Finance Keynote Address

Transcription

1 Finance Keynote Address Michael Whalen, CFO SolarReserve 28 th Global Power Markets Conference Las Vegas, NV April 2013

2 Forward-Looking Statements Please note the following cautionary language regarding all forwardlooking statements in this presentation. Caution must be exercised in relying on forward-looking statements. Due to known and unknown risks, actual results may differ materially from expectations or projections. Information set forth in this presentation contains financial estimates, projections and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. Please consult relevant filings with the Securities and Exchange Commission, if and when submitted, or any other relevant regulatory authority to review factors affecting SolarReserve s future results. SolarReserve disclaims any obligation to update or revise statements contained in this presentation based on new information or otherwise.

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4 A Nickel s Worth Renewable Energy: You ve Come a Long Way, Baby Renewable Energy is Evolving to Meet Market Demands Policy Challenges Abound in Established Markets The Pivot to Growth Market Opportunities A Call to Action

5 You ve come a long way, baby

6 The Indispensable Market Globally Wind 44.7 GW in new capacity in 2012, estimated $74 billion of new capex Solar 30.0 GW in new capacity in 2012, estimated $80 billion of new capex Biofuels 31.4 billion gallons of ethanol and biodiesel produced in 2012, up from 27.9 billion gallons in 2011 United States Approx. 55% of MW additions to the US power fleet in 2012 were renewable energy generation sources Europe Renewable sources were >31 GW of 44.6 GW of generation capacity added in EU in 2012; approx. 70% of all new capacity for second consecutive year New solar PV was 37% of this new capacity in 2012

7 Global Investment in Key Renewable Sectors US$ billions Solar PV Wind Biofuels Source: Clean Edge

8 US Solar PV Installations 2003 to MW (DC) Residential Commercial Utility Source: GTM Research

9 Solar Outlook for the United States GTM Research forecasts that the industry will maintain its sustained growth, as an additional 4,300 MW of solar PV to be installed in % increase over 2012 Utility segment in 2013 only 31% y-o-y versus 134% y-o-y in 2012 Longer term, 38% CAGR from 2013 to 2016 Sustainable growth 82% CAGR from 2009 to 2012 Increased distributed generation volumes ITC rush for 2016 in-service deadline

10 Prices for PV Continued Its Descent in 2012 Component Price ($/W) Q12 2Q12 3Q12 4Q Wafer ($/W) Cell ($/W) Module ($/W) PolySi ($/kg) PolySilicon Price ($/kg) Source: GTM Research

11 Large CSP Additions Online in 2013 and 2014 >1,100 MWac CSP projects are scheduled to be online in 2013 and 2014 Crescent Dunes/Tonopah (SolarReserve) Solana (Abengoa) Mojave (Abengoa) Genesis (NextEra) Ivanpah (BrightSource) Announced projects include SolarReserve s Rice, Saguache, Crossroads and Quartzite projects and BrightSource s Palen project

12 Renewable Energy is Evolving to Meet Market Demands

13 Market is Seeking More from Renewables As penetration of renewable energy increases, market asks for clean power become more demanding Reliability Mitigation of intermittency and load misalignment Reduction of resource variability Cost Effectiveness Minimization or greater effectiveness of policy supports Minimization of additional system investments

14 Increased Recognition of Need for Storage California AB 2514 (2010) Requires CPUC to study and set energy storage procurement targets by October 2013 to be achieved by 2015 and 2020 California Public Utilities Commission Approved a long term procurement decision ordering Southern California Edison to procure between 1,400 and 1,800 MW of energy resource capacity in the Los Angeles basin by 2021 Of this amount, at least 50 MW to be from energy storage resources, as well as up to an additional total of 600MW of capacity to be procured from preferred resources including energy storage February 2013 unanimous decision move beyond paralysis by analysis Lawrence Berkeley National Laboratory (Mills & Wiser, 2012) Marginal economic value of PV and CSP without thermal storage is found to drop considerably (by more than $70/MWh) as the penetration of solar increases toward 30% on an energy basis At solar penetration levels above 10%, CSP with thermal storage is found to be considerably more valuable relative to PV and CSP without thermal storage.

15 Example of Solar PV Intermittency 100% 80% Percent Load 60% 40% Afternoon Haze or Transient Clouds 20% 0% 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 Time of Day

16 CSP Without Storage 100% 80% Percent Load 60% 40% Smoother Ride But Same Destination 20% 0% 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 Time of Day

17 But CSP With Storage Is Another Story 100% 8-Hour Generation Profile 80% Percent Load 60% 40% 20% 0% 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 Time of Day

18 and Design Can Be Optimized to System Needs 100% 80% Percent Load 60% 40% 20% 0% 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 Time of Day 16-Hour Generation Profile

19 Wind Generation vs. CAISO Load Profiles 1,200 40,000 38,000 1,000 36, ,000 MW 32,000 MW , ,000 26, Hours 24,000

20 Storage Maximizes Time-of-Day Revenue $12,500,000 Annual Revenue (assumes equivalent 250MW $.10/kWhr base rate) $10,000,000 $7,500,000 $5,000,000 $2,500,000 Dispatch as Available Dispatch out of Storage $ Average realized price: CSP + storage achieves 1.34x in CA Time of Day market, while availability-initiated dispatch achieves only 1.19x Hour

21 Cost Effectiveness Avoidance of additional investment in fossil-fueled peaking reserve Optimization of investment in transmission upgrades by shifting generation profile to offset cyclicality of wind or solar PV Thermal storage offers high efficiency / long cycle life alternative to costly / low cycle life battery options Cost effective curtailment option Available for ancillary services (ramping, firming, balancing, and reserves) Incremental investment for additional storage in thermal storage system can be a fraction of the cost of incremental battery systems

22 SolarReserve Overview California-based developer of large-scale solar power projects includes development of CSP and PV projects Exclusive 20-year license to the Molten Salt Power Tower CSP technology with Rocketdyne. Inherent thermal energy storage allows for dispatchable power on demand Lowest projected Levelized Cost of Energy (LCOE) of any CSP technology Significant projected future cost reductions and efficiency improvements expected

23 SolarReserve s CSP Technology Molten Salt Tower Receiver 565 MWt Hot Tank Multi-Extractions Reheat Steam Cycle Conventional Steam Turbine Generator Heliostats 1.08 million m 2 Cold Tank Molten Salt Steam Generation System Air Cooled Condenser Molten Salt Thermal Storage Tanks

24 SolarReserve CSP Solar Energy Plants 640 foot tall tower More than 10,000 heliostats Project Rendering

25 Crescent Dunes Solar Energy Project Overview Location: Tonopah, Nevada Technology: CSP with thermal energy storage via molten salt system Size: 110 MW net output Storage: 10 hours full load storage Energy production: more than 500,000 MW-hours annually Capacity factor: 52% Power contract: NV Energy EPC Contractor: Cobra Thermosolar Plants, Inc. with full EPC wrap Technology Supplier: SolarReserve Investors: SolarReserve (managing investor), Cobra, Santander

26 Crescent Dunes Project Arrangement 1.75 mile (2800m) diameter 640 foot tower 10,000 heliostats Hot and Cold Salt Storage Tanks Steam Turbine, Generator and Controls Heliostat Manufacturing Evaporation Ponds Offices and Construction Laydown

27 Construction Activities 2012 Pouring receiver deck foundation Constructing receiver deck Steel reinforcement Nearing tower completion

28 Construction Activities March 2013 Heliostat steel components Assembled heliostats Closer aerial view Molten salt tank in construction

29 Construction Activities Receiver Installation First receiver panel installation Aerial view of tower (Pre-panel installation) Receiver panels fully installed

30 SolarReserve US CSP Developments

31 Rice Solar Energy Project Location Turbine Capacity Est. Annual Output PPA PPA Counterparty Riverside County in southeast California 170 MW gross 150 MW net 500 GWh 25-year PPA COD mid-2016 Pacific Gas & Electric Rice Project Site Technology Arrangement Site Control; Permitting Transmission Molten salt system collection and storage arrangement consistent with Crescent Dunes; identical receiver and tower; full air cooling Unanimous CPUC Amended PPA Approval on Jan. 2013; BLM ROD for transmission corridor on Feb. 2012; CEC AFC Final Decision on Dec. 2010; previously disturbed 3,300 acre private land site under option 10-mile gen-tie to Western Area Power Administration network with Mead substation as point of delivery; CAISO as balancing authority

32 Selected Comments from CPUC Commissioners "In my personal view, projects like the Rice Solar Project will be important to demonstrate that we can firm and shape intermittent renewables with clean technology, not just with fossil technology. Commissioner Ferron "This particular project will also offer storage, which is a key component, and make it therefore hopefully more flexible in terms of being able to help us support integration. I look forward to this technology coming into California and helping us with renewable integration. Commissioner Sandova "Eight to 10 hours of fully dispatchable storage is quite impressive and offers significant benefits to the system that we don't yet know how to quantify fully, but there's definitely value there. Hopefully this is the first of many. Commissioner Florio "I think technology diversity is critical for risk diversification, and this project brings that to the energy mix. Commissioner Peterman

33 Policy Challenges Abound in Established Markets

34 Headwinds Europe Collapse of feed-in-tariff policy regimes United States Department of Commerce Antidumping and Countervailing Duties Phase-out of Section 1705 US Department of Energy Loan Guarantee Program Section 1603 Expiry and Sequestration Impact Depth of Tax Capacity Market for ITC Question of Whether States Have Met Success in Achieving Renewable Portfolio Standard Targets Considerable increase in distressed activity via bankruptcies and restructurings

35 A Tale of Two Markets GW Projected CAGR (7.9%) Projected CAGR 52.8% GW Germany Spain Rest of Europe Italy France USA China India Japan Korea Australia Rest of World Source: Analyst Reports

36 The Pivot to Growth Market Opportunities

37 SolarReserve Growth Market Focus

38 Saudi Arabia: Baseload Solar Offsets Oil Use Flat daily demand profile and energy prices CSP value is shifting generation to nighttime for combined baseload solar alongside PV, for maximal fuel conservation without compromising grid stability Government announced solicitation for CSP and has targeted 40GW of solar capacity Opportunity cost: Oil at $100/barrel Fleet requires 1.3 to 2 barrels of oil per MWh, depending on type of generating facility At $100/barrel, this is $134-$205/MWh in variable fuel cost alone

39 A Call to Action

40 Policy Opportunities to Maintain US Solar Growth Modify ITC recapture rules to mirror more flexible Section 1603 Cash Grant transfer rules Convert end-2016 in-service deadline for 30% ITC into Section 1603 style commencement of construction or investment safe harbor Redesign Federal financing support away from full loan guarantee approach and toward new technology performance risk coverage Permit use of Master Limited Partnerships toward renewable energy properties (although changing passive income loss rules may be counter to prevailing mood against tax shelters for the 1%) Allow qualifying solar projects option to convert ITC into equivalent PTC Replace distortive tax credit incentives with technology-neutral carbon tax levy to price carbon externalities to encourage market-based investments in low- or zero-carbon alternatives

41 Thank You

42 Contact Information Corporate Headquarters: 2425 Olympic Blvd. Suite 500 East Santa Monica, CA Phone: (310) Toll-Free: (866) Fax: (310)