C h a l l e n ge s a n d o p p o r t u n i t i e s fo r t h i n ‐ f i l m P V i n M E N A

Forward‐Looking Statements

During the course of this presentation the company may make statements that are forward‐looking
statements within the meaning of the federal securities laws. The forward‐looking statements in this
presentation are based on current information and expectations, are subject to uncertainties and
changes in circumstances, and do not constitute guarantees of future performance. Those statements
involve a number of factors that could cause actual results to differ materially from those statements,
including the risks as described in the company’s most recent Annual Report on Form 10‐K, Quarterly
Report on Form 10‐Q, and other filings with the Securities and Exchange Commission. First Solar
assumes no obligation to update any forward‐looking information contained in this presentation or

© Copyright 2012, First Solar, Inc.

with respect to the announcements described herein.

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Table of Contents

• Introduction to First Solar

• Market Opportunity in MENA
• MENA Market Challenges
• Project Profiles

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Overview

— Formed in 1999 and launched production in 2002

— Largest thin‐film solar module manufacturer in the world

— Announced capacity of 2.5 GW by the end of 2012
— Lowest cost PV manufacturer in the world
— $0.73/watt in 2011 Q4

— Smallest carbon footprint and fastest energy payback

— First PV manufacturer to offer prefunded collection and recycling

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— Produced over 66 million solar modules that generate over
5GW of power

Robust track record built on clear vision and state of art technology.
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First Solar Offerings
Module Manufacturing
• Breakthrough thin‐film process technology
Semiconductor Cell Final Assembly
• Fully integrated, continuous process Deposition Definition and Test
• Continuous cost reduction driven by productivity
and technology improvements <2.5 Hours

Glass In Module Out

Systems Solutions
• Utility‐scale PV systems
• Project and site development capabilities

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• Engineering, procurement, and construction
capabilities (turnkey solution)
• Monitoring and maintenance program—
predictable lifetime expenses

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Overview

• Good to excellent solar resources and expected energy yields between 1800‐2100
kWh/kWp
• Two types of markets: Net energy exporters and net energy importers
Both have strong but different drivers
• Huge growth in power demand of 7‐9% annually due to increase of population and
industrialization
• Region is in transition phase with short term retained market but mid/long term
recovery

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• Biggest Middle East long term and sustainable markets are expected to be Saudi Arabia,
Turkey and Egypt. Followed by Algeria and Morocco.

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Example: Regional Energy Yield mapping

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Example Net Exporter, Saudi Arabia’s significant opportunity costs

Volume of oil used Lost export % of % of 2009 • Oil diverted for electricity use
for electricity earnings1 2009 Government reduces oil export revenues, raw
(MM barrels /d) Billion USD ($) /y GDP expenditures
material for petrochemical
0.8 23.4 6% 16% industry and depletes reserves

1.5 43.8 12% 30% • Local consumption of oil (2.5MM

b/d) already represents 27‐32%
2.0 58.4 16% 40%
of KSA oil production
2.5 73.0 20% 49%
• Current oil use in electricity

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generation is estimated at 1.2
MM barrels / day, equivalent to
an annual subsidy of $33.3
billion in 2010
• Source: team analysis
•1Assumes price of oil is USD 80/barrel. Lost export earnings are likely to closely represent net losses to government budget, as oil for
domestic electricity is approximately 95% subsidized below market prices
•2World Bank 2009 figure of $369bn

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Technology advantages in the investment phase
Development and Installation
• Short project development cycle
‐ A minimum of 4‐5 years are needed to develop and construct a fossil power plants
‐ A comparable size plant for example PV system as executed can be developed and
built in half the time.
This time factor is particularly of value for regions with rapidly growing demand

• Most topographies possible – depending on technology

• No gas pipelines nor water infrastructure required
limited or no adjustments to existing infrastructure. Most renewable technologies require neither gas nor water supply lines or
adjustments to grid and transmission lines.

• Simple, rapid installation (0.5‐1 MW / day) – no moving parts

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Wind and especially PV has only a few numbers of components. Modularity and simplicity allows ease of expansions without major
disruption. PV can be installed with no moving parts resulting in high availability and reliability.

• Highly modular and flexible construction

• Parallel development of several sub‐plants possible
• Flexibility for gradual expansion of system and transmission lines
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Advantages in the operation phase
Performance , Sustainability and Enviromental attributes
• No water, gas or oil during required for operation
Conventional power generation requires cooling mostly done and effective using water. Whether for oil, gas, coal, or nuclear
power plants but also solar thermal power plants (CSP). Typically 1.6 liters/kWh (Gas power plants), 2.3 liters/kWh (Nuclear) and 4
liters/kWh (CSP) are consumed irrevocably to cool down the system.

• No emissions or waste
• Low carbon footprint
• Highly reliable, simple system with few components
• Low maintenance (no moving parts)

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• Low sensitivity to dust, humidity and strong winds
• Recycling and reuse of 90% module weight and 95% of semiconductor

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 Thin Film Energy Yield Advantage

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Solar sector addresses real and growing challenges
Power/ energy • MENA has large and growing power needs with capacity gaps for domestic
challenges electricity, desalination and industry

• True cost of oil/gas‐generated electricity hidden by subsidies; solar price is

close to being competitive or even has reached it in certain areas and
applications
Economic • Energy Exporters needs to address the opportunity costs
challenges • Energy importers need to reduce their energy bills portion of GDP
• Oil/gas‐generated electricity depletes strategic resources which is critical for
other industries and exports.
• MENA needs to create jobs for a growing population
• Renewable energy preserves oil reserves & energy independence ‐ critical for

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Political challenges
national security in a volatile region
• Subsidies for oil and gas‐generated electricity are difficult to remove directly
• MENA and GCC in particular have massive CO2 emissions (avg. 4.6 tons/
Environmental capita vs. 2.6 in Germany) which is a liability in the context of international
challenges negotiations
• Scarcity of water and air pollution is worsening
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Challenges 1/2

Tender based MENA approach creates many challenges.

• Few projects with big sizes creates a competitive environment; Many bidders and few
project
• Project documents are frequently based on conventional power plants and not
sufficiently adapted to PV power plants. This creates threats to success and/or project
timeline
• Gray Areas in Risk Allocation between the stakeholders

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• Terra Incognita of the legal framework and local licensing process. First of its kind type
of projects is a real challenge for authorities and other stakeholders
• Competition from Subsidies on Carbon Based Fuels for Electricity generation clouds the
perception of the right tariff

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Challenges 2/2 (Project Finance)

• Bankability of products and stakeholders is crucial as everywhere in the world

• Project Finance of a mostly capex related asset in regions with extended risks increases
the importance of the role of concessional funding (CTF, IFC, kfW,…) and ECA’s
• High requirements on DSCR and IRRe drive LCOE and PPA prices up.
• The need for investors and lenders with a long term view. Untypical for MENA
commercial banks
• Power projects requires many years between development, tendering, evaluation,

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studies and finally implementation.

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Typical distribution of LCOE cost components

$/kWh
16,00

14,00 4,11 0,17 15,00

With typical MENA 1,35 DSCR and 13%

12,00
IRRe/9% lending rate, PF portion can go as
high as 52% of LCOE leaving the
10,00 3,68 component cost portion far behind

8,00

2,26

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6,00

4,00 4,77

2,00

0,00
Turnkey O&M Debt Equity Tax Total

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Holistic approach across the value chain needed

VALUE CHAIN

Development Module EPC O&M Financing

INDUSTRY CONSTRAINTS

Long Turnkey Solution Module Lifecycle High Cost of

Development High Balance of
Pricing too High System Costs & Performance Capital
Lead Times

• OptiSolar (2009) • Low Module Cost • Turner (2007) • Data Monitoring • Bankability
Balance Sheet

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• EME (2010) • Aggressive Cost • EPC Velocity • O&M Program • Capital Structure
Structuring know
• NextLight (2010) Reduction Roadmap • BoS Cost • how
Track Record
• Strategic • Scale Optimization •• Relationships
Partnerships into
Partnerships financing markets

First Solar INJECTIONS

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Summary and Conclusion

• All Middle Eastern countries are recognizing the importance of Renewable

Energy utilization. The goals are similar, the drivers different
• Regulatory framework still not developed and is key
• The economics of PV (expressed in LCOE) are evident but real challenge will be
financing of projects and developing and implementing “First of its kind
projects”
• Finance takes a huge portion of the cost of kWh
• A power plant provider approach is needed. This means understanding the
complete value chain including development, financing, EPC and O&M

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