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The China Solar Energy Market

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					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
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 100-400% 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

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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

                                                                                    4
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

                                           Generation of Electricity                                                    Generation of Heat Energy

        Solar Photovoltaic                    Concentrating Solar                    Building-Integrated                        Solar Thermal
            (Solar PV)                           Power (CSP)                         Photovoltaic (BIPV)                        Water Heater

  A solar cell, or photovoltaic cell      Concentrating solar power (CSP)       Building-Integrated Photovoltaic        The most common types of
  (PV), is a device that converts light   technologies use lenses or mirrors    (BIPV) technologies integrate           thermal water heaters include
  into direct current using the           and tracking systems to focus a       photovoltaic cells into buildings to    evacuated tube collectors (44%),
  photoelectric effect                    large area of sunlight into a small   generate electricity as a distributed   glazed flat plate collectors (34%)
                                          beam, then convert the                energy solution                         generally used for domestic hot
                                          concentrated light to heat for                                                water heaters and unglazed plastic
  Solar PV is the main technology
                                          power turbines to generate            BIPV technologies are relatively        collectors (21%) used mainly to
  used in China for the generation of
                                          electricity                           new in China, but growth in             heat swimming pools
  electric solar power
                                                                                applications is expected under
                                                                                new MOF & MOHURD subsidy




Source: Wikipedia; XYZ.
                                                                                                                                  China Solar Energy Fact Book

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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              Polysilicon            Entails etching,        The assembly              Power conditioning equipment to                 Solar power farm
   sorting                    feedstock is            doping, coating          and array of               convert generated electricity for home          BIPV
                              crystallized into       of wafers and            multiple cells             use / transmission                              LED
  Poly-silicon type                                                                                     Installation equipment to mounting
                              ingot                   applying                 on a solar                                                                 Solar Battery
   check                                                                                                  racks, wiring
                                                      electrical               panel, along
  Poly-silicon Etch         Ingot shaping and
                                                      contacts to              with electrical           Installation labour
                              sizing
  Solar Grade                                        form a PV cell           connections
   Poly-silicon              Ingots are cut and
   manufacturing              shaped then sliced                                                                        New Financing and Partnering1
                              into wafers

                           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

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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
                                                                             Schematic of an Active Concentrating Solar Power System
 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)


  Concentrated             Used to produce renewable heat or electricity
  solar thermal             (generally, in the latter case, through steam)
  (CST)                    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             Employ sunlight concentrated onto
  photovoltaics             photovoltaic surfaces for the purpose of
  (CPV)                     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

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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

                                                                                        Finished
        Materials                           Components                                                                      Distribution                               End Use
                                                                                        Products

 Industry Activities:
  Materials include steel,                Components include                    The finished products                    Distribution is via                 The end users are utility
   copper, brass, concrete,                 collectors, mirrors, heat              including solar technology                ownership and                        companies
   plastic, silica, synthetic oil           collection elements,                   and plant development                     operation of the CSP
   and molten salt                          steam generators, heat                                                           plant
                                            storage and central
                                            controls
  Selected Companies:
                                            Boeing, Chicago, IL                  Luz                                      Sunray Energy                       Southern California
                                            3M Company,                          Acciona                                  Florida Power&Light                  Edison
                                            Siemens                              Abengoa Solar                            Acciona                             Nevada Power Co
                                            Luz/Solel                            Carrizo Energy                           Arizona Public                      Sierra Pacific Power Co
                                            Alanod                               BrightSource                             Abengoa Solar                       Pacific Gas & Electric Co
                                                                                                                            BrightSource                        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

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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           Schematic of an Active Solar Heating System
  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
 Formed plastic            Formed plastic collectors (such as
 collector                  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                A flat plate collector consists of a thin absorber
 collector                  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

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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

                                                                                Finished
        Materials                        Components                                                    Distribution                    End Use
                                                                                Products

 Industry Activities:
  Materials include                    Components include                The finished products,      Independent sales         Builders and developers
   aluminum, steel, copper,              collectors, storage                including add-on product     representatives           Contractors and
   fibreglass, plastic,                  tanks, valves and                  manufacturers               Wholesale distributors     plumbers
   polyutherane foam                     central pumps and                                              Retailers                 Homeowners
                                         controls

                              Manufacturing Equipments                                                            Building Integration

 Selected Companies:
                                        Consol Changzhou                  Beijing Tsinghua Solar      Solahart (Australia)      Sangle Solar Energy
                                        Changzhou Flying                   Systems                     Sunshore                  Mondial Energy (Canada)
                                         Water Heater Co.                  Sunrain                     Linuo Paradigma
                                        Huayang Solar Energy              Hi-min Solar


      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

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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

                                                                                    11
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
                         China has abundant solar resources; two-thirds of the country enjoys over 2,200 radiation hours annually, and 70% of the
      Resources           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
      Market Size         energy is much greater


                         Provides an alternative electricity and heat energy source, suitable for both utility scale (electricity supplied through the
            Energy        grid) and as a distributed energy solution
            Security     Could reduce China’s dependency on world energy imports, and inherent vulnerability to world energy price fluctuations


  D
            Limitless    Provides a limitless natural resource that is not depleted like conventional energy sources of oil and coal
  R
           Renewable
  I
  V
  E                      The development of the solar energy industry may generate millions of direct and indirect employment opportunities and
  R          Socio-       social and economic benefits
           economics     In China, over 150,000 jobs are linked to the Solar Photovoltaic (PV) sector - over RMB150 billion revenue is generated
  S
                          per year with a CAGR over 20%, with significant ongoing growth potential


                         Various forms of carbon regulations facilitating “cleaner” energy industries are gradually taking place
            Carbon
           Regulation    In March 2009 MOF and MOHURD announced a RMB20/Watt subsidy for Building Integrated PV (BIPV) applications


Source:   XYZ
                                                                                                                          Renewable Energy Final Deliverables

                                                                                                                                                                12
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

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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

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Solar Energy – market context – resources

China is abundant in solar resources and has great potential
for solar energy development
                                                      Solar Energy Resources in China

                                                                                 Distribution of Solar Energy Resource in China
                                                                                             Unit:: MJ/Square Meter
  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)




Source: Chinese Academy of Meteorological Science, http://www.cams.cma.gov.cn.
                                                                                                                 China Solar Energy Fact Book

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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 Thermal Water                        Concentrating Solar
                                   (Solar PV)                                         Heater (SWH)                               Power (CSP)
                           China is ranked number one
                            worldwide in PV cell production                         China is the world’s leader in the       U.S., Germany and Spain are
                                                                                     solar hot water market and over           leaders in this technology
                           In 2007, China’s PV cell production                      95% of the core technology is held
                            was 1189 MW*, which accounted for                                                                 Chinese companies like Himin
    Supply                  approximately 29% of worldwide
                                                                                     by Chinese companies
                                                                                                                               have been investing in R&D
                            installation. By 2008 cell production                   As of 2007, the global capacity of
                            capacity was 4GW                                         solar hot water systems was
                           Over 90% of China’s Solar PV cells                       approximately 154 GW
                            and PV modules are exported



                             China’s domestic demand accounts
                              for only 4% of total global PV                        China is the world’s largest solar      Estimated that worldwide installed
                              installations                                          thermal water heater market; it          CSP capacity will reach 6,400 MW in
                                                                                     installed 70 GW and 107GW of             2012
                             Government targets are seeking to                      capacity in 2006 and 2007
    Demand                    stimulate domestic demand – 2010                       respectively, or about two-thirds of    Development is still at an early stage
                              target is 300MW, and 2020 1,800MW                      the world’s total capacity               in China, with a stronger PV
                              target will likely be upgraded to over                                                          manufacturing base
                              10,000MW                                              China’s long term goal is 210GW
                                                                                     by 2020


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

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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

                                                                           10
   5,000

                                                                           5

        0                                                                  0
            1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2010E
 Global PV capacity is projected to increase to approximately 21.9 GW                    China is still a small market for PV systems and
  by 2010                                                                                  installation with domestic demand accounting for
 Technology improvement and government subsidies also effectively                         only 1% of the total market in 2007
  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
Source: European Photovoltaic Industry Association.
                                                                                                                      China Solar Energy Fact Book

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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, www.chinadaily.net
                                                                                                                                   China Solar Energy Fact Book

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Solar Energy – market context – size – solar PV

The global solar PV market is predicted to double or triple
2006 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
     8000                                                           7,630    4500                                                       4,177
                                                                             4000
     7000
                                                                             3500
     6000                               CAGR: 34%                                                         CAGR: 19%
                                                                             3000
     5000
                                                                             2500
     4000                                                                    2000      1,744
     3000                                                                    1500
     2000        1,744                                                       1000
     1000                                                                     500
         0                                                                       0
                 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                             20000                     Unit: USD in million
      35000                                                                                                                             18,619
                                                                    30,463   18000
      30000                                                                  16000                         CAGR: 12%
      25000                              CAGR: 24%                           14000
                                                                             12000   10,589
      20000
                                                                             10000
      15000                                                                   8000
                 10,589                                                       6000
      10000
                                                                              4000
       5000
                                                                              2000
             0                                                                   0
                   2006     2007E       2008E       2009E   2010E    2011E            2006       2007E    2008E   2009E      2010E       2011E


Source: Solarbuzz annual world PV Market Review, 2007
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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)                                            China Solar PV Cumulative Installation (1990 – 2007)
                             Unit: MW                                                                                                                   World Total:
                                                                                                                             Unit: MW
                                                                                                                                                         9200MW
                                                                                                100

    1400
                                                                                                 90
    1200                                                                                         80
    1000                                                                                         70                    CAGR: 27%
     800                                                                                         60
     600                                                                                         50
     400                                                                                         40
     200                                                                                         30
       0
                                                                                                 20
                                                                                                 10
                                                                                                  0
                                                                                                        1990 1995 2000 2002 2004 2005 2006 2007
                                                                                                      Annual Installed Capacity Cumulative installed Capacity

  During the last five years, China’s PV cell production                                 In 2007, China’s cumulative solar PV installation reached
   has increased at between 100%-300%                                                      100 MW, which accounted for less than 4% of the worldwide
  In 2007, China’s PV cell production amounted to                                         installation capacity
   1,189 MW accounting for approximately 29% of                                           Dependent on coal consumption and petroleum imports to
   worldwide installation, followed by Germany and                                         meet its energy needs, China is actively providing incentives
   Japan                                                                                   to boost solar PV installation


Source: European Photovoltaic Industry Association; China Solar PV report 2007; PwC Research.
                                                                                                                                             China Solar Energy Fact Book

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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


                               Wafer/Ingot               Cell          PV Panel      PV System &
               Polysilicon
                              Manufacturers          Manufacturers   Manufacturers    installation


         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

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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                     2007-2010 Highly Pure Polysilicon Production in China
                                  Unit: MT                                                           Unit: MT
160,000


140,000
                                                                               35000
                                                                                                                                     30,000
120,000                                                                        30000

100,000                                                                        25000

 80,000                                                                        20000

 60,000
                                                                               15000
                                                                                                                   10,000
                                                                               10000
 40,000
                                                                                                      4,110
                                                                               5000
 20,000                                                                                  1,130
                                                                                  0
       0
              2007          2008         2009E        2010E    2011E   2012E             2007         2008        2009(E)           2010(E)

                                             Demand   Supply

 As a result of polysilicon shortages and high-surging ASP, aggressive capacity expansion occurred during 2006-2008 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

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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
                                                                                                                                     2007       2008      2009E       2010E
                                                                                              Total Capacity (MWp)                               13300      19600       28600
                                                                                              C-Si Module Prouction (MWp)               2520      3630       5663        9131
                                                                                              CdteModule Prouction (MWp)                 208       498       1100        1590
                                                                                              Amorphous-Si Module Prouction (MWp)        144       323        688        1252
                                                                                              Total Solar Module Prouction (MWp)        2872      4451       7451       11973
                                                                                              Industry utilization (%)                           33.5%       38.0%       41.9%
                                                                                              Reduction from DB Q208 forecast (%)                   3%        18%         12%
                                                                                              c-Si Module Sales(MWp)                              3000        4800        7900
                                                                                              Thin film Module SalesMWp)                           800        1500        2700
                                                                                              Total solar Module Sales(MWp)                       3800        6300       10600
                                                                                              Reduction from prioe forecast(%)                    2.6%       22.2%       28.3%
                                                                                              S&D mismatch(MW)                                     -607      -1090       -1613

              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
                                                                                                 2009 followed by 6.6GWp in 2010
                                                                                                As a result there has been demand and supply mismatch
Source: Lazard Report, 2008, Suntech Interview in May 2009, DB, PV Industry Looking through the storm, 2009. Feb
                                                                                                                                               China Solar Energy Fact Book

                                                                                                                                                                                 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

                                                    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
                     2002-2005                       capability to secure feedstock suppliers
                Worldwide tight supply              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

                                                    A breakthrough in high quality polysilicon production technology occurred as nearly 40
                      2006-2008                      enterprises developed high quality polysilicon projects
               Rapid capacity expansion             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

                                                  • 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
               2009-2010 Forecast                   as well as the changing subsidy policies in major PV markets such as Spain and Italy
         Overcapacity and decreasing ASP          • 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
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
              An oversupply dynamic in
              the poly-silicon would lead to                         solar sector resulted in supply constraints that led to poly costs reaching as high
              falling prices which would                             as US$400/kg(spot) and US$150-200/kg(contract) in 2Q08
              matriculate down the value                           - As polysilicon oversupply sets in, it is estimated that spot prices will fall about
              chain, resulting in an industry                        70% over 3Q08-4Q10F
              shake-out                                            - 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
Source: Deutsche Bank 2009
                                                                                                                         China Solar Energy Fact Book

                                                                                                                                                           25
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
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
 MW                                                                   Growth Rate %              MW                                                      Growth Rate%
16,000                                                                             40            400                                                                    90
                                                                        14053
                                                                                                 350                                                                    80
14,000                       35                                                    35
                                                                                                                                                                        70
12,000                                   30                 11243                  30
                                                                                                 300
                                                                          25
                                                                                                                                                                        60
                                                    25        25                                 250
10,000                                                                             25
                                                 8994                                                                                                                   50
                                                                                                 200
    8,000                           7195                                           20                                                                                   40
                        5535
                                                                                                 150
    6,000                                                                          15                                                                                   30
            4100                                                                                 100
    4,000                                                                          10                                                                                   20
                                                                                                  50                                                                    10
    2,000                                                                          5
                                                                                                   0                                                                    0
       0                                                                           0                       2002       2003     2004    2005       2006        2007
            2007        2008        2009E       2010E       2011E       2012E

 Solar PV cell production capacity increased significantly                              Estimated that thin-film market share will reach about 20% of the total
 In 2007, China’s solar PV cell production exceeded 1 GW,                                production of PV cells by 2010 and around 30% by 2015
  and 97.5% of the total output was exported to overseas                                 Among thin-film PV technologies, amorphous silicon (a-Si) development
  markets                                                                                 is most significant in terms of technology maturity, production,
 China accounted for 29% of global PV cell production in                                 application scales and installation capacity (approximately 5.2% of the
  2007                                                                                    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 (2006-2007).
                                                                                                                                              China Solar Energy Fact Book

                                                                                                                                                                             27
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                                        Retail Price Per Watt Peak
   produced in China is driven by exports, U.S. and European                   Unit USA:USD/Watt; Europe: Euro/Watt
   retail prices are more relevant to domestic suppliers
                                                                 4.95



  JP Morgan estimates that by 2009 module ASPs will likely
                                                                  4.9


   decline by 14-26%, depending largely on the terms of a new    4.85

   Spanish subsidy                                                4.8

                                                                 4.75

  In 2007, China’s PV solar module production exceeded           4.7
   1.7GW, while the total generation capacity installed was
                                                                 4.65
   much less (only 100MW in 2007 and 120-130MW in 2008)
                                                                  4.6


  The solar PV domestic market will scale up continuously:      4.55

    - Solar PV rooftop system demonstration projects are          4.5

      being implemented                                          4.45

    - BIPV has been installed at commercial buildings, Olympic
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      facilities and the Beijing Airport                          2005          2006                    2007                       2008            2009
                                                                                                         USA          Europe
    - RMB20/watt subsidy from government




Source: Solarbuzz, 2008.
                                                                                                                               China Solar Energy Fact Book

                                                                                                                                                              28
    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                                                                                                    Deutsche Bank’s
        Silicon                             Thin Film                                                                       View:
         (c-Si)                                                                                                      c-Si cannot challenge
                                    Output less affected by
 Highest power per area             temperature
                                                                                                                      CdTe at the module
 Requires less racking                                                                                               level: although the
                                    Less manufacturing
  and support material               materials used
                                                                                                                      gap will narrow, CdTe
 Fewer modules mean                                                                                                  module cost and ASP
                                    Lower cost per watt
  lower shipping costs                                                                                                leadership will not be
                                    Good aesthetics for building-
 Large number of module             integrated applications
                                                                                                                      effectively challenged
  choices                                                                                                             by average
                                    Faster energy payback
 Greater inverter flexibility                                                                                        conversion efficiency
                                    Non-glass substrates
                                     possible
                                                                                                                      c-Si modules, even as
                                                                                                                      c-Si module ASP
                                    More shade tolerant
                                                                                                                      begins to approach
                                   ×   Lower power per area
                                                                                                                      $2.00/Wp and
×     High cost per watt                                                                                              installed system
×     High temperatures            ×   Takes months to stabilize
                                       output
                                                                                                                      approach $4.00/Wp
      impact output more
×     Low shade tolerance          ×   Twice as much rack material                                                   High efficiency c-Si
                                       required
×     Individual cell visibility                                                                                      will be the only
                                   ×   More modules mean higher                                                       volume technology
                                       shipping costs
                                                                                                                      able to compete with
                                   ×   Lower series-string capacity                                                   CdTe in terms of
                                   ×   Less suitable for battery                                                      Levelized Cost Of
                                       charging
                                                                                                                      Electricity (LCOE)
                                   ×   Requires more combiner
                                       boxes
                                      Limited inverter flexibility
                                      Fewer module manufacturer
                                       choices                        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, 2009. Feb, Company Data
                                                                                                                  China Solar Energy Fact Book

                                                                                                                                                 29
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                               Assumptions
                                                                                                                  System
    Industry Average US             0.7           0.2            0.25         0.35   0.45            1.95
                                                                                                                  DC Rating (KW)                                                    12,600
    $/Watt produced
                                                                                                                  Lifetime                                                            20
    Target for 2011 US              0.39          0.15           0.2          0.2    0.3             1.24         Output Degradation (%, starting year 2)                           0.80%
    $/Watt produced
                                                                                                                  Capacity Factor (%)                                                20%
                                                                                                                  1st year generation (GWhs)                                         23.2

                             Poly-Si Price $/KG (Processing Cost $1.25)                                           Financing
                                                                                                                  Equity Financing (%)                                               60%
                      1.25    50           60             70           100    125    150      175           200   Debt Financing(%)                                                  40%
                                                                                                                  Equity Required Return (%)                                         12%
                      6.60   1.58          1.65           1.71         1.91   2.08   2.24     2.41       2.57
                                                                                                                  Debt Required Return (%)                                           8%

                      6.70   1.59          1.65           1.72         1.92   2.09   2.26     2.42       2.59     Loan Term (Yrs)                                                    20%
                                                                                                                  Discount Rate/WACC (%)                                            9.28%
    Grams of /Wp




                      6.80   1.59          1.66           1.73         1.93   2.10   2.27     2.44       2.61     Tax Rate (%)                                                       35%
                                                                                                                  Inflation Rate (%)                                                 3%
                      6.90   1.60          1.66           1.73         1.94   2.11   2.29     2.46       2.63     Subsidies
                                                                                                                  Federal Incentive (%, total capital cost)                          30%
                      7.00   1.60          1.67           1.74         1.95   2.13   2.30     2.48       2.65
                                                                                                                  Captial Costs

                      7.10   1.61          1.68           1.75         1.96   2.14   2.32     2.49       2.67     Moduel ($/W)                                                      $1.00
                                                                                                                  Inventer ($/W)                                                    $0.25
                      7.20   1.61          1.68           1.75         1.97   2.15   2.33     2.51       2.69     BOS ($/W)                                                         $0.75
                                                                                                                  Labor & Design ($/W)                                              $0.55
                      7.30   1.62          1.69           1.76         1.98   2.16   2.35     2.53       2.71
                                                                                                                  Gross Margin (%)                                                   20%
                      7.40   1.62          1.69           1.77         1.99   2.18   2.36     2.55       2.73     Total Capital Cost ($/W)                                          $3.17
                                                                                                                  O&M Costs

                  The current cost of PV system installation is $3.20, the direct cost is                        Variable O&M ($/MWh)                                              $0.00
                                                                                                                                                                                    $30.00
                   $2.25 (including BOS, Inverter, labors and others, excluding land costs)                       Fixed O&M ($/MWh)
                                                                                                                                         LCOE, €/kWh                               10.86 €
                   - according Deutsche Bank, the direct cost could fall to $1.69                                                        LCOE, €/kWh¹                              13.86 €

Source: 1. DB, PV Industry Looking through the storm, 2009. Feb, Company Data 2. MorganStanley Research, Sempra Energy, FSLR, NREL
                                                                                                                                                              China Solar Energy Fact Book

                                                                                                                                                                                             30
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          Cell         Module       Costs/Wp          Capacity          Expansion Goal      Finances
                                                                         Equipment           Efficiency   Efficiency                     2008

  Solyndra        Jan .2005         USA         CICG on glass            Proprietary         12-14%       7.6-10%      $3.5 to $4 per    110 MW            520 MW in next      Investors includes argonaut Private
                                                cylinders                development                                   Wp                                  few years           Equity, ARTIS, CMEA VC, Masdar

  NanoSolar       May 2002          USA         Printed CIGS cells       Proprietary         9-14.50%     N/A          The goal is 35¢   *0MW              430 MW              Benchmark, MDV VC, etc, $420
                                                                         development                                   per W                                                   million

  Solibro         End of 2006       Germany     CIGS on glass            Proprietary         16%          8-12%        N/A               30MW              45 MW; 90MW         Qcell
                                                                         development

  Miasole         2003              USA         CIGS on steel            Proprietary                      10.20%                         50MW                                  KPCB
                                                                         development

  GlobalSolar     1996              USA         CIGS on Flexible                             10.20%                    N/A               65MW              85MW                Privately held
  Energy                                        materials

  Wurth Solar     1999              Germany     CIS                                          13%                       N/A               30MW              30MW                Wholly-owned subsidiary of the
                                                                                                                                                                               Würth Group

  Flexcell        2000              Switzerla   Amorphous silicon        Proprietary         10.90%       3%           60 euro cents     25MW              A second line       Qcell
                                    nd                                   development                                   (76.2¢)                             with another
                                                                                                                                                           25MW

  Nesxpower       2005              Taiwan      Amorphous-Si             ULVAC                            7%           N/A               25MW              100MW in 2010       Founded by UMC Group
  tech

  Kaneka          1998              Japan       Micromorphous silicon    Proprietary         9-10%                     $1 per W after    40MW (plus        240MW by            Ommon stock traded: Tokyo, Osaka
                                                                         development                                   2010              30 MW a-si)       2011                Nagoya

  Sontor          2007              Germany     Micromorphous silicon    Applied             Up to 12%    7-8%         N/A               25MW              120MW               Qcell
                                                                         Films

  Inventux Tech   2007              Germany     Micromorphous silicon    Oerlikon Solar AG   8.50%                     Goal:<€1($1.27    33MW              100MW by            Financial secure until 2010,
                                                                                                                       )                                   2010                Oerlikon, BEOS, Berlin Partner

  AVA Solar       2007              USA         Cadmium telluride        Proprietary         10.50%       N/A          Less than $1      Pilot line with   200MW in 2009       $150 million DCM, GLG Partners,
                                                                         development         (Expected)                per W             3MW                                   Tchnology Partner, Invus etc.

  Calyxo          2005              Germany     Cadmium telluride        Proprietary         Up to 16%    6%           N/A               25MW              A second line       Qcell
                                                                         development                                                                       with 60MW

  CSG             1995 as Pacific   Germany     Crystalline thin-film    Proprietary         10.40%       6.10%        N/A               20MW              No plans            Qcell
                  Solar                         silicon on glass         development

  First Solar     1999              USA         Cadmium telluride                                         10.90%       $.93/watt         735MW             1.1 GW end of       NASDAQ listed
                                                                                                                                                           2009

Source: Company data and public reported
                                                                                                                                                                            China Solar Energy Fact Book

                                                                                                                                                                                                                     31
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             Location         Technology    Production Equipment          Recent progress           Expansion               Finances
                     Founded                                                                                                     Goal

 Shenzhen          1993             Shenzhen           a-Si           Domestic or Proprietary   5-6%; 50MW-100MW;              1000MW by       Intel 20M M S
 ChuangYi                           Guangdong                         development               produce 25MW in 2007           2013

 JinTaiYang                                            a-Si, uc-      Domestic or Proprietary   6-7%; 200MW around                             IDGVC
                                                       Si/tandem      development

 PuLe              2006             Bengbu Anhui       a-Si           Domestic or Proprietary   12-18MW; 5-6%                  200MW by        SAIF not Close
                                                                      development                                              2012

 XinAo             1995             Langfang Hebei     uc-Si/tandem   AMAT (5.72m²)             Small batch production,        500MW by        IFC 15M M S
                                                                                                they will produce at the end   2010
                                                                                                of this month

 ZhengTai          2006             Hangzhou           uc-Si/tandem   Oerlikon (1.43m²)         Equipment just arrived and     380MW by        50M M S? SaiBoLe
                                    Zhejiang                                                    in the process of debugging    2010            investment together

 Hangzhou          2008             Hangzhou           CdTe           Domestic or Proprietary   In the process of debugging                    Lenovo, morning
 LongYan                            Zhejiang                          development               of 30CM*30CM                                   star,GSR; 10M M S
                                                                                                                                               around

 Hangzhou          2008             Hangzhou           CdTe           Domestic or Proprietary   Just set up, complete the                      Private enterprises in
 ShengTong                          Zhejiang                          development               debugging at the end of the                    Zhejiang province. 4M M
                                                                                                year                                           S

 University of                      Chengdu Sichuan    CdTe           Domestic or Proprietary   In the process of debugging                    Wuxi ShangDe
 SiChuan                                                              development               0.3MW of 60CM*30CM

 Suzhou FST        2006             Suzhou Jiangsu     CIGS           Optorun & Proprietary     10CM already complete,         40MW by         8.6M M S; individual
                                                                      development               13% change frequency and       2010            investor
                                                                                                in the process of debugging
                                                                                                of 3MW

 NUVO Solar        2006             Chengdu Sichuan    CIGS           Proprietary development   9%, in the process of 3-                       2.7M M S; in financing
                                                                                                5MW

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                 Technology
     own technical roadmap, coating, printing, vapor                    - Control of multi-layer coating
     deposition or sputtering and different bottom material             - Unavailable of the standard process and tools
                                                                        - Home made equipment
    The laboratory data has shown 19.9% conversion
     efficiency, but only Global Solar, Wurth, Showa Shell            Cost
     have industrial-scale production                                   - 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
    Venture capital has backed it excessively, keen to find
                                                                        - At present, all the costs are estimated
     the next First Solar: Nano Solar, 420mms

                                                                      Large-scale Production
    They want to control the cost to within $1Watt                     - Compared with the production of the a-si and
                                                                           CdTe, this process is much more complex
    It is believed that AMAT have just established a group
     which research and develop the equipment of CIGS



                             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
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
                                                                                             Chinese companies are disproportionately positioned
 Polysilicon oversupply dynamic: As a result of




                                                                              Poly-silicon
  polysilicon shortages and high-surging ASP, aggressive                                     upstream in supply chain, leaving many vulnerable:
  capacity expansion occurred during 2006-08 and                                              Chinese companies are major producers of solar-grade
  resulted in excess output and falling prices                                                 polysilicon, as this graph demonstrates
                                                                                              The oversupply dynamic has significant impact
 Excess capacity expected to be absorbed when the                                             downstream on other Chinese solar companies:
  cost per KW of solar PV generated electricity falls below
  the average retail price of grid supplied electricity                                       China has around 140 solar-grade crystalline silicon wafer




                                                                              Wafer
                                                                                               makers who are expected to be adversely affected
2007-2010 Highly Pure Polysilicon Production in China
                      Unit: MT
                                                                                              China was the world’s largest producer of solar PV cells in




                                                                               Cell
35000                                                                                          2007, accounting for 29% of production
                                                                    30,000
30000

25000                                                                                         Lazard estimate a 30% drop in module ASPs this year1,
                                                                                               Deutsche Bank believe module market will become a
                                                                               Module
20000                                                                                          commodity market
15000                                                                                         It is estimated that between 50% and 80% of Chinese
                                                    10,000                                     module manufacturers have closed their factories since
10000                                                                                          February 2009
                                  4,110
                                                                                Downstream



  5000
               1,130                                                                          Overall Chinese solar companies are suffering:
     0                                                                                         Chinese solar stocks plummeted from $23/share in Sept
                2007               2008             2009(E)         2010(E)
                                                                                               2008 to $3.45/share March 2009, compared to an
                                                                                               equivalent fall of 45% in US stocks2
Source: Hongyuan Securities Co.,Ltd.; XYZ.
1 Lazard Solar report Jan 2009, 2 Barclays Solar Report, May 2009
                                                                                                                                China Solar Energy Fact Book

                                                                                                                                                               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

                                                        Quantity vs. quality: China a world leader in production capacity, but questions
                     Manufacturing                       exist about the quality of production
                      equipment                         Oversupply dynamic: position of Chinese companies upstream in supply chain
                                                         is negative

                                                        Cell conversion rates are lower on average than companies in other countries.
                      Technological                      Concerns over silicon quality and development of new high technologies
                      comparisons                       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
                         Financing                       stream for project investors, similar to interest earned on a government bond –
                                                         although investors faith in government commitment is central

                                                        Position in value stream leans heavily towards cell-level and upstream
                                                        Chinese companies are net manufacturers: 2007 cell production represented
                  Suitable companies                     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
  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
 Dormant since the early 1990s, solar CSP
  technology is being re-evaluated in the solar-rich                         Unit: MW
  areas of the world
                                                               Cannot edit since we
 2007 was a pivotal year for solar CSP                        do not have the data.
  development as both Acciona and Abengoa                      MangoStrategy
  inaugurated 65 MW of parabolic trough and 11
  MW of central receiver technologies respectively             colors should be
                                                               used.
 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
                         Note: More
  investment over the next decadespecificity to source info?
Source: Emerging Energy Research.
                                                                                          China Solar Energy Fact Book

                                                                                                                         36
  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.
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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
                                                                                                             Cost Structure for Large Commercial
      sales amounted to US$199 million in 2007, representing
      an annual growth rate of 33%
                                                                                                                       BIPV Installation


     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


Source: Frost & Sullivan Market Research; NanoMarket Report “Building Integrated Photovoltaic Markets 2008”; United Solar.
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  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 (2000-2007)
                    Unit: square meters in million      23.4
                                                                                China is now the number one solar
                                                         18                      thermal water heater producer in the
                                         15
                        13.4                                                     world accounting for over 50% of total
                                                                                 production
        6.4


                                                                                Over 95% of the core technology for
        2000            2004            2005            2006            2007     production is held by Chinese
        China Solar Thermal Water Heater Export (2005-2007)                      companies
                        Unit: USD in million

                                                                                Some leading firms, such as Huang
                                                                                 Ming, have already improved technology
                                                                                 transfer rates from 35% (the average) to
                                                                                 38% or higher


Source: National Development and Reform Commission’s (NDRC) comments; XYZ.
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  Solar Energy – market context – size – solar thermal water heater


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
                                                                  Market Demand:
     Solar Thermal Water Heater Market Installation
                Size by Country (2006)                               - 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.
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 Solar Energy – market context – size – solar thermal water heater


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                                          As the world largest market for solar thermal water
            Installation (2000-2020E)                                                    heaters, China’s total accumulative installation was
         Unit: Square Meters in million                                                  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 0.038 compared to an EU average
                                                                                         of 0.3-0.5
                                                         According to the National Development and Reform
                                                          Committee’s Medium-Long Term Plan, China’s
                                                          target is to reach a 20%-30% household penetration
    Latest figures show Chinese industry meeting         rate by 2010, with solar energy consumption to be
     government targets: in 2008, accumulative            over 2% and 5% of the nation’s total energy
     installation reached 125 million m3, and production consumption in 2010 and 2020 respectively
     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
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   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                 Rich in Solar
                                                            Hours                       resource

                          China lies between             Two-thirds of the            70% of territory has
                           20N and 40N,and the             country enjoys                solar resources in
  Resource
                           North and West are              over 2,200                    excess of
considerations             almost completely               radiation hours               500KJ/square cm/
                           cloudless                       annually                      year                                          China’s Target for Solar Energy

                             Job Creation                Value Added                 Rural Market Potential
                                                                                                                                                  By 2050, attain 5%
                                                                                                                                                  of total electricity
                                                           Over RMB150                Suitable for stand-                                           generation
                           Over 150,000 jobs
                                                            billion revenue per         alone power stations
  Economic                  linked to the sector                                                                                                       capacity
                                                            year with a CAGR            in rural areas without
considerations                                              over 20%                    easy access to other
                                                                                        traditional energy                           2010 Solar Power 2050 Solar Power
                                                                                        sources                                        Installation:    Installation:

                                                                                                                                             300MW                       1000MW
                            Dependency on                Dependency on                  Environment
                          Imported Petroleum                  Coal                      Protection

                             Current high                   Current coal               China’s CO2
                              petroleum import                consumption                 emissions account
Energy security               dependency (over                dependency (over            for 15.1% of the
considerations                50%) should                     70%)                        world’s total, the
                              decrease to a                                               largest of any
                              reasonable degree                                           country


   Source: National Development and Reform Commission http://www.ndrc.gov.cn; National Energy bureau http://nyj.ndrc.gov.cn; XYZ and individual interviews.
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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
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Contents

  Overview of the China Solar Power Industry

  Segment Definition

  Market Context

  Regulatory Environment

  Existing and Emerging Standards

  Technologies Innovation and Alternative Solutions

  Competition and Industry Structure

  Financial Investment


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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 2030 1
          -     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 http://www.ndrc.gov.cn; XYZ. 1. http://www.unep.org/PDF/ourplanet/2008/dec/en/OP-2008-12-en-ARTICLE3.pdf
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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
                         Indirect oversight                                 People’s Congress

                                                                                                                                                 National Development
                                                                               State Council
                                                                                                                                                      and Reform
                                                                                   (SC)
                                                                                                                                                 Commission (NDRC)

          Ministry of Finance          Ministry of Housing & Rural-           Ministry of Land and                         National
                (MOF)                Urban Development (MOHRUD)               Resources (MOLR)                           Energy Bureau
                                                                                                                                                      Price Bureau
                                              Ministry of Science
     Ministry of Environment                                                                                    State Electricity Regulatory              (PB)
                                               and Technology            Ministry of Agriculture (MOA)
        Protection (MEP)                                                                                           Commission (SERC)
                                                   (MOST)
Sub-national
                                                                                 Provincial
                                                                                Government


           Environmental           Local Bureau of                                                       Provincial Offices of
                                                               Urban Construction                                                                     Local Price
             Protection               Finance                                                                 the State
                                                                  Commission                                                                           Bureaus
           Bureaus (EPBs)               (BF)                                                              Administration of
                                                                     (UCC)                                                                              (PBs)
                                                                                                              Taxation


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
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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                                             Energy Efficiency

                  The Chinese government envisions that 10%                                Regulations have been set to reduce energy
                  and 15% of China’s total energy needs will be                            consumption per GDP by 20% by 2010b
                  met by renewable energy by 2010 and 2020a



                             Laws and Regulations Enacted to Support These Targets Include:b
              •   The Renewable Energy Law
              •   Medium and Long-Term Development Plan for Renewable Energy (2004-2010)
              •   Medium and Long-Term Energy Conservation Plan (2004-2010)
              •   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, http://www.renewableenergyworld.com/rea/news/story?id=23531; b. Ivan Lee and Evan Li, Global
          Equity Research: Climate Change in China, Lehman Brothers, 2008.
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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
                                                                      Measures and Programs
Source:   The Renewable Energy Law – The People’s Republic of China document, January 1, 2006.
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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               The grid power price of renewable energy       Energy authorities of various local
 loans with financial interest subsidies to                  power generation projects shall be             governments above the county level shall –
 renewable energy development and                            determined by the price authorities from the   on the basis of local economic and social
 utilization projects                                        State Council                                  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                   The excess costs associated with the           Encouragement and support for the
 energy development fund to support                          purchase of renewable power (compared to       development and utilization of renewable
 research, development and promotion of                      the purchase of power generated by             energy in rural areas is stressed
 renewable energy                                            conventional sources) will be factored into
                                                             the selling price


 The government will grant tax benefits to                   Grid connection expenses paid by grid          Governments above the county level shall
 projects listed in the renewable energy                     enterprises for the purchase of renewable      provide financial support for renewable
 industrial development guidance catalog                     power and other reasonable expenses may        energy utilization projects in rural areas
                                                             be included in grid enterprise power
                                                             transmission costs and recouped from the
                                                             selling price

Source:   The Renewable Energy Law – The People’s Republic of China document, January 1, 2006.
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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 (2004-2020)
            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

                                                                     Measures and Programs
Source:   Ivan Lee and Evan Li, Global Equity Research: Climate Change in China, Lehman Brothers, 2008.
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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 (2004-2020)

            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

                                                                     Measures and Programs
Source:   “China Medium and Long Term Energy Conservation Plan,” World Resources Institute, http://projects.wri.org/sd-pams-database/china/medium-and-long-term-energy-conservation-plan.
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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


                                                                   Measures and Programs
Source:   Jeff Osborne, “New Subsidy Announced - Can The Chinese Government Prevent The Solar Industry From Seeing Red?,” Thomas Weisel Partners, March 26, 2009.
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Solar Energy – regulatory environment – policies and incentives


The Chinese Renewable Energy Fund aims to promote
the efficiency of the domestic solar industry
The program is being supported by the Chinese Renewable Energy Fund




                                                                             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
          1     Photovoltaic Building Construction                                                    2 National Climate Change Program
  Introduced by the Ministry of Finance and the Ministry of Construction:                  China formulated policies to substantially decrease its greenhouse gas
   Section 3: Subsidies supporting projects should meet the following                      emissions in order to help mitigate climate change
    conditions:                                                                            Some of these policies and measures are related to the solar power industry:
       - Solar photovoltaic products installed capacity for single                             - Continuous support for the development and utilization of wind, solar,
           projects must be not less than 50kWp                                                  geothermal and tidal energy, including popularizing family-use
       - Sc-Si products must be more than 16%, the efficiency of                                 photovoltaic power systems or small-scale photovoltaic power plants in
           polisilicon products must be more than 14%, and the                                   remote areas; disseminating integrated solar energy buildings, solar
           efficiency of non-crystalline silicon PV products must be more                        energy-based hot water supply, space heating and cooling pilot projects
           than 6%                                                                               in urban areas and popularizing household solar water heaters, solar
                                                                                                 greenhouses and solar stoves in rural areas
       - The projects that combine and integrate solar electricity PV
           components and buildings will be prioritized                                        - Prioritize the development of low-cost and scale exploitation and
                                                                                                 utilization technologies, including the development of large-scale wind-
       - Grid-connected solar photovoltaic building projects will be
                                                                                                 power generation equipment, high-performance and low-cost PV battery
           prioritized
                                                                                                 technology, solar thermal power generation, integrated solar energy
       - Building projects related to schools, hospitals, government                             building technology, and biomass and geothermal energy development
           offices and other public utilities will be prioritized                                and utilization technologies
   Section 6: Subsidy will be 20 RMB/Watt in 2009
Source:   “China’s National Climate Change Programme,” Embassy of the People’s Republic of China in the Islamic Republic of Pakistan, http://pk.china-embassy.org/eng/ep/t326796.htm .
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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         In 2008, a subsidy for      The fixed rate price        Fixed rate of price         Gradual price              Fixed price rate cut
    Credit (ITC) policy is     PV systems installed        of PV electricity was       reduced to as much          deduction for small-       down: 2% in 2009
    a tax refund of up to      (>50kw) in small to         modified: the uniform       as roof project             sized, large sized         and 2010
    30% of the total           mid-sized enterprises       fixed price 0.45            equivalent (0.33            and ground PV
    investment (or up to       designed to provide         EUR/W (the price            EUR/W, ground               project to as much as      The fixed rate price
    US$2,000 for               one-third of the total      before 2009: BIPV           project 0.29 EUR/W)         10% in 2009- 2010,         will be discussed and
    residential solar          investment costs            0.55 EUR/W, roof                                        and 9% in 2011-2012        modified in 2010
    energy projects)           was implemented;            project and power
                                a subsidy for home         generation station
    Expired at the end of      use PV systems of           0.45 EUR/W)
    2008                       up to 70000 JPY(ca.
                               US$715) was also
                               established
    Since 2009, ITC            Since April 2008, the
    policy extensions of       subsidy to
    eight years for            school/hospital/rail
    commercial PV              station PV projects
    projects and two           has been increased
    year extensions for        to one half of the
    residential PV             total investment
    projects are allowed;
    the upper limit of
    US$2,000 can be
    exceeded

Source: www.chinadialogue.net; www.docin.com; www.china-solarenergy.com; www.renewableenergyworld.com; www.mysolarshop.co.uk; www.austrade.gov.au; XYZ.
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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                       A guaranteed tariff of 0.27 EUR per kWh                     A guaranteed tariff of 0.27 EUR per kWh
  treatment to concentrated solar power users




Source: S. Sakakura,“Sunshine project of the Japanese Government,” The Smithsonian/NASA Astrophysics Data System, http://adsabs.harvard.edu/abs/1975ente.proc..105S.
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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.
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  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
       Trillion Stimulus Package
     ¥4Breakdown of ¥4 Trillion Stimulus Package1                                             Post-earthquake
                                                                                                          Analysis of Package
                                                                                              reconstruction - 1 trillion
                             Social welfare                                                    Overview of Commitment2
                                                                                              yuan
                             150 billion yuan                                                   Of the ¥4 Trillion ($586
                                                                                              Technology advancesmillion) package only
                                                                                                 ¥210 billion ($30 billion) is directly earmerked
Infrastructure                                                 Post-earthquake reconstruction and industry restructuring
                                                                                                 for green investments
1.5 trillion yuan                   4%                         1 trillion yuan                -370 billion yuan
                                                                                                 However, HSBC estimate that $221 billion has
                                                                                              Sustainable Environment and
                                                                                                 green features, including grid
                                                   25%                                        - 210 billion yuan
                                                                                                 infrastructure investments, making it the
                                                                                                  largest green stimulus package in the world
                                                                                                 America’s green - 400
                                                                                                Civilian Projectsstimulus package stands at
                        38%                                                                       only yuan
                                                                                                billion$112 billion, although the economy is 1.5
                                                                                                  times larger

                                                           9%                                   Rural civilian projects -
                                                                       Technology advances/     Qualitative Considerations3
                                                                                                370 billion yuan
                                                                       industry restructuring     As with the Renewable Energy Law, the
                                                         5%            370 billion yuan            effectiveness of measures will depend on
                                                                                                Infrastructure - 1.5 trillion transparency to
                                                                                                   ensuring sufficient detail and
                                 9%            10%               Sustainable environment        yuan
                                                                                                   remove uncertainties and improve spending
                                                                 210 billion yuan                  quality
                                                                                                Social welfare - 150 will be locked in later
                                                                                                  The finalized package
        Rural civilian projects                  Civilian projects
                                                 400 billion yuan
                                                                                                   this year and
                                                                                                billion yuan is expected to favor SOEs,
        1.5 trillion yuan                                                                          limiting opportunities for foreign companies



  Source: 1 NDRC press converence, March 2009, 2 www.chinadaily.com, 3 XYZ
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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


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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                       AS4509.1-    Stand-alone power systems        NF       Solar Energy
          4777.1-      systems via inverters Part 1:                   1999 :       Part 1. Safety requirements      P50-     Solar collectors Methods
          2005         Installation requirement                                                                      503-     of measurement of
                                                                                                                     1985     optical characteristics
                                                                       AS4509.2-    Stand-alone power systems
          AS           Grid connection of energy                       2002 :       Part 2. System Design
          4777.2-      systems via inverters Part 2:                                Guideline                        NF       Direct transformation of
          2005         Inverter requirements                                                                         C57-     solar energy into
                                                                                                                     100-     electrical energy,
                                                                       AS4509.3-    Stand-alone power systems
                                                                                                                     1986     terrestrial photovoltaic
          AS           Grid connection of energy                       1999 :       Part 3. Installation and
                                                                                                                              modules
          4777.3-      systems via inverters Part 3:                                Maintenance
          2005 :       Grid protection requirements
                                                                       AS4086.2 -   Secondary batteries for use
          MS 1837-     Installation of Grid-Connected                  1997 :       with stand-alone power
          2005 :       Photovoltaic (PV) System                                     systems


                                                                                    National Electrical Code
                                                                                    (NEC) 2005 Article 690


                                                                       NF C57-      Direct transformation of Solar
                                                                       310-1988     energy into electrical energy;
                                                                                    Photovoltaic pumping system



Source: www.saiglobal.com; www.mbipv.net.my; www.sunsecond.net
                                                                                                                            China Solar Energy Fact Book

                                                                                                                                                           59
Solar Energy – standards – Solar PV


China has established key standards designed
to manage Solar PV sector components
                                                        Domestic Solar PV Standards

  GB/T19064-2003                                 Solar home system specifications and test procedures

  GB/T2680-1994                                  Determination of light transmittance, solar direct transmittance, total solar
                                                 energy transmittance and ultraviolet transmittance for glass in building and
                                                 related glazing factors
  NF C57-326-1996                                Covers photovoltaic devices and requirements for reference solar modules




Source: www.bjzhxy.com; www.51zbz.com; www.sunsecon.net; www.standardcn.com;
                                                                                                              China Solar Energy Fact Book

                                                                                                                                             60
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                       GB/T6495.1-1996: PV devices Part 1:Measurement of PV current-voltage
      GB2296-2001: Designation method of solar cells (PV device)                        characteristics
      GB12632-90: General specification of single silicon solar cells                  GB/T6495.2-1996: Photovoltaic devices Part 2: Requirements for reference
                                                                                         solar cells
      GB6497-1986: The general rules of terrestrial solar cell calibration
                                                                                        GB/T6495.3-1996 : Photovoltaic devices Part 3:Measurement principles for
      GB6495-86: Measurement procedures for electrical characteristics of               terrestrial PV solar devices with reference spectral irradiance data
       terrestrial solar cells
                                                                                        GB/T6495.4-1996: Procedures for temperature and irradiance corrections to
      IEEE 1262-1995: Recommended practice for qualification of photovoltaic            measured I-V characteristics of crystalline silicon photovoltaic devices
       (PV) modules
                                                                                        SJ/T11127-1997: Overvoltage protection for PV power generating systems
      GB/T 14007-92: General specification for terrestrial-use solar cell modules
                                                                                        GB/T9535-1998: Crystalline silicon terrestrial PV modules-design qualification
      GB/T 14009-92: Measurement procedures for parameters of solar cell                and type approval
       modules
                                                                                        GB/T18210-2000: Crystalline silicon photovoltaic(PV)array ─ On-site
      GB 9535-1988: Environmental test methods for terrestrial silicon solar cell       measurement of I-V characteristics
       module
                                                                                        GB/T18479-2001: Terrestrial photovoltaic(PV)power generating systems
      GB/T 14008-92: General specification for sea-use solar cell modules
                                                                                        GB/T19064-2003: Solar home system specifications and test procedures
      GB11011-89: General rules for measurements of electrical
       characteristics of amorphous silicon solar cells




Source: www.standardcn.com; www.bylm.net; www.geoenv.cn; www.elecm.com
                                                                                                                                             China Solar Energy Fact Book

                                                                                                                                                                            61
Solar power – standards


These standards cover a wide array of operating
systems, including batteries
                                            Domestic Solar PV Standards - Batteries


    GB 13337.1-91 Stationary acid spray-proof lead-acid batteries Technical conditions
    GB 5008.1-85 Lead-acid starter batteries Technical requirements and methods of test
    GB 9368-88 Nickel-cadmium alkaline secondary cells
    GB/T14162-93 Sampling procedures and tables for product quality audit (Apply to inspection by attributes for
     nonconformities per hundred units)




Source: www.gb99.cn; www.chinaeeb.gov.cn.
                                                                                                          China Solar Energy Fact Book

                                                                                                                                         62
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 P50-530-2-2003            Thermal solar systems and components - Solar collectors - Part 2: test
                                     methods
        NF C57-323-1994              Photovoltaic devices. Part 3: measurement principles for terrestrial
                                     photovoltaic (PV) solar devices with reference spectral irradiance data
        NF C57-322-1994              Photovoltaic devices. Part 2: requirements for reference solar cells




Source: www.sunsecond.net
                                                                                               China Solar Energy Fact Book

                                                                                                                              63
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-379.1-88                    Solar domestic hot water systems


                                       E 1056-85                           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 P50-601-1/A1-1998                Building works - plain solar collector installations using heat
                                       DTU 65.12.                          transfer liquid (used for heating and the production of domestic
                                                                           hot water)
                                       NF P50-601-2-1993                   Building works, private contracts, plain solar collectors (uses
                                       DTU 65-12.                          heat transfer liquid for heating and production of hot water)

                                       JIS A 4111: 1997                    Solar water heater for dwellings


                                                                                       Note: More specificity to source info?
Source: http://www.standards.co.nz; www.egnret.ewg.apec.org; www.astm.org; www.bzcity.net; www.sunsecond.net; www.bzjsw.com
                                                                                                                                China Solar Energy Fact Book

                                                                                                                                                               64
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/T12936.2-1991              Solar energy—Thermal applications—Terminology part 2

              GB/T12936.1-1991              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: www.86ne.com; www.efluid.com.cn
                                                                                                               China Solar Energy Fact Book

                                                                                                                                              65
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
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

                                                                                    67
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

                                                           Highest power per area                                     Output less affected by temperature
                                                           Requires less racking and support material                 Less manufacturing materials used
                                                           Fewer modules mean lower shipping costs                    Lower cost per watt
                                                           Large number of module choices                             Good aesthetics for building-integrated
                                                           Greater inverter flexibility                                applications
                    Advantages                                                                                         Faster energy payback
                                                                                                                       Non-glass substrates possible
                                                                                                                       More shade tolerant

                                                           High cost per watt                                             Lower power per area
                                                           High temperatures impact output more                           Takes months to stabilize output
                                                           Low shade tolerance                                            Twice as much rack material required
                                                           Individual cell visibility                                     More modules mean higher shipping costs
                                                                                                                           Lower series-string capacity
                  Disadvantages                                                                                            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,
          http://www.homepower.com/view/?file=HP127_pg98_Weliczko.
                                                                                                                                                     China Solar Energy Fact Book

                                                                                                                                                                                    68
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                                       Monocrystalline
                                                                          (Polysilicon)                                         (Monosilicon)


                                                        Most common (and cheapest) application                Typically used in telecommunications applications
                     Application                                                                              In use for over 20 years


                                                        Conversion efficiency of sunlight to electricity is   Conversion efficiency of sunlight to electricity is
                                                        12-12.5%, meaning that one square meter of            similar to the efficiency levels of polycrystalline cells
                                                        panels exposed to the full sun will generate
                      Efficiency                        120W-125W of electricity




                                                        Retails at between US$8.50-9.50 per watt              Retails at between US$10.00-11.00 per watt
                          Price


                                                        BP SX (formerly Solarex), Sharp and Kyocera           BP and Siemens
              Selected Companies



Source:   “Solar Panels,” Planetary power website http://www.planetarypower.com.au/solar_panels.htm.
                                                                                                                                              China Solar Energy Fact Book

                                                                                                                                                                             69
 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
350                                                                  14
         12
300               11                                                 12
         300                10
                                       9
250                                         8.5                      10
                  240                                 8
                                                               7.5
200                                                                  8
                            200
150                                   180   170                      6
                                                     160
                                                               150
100                                                                  4

50                                                                   2

 0                                                                   0
        2004     2005      2006      2007   2008    E2009    E2010

                Silicon consumption(g/wp)    wafer thickness(um)


       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

                                                                                                                                                70
     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 &
                                                                                     E.g. Nanowin 12%
                                                                                     CIGS Solar Module
                                                                                                            Installation
          Raw Materials         Glass                  Thin Film Cell                                     Thin Film
E.g. CIGS  Copper              Material               CIGS Solar Cell                                    Low manufacturing cost
(pictured)  Indium             CIGS powder onto                                                          Higher accumulated electricity generation
            Gallium            sputtering target                                                         Lower $/KWh costs
            Selenium                                                                                     Attractive physical appearance
                                                         CIGS                     CdTe
                                  Amorphous                                                               Light weight modules
                                                     • No degradation       • Low production cost
                               •Proven technology                                                         Potential production cost of US$1/watt
                                                     • Highest efficiency
                               •Flexible substrate
                                                     • Flexible substrate




     Source: NanoWin Technology Co.,Ltd
                                                                                                                        China Solar Energy Fact Book

                                                                                                                                                       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
                           A Si PV cells can be used with glass (or other materials as                    Most developed Thin Film technology to date
     Amorphous              substrates)                                                                    Can achieve further development by combining the stable
    silicon (a-Si),        The use of glass as a substrate for conventional glass walls                    high efficiency of Si technology with the simpler and cheaper
                            with plated membrane is used for making PV curtain walls                        large area deposition technology of amorphous silicon


      Cadmium              Utilizes long flat mirrors at different angles that focus sunlight             High efficiency
      telluride             on one or more pipes containing heat-collecting fluid                          Easier to deposit and more suitable for large-scale
       (CdTe)                                                                                               production
                                                                                                          × Toxicity (still being debated)
                           Made by depositing several layers of metal compounds on                        CIGS has demonstrated the highest laboratory efficiency
       Copper-              semi-conductive films (with a thickness of about 2-3 microns)                  rates
       indium-                                                                                             Stable performance
       gallium-                                                                                            Non-polluting
      diselenide                                                                                           High anti-radiation capacity
        (CIGS)
                                                                                                           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., http://www.planetarypower.com.au/solar_panels.htm.
                                                                                                                                                China Solar Energy Fact Book

                                                                                                                                                                               72
Solar Energy – technology innovation and alternative solutions – Thin Film

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-
  Utilizes long flat mirrors at                                volts is matched nearly perfectly to the solar spectrum
   different angles in order to focus                         – The device structure also includes a very thin layer of cadmium sulfide that
   sunlight on one or more pipes                                allows most sunlight to pass through to the CdTe layer
   containing heat-collecting fluid                           – Current research is geared towards:
   which are mounted above
                                                                 Boosting efficiencies by, among other things, exploring innovative transparent
   mirrors                                                          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
          Selected Actors                                        Understanding the degradation that some CdTe devices exhibit at contacts
                                                                    and then redesigning devices to minimize this phenomenon
  First Solar (U.S.)
                                                                 Designing module packages that minimize any outdoor exposure to moisture
  PrimeStar (U.S.)
                                                                 Engaging aggressively in both indoor and outdoor cell and module stress
  AVA (U.S.)                                                       testing (e.g., tests for thin-film modules in hot and humid climates)
  Sichuan Apollo Solar Science &
   Technology Co., Ltd.                                  Commercialization:
  Sichuan Xinju Mineral Resource                             – NREL currently holds the world-record conversion efficiency for CdTe of 16.5%
   Development Co.




Source: “Solar Panels,” Planetary power website, http://www.planetarypower.com.au/solar_panels.htm.



                                                                                                                                                    73
Solar Energy – technology innovation and alternative solutions – Thin Film


Amorphous silicon (a-Si) is expected to establish a presence in
the market given the strong backing of several major companies
                                                         Value Proposition:
               Description
                                                           – Amorphous silicon is full of natural defects, but said defects do not affect the
  A Si PV cells can be used with                             overall characteristics of the material too drastically
   glass (or other materials) as                           – Current research is geared towards:
   substrates
                                                                    Improving the stability and conversion efficiency of a-Si modules in actual
  The use of glass as a substrate                                    use (in a detrimental phenomenon called the Staebler-Wronski effect, the
   for conventional glass walls with                                  conversion efficiency of an a-Si module decreases when the module is
   plated membrane is used for                                        first exposed to sunlight)
   making PV curtain walls
                                                                    Reducing the capital equipment costs for manufacturing a-Si panels by
                                                                      improved manufacturing processes that include increasing the rates of
          Selected Actors                                             depositing material
  Sharp                                                            Improving module-packaging designs to make them more resilient in
  Applied                                                            outdoor environments and less susceptible to glass breakage or moisture
                                                                      ingress
  Unisolar (retails at US$10.00
   per watt)                                                        Developing new module designs for building-integrated applications
  China Solar Energy Holdings                           Commercialization:
   Ltd. (has a thin-film panel turn-                       – Amorphous silicon is expanding its market share as a result of increasing
   key production line)                                       efficiencies, proven manufacturability, and innovative products
  Sinonor Corporation – Hsichu,                         Cost-Benefit Analysis:
   Taiwan, 3MW                                             – With an efficiency of sunlight to electricity rate of 6.3% (about half that of
  Tianjin Jinneng Solar Cell Co.                             polycrystalline or monocrystalline panels), an array of amorphous panels will
   Ltd. (produces a-Si, multi-                                require about twice as much roof space as an array with a similar rating using
   junction, glass or SS substrate)                           other types of panels, thereby presenting a challenge when the amount of
                                                              unobstructed roof space is limited
Source: “Solar Panels,” Planetary power website, http://www.planetarypower.com.au/solar_panels.htm.
                                                                                                                     China's Solar Power Industry Fact Book

                                                                                                                                                              74
Solar Energy – technology innovation and alternative solutions – Thin Film


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
  CIGS is made by depositing                greater than 11%, CIGS is being introduced to the market
   several layers of metal
                                           – CIGS is also enjoying success in the laboratory, with cell efficiencies climbing to
   compounds on semi-conductive              a world-record rating of 19.2%
   film (with a thickness of about 2-
                                           – Current research is geared towards:
   3 microns)
                                              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
          Selected Actors                        increasing the yield of CIS modules, a stage which requires increasing the
                                                 percentage of modules and cells that make it intact through the
  International Solar Electric                  manufacturing process
   Technology                                 Decreasing manufacturing complexity and cost and improving module
  GSF GroupSat Solar                            packaging
  Nanowin Technology
                                         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)

Source:   Sun & Wind Energy



                                                                                                                                   75
Solar Energy – technology innovation and alternative solutions – Thin Film


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



                                                                                76
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

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

Source:    Company Annual Reports and Presentations; XYZ.
                                                                                                              China Solar Energy Fact Book

                                                                                                                                             77
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 power plants consist of large        Currently the technology with the strongest track record and
                            Parabolic        parallel arrays of parabolic trough solar              cost efficiencies (costs are to US$0.10/kwh or less)
                             Trough          collectors which constitute the solar field           Heat storage by melted salt and hybridization with gas firing
                                                                                                    allows the system to work during the night and cloudy days


                                             Instead of using trough-shaped mirrors that           Relatively cheap to manufacture
                                             track the Sun, Fresnel Mirrors utilize long flat      Easy integration into buildings
                         Fresnel Mirror      mirrors at different angles that have the effect      Shaded areas under the mirror provide a suitable environment
                                             of focusing sunlight on one or more pipes             for plants
                                             containing heat-collecting fluid which are
                                             mounted above the mirrors

                                             Power towers are towers surrounded by a               Higher conversion efficiency
                                             large array of heliostats (mirrors that track the     Heat storage by melted salt and hybridization with gas firing
                         Power Towers        sun and reflect its rays onto the receiver at the      allows the system to work during the night and cloudy days
                                             top of the tower)                                    × Lack of a commercial track record
                                                                                                  × High financial risks

                         Dish/Stirling-      Solar dish systems consist of a dish-shaped           Higher conversion efficiency
                             engine          concentrator (like a satellite dish) that reflects    Smaller PV area is needed
                          systems and        solar radiation onto a receiver mounted at the       × Not well suited to hybridization with gas firing and cannot be
                         concentrating       focal point                                            stored by melted salt meaning that its operations are subject to
                            PV(CPV)                                                                 weather conditions
                                                                                                  × Less able to provide dispatchable power

Note:     CSP – Concentrating Solar Power.
Source:   XYZ.
                                                                                                                                       China Solar Energy Fact Book

                                                                                                                                                                       78
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. www.chsel.com/english/news/2009-5-27/110434-1.htm
                                                                                                    China Solar Energy Fact Book

                                                                                                                                   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                                Highly reliable in the long-term with a life span of 20-25 years
      incorporate solar PV materials (whether                                        Maintenance-free panels
      crystalline or thin-film) into the building structure                          Cost-saving for building owners
                                                                                     No extra space is taken up
      itself and can integrate with windows, or can be                               No extra supporting structure is necessary for installation
      laminated onto a low-slope industrial roofs                                    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
BIPV Sub-Categories                                                                  Can be integrated with the other building systems including protection,
                                                                                      control and operation
                    The most widely installed version to date is a thin-film
  Flat roofs         cell integrated to a flexible polymer roofing membrane           BIPV Disadvantages
                                                                                   Limited cost-down potential
                    Modules shaped like multiple roof tiles                       Low manufacturing yield and higher risk related to product safety and
 Pitched roofs      Solar shingles are modules designed to look and act like       durability leads to high installation costs
                     regular shingles, while incorporating a flexible Thin Film    As modules account for over 50% of system cost, cost-down potential is
                     cell                                                           limited for both crystalline-based modules and Thin Film modules due to
                                                                                    material price hikes for the former and lower efficiency for the latter
                    Modules mounted on exterior faces of buildings can            While cost reductions can be achieved by improvements in efficiency,
   Facades           provide additional weatherproofing or simply be used as        optimized design and economies of scale, the potential is quite limited on
                     a style element                                                the BOS (Balance-of-System) front, especially for thin-film-based
                                                                                    systems given their lower efficiency and operating voltage
                    (Semi) transparent modules can be used to replace a           Higher energy generation costs would require higher subsidies to boost
   Glazing           number of architectural elements commonly made with
                                                                                    demand
                                                                                   While Thin Film modules are superior to standard roof mounted systems
                     glass or similar materials such as windows and skylights
                                                                                    in terms of aesthetics and transparency, low efficiency and questionable
                                                                                    scalability are problems

  Source:   XYZ.
                                                                                                                                    China Solar Energy Fact Book

                                                                                                                                                                   80
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
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

                                                                                    82
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
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

                                                                                                                           84
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

                                                                                           PV Cell
                                                                        Ingot/
                                                                                                                                         Application
                                  Capacity                              Wafer
   Selected         Listed                                                                     Thin Film                     System
                                   (2008)                                                                         Module
  Companies         Market                       Polysilicon                     c-Si                                      Integration
                                  Unit: MW
                                                               Mono-Si Poly-Si          a-Si   Cd-Te       CIGS                              BIPV


    Suntech          NYSE            1000

    Renesola          AIM             580

      Trina          NWSE             350

  CSI Changsu         NAS          1500tons

     JASolar          NAS             500

    Solarfun          NAS             360

     CEEG            NYSE             600

      Yingli         NYSE             600

      LDK            NYSE            1000

    Solargiga        HKSE          2000tons

     Topray          SHSE             55


Source: Company Annual Reports and news clips; XYZ.
                                                                                                                             China Solar Energy Fact Book
                         Notes: BIPV=building-integrated photovoltaic
                                                                                                                                                            85
Solar Energy – competition – solar PV


Chinese solar PV companies are generally perceived
as not being technology leaders
 Solar PV Companies         Leading Technology   Sustainable Cost   Branding     Financial Strength   Profitability              Revenue Growth
                                                 Competitiveness
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

                                                                                                                                                     86
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
                  1                                                                 High entry barriers to upstream
Degree of                                                                            characterized by only a few
fragmentation                                                                        silicon suppliers

                                                                                    Numerous players and markets
                  2                                                                  with highly dispersed structure
                                                                                     and intense competition
Import
                                                                                    High quality polysilicon for solar
                                                                                     energy cells is still dependent
                                3                                                    on overseas suppliers
Export                                                                              Over 90% of PV
                                                                                     cell/module/system produced in
                                                                                     China are exported to overseas
                  4
                                                                                     markets
Profitability
                                                                                    Under pressure from
                                                                                    decreasing profit margins, the
                                                                                    degree of consolidation is
Historic growth                                                                     increasing along the value
                                                                                    chain


Source:   XYZ.
                                                                                          China Solar Energy Fact Book

                                                                                                                          87
                                                                                                                          87
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             High entry         High entry barriers due to the high cost for product line construction and    Upstream vertical
 new entrants          barriers            economies of scale (initial investment for a 1000-ton-capacity facility        integration
                                           exceeds RMB1 billion)                                                         Semi-conductor
                                          Downstream firms enter the market in order to avoid further dependency on      polysilicon enter PV
                                           silicon supply                                                                 polysilicon production
 Threat of             Overseas           Sophisticated technology ensures high quality production                      Expand capacity
 competitors           competitors        Realized economy of scale with production over 2500 tons                       through horizontal
                       with incumbent     Low unit cost: less than US$30/kg, while most Chinese manufacturers’           integration
                       advantages          average cost per unit exceeds US$50/kg                                        Technology
                                          China’s polysilicon producers apply less advanced technology which             improvement
                                           consumes 2-3 times the energy to produce the same amount of raw
                                           material than overseas competitors do
 Bargaining power of   Tight supply on    The supply of industrial silicon: China’s average annual production of       Location selection: close
 suppliers             raw materials       industrial silicon is 700,000 tons, of which two-thirds is exported to       to silicon resources
                                           overseas markets
                                          Increasing demand from solar energy polysilicon production results in
                                           increasing price
 Bargaining power of   Excess supply,     Supply (estimated as around 30%) will result in ASP falling from US$400      Upstream vertical
 customers             price erosion       (in 2008) to US$150 ( early 2009) per ton                                    integration
                                          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

                                                                                                                                                        88
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             Low entry          Low entry barriers result in numerous players and markets with highly             Heightened
 new entrants          barriers            dispersed market structures                                                        downstream
                                          Intense competition but less sophisticated technology applied                      integration,
                                          Unsteady quality                                                                  Realization of
                                          Profit margin will continuously decrease as more and more silicon makers           advantages in
                                           and cell makers enter the market                                                   economies of
                                                                                                                              scale/more efficient
                                                                                                                              production
                                                                                                                             Increasing market
                                                                                                                              concentration
 Threat of             Technique          Thin Film: less dependent on silicon price, with higher cost per unit and less    Technology innovation
 substitutes           bottleneck: low     than 10% of the domestic market                                                   Investment in R&D
                       conversion rate




 Bargaining power of   Shortage of        Shortage of supply during 2005-2008                                               Downstream integration
 suppliers             supply             Due to the unsophisticated technology of domestic suppliers, the price and         by silicon makers
                                           production of silicon wafers are still highly dependent on overseas suppliers


 Bargaining power of   Excess supply,     Rapid increasing capacity compared with steady increasing demand from             Upstream vertical
 customers             price erosion       cell/module makers                                                                 integration (including
                                                                                                                              silicon suppliers) by cell
                                                                                                                              makers
Source: XYZ
                                                                                                                            China Solar Energy Fact Book

                                                                                                                                                           89
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               Few barriers to    Higher profit margins attracted some semi-conductor        Industry shake out and consolidation
 new entrants            entry other         firms to transfer to solar silicon cell production
                         than cost and      Decreasing price of polysilicon will continue to reduce
                         risk appetite       the cost and increase the gross margins of silicon-
                                             based PV cell makers

 Threat of overseas      Imperative to      Big firms such as Q-cells use long-term purchasing         Leverage low labor costs over foreign
 competitors             retain cost         agreements to ensure the future cost of silicon since       competitors
                         advantages          they can promise considerably larger acquisitions          Upstream integration to grasp the profit
                                            The current silicon price is lower than the predicted       margin on silicon supply side
                                             long-term future price

 Threat of substitutes   Technique          Thin Film: less dependent on silicon price, with higher    Technology improvement needed to maintain
                         bottleneck: low     cost per unit, low technology transfer rate as              the higher transfer rate advantage over
                         transfer rate       technical bottleneck                                        alternative solutions
                                            Improved transfer rate increasingly makes Thin Film
                                             a good alternative to silicon-based techniques             Thin-film cell maker can take chances to
                                                                                                         become more competitive

 Bargaining power of     Oversupply         Oversupply since the 2Q 2008 resulted in the sharply       Upstream integration
 customers               dynamic             decreasing price of poly-silicon; the current price is
                                             lower than the predicted long-term future price            Technology innovation to continue reducing
                                                                                                         the average amount of silicon used in cell
                                            Polysilicon accounts for 70%-80% of the total cost in
                                             cell production meaning that its decreasing price           production
                                             effectively cuts down costs

Source: XYZ.
                                                                                                                             China Solar Energy Fact Book

                                                                                                                                                            90
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               High entry       High entry barriers due the high cost of product line    Downstream integration initiated by PV cell
 new entrants            barriers          construction and economies of scale                       makers
                                          Less sophisticated technology compared with
                                           overseas incumbents
                                          High production costs and low efficiency

 Threat of substitutes   Technique        Recent advanced technology greatly enhanced the          Time for entering thin-film module sector with
                         bottleneck:       Thin Film PV module’s conversion rate (the highest        more sophisticated technology
                         breakthroughs     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
 Bargaining power of     Shortage of      Increasing demand for polysilicon due to the release     Upstream integration by module makers
 suppliers               supply            of expanded capacity




 Bargaining power of     Excess           Slower demand predicted compared with 2007-2008,         TBD
 customers               supply/price      due to policy changes in Spain, a major market
                         erosion          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
Source: XYZ.
                                                                                                                         China Solar Energy Fact Book

                                                                                                                                                        91
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              Low entry          A large number of entrants rushed into the market during the last decades     Market leaders can
 new entrants           barrier                                                                                            increase their market
                                                                                                                           share and realize
                                                                                                                           economies of scale by
                                                                                                                           horizontal integration
 Threat of              Sophisticated      As the first mover, gas water heaters hold the biggest share of
 substitutes            markets of          accumulated installed market while electricity water heaters account for
                        gas/electricity     70% of the annual installation in the Chinese market
                        water heater       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    Market to be       Aesthetic considerations became an important hurdle; many apartments          Supportive policies are
 consumers              explored            forbid the installation solar water heaters on their roofs                     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

                                                                                                                                                         92
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             High entry        High entry barriers
 new entrants          barriers          Promising market outlook attracted some construction firms to
                                         enter the market
 Threat of overseas    Design            Most Chinese players are less competitive in aesthetic design        Outbound acquisitions or
 competitors           sophistication                                                                           strategic alliances

 Bargaining power of   Dependency on     As PV modules account for over 50% of the total cost for BIPV,       Encourage module makers to
 suppliers             module supply     the sector is sensitive to any fluctuations in module price trends    add new business on BIPV

 Bargaining power of   Policy driven     The regulation published by China's Ministry of Finance provides
 customers                                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

                                                                                                                                                       93
Solar Energy – competition – companies – Solar PV – poly-Si




Major listed poly-silicon suppliers
                                                      Major Polysilicon Suppliers


      Polysilicon                     Wafer/Ignot                 PV Cell                 32.01
                                                                                        PV Module          PV System &
                                                                                                           Installation


Selected International Companies                                                                                Key Multiples
   Company        Country    Market      Enterprise     Revenue       Net      Price       Gross      Price/      EV/              EV/
    Name                      Cap          Value                    Income   (Feb 13)      Margin    Earning    EBITDA             EBIT
                                                                                            Rate

  MEMC           US         3,194.0      2,124.3       2,004.5     390.3     14.23        50.13     7.95       6.73          2.49
  ELEC
  MATER

  TOKUYAM        JAPAN      1,563.3      2,047.7       3,378.8     207.6     5.67         32.01     7.89       3.65          6.26
  A CORP

  MITSUB         JAPAN      3,317.1      11,442.6      18,235.1    816.2     2.59         14.09     5.44       9.18          13.65
  MATERIAL
  S
  WACKER         GERMANY    4,257.8      4,034.2       4,868.4     543.3     81.64        30.47     6.16       2.83          6.43
  CHEMIE
  AG

  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
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
                                                                                  Mudanjiang(牡丹江)
  Asian Silicon                                  Jinglong(晶龙)                     3,000MT(2010)
  2000MT(2010)                                   5,000MT(2010)

                                                                                  Jinzhou Chem(锦化)
  Xuntianyu(迅天宇)                                                                  1,000MT(2009)
  6000MT(2010)
                                                                                  Zhonggui(洛阳中硅)
                                                                                  2,000MT(2009)
  Shennanbo(深南玻)
  1500MT(2009) to 5,000(2010)
                                                                                  Tianhe(天和光能)
                                                                                  10,000MT(2009)
  Emei(东汽峨嵋)
  1500MT(2009)                                                                    Zhongneng(中能光伏)
                                                                                  6000MT(2009) to 15,000(2010)

  Xinguang(新光硅业)
                                                                                  Shunda(顺大)
  6000MT(2010)
                                                                                  1,500 (2009)

                                                                                  LDK(江西赛维)
  Jingxin(益阳晶鑫)                                 Aixinjia(曲靖爱信多)                   6000MT(2009) to 15,000(2010)
  5,000MT(2010)                                 10,000MT(2010)


Source: Company websites and news clips; XYZ.
                                                                                         China Solar Energy Fact Book

                                                                                                                        95
Solar Energy – competition – Key players – Wafer


Comparable listed companies:                                           Note: Fix header to reflect style rules.

Wafer/Ingot Suppliers
                                                   Major Wafer/Ingot Suppliers


      Polysilicon                                                                                                 PV System &
                                      Wafer/Ingot               PV Cell                     PV Module
                                                                                                                  Installation


Selected Chinese Companies
  Company         Country    Market      Enterprise   Revenue      Net             Price      Gross        Price/       EV/           EV/
   Name                       Cap          Value                 Income          (Feb 13)     Margin      Earning     EBITDA          EBIT
                                                                                               Rate

 LDK                        1,222.7      1,886.4      524.0     144.1          10.81         32.49       3.66        5.31          13.22
 SOLAR           CHINA
 CO-ADR

 SOLARGI         CHINA      338.2        228.2        131.0     37.7           0.20          31.82       2.35        4.06          N/A
 GA
 ENERGY

 JA SOLAR        CHINA      505.3        142.4        354.0      52.6           3.01         22.31       68.22       3.29          11.37
 HOL-ADR

 Average                    688.7        752.3        336.3     78.1            4.7          28.9        24.7        4.2           12.3

 Median                     505.3        228.2        354.0     52.0             3.0         31.8        3.7         4.1           12.3




Source: Bloomberg; XYZ.
                                                                                                                       China Solar Energy Fact Book

                                                                                                                                                      96
Solar Energy – competition – Key players – PV cell


Comparable listed companies: Note: Fix header to reflect style rules.
PV Cell Manufacturers (non-integrated)
                                       Single/Multi-sector PV Cell Manufacturers


                                                                  PV Cell               PV Module           PV System &
      Polysilicon                      Wafer/Ignot
                                                                                                            Installation

Single-sector PV Cell Manufacturers (only focus on PV cell manufacturing)
    Company          Country   Market      Enterprise   Revenue       Net      Price       Gross      Price/      EV/            EV/
     Name                       Cap          Value                  Income   (Feb 13)      Margin    Earning    EBITDA           EBIT
                                                                                            Rate

  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             GERMANY    1,417.9    1,328.6       206.2      11.2      132.23       N/A       36.68      11.17          21.32
  SOLAR
  ENER

  SUNWAYS           GERMANY    32.2       44.8          274.9      1.6       2.78         N/A       21.60      3.88           25.24
  AG

  SUNTECH           CHINA      1,4732.2   2,727.1       1,348.3    171.3     9.57         20.33     7.14       10.91          24.71
  POWE-ADR

  MOTECH            TAIWAN     582.4      545.5         458.0      71.8      2.33         18.98     7.59       5.46           24.56
  INDUSTRIES

  EVERGREE          U.S.       268.7      465.0         112.0      -84.9     1.63         16.87     N/A        15.60          N/A
  N SOLAR

  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
Solar Energy – competition – Key players – PV cell


Comparable listed companies: Note: Fix header to reflect style rules.
PV Cell Manufacturers (non-integrated)
                                          Single/Multi-sector PV Cell Manufacturers


      Polysilicon                        Wafer/Ignot                   PV Cell            PV Module             PV System &
                                                                                                                Installation

 Multi-sector PV Cell Manufacturers (with some core business in other industrial sector such as consumer electrics)
     Company              Country   Market     Enterprise   Revenue        Net       Price     Gross      Price/       EV/              EV/
      Name                           Cap         Value                   Income    (Feb 13)    Margin    Earning     EBITDA             EBIT
                                                                                                Rate

   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            JAPAN         12,110.1   1,328.6      14,181.6    1,178.6   63.30       31.51     10.72       5.46          6.95
   CORP

   SANYO              JAPAN         2,798.4    8,541.8      22,175.4    315.4     1.49        15.82     33.39       7.06          9.94
   ELECTRIC

   MITSUB ELEC        JAPAN         9,037.7    13,230.5     44,506.4    1,736.1   4.21        26.98     5.64        4.02          6.34
   CORP

   KANEKA             JAPAN         1,761.7    2,319.6      5,527.5     206.8     5.03        25.24     11.38       6.03          8.59
   CORP
   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    8,541.8      22,175.4     717.8    4.6         23.7      11.1        5.7           9.2



Source: Bloomberg; XYZ.
                                                                                                                     China Solar Energy Fact Book

                                                                                                                                                    98
                                                                                                                                                    98
Solar Energy – competition – Solar PV – key players – PV cell


Comparable listed companies: Note: Fix header to reflect style rules.
PV Cell Manufacturers (Integrated)
                                                           PV Cell Manufacturers


     Polysilicon                       Wafer/Ignot                   PV Cell               PV Module           PV System &
                                                                                                               Installation


    Company               Country   Market    Enterprise   Revenue      Net       Price       Gross      Price/      EV/            EV/
     Name                            Cap        Value                 Income    (Feb 13)      Margin    Earning    EBITDA           EBIT
                                                                                               Rate

 SOLARWORLD          GERMANY        2,485.5   2,336.4      887.8     145.8     22.25         N/A       18.89      5.52          12.13
 AG

 RENEWABLE           NORWAY         5,300.7   5,718.5      970.4     194.8     10.72         N/A       15.29      11.84         21.74
 ENERGY
 NORWAY

 Average                            3,893.1   4,027.4      929.1     170.3     16.5          N/A       17.1       8.7           16.9

 Median                             3,893.1   4,027.4      929.1     170.3     16.5          N/A       17.1       8.7           16.9




Source: Bloomberg; XYZ.
                                                                                                                    China Solar Energy Fact Book

                                                                                                                                                   99
Solar Energy – competition – Solar PV – key players – Thin Film PV cell


Comparable listed companies: Note: Fix header to reflect style rules.
Thin Film PV Cell Manufacturers
                                                  Thin Film PV Cell Manufacturers


      Polysilicon                           Wafer/Ignot                PV Cell                PV Module           PV System &
                                                                                                                  Installation


      Company             Country    Market     Enterprise   Revenue       Net       Price       Gross      Price/      EV/            EV/
       Name                           Cap         Value                  Income    (Feb 13)      Margin    Earning    EBITDA           EBIT
                                                                                                  Rate
  FIRST SOLAR             U.S.      11,908.9    11,361.2     504.0      158.4     146.86        49.88     43.32      23.94          45.73
  INC

  RENESOLA                CHINA     245.6       N/A          N/A        N/A       3.62          N/A       N/A        N/A            N/A
  LTD-ADR

  Average                           6,077.2     11,361.2     504.0      158.4     75.2          49.9      43.3       23.9           45.7

  Median                            6,077.2     11,361.2     504.0      158.4     75.2          49.9      43.3       23.9           45.7




Source: Bloomberg; XYZ.
                                                                                                                       China Solar Energy Fact Book

                                                                                                                                                      100
Solar Energy – competition – Solar PV – key players – PV Module


Comparable listed companies: Note: Fix header to reflect style rules.
PV Cell Module Manufacturers
                                                  PV Cell Module Manufacturers


                                       Wafer/Ignot               PV Cell                PV Module           PV System &
     Policilicon
                                                                                                            Installation

    Company          Country   Market     Enterprise   Revenue       Net       Price       Gross      Price/      EV/            EV/
     Name                       Cap         Value                  Income    (Feb 13)      Margin    Earning    EBITDA           EBIT
                                                                                            Rate

 SUNTECH            CHINA      1,473.2    2,727.1      1,348.3   171.3      9.57          20.33     7.14       10.91          24.71
 POWE-ADR
 TRINA              CHINA      242.1      541.7        301.8     35.7       8.23          22.41     2.69       4.57           7.79
 SOLAR-ADR

 SOLARFUN           CHINA      251.3      528.9        328.3     20.3       4.67          16.61     7.51       14.63          17.21
 POW-ADR

 CANADIAN           CHINA      181.0      263.5        302.8     -0.2       5.08          7.85      2.70       3.75           10.23
 SOLAR I

 CHINA              CHINA      96.5       209.7        234.9     -4.9       2.44          7.67      61.00      13.64          26.16
 SUNERG-ADR

 YINGLI             CHINA      N/A        N/A          1,107.1   100.0      N/A           21.58     N/A        5.66           8.23
 GREEN-ADR

 Average                       448.6      854.2        603.9      53.7      6.0           16.1      16.2       8.9            15.7

 Median                        241.1      528.9        315.6      28.0      5.1           18.5      7.1        8.3            13.7

Source: Bloomberg; XYZ.
                                                                                                                 China Solar Energy Fact Book

                                                                                                                                                101
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                                                             Financial Overview
  Company history                                                                   Revenue
           Sichuan Chuantou was previously known as Sichuan Emei Ferroalloy               – 2007: RMB363 million
            (Group) Holdings Ltd
                                                                                          By business segment:
  Company Leadership                                                                     – Electricity : RMB252 million
           Chairman: Mr. Huang Shunfu; CFO: Amy Yi Zhang                                  – Solar PV: RMB91 million
                                                                                          – Other production and services: RMB20 million
  Company Ownership
           Listed on Shanghai Stock Exchange in 1993
                                                                                     Growth
                                                                                          – Net Revenue (2006-2007): 8.1%



 .
                          Business Overview                                                             Shareholder Structure
  Primary Product and Service Lines                                                 Principal shareholders
           – Developing, managing and providing hydroelectricity and investing in          Sichuan Province Investment Group Limited
             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


Source:   Sichuan Chuantou Energy Company Limited, Corporate Website.
                                                                                                                                       China Solar Energy Fact Book

                                                                                                                                                                      102
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                                                           Financial Overview
  Company history                                                                 Revenue
           Founded in 1988, Leshan Electric Power Co.,Ltd., which was                    2007: RMB660 million
            established by Leshan Ministry of Finance and nine electric power            By business segment:
            companies, is China’s first electricity shareholding enterprise              – Electricity : RMB473 million
                                                                                         – Water supply: RMB41 million
  Company Leadership                                                                    – Gas: RMB97 million
           Chairman: Mr. Liao Zhengquan; Chief Accountant: Sun Zhiyuan                   – Coal: RMB19 million
                                                                                         – Hotel services: RMB25 million
  Company Ownership                                                                     – Others: RMB6 million
           Listed on Shanghai Stock Exchange in 1993
                                                                                   Growth
                                                                                         Net Revenue CAGR (2006-2007): 11.5%

 .
                            Business Overview                                                         Shareholder Structure
  Primary Product and Service Lines                                               Principal shareholders
           – The development, supply and management of electric power                     – Leshan Assets Operation Co.,Ltd
           – Production and supply of coal gas, communication equipment and               – Sichuan Electricity Power Co.,Ltd
            electrical transmission equipment                                             – Meishan Assets Operation Co.,Ltd
           – Hotel services, supply of tap water and development of real estate



  Company Geographical Presence
           The business mainly operates in Sichuan province



Source:   Leshan Electric Power Co.,Ltd , Corporate Website.
                                                                                                                                China Solar Energy Fact Book

                                                                                                                                                               103
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                                                                   Financial Overview
  Company history                                                                       Revenue                            By geographical segment:
           Founded in 2001, Suntech is one of the largest solar module providers              2007:US$1,348 million                 – Europe: US$1,196 million
            worldwide                                                                                                               – U.S.: US$87million
                                                                                              By business segment:                  – China: US$26 million
  Company Leadership                                                                         – PV modules :US$1,332 million        – South Africa: US$1 million
           CEO: Dr. Zhengrong Shi (also Chairman), CFO: Amy Yi Zhang                          – PV cells: US$13 million             – Japan: US$8 million
                                                                                              – PV system integration: US$3 million – Others:US$30 million
  Company Ownership
           Listed on the New York Stock Exchange (NYSE: STP)

                                                                                         Growth
                                                                                              Net Revenue CAGR (2006-2007): 125%

 .
                          Business Overview                                                                   Shareholder Structure
  Primary Product and Service Lines                                                     Principal Shareholders
           – Suntech designs, develops, manufactures, and markets various                      –   Directors and executive officers
             photovoltaic (PV) cells and modules to provide electric power for                 –   D&M Technologies Limited
             residential, commercial, industrial, and public utility applications              –   FMR LLC
             worldwide                                                                         –   As of March 25, 2008, approximately 65.5% of the ordinary shares
           – It offers various monocrystalline and multicrystalline silicon PV cells,              were held in the U.S.
             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).
Source:   Suntech Power, Corporate Website.
                                                                                                                                           China Solar Energy Fact Book

                                                                                                                                                                          104
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                                                                        Financial Overview
  Company history                                                                          Net Revenue                            By Related Party& Non related party:
           Commencing business operations in August 2004, China Sunergy is a                     2008:US$350.9 million                – Third Parties: US$297.3 million
            leading manufacturer of solar cell products in China as measured by                                                       – Related Parties: US$53.6million
            production capacity. It is also a pure-play cell manufacturer focusing               By business segment:
            on the highest value segment of the solar value chain                                – solar cells :US$333.4 million
                                                                                                 – modules: US$10.9 million
  Company Leadership                                                                            – cells processed : US$2.8 million
           CEO: Dr. Allen Wang, Chairman: Mr. Tingxiu Lu, CFO: Mr. Kenneth                       – Others: US$3.8 million
            Luk

  Company Ownership                                                                        Growth
           Listed on the Nasdaq Stock Market (NASDAQ: CSUN)                                      Net Revenue CAGR (2007-2008): 49.4%

 .
                           Business Overview                                                                      Shareholder Structure
  Primary Product and Service Lines                                                        Principal Shareholders
           – China Sunergy Co., Ltd., together with its subsidiaries, engages in the              –   All directors and executive officers
             design, development, manufacture, and marketing of solar cells in                    –   Elite Shine Group Limited
             China and overseas                                                                   –   Smooth King Investments Limited
           – It manufactures solar cells from silicon wafers utilizing crystalline                –   Brightest Power Holdings Limited
             silicon solar cell technology to convert sunlight directly into electricity          –   Exuberance Investment Limited
             through a process known as the photovoltaic effect                                   –   PraxCapital Fund II, L.P.
                                                                                                  –   Luck Great Investments Limited
  Company Geographical Presence
           – Head office: Nanjing, China
           – Branch: Munich, Germany


Source:   China Sunergy, Corporate Website.
                                                                                                                                                China Solar Energy Fact Book

                                                                                                                                                                               105
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                                                                 Financial Overview
  Company history                                                                       Net Revenue
           – Established in 1997, Trina Solar is committed to improving the                   – 2008: US$831.9 million
             competitiveness and efficiency of solar energy and developing a                  – 2007: US$301.8 million
             sustainable PV industry                                                          By geographical segment in 2007:
                                                                                              – Europe: US$291.3 million
  Company Leadership                                                                         – China: US$6.4 million
           – CEO: Jifan Gao (also Chairman), CFO: Terry Wang                                  – Mongolia: US$1.5 million
                                                                                              – Others: US$2.6 million
  Company Ownership
           – Listed on the New York Stock Exchange                                       Growth
                                                                                              – Net Revenue CAGR (2007-2008): 175.6%



 .
                           Business Overview                                                                Shareholder Structure
  Primary Product and Service Lines                                                     Principal shareholders
           – Trina Solar Limited, through its subsidiary, Changzhou Trina Solar                – Topower International Limited
             Energy Co., Ltd., engages in the manufacture and sale of solar power              – South Great Investment Limited
             products primarily in China. The company manufactures ingots,                     – Divine Land International Investment
             wafers, and solar cells for use in its solar module production, provides          – Sino Base Investment Co., Ltd
             silicon wafers to toll manufacturers and purchases solar cells from toll          – Perseverance International Invetment Limited
             manufacturers                                                                     – Changzhou Tianhe Investment Co., Ltd
           – Trina Solar Limited sells its products to distributors, wholesalers, and          – Changzhou Wujin Nanfang Bearing Co., Ltd
             PV system integrators                                                             – Wai Tat (Hong Kong) Limited
                                                                                               – Sino Super Investment Limited
  Company Geographical Presence                                                               – Sun Era Industries Limited
           – Trina Solar's increasingly global presence includes offices in China,
             Germany, Spain and the U.S.
Source:   Trina Solar Limited, Corporate Website.
                                                                                                                                          China Solar Energy Fact Book

                                                                                                                                                                         106
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                                                                   Financial Overview
  Company history                                                                        Net Revenue
           Established by leading electricity meter manufacturer Lingyang                      2008: US$725.4 million
            Electronics in August 2004, Solarfun Power is a leading global
            manufacturer of photovoltaic (PV) cells and modules                                By business segment:
                                                                                               – Photovoltaic modules:US$678 million
  Company Leadership                                                                          – Photovoltaic cells: US$37 million
           CEO: Dr. Sven M. Hansen, Chairman: Mr. Yonghua Lu, CFO: Ms. Amy                     – PV cells processing: US$0.4 million
            Liu                                                                                – Raw materials:US$10 million

  Company Ownership                                                                      Growth
           Listed on the Nasdaq Stock Market (NASDAQ: SOLF)                                    Net Revenue CAGR (2007-2008): 106.6%



 .
                           Business Overview                                                                  Shareholder Structure
  Primary Product and Service Lines                                                      Principal shareholders
           – Solarfun Power Holdings Co., Ltd., through its subsidiaries, engages               – Lingyang Electronics
             in the development, manufacture, and sale of photovoltaic (PV) cells               – Citigroup Venture Capital
             and PV modules                                                                     – Hony Capital
           – It offers monocrystalline and multicrystalline silicon cells and modules,          – Legend Capital
             monocrystalline ingots, and raw materials                                          – Good Energies
           – 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

Source:   Solarfun Power, Corporate Website.
                                                                                                                                       China Solar Energy Fact Book

                                                                                                                                                                      107
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                                                               Financial Overview
  Company history                                                                     Net Revenue
             Founded in 1998, Yingli, through its principal operating subsidiary in                                         By geographical segment:
                                                                                            2007: US$556.5 million                 –    Europe: US$520.2million
             China, Baoding Tianwei Yingli New Energy Resources Co., Ltd.,
             designs, manufactures and sells PV modules and designs,                                                               –    U.S.: US$5 million
                                                                                            By business segment:                   –    China: US$8.4 million
             assembles, sells and installs PV systems that are connected to                 – PV modules : US$550.5 million
             electricity transmission grids or those that operate on a stand-alone                                                 –    HK: US$14.2 million
                                                                                            – PV system: US$0.3 million            –    Others:US$ 8.7 million
             basis                                                                          – Other: US$5.7 million

  Company Leadership
           CEO: Mr. Liansheng Miao (also Chairman), CFO: Mr. Zongwei Li                Growth
                                                                                            Net Revenue CAGR (2006-2007): -66.1%
  Company Ownership
           Listed on the New York Stock Exchange
 .
                           Business Overview                                                              Shareholder Structure
  Primary Product and Service Lines                                                   Principal Shareholders
           – Yingli Green Energy Holding Company Limited and its subsidiaries                – Public shareholders
             engage in the design, development, marketing, manufacturing,                    – Financial investors and other Shareholders
             installation, and sale of photovoltaic (PV) products                            – Yingli Power Holding Company Limited (British Virgin Island)
           – 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
Source:   Yingli Green Energy, Corporate Website.
                                                                                                                                         China Solar Energy Fact Book

                                                                                                                                                                        108
Solar PV – competition – key players profile – PV cell and module manufacturer




Canadian Solar is a major manufacturer of solar components
                                                                          Canadian Solar
                             Company Profile                                                                   Financial Overview
  Company History                                                                        Net Revenue
           – Founded in Canada in 2001, Canadian Solar Inc. is a vertically-                   2008: US$303 million
             integrated manufacturer of silicon, ingots, wafers, cells, solar modules
             (panels) and custom-designed solar power applications                               By geographical segment:
                                                                                                        – Europe: US$287million
  Company Leadership                                                                                   – Asia: US$13 million
           – CEO: Shawn (Xiaohua) Qu (also Chairman), CFO: Arthur Chien                                 – US: US$3 million

  Company Ownership                                                                      Growth
           – Listed on the Nasdaq Stock Market (NASDAQ: CSIQ)                                  – Net Revenue CAGR (2007-2008): 344%




 .
                           Business Overview                                                                 Shareholder Structure
  Primary Product and Service Lines                                                      Principal Shareholders
           – Products include a range of standard solar modules built to general                – All directors and Executive Officers as a Group
             specifications for use in various residential, commercial, and industrial          – Columbia Wanger Asset Management, L.P
             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
Source:   Canadian solar, Corporate Website.
                                                                                                                                            China Solar Energy Fact Book

                                                                                                                                                                           109
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                                                                Financial Overview
  Company history                                                                     Revenue                                     By geographic segments:
             Founded in 2003 and based in Jiashan, China, the company is a                  – 2008: US$670.4 million                 – China: US$155 million
             leading manufacturer of wafers and one of the fastest growing                  – 2007: US$249.9 million                 – Rest of Asia: US$87million
             companies in the photovoltaic (PV) industry
                                                                                                                                     – U.S.: US$7 million
                                                                                            By business segment in 2007:             – Others:US$0.9 million
  Company Leadership                                                                       – Product Sales: US$231.2 million
             CEO: Xianshou Li, Chairman: Martin Bloom, CFO: Charles Xiaoshu                 – Processing Service: US$18.7 million
             Bai

  Company Ownership                                                                   Growth
           – Listed on the New York Stock Exchange (NYSE: SOL)                              – Net Revenue CAGR (2007-2008): 169.3%
           – Listed on the New York Stock Exchange (Ticker: SOLA.L)

 .
                           Business Overview                                                              Shareholder Structure
  Primary Product and Service Lines                                                   Principal Shareholders
           – ReneSola, Ltd., along with its subsidiaries, engages in the                     – Directors and Executive Officers
             development, manufacture, and sale of solar wafers and related                  – Ruixin Holdings LTD
             products in China                                                               – Yuncai Holdings LTD
           – 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


Source:   ReneSola, Ltd, Corporate Website.
                                                                                                                                          China Solar Energy Fact Book

                                                                                                                                                                         110
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                                                             Financial Overview
  Company history                                                                  Net Revenue
             Founded in 2002, Shenzhen Topray Solar Co., Ltd. is a manufacturer          2008: RMB 294.8 million
             of solar cells, solar panels, solar chargers, solar lights, solar
             gardening products and solar power systems                                  By business segment:
                                                                                         – Solar cells: RMB 17.5 million
                                                                                         – Solar power applications/solar power systems: RMB 11.8 million
  Company Leadership                                                                    – Others: RMB 29.3 million
             General Manager: Ms. Li Fenli, CFO: Ms. Zhang Hongying

  Company Ownership                                                                Growth
             Listed on the Shenzhen Stock Exchange (002218)                                   Net Revenue CAGR (2007-2008): 43.9%



 .
                          Business Overview                                                             Shareholder Structure
  Primary Products and Service Lines                                               Principal Shareholders
           – Over 95% of Shenzhen Topray Solar’s output is exported and its               – Public shareholders
             current annual production capacity is up to three megawatts, making          – Shenzhen AoXin Investment and Development Limited
             it one of the world's highest volume producers                               – Shenzhen He Rui Yuan Investment and Development Limited
           – 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


Source:   Shenzhen Topray Solar, Corporate Website.
                                                                                                                                    China Solar Energy Fact Book

                                                                                                                                                                   111
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

                                                                       Finished                    Distribution
       Materials                       Components                                                                                   End Use
                                                                       Products

Selected Companies:
                                     Boeing, Chicago, IL        Luz                          Sunray Energy               Southern California
                                     3M Co.                     Acciona                      Florida Power &              Edison
                                     Siemens                    Abengoa Solar                 Light                       Nevada Power Co.
                                     Luz/Solel                  Carrizo Energy               Acciona                     Sierra Pacific Power Co.
                                     Alanod                     BrightSource                 Arizona Public              Pacific Gas & Electric Co.
                                                                                               Abengoa Solar               Florida Power & Light
                                                                                               BrightSource                San Diego Gas & Electric


                          Status                                             Trends                                     Opportunities
   There has been a proliferation of new entrants up        The largest owners of wind power plants         Wind power plants invest in the CSP
    and down the value chain ranging from technology          globally are emerging as significant players     sector
    innovators looking to change the economics of             in the CSP sector
    CSP to investors and IPPs looking to gain first
    mover advantages by trying up sites



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           Building Integrated PV            Solar Thermal Water Heater
                 (CSP)                              (BIPV)                              (SWH)

   Xinjiang Sun Oasis                    Suntech Power Holdings Co.,    Ecoo Solar
   eSolar                                 Ltd.                           Hi-min Solar
   Edison                                Giant Vigo                     Linuo Paradigma Solar Engergy
   Acciona                               Johanna Solar Technology       Huayang Solar
   Abengoa                                GmbH
                                          Phoenix Solar AG




Source: Company websites; XYZ.
                                                                                          China Solar Energy Fact Book

                                                                                                                         113
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

                                                                                    114
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
 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
                              R&D             Capacity        Value chain    Application    R&D             Production    R&D             Production      Project
                                              expansion       consolidatio                                  facility                      facility        sourcing
    Use of Proceeds
                                                              n

                              US$5            US$30 million   US$100         Growing        US$5 million-   US$100        Early           Early           Early
                              million-10                      million-300    stage          10 million      million
  Funding Size/Stage
                              million                         million
                              Seek             Thin Film     Capitalized     BIPV tax      Improve        Achieve     Acquire          Connect        Out-
                              technology        Production    on vertical      and fiscal     efficiency      econo-      technology        with grid       bound
                              leadership in     capacity      integration      incentives    Reduce          mies of     /solution        Leverage       Gov’t
                              Thin Film         critical to                   Project        operation       scale                         scale           projects
      Opportunity                               success                        developer      costs          Project                      Turn key
                                               Turn key                                     Licensing       develop-                     OEM
                                                                                                              ment
                                                                                                             Tax and
                                                                                                              fiscal
                                                                                                              incentive
                              Renewable       China                          Renewable      Renewable                     Renew-
                              Energy Fund     Development                    Energy Fund    Energy Fund                   able
                Government
                                              Bank                                                                        Energy
 Funding                                                                                                                  Fund
 Source
                 Financial                    IPO                                                           CDH,
  Active
                                                                                                            Tsing, GS
Investors
                 Industrial   Suntech         LDK, Yingli     Suntech,                      Himin           Himin,        Himin
                                                              Yingli                                        Solar Rain



 Source: XYZ.
                                                                                                                                   China Solar Energy Fact Book

                                                                                                                                                                       116
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

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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.
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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
                                                                                                          System
                                                                                                          Intergration/
     Equipment          Silicon Feedstock              Ingots & Wafers   Solar Cells      Solar Modules   Installation/
                                                                                                          Services




                                                                              Thin Film




Source: Clean Tech Overview, Morgan Stanley, July 21, 2008, XYZ.
                                                                                                             China Solar Energy Fact Book

                                                                                                                                            119
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

                       Industry focus: Cleantech                                    Beijing Giant Hemu Technology          Tsing Capital is the first cleantech venture
                       Typical investment size: US$1 million-5 million              Beijing PowerU Technology Co., Ltd.     capital management firm in China
                                                                                     China Sunergy                          The company manages the China
                                                                                     Environmental Services Group            Environment Fund
                                                                                     Fujian Haiyuan Automatic Equipments    In September 2008, the company
                                                                                      Co., Ltd.                               invested in wind power equipment
    Tsing Capital                                                                    LDK Solar Co., Ltd.                     accessories manufacturer Wuxi Qiaolian
                                                                                     Shenzhen Dongjiang                      Wind Power Technology Co., Ltd.
                                                                                     ET Solar
                                                                                     Green Bio

                       SCGC is a balanced fund manager with an equal              Jinkosolar Holding Company Ltd.          SCGC is one of China’s largest PE firms
                        focus on expansion along with funding of early and         Shenzhen HJ Technology Co., Ltd.         SCGC is a state-controlled PE
                        seed stage companies                                       Kingsun Photoelectricity Co., Ltd.       Shareholders include the state-owned
                       Industry focus: Primarily hi-tech, but also service and    Beijing Shenwu Thermal Energy             Assets Supervision and Administration
                        logistics industries                                        Technology                                Commission of Shenzhen Municipal
                       Geographic focus: Shenzhen and Greater China               Mingyang Electric                         Government and other state-owned
  Shenzhen Capital                                                                 Jiangsu Highstar Battery                  entities
      Group                                                                         Manufacturing Co., Ltd .                 In October 2008, the company invested in
                                                                                                                              silicon wafer manufacturer Jinkosolar
      (SCGC)
                                                                                                                              Holding Company Ltd.

                       SCGC is a balanced fund manager with an equal                Trina Solar Ltd.                       The company invests in a limited number
                        focus on expansion along with funding of early and           China Bio Solutions Group Ltd.          of portfolio companies where it can
                        seed stage companies                                         VisionChina Media Inc.                  dedicate significant resources to each
                       Instead of focusing on any particular industry,              Focus Media Holding Ltd.                investment
                        Milestone Capital’s investment team looks for                Dehaier Medical Systems Ltd.           The company wants to play an active role
                        companies with sound financial and operating track           Kingsun Photoelectricity Co., Ltd.      and work closely with the management of
  Milestone Capital     records that have already established leading                                                         its portfolio companies
                        positions in their respective market segments
                       Typical investment size: US$ 10 million-100 million

Source:   XYZ.
                                                                                                                                       China Solar Energy Fact Book

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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

                      Industry focus: broader IT, sustainable growth          Goldwind Science & Technology Co.,    NewMargin currently has about US$520
                       technology, healthcare and high margin                   Ltd.                                   million under management
                       manufacturing                                           Zhenghe Bioenergy                     The company is seeking to invest in
                      Geographic focus: China                                 EcoGreen Fine Chemicals Group Ltd.     companies that will be future technology
                                                                               Shenzhen Dongjiang Environmental       leaders and dominate China’s economy
                                                                                Company Ltd.                           in the 21st century
                                                                                                                      The company is one of China's oldest
 NewMargin Venture
                                                                                                                       domestic venture capital companies


                      Deal size typically US$700,000-900,000                  Himin Solar Energy Group              Focuses on industries that have been
                      Industry focus: environmental protection,               Meihua Monosodium Glutamate Group      promoted by the Chinese government
                       pharmaceuticals, telecommunications, optical-            Co., Ltd.                             All investments require a rate of return
                       mechanical-electrical integration, new materials and    Meng Niu Dairy                         greater than 30% and yearly dividends
                       energy, etc.                                            Li Ning                                need to be greater than 16%
                      Geography: Beijing/Guangdong                            Focus Media                           Provides growth capital to companies that
   CDH Investment                                                              Sina                                   have strong business fundamentals,
                                                                               Air Media                              favourable growth prospects and viable
                                                                                                                       exits via listings or trade sales in 1-2
                                                                                                                       years

                      Industry focus: chemicals, energy, multimedia, high-    Goldwind Science & Technology Co.,    The company’s investment holding
                       tech, consumer products, and auto components             Ltd.                                   period is 2-5 years
                      Geographic focus: China                                 Yingli Solar                          The company’s two limited partners are
                                                                                                                       Tamasek Holdings Private Limited and
 New Horizon Fund
                                                                                                                       SBI Holdings Inc.
                      Typical investment size: US$ 3 million-10 million       Universtar Science & Technology       Although primarily an early to expansion
                      Investment focus: new energy and Greentech,             Zhong Hang (Baoding) Huiteng           stage investor in the consumer, media
                       technology, telecoms, healthcare, consumer               Windpower Equipment Co., Ltd.          and technology sectors, the company has
     TDF Capital      Geographic focus: Greater China                         Hefei Sungrow Power Supply Ltd.        also begun investing in the new energy
                                                                                                                       and greentech industries

Source:   XYZ.
                                                                                                                               China Solar Energy Fact Book

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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
                      Industry focus: Clean technology, media and            LP Amina                      The company has origins and expertise in
                       Internet information, technology, healthcare, and                                      making IT-related investments
                       consumer and retail                                                                   Although the company has made only one
                      Geographic focus: China                                                                cleantech investment thus far, it views the
   Qiming Venture
                                                                                                              industry as having strong potential
      Partners
                                                                                                             Over US$500 million under management

                      Industry focus: Semiconductors, Internet, wireless,    LatticePower Corporation      The company’s expertise is in Internet and
                       new media and green technology                         Sierra Solar Power             telecommunications sector investment
                      Geographic focus: China                                Sinowyde Energy               However, the company has been broadening
                                                                               Technologies Corporation       its focus to invest in greentech
                                                                              Times Energy Corporation      In January 2009, the company announced that
                                                                                                              it had raised US$ 383million for a new fund to
    GSR Ventures                                                                                              focus on investing in Chinese technology
                                                                                                              companies

                      Deal size generally ranges from US$50 million -$5      Coskata Inc.                  In mid-2008, Blackstone Group formed
                       billion                                                Sithe Global Power             Blackstone Cleantech Venture Partners
                      Industry focus: Cleantech, manufacturing,                                              indicating Blackstone Group’s growing focus
                       chemicals, transportation, communications,                                             towards cleantech investment
                       insurance, lodging, entertainment                                                     Also in mid 2008, Blackstone Group
  Blackstone Group
                      Geographic focus: U.S., Europe and Asia -Pacific                                       announced a partnership with Windland
                                                                                                              Energieerzeugungs GmbH to develop and
                                                                                                              construct a 400MW offshore wind farm in
                                                                                                              Germany

                      Industry focus: diversified including                    Jing-Jin Electric           Draper Fisher Jurvetson has been investing in
                       energy/greentech, life sciences, consumer apps,          Prudent Energy               cleantech since 2001
                       media, enterprise applications, hardware, mobile,        Nottingham International    In 2007, the company was involved in 11
                       and nanotechnology                                       SolarCity                    cleantech deals with a total investment of over
    Draper Fisher
                      Geographic focus: Mainly U.S., Canada, China, and        GreenFuel Technologies       US$40 million
     Jurvetson
                       India                                                    BioFuelBox


Source:   XYZ.
                                                                                                                                China Solar Energy Fact Book

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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

                    Deal size range from US$10million-$1billion            Conergy Wind GmbH             PwC is the PE fund’s tax advisor
                    Industry focus: financial services, healthcare,        Competitive Power Ventures    Invested more than US$29 billion in more than
                     consumer and industrial, media and business             Holdings                       600 companies in 30 countries around the world
                     services, information and communication technology,                                   Has been in Asia for more than a decade and has
                     energy and real estate                                                                 invested more than US$2 billion in the region
                    Geographic: Global                                                                    As a foreign PE house, it prefers to invest in
                                                                                                            companies with a high return (usually above 20%
 Warburg Pincus                                                                                             to 30%) in short term (usually three years) and a
                                                                                                            clear path to exit (i.e., through IPO)

                    Intel's global investment organization makes equity    Trony Solar Holdings Co.,     In April 2008, Intel established the US$500 million
                     investments in innovative technology start-ups and      Ltd.                           Intel Capital China Technology Fund II
                     companies worldwide                                    NP Holdings Ltd.              In Oct. 2008, the company made its first
                    Industry focus: cleantech, information technology,                                     investment in China’s cleanteach industry by
                     semiconductor manufacturing                                                            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
   Intel Capital
                                                                                                            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

                    Industry focus: any                                    Biomax Environment            In Dec. 2008, the company’s Managing Director
                    Geographic focus: China and Asia                        Holdings Ltd.                  Adrian Cheng said the company is seeking to
                    Other investment criteria: companies are 1-3 years     Renhe Commercial Holdings      explore investments in the alternative energy
                     old before their listing                                Co., Ltd.                      territory
                                                                                                           Based in Hong Kong, the company is a wholly-
   New World
                                                                                                            owned subsidiary and the strategic investment
    Strategic
                                                                                                            arm of conglomerate New World Group
 Investment Ltd

Source:   XYZ.
                                                                                                                               China Solar Energy Fact Book

                                                                                                                                                                  123
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                              Project                          Integrated Power
                                                 Model                               Developer                             Company
                                   Business Model
What the                            Sell equipment and license           Developer of solar projects              Develop projects and establish
                                     technology to developers of solar    Provides revenue and profits through      the company as an integrated
Market Needs                         projects                              a developer fee, service and O&M          energy concern
                                    Provides revenue and profits in a     contracts, and associated tax credits    Provides revenue and profits
                                     similar way to manufacturing of       or incentives                             through the sale of electricity to
Best of breed                       industrial equipment                                                            power and utility entities and
                                    Use technology as a “currency” to                                               through any associated tax credit
technologies              F          invest in solar projects                                                        or fiscal incentives

                          U        Funding Sources
                          N           Venture Capital                      Provincial/Municipal/Government        Utility company Joint Venture
Development              D           Private Equity                       Growing stage venture funds            Private equity funds
                                      IPO                                  Private equity funding                 IPO
and operation             I           China Renewable Energy Fund          Project Financing
of projects               G                                                 IPO

                                   Risks
                                    Strong balance sheet requirement     Strong balance sheet requirements        Greatest level of business risk
                                     to offer O&M contracts               Sell-down timing uncertainty             Least diversified revenue stream
                                    Least overall business risk
                                    Potential for sales to be less

                                                                                                                            China Solar Energy Fact Book

                                                                                                                                                           124

				
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