ASIA & PACIFIC PV MARKET OUTLOOK

Solar Asset Management Asia24 – 25 June 2015, Tokyo Conference Centre Ariake, Tokyo

Takehiro Kawahara

24 June 2015

1

Note: A conservative and optimistic forecast has been developed for each country. It is unlikely that all countries will comein at the conservative or optimistic end, so for the global forecast, conservative is (sum of conservative country forecasts + 25%*(sum of optimistic – conservative forecasts). Global optimistic forecast is sum of conservative country forecasts + 75%*(sum of optimistic – conservative forecasts). Source: Bloomberg New Energy Finance

PV NEW BUILD BY YEAR, HISTORICAL AND FORECAST TO 2017 (CONSERVATIVE)

6.6GW 7.7GW

18.2GW

28.5GW30.7GW

40.0GW45.0GW

55.5GW61.0GW 61.3GW

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Western Europe Eastern Europe Japan USA China India Rest of World

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H1 2015 LCOE ($/MWH) – APAC – COUNTRY RANGESUTILITY-SCALE PV (NO TRACKING)

0 50 100 150 200 250 300 350 400

AustraliaChinaIndia

MalaysiaThailand

PhilippinesIndonesia

VietnamJapan

LCOE range H1 2015 H2 2014

Source: Bloomberg New Energy Finance, Maycock, Battery University, MIIT

24 June 2015

3

Note: Prices are in real (2014) USD. Source: Bloomberg New Energy Finance, Maycock, Battery University, MIIT

SOLAR PV EXPERIENCE CURVE

1988

1976

19982004

2014

2008

m=24.3%

0.1

1

10

100

1 10 100 1,000 10,000 100,000 1,000,000 10,000,000

His

toric

al p

rice

(US

D/W

)

Cumulative production (MW)

Crystalline Si PV module

Solar PV module experience curve: 24% cost reduction for every doubling of capacity

24 June 2015

4

CONTENTS

Australia

China

Southeast Asia: Thailand, The Philippines

24 June 2015

AUSTRALIA

6

Source: Solarchoice, BSW-Solar, METI, California Solar Initiative, Bloomberg New Energy Finance

PUBLIC BENCHMARKS OF RESIDENTIAL PV SYSTEM CAPEX, USD/W (DC)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Q12008

Q32008

Q12009

Q32009

Q12010

Q32010

Q12011

Q32011

Q12012

Q32012

Q12013

Q32013

Q12014

Q32014

Germany California Japan Chinese multi module Australia (3kW)

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Structural demand changes in Australia Total small PV systems in Australia

100 TWh

150 TWh

200 TWh

250 TWh

06 08 10 12 14 16 18 20

Historical

20102011

20122013

2014

Australia National Electricity Market demand forecasts, 2010 – 2014

0.0m

0.2m

0.4m

0.6m

0.8m

1.0m

1.2m

1.4m

1.6m

0k

50k

100k

150k

200k

250k

300k

350k

400k

06 07 08 09 10 11 12 13 14

Australia now has nearly 1.4 million small PV systems on the grid

Source: Bloomberg New Energy Finance Source: Bloomberg New Energy Finance

Annual Cumulative

STRUCTURAL POWER DEMAND CHANGES IN LINE WITH PENETRATION OF SMALL PV SYSTEMS

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FORECAST PV SYSTEM CONNECTIONS IN AUSTRALIA, 2014-30

Source: Bloomberg New Energy Finance

CAPACITY ADDITIONS BY SECTORANNUAL (MW) CUMULATIVE (GW)

CONNECTIONS BY SECTORANNUAL (THOUSAND) CUMULATIVE (MILLION)

0

1

2

3

4

5

6

0

50

100

150

200

250

300

2014 2016 2018 2020 2022 2024 2026 2028 2030

Commercial annual Residential annual

Residential cumulative Commercial cumulative

0

4

8

12

16

20

0

300

600

900

1,200

1,500

2014 2016 2018 2020 2022 2024 2026 2028 2030

Commercial annual Residential annual

Residential cumulative Commercial cumulative

24 June 2015

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Source: Bloomberg New Energy Finance

FORECAST RESIDENTIAL PV MARKET PENETRATION IN AUSTRALIA (% OF NATURAL BUILDING STOCK)

13%

7%

25%30%

9% 10%

18%

33%

40%44%

53%

24% 22%

41%

59%64%

55%

70%

52%

44%

56%

0%

10%

20%

30%

40%

50%

60%

70%

80%

NSW NT QLD SA TAS VIC WA

2013

2020

2030

24 June 2015

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Note: Prices are in real (2014) USD Source: Bloomberg New Energy Finance, Maycock, Battery University, MIIT

LITHIUM-ION EV BATTERY EXPERIENCE CURVECOMPARED WITH SOLAR PV EXPERIENCE CURVE

1988

1976

19982004

2014

2008

2010

H1 2014

m=21.6%

m=24.3%

0.1

1

10

100

1 10 100 1,000 10,000 100,000 1,000,000 10,000,000

His

toric

al p

rice

(US

D/W

, US

D/W

h)

Cumulative production (MW, MWh)

Crystalline Si PV module

Li-ion EV battery pack

24 June 2015

11

AUSTRALIA SUMMARY

● PV system price dropped after subsidy cuts. It resulted in significant penetration of small-scale PV systems in the country.

● Electricity demand pattern has been changing due to penetration of residential PV.

● The energy storage system prices will likely go down further, however, a PV system without energy storage will remain a home owners cheapest energy source until the late 2020’s.

24 June 2015

CHINA

13

Source: National Energy Administration, Bloomberg New Energy Finance

CHINA’S 2015 QUOTA FOR PV, BY PROVINCE

Province 2015 quota (MW) Including quota for ‘PV for Poverty Reduction’ (MW)1 Hebei 1,200 3002 Shanxi 650 2003 Inner Mongolia 8004 Liaoning 3005 Jilin 3006 Heilongjiang 3007 Jiangsu 1,0008 Zhejiang 1,0009 Anhui 1,000 40010 Fujian 40011 Jiangxi 60012 Shandong 80013 Henan 60014 Hubei 50015 Hunan 40016 Guangdong 90017 Guangxi 35018 Hainan 20019 Sichuan 60020 Guizhou 20021 Yunnan 60022 Shaanxi 80023 Gansu 500 25024 Qinghai 1,000 15025 Ningxia 1,000 200

26Xinjiang 1,300

Xinjiang Bintuan 500

Total 17,800 1,500

Note: The quota can be applied to either a transmission-grid-connected PV project or a distribution-grid-connected project. Beijing, Tianjin, Shanghai, Chongqing and Tibet are not limited by quota, provided that curtailment does not occur.

24 June 2015

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Source: National Energy Administration, Bloomberg New Energy Finance

GOVERNMENT-SUGGESTED BUSINESS MODELS FOR ‘PV FOR POVERTY REDUCTION’ PROGRAMME

Type of PV

Central government funds (% of capex)

Local government funds (% of capex)

Zero-interest bank loans (% of capex)

Tenor of bank loans (years)

Income to the poor (% of power sale profit)

Rooftop PV 35% 35% up to 30%

5 up to 100%

PV mounted on barren hills/lands

20% 20% up to 60%

10 up to 50%

PV mounted on agricultural facilities (e.g. greenhouses)

35% 35% up to 30%

5 up to 100%

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Source: Bloomberg New Energy Finance

CHINA PV DEMAND FORECAST, 2010-17E(CONSERVATIVE SCENARIO, GW)

0.4 2.1 2.0

12.1 10.9 11.0 10.0 9.0 0.1 0.5 1.6

0.8 2.1 5.0 7.5 10.3

0.5 2.6 3.6

12.9 13.0

16.0 17.5

19.3

2010 2011 2012 2013 2014 2015e 2016e 2017e

transmission-grid-connected distribution-grid-connected

420% 38% 258% 1% 23% 10%9%

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Note: BNEF Desktop data as of 19 March 2015. Source: Bloomberg New Energy Finance Source: Bloomberg New Energy Finance

TOP 10 SOLAR DEVELOPERS IN CHINA IN TERMS OF INSTALLED CAPACITY (MARKET SHARE IN %)

13.1

3.6

3.4

3.3

3.3

2.8

2.6

2.2

2.1

1.8

China Power Investment

CECEP

China Three Gorges

China Guodian

China Huadian

GCL-Poly Energy

Chint Solar

China General Nuclear Power

Jiangsu Akcome

Shunfeng Photovoltaic Four private-sector developers; top 10

totals 38% of the 31GW national fleet

24 June 2015

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CHINA SUMMARY

● China’s PV demand will grow to 16-19GW in 2015, which is mainly driven by the 17.8GW quota allocated by National Energy Administration. This is neither a target nor a cap.

● The four private solar developers within the top 10 were from the solar manufacturing industry, but they plan to become “long-term clean energy developers and operators”.

● The advantage to the developer of spinning off projects into a yieldco is to release capital that can be used to develop or build more projects.

24 June 2015

THAILAND

19

Source: Bloomberg New Energy Finance. ERC of Thailand.

THAILAND’S SOLAR FIT QUOTA FOR 2015-16

Project type Capacity (MW) Commissioning deadline

Utility-scale 1,014 December 2015

Community (<=5MW) 800 June 2016

Rooftop (commercial & industrial) 130 June 2015

Rooftop (residential) 100 December 2015

24 June 2015

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UTILITY-SCALE PROJECTS REGISTERED WITH ERCBY STATUS

Note: solar projects are under the new FiT regime, whereas wind and other projects are still under the ‘adder’ programme. FiTs for wind, biomass and small hydro were introduced but not implemented. Source: Bloomberg New Energy Finance. ERC of Thailand’s online database.

UTILITY-SCALE PROJECTS REGISTERED WITH ERC BY STATUS AS OF JUN 2014, MW

UTILITY-SCALE PROJECTS REGISTERED WITH ERC BY STATUS AS OF APR 2015, MW

361 666 1,300

1,066 179

1,144

594 347

16 0

500

1,000

1,500

2,000

2,500

3,000

Solar Wind Biomass Small hydroApplication not approvedApproved but PPA not signedPPA signed

10

977 746

545 241

1,028

193 1,061

16 0

500

1,000

1,500

2,000

2,500

3,000

Solar Wind Biomass Small hydroApplication not approvedApproved but PPA not signedPPA signed

24 June 2015

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Source: Bloomberg New Energy Finance. National Energy Policy Commission of Thailand.

THAILAND’S FITS FOR DISTRIBUTED SOLAR

Note: THB/USD exchange rate = 0.30 on 20 April 2015.

Rooftop FiT rate Quota (MW)

Community ground-mounted

(<=5MW/project)

FiT rate Quota (MW)

Baht/kWh $/kWh

Baht/kWh $/kWh

0-10kW 6.96 0.21 100 1-3 year 9.75 0.30 800

10-250kW 6.55 0.20 130 4-10 year 6.50 0.20

250kW-1MW 6.16 0.18 11-25 year 4.50 0.14

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FiT (Bhat/kWh) FiT ($/kWh) Duration (years)

FiT premium for southern provinces*

2015-2016 2017Post-2017 2015-2016 2017

Post-2017 THB/kWh $/kWh

5.66 0.17 25 0.5 0.015

Source: Thai Royal Government, Bloomberg New Energy Finance.

THAILAND’S FITS FOR UTILITY-SCALE SOLAR PROJECTS

Note: USD/THB=0.03 on 20 April 2015. *Three southern border provinces and four districts of Songkhla province are offered FiT premium.

24 June 2015

THE PHILIPPINES

24

TOTAL RENEWABLE PROJECTS UNDER FIT SYSTEM, MW

Note: ‘under DOE consideration’ category includes both ‘commerciality declared’ and ‘enrolled in FiT system’ categories. ‘Commerciality declared’ is a step before receiving approval for FiT. ‘Enrolled in FiT system’ is the first step in the FiTapplication process.

Source: Bloomberg New Energy Finance. DOE of the Philippines. Data as of January 2015.

TOTAL RENEWABLE PROJECTS UNDER FITSYSTEM, MW

TOTAL RENEWABLE PROJECTS UNDER FITSYSTEM BY SECTOR AND STATUS, MW

FiT allocated

306

Commerciality

declared 1,220

Enrolled in FiT system

188

Total 1,741MW

0

250

500

750

1,000

Wind Solar Smallhydro

Biomass

Under DOEconsideration

FiT allocated

FiT quotaProposed FiT quota

24 June 2015

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Project name Developer FiT Status

Capacity (MW)

Pre-construction

Construction progress

Inter-connection

San Carlos 1 San Carlos Granted 22 100% 100% 100%Cavite Economic Zone Solar

Majestics Energy Corp

CCC, subject to FiT capacity

target

41.3 100% 100% 100%

SM North Solar Solar Philippines Commercial

Rooftop Projects, Inc

CCC, subject to FiT capacity

target

1.5 80% 100% 0%

Pampanga Raslag CCC 10 85% 80% 100%Burgos Solar EDC CCC 4.1 100% 10% 10%Leyte Phil Solar Farm-

LeyteCCC 30 80% 35% 10%

Macabud ATN CCC 30 85% 0% 0%Miag-ao Cosmo Solar

EnergyCCC 5.67 80% 5% 0%

San Carlos 2 San Carlos CCC 23 80% 0% 0%Cadiz Solar Phil-Power Solar

EnergyCCC 100 80% 0% 0%

Digos Enfinite CCC 10 0% 0% 0%

Bloomberg New Energy Finance, Department of Energy of the Philippines.

SOLAR PROJECTS UNDER THE FILIPINO FIT SYSTEM AS OF JANUARY 2015

Note: data as of January 2015.Note: ‘CCC’ stands for confirmation for commerciality. For the FiT approving process read Analyst Reaction Philippines FiT: 'first-commission-first serve'? in June 2013.

24 June 2015

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COMMISSIONED RENEWABLE CAPACITY, FOUR-QUARTER ROLLING TOTAL, GW

Source: Bloomberg New Energy Finance. Source: Bloomberg New Energy Finance.

RENEWABLE CAPACITY COMMISSIONED BY COUNTRY

RENEWABLE CAPACITY COMMISSIONED BY SECTOR

GW GW

00.10.20.30.40.50.60.70.8

4Q 'Mar2010

4Q 'Mar2011

4Q 'Mar2012

4Q 'Mar2013

4Q 'Mar2014

4Q 'Mar2015

Philippines Thailand Malaysia Indonesia Vietnam

0.32

0.76

0.360.44 0.42

0.68

00.10.20.30.40.50.60.70.8

4Q 'Mar2010

4Q 'Mar2011

4Q 'Mar2012

4Q 'Mar2013

4Q 'Mar2014

4Q 'Mar2015

Wind Solar Geothermal Biomass & Waste Small hydro

0.32

0.76

0.360.44 0.42

0.68

24 June 2015

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UTILITY-SCALE PROJECT PIPELINE IN SOUTHEAST ASIA, GW

Source: Bloomberg New Energy Finance. DEDE of Thailand, DOE of the Philippines, SEDA of Malaysia.

UTILITY-SCALE PROJECT PIPELINE BY COUNTRY IN SE ASIA (GW)

UTILITY-SCALE PROJECT PIPELINE BY SECTOR IN SE ASIA (GW)

0

2

4

6

8

10

Small hydro Wind Solar Biomass Geothermal

Philippines Thailand Indonesia Malaysia Vietnam

Total 16.6GW

0

2

4

6

8

10

Philippines Thailand Indonesia Malaysia Vietnam

Wind Small hydro Solar Biomass Geothermal

Total 16.6GW

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INCREMENTAL INSTALLATION FORECAST 2015E-20E

Source: Bloomberg New Energy Finance. Source: Bloomberg New Energy Finance.

BY COUNTRY BY SECTOR

0.8 1.1 1.3 1.4 1.5 1.50.4

0.5 0.6 0.6 0.7 0.8

0.1

0.3 0.3

0.4 0.4 0.6

0.1

0.2 0.2

0.2 0.2 0.2

0.2

0.1 0.2

0.2 0.2 0.3

0

1

2

3

4

2015e 2016e 2017e 2018e 2019e 2020e

Vietnam

Malaysia

Indonesia

Philippines

Thailand

Total15.3GW

0.8 0.8 0.9 1.0 1.1 1.10.3

0.6 0.6 0.7 0.8 0.8 0.4

0.5 0.6 0.6 0.6 0.7

0.2 0.2

0.3 0.3 0.5

0.1

0.1 0.2

0.2 0.2 0.2

0

1

2

3

4

2015e 2016e 2017e 2018e 2019e 2020e

Small hydro

Geothermal

Biomass &WasteWind

Solar

Total15.3GW

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THAILAND/PHILIPPINES SUMMARY

● In Thailand, all developers of the 1,014MW originally applied under the old ‘adder’ regime were allowed to transit to a new FiT regime, but are required to commission their projects in one year.

● The Philippines has approved an additional solar FiT quota of 450MW under a new FiT rate of PHP 8.69/kWh ($0.2/kWh)

● A total of 15.3GW of new renewable capacity will be developed during 2015-20 across SE Asia, with Thailand leading the way.

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SUMMARY

The world largest market

China’s long-term PV market is bright. The advantage to the developer of spinning off projects into a yieldco is to release capital that can be used to develop or build more projects.

New emerging markets

Thailand and the Philippines have some positive policy changes, which will drive future capacity build.

distributed PV

penetration

In Australia, electricity demand pattern has been changing due to penetration of residential PV. This has happened in Germany and California, and it will likely to happen in other markets such as Japan.

24 June 2015

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COPYRIGHT AND DISCLAIMER

24 June 2015

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