The Solar Market and Q.

Cells
Business and the Environment Group 1 Jose Carlos Munoz Philipp Rosenbauer Simon-Ole Schulz Kerstin Wiesner

Table of Contents

Case Study

How does the solar market work?

How is the market evolving and what are the prospects?

What is the role and position of Q.Cells in this market?

20.03.2012

Business and the Environment - Group 1

1 How does the solar market work?

Basic Technologies
Photovoltaics (PV) Technologies Concentrating Solar Power (CSP) Solar Thermal Collectors

Case Study

Grid-connected domestic systems / power plants (compensation for feed-ins) PV Applications Off-grid industrial applications / applications for rural areas Consumer goods / hybrid systems

20.03.2012

Business and the Environment - Group 1

1 How does the solar market work?

Solar Value Chain

Case Study

Full range of integration can be observed in the market Value Chain Few fully integrated companies (backward and forward) Outsourcing of installation very common especially in Europe Relatively fragmented market

20.03.2012

Business and the Environment - Group 1

1 How does the solar market work?

Market Specifics
Policy tagets for renewable energy Government Involvement

Case Study

Extensive regulatory frameworks (incentives for production/feed-ins etc.) in developed countries Recent changes provide new challenges

Watt peak is used as nominal measure of power of PV cells Watt-Peak Maximum energy level obtained under laboratory settings Solar industry bases sales, growth and prices on Wp Real output well below Wp

20.03.2012

Business and the Environment - Group 1

2 How is the market evolving and what are the prospects?

Global Renewable Energy Industry

Case Study

Renewable energy industry showed no signs of downturn in 2009 Renewables Renewables accounted for 16% of global final energy consumption in 2010 Solar energy makes up only very small fraction

Solar fastest growing industry within Renewables For the first time EU added more PV than wind - in EU Renewables account for 41% of newly installed electric capacity (2010) where PV accounts for more than 50%! EU accounts for 80% of the global newly installed capacity in 2010 (enough to provide energy for 10 million EU households)

Solar PV

20.03.2012

Business and the Environment - Group 1

2 How is the market evolving and what are the prospects?

Global Renewable Energy Industry

Case Study

20.03.2012

Business and the Environment - Group 1

2 How is the market evolving and what are the prospects?

Global Renewable Energy Industry

Case Study

PV Solar fastest growing industry within Renewables In 2010 an estimated 17 GW of capacity was added worldwide (compared with just under 7.3 GW in 2009), bringing the global total to about 40 GW more than seven times the capacity in place five years earlier.
Business and the Environment - Group 1 8

20.03.2012

2 How is the market evolving and what are the prospects?

Global Solar PV Industry By Country

Case Study

20.03.2012

Business and the Environment - Group 1

2 How is the market evolving and what are the prospects?

Global Renewable Energy Investment

Case Study

Reduced Risk

Increasing geographical diversification decreases the vulnerability to policy changes and misallocations in individual markets increasing geographical
Business and the Environment - Group 1 10

20.03.2012

2 How is the market evolving and what are the prospects?

Global Solar PV Investment
Total solar power $79 Billion in 2010

Case Study

The trend toward utility-scale PV plants continued, with the number of such systems exceeding 5,000 and accounting for almost 25% of total global PV capacity.
Solar PV second largest asset investment market in 2010 with $19 Billion in financing secured (up 5% from 2009) Utility Scale Projects However, below all time high of $23Billion in 2008 due to sharp decline in PV panel prices

$60 billion in 2010 (25% of total investment in renewable energy) Small scale projects Germany has 57% share of global investment Mostly solar PV due to: generous support programs, falling prices for solar modules, growing base of installers that are marketing to consumer

20.03.2012

Business and the Environment - Group 1

11

2 How is the market evolving and what are the prospects?

Trend: Decreasing costs

Case Study

Sufficient supply of polysilicon and wafers due to rapid manufacturing expansion in China. Cost Reductions Production sold out one quarter in advance Cost reductions 38% and 14% in 2009 and 2010, respectively

20.03.2012

Business and the Environment - Group 1

12

2 How is the market evolving and what are the prospects?

Solar PV Manufacturing Competition

Case Study

Concentrated: Top 15 Manufacturers account for 55% of global production (23.9 GW) PV Market Competition Regional Shift: Cell production continues to shift to Asia China and Taiwan: account for 59% of global production in 2010 (up from 50% in 2009)

20.03.2012

Business and the Environment - Group 1

13

2 How is the market evolving and what are the prospects?

Market Overview
Falling costs PV Market Drivers

Case Study

New applications
Strong investor interest Strong policy support accelerated tariff digression

Drastic price declines compared to 2010 Market Challenges 2011 Present overcapacities outstrip market demand Major reductions in subsidy levels in Europe Pressure to consolidate market

20.03.2012

Business and the Environment - Group 1

14

3 What is the role and position of Q.Cells in this market?

Company Overview
Large supplier of photovoltaic solutions in Europe Company Facts Established 1999, headquarter in Thalheim (D) 2380 employees (2010)

Case Study

Grow of sales revenue by over 70 %, to approx. 1.35 bn in 2010

Core Business: Development, production and marketing of crystalline silicon photovoltaic cells Business Recently also sale of solar modules under its brand R&D of more efficient cells and technological production processes

20.03.2012

Business and the Environment - Group 1

15

3 What is the role and position of Q.Cells in this market?

Recent Economic Situation
Strong supply overhang of solar energy providers Summary of Situation Drastic decline in prices / concurrence from China Reduction of state subsidies and in feed-in tariffs But still growing market

Case Study

Bankrupcy of several solar companies ( Evergreen (US/Aug11), Solyndra (US/11), Solon (D/Dez11) Consequences Q-cells: loss of 864 mio. (2012), highly indebted, in danger of insolvency, cut of debt &capital, restructuring measures, 95% loss in shares during last 3 years

20.03.2012

Business and the Environment - Group 1

16

3 What is the role and position of Q.Cells in this market?

Position & Role
FOCUSED CORE BUSINESS Specialist in photovoltaic silicon cell production Minimal vertical integration INHOUSE R&D Development of more efficient cells New process technologies Text

Case Study

CONCURRENCE FROM CHINA Decline in prices/ dumping prices Overcapacity in offers on market SUBSIDY CUT Lower state subsidies Reduction of feed-in tariffs

HEAVILY INDEBTED Close to insolvency Suspension of payments to creditors Restructuring measures MARKET POSITION As of 12.2011 7th biggest PV producer Germany as leading PV market
Business and the Environment - Group 1

INTERNATIONALISATION Plans of entering growth markets outside EU Despite weak financial status: 13.Feb 2012 major order to Greece (tot. 2600kW)

20.03.2012

17