Solar Merger & Acquisition Activity

Transaction Activity in the Solar Industry

Solar transactions by year Solar transactions by quarter

100 35
90 30
80
70 25
60 20
50
40 15
30 10
20
10 5
0 0
2005 2006 2007 2008 YTD Q3 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09
2009

• 32 completed solar energy transactions in Q3 2009 representing a 100% increase from the 16
recorded in Q3 2008

• YTD 2009 transaction volume is 8.0x the volume within the solar industry exhibited in 2005

• 2009 is on track to be another record year from a transaction perspective

• Drivers include companies diversifying into solar, strategic combinations due to capital
constraints, and consolidation within fragmented sectors (i.e. installation)

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Transaction Activity by Sector
Over the last year EPC Integrators / Developers have been the most active category for solar transactions

Transaction volume by target company category

14
12
10
8
6
4
2
0
Q4-08 Q1-09 Q2-09 Q3-09
Equipment for Solar Industry Producers of Solar Energy
Cells/Modules Vertically Integrated Companies
EPC Integrators / Developers Wafers/Ingots

• Consolidation and the limited availability of project financing is driving

continued EPC Integrators / Developers transaction volume
• There is also significant growth in transactions of Producers of Solar
Energy (already in place MW)

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Types of Solar Transactions
Consolidation and Vertical Integration continue to be driving forces of transaction volume

Transaction volume by quarter and type of transaction

16

14

12

10

0
Q4-08 Q1-09 Q2-09 Q3-09
Consolidation Vertical Integration
Diversification into Solar Energy Private Equity/Investors

• Vertical integration and Consolidation combined for 22 transactions

representing nearly 69% of total transaction volume in Q3 2009
• Entry into solar has increased over the last year both through private
equity investment and diversification

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Geographies of Solar Transactions
Transaction volume in the United States and Europe continues to grow

Solar transactions by quarter Solar transactions by year

35
20 30
25
15
20
10 15
10
5 5

0 0
2008
Q4-2008 Q1-2009 Q2-2009 Q3-2009
U.S./Canada Europe Asia Cross-Border U.S./Canada Europe Asia Cross-Border

• The European market still exhibits its maturity and leadership in the solar industry remaining the
leader in transaction activity with 53% of the transaction volume for Q3 2009 and 47% for 2008

• U.S./Canada transaction volume has nearly tripled since Q1 2008

• The stimulus legislation is driving additional transaction growth with more opportunities being
created in the solar industry

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Solar Company Valuations
Multiples have declined through Q1 2009 and are now showing an increase in Q2 and Q3 2009…

Enterprise value / EBITDA

Enterprise Value*/ EBITDA

30.0x
Multiple of EBITDA

20.0x

10.0x

0.0x
Q3-08 Q4-08 Q1-09 Q2-09 Q3-09
Wafers/Ingots Cells/Modules
Vertically Integrated EPC Integrators/Developers

Valuations on the rise

Note: Enterprise Value is calculated as Market Cap on September 30, 2009 plus debt, preferred equity and minority interest less cash

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Future Expectations
The Future is Bright for Solar

Revenue for companies in the worldwide solar industry is expected to be down or essentially flat for
2009, however solar projects have been growing
Look for market growth

Share gains will come to differentiated players with strong balance sheets
beyond 2009 into 2010

Companies need to broaden markets, expand geographies, and execute mature business plans to
emerge stronger when industry growth resumes

The U.S. Solar market

growth will outpace
Stimulus benefits are providing incentives that will drive industry growth
more mature foreign
Potential growth acceleration with RPS initiatives or the establishment of feed-in-tariffs
markets

Module assembly and manufacturing is not a core competency of most solar companies and is more
Solar OEMs moving
efficiently provided through outsourcing arrangements
toward outsourcing

Divestiture of internal module assembly and manufacturing capacity provides the greatest immediate
module assembly
benefit to a solar company (e.g. greatest value achieved through sale “process”)

The PPA party is critical for project financing

Project financing is
Access to tax equity and tax equity partners is critical to project financing
essential for success
Interest from international strategic partners in U.S. projects provides an alternative to traditional
project financing sources

Strategic alternatives
Solar companies will need to focus on their core competencies
are key to making
Current capital constraints will force companies to pursue focused strategies
existing companies
Alternatives made available through mergers, acquisitions, or divestitures will be necessary to help
successful for the future companies capitalize on future market growth and sustain leadership positions

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