Moderator: Ray Sun

1
Accelerating Solar Deployments in China

• Moderator Ray Sun
• Applied Materials
• November 10, 2008

2
Panelists
Ray Sun, Managing Director, Applied
Materials Boxun Zhang, Director of Business
Analysis, Suntech Jifan Gao, CEO, Trina Solar
Energy Ma Xuelu, Representative of city of
Baoding, Solar Energy Demonstration City Li
JunFeng, Deputy Director General of Energy
Research Institute Secretary General of China
Renewable Energy Industries Association
3
Agenda

• Introduction to the Global Solar Market
• Solar in China
• Applied Materials Perspectives

4
Energy Crossroad

• Fuel Crisis
• EM Demand challenging Supply
• 100/barrel (145 spike)
• Gas, Coal follow
• Coal (40 Volume, 500 Price)
• From 2.5 GDP (1998) to 12.5 GDP (2008)

Spiraling Carbon Fuel Costs
5
Solar Market Growing at 42 CAGR
Source DB Alternative Energy Solar Photovoltaic
Industry
6
PV End Market Demand by Application Segments
Overall PV growth rate gt40
Solar Farms
Grid Connected Industrial
Grid Connected Residential
Source Navigant, Solarbuzz, Applied Materials
7
China Consumption by Energy Source
19
18
17
21
21
25
of Consumption
75
77
70
76
72
66
1982
1987
1992
1997
2002
2007
Overwhelming portion of consumption from coal
Source Boston Consulting Group
8
Solar in China
9
Solar in China
2007 contraction decline in MWs in remote
industrial and grid connected markets
10
Chinas Participation in the Solar Industry

• All Levels of the Value Chain

• Rapid Production Capacity Growth

• Low Cost Manufacturing Platform

Solar Grade Polysilicon
Ingots and wafers
Solar cells
Solar modules
Distribution, system integration
150
30
20
80
60
Company
2007 Output
1,130t
1,181MWp
1,059MWp
gt2,000MWp
41.1MWp
gt95 of panels made in China are exported!
Source Company estimates, China PV Industry
Development Research Report (2006 -2007)
11

NDRC Targets 300MW of installed PV capacity
by 2010 and 1.8 GW by 2020
Sept 2007 Chinas National Development and
Reform Commission (NDRC) announced 4 key areas
for the development of solar
energy
1. Rural Electrification Program
Solar energy projects to be developed in remote
areas without electricity in Tibet, Qinghai,
Inner Mongolia, Xinjiang, Ningxia, Gansu, and
Yunnan Province Targets 2010 150MW 2020
300MW Provide electricity to 1 million
households in rural China
12

NDRC Targets 300MW of installed PV capacity
by 2010 and 1.8 GW by 2020
2. Public Facility Solar Projects
Promote PV energy use through projects on public
buildings, roads, parks, railway stations and
other public facilities in Beijing, Shanghai,
Jiangsu, Guangdong, Shandong and in other areas,
city building roof PV pilots. Targets 2010
1,000 rooftop PV projects
total capacity 50MW 2020
20,000 rooftop PV installations
total capacity 1GW
13

NDRC Targets 300MW of installed by 2010 and 1.8
GW by 2020
3. Large-scale PV Solar Thermal Power Stations
Construction of large-scale solar PV solar
thermal power generation stations in
Dunhuang,Gansu, Tibet, Inner Mongolia and
Xinjiang Targets 2010 total capacity 20MW
PV projects and 50MW solar thermal
2020 total capacity 200MW PV projects
and 200MW solar thermal
14

NDRC Targets 300MW of installed PV capacity
by 2010 and 1.8 GW by 2020
4. PV in Communications, Weather, Long-Distance
Pipelines, Railways and Highways
Encourage PV installations to support remote
infrastructure and service provision
equipment Targets 2010 30MW of installed
capacity 2020 100MW of installed
capacity
15
Excellent Solar Resources in China
Taklamakan Desert
Excellent opportunity for deployment of
large-scale PV farms in Chinas arid interior
regions
Gobi Desert
PV coverage of 0.5 of desert area would meet
entire current Chinese energy demand
Chong Qing
Low (lt1050 kWh/m2/yr)
Tibetan Plateau
Moderate (1050-1400 kWh/m2/yr)
Good (1400-1750 kWh/m2/yr)
China Environmental Science Press
Excellent (1750 kWh/m2/yr)
15
16
Power Plant Comparisons
17
(No Transcript)
18
Accelerating Solar In China

• China has world leading domestic manufacturing.
  Supply of panels is not an issue. However
• End market use of solar in China is minimal in
  2008
• Solar costs perceived too high vs coal power
• Government/Policy Initiatives will be required to
  start the industry
• Experienced installer infrastructure (mainly in
  Europe)

19
Applied Materials Perspectives
20
Extending Cost Reduction Focus to Solar
FIRST
THEN
NOW
20,000,000x Cost Reduction
Source SIA, IC Knowledge LLC
20x Cost Reduction
Source Display Search, Nikkei BP, Applied
Materials
21
Enabling All Forms of Solar PV
22
Applieds c-Si Solar Business

• More than 1,200 systems installed
• Supplier to 13 of top 15 wafer makersand 13 of
  top 15 cell makers
• Wafering solutions which reduces silicon
  grams/watt by 45
• Applied Baccini Cell Systems which offers gt98
  uptime with lowest breakage
• SunPowers back-contact, with leading gt20
  efficiency commercial c-Si cells, requires
  precision alignment unique to Applied Materials
• ATON PVD which offers the lowest cost of ownership

Worlds largest c-Si Solar manufacturing systems
provider
23
The New Standard 5.7m2 Thin Film Modules
5.7m2 Module Production cost Install cost

• SunFabTM fully integrated automated production
  line solution
• Scale lowers production costs to lt1/Wp
• Size enables gt17 reduction in BOS
• Enables cost effective Building Integrated
  Photovoltaic (BIPV) solution

Illustration Only. Actual configuration varies
24
Energy Harvest Advantage for Thin Film
Because of the superior performance, we already
sell some TF projects at a higher price to some
investors than c-Si projects Manfred Bächler
CTO, Phoenix Solar
-0.47

Applied Internal Model
Thin Films outperform c-Si in the field by 10
25
Benefits of Utility-Scale Ground-Mounted PV

• Ground-mounted installations at the substation
  level represent an ideal application of thin-film
  PV
• Supports the grid by relieving excessive peak
  loading
• Scaleable/modular nature of PV enables utility to
  meet periods of localized peak demand without
  having to overbuild capacity
• Ties into existing transmission and distribution
  lines
• Proximity to load center reduces energy losses
• Increases substation transformer capacity while
  simultaneously reducing transformer temperature
• Reduces the number of transformer load tap
  changes
• By displacing 10MW of coal-fired generation
  capacity, a 10MW solar farm could eliminate up to
  200 metric tons of CO2 emissions per day
• Applieds full-size SunFab panels gives
  opportunity to reduce BOS costs for
  ground-mounted installations greater than 17

The Future of Coal Options for a
Carbon-Constrained World," MIT press
25
26
Job Creation Benefit to PV
Job Creation Benefits

• 30 jobs per MW created throughout the solar
  value chain
• Navigant Consulting estimates for downstream
  jobs
• System integration 10 jobs/ MW
• Installation labor 7 jobs/ MW
• 400MW of solar creates 2,800 local installation
  jobs
• Local single-line, single junction SunFab would
  create 120 full time manufacturing jobs

UPSTREAM 16
Oth Materials
Gas
Glass
PV MANUFACTURING 22
Installation
Cables/BOS
Inverters
DOWNSTREAM 63
Percentages based on jobs data from Germany
27
Applied Is Making Solar More Affordable
Cost of Electricity from PV
Conventional Electricity Rates
28
(No Transcript)