This webinar goes through the technico-economic assessment of photovoltaic installations in non-residential buildings. Its viability is compared with the costs of electricity from the grid. The methodology for such an exercice will be explained and the conclusions and lessons will be presented. http://www.leonardo-energy.org/webinar/photovoltaic-grid-parity-tertiary-sector-session-2 Additionally, an assessment of local regulation in seven countries is made: France, Germany, Italy, Spain, Brazil, Chile and Mexico. For further information, please read the Grid Parity Monitor issues. http://www.leonardo-energy.org/photovoltaic-grid-parity-monitor

1. PV Grid Parity Monitor for Commercial
Consumers
Financial AdvisoryStrategy Consulting Market IntelligencePolicy Consulting
Leonardo ENERGY Webinar Series
Mon, May 5, 2014 - 17:00 CET
David Pérez, Partner
dpn@eclareon.com
María Jesús Báez, Associate
mjb@eclareon.com
GPM 3rd Issue

2. Platinum sponsors:
• ECLAREON
• Grid Parity Monitor (GPM)
- Introduction
- Definitions and Methodology
- Results
- Conclusions
Agenda
2

3. Platinum sponsors:
3
ECLAREON’s service portfolio includes strategy and policy consulting as
well as financial advisory
COMPANY OVERVIEWINDUSTRY FOCUS
• Entry strategies
(new
geographies &
technologies)
• Commercial &
business
strategy
• New ventures &
business
planning
• EBITDA
improvement
• Restructuring
• Corporate
strategy
• Market
information tools
and publications
for the RE sector:
- Grid Parity
Monitor (GPM)
- PV price
navigator
- Solar Atlas
• Organization of
trade
delegations and
sector
conferences
• Commercial due
diligence
• M&A advisory,
coordination &
negotiations
• Company
valuation
• Target screening
& partner search
• Equity and debt
capital raising
• Investment
opportunities
• Expert’s reports
• Horizon 2020:
coordination of
proposals and
participation as
partners
• Legal framework
analysis
• Support in policy
making
• International
knowledge
sharing
Strategy
consulting
Market intelligence
Financial
advisory / M&A
Policy consulting
Business
promotion
RenewableEnergySmartGrids
Energy
Efficiency

4. Platinum sponsors:
4
ECLAREON mainly covers the European, Latin American and US markets
and has permanent offices in Berlin and Madrid (>40 employees) and
partner offices in Bogota, Milan, New Delhi, and Santiago
ECLAREON’s global presence
Note: * Partner offices represent partnership agreements with local consultants
COMPANY OVERVIEWGEOGRAPHIC REACH
Permanent office Partner office* ECLAREON activity

5. Platinum sponsors:
• ECLAREON
• Grid Parity Monitor (GPM)
- Introduction
- Definitions and Methodology
- Results
- Conclusions
Agenda
5

6. Platinum sponsors:
PV “grid parity” is the moment when the cost of generating PV
electricity is equal to the price paid for grid electricity
For the sake of simplicity
this report compares PV
LCOE with retail electricity
prices
In reality, depending on the
local self-consumption
regulation, a part of the PV
generation might be lost or
valued at a different rate
Note: * Levelized Cost of Electricity
Source: ECLAREON analysis
INTRODUCTION
Grid electricity price
PV electricity cost (LCOE*)
EUR ct /
kWh
Grid Parity
Years
Simplistic Illustration of PV Grid Parity
• Grid electricity is cheaper than
PV-generated electricity
- PV needs support
mechanisms (FiT, tax credit,
etc.)
• PV-generated electricity is
cheaper than grid electricity
- It is more convenient to self-
consume PV electricity than
to buy electricity from the
utility
6

7. Platinum sponsors:
The GPM Series analyzes grid parity proximity in several markets;
this 3rd issue focuses exclusively on the commercial segment
INTRODUCTION
Countries included in the GPM Series up to date
Source: ECLAREON
7
Distinctive features of this issue
Included in GPMC Included in previous issues
BRASIL
(Salvador)
MEXICO
(Hermosillo)
SPAIN
(Las Palmas)
ITALY
(Rome)
FRANCE
(Marseille)
GERMANY
(Munich)
CHILE
(Copiapó)
Key:
Perspective
• Commercial segment
- 30kW system vs. commercial utility rates
Markets
• Mature markets
- France, Germany, Italy and Spain
• Promising markets
- Brazil, Chile and Mexico
Methodology
• Assumptions (not exhaustive)
- 100% on-site self-consumption
- 70% debt ratio
• Inputs (not exhaustive)
- Real market data for EPC prices
- After-tax cost flows
- Only accounts for the energy charge

8. Platinum sponsors:
The PV Grid Parity Monitor is sponsored by renowned international
companies
• Platinum Sponsors
• Gold Sponsors
INTRODUCTIONSPONSORS
8
Platinum sponsors:

9. Platinum sponsors:
The PV Grid Parity Monitor is supported by relevant PV partners in
each market
• Partner Associations
• Supported by
INTRODUCTIONPARTNERS
9

10. Platinum sponsors:
The LCOE of a system refers to the constant and theoretical
cost of generating PV electricity over the system life
DEFINITIONS & METHODOLOGY
Cost flows of a commercial PV System
Source: ECLAREON analysis
10
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28
€ Initial investment
Operating expenses
Key:
Tax shield
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28
€ct /
kWh
PV LCOE of the PV System
• PV Levelized Cost of Energy (LCOE) accounts
for all costs associated with a PV system over
its life
- These include initial investment, O&M
costs, corporate taxes, among others
• It assumes a constant value per year and is
expressed as cost per kWh
- It incorporates total PV electricity generated
over the system’s lifespan
• It considers the return required from the
investment, to discount future costs (and
production) to present

11. Platinum sponsors:
For a specific PV system, PV LCOE is fixed as soon as the PV
system is built, but grid electricity prices are likely to increase
LCOE of PV Technology vs. Grid Electricity Price
0
5
10
15
20
25
30
2009S1 2009S2 2010S1 2010S2 2011S1 2011S2 2012S1
Years
EUR ct/
kWh
LCOE of PV technology
Grid electricity price
0
10
20
30
40
50
60
70
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
EUR ct/
kWh
Years of operation of the PV system
Grid electricity price
LCOE of a specific PV system
installed in S2 2013
LCOE of A SPECIFIC PV System Installed S2 2013 vs. Grid Electricity Price
Source: ECLAREON analysis
DEFINITIONS & METHODOLOGY
11

12. Platinum sponsors:
12
Note: Data from the second half of 2013
Source: ECLAREON analysis
RESULTS
Germany, Italy, and Mexico are best positioned for the
development of the PV self-consumption market
Positioning Matrix of the countries analyzed
Note: Data from the 2nd
half of 2013
Source: ECLAREON Analysis
0,0
0,2
0,4
0,6
0,8
1,0
- +
Regulatory support for PV Self-Consumption
-
+
GridParityProximity
BrazilChile
France
Germany
Italy
Mexico
Spain
Countries at grid parity
Best positioning for self-consumption

13. Platinum sponsors:
RESULTSBRAZIL
The regulatory environment in Brazil is favourable, but PV is not
yet competitive against grid electricity
Note: * Compound Annual Growth Rate
Source: ECLAREON analysis
Past evolution of grid electricity price and PV LCOE
(SALVADOR)
• A net-metering regulation,
proposed by ANEEL, for
renewable energy systems up to 1
MWp is in place since January
2013
- Users pay for the difference
between the energy consumed
and the one fed to the grid
- Compensation will be held within
the same rate period
Assessment of Brazilian regulatory
framework for PV self-consumption
13
0
20
40
60
80
100
120
140
2012S2 2013S1 2013S2
PV LCOE (avg.)
CAGR *
S2'12-S2'13
Standard tariff
-23.2%
-27.3%
BRL ct/
kWh
• In Salvador, PV technology is still far from being
competitive against grid electricity
- Commercial electricity tariffs were recently reduced
- PV LCOE remains high due to high system prices and a
high discount rate

14. Platinum sponsors:
RESULTSCHILE
Despite high irradiation levels in Copiapó, a relatively low variable
component of the electricity tariff impedes Grid Parity
Past evolution of grid electricity price and PV LCOE
(COPIAPÓ)
• In March 2012 a net metering
regulation for PV installations up
to 100 kW was approved (Law
20.571) but technical rules are still
pending
- PV surpluses will be valued at an
economical rate (lower than the
retail electricity price)
- This law will not come into force
until a technical code is published
Assessment of Chilean regulatory
framework for PV self-consumption
Source: ECLAREON analysis
14
0
20
40
60
80
100
120
140
160
180
2012S2 2013S1 2013S2
PV LCOE (avg.)
CAGR
S2'12-S2'13
-23.1%
-25.6%Standard tariff
CLP/
kWh
• Despite relatively high irradiation levels in Copiapó, PV
technology is not competitive against grid electricity:
- Variable electricity prices for the commercial segment are low
- PV installation prices remain above international competitive
price levels
- The discount rate is relatively high

15. Platinum sponsors:
RESULTSMEXICO
In the North of Mexico, commercial consumers with contracted
power below 25 kW have reached grid parity
Past evolution of grid electricity price and PV LCOE
(HERMOSILLO)
• The Medición Neta regulation
already allows PV self-consumers
to feed part of their production
into the grid for energy credits
• An eventual regulatory change that
modifies the recognition process
of injected power by PV systems
would benefit these generators
- If distributed PV generation is
included in this legislation, it
would allow self-consumers to
attain savings from the fixed
component of the utility rate
Assessment of Mexican regulatory
framework for PV self-consumption
Note: *Tarifa 2; **Tarifa 3; ***Tarifa OM
Source: ECLAREON analysis
15
PV LCOE (avg.)
CAGR
S2'12-S2'13
-22.7%
4.4%
Tariff <25kW*
8.8%Tariff >25kW**
Tariff <100kW*** 10.0%
MXN/
kWh
0
1
2
3
2012S2 2013S1 2013S2
• In Hermosillo, certain commercial electricity consumers
(“Tarifa 2”) have reached grid parity
- For other consumers, low electricity tariffs still represent a
barrier

16. Platinum sponsors:
RESULTSFRANCE
In Marseille, grid parity has not been reached yet, mostly due to
low electricity rates for the commercial sector
Past evolution of grid electricity price and PV LCOE
(MARSEILLE)
• In France, commercial PV systems
can receive a Feed in Tariff (FiT)
that compensates for the excess
electricity fed into the grid
- Given that FiTs are still higher
than the retail price of
electricity, self-consumption is not
being incentivized
• There is uncertainty about the
future of the FiT scheme
Assessment of French regulatory
framework for PV self-consumption
Source: ECLAREON analysis
16
0
2
4
6
8
10
12
14
16
2012S2 2013S1 2013S2
PV LCOE (avg.)
CAGR
S2'12-S2'13
Peak Summer
Peak Winter
-24.0%
1.4%
14.4%
EUR ct/
kWh
• Despite relatively high solar irradiation in Marseille, grid
parity has not been reached yet, mostly due to low
electricity rates for commercial consumers
- However, with an estimated annual decrease of PV LCOE
of 24%, grid parity could be a reality in the medium term

17. Platinum sponsors:
RESULTSGERMANY
PV grid parity has already been reached in Munich for commercial
consumers; the regulatory support encourages the market
• Germany’s EEG FiT program
fosters the self-consumption
market in an efficient way, as the
tariff for the excess electricity is
lower than the price of electricity
from the grid
- Moreover, the country is reducing
the level of incentives every
month
• An EEG surcharge payment for PV
on-site self-consumption is under
discussion
Assessment of German regulatory
framework for PV self-consumption
Source: ECLAREON analysis
17
0
2
4
6
8
10
12
14
16
18
2012S2 2013S1 2013S2
PV LCOE (avg.)
CAGR
S2'12-S2'13
Off-Peak Tariff
Peak Tariff 13.3%
18.0%
-11.1%
EUR ct/
kWh
Past evolution of grid electricity price and PV LCOE
(MUNICH)
• Full grid parity has already been reached in Munich for
commercial consumers
- System prices in Germany are competitive
- The discount rate used for the calculation of LCOE is low
- Retail electricity prices charged to commercial consumers are
high

18. Platinum sponsors:
RESULTSITALY
In Italy, full grid parity has been reached and the market is driven
by a regulation that fosters self-consumption
Past evolution of grid electricity price and PV LCOE
(ROME)
• The Scambio Sul Posto (SSP) net-
metering mechanism allows users
with PV systems under 200 kW to
obtain credits
• It should be noted that this
mechanism is currently under
discussion among Italian
regulators
- The nominal power limit has
already been cut and it is
uncertain whether the SSP will
be maintained in the future
Assessment of Italian regulatory
framework for PV self-consumption
Source: ECLAREON analysis
18
0
2
4
6
8
10
12
14
2012S2 2013S1 2013S2
PV LCOE (avg.)
CAGR
S2'12-S2'13
-2.8%
5.2%
-19.8%
Peak tariff
Mid tariff
Off-Peak tariff
1.2%
EUR ct/
kWh
• Grid parity is an economic reality in Italy
- The main drivers are competitive PV system prices, high
irradiation levels (in comparison to others EU countries) and
relatively expensive grid electricity prices

19. Platinum sponsors:
RESULTSSPAIN
Grid parity has been reached in Las Palmas, but the regulation is a
barrier for market creation in Spain
• In Spain, any electricity consumer
can generate PV electricity for self-
consumption
• The latest law proposal de-
motivates the installation of self-
consumption PV systems
- No compensation is allowed for
the excess PV generation fed into
the grid
- A fee is charged for every kWh of
PV self-consumption *
Assessment of Spanish regulatory
framework for PV self-consumption
Note: *This fee has not been considered in the economic analysis
Source: ECLAREON analysis
19
0
2
4
6
8
10
12
14
16
2012S2 2013S1 2013S2
CAGR
S2'12-S2'13
Shoulder Tariff
Peak Tariff
-23.5%
-17.3%
-13.5%
EUR ct/
kWh
PV LCOE (avg.)
Past evolution of grid electricity price and PV LCOE
(LAS PALMAS)
• In Las Palmas, grid parity has been reached, driven by two
main factors:
- The important decrease experienced by PV system prices
- High irradiation levels

20. Platinum sponsors:
CONCLUSIONS
Main conclusions
• Grid parity for the commercial sector has been reached in major markets: Germany, Italy, Spain, and
Mexico *
• The results of the analysis show that the main driver of PV grid parity is the reduction of PV system
prices, one of the main parameters that determine LCOE
- LCOE has decreased the least in Germany (11% annual decrease) and the most in France (24%)
• Grid parity by itself is no guarantee of market creation, as PV self-consumption will only be fostered if
grid parity is combined with governmental regulatory support
- Germany, Italy, and Mexico are best positioned for PV self-consumption to represent a cost-effective and
sustainable alternative
• With PV already competitive against grid electricity in several markets, new trends are posing
challenges on grid parity
- In Germany, the idea of extending the EEG to on-site self-consumption is under discussion
- In Spain, the latest proposal on self-consumption includes a fee on self-consumption (called “peaje de
respaldo”) to cover grid charges
Note: * Commercial consumers under “Tarifa 2”
Source: ECLAREON
20

21. Platinum sponsors:
21
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