GTM - Latin America PV Playbook - Q2 2016 Market Update - May 2016

Latin America PV Playbook
Q2 2016 Market Update
Mohit Anand
Senior Analyst, Global Solar Markets
anand@gtmresearch
Manan Parikh
Research Associate, Global Solar Markets
parikh@gtmresearch
May 2016
Contents
1. Executive Summary 3
2. Brazil 10
3. Chile 20
4. Mexico 32
5. Market on the Rise – Argentina 44
6. Market on the Rise – Peru 48
7. Central America 51
8. The Caribbean 54
9. The Rest of South America 56
1
List of Figures
Executive Summary • Chile Utility Scale (projects >5 MW) PV Demand 2015-2020E • State-level Status of Grandfathered Pipelines
• Latin America PV Demand 2010-2020E • Chile Utility-scale Developer Rankings Q2 2016 • Where CENACE will award projects in the next auction
• Latin American Markets’ Share of Regional Demand 2015- • Sistema Interconectado del Norte Grande (SING) Grid PV • Mexico Distributed Generation (<20 kW-5 MW) PV Demand
2020E Highlights 2015-2020E
• Latin America Major Markets’ PV Outlook • Sistema Interconectado Central (SIC) Grid PV Highlights • Mexico Overall PV Demand Scenarios 2016E-2020E
• Latin America Market Segmentation 2015-2020E • Difference in capacity awarded between the last CNE auction • Mexico Residential (<20 kW) PV Demand Scenarios 2016E-
• Regional Project Pipelines (MWdc) and the next one 2020E
• Top Developers with under construction pipelines in select • Spot prices in Chile in SIC and SING grids • Mexico Commercial (20 kW-1 MW) PV Demand Scenarios
markets • Change in expected SING territory PV Pipeline 2016E-2020E
Brazil • Chile Distributed Generation (<20 kW-5 MW) PV Demand • Mexico Industrial (1-5 MW) PV Demand Scenarios 201E-2020E
• Brazil Overall PV Demand 2015-2020E 2015-2020E • Mexico Utility-Scale (>5 MW) PV Demand Scenarios 2016E-
• Brazil Market Segmentation 2015-2020E • Chile Overall PV Demand Scenarios 2016E-2020E 2020E
• Brazil Utility Scale (projects >5 MW) PV Demand 2015-2020E • Chile Residential (<20 kW) PV Demand Scenarios 2016E-2020E Market on the Rise: Argentina
• Brazil Utility-scale Developer Rankings Q2 2016 • Argentina Overall PV Demand 2015-2020E
• Developments taking place within Brazil’s PV market • Chile Commercial (20 kW-1 MW) PV Demand Scenarios 2016E-• Argentina Policy Evolution in Favor of Solar
• Falling value of PPA prices and rising ceiling prices in Brazil 2020E • Insolation Levels in Argentina
• Brazil Distributed Generation (<20 kW-5 MW) PV Demand • Chile Industrial (1-5 MW) PV Demand Scenarios 2016E-2020E Market on the Rise: Peru
2015-2020E • Chile Utility-Scale (>5 MW) PV Demand Scenarios 2016E- • Peru Overall PV Demand 2015-2020E
• Brazil Overall PV Demand Scenarios 2016E-2020E 2020E • Auctioned capacity versus operational capacity in Peru
• Brazil Residential (<20 kW) PV Demand Scenarios 2016-2020E Mexico Central America
• Brazil Commercial (20 kW-1 MW) PV Demand Scenarios 2016- • Mexico Overall PV Demand 2015-2020E • Central America Overall PV Demand 2015-2020E
2020E • Mexico Market Segmentation 2015-2020E • Central America Market Segmentation 2015-2020E
• Brazil Industrial (1-5 MW) PV Demand Scenarios 2016-2020E • Mexico Utility Scale (projects >5 MW) PV Demand 2015-2020E The Caribbean
• Brazil Utility-Scale (>5 MW) PV Demand Scenarios 2016-2020E • Mexico Utility-scale Developer Rankings Q2 2016 • The Caribbean Overall PV Demand 2015-2020E
Chile • Total capacity of auctioned projects by developer The Caribbean
• Chile Overall PV Demand 2015-2020E • Total capacity of auctioned projects by state • The Rest of South America Overall PV Demand 2015-2020E
• Chile Market Segmentation 2015-2020E • IRR Estimates Relative to PPA Prices with fixed GTM Research
Assumptions
2
1. Executive Summary
Executive Summary: Auction-led demand continues to strengthen prospects for solar in
Latin America
Latin America PV Demand 2010-2020E

9.3% 10.0% • Latin America had a record year in
Cumulative Forecast 2016-2020 CAGR = 37%
10,000 2016-2020 = 27GW 9.0% 2015 installing 1.4GW, 813MW more
8.1%
7.6%
than in 2014
8.0%
8,000 7,723 • 2016 is set to be another record year
7,144 7.0%
for solar in the region with the
5.9% 6,353 6.0% market growing 55% to 2.2GW
MW
6,000
5.0% • The strengthening of the market is
4,032 4.0% reflected in the fact that the region’s
4,000 3.4%
share of global demand will increase
2.6% 3.0%
2,198 year-on-year to peak at 9.3% in 2018
2,000 1.5% 2.0%
1,416 • Utility-scale auctions in Brazil, Chile,
0.8% 1.0%
0.4% 603 and Mexico in which solar is out-
0.2% 237
2 162
0 63 0.0% competing other clean technologies
2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E are the key driver behind its strong
Annual Installed PV Global Demand Share growth in the region
Source: GTM Research Global Solar Demand Monitor Q2 2016
4
Executive Summary: Chile leads regional demand but will soon give way to Mexico and
Brazil
Latin American Markets’ Share of Regional Demand 2015-2020E

100%
6% 4% 4% 4% 4% • Chile was the largest market in 2015
9% 5% 4% 6%
3% 8%
90% 5% 4%
1%
with 37% share of regional demand
6% 2% 4% 4% 4%
3% 2% 1% and will remain in the lead in 2016:
80% 9% 7% 8%
1% 1% The market has been driven by
39%
70% 28% merchant projects
Share of Regional Demand
60% 29% 47% 34% 33% • Mexico will be close to Chile in 2016
50% 4% 7% with 29% of regional demand share
2%
7% as several grandfathered projects are
40%
16%
under construction now that there’s
18%
30% 30% 12% more certainty in the market
49%
20% 37% • Brazil has a 3GW pipeline driven by
28% 25% auctions but few installations: This
10% 23%
14% will change in 2016/2017 as several
0% 3% projects face completion deadlines
2015 2016E 2017E 2018E 2019E 2020E
• An auction in Peru and one planned
Brazil Chile Mexico Argentina Peru Central America The Caribbean The Rest of South America
in Argentina position them as
Source: GTM Research Latin America PV Playbook: Q2 2016
markets on the rise in Latin America
5
Executive Summary: Brazil’s outlook is weak whereas Mexico’s has significantly
strengthened
Latin America Major Markets’ PV Outlook
Brazil Chile Mexico
Outlook: Weak Outlook: Neutral Outlook: Strong

• Significant downside risks from political • Low spot prices have suppressed • Solar’s strong win of 74% of energy
uncertainty and a very weak macro- demand: They are at their historical offered in the country’s first clean
economic environment make lowest and often negative due to high energy auction held in March 2016 has
conditions weak congestion at the SIC-SING boosted market sentiment and demand
• Falling electricity demand and interconnection point and will not • Another auction with 9TWh of energy
cancellation of several transmission recover until the new 753km Cardones- on offer is scheduled for Sept. 2016 and
projects needed for solar generation Polpaico transmission line opens solar could win 60-70% of the energy
further weaken fundamentals • A crash in global copper prices has offered
• Solar installations remain stuck because contracted mining demand but copper • 400-500MW of additional
of a severe lack of financing and drastic prices are showing early signs of a grandfathered projects will execute
depreciation of the Real turnaround and demand from the given better certainty in the market
sector could rise again from the energy transition law
6
Executive Summary: The utility-scale segment dominates demand but the distributed
generation segment will strengthen over the next years
Latin America Market Segmentation 2015-2020E

100%
• Auction-led demand is skewing the
90% market towards the utility-scale
segment as governments prefer rapid
80%
solar competitiveness through
70% economies of scale
60% 81% • Brazil, Chile and Mexico each have
Market Segmentation
84%
90% 90% 91% 91%
50%
predominantly utility-scale markets
• New markets Peru and Argentina too
40%
are pushing utility-scale projects
30%
• Brazil and Mexico have early stage
20% distributed generation markets that
3%
2%
10% 8% 10% will grow and push that segment’s
2% 2% 1% 1%
5% 5% 5% 5% share of demand in the region
3% 3% 3% 3% 6% 7%
0%
2015E 2016E 2017E 2018E 2019E 2020E • Chile is the only major market that is
Residential (<20kW) Commercial (20kW - 1MW) Industrial (1MW - 5MW) Utility (>5MW) conspicuous in its lack of a viable
incentive for distributed generation
7
Executive Summary: Chile continues to soar above the pack for installed capacity in Latin
America; Brazil and Mexico make strides in projects under construction
Regional Project Pipelines (MWdc)

296 500
0 214 350
54 100 2100
Carribbean 128
533
180 Central America
Mexico 550
148
3232 100 40
Brazil
Peru
400
1500
1323
162
77
Rest of South America
Chile
Source: GTM Research Latin America PV Project Tracker
8
Executive Summary: Enel Green Power leads the way in Latin America with over 700MWdc
under construction in key regional markets
Top Developers with under construction pipelines in select markets
Brazil
Mexico
Canadian Solar 280
Fisterra Energy 350
Enel Green Power 270
Eosol 150
Buenavista Renewables 27 0 100 200 300 400
Capacity (MWdc)
0 200 400
Capacity (MWdc)
Chile
Enel Green Power 403
Acciona 329 Uruguay
SunEdison 231
TerraForm
Pattern Energy 140 75
Global/SunEdison
SunPower 131
0 100 200
0 100 200 300 400 500
Capacity (MWdc)
Capacity (MWdc)
9
2. Brazil
Brazil: Contradictory market conditions as new installations struggle to take off even as
more auctions are launched
Brazil Overall PV Demand 2015-2020E The market’s trajectory:

5,000 1000% • Highlights:
Cumulative Forecast CAGR = 57%
4,500 2016-2020 = 8.4GW ◦ Solar installations remain stuck because of a severe lack of financing and drastic
788% 800% depreciation of the Real even as the govt. is launching more auctions: Less than 20%
4,000
of the auctioned pipeline of 2.6GW is under construction and auctions have been
3,467 announced for July and Oct. 2016 when additional 1.5-2GW PV could be allocated
3,500
600%
◦ The market will add only 315MW in 2016, 146MW less than what we had estimated
3,000
last quarter, but nonetheless a growth of 788% from the low base of 36MW that was
MWdc
2,500 400% installed in 2015: Only 210MW of installations expected this year are utility-scale
274% with the remaining installed in the country’s DG segment
1,920
2,000 194% 1,773
• Near-term:
200%
1,500 ◦ Auctions are the key utility-scale driver, but there is uncertainty about projects
48% 28% 25%
61% 22% installing successfully: Over 80% of projects from the 1st Reserve Auction held in Nov.
1,000 3% 14%
0% 2014 are delayed and are seeking an extension
926 8%
500 -49%
315 ◦ The ProGD policy has expanded opportunities for new business models for an active
36
- -200% DG sector but will not see significant volume as challenges to scalability remain
2015 2016E 2017E 2018E 2019E 2020E
• Long-term: Auctions will remain a key market driver, keeping the utility-scale segment in
Annual Installed PV Annual Growth LatAm Demand Share the lead but the market will over time transition to a greater role of a more scalable DG
Source: GTM Research
market due to higher electricity prices and rising electricity demand
11
Brazil: Utility-scale solar is emerging as the key demand segment driven by large allocations
under auctions
Brazil Market Segmentation 2015-2020E Key takeaways:

100% • Utility-scale:
90% ◦ This segment was less than 50% of the market until 2015 as auctions have been in
31% place only since end-2014, with installations expected to complete only starting 2016
80%
◦ Three previous utility-scale focused renewables auctions with total allocations of
70% over 2GW for solar so far are set to change the market’s composition drastically
Market Segmentation
10% 71% starting this year: The utility-scale segment will jump to over 80% of the market
60% 77%
83% 86%
92% ◦ Continued auctions will consolidate the utility-scale segment’s dominance of the
50% Brazilian market beyond 2020: Two more auctions are planned for 2016 and several
40% more are expected in the future as the govt. drives its goal of 7GW of PV by 2024
45%
• Distributed Generation:
30%
5% ◦ A long-running net metering policy kick-started DG, that has made up more than
20% 4%
50% of the market until 2015 in the absence of auction-driven utility-scale projects
2% 16%
2% 13%
10% 11% ◦ A strong driver for DG is high electricity prices that have increased on avg. by 50% in
14% 10% 1%
5% 6% 8% the past one year: While absence of low cost credit continues to hinder scale, the
0% 3% 3% 2%
new ProGD policy has expanded DG off-take options
2015 2016E 2017E 2018E 2019E 2020E
Residential (<20kW) Commercial (20kW - 1MW) ◦ PV has so far been competitive on an LCOE basis with residential and commercial
Industrial (1MW - 5MW) Utility (>5MW) retail rates but now with net metering extended to 5MW project sizes, the industrial-
Source: GTM Research scale segment too is attractive for solar
12
Brazil: Significant risk to utility-scale projects though developers are lining up for the next
auction
Brazil Utility Scale (projects >5 MW) PV Demand 2015-2020E The utility-scale segment:
5,000 3000%
• Highlights: The segment will jump by an exceptional 2,283% in 2016 given that 262MW
Build up from several auctions:
4,500 • 6th Reserve Oct. ’14: 580MW delayed will install this year compared to just 11MW in 2015; 2018 could be a crunch year as
• 7th Reserve Aug. ‘15: 309MW delayed 2500% 3GW, either delayed or on time from several auctions, will aim to get commissioned
4,000 • 8th Reserve Nov. ‘15: 824MW scheduled
2283%
• 9th Reserve July ‘16: >1000MW likely • Upcoming July 2016 auction has 9GW of solar registered, signaling strong interest:
3,500 2000%
3,200 ◦ Brazil’s large energy deficit is driving confidence that ANEEL will increase the ceiling
price in the auction to compensate for a low Real and high cost of financing
3,000
MWdc
1500% ◦ Dilma Rousseff’s successful impeachment is raising hopes that political stability has
2,500 been achieved and will soon be followed by an economic recovery
1000% • Significant risks caution against confidence:
2,000
1,361 1,361 ◦ Upcoming solar auction could be cancelled: ANEEL claims it has no funds to execute
1,500 500%
303% an auction + the recent A-5 auction saw <10% of auctioned capacity allocated
203%
1,000 ◦ No financing for projects: Brazil’s junk credit rating has made international financing
794 -57% 0%
22% 0% impossible and BNDES, as the only affordable source of finance, is stretched
500 262
11 ◦ Worsening fundamentals: Electricity demand fell y-o-y because of recession + several
0 -500% transmission projects needed for solar generation have been cancelled
2015 2016E 2017E 2018E 2019E 2020E
Annual Utility-Scale Installed PV Annual Growth ◦ Several companies holding back: Over 80% of capacity from the Oct. ‘14 auction has
asked for an extension, Elecnor has walked away from a deal, and First Solar is
holding back from entering the market
13
Brazil: Enel Green Power leads the utility-scale ranking with the largest operational capacity
Brazil Utility-scale Developer Rankings Q2 2016
1. Enel Green Power 300 270 10
2. Canadian Solar 240 280
3. Solairedirect/Solatio 535
4. SunEdison 180
5. Fotowatio 150
6. Renova 100
7. Gransolar 60
8. Conergy 54
9. Rio Alto 30
10. Coremas II 30
0 100 200 300 400 500 600 700

MWdc
Contracted Under Construction Operational
14
Brazil: Over 500MW projects under construction in Brazil, but others delayed in moving
forward
Developments taking place within Brazil’s PV market Two developers encapsulate the dynamics of the market:
Paraiba is working in • Enel Green Power:
conjunction with
the Northeast bank ◦ In Q1, Enel’s Ituverava complex (254MWdc) and Lapa complex (78MW) broke ground
to provide USD $14
million to PV in Bahia, a state in which ANEEL has awarded many projects in recent auctions
systems for because of the lack of supply in the region: Projects will be completed by 2017 along
agriculture. Areas of
the northeast and
a new transmission line that will facilitate the new capacity additions in the state.
especially farms lack
◦ All developers other than Enel from the Oct. 2014 auction have asked for postponing
access to electricity
CODs by two years beyond the original Q4 2016 date citing unviable PPA prices: Due
to a depreciated Real, the value of PPAs have declined by 30% from an average of
Minas Gerais announced $86.3/MWh to $61/MWh since the auction
and then cancelled its
In Brasilia, the state-wide auction which • Canadian Solar:
country’s first project would have awarded
was installed under the 200MW of solar citing a ◦ Its Pirapora (280 MW) complex started construction in Q1 2016 in Minas Gerais: Its
new ProGD scheme, a lack in transmission; a PPA price has retained value because it was auctioned in Aug. 2015, when ANEEL set
DG Development smart move until planned
Program. The project is transmission is completed higher ceiling prices relative to Nov. 2014 to account for currency depreciation
a 60 kW project on in the next five years. The
government buildings. state may still get awarded
◦ Canadian also benefits from local content in the form of a 350MW/year Sao Paolo PV
The project was projects in the upcoming manufacturing plant which should be complete by Q4 2016 further aiding progress
developed and two national auctions
installed by ABSOLAR ◦ On the flip side, Canadian Solar asked for an extension on its October 2014 auction-
winning 90MW Vazante project because of the devaluation of the Real: Present day
value for this PPA is down to close to $62/MWh from $87/MWh
15
Brazil: Despite a deepening economic crisis, Brazil looks to allocate as much as 2GW of PV
in 2016
Falling value of PPA prices and rising ceiling prices in Brazil Two national auctions look to add to the 3 GW pipeline:
180.00 450 • The first clean energy auction for 2016 will take place in July with a COD of July 1st,
BRL ceiling prices
170.00 increased across 2018: Previous auctions have averaged 900MW of tendered PV capacity; it can be
auctions to account 400
160.00 for inflation. So, USD BRL 384, BRL 354, expected that a similar amount will be allocated in July
BRL 352,
values of prices (USD 99) (USD 94)
150.00 (USD 103)
remained similar. 350 • 9.2 GW of projects registered in the July auction, which is on par with the large interest
140.00 in past auctions (average of 12 GW): Projects are awarded based on whether they are
130.00 300 located in areas that lack electricity and whether the price bid is competitive so only
PPA (USD/MWh)
Ceiling price for July auction

120.00 slightly lower than previous 10% of the registered projects of interest will likely be awarded.
PPA (BRL/MWh)
BRL 261, ones to account for decreases 250
110.00 (USD 105) in system costs and a slightly • PPA prices in July can be expected to be around $75-80/MWh1, tendered in the
improved economy. equivalent Real conversion. Although a ceiling price has not yet been announced by
100.00
200
ANEEL, if a trend similar to previous auctions is followed, it will be around $94/MWh:
90.00 86.22
78.70 ANEEL increased ceiling prices in the 2nd and 3rd auctions so that they reflect a
80.00 80.80 79.60 150
70.95
weakened Real, which will likely be repeated in the upcoming auction giving relatively
70.00 75 higher PPA prices compared to the rest of Latin America
100
60.00 Avg. solar PPA prices 55.13
in first three auctions
• Another clean energy auction will take place in October of this year with a COD
50.00 were approx. 20% Avg. PPA prices could again be scheduled for July 1st, 2019: Projects that bid into this auction have the clear advantage
50
40.00 lower than ceiling. around 20% lower than the
of completing a year later in the hopes of an economic recovery though the
ceiling or around $75/MWh1
30.00 0 disadvantage is that if the economy continues a downturn, PPAs will devalue for a full
Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 calendar year after the July auction before winners start making a return on investment
Oct 2014 Avg PPA Value Aug 2015 Avg PPA Value
Nov 2015 Avg PPA Value Expected Jul 2016 Avg PPA Source: GTM Research
Oct 2014 BRL Ceiling Price (USD) Aug 2015 BRL Ceiling Price (USD) 1. Considering macro-economic trends like investor confidence and exchange rates and extrapolating ceiling prices and avg. PPA price
Nov 2015 BRL Ceiling Price (USD) Expected Jul 2016 BRL Ceiling Price (USD) discounts in previous auctions
16
Brazil: ProGD unlocks new DG business models and increases demand but access to finance
is a major barrier to scale
Brazil Distributed Generation (<20 kW-5 MW) PV Demand 2015-2020E The DG segment:
600 180% • Access to finance hinders the scaling of DG as leasing models are yet to take off and low
cost loans are unavailable, restricting the market to upfront cash sales
148% 160%
500 95 • But, market fundamentals remain strong with electricity prices increasing between 6-
140% 9% for low and high tension consumers in Q1 2016 apart from a 50% increase y-o-y
117% • Residential and Commercial:
400 120%
103% 63
◦ Installations under ProGD are advancing with a 60kW pilot system under
Annual Installed (MWdc)
88% 100% development at the Ministry of Mines and Energy: ProGD incentivizes PV installations
300 309
238 on public buildings with low cost financing from Brazil’s development bank BNDES
80%
35
◦ New business models are possible under new ProGD rules: 1. Community Solar as
200 60% net metering is available to systems shared by several consumers in condominiums
158 54% or consortia of several consumers; 2. Energy Brokering as DG electricity sale on the
36% 40%
18 market is allowed raising the opportunity to aggregate PV generation across several
100
155 small consumers; 3. Off-site DG as centralized plants can supply to several DG
88 20%
4 7 111 consumptions points
35 74
16 26
0 5 11 0% • Industrial: Electricity prices are the lowest for this segment and projects have been
2015 2016E 2017E 2018E 2019E 2020E
disadvantaged by a lack of net-metering: ProGD has now expanded net-metering to
Residential (<20kW) Commercial (20kW - 1MW) 5MW projects sizes making the industrial segment attractive; another driver now is the
Industrial (1MW - 5MW) Annual Growth
opportunity for single large projects to supply to several smaller consumers
17
Brazil: The market faces significant downside risks in the short-term
Brazil Overall PV Demand Scenarios 2016E-2020E Key takeaways:

5,000 Downside Risks:
Potential Upside = 2.4GW 2016-2020
4,500 Potential Downside = 3.5GW 2016-2020 • Short-term:
4,000 3,787 ◦ Continuing or worsening economic and political crises could make it impossible for
projects to access financing and complete installations, worsening demand in 2017
3,500 3,467
◦ Project failures in the current pipeline coupled with a chance that the July and Oct.
3,000 CAGR = 58% 2016 reserve auctions might not move ahead, could push down demand significantly
2,691
MWdc
2,492
2,500 • Long-term:
CAGR = 57% ◦ Falling electricity demand due to a prolonged recession could scale back the govt.’s
2,000 1,920
1,773 solar capacity addition targets
1,446
1,500 1,724 Upside Risks:
CAGR = 40%
1,000 • Short-term: The strong pipeline could spur project acquisitions by well capitalized
926
400 870 922 international conglomerates that could fund projects on their balance sheets to
500
315 complete them on time in 2017 and 2018
469
- 243 • Long-term:
2016E 2017E 2018E 2019E 2020E
◦ Financing models around leasing could be pioneered to take advantage of increasing
Upside Scenario Baseline Scenario Downside Scenario electricity prices, boosting DG growth
18
Brazil: Downside risk is most pronounced for utility scale projects
Brazil Residential (<20 kW) PV Demand Scenarios 2016-2020E Brazil Commercial (20 kW-1 MW) PV Demand Scenarios 2016-2020E
250 500 413
197
200 400 318
140
MWdc
MWdc
150 155 300 309
94 199
111 238
100 200 99
31 74 68 158
50 12 53 100 37 104 125
35 35 88 69
11 26 46
- 7 14 - 21
2016E 2017E 2018E 2019E 2020E 2016E 2017E 2018E 2019E 2020E
Upside Scenario Baseline Scenario Downside Scenario Upside Scenario Baseline Scenario Downside Scenario
Source: GTM Research Source: GTM Research
Brazil Industrial (1-5 MW) PV Demand Scenarios 2016-2020E Brazil Utility-Scale (>5 MW) PV Demand Scenarios 2016-2020E
200 4,000 3,440
164
150 3,000 3,200
MWdc
MWdc
109 2,124
1,718
100 95 2,000 1,291
55 1,600
25 63 1,361 1,361
50 9 49 1,000 342 794
35 32 262 681 681
7 18 20 397
- 5 11 - 210
2016E 2017E 2018E 2019E 2020E 2016E 2017E 2018E 2019E 2020E
19
3. Chile
Chile: Downside drivers are already in play with the estimate for this year pulled back by
200MW and a contraction expected in 2017
Chile Overall PV Demand 2015-2020E The market’s trajectory:

Cumulative Forecast CAGR = 20% 94%
2016-2020 = 4GW ◦ PV demand forecast for 2016 has been scaled down to 650MW (pullback of 200MW
1,400 1,353 90%
from last quarter’s estimate): Downside drivers like low spot prices and contracted
mining demand have coupled with a delay in the auction to suppress demand
1,200 70%
◦ Market will grow by 24% this year before contracting 26% in 2017: There has been a
993 sharp decline in new project announcements in the past two quarters (Q4 2015 and
1,000 50%
37% Q1 2016) due to the downside drivers, which will drop installations in 2017
MWdc
30% 36%
800 24% 30% • Near-term:
26% 16% 17%
650 12% ◦ Spot prices are at their historical lowest and often negative due to high congestion at
7%
600 10% the SIC-SING interconnection point that brings electricity from the high insolation
526 483 6% 511
north to the high demand areas of central Chile: Prices will remain unviable until
400 -10% end-2018 when the new 753km Cardones-Polpaico transmission line will open
◦ The only reliable demand driver in the near-term is the CNE auction: With the crash
200 -26% -30%
in the sport market, it is now pertinent to have a fixed PPA to get projects financed
and in the absence of mining demand, CNE auctions are the only bankable off-take
- -50%
2015 2016E 2017E 2018E 2019E 2020E • Long-term: Copper prices are showing early signs of a turnaround and demand from the
Annual Installed PV Annual Growth LatAm Demand Share sector will be sizable again; additionally, after the new transmission line opens, spot
prices will recover to $60-80/MWh, making that market a viable off-take again
21
Chile: The distributed generation segment remains subdued due to lacking policy drivers
and utility-scale demand dominates despite a contraction
Chile Market Segmentation 2015-2020E Key takeaways:

100%
• Utility-scale:
90% ◦ At 98%, this segment makes up almost the entire Chilean market this year as large-
scale solar has been competitive across multiple off-take avenues like direct PPAs,
80%
merchant market, and CNE auctions
70%
Market Segmentation
◦ Despite deteriorating viability of direct PPAs and the merchant market for solar, over
90% of the market will remain utility-scale as:
60%
94% – The auctioned pipeline is being built out in 2016/2017
50% 98% 98% 97% 96% 96%
– Developers are seeking non-mining off-takers for direct PPAs
40%
– Developers are looking at the Pequeños Medios de Generación Distribuidos
30% (PMGD) program that offers a short-term fixed spot price to 3-9MW size projects
• Distributed Generation:
20%
◦ At 2% of the market, the DG segment is in its early stages due to an unviable net-
10% billing system that compensates solar at ~50% of the retail price, falling short of
1% 1%
2% 2% 2% 3% 3% 4% giving an adequate incentive for customers to install solar
0% 1% 1%
2015 2016E 2017E 2018E 2019E 2020E
◦ With little indication that incentives for residential and commercial DG will improve
Residential (<20kW) Commercial (20kW - 1MW) in the near-term, the segment will remain dormant and expand its demand share to
Industrial (1MW - 5MW) Utility (>5MW) just 6% by 2020 driven almost entirely by industrial-scale projects
22
Utility Scale: Demand is set for a drop as the project pipeline is starting to contract in
reaction to deteriorating drivers
Chile Utility Scale (projects >5 MW) PV Demand 2015-2020E The utility-scale segment:
Demand upswing driven by 94% ◦ The utility-scale pipeline stood at 14GW by end-2015 encouraged by previoisly
100%
expected opening of the Cardones- exceptionally high spot prices at >$100/MWh and robust demand from the mining
2,000 Polpaico SIC-SING transmission line
80% sector: Close to 70% of that pipeline is now inactive due to a deterioration in spot
prices and mining demand and has been scaled back by us to around 4GW
Demand drop due to low spot 60% ◦ The impact of failing drivers is reflected in project announcements: In Q4 2015 and
1,500
prices and little mining demand
MWdc
1,279 Q1 2016 they were 1/3rd of what was announced in the same period in 2014/2015
40%
◦ System and module prices are holding stable for ≥100MW projects: Module prices
28% 24%
952 34% are on average $0.46/W and system prices are on average $1.25/W
1,000
20%
5% • Auctioned Projects:
638
513 490 0% ◦ Neither of the two projects that won under the Oct. 2015 CNE auction are known to
468
500 have started construction: These were a ~55MW (110GWh) project by Solarpack and
-20% a ~44MW project (88GWh; part of a larger 420MW project) by First Solar
-27%
◦ The next CNE auction has been further delayed to Dec. 2016 as the govt. awaits the
0 -40%
2015 2016E 2017E 2018E 2019E 2020E finalization of a transmission infrastructure law that will impact bid prices
Annual Utility-Scale Intalled PV Annual Growth • Merchant Projects: They are getting a lease of life through the PMGD program by
clubbing several 3-9MW projects together for fixed spot rates that are especially useful
Source: GTM Research in the SIC grid region where prices can be relatively higher than SING but very volatile
23
Chile: Enel Green Power leads the utility-scale ranking with the largest operational capacity
Chile Utility-scale Developer Rankings Q2 2016
1. Enel Green Power 205 403 602
2. SunEdison 524 231 334
3. First Solar 252 163
4. Acciona 55 330
5. Pattern Energy 179 140
6. Solarpack 204 41
7. Solairedirect 100 54 2
8. SunPower 131
9. Gestamp 123
10. Austrian Solar 307
0 200 400 600 800 1000 1200 1400

MWdc
Announced (Pre-Contract) Under Construction Operational
24
Chile: SING region boasts 20% more projects under construction than SIC territory despite
lesser demand ahead
Sistema Interconectado del Norte Grande (SING) Grid PV Highlights Sistema Interconectado Central (SIC) Grid PV Highlights
SING Top Installed and Under

SIC Top Installed and Under
Construction Projects from Q1:
Construction from Q1:
• 208MWdc Finis Terrae I & II
• SunEdison went into SIC Interconnection Developments:
projects commissioned by Enel
bankruptcy last quarter • 50% of the 1.3GWdc operational
Green Power, which brings the
putting at risk 230MWdc of its now in Chile is located in SIC,
developer’s total operational
projects under construction mostly in Atacama: The region
capacity to 618MWdc in Chile;
tied to SIC: projects will likely has 90% of the country’s
Enel has 148MWdc under
be acquired by other population so projects here are
construction as part of its Blue
SING Interconnection Developments: companies looking to expand within the primary off-take
Sky project
• Govt.’s estimate for the their pipeline. None of these region and so face few
completion of the SIC-SING projects are within protected transmission bottlenecks
transmission line is mid-2017 but yieldco TerraForm Global (as
end-2018 is more realistic due to with SunEdison’s Uruguay
likely delays as construction has projects) escalating the risk of
SING Pipeline Dynamics: SIC Grid Pipeline Dynamics:
yet to fully advance and project failure
• Chile exported the equivalent of • Since the decline of the mining
permitting delays with a project
8% yearly generation to Argentina industry in SING, many projects
of this magnitude are common
in Q1 2016 through the recently previously announced there
• 50% of the 2GW under
reactivated SING-SADI line; have shifted to SIC, increasing
construction in Chile is in the
Argentina faced an electricity the region’s pipeline: Only 25%
SING region: projects completing
supply shortfall and SING has a of the projects here were
between now and 2018 face
surplus due to a lack of demand in announced pre-2014, however,
major grid bottlenecks
the region allowing both sides to these projects have been slow-
gain from the surplus/shortfall moving without established off-
takers and many are turning
into ghost projects
Source: GTM Research Latin America PV Project Tracker Source: GTM Research Latin America PV Project Tracker
25
Chile: Government will award over 6GW of total capacity and solar could win over 40% of
the capacity offered in the upcoming CNE auction
Difference in capacity awarded between the last CNE auction and the next one Solar’s role in the upcoming CNE auction:
• Solar could win at least 40% of the awarded capacity going by its success thus far in
7000 Chilean auctions and the hourly structure of the bidding
Capacity increase is due to higher
electricity demand expected by ◦ The total generation awarded in this auction will be 13,750MWh, a factor of 12
6000 2021 and the govt’s goal to reduce
higher than the previous auction in October 2015, which also represents 29% of
electricity prices 25% by increasing
supply regulated supply expected to be auctioned over the next decade.
MW Capacity Awarded
5000
Solar could win 2.5GW ◦ Previous auctions had average PPA prices between $64-$67/MWh, but given that
prices in Mexico and Peru were at an average of $46-48/MWh in recent auctions,
4000 and the competition expected, prices in Chile will clear between $45-55/MWh
6500 ◦ Block pricing ensures that solar will compete against other solar projects (and not
3000
other generation sources) by bidding into the daylight hour blocks allocated by CNE
Solar won 100MWdc
2000 in this auction • Completion deadlines for projects are 2021, which will ensure that the major
12X
between two projects interconnection between the north and central grids will be ready for them and other
projects already in the queue will finish so that grid congestion does not occur
1000 550
• Chile has the third highest electricity prices in Latin America behind Uruguay and
0 Guyana because it imports upwards of 60% of its conventional fuel sources: Increased
Chile Auction Oct. 2015 Chile Auction Dec. 2016 solar capacity through the auction along with grid expansion will help bring greater
supply of solar from the north, reducing consumer costs by as much as 25% as cheaper
solar will replace conventional fuels
26
Chile: Merchant projects especially on the SING grid are exposed to falling spot prices and
decreasing returns
Spot prices in Chile in SIC and SING grids1 Why spot prices are falling:
200 • 90% of the population resides in central (SIC) grid region where there is a large
supply of hydro-based electricity: Each summer, as the snow melts and reservoirs fill,
180 SIC prices skyrocket as
hydro dam reservoirs hydro generation increases, crashing the spot prices
160 slowly get lower over
the summer months and • Projects in the SING region are not as prone to drastic fluctuations in spot prices but
140
hydro output decreases still face a downward trend due to the mining industry’s current slump that has
drastically reduced energy demand and left an oversupply
USD/MWH
120
• Merchant schemes have long been favored by the Chilean government as they are
100 representative of the free market system that the country boasts but sudden PV
capacity additions in the past two years have led to a oversupply and in turn lower
80 prices: The viability of many projects in the pipeline has been jeopardized
60 • Several instances of projects which generate returns on the merchant model include:
40
◦ Etrion’s Salvador which sold 55% of its generation on the spot market last year while
SIC prices decrease as snowpacks are 70GWh of its yearly generation was tied to a PPA
20 replenished and melt in the spring refilling
reservoirs and increasing hydro generation ◦ SunEdison’s Maria Elena project which sells all of its 201GWh on the spot market
0 • Some companies continue to try and play in the spot market by taking advantage of
Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16
stabilized prices as part of the PMGD scheme: Projects under 20MW get a fixed 6-
SIC SING SIC Projected SING Projected month price based on the previous 6-month average spot price as part of a 4-year
Source: GTM Research; 1- Systep contract
27
Chile: Fall in mining production in Chile negatively impacts project pipeline assessment in
SING
Change in expected SING territory PV Pipeline Reasons for the mining industry’s fall:
• Chile is the world’s biggest producer of copper and prices for the commodity have
8000 fallen from $4.50/lb in 2011 to $2.30/lb in late-2015 due to a decrease in global
Over half of the demand and an oversupply of copper globally
7000 projects in this
region are tied to • Mines have already scaled back 7.6% production in 2016 alone: Banks are hesitant to
7424
mining interests finance new solar projects, especially in the SING grid that are tied to mining
6000
• Over 75% of mining interests in Chile are concentrated in the SING grid region of
5000 Antofagasta, Tarapaca, and Arica y Parinacota: Many large projects have already taken
MWdc
up prime sites for solar further reducing the viability of larger projects in SING
4000 Which projects will move forward?:
3000 Only 16% of projects in the • Projects submitted before 2014 and not under construction likely do not have
region are expected to move financing or an off-taker by now: These projects are further exposed to low spot
2000 towards completion prices and have diminished returns if they build now
• 70% of the current projects under construction and less than 10% of announced
1000 projects are considered as active as part of the current pipeline: The number of
1194 submitted projects in SING has declined drastically since the start of 2015 and over
0 75% of the announced projects were submitted pre-2015.
Unfiltered SING Pipeline Materialized Pipeline
• Given the challenges facing the mining industry, long-term PPAs are much more
Source: GTM Research difficult to negotiate and the spot market prices are unviable
28
Chile: In the absence of new incentives for DG, little has changed for this segment
Chile Distributed Generation (<20 kW-5 MW) PV Demand 2015-2020E The DG segment:
80 120% • Residential and Commercial:
70 100% ◦ The segments are incentivized through Law 20.571, which allows PV self-
93%
85% consumption and exporting of energy to the grid for installations under 100 kW but
Industrial-scale projects will push DG compensates only a maximum 50% of what is produced with the remaining 50%
60 demand through projects driven by the 80%
PMGD program with fixed spot rates considered as a charge for grid usage: This form of net billing has made residential
50 60% and commercial projects unviable because of payback periods of not less than 10
54
years
39%
40 40% ◦ Residential and commercial electricity rates remain unchanged in 2016 but could go
25%
up substantially by end of 2016 as contracts that current generators have with
30 20%
distribution companies are due to expire and new contracts could see a restructuring
30
of rates with a greater burden on residential and/or commercial consumers
20 -6% 0%
10 • Industrial:
17
10 -29% 12 -20% ◦ There continues to be demand from industrial consumers - many are located in
10 5
1 1 2 2 10 remote locations, off-grid and rely on diesel generators and solar is an excellent
12 5
0 1 1 2 2 -40% alternative to fuel price volatility, offering excellent reliability
2015 2016E 2017E 2018E 2019E 2020E
Residential (<20kW) Commercial (20kW - 1MW) ◦ While 3-9MW size projects under the PMGD program will club together and
Industrial (1MW - 5MW) Annual Growth effectively become utility-scale, many will remain stand alone at 3-5MW and will
drive growth in the industrial segment
29
Chile: Risk is skewed to the downside in the short-term though the fall in demand will be
not more than 20% of the current estimate
Chile Overall PV Demand Scenarios 2016E-2020E Key takeaways:

1,655
Potential Upside = 960GW 2016-2020
1,600 CAGR = 19% • Short-term:
Potential Downside = 2.3GW 2016-2020
◦ Sustained low global copper prices could push mining demand lower
1,400
1,353 ◦ Further project failures are possible within the current pipeline as spot prices in SIC
1,200 1,140 could fall in addition to prices falling in SING due to better rainfall and continued
strong hydro power output in the winter months
MWdc
1,000 993 CAGR = 20% • Long-term:

814
800 690 ◦ Severe delays could occur in the operationalization of the Cardones-Polpaico
650
650 transmission line extension at SIC and the interconnection between SIC and SING
600
511 CAGR = -5% Upside Risks:
483
400 508 • Short-term: Swift recovery in copper prices could rebound mining demand as early as
416
2017
200 311
257
211 • Long-term:
- ◦ The govt. could introduce better incentives for the DG segment spurring residential
2016E 2017E 2018E 2019E 2020E
and commercial PV growth
Upside Scenario Baseline Scenario Downside Scenario
◦ Solar could win far more than currently estimated in the upcoming auction due to
Source: GTM Research aggressive cost reduction assumptions as projects have to commission only by 2021
30
Chile: Downside risk is most pronounced in the utility and industrial segments
Chile Residential (<20 kW) PV Demand Scenarios 2016E-2020E Chile Commercial (20 kW-1 MW) PV Demand Scenarios 2016E-2020E
40 38 40 38
30 30
MWdc
MWdc
20 20
20 20
10 10
10 3 5 10 10 3 5 10
5 5
- 1 2 2 1 1 - 1 2 2 1 1
2016E 2017E 2018E 2019E 2020E 2016E 2017E 2018E 2019E 2020E
Chile Industrial (1-5 MW) PV Demand Scenarios 2016E-2020E Chile Utility-Scale (>5 MW) PV Demand Scenarios 2016E-2020E
100 80 2,000
1,500
80
1,500
MWdc
MWdc
60 50 1,050 1,279
54 800
40 30 1,000 625 640 952
9 10 15 30 638
20 17 15 500 468 490
12 10 504
- 3 6 300 400
5 - 206 250
2016E 2017E 2018E 2019E 2020E 2016E 2017E 2018E 2019E 2020E
31
4. Mexico
Mexico: Solar demand has received a big boost from its success in the recent Clean Energy
Auction – market will now offer cumulative 9.3GW between 2016-2020
Mexico Overall PV Demand 2015-2020E The market’s trajectory:

3,000 600%
Cumulative Forecast • Highlights:
CAGR = 41%
521% 2016-2020 = 9.3GW ◦ Solar has proved it’s competitiveness in Mexico, winning 74% of energy offered in
2,546
2,500 500% the country’s first clean energy auction held in March 2016
2,169 ◦ Playing into its upside scenario, Mexico will grow by 521% to install 646MW in 2016
2,013 (up 79% from earlier estimates), only to jump again by 3X in 2017
2,000 1,913 400%
• Near-term:
MWdc
◦ Large auctions with multi-gigawatt wins for solar are set to become more frequent:
1,500 300%
196% Another auction with 9TWh of energy on offer is scheduled for Sept. 2016 and solar
could again win 60-70% of the energy translating to capacity of around 3GW
1,000 200% ◦ The pipeline of 8.4GW of grandfathered projects under the erstwhile Self-Supply and
646 Small Power Producer permit programs is set to scale down to only about 1.1GW, the
majority giving up permits and shifting instead to auctions: Not more than 400-
500 118% 100%
46% 500MW of grandfathered projects will continue and execute
29% 28% 34% 33%
104 7%
• Long-term: Developer interest and solar demand in Mexico extend far beyond the
5% 8% 17%
- 0% auction due to the CEL obligations on industry and high electricity prices for T2 and T3
2015 2016E 2017E 2018E 2019E 2020E
commercial tariff customers: direct PPA and wholesale merchant projects will grow,
Annual Installed PV Annual Growth LatAm Demand Share supported by a soon-to-be-active power marketing industry
33
Mexico: Utility-scale solar has further consolidated its lead as Mexico’s primary segment
with additional capacity tied to the auction
Mexico Market Segmentation 2015-2020E Key takeaways:

100% • Utility-scale:
90% ◦ This segment has been about 50% of a small annual market of only 100MW until
2015 but will expand significantly to 87% of the market in 2016
80%
52% ◦ Permitted projects under the erstwhile Self-Supply and Small Power Producer
70%
programs were primarily utility-scale indicating that the market would skew towards
74% that segment: solar’s large win under the auction has now consolidated that view
60% 81%
Market Segmentation
87% 89%
93% ◦ With large-scale auctions expected to continue until 2020, the market is set to
50%
remain driven by the utility-scale segment, which will expand further to 93% of the
40% 19% market in 2017 before starting a slow scale-back in share out to 2020
30% ◦ Utility-scale dominance will be further supported by >5MW projects with direct PPAs
1% and those selling on the wholesale market
20% 13%
29% 8% • Distributed Generation:
10% 5% 5%
3% 10% 12% ◦ For an emerging segment, DG has a sizable share of the market at a combined 12%
7% 4% 6%
0% (48% in 2015), which is due to strong fundamentals - high electricity prices for DAC
2015 2016E 2017E 2018E 2019E 2020E
residential customers, T2 and T3 tariff commercial customers, and O-H and O-M
Residential (<20kW) Commercial (20kW - 1MW) industrial customers that solar can compete with
Industrial (1MW - 5MW) Utility (>5MW)
◦ The strength of the market is reflected in its share expanding to 26% in 2020
34
Mexico: Auction-led demand will combine with grandfathered projects to provide an
exceptional jump in 2016
Mexico Utility Scale (projects >5 MW) PV Demand 2015-2020E The utility-scale segment:
2,500
New 264MW from latest auction • Highlights:
944% 950%
adds to 300MW grandfathered
◦ Auctioned projects substantially boost utility-scale installations in 2016 with growth
capacity to spike growth
in this segment spiking to 944% to give 564MW
2,000 1,890
1,781 1,792 1,754 750%
◦ Growth will continue at triple digits in 2017 reaching 216% as the market ramps up
capacity tied to projects won under the auction
1,500 • Auctioned Projects:
550%
MWdc
◦ With only 21 months to COD (early 2018 commissioning deadlines), the pressure is
on - 264MW of projects that won under the auction will install already this year as
1,000 350% some developers have pipelines of over 500MW
223% 564 ◦ Only an additional 1,200MW of the remaining 1,500MW will install in 2017 with
500 300MW spilling into 2018 as the market’s ramp up from 54MW to 2GW in two years
216% 150%
will strain the ecosystem and hold back part of the pipeline of most developers
1% -2% 8%
54 • Grandfathered Projects:
0 -50% ◦ Not more than 300MW of grandfathered projects will install in 2016 with at most an
2015 2016E 2017E 2018E 2019E 2020E
additional 150MW installing next year as legacy projects
Annual Utility-Scale Intalled PV Annual Growth
◦ The pipeline has shrunk as many developers have put projects on hold or dropped
them amidst falling electricity prices and relative benefits of switching to the auction
mechanisms for highly bankable PPAs with CFE and priority interconnection
35
Mexico: Enel Green Power leads the utility-scale ranking with the largest contracted
capacity
Mexico Utility-scale Developer Rankings Q2 2016
1. Enel Green Power 992
2. SunPower 568
3. Iberdrola 525
4. JinkoSolar 501
5. Fisterra Energy 349
6. Eosol 163
7. Gestamp 111
8. Canadian Solar 62
9. Alter Enersun 29
10. Solairedirect 27
0 200 400 600 800 1000 1200

MWdc
Contracted Under Construction Operational
36
Mexico: First Clean Energy Auction saw projects awarded skewed towards large developers
and regions most in need of greater generation capacity
Total capacity of auctioned projects by developer Project allocations under the auction:
2% 2% SunPower, 509 MW
• CENACE awarded 5.4 TWh of total energy, 72% of which was to solar projects, signaling
3% JinkoSolar, 241 MW its competitiveness in the country: Yucatan saw high interest due to high marginal
27% prices tied to its isolation relative to the country’s grid structure
Enel Green Power, 992 MW
• Areas with high insolation (Coahuila) and strong manufacturing (Guanajuato,
Canadian Solar, 62 MW
Aguascalientes) also won projects due to high demand: Guanajuato and Aguascalientes
53% 13% Solairedirect, 27 MW lie within Mexico’s “golden triangle” where 70% of the automotive industry exists
Photoemeris Sustentable, 29 MW • Enel Green Power was the largest winner in the auction with 992MWdc, adding to their
already large regional pipeline of 1,350MWdc in Chile, 655MWdc in Brazil and 650MWdc
Total capacity of auctioned projects by state in Peru effectively leveraging their assets and internal financing to gain market shares in
countries: With an ever-expanding pipeline, they are now increasingly exposed to the
3% 1%
Yucatan, 537 MW relatively high economic and political risk in countries in the region
7% Coahuila, 754 MW • SunPower won 509MWdc and currently has 131MWdc of pipeline capacity in, expanding
29%
Guanajuato, 357 MW it’s LatAm project development play
19%
Jalisco, 122 MW • Recurrent Energy won 62MWdc, but parent company Canadian Solar will develop the
Aguascalientes, 62 MW Aguascalientes project while Recurrent continues to focus on the U.S. market
Baja California Sur, 27 MW • Solairedirect won a 27MWdc project through subsidiary Sol de Insurgentes and can be
41% expected to leverage the financial backing their parent Engie, an global energy giant
Source: CENACE 1. SunPower’s capacity includes subsidiary Vega Solar which won two projects 2. Alter Enersun’s bid was represented by Photoemeris Sustentable 3. Solairedirect’s winning project was represented by Sol de Insurgentes
37
Mexico: Rock-bottom PPA prices in the auction are aggressive but several strategies leave
room for viability
IRR Estimates Relative to PPA Prices with fixed GTM Research Assumptions1 Possible strategies behind rock-bottom PPA prices:
30% • PPA contracts for energy are for 15 years but record low PPA rates suggest assumptions
These are only estimates. Actual IRRs
Photoemeris
could be higher if projects have better Ticul 1
Sustentable
of 30 year plant-life periods:
terms than the ones assumed here. (SunPower)
25% 29 MW
Aguascalientes 130 MW ◦ As already common in the U.S., developers might assume 30-year plant lifetimes with
Don Jose
Potencia I additional revenue factored in for another 15 years beyond current contracts
62 MW
20% 238 MW San Ignacio
Ticul 1 ◦ This is a big bet on the future with little clarity on where the market will go and what
Estimated Equity IRR
26 MW
(SunPower)
off-take opportunities will look like in 15-20 years
Guajiro 2 260 MW
15% 119 MW Concunul • Market-bottom debt rates of 7% are possible within Mexico if balance-sheet-backed but
Las Viborillas (JinkoSolar)
Villanueva 3 (JinkoSolar) 93 MW many developers have dollar-denominated contracts giving them access to international
10% 327 MW Sol de Insurgentes 122 MW financing, development financing, or corporate financing that could be available at
27 MW
considerably lower rates, allowing them to increase IRRs
Villanueva I
427 MW = Projects in Yucatan that on
5% average have 10% less insolation
• Companies with projects on the ground, especially in non-solar technologies, can
= Represent project sizes
leverage their assets for better debt terms
0% • Companies could make a strategic play by accepting lower IRRs now only to compensate
30 35 40 45 50 55 60 65 70 in the future by adding incremental capacity at low marginal costs at the same sites
PPA Price Awarded in Auction (USD/MWh)
• Some companies with upstream businesses might be able to compensate for lower
Enel Green Power Jinkosolar Photoemeris Sustentable
project IRRs through better returns for their overall business from sales to their own
Recurrent (Canadian Solar) Sol de Insurgentes SunPower projects
1. Assumptions: Capex - $0.95/W for >100MW, $1.05/W <100MW; Debt @ 7%; Equity @8%; Standard insolation rates for
regions; Project Term: 30 years
38
Mexico: Grandfathered projects pipeline is in for a major scale-back - set to fall by 87% to
1.1 GW
State-level Status of Grandfathered Pipelines Scaling-back the pipeline:

• With no capacity or pricing constraints to obtaining permits, the pipeline of Small Power
State: Coahuila
Previous Pipeline : 385 MW Producer (SPP) and Self Supply (SS) projects has reached 8.5GW
State: Sonora Continuing Pipeline : 41 MW
Previous Pipeline: 1.8 GW • At 8.5GW, such permitted projects have so far represented 72% of the total 11.7GWdc
Continuing Pipeline: 472 MW pipeline in Mexico, which we are now scaling back because:
◦ Electricity prices have fallen by 40% in the last year and 32% of permits were signed
State: Chihuahua prior to 2015 at higher prices, making them unviable now
Previous Pipeline : 1.5 GW
Continuing Pipeline : 275 MW ◦ Due to deteriorating viability, banks are avoiding financing projects: 80% of projects
are struggling to raise the capital needed to continue beyond end-2016, which is
Rest of Mexico
when their permits “sunset” or expire if they fail to raise at least 30% of the CapEx
Previous Pipeline : 4.3 GW
Continuing Pipeline : 277 MW ◦ Even if projects raise the required CapEx and achieve legacy status, they remain at a
disadvantage compared to the growing auctioned pipeline as the latter has
Factors considered to scale-back the pipeline interconnection priority, encouraging many to give up permits
Project retained: ◦ 80% of permits are with developers with little to no project development experience:
1. Those with permits filed after August 2014 because they used siting and
transmission to take into account optimal spots with high insolation They are now struggling to overcome market challenges and some will sell permits to
2. Self Supply projects since they already have offtakers lined up and may be able to larger, experienced project developers while others will default on execution
finalize PPAs with these offtakers by the end of 2016 if both sides agree
◦ 20% of the permitted pipeline will try for future auctions due to better chances at
Projects removed: Small Power Producer projects are the most likely to vanish because
CFE, the off-taker, now has access to lower PPA prices through the auction financing and execution
Source: GTM Research • Only 1.1 GW will continue with permits as legacy projects or as auctioned projects
39
Mexico: Christmas comes early for PV- second clean energy auction in September 2016 will
be significantly larger than the one in March, but more competitive
Where CENACE will award projects in the next auction Expectations for the next auction:
The first tendered transmission lines will link • An estimated 9TWh will be auctioned in the next tender where solar, wind, hydro and
Oaxaca to the central Mexican grid. Oaxaca cogeneration projects will compete with one another again
has high insolation while supply is needed in
high demand areas of central Mexico: • Unlikely that prices will come down further because 450% greater capacity is being
• CENACE might allocate 20-40% of capacity
offered relative to the last round
here in the next auction as greater
generation is needed and gas pipeline • Because of the short turnaround between the two auctions, many of the 216 bids not
build out costs are high
• Both Oaxaca and Chiapas had no winning selected in the first will likely resubmit due to the larger capacity offered despite
bids in the first auction aggressively low prices in the first round
• Sponsors of 4.6GWdc of Small Power Producer projects that would lapse in end-2016
without 30% CapEx will compete in this auction as the model of selling power at 98% of
Yucatan already
Baja California Sur (BCS) has 540MWdc the marginal cost of generation to CFE is now uncompetitive with auctioned PPA prices
will add 60GWh more awarded from the and such projects have little chance of securing funding to continue as legacy projects
due to a transmission last auction:
line in the works CENACE will likely • Developers with large LatAm project pipelines such as First Solar (163MWdc), Acciona
between BCS and Sonora, Chihuahua, Durango and allocate not more (329MWdc), Solatio (335MWdc) and Iberdrola (160MWdc) that did not win or submit
Sonora in 2018 Coahuila have a 5.2GWdc project than additional
pipeline and are unlikely to win projects in the first auction might be active in the upcoming auction
100MWdc in the
more projects until permits expire upcoming auction
or projects develop further • The developer landscape will diversify in the upcoming auction as major players Enel
Lower probability to Higher probability Green Power, Solairedirect and SunPower are highly exposed to the Mexican market
receive project in to receive project in from the first auction and even more so across Latin America: In Brazil and Chile, Enel’s
next auction next auction
pipeline is 655MWdc and 1,353MWdc respectively, Solairedirect has a 200MWdc pipeline
each in Chile and Brazil
40
Mexico: Increased competition in the residential segment even as uncertainty remains on
the future of net metering for DG as a whole
Mexico Distributed Generation (<20 kW-5 MW) PV Demand 2015-2020E The DG segment:
700 100% • Net-metering remains uncertain for all DG segments as a new law is under deliberation,
Market to pick up as 88% 15 coming into force by early 2017: Early indications are that it could switch compensation
electricity tariff reform in 90%
600 2018 will expand DG market to wholesale instead of retail rates or introduce net billing instead of net metering
80%
• Electricity prices continue to fall as the govt. has kept pressure up on CFE to keep prices
500 67% low to keep inflation under check even as CFE’s losses mount: Prices in Q1 fell between
64% 70%
61% 61% 332
5-15% for commercial and industrial customers and even 5% for the highly lucrative
60%
400 10 DAC residential customers even as CFE faced a loss of $1.15 billion in that quarter1
58%
Net metering continues 50% • Residential: The installer landscape has become over-crowded with over 600 installers
for residential as well as 184
300 for a market of only around 50MW in 2016: This is pushing prices down for 10kW
C&I segments but future 40%
remains uncertain systems to as low as $1.35/W with $1.60/W and upwards instead seen as viable
6 30%
200 • Commercial and Industrial :
92 310
4 20% ◦ Small-commercial projects of <500kW continue to remain viable for customers in the
100 51 221
2 T-2 and T-3 tariff segments but falling electricity prices have made the sell difficult
32 123 10%
20 77 ◦ Systems >500kW continue to languish as net metering is not available for them and
30 48
0 0%
2015 2016E 2017E 2018E 2019E 2020E customers are mandated to stay under regulated tariffs: such system sizes might be
able to connect with solar in addition to the grid but there is no clarity yet on how
Residential (<20kW) Commercial (20kW - 1MW)
Industrial (1MW - 5MW) Annual Growth the regulations aim to deal with such cases
Source: GTM Research 1. Source: BNAmericas “Mexico power tariffs dip as natural gas use rises” by Adam Critchley, March 3, 2016 and “Pension liabilities deepen CFE's Q1 losses” by Adam Critchley, April 29, 2016
41
Mexico: The market is skewed slightly to the downside in the short-term but likely to enjoy
more upside in the long-term
Mexico Overall PV Demand Scenarios 2016E-2020E Key takeaways:

Potential Upside = 3.8 GW 2016-2020
4,000 Potential Downside = 4GW 2016-2020 3,836 • Short-term:
◦ Some Self-Supply contracts could fall through as electricity prices continue to drop
3,500 3,296
CAGR = 47% ◦ Grandfathered projects that aim to continue as legacy projects might fail to raise
3,000 2,795 financing in time for the end 2016 deadline to retain their permits
2,546
2,390 ◦ Uncertainty about net metering and falling electricity prices threaten DG growth
MWdc
2,500
2,169
2,013 • Long-term:
1,913 CAGR = 41%
2,000
◦ Aggressively low PPA prices in the first auction could drive prices and thus returns
1,500 1,287 1,227 down to unsustainable levels in the future, jeopardizing the viability of the market
1,085 1,114
Upside Risks:
1,000 CAGR = 25%
814 • Short-term: Merchant projects could take off sooner, building on developers’
500 646
497 experience in developing the Self-Supply and Small Power Producer programs’ pipelines
- • Long-term:
2016E 2017E 2018E 2019E 2020E
◦ Electricity prices will likely increase as CFE’s losses are increasingly unsustainable
Upside Scenario Baseline Scenario Downside Scenario ◦ PV’s falling costs and high PPA price competitiveness could hold PV in good stead in
the utility-scale segment
42
Mexico: Upside risk is most consistent for the utility-scale segment
Mexico Residential (<20 kW) PV Demand Scenarios 2016E-2020E Mexico Commercial (20 kW-1 MW) PV Demand Scenarios 2016E-2020E
800 800
608 590
600 600
MWdc
MWdc
380
400 400 328
173 310 332
86 221 143
200 4848 200 36 65 184
77 123 92
- 35 42 54 76 - 32 21 51 28 54
32 23 36
2016E 2017E 2018E 2019E 2020E 2016E 2017E 2018E 2019E 2020E
Mexico Industrial (1-5 MW) PV Demand Scenarios 201E-2020E Mexico Utility-Scale (>5 MW) PV Demand Scenarios 2016E-2020E
40 32 3,000 2,466 2,568 2,605
2,228
30
MWdc
MWdc
20 2,000 1,890
1,781 1,792 1,754
20 14
10 15 724
6 1,000 1,229
10 10 1,093
6 564 1,013 1,021
2- 4 2 3 4 444
- 1 -
2016E 2017E 2018E 2019E 2020E 2016E 2017E 2018E 2019E 2020E
43
5. Market on the Rise – Argentina
Argentina: The country could emerge as a new major market in Latin America
Argentina Overall PV Demand 2015-2020E The market’s trajectory:

700 400%
Cumulative Forecast CAGR = 120% • Highlights:
2016-2020 = 1.4GW ◦ Argentina has cumulative PV installations of only 34MW and is set to install an
595 350%
600
additional 26MW in 2016: Utility-scale projects have been opportunistic though
311%
300% there have been several small-scale residential projects driven by high electricity
500 prices and severe blackouts
426
250% ◦ PV installations will jump next year as the gov.t is set to auction 300MW of solar
400
MWdc
capacity as part of a 1GW auction launched under a new renewables policy

200%
305 190% • Near-term: There is high confidence that the first auction with 300MW for PV will be
300 successfully implemented because of:
150%
◦ Strong fundamentals - A severe energy deficit has left an emergency situation and
200 there is an increasing reliance on electricity imports from neighboring countries
100%
105 40% ◦ Country’s image makeover - President Macri’s pro-business rhetoric and swift action
100 40% 50% to turn around investor confidence is driving strong investor interest
24 26 5%
◦ Abundant Latin American financing – Regional banks have high liquidity and a strong
0 0%
2015 2016E 2017E 2018E 2019E 2020E appetite for energy infrastructure projects in countries with strong fundamentals
• Risks: Despite strong intent by the govt. and significant investor interest, several factors
Annual Installed PV Annual Growth
like macro-economic stability, off-taker risk, domestic content requirement stipulations,
Source: GTM Research and interconnection challenges are yet to be assessed accurately
45
Argentina: The country has launched a renewables policy with sizable targets that include
capacity carved out for solar
Argentina Policy Evolution in Favor of Solar Key measures pushing Argentina to move ahead with PV
Renew-
Measures • The new Macri government has launched a national Renewable Energy mandate sets a
able First Clean
Mauricio Macri to meet
energy Energy target of 8% consumption coming from renewables by 2017 and 20% by 2025
becomes President debt
mandate Auction
on December 10th, obligations starts in • Less than 100MW of cumulative PV has been installed thus far in the country: Argentina
passed in
2015 taken in May 2016
March would need to add 3.4 GW of renewables capacity to meet the 2017 target with many
Feb. 2016
2016
rules and incentives still being finalized and solar could take up a 1/3rd share of that
• Macri has • Argentina has re- • The policy • Argentina is • Electricity demand in Argentina has increased by 40% over the last decade
prioritized entered the bond establishes targets auctioning 1GW in
economic growth market for the first of 8% renewables the upcoming (131,000GWh) while only building 30% of the capacity required to meet this demand:
and a quick time in 10 years (3.4GW) by 2017 clean energy
◦ Argentina is the 30th largest consumer and 29th largest producer of electricity in the
improvement in after striking a and 20% (12GW) auction that will
the business deal to pay back by 2025 and conclude by Dec. world, second only to Brazil in Latin America. The lack of new generation that has
climate in creditors an places heavy 2016, with another come online in the last 10 years has led to rolling blackouts during the summer
Argentina estimated $9bn in emphasis on solar auction for next
• New national outstanding debts • Solar incentives year likely to be ◦ Argentina imported electricity in recent months from neighbors Chile (225GWh),
focus on • As Argentina thus far have been announced at the Uruguay (1,300GWh) and signed an agreement with Bolivia to import energy tied to
business growth improves it’s few and sporadic end of 2016
has improved the credit rating, (net metering in • Increasing 500MW of capacity beginning in 2017 to account for the shortage
environment for financiers are one state, ad hoc electricity demand,
PV in the country getting more budget allocations large energy
• State-run utility CAMMESA will act as the off-taker for all renewable energy projects but
inclined to fund for solar in others) deficits and clean has been hit hard in recent years by budget overruns raising risks of credit-worthiness
solar projects but the new policy energy auctions
gives a reliable will drive PV • The first clean energy auction has been finalized with a call for bids in May 2016, with
framework capacity to projects expected to be auctioned and finalized by Dec. 2016: Total capacity offered is
quadruple by 2020
1GW with a carve out of 300MW for solar
46
Argentina: The upcoming energy auction will have at least 300MW PV awarded
Insolation Levels in Argentina Building up to the final auction results in December 2016
• Specifications for the upcoming Argentina power auction will be released in June 2016,
Northwest regions of however, the ministry of energy already announced its intentions to tender 1GW of
Argentina see insolation
clean energy capacity, at least 300 MW of which will be solar PV:
levels between 2300-2600+
kWh/m2. This is comparable ◦ Under the clean energy mandates, a sudden demand of 8% renewable by 2017 will
to Northern Chile where PV
has taken off in large see that wind will win much more of the share of projects awarded in the first
numbers. auction because wind resources are in closer proximity to population centers. Solar
will continue to have a stronger footing in the long term towards the 2025 target.
Santa Fe is the first state in
Argentina to establish a ◦ COD for projects to be completed will be March 21st 2018, giving projects a rigid
clear net metering law at a timeline to complete after winners are announced in later this year.
rate of $0.38/kWh
• The govt. has finalized a relatively high benchmark price for the auction at $100/MWh:
The intention is to compensate developers for the inflation and risks associated with
Large population centers are selling to just one govt. off taker CAMMESA that has a weak credit rating
far from areas of highest
insolation, that typically have • Because of the high benchmark, final PPA prices will be higher than $80/MWh, bucking
inadequate transmission
the overall trend of rock-bottom prices in Mexico ($46/MWh) and Peru ($48/MWh)
infrastructure and require
any new PV projects to be • Financing has received a significant boost as the IDB has offered debt financing for up to
built near transmission
nodes. 100MW of PV that might come up in the Jujuy province
• For solar’s success, the country must ensure that an aging transmission system is
capable of handling an influx of new capacity from remote Northeastern Argentina
47
6. Market on the Rise – Peru
Peru: The country’s latest auction boosts demand and more auction could take place in the
future
Peru Overall PV Demand 2015-2020E The market’s trajectory:

120 400% • Highlights:
2016-2020 = 382MW 350% ◦ Cumulative installed is 100MW, 60MW of which was installed in 2015: An auction in
100 100
100 296% 2011 allocated 100MW of PV and current installed capacity is a result of that
300%
◦ Since the 2011 auction, close to 1GW of projects have been granted concessions but
80 80 250% none have installed: In 2015 alone, 450MW worth of projects have signed
80
concessions with an eye on the merchant market, but only 20MW will install in 2016
200%
MWdc
60 ◦ PV installations will jump in the next two years as 184MW of projects allocated in an
60 150% auction in February 2016 will install, half in 2017 and the rest in 2018
100% • Near-term:
40 ◦ More auctions are expected in the future and will be the primary driver of demand
25% 50%
0% in the market: The govt. has had a 5% renewables goal that has now lapsed but
20 0% remains committed to solar growth to diversify away from hydropower
20 0%
-66% -50% ◦ Further auctions will be one-off, held every other year and some merchant projects
are possible: More solar is needed to meet rising electrification needs of rural areas,
0 -100% but peak demand is modest at 5.5GW, limiting the need for new capacity
2015 2016E 2017E 2018E 2019E 2020E
• Risks: Financing, which is a key bottleneck in the region is less of an issue for these
Annual Installed PV Annual Growth
projects since Peru enjoys a strong credit rating that is on par with Mexico and the two
Source: GTM Research companies with winning bids Enel Green Power and Engie have strong capital backing
49
Peru: Q1 auction allocates 84% more capacity than what is currently operational
Auctioned capacity versus operational capacity in Peru Peru has promising growth as an emerging PV Market
• Energy and Mines Ministry, Osinergmin allocared 184MWdc of PV capacity in the
400
• Solarpack (60MWdc) • Enel Green Power won February power auction, its first auction since early 2011 featuring renewable energy.
and T Solar (40MWdc) 144MWdc of this capacity at All of the projects from the 2011 auction were completed adding 100MWdc of PV
350 combine for the total $47.98/MWh in the form of capacity to the generation mix of the National Interconnected System (SEIN)
installed capacity in its Rubi project in
300 Peru Moquegua, Peru ◦ Peru aims to receive 5% of its generation mix from renewables by 2018, and 60% of
• Most of the projects in • Enersur, a subsidiary of its energy mix in 2025 by renewables, translating to about 14GW of capacity would:
the pipeline are in the Engie, won the other The government will continue to rely on auctions to hit this mark.
250 high insolation regions 40MWdc in the Intipampa
MWdc
of southern Peru on project at $48.50/MWh of ◦ Enel had close to 520MWdc of capacity approved, between 12 projects from 2013
the border with Chile the tendered capacity and 2015, but with this latest auction win and the PPA guarantee that comes with it,
200 and Bolivia
+84% it is unlikely Enel moves ahead with its previous project plans instead shifting focus
to winning auction bids: Of the 48 total PV bids in this auction, Enel submitted 17.
150
• PV PPAs in Peru were the lowest in Latin America at an average price of $48/MWh
until Mexico tendered projects at an average of $46/MWh in March. This continues
100
the trend of lower prices in the region as a result of falling system prices. Previous
184 Peruvian PV winners in the 2011 auction received PPAs at an average of $110/MWh.
50 100
• As evidenced by the December 2018 COD for these projects, the low prices ensure
that system costs may be able to decrease further before companies must complete.
0
Operational Capacity Auctioned Capcity A fifth power auction in 2017 will award approximately 220MWdc or more of total
Source: GTM Research capacity if previous auction amounts are any indication, building on Peru’s PV growth.
50
7. Central America
Central America: Honduras and Guatemala made little progress on new development last
quarter raising expectations of a slowdown
Central America Overall PV Demand 2015-2020E Key takeaways:

600 700% • Honduras: New projects worth 50-100MW for 2016 were expected to be announced
515 last quarter, building on the momentum of the 395MW installed last year but the govt.
550 2016-2020 = 1.1GW
471%
500% for the moment is holding back on further auctions scaling back our assessment of
500
demand: now only cumulative 240MW forecasted between 2016-2020 as opposed to
450
An nual Installed PV (MWdc)
300% the earlier 439MW with only 40MW expected this year
400 • Guatemala: Similar to Honduras, Guatemala too has made little further progress after
350 395 37% 100% installing the Horus I and II projects that saw 80MW installed in 2015: The forecast has
-2% 4% 13%
233 been scaled back to 5MW for 2016 as opposed to the earlier 85MW expected this year
300 -65%
255 264 39 with a knock-on effect scaling back expectations of cumulative demand to 214MW
250 -100%
37 between 2016-2020 compared to 434MW earlier
70 73
200 190 186 61 • El Salvador:
40 -300%
150 54 49 72
5 ◦ A 100MW tender was launched last quarter, project allocations from which will
69
81 26
100 83 64 conclude by the end of the year: But with completion deadlines 5 years out in 2020,
56 -500%
4 80
50 21 5 10 49 11 64 demand from these projects is forecasted only for 2018-2019
45 2 51 5 32 6 8 16 13 16 14
0 1 1 2 4 4 4 -700% ◦ The 74MWdc project by Udp Neoen-Almaval (Providencia Solar) secured $88m debt
2015 2016E 2017E 2018E 2019E 2020E financing from Inter-American Development Bank (IDB) raising expectation for 2016
Belize Nicaragua Costa Rica Panama to 83MW as opposed to the earlier 59MW: IDB is also considering lending to the
El Salvador Guatemala Honduras Annual Growth 26MWdc Solar Reserve project that will likely come up in 2017
52
Central America: Utility-scale PV remains the primary driver of demand in Central America
Central America Market Segmentation 2015-2020E The market’s segmentation:

600 150% • Utility-scale:
◦ Financing remains a key challenge for utility-scale projects: Projects are mostly able
500 96% to access only Latin American development finance which has limited availability and
100%
80% takes very long to materialize
72% 71%
64% 63% ◦ Govt.’s are holding back on tenders as regulators in countries like El Salvador are
400
526 insisting that projects do more to assess execution risks and realistically assess
36% 37% 50%
28% 29% availability of finance to avoid a failure of tenders to convert to installations, as seen
20%
300 in Panama in the past
4%
0% • Distributed Generation:
200 187 ◦ Panama: The regulator is deliberating removing the 500kW limit on net-metering,
169
182 which is widely seen as a major barrier to the expansion of the commercial-scale
151 133 -50% segment: There is already 7MW of cumulative DG capacity installed in Panama an
100 21
18 additional 5MW will install this year and double to 10MW in 2017: The market’s
3 13 67
10 10 44 58 growth could double overall if the 500kW cap is removed in 2016
20 32
0 16 4 8 10 16 19 23 -100% ◦ Costa-Rica: The country’s new net-metering law which was approved last year but
2015 2016E 2017E 2018E 2019E 2020E
had been held back from implementation finally kicked in on April 7 2016:
Residential (<20kW) Commercial (20kW - 1MW) Industrial (1MW - 5MW) Commercial and residential systems will be charged a grid access fee of 11 Colones
Utility (>5MW) Utility-Share DG Share
to 29 Colones ($0.02 to $0.05)/kWh for energy fed into the grid while self-
consumption has no charge
53
8. The Caribbean
Caribbean: The Dominican Republic is set for sizable capacity growth in 2016 with over
80MW in the pipeline
The Caribbean Overall PV Demand 2015-2020E Key takeaways:

700 400% • Cuba:
2016-2020 = 1.6GW 624 ◦ A commercial agreement has been signed between the Chinese govt. and Cuba to
600 283% 36
300% develop a 100MW PV plant which is in line with the country’s target of 700MW of PV
64
(target has no specific timeline); the project will likely commission only in 2018
Annual Installed PV (MWdc)
500
111 200% ◦ Another 10MW project is in the works supported by a $15m concessionary loan
from the Abu Dhabi Fund for Development (ADFD) even as several 1-2MW projects
393
400 amounting to a total of 20MW are in various stages of planning and development
25
55 59% 100% and expected to commission in 2016
36% 35% 50%
300 23% • Dominican Republic:
262 101
20
194 41 0% ◦ A 34MW PV plant came online in March 2016 as phase one of a total 68MW project
200 400
17 by Neo Solar Power’s project development subsidiary General Energy Solutions; the
143 37 90
15 remainder of the project will be completed in 2016
37 7 25 200 -100%
100 3 83
◦ A generation concession has been approved for a 50MW project in Santo Domingo
7.5 75 100
17 50 by Wall Green Solar Dominicana; the project will commission in 2017
0 3 25 3 7.2 11 12 13 -200%
2015 2016E 2017E 2018E 2019E 2020E • Jamaica: Auctions for PV have kicked off in the country though for limited capacity
Bahamas Cuba compared to the rest of Latin America: The country’s Office of Utilities Regulation
Dominican Republic Jamaica
allocated 33.1MW to Eight Rivers Energy Company at a PPA price of $85.4/MWh out of
All Other Caribbean Countries Annual Growth
19 project proposals for a total of 500MW
55
9. The Rest of South America
Rest of South America: Colombia sees progress in the commercial segment even as the
implementation of Renewables Law 1715 stays stalled
The Rest of South America Overall PV Demand 2015-2020E Key takeaways:

500 2000%
1613% Cumulative Forecast • Colombia:
CAGR = 8%
450 2016-2020 = 1.1GW ◦ A severe power shortage continues tied to Colombia’s over-reliance on hydropower
1500%
and poor rainfall: The govt. brought in emergency power rationing in the country in
400
1000% March to compensate for the deficit
An nual Installed PV (MWdc)
350 ◦ The Renewable Energy Law 1715 is yet to be implemented, holding up support for
500%
159% 73% 21% PV that includes deduction of 50% of investments from income tax for five years,
300 -30% -6% 286
0% accelerated depreciation, VAT exemption on equipment and exemption from duties
252
250 236
209 ◦ Independent of the policy, due to high prices and poor electricity supply security, the
120 -500%
200 80 Technoglass Group is investing in a 1.8MW commercial project as part of the first
100 phase of a total 12MW project to be executed by Panasonic
146 -1000%
150 62 • Uruguay: The Technogroup has won a tender to build a 10MW project followed by
167 60 116 -1500% another 20MW project in the city of Young in Uruguay: The project builds into a
100 81 91
31 broader goal of the state owned utility UTE to procure 167MW of PV in 2016
50 100 -2000%
60
15 50 30 30 • Bolivia:
11 25 20
0 5 2 5 10 15 -2500%
2015E 2016E 2017E 2018E 2019E 2020E ◦ Bolivian power company ENDE secured $9.4m in financing for a 5MW PV project as
part of a total 50MW under development by ENDE in the Tarija department
Ecuador Bolivia Colombia Uruguay Annual Growth
◦ ENDE also tendered projects for 60MW in Potosi and 50MW in Oruro (possible
Source: GTM Research expansion to 100MW)
57
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May 2016

GTM - Latin America PV Playbook - Q2 2016 Market Update - May 2016

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GTM - Latin America PV Playbook - Q2 2016 Market Update - May 2016

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Latin America PV Playbook

Q2 2016 Market Update

Latin America PV Demand 2010-2020E

Source: GTM Research Global Solar Demand Monitor Q2 2016

Latin American Markets’ Share of Regional Demand 2015-2020E

Latin America Major Markets’ PV Outlook

Brazil Chile Mexico

Outlook: Weak Outlook: Neutral Outlook: Strong

Latin America Market Segmentation 2015-2020E

Regional Project Pipelines (MWdc)

Rest of South America

Top Developers with under construction pipelines in select markets

Source: GTM Research Latin America PV Project Tracker

Brazil Overall PV Demand 2015-2020E The market’s trajectory:

Brazil Market Segmentation 2015-2020E Key takeaways:

Brazil Utility-scale Developer Rankings Q2 2016

1. Enel Green Power 300 270 10

2. Canadian Solar 240 280

0 100 200 300 400 500 600 700

Ceiling price for July auction

Brazil Overall PV Demand Scenarios 2016E-2020E Key takeaways:

Source: GTM Research

Chile Overall PV Demand 2015-2020E The market’s trajectory:

Chile Market Segmentation 2015-2020E Key takeaways:

Chile Utility-scale Developer Rankings Q2 2016

1. Enel Green Power 205 403 602

2. SunEdison 524 231 334

3. First Solar 252 163

5. Pattern Energy 179 140

10. Austrian Solar 307

0 200 400 600 800 1000 1200 1400

SING Top Installed and Under

Chile Overall PV Demand Scenarios 2016E-2020E Key takeaways:

1,000 993 CAGR = 20% • Long-term:

Mexico Overall PV Demand 2015-2020E The market’s trajectory:

Mexico Market Segmentation 2015-2020E Key takeaways:

Mexico Utility-scale Developer Rankings Q2 2016

1. Enel Green Power 992

5. Fisterra Energy 349

0 200 400 600 800 1000 1200

State-level Status of Grandfathered Pipelines Scaling-back the pipeline:

Mexico Overall PV Demand Scenarios 2016E-2020E Key takeaways:

Argentina Overall PV Demand 2015-2020E The market’s trajectory:

capacity as part of a 1GW auction launched under a new renewables policy

Peru Overall PV Demand 2015-2020E The market’s trajectory:

Central America Overall PV Demand 2015-2020E Key takeaways:

Central America Market Segmentation 2015-2020E The market’s segmentation:

The Caribbean Overall PV Demand 2015-2020E Key takeaways:

The Rest of South America Overall PV Demand 2015-2020E Key takeaways:

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