249.9 million By business segment in 2007: Product Sales: US$231.2 million Processing Service: US$18.7 million Growth Net Revenue CAGR ( ): % By geographic segments: China: US$155 million Rest of Asia: US$87million U.S.: US$7 million Others:US$0.9 million Business Overview . Primary Product and Service Lines ReneSola, Ltd., along with its subsidiaries, engages in the development, manufacture, and sale of solar wafers and related products in China It offers silicon ingots and solar wafers, which are processed from silicon raw materials, including reclaimable silicon raw materials, in the form of partially-processed and broken wafers, broken solar cells, pot scrap, silicon powder, ingot tops and tails, and other off-cuts Company Geographical Presence Subsidiaries across China, the U.S. and Malaysia Principal Shareholders Directors and Executive Officers Ruixin Holdings LTD Yuncai Holdings LTD Shareholder Structure Source: ReneSola, Ltd, Corporate Website. China Solar Energy Fact Book 110 110

Shenzhen Topray Sola Co., Ltd. Shareholder Structure
Solar PV – competition – key players profile – PV cell and module manufacturer Shenzhen Topray Solar Co., Ltd. is a PV cell, module and solar related consumer products manufacturer Shenzhen Topray Sola Co., Ltd. Company Profile Company history Founded in 2002, Shenzhen Topray Solar Co., Ltd. is a manufacturer of solar cells, solar panels, solar chargers, solar lights, solar gardening products and solar power systems Company Leadership General Manager: Ms. Li Fenli, CFO: Ms. Zhang Hongying Company Ownership Listed on the Shenzhen Stock Exchange (002218) Financial Overview Net Revenue 2008: RMB million By business segment: Solar cells: RMB 17.5 million Solar power applications/solar power systems: RMB 11.8 million Others: RMB 29.3 million Growth Net Revenue CAGR ( ): 43.9% Business Overview . Primary Products and Service Lines Over 95% of Shenzhen Topray Solar’s output is exported and its current annual production capacity is up to three megawatts, making it one of the world's highest volume producers It is the only company in China that has the ability to produce amorphous silicon solar cells with 50MW capacity, and mono-crystalline & poly-crystalline solar cells with 30MW capacity Company Geographical Presence Head office: Shenzhen, China Branch: Kampala, Uganda; Sichuan, China Principal Shareholders Public shareholders Shenzhen AoXin Investment and Development Limited Shenzhen He Rui Yuan Investment and Development Limited Shareholder Structure Source: Shenzhen Topray Solar, Corporate Website. China Solar Energy Fact Book 111 111

Selected International CSP Companies
Solar Energy – competition– CSP CSP will become increasingly attractive to new entrants as prices fall as a result of technology innovation and economies of scale Selected International CSP Companies Materials Components Finished Products Distribution End Use Selected Companies: Boeing, Chicago, IL 3M Co. Siemens Luz/Solel Alanod Luz Acciona Abengoa Solar Carrizo Energy BrightSource Sunray Energy Florida Power & Light Arizona Public Southern California Edison Nevada Power Co. Sierra Pacific Power Co. Pacific Gas & Electric Co. San Diego Gas & Electric Status Trends Opportunities There has been a proliferation of new entrants up and down the value chain ranging from technology innovators looking to change the economics of CSP to investors and IPPs looking to gain first mover advantages by trying up sites The largest owners of wind power plants globally are emerging as significant players in the CSP sector Wind power plants invest in the CSP sector Source: CGGC; company annual reports and websites. China Solar Energy Fact Book 112

Solar Energy - competition – companies
There are a wide range of domestic and foreign actors involved in solar thermal, CSP and BIPV Selected SWH, CSP and BIPV Companies Concentrating Solar Power (CSP) Building Integrated PV (BIPV) Ecoo Solar Hi-min Solar Linuo Paradigma Solar Engergy Huayang Solar Solar Thermal Water Heater (SWH) Xinjiang Sun Oasis eSolar Edison Acciona Abengoa Suntech Power Holdings Co., Ltd. Giant Vigo Johanna Solar Technology GmbH Phoenix Solar AG Source: Company websites; XYZ. China Solar Energy Fact Book

Financial Investment Overview
Solar Energy – financial investment – overview Financing alternatives for solar energy are becoming plentiful as the industry matures and price points become lower Financial Investment Overview Solar PV and solar thermal have access to various sources of capital while the lack of capital is still a barrier to entry for CSP Investors will look to see that operational, financial and strategic milestones have been met and will pay premiums for demonstrated high revenue mix and growth, expansion, profit margin uplift, long-term contracts, production volume, sustainability of feedstock, and realistic strategies to reach grid parity Investors seek vertical integration for several reasons: – Multiple products allow for multiple margin opportunities in the form of differentiated technology, cost-saving, and system integration – Protection against over- and undersupply choke points as industry evolves – Maximize overall system design to assemble the right products in the design for each installation There are venture capital firms, private equity concerns and IPO markets, as well as government renewable energy funds and subsidy activities, investing in the solar sector Source: XYZ. China Solar Energy Fact Book 115

Financial Investment in Solar
Solar Energy – financial investment Solar PV and solar thermal have access to various sources of capital, unlike the CSP sector Financial Investment in Solar Solar PV Solar Thermal CSP Use of Proceeds R&D Capacity expansion Value chain consolidation Application Production facility Project sourcing Funding Size/Stage US$5 million-10 million US$30 million US$100 million-300 million Growing stage US$100 million Early Opportunity Seek technology leadership in Thin Film Thin Film Production capacity critical to success Turn key Capitalized on vertical integration BIPV tax and fiscal incentives Project developer Improve efficiency Reduce operation costs Licensing Achieve econo-mies of scale Project develop-ment Tax and fiscal incentive Acquire technology/solution Connect with grid Leverage scale OEM Out-bound Gov’t projects Funding Source Active Investors Government Renewable Energy Fund China Development Bank Renew-able Energy Fund Financial IPO CDH, Tsing, GS Industrial Suntech LDK, Yingli Suntech, Yingli Himin Himin, Solar Rain Source: XYZ. China Solar Energy Fact Book

Valuation Versus Key Milestones
Solar Energy – financial investment Greentech companies need to achieve certain milestones before they can achieve an initial public offering (IPO) Valuation Versus Key Milestones Investors will pay premiums for Revenue growth Revenue diversification Long-term contracts Production capacity Gross margins Grid parity Global expansion Sustainability of material resources Source: Clean Tech Overview, Morgan Stanley, July 21, 2008. China Solar Energy Fact Book

China Clean Tech’s Access to Capital
Solar Energy – financial investment The recent wave of interest in renewable energy offers Chinese solar companies access to capital China Clean Tech’s Access to Capital Please double check the charts, the data on the “Clean Tech Venture Investments in China” looks old since it refers 2007 as an estimate. Meaning a forecast. Which means this data has been generated 2006 the lastest. Re “Capital Raised in Primary Market” Q2’06 indicated a “0” as for its statistic. Although it would most probably mean that it is less than a million but some might think of it as plainly zero. To avoid confusion, it would be best if we would indicate the actual capital raised such as “0.45” and the like so that we are clear about the data. Source: Clean Tech Overview, Morgan Stanley, July 21, 2008. China Solar Energy Fact Book

Solar Market Consolidation Themes
Solar Energy – financial investment Recent solar M&A has exhibited vertical integration across the value chain to drive overall costs down and to increase scale Solar Market Consolidation Themes Equipment Silicon Feedstock Solar Cells Solar Modules Ingots & Wafers System Intergration/ Installation/ Services Thin Film May 2008,Suntech acquired a minority stake in Shunda Holdings Co. Ltd, a water manufacturer, from Actis, and Waichun Investment Fund, for a total consideration of $98.9 million. 2007, Suntech acquired the Japanese photovoltaic (PV) company MSK for a total consideration price around $ million. Oct,2008, Intel invest $ 20M to acquire stakes in Trony solar Holding.co.,ltd Source: Clean Tech Overview, Morgan Stanley, July 21, 2008, XYZ. China Solar Energy Fact Book

Shenzhen Capital Group
Solar Energy – financial investment – financial investors profile We have identified a number of key financial investors that are active in the sector House Business Description Sample Investments Comments Tsing Capital Industry focus: Cleantech Typical investment size: US$1 million-5 million Beijing Giant Hemu Technology Beijing PowerU Technology Co., Ltd. China Sunergy Environmental Services Group Fujian Haiyuan Automatic Equipments Co., Ltd. LDK Solar Co., Ltd. Shenzhen Dongjiang ET Solar Green Bio Tsing Capital is the first cleantech venture capital management firm in China The company manages the China Environment Fund In September 2008, the company invested in wind power equipment accessories manufacturer Wuxi Qiaolian Wind Power Technology Co., Ltd. Shenzhen Capital Group (SCGC) SCGC is a balanced fund manager with an equal focus on expansion along with funding of early and seed stage companies Industry focus: Primarily hi-tech, but also service and logistics industries Geographic focus: Shenzhen and Greater China Jinkosolar Holding Company Ltd. Shenzhen HJ Technology Co., Ltd. Kingsun Photoelectricity Co., Ltd. Beijing Shenwu Thermal Energy Technology Mingyang Electric Jiangsu Highstar Battery Manufacturing Co., Ltd . SCGC is one of China’s largest PE firms SCGC is a state-controlled PE Shareholders include the state-owned Assets Supervision and Administration Commission of Shenzhen Municipal Government and other state-owned entities In October 2008, the company invested in silicon wafer manufacturer Jinkosolar Holding Company Ltd. Milestone Capital Instead of focusing on any particular industry, Milestone Capital’s investment team looks for companies with sound financial and operating track records that have already established leading positions in their respective market segments Typical investment size: US$ 10 million-100 million Trina Solar Ltd. China Bio Solutions Group Ltd. VisionChina Media Inc. Focus Media Holding Ltd. Dehaier Medical Systems Ltd. The company invests in a limited number of portfolio companies where it can dedicate significant resources to each investment The company wants to play an active role and work closely with the management of its portfolio companies Source: XYZ. China Solar Energy Fact Book

Solar Energy – financial investment – financial investors profile
We have identified a number of key financial investors that are active in the sector House Business Description Sample Investments Comments NewMargin Venture Industry focus: broader IT, sustainable growth technology, healthcare and high margin manufacturing Geographic focus: China Goldwind Science & Technology Co., Ltd. Zhenghe Bioenergy EcoGreen Fine Chemicals Group Ltd. Shenzhen Dongjiang Environmental Company Ltd. NewMargin currently has about US$520 million under management The company is seeking to invest in companies that will be future technology leaders and dominate China’s economy in the 21st century The company is one of China's oldest domestic venture capital companies CDH Investment Deal size typically US$700, ,000 Industry focus: environmental protection, pharmaceuticals, telecommunications, optical-mechanical-electrical integration, new materials and energy, etc. Geography: Beijing/Guangdong Himin Solar Energy Group Meihua Monosodium Glutamate Group Co., Ltd. Meng Niu Dairy Li Ning Focus Media Sina Air Media Focuses on industries that have been promoted by the Chinese government All investments require a rate of return greater than 30% and yearly dividends need to be greater than 16% Provides growth capital to companies that have strong business fundamentals, favourable growth prospects and viable exits via listings or trade sales in 1-2 years New Horizon Fund Industry focus: chemicals, energy, multimedia, high-tech, consumer products, and auto components Yingli Solar The company’s investment holding period is 2-5 years The company’s two limited partners are Tamasek Holdings Private Limited and SBI Holdings Inc. TDF Capital Typical investment size: US$ 3 million-10 million Investment focus: new energy and Greentech, technology, telecoms, healthcare, consumer Geographic focus: Greater China Universtar Science & Technology Zhong Hang (Baoding) Huiteng Windpower Equipment Co., Ltd. Hefei Sungrow Power Supply Ltd. Although primarily an early to expansion stage investor in the consumer, media and technology sectors, the company has also begun investing in the new energy and greentech industries Source: XYZ. China Solar Energy Fact Book

Qiming Venture Partners Draper Fisher Jurvetson
Solar Energy – financial investment – financial investors profile We have identified a number of key financial investors that are active in the sector House Business Description Sample Investments Comments Qiming Venture Partners Industry focus: Clean technology, media and Internet information, technology, healthcare, and consumer and retail Geographic focus: China LP Amina The company has origins and expertise in making IT-related investments Although the company has made only one cleantech investment thus far, it views the industry as having strong potential Over US$500 million under management GSR Ventures Industry focus: Semiconductors, Internet, wireless, new media and green technology LatticePower Corporation Sierra Solar Power Sinowyde Energy Technologies Corporation Times Energy Corporation The company’s expertise is in Internet and telecommunications sector investment However, the company has been broadening its focus to invest in greentech In January 2009, the company announced that it had raised US$ 383million for a new fund to focus on investing in Chinese technology companies Blackstone Group Deal size generally ranges from US$50 million -$5 billion Industry focus: Cleantech, manufacturing, chemicals, transportation, communications, insurance, lodging, entertainment Geographic focus: U.S., Europe and Asia -Pacific Coskata Inc. Sithe Global Power In mid-2008, Blackstone Group formed Blackstone Cleantech Venture Partners indicating Blackstone Group’s growing focus towards cleantech investment Also in mid 2008, Blackstone Group announced a partnership with Windland Energieerzeugungs GmbH to develop and construct a 400MW offshore wind farm in Germany Draper Fisher Jurvetson Industry focus: diversified including energy/greentech, life sciences, consumer apps, media, enterprise applications, hardware, mobile, and nanotechnology Geographic focus: Mainly U.S., Canada, China, and India Jing-Jin Electric Prudent Energy Nottingham International SolarCity GreenFuel Technologies BioFuelBox Draper Fisher Jurvetson has been investing in cleantech since 2001 In 2007, the company was involved in 11 cleantech deals with a total investment of over US$40 million Source: XYZ. China Solar Energy Fact Book

New World Strategic Investment Ltd
Solar Energy – financial investment – financial investors profile We have identified a number of key financial investors that are active in the sector House Business Description Sample Investments Comments Warburg Pincus Deal size range from US$10million-$1billion Industry focus: financial services, healthcare, consumer and industrial, media and business services, information and communication technology, energy and real estate Geographic: Global Conergy Wind GmbH Competitive Power Ventures Holdings PwC is the PE fund’s tax advisor Invested more than US$29 billion in more than 600 companies in 30 countries around the world Has been in Asia for more than a decade and has invested more than US$2 billion in the region As a foreign PE house, it prefers to invest in companies with a high return (usually above 20% to 30%) in short term (usually three years) and a clear path to exit (i.e., through IPO) Intel Capital Intel's global investment organization makes equity investments in innovative technology start-ups and companies worldwide Industry focus: cleantech, information technology, semiconductor manufacturing Trony Solar Holdings Co., Ltd. NP Holdings Ltd. In April 2008, Intel established the US$500 million Intel Capital China Technology Fund II In Oct. 2008, the company made its first investment in China’s cleanteach industry by investing US$20 million in Trony Solar Holdings Co., Ltd., a leading Chinese thin-film solar energy and solution provider Over the past 10 years, Intel Capital has invested in more than 80 companies across mainland China and Hong Kong In 2007, Intel Capital invested about US$639 million in 166 deals with approximately 37 percent of funds invested outside the United States New World Strategic Investment Ltd Industry focus: any Geographic focus: China and Asia Other investment criteria: companies are 1-3 years old before their listing Biomax Environment Holdings Ltd. Renhe Commercial Holdings Co., Ltd. In Dec. 2008, the company’s Managing Director Adrian Cheng said the company is seeking to explore investments in the alternative energy territory Based in Hong Kong, the company is a wholly-owned subsidiary and the strategic investment arm of conglomerate New World Group Source: XYZ. China Solar Energy Fact Book

Financial Investment Implications Integrated Power Company
Solar power – financial investment – implications We’ve identify three potential business and funding models to promote solar energy development in China Financial Investment Implications Licensing Model Project Developer Integrated Power Company F U N D I G Business Model Sell equipment and license technology to developers of solar projects Provides revenue and profits in a similar way to manufacturing of industrial equipment Use technology as a “currency” to invest in solar projects Developer of solar projects Provides revenue and profits through a developer fee, service and O&M contracts, and associated tax credits or incentives Develop projects and establish the company as an integrated energy concern Provides revenue and profits through the sale of electricity to power and utility entities and through any associated tax credit or fiscal incentives Funding Sources Venture Capital Private Equity IPO China Renewable Energy Fund Provincial/Municipal/Government Growing stage venture funds Private equity funding Project Financing Utility company Joint Venture Private equity funds Risks Strong balance sheet requirement to offer O&M contracts Least overall business risk Potential for sales to be less Strong balance sheet requirements Sell-down timing uncertainty Greatest level of business risk Least diversified revenue stream What the Market Needs Best of breed technologies Development and operation of projects China Solar Energy Fact Book 124 124

The China Solar Energy Market

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The China Solar Energy Market

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