1. MIT Energy Conference 2007 -
Solar Power: A Path to Grid Parity?
Moderator - Travis Bradford, President, Prometheus Institute
1. Manufacturing - Dick Swanson, President and CTO SunPower
2. Technology - Charlie Gay, VP & GM Solar Group, Applied Materials
3. Policy - Rhone Resch, President SEIA
4. Financing/Integration - Jigar Shah, CEO SunEdison
Special Thanks to the student organizers:
Keith Peltzman - Eerik Hantsoo - Joel Conkling - Anthony Fotopoulos - Carlos Molina

2. Meeting the Need
The Prometheus Institute for Sustainable Development
Institute Research Products
2006

3. Solar Revolution
From MIT Press – September 2006
Based on Economic-only Projection
Models
Not only will we reach grid-parity, but
permanently exceed it
Disruptive Technological
Transformation

4. What is Grid Parity?
Assumes Distributed (not Centralized) Solar
Must correctly calculate the cost of PV, including:
Component Costs (Modules, Inverters, Racking, etc.)
Installation Cost
Financing Costs (and terms of repayment)
And must impute amount of sunlight captured in
usable form:
Sunlight Available
Installation characteristics (angles and shading)
Losses from DC capture to AC use
Decide to compare with or without subsidies:
Rebates, Tax Credits, Accelerated Depreciation, Tax
Deducibility of Home Mortgage Interest

5. What is Grid Parity ?
PV presents a range of cents/ kWh (based on many variables)
Compare versus range of local grid-prices
Number of Locations
Di
str
ty ibu
trici ted
Elec PV
G rid
Cents / kWh
When do we achieve grid parity? How do we get there?

6. Dr. Richard Swanson
SunPower Corporation

7. Richard Swanson
Founder, President, CTO
MIT Energy Conference
March 10, 2007

8. Solar Price Learning Curve
Solar Panel Cost Drops by 19%
With Each Doubling in Manufacturing Capacity
1979
$30/W
100
1979
$32/W
Module Price (2002$)
81% Progress Ratio
2002
10
$3/W
2002
$3.10/W
Silicon
Shortage
1
1 10 100 1000 10000
Cumulative Production (MW)
8

9. Now two new factors are emerging that will help
continue this trend:
• Efficiency as an Important Driver
– Increased efficiency drives value
through the entire value chain
• Thinner wafers
– Reduces consumption of expensive
silicon
9

10. Silicon Utilization
Poly Grams per Cell Watt
14
12
10
8
6
4
2
0
Q105 Q205 Q305 Q405 Q106 Q206 Q306
10

11. Future Cost Reduction Drivers
• Thinner wafers
• Higher efficiency
• Improvements in crystal growth technology
• Improvements in slicing technology
• Improvements in cell processing technology
• New lower cost silicon refining technologies
• Increased manufacturing scale:
200 MW → 500 MW plant size
11

12. Value Chain Cost Distribution
Polysilicon
Polysilicon Ingot Wafer Solar Cell Solar Panel System
2006 US Solar System Cost Allocation by Category
50%
30%
20%
12

13. 50%+ cost reduction from CA system cost is achievable
60% Drop in System Cost
Downstream Savings (50%)
Panel Savings (50%)
Cell Savings (25%)
Silicon Savings (50%)
Conversion Efficiency (15%)
Downstream
Panel
Cell
Silicon
2006 2016
13

14. Solar Panel Learning Curve Predicts Retail Rate Parity < Decade
100
1980 Historical
$21.83/W
Projected
Module Price ($/W) ($2002)
1990
$6.07/W
2000
$3.89/W
10
2010
$1.82/W
2013
2002 Roadmap $1.44/W
1
1 10 Silicon Roadmap Cost
100 1,000 10,000 100,000
Cumulative Production (MW)
14

15. Dr. Charlie Gay
Applied Materials Corporation

16. Gigawatt Scale Solar Manufacturing
Charlie Gay
Vice President and General Manager, Solar Business
The MIT Energy Conference
March 10, 2007
External Use

17. Enabling Industry Growth by Driving Cost
Reduction….
FIRST
THEN
NEXT
Cost per transistor
1974 2004 Cost per area
4 trillion 1,400,000 trillion
1995 2005
10 cents 5 nano-dollars
0.3 million m2 25 million m2 Cost per watt
20,000,000x Cost Reduction
$30,000 / m2 $1,500 / m2
Source: SIA, IC Knowledge LLC
20x Cost Reduction
Source: Display Search, Nikkei BP, Applied Materials
17
External Use

18. Scale to Enable Learning Curve
100
1980 Historical
$21.83/W Projected
Module Cost ($/W)*
1990
$6.07/W
10
2005
$2.70/W
1
1 10 100 1,000 10,000 1E5
Cumulative Volume (MW)
Production line size 0.5 5 50 100
(Megawatts per Year): (1980) (2000) (2005) (2010F)
Lines Per Factory 2 3 4 10
* 2002 Dollars
Source: Navigant Consulting
18
External Use

19. Cost Per Watt Expected to Scale with Fab Size
Device and Glass Substrate
Transparent Conductor
materials Amorphous Silicon
optimization
>$1.42/W Jumbo size Microcrystalline
Silicon
Optimized supply
glass chain, especially glass
Back Contact
and glass coating
$1.00/W Line balancing
$0.71/W
Current thin film Projected Applied Projected Applied
technology for thin film thin film
25MW fab technology for technology for
~60MW fab 1GW fab
Sources: First Solar, Applied Materials, supplier quotations
19
External Use

20. Strategy to Reduce Production Costs
Cost / m2 Increase Watts per m2
$ Production / Watt = PVD & PECVD experience in materials
Watt / m2 and uniformity
Entire film stack solution to optimize
interfaces, performance and yield
Reduce Cost per m2
Jumbo size glass - Equipment scaling
28% lower balance of systems cost for jumbo
glass vs. 1m x 1m
Yield & control
Jumbo Size
~2.6m x 2.2m Enhanced light
4X less cabling trapping increases
cell efficiency
& mounting
Typical for Exhibition Tandem Plate unveiled
Industry at Solar Power 2006
~1m x 1m
Average Cell Efficiency = 10.6%
Thickness uniformity <5% (range)
20
External Use

21. Large Area Processing Equipment
21
External Use

22. Rhone Resch
Solar Energy Industries Association
(SEIA)

23. Expanding the Solar Market in
the United States
Rhone Resch
President
Solar Energy Industries Association
23
www.seia.org

24. Expanding the US Solar Market
Public education
Long-term state
campaign
incentives
Long-term
commitment to
Long-term, meaningful
R&D
Federal incentives
24
www.seia.org

25. California Leading the Country
• California Solar Initiative
– 11-year program, $3.2 billion
– CPUC Commercial and Existing Residential
Buildings Program (CERB)
• $2.8 billion
• Fund 2,800 MW
• Hybrid PBI program
– 50% rebate
– 50% performance based incentive
– CEC Residential New Construction Comp -
2007
• $350 million
• New residential single and multi-family homes
• Set aside for affordable housing
25
• Renewable Portfolio Standard - 20% by www.seia.org
2010

26. Requirements:
23 States and Washington
D.C. MN: 10% by 2015 Goal +
Xcel mandate of VT: RE meets load
1,125 MW wind by 2010 ME: 30% by 2000;
*WA: 15% by 2020 growth by 2012 10% by 2017 goal - new RE
WI: requirement varies by
MT: 15% by 2015 MA: 4% by 2009 +
utility; 10% by 2015 Goal 1% annual increase
RI: 15% by 2020
CT: 10% by 2010
CA: 20% by 2010 IA: 105 MW ☼ NY: 24% by 2013
☼ NJ: 22.5% by 2021
☼ NV: 20% by 2015 ☼ CO: 10% by 2015 IL: 8% by 2013
☼ PA: 18%¹ by 2020
*MD: 7.5% by 2019
☼ AZ: 15% by 2025 *NM: 10% by 2011 *DE: 10% by 2019
☼ DC: 11% by 2022
TX: 5,880 MW by 2015
HI: 20% by 2020
State RPS
☼ Minimum solar or customer-sited requirement
* Increased credit for solar or customer-sited
State Goal
¹PA: 8% Tier I, 10% Tier II (includes non-renewable sources) Solar water
heating eligible
Source: DSIRE, www.dsireusa.org, January 2007
26
www.seia.org

27. Solar RPS Programs
11 States and Washington DC
WA: double credit for DG
NY: 0.1542% customer-sited by 2013
NV: 1% solar by 2015;
2.4 to 2.45 multiplier for PV
NJ: 2.12% solar electric by 2021
PA: 0.5% solar PV by 2020
CO: 0.4% solar electric by 2015 DE: triple credit for solar electric
MD: double credit for solar electric
AZ: 4.5% DG by 2025 DC: 0.386% solar electric by 2022
NM: triple credit for solar electric
TX: 500 MW non-wind
Solar water heating counts
DG: Distributed Generation towards solar set-aside
Source: DSIRE, www.dsireusa.org, February 2007 27
www.seia.org

28. State Status Marketsize Yr to Start
Thru 2015 Program
Arizona ACC has secured funding, final rules in place by end of 2007 1,000 MWs 2007
California IOU program is place, municipal program in place by end of 2007 3,000 MWs 2007
Colorado Passed RPS, started program, looking to double RPS 50 MWs 2006
DC Passed RPS, putting rules in place by end of 2007 30 MWs 2008
Hawaii High electricity prices, smaller systems, state tax credits 55 MWs Current
Nevada Passed RPS, current program needs to be fixed 145 MWs Current
New Jersey Program increased to 1,500 MWs, rules in place by end of 2007 1,500 MWs Current
New York Passed RPS, more legislation coming, program start by 2008 25 MWs 2007
North Carolina Reauthorized 35% Tax Credit, $2.5m cap through 2011 35 MWs Current
Northeast States Existing, subsidy underutilized, need some rule changes 35 MWs 2007
Pennsylvania Passed RPS, announced $200MM additional dollar 750 MWs Current
Texas $500MM legislation going through legislature, Austin 100 MW 200 MWs 2007
AK, DE, FL, IL, Existing programs, generally small. Need some work on 300 MWs 2007+
MN, MI, MT, NM, interconnection, net metering, customer awareness, low rebates
OH, OR
Totals Solar balances rural central generation from Wind, Geo, etc ~7,200 $35B
MWs market
28
www.seia.org

29. EPAct 2005
First Residential Tax Credit in
20 Years
• 30% capped at $2,000
• Available for PV and DSWH
• Only 2 years
Expands Commercial Credit
• 30%, no cap
• Covers all equipment and
installation costs
• Available for all technologies
• Only 2 years
29
www.seia.org

30. Securing America’s Energy
Independence Act (HR 550, S 590)
• Provisions
– Extend the Federal tax credits to 10 years
(through 2016)
– Thermal remains at 30%
– PV credit modified to fixed $/W
• $3.00/watt
– Remove the residential cap of $2,000
– Provide AMT relief
– Provide 3-year accelerated depreciation
– Retroactive to January 1, 2007
30
www.seia.org

31. Securing America’s Energy
Independence Act (HR 550, S 590)
• Industry activities
– Expanded staff
– Hired tax lobby firm
– Engaged industry, expanded government affairs committee
– Created a national grassroots campaign
• Action alert
• Targeted local media buy
– Initiated a paid media campaign
• For the Action Alert, Talking Points and Fact Sheets:
WWW.SEIA.ORG
31
www.seia.org

32. Solar Right’s Act
• Remove market barriers nationwide
– Create national interconnection standards
– Require retail net metering in all 50 states
– Remove restrictive homeowner association covenants
– Prevent exploitative permitting fees
– Encourage solar-friendly rate structures
– Facilitate REC ownership and exchanges
• Additional incentives
– Remove utility exemption from ITC
– Create tax credit for manufacturing facilities in the US
• Still under development, original co-sponsors in
House and Senate identified
32
www.seia.org

33. Jigar Shah
SunEdison, LLC

34. The Coming “Solar Decade”
Preparing your electricity market for
Cost-effective distributed solar energy
Jigar Shah, CEO
Sun Edison LLC
February 07
3/8/2007 34

35. Insights on grid parity
Energy Cost are going up!
– “Gas production has peaked in North America"
CEO - Exxon Mobil, Lee Raymond - Reuters Energy Summit 6/21/05
– “Over the past year, that Great Britain and the United States each invested
roughly $800 million in electricity transmission; but the American grid is 15 times
larger than the British one” Financial Times 8/18/03
– “In less than two years, the price of coal from the Eastern fields that start a
couple of hundred miles south and west of Washington has climbed from a
range of $25 to $28 a ton to $50 to $60 a ton.”
Washington Post 4/11/05
– Double digit rate increases in AZ, CA, CO, CT, HI, MD, MA, NJ, NV
– US needs 20 GWs annually – this can and will come mostly from renewables
• Represents about a 2% increase per annum
• US needs more peaking capacity, NOT baseload
• US has still not invested enough in Transmission & Distribution
• Utilities are turning to expensive technologies because it is what they know
3/8/2007 35

36. Challenges to grid parity
• Cost of Solar panels
– Qcell, Suntech, others have announced cost reductions of 50%
expected by 2010 for traditional crystalline
– First Solar announced costs have dropped to less than $1.35/Wp
• Finding labor
– To install 10,000 MWs of solar by 2012 we will need 40,000
additional job-years, maybe 10,000 NEW people in the solar industry
– Sales, marketing, finance, accounting, construction, safety, quality
• Leveling the playing field
No standby charges (Net metering)
Streamlined Utility Interconnection
Incentives tied to the Value of Distributed Generation
Fair Utility Rate Design
3/8/2007 36

37. What SunEdison is doing: Getting Ready
• Vision:
– Make solar a meaningful worldwide energy source
– Deliver electricity at or below existing retail prices
• Make it easier to switch: First provider to offer solar energy as a turn-key
service
– No capital outlays
– No impact on existing services
– No ongoing customer maintenance costs
• Gain Scale: Largest solar energy service provider in North America
– Over 30MWs of 100% renewable electricity installed since 2004
– Largest solar panel purchases for the US market
– 160 Employees in 5 offices (California, Colorado, New Jersey, and Maryland)
• Raise Financing: Strongest financial position of any solar services
provider
– Over $180M in arranged shelf financing
– Over $30M in equity financing
3/8/2007 37

38. What SunEdison is doing
• Assessing the value of solar to utilities and consumers:
– Ratepayers, Utility, Industry, State/Local gov’t, Federal gov’t
– Utility savings: Energy, Capacity, T&D Investment, Reliability
– Local Economic Development: Tax Revenue
– Environmental Benefits: particulate emissions, water usage, etc
• Debunking Myths
– US has the lowest energy prices among OECD countries
– There is not enough space to supply the nation with solar power
– Solar power will always need incentives
– Solar power makes the grid unstable
– Solar power is maintenance-free
– Coal is a low cost, stable energy source
– Nuclear energy is the lowest cost energy source
• Developing a supply/demand curve
– For solar to grow folks need to continue to invest, for this to happen we
have to show that there is demand for the product – more than just studies
3/8/2007 38

39. Question 1:
How important is achieving grid parity, what
price per installed Watt does that represent,
and when will we get there?
What are the best tools (other than the ones
you are currently pursuing) to accelerate the
point of crossover?
Higher Efficiency – Manufacturing Scale – Vertical Integration
Next-generation Technologies – Policy and Incentives
Financial Innovation – New Business Models

40. Question 2:
What would slow the achievement of
grid-parity?
What economic risks persist for wider
commercialization of distributed solar?

41. Question 3:
What opportunities exist in financial
innovation to accelerate grid-parity?
What opportunities exist in delivery
innovation to accelerate grid-parity?
(e.g. Building-integrated PV,
New Construction vs. Retrofit)

42. Question 4:
How are emerging low-cost global producers
going to impact the drive to grid-parity?
How are non-US customers and government
incentive programs going to impact the drive
to grid-parity in the US?

43. Question 5:
Beyond economics, what are the remaining
obstacles to faster deployment of PV?
How will they be addressed?

44. Question 6:
How will solar at grid-parity impact the
broader energy and electricity market?

45. Audience Questions:

46. MIT Energy Conference 2007 -
Solar Power: A Path to Grid Parity?
Moderator - Travis Bradford, President, Prometheus Institute
1. Manufacturing - Dick Swanson, President and CTO SunPower
2. Technology - Charlie Gay, VP & GM Solar Group, Applied Materials
3. Policy - Rhone Resch, President SEIA
4. Financing/Integration - Jigar Shah, CEO SunEdison
Special Thanks to the student organizers:
Keith Peltzman - Eerik Hantsoo - Joel Conkling - Anthony Fotopoulos - Carlos Molina