Paris, june 20th, 2012Introduction

Marie-Ange Verdickt

Research Manager and SRI, Financière de l’Echiquier

Alastair GIFFIN,

President club Energy Insead

Confidential

President club Energy Insead

Jean-Christophe PRUVOST,

V-President club Sustainable & Business Insead

Are pleased to welcome Amaury KORNILOFF,

Founder of Solaire Direct

About : About : About : About : doesdoesdoesdoes the the the the photovoltaicphotovoltaicphotovoltaicphotovoltaic technolologytechnolologytechnolologytechnolology stillstillstillstill have a future ? have a future ? have a future ? have a future ?

ConfidentialConfidential

Solar power generation: beyond feed in tariffs

INSEAD Alumni association ConferenceJune 20 th, 2012

Solairedirect at a glance

Key figures

N°°°°1 solar power operator in France with ~120 MW of installed capacity (2011)

Created in 2006 / now 300 employees worldwide

Revenues of € 213 m in 2011

€500m raised in financing since 2007 (including €200m in 2011)

Activities

Solairedirect’s principal activity is to develop, finance, build and operate solar parks and rooftops through SPVs in which it ultimately retains a minority stake (usually less than 20%) showing Solairedirect’s long term commitment

4Confidential

Markets

StrategyBecome the first solar engineering company / power generator to develop competitive solar power through market-priced Power Purchase Agreemen ts (PPA) and integrate widely solar power in local energy mix.

20%) showing Solairedirect’s long term commitment

Solairedirect’s objective in the long-term is to sell solar electricity

Utility-scale installations: ground-mounted solar parks

Energy positive building: professional and residential rooftop installations

Solairedirect’s shareholding structure

Shareholding structure Shareholding structure

Several rounds of capital raising completed in the past:

� 1st round: €6m raised in March 2007

� 2nd round: €20m raised in November 2008

A range of investor profiles with different investmentstrategies demonstrating Solairedirect’s attractivity:

Vernier Participations(Macif, UMR and AGPM)

6.3%

Avenir Sol (OFI Group)1.2%

Founders18.9%

Aster Capital

5Confidential

Shareholders’ involvement enabling access to industrialpartners (Schneider Electric), local authorities (CDC) andclients (mutual insurance companies)

� VCs, mutual insurance companies, industrials

___________________________Notes: *o/w FIP Expansion I, II & III: 9.7%

**o/w Smart Energy: 2.95%

Demeter24.5%

Techfund*24.3%

Aster Capital(Schneider Electric

Ventures)17.3%

Solairedirect a worldwide company operating on 4 con tinents

6Confidential

PolysiliconWafer

& CellsModules&Systems

Project Development Financing EPC O&M Sale of

energy

An integrated business model geared for grid parity transition

� Vertical integration allowing cost optimization and returns along the value chain: products, designs, installs and operates PV structures

Upstream Downstream

Solar energy value chain

7Confidential

Sale of energy

� Grid parity environment and PPA model means a change in the final client

Grid parity (PPA)Feed in-tariff

StatePower utilities

Industries

Municipalities

Solairedirect: a differentiating business model bas ed on key competitive advantages

Integratedbusiness model

Lower EPC cost

Optimal reliability and

Best-in-class systems cost

competitiveness

8Confidential

Non-recoursefinancing model

Optimal reliability and bankability

Reduced risk

Service-orientedapproach

Low-cost financing(low WACC)

More value for the kWh

Solairedirect a Worldwide proven model

Solairedirect leads the National Solar Mission bidd ing process in India and shows the way to grid paritySolairedirect was selected on December 2nd by the Government of India as the best bidder in the second round of bidding for the National Solar Mission with a rate of 7.49 Rs/kWh (109 €/MWh) for a 5 MW project in Rajasthan

Solairedirect launched the first solar PPA in Europe at mark et-based pricesEster is a pioneering scheme, the first market-based solar PPA in Europe,featuring an extremely competitive pricing mechanism, bringing together a localgovernment and industry players.F

RA

NC

EIN

DIA

9Confidential

Solairedirect and mining industrySolairedirect signed the first spot market based Purchase Agreement’s(PPA) towards to the Mining Industry.

7.49 Rs/kWh (109 €/MWh) for a 5 MW project in Rajasthan

IND

IAS

OU

TH

ER

N

AF

RIC

A

Solairedirect won preferred bidder status for two South African solar projects for a total of 18 MWSolairedirect SA was successful in the bids to develop solar photovoltaicprojects at Aurora and Vredendal with a contracted output of 9.0 MW and 8.8MW respectively. This bid is part of he second phase of government’sRenewable Energy Independent Power Producer Programme (REIPPP)

A track record of 6 years of operating & industrial excellence

10Confidential

Why solar power changes it all – in 6 points

1. A ressource that is bigger than any else

(1 day = 100% of all worldwide oil

reserves), more than 38 000 billion tonnes

of silicium…

3. The only electronical energy (non

mechanical) , with open technologies and

a Moore law with increasing efficiency

since 1970.

2. The only energy that exists in large

quantities everywhere in the world,

without significant advantage for any

specific country.

11Confidential

-

5 000

10 000

15 000

20 000

25 000

30 000

1981 1985 1990 1995 2000 2005 2010

-

2

4

6

8

10

12

14

16

18

1981 1985 1990 1995 2000 2005 2010

of silicium… since 1970.

4. A logarithmic decrease of costs (-10% per

year since 1980), despite of cycles and an

ultra-commoditized industry.

specific country.

5. An exponantial volume increase (+43%

per year since 1980, with no decreasing

year) thanks to an endless race for new

and cheaper investments.

6. One of the cheapest power in the

world…from 2014, with competitivity

advantage wich will keep on growing till

2025 at least

Module average price (in $/W, source:

Goldman Sachs)

Worldwide annual installations (in MW,

source: EPIA)

Energy source Generation costs (new generation only,

best-in class players)

Solar PV (Solairedirect) 100/120 €/MWh (2012)

65/80 €/MWh (2014)

CSP 140/250 €/MWh

Onshore wind 55/90 €/MWh

Offshore wind 120/200 €/MWh

Mini hydro 80/120 €/MWh

Biomass 100/150 €/MWh

Fuel (DG) 120/200 €/MWh

Coal (imported) 70/90 €/MWh

Nuclear (EPR) 70/90 €/MWh

Gas (exc. shale) 70/90 €/MWh

ConfidentialConfidential

ConfidentialConfidential

• Long term power purchase agreement for the sale of solar power at market prices to the regional energy companies

• Financing is contributed by both public and private sources

Shareholders:

Public (Region

etc.) and

Private

(Solairedirect

etc.)

ESTER (SEML)

Public local

authority

Controls

Ester

Capital

2

1

2 Other investors in equity

(market operators;

The new distributed utility paradigm: introducing E ster

14Confidential

• Smart grid and demand response services to accommodate large quantities of solar into the grid

• Establishment of manufacturing facilities to supply the solar projects (local content approach)

• Creation of a SEML (public-private company) withthe aim of empowering the community, carryingout the regional ambitions in solar power andinvesting in SPVs

SPV 1 SPV 2 SPV 3 …

Subscribers ,

CDC, institutional

investors

etc.

Banks

Investment politic in

capital

Pro

ject

fin

an

cin

g

Off taker

(Market operators,

suppliers etc.)

Off taker …

Equity or Bonds

PPA

Regional

industrial

project

(upstream)

Mo

du

les

1

3

3

(market operators;

institutional etc…

The commodity trap, a dead end for most existing so lar players

� The commodity trap in PV mirrors that of other commoditized electronic products, such as DRM and flat panel displays (Darwinian selection pro cess out of which just a handful of companies survive)

� The “ smile curve” offers an accurate description of the commodity tra p. No differentiation –and sustainable margins – can be expected except in the very upstream part of the value chain (polysilicon) and in the very downstream – pow er generation

15Confidential

Power

generation

Commodity trap

Assessing the capacity of existing solar players to mutate into the world of competitive solar

� The crystalline cell/module manufacturers are being severely threatened: the new entrant premium keeps putting pressure on prices. The weake st players (with higher costs, excess debt or insufficient financial backing) are going o ut of business,. Over time this part of the value chain only promises meagre margins to the very best players

� The thin film module manufacturers are seeing their competitive advantage vanish while efficiencies remain significantly lower than crysta lline silicon. Most of them are unlikely to survive

16Confidential

� The downstream value chain (distributors, developer s, EPC contractors and installers) is destabilized by the much lower feed-in tariffs (pre ssures on the margins, inventory write-offs). The advent of the post feed-in tariff, PPA-d riven model is bound to eliminate most small-size players, as two key factors will emerge: (i) t he ability to inspire trust to off-takers as part of long term contracts and (ii) the capacity to rai se project debt and equity in an increasingly strained financial environment

The 4 key drivers in the business of competitive so lar power

1. Ability to contract PPAs

2. Privileged

relationships with local

public and private

stakeholders, and access to

prime locations (land and

rooftop) and grid connections.

local content a privileged tool

3. Best-in-class EPC costings,

with a permanent view to minimize

17Confidential

1. Ability to contract PPAs generating the highest value through

value-added (smart) grid services and

financial engineering, and helping the

off-takers reap all the advantage of

competitive solar power

with a permanent view to minimize

module, BOS, development and other

costs, preferably through some form

of vertical integration with one or

several of the most competitive

upstream players

4. Access to abundant,

lowest cost capital thanks

to risk control that equates

solar projects with bond-like

annuities

A likely new solar Business model

� The two solar paradoxes: (i) most solar companies go out of business at the very same time solar is becoming competitive, and (ii) the resulti ng concentration seems at odds with the distributed nature of solar power generation (cf. J eremy Rifkin’s “peer-to-peer” vision of the so-called energy democracy)

� The ongoing paradigm change is indeed likely to ush er the age of new solar Business model:

1. Who can underwrite GWs of PPAs for maturities of up to 30 years and beyond?

2. Who can inspire the trust of governments and key local stakeholders to establish long term public/private partnerships, and develop the sufficient clout with governments to influence

18Confidential

public/private partnerships, and develop the sufficient clout with governments to influence planning, construction, infrastructure and energy regulation?

3. Who can develop GWs of projects on the ground and on rooftops over the long term?

4. Who can integrate the manufacturing value chain and sustain cost leadership?

5. Who can inspire trust to pension funds and the like to raise billions of euros with the lo west IRRs?

6. Who can develop the mass marketing of solar-based power?

7. Who can develop the smart grid platforms and aggregate millions of intermittent sources of energy?

Confidential