Photovoltaic on rooftops Istanbul 05.04.2019

Rödl & Partner – Public Management Consulting Legal Audit services Tax consulting Management Consulting The foundation of our dynamic development: 1977 opening of Nürnberg office Locations today: Germany: 25 International: 83 Turkey (Istanbul and Izmir): 2 Employee development: 1990 174 Employees 2000 2.000 Employees 2018 4.500 Employees

Agenda 1 Market overview 2 Terminology 3 Business models 4 Summary Letzter Punkt eher offene Diskussion mit Beispiel (Vertragskonzepte, ….), offene Fragen

Market overview

The Journey of Energy Quelle: European Smart Grids Technology Platform: Vision and Strategy for Europe's Electricity Networks of the Future, Europäische Kommission [2006] The journey takes us from large power plants to autonomous quarter-concepts

Quarters-Concept in Germany Rooftop PV Landshut

Historical Development of PV in Germany Quellen BMWi https://www.erneuerbare-energien.de/EE/Navigation/DE/Recht-Politik/Das_EEG/DatenFakten/daten-und-fakten.html#doc95662bodyText1 https://www.erneuerbare-energien.de/EE/Navigation/DE/Service/Erneuerbare_Energien_in_Zahlen/Zeitreihen/zeitreihen.html Source: BMWi (2019)

Solar potential of Turkey Radiation in Germany Photovoltaic capacity installed in Germany: 45,3 GW (2018) Photovoltaic capacity installed in Turkey: 4,7 GW ( 5,4% of 87,1 GW, 2018) Calculated area required to supply Turkey with PV-power (only energy: 4.800 km² (not even the area of Istanbul) Turkey installed capacity 87,1 GW, of which PV 5,4% = 4,7 GW Flächenberechnung Turkish Gov: energy data 2018 (für Flächenbeispiel: Sonneneinstrahlung 1,500 kWh/kWp  pro Jahr im Durchschnitt, mit Daten von link 357,4 TWh à Fläche 357.400.000.000 kWh/1500kWh/kWp =  238.266.666 kWp = 238GW zu installierende Leistung; Flächenverbrauch in Freifläche = 20m²/kWp = 4800 km2; Istanbul hat 5.400km2 , Ankara hat 2.500km2) 1500 kWh/kWp Source: Solar GIS (2019)

Power Generation Costs Power generation costs [€cent2018/kWh] Achsenbeschriftungen auf deutsch 2 LEVELIZED COST OF ELECTRICITY RENEWABLE ENERGY TECHNOLOGIES Source: Fraunhofer Institute for solar energy systems ISE – Levelized Cost of Electricity (2018)

PV Market Outlook Overview of currently available PV systems: Mature technologies: Rooftop Utility scale Solar Car Port Cutting edge, innovative designs: Bifacial Floating PV Agro pv Solar Car e.g. Sonomotors sion Grafik Quelle: ITRPV 10th edition 2019 report release and key findings, march 2019; Malaysia

Vertical bifacial PV utility scale system Innovative PV Vertical bifacial PV utility scale system Agro PV Solarwand Next2sun.com https://w Agro PV https://www.ise.fraunhofer.de/de/presse-und-medien/presseinformationen/2018/agrophotovoltaik-goes-global-von-chile-bis-vietnam.html ww.hannovermesse.de/de/news/next2sun-baut-europas-groessten-bifazialen-solarpark-98242.xhtml Source: Next2Sun, Fraunhofer ISE (2019)

Bifacial Noise Protection Innovative PV Bifacial Noise Protection Bifacial Carport Lärmschutzwand https://www.top50-solar.de/experten-forum-energiewende/?qa=blob&qa_blobid=15152161721786670443 https://www.baunetzwissen.de/gebaeudetechnik/tipps/news-produkte/photovoltaikdaecher-fuer-carport-und-terrasse-4952750 Source: TNC Consulting AG, Baunetzwissen (2019)

Floating PV system applications Innovative PV 1.133 kWp, Taiwan 9.982 kWp, China https://www.ciel-et-terre.net/essential_grid/sugu-2-1-133-kwp/ https://www.cieletterre.us/project/pei-county-9982-kwp-mw-scale-floating-pv-plant-china/ Floating PV system applications Source: Ciel et Terre(2019)

PV Market Outlook World market share of different PV applications Grafik Quelle: ITRPV 10th edition 2019 report release and key findings, march 2019; Malaysia Source: ITRPV 10th edition (2019)

Terminology

Business Models - Terminology Feed-in tariff EEG-surcharge EEG Motivation Wettbewerbsfähigkeit Die 4 Begriffe nicht übersetzen Market premium Self supply

Einspeisevergütung – Feed-in Tariff Regulated in §§ 19 Section 1 Nr. 2, 21 Section 1, 2 Renewable Energy Sources Act (EEG 2017). The EEG differentiates the feed-in tariffs by capacity: up to 10 kWp, 40 kWp, 100 kWp. The EEG differentiates further by building utilization: Residential, non-residential, noise protection walls. The EEG provides a fixed feed-in tariff for a period of 20 years. The entitlement to feed-in tariffs also remains in cases where the electricity is stored in a buffer before the grid feed-in. In this case, the entitlement shall refer to the quantity of electricity which is fed from the electricity storage system into the grid system. Renumerations in cent/kWh - Fixed feed-in tariffs: Date of commissioning Residential buildings, noise protection walls and buildings according to § 48 section 3 EEG Other plants up to 10 kWp up to 40 kWp up to 100 kWp from 01.01.2019 4 11,47 11,15 9,96 7,93 from 01.02.2019 4 11,35 11,03 9,47 7,84 from 01.03.2019 4 11,23 10,92 8,99 7,76 from 01.04.2019 4 11,11 10,81 8,50 7,68 Source: Bundesnetzagentur (2019)

Market premium Surplus from direct selling (if applicable) Difference to value to be applied Market premium Compensation for grid feed-in (ct/kWh) EEG-promotion 2-4 ct/kWh Spot market price Values to be applied in Cent/kWh – Market premium model (since 01.01.2016 above 100 kWp obligatory), April 2018: Residential buildings, noise protection walls and buildings according to § 48 section 3 EEG Other plants up to 750 kWp All plants above 750 kWp up to 10 kWp up to 40 kWp up to 750 kWp 11,51 11,21 8,90 8,08 Value to be applied determined through tenders up to 100 kWp: option between market premium and feed-in tariffs. The value to be applied is smaller by 0,4 ct/kWp for feed-in tariffs. Highest accepted bid - lowest accepted bid Feb 2018: 4,59 ct/kWh – 3,86 ct/kWh June 2018: 4,96 ct/kWh – 3,89 ct/kWh Okt 2018: 5,15 ct/kWh – 3,86 ct/kWh Direktvermarktung vs EEG Vergütung bitte nachbauen Source: Bundesnetzagentur (2019)

EEG-Surcharge Regulated in §§ 60 et seq. EEG-Act The payments to the RES-facilities exceeds the returns from electricity sold This difference is spread over all consumers through the EEG-surcharge In 2019, the EEG-surcharge accounted for 6,405 ct/kWh All consumer are exposed to the EEG-surcharge as a component of the electricity price The EEG-surcharge differs between electricity consumers. There are special privilges for energy intensive companies. Companies may apply for reductions when their power purchase exceeds 1 GWh per annum The EEG-surcharge for storage shall not apply if the EEG-surcharge is paid for the electricity fed back into the grid. By now, EEG-surcharge of 40% has to be paid for self supply from plants larger than 10 kWp

EEG-Surcharge Impacts on the amount of the EEG-surcharge: Quantity and amount of EEG-compensation/market premiums paid to RES-facilities Spot market prices Problem: electricity price paradox Renewable energy generation Power consumption Conventional power plants Electricity price

Historical Development of PV in Germany Quellen BMWi https://www.erneuerbare-energien.de/EE/Navigation/DE/Recht-Politik/Das_EEG/DatenFakten/daten-und-fakten.html#doc95662bodyText1 https://www.erneuerbare-energien.de/EE/Navigation/DE/Service/Erneuerbare_Energien_in_Zahlen/Zeitreihen/zeitreihen.html Source: BMWi (2019)

Structure of household-electricity prices in Germany Average electricity price for households 2019: 30,22 ct/kWh Bitte Nachbauen: Quellen: BDEW-Strompreisanalyse Januar 2019 - Haushalte und Industrie, BDEW, Januar 2019 Foto aus Fraunhofer aktuelle Fakten zur PV in Deutschland 2018 All prices in ct/kWh Source: BDEW-Strompreisanalyse (2019)

„Flexible cap“ The flexible cap was introduced as market instrument in the course of the EEG 2012 and successfully contributed to the reduction of the rate of remuneration for photovoltaic (PV) plant Main trigger is increasing electricity prices, caused by increasing EEG-surcharges as electricity cost component Basic concept: Determining a target corridor Slight reduction of values to be applied when the gross new-build solar installations stay inside the corridor. Hence, the rate of remuneration decreases faster in times of strong growth and thus large additional installation than in times of slower growth and smaller additional installation Grafik animierbar einfügen, es müssen nicht alle Degressionsschritte enthalten sein

Business models

Photovoltaik business models rooftop Basis Model Rooftop Leasing Model PV-Leasing PPA Tenant Model Future Systems

Basis model Investor is Owner and Operator Owner Operator Owner Owner Power supply contract Owner Operator Energy Supply Company Surplus PV-Grid feed-in (full EEG-promotion) Own power consumption: - no EEG-promotion - no EEG-surcharge up to 10 kWp from 10 kWp 40% EEG-surcharge - no grid use fee - no electricity tax - Usage of Battery raises the share of self-supplies energy Owner Reserve and peak-load electricity delivery (possibly basic supply): - with electricity tax - with grid fee - with EEG-surcharge NNE = Netznutzungsentgelte Owner

Pure rooftop leasing model contract Property owner PV-plant owner PV Grid feed-in 100% (full EEG-promotion) Owner Hier müsste doch noch irgendwo die Beziehung zwischen PV Eigentümer und Mieter auftauchen

Photovoltaik Leasing Leasing Owner PV-plant owner PV-plant owner Owner PV-(Partial-) Leasing contract Owner Rooftop leasing contract Energy Supply Company PV-plant owner Surplus PV-Grid feed-in (full EEG-promotion) Own power consumption: - no EEG-promotion - no EEG-surcharge up to 10 kWp from 10 kWp 40% EEG-surcharge - no grid use fee - no electricity tax Leasing contract - fixed compensation - Maintenance PV-plant owner Reserve and peak-load electricity delivery (possibly basic supply): - with electricity tax - with grid fee - with EEG-surcharge @Kai: gibt es hier noch andere Ausführungen Owner

PPA Power Purchase Agreement / Thrid-party contracting Tenant Power supply contract Tenant Rooftop leasing contract Energy Supply Company PV-plant owner Surplus PV-Grid feed-in (full EEG-promotion) Supply with PV-power: - Price according to PPA - no EEG-promotion - with EEG-surcharge - no grid use fee - no electricity tax Owner Reserve and peak-load electricity delivery (possibly basic supply): - with electricity tax - with grid fee - with EEG-surcharge Hier müsste doch noch irgendwo die Beziehung zwischen PV Eigentümer und Mieter auftauchen Tenant

Landlord-to-tenant-model Power supply contract Owner Energy Supply Company PV-grid feed-in (with EEG-promotion) Owner Reserve and peak-load electricity delivery (possibly basic supply): - with electricity tax - with grid fee - with EEG-surcharge Tenant 1 Tenant 2 Tenant 3

Exemplary calculation Example PV-plant on factory hall Roof area in south exposure: 900m² Electricity generation costs (20a, 2% interest): ca. 4,4 ct/kWh Annual revenue for full feed-in: EEG market premium: 8,9 ct/kWh, prospect April 2019, operational costs: 1 % of investment costs approx. 18,7 K € p.a. Annual revenue/saving for 100%** own consumption: see above; procurement costs: 20ct/kWh; 40% EEG-surcharge on own consumption: 2,56 ct/kWh approx. 37,9 K € p.a. Performance PV-plant: ca. 6 m²/ kWp PV = 150 kWp PV Investment PV-plant: Ca. 900 €/kWp PV (net) = ca. 135 K € Amortisationszeit Case 1: 7,2 a Amortisationszeit Case 2: 3,5 a Production potential*: Ca. 1500 kWh/kWp PV = 225.000 kWh p.a. *regardless of shading, ** possible through weekend and holiday shifts, *** individual assessment of profitability necessary

Summary

Lessons Learned Creation of new laws shall refer to market and targets General Key Findings Ensure predictability for investors Ensure transparency, e.g. publication of degression and growth figures Statutory long-term plans for promotion mechanisms Learnings from the German development of renewable energy programs Integration of promotion mechanisms in market economy / competition Linking promotion to development targets and economic development („flexible cap“, tenders) Identification of potentials and corresponding definition of aims Economical impact of Renewable Energies PV power generation is already today and also in long-term consideration one of the most cost efficient electricity generation sources Renewable energies can reduce the required energy import and thus strengthen the national economy Creation of new laws shall refer to market and targets Die Türkei darf nicht versuchen (nur) den aktuellen Stand einzuholen, sondern versuchen mit intelligenten Konzepten die „Konkurrenz“ zu überholen. Dafür ist es notwendig aus den Fehlern anderer zu lernen und vorausschauend Zukunftsstrategien zu Entwickeln. Wenn wir nämlich das EEG betrachten sehen wir Deutschlands „Plan“ und Voraussicht vom 1.4.2000 also vor 19 Jahren.

Contact person Kai Imolauer Caner Demirci Michael Rogoll Associate Partner Economic Engineer Rödl & Partner Äußere Sulzbacher Str. 100 90491 Nürnberg Tel: +49 911 9193 - 3606 Fax: +49 911 91 93 – 3549 kai.imolauer@roedl.com Caner Demirci Attorney at Law Public Management Consultant Rödl & Partner Äußere Sulzbacher Str. 100 90491 Nürnberg Tel: +49 911 9193 - 3715 Fax: +49 911 91 93 – 3549 caner.demirci@roedl.com Michael Rogoll Consultant Master of Science in Engineering Rödl & Partner Äußere Sulzbacher Str. 100 90491 Nürnberg Tel: +49 911 9193 - 3782 Fax: +49 911 91 93 – 3549 michael.rogoll@roedl.com