2015 ANALYST DAY. Delivering Better Energy

Transcription

1 2015 ANALYST DAY Delivering Better Energy

2 Forward-Looking Statements This presentation contains forward-looking statements that involve risks and uncertainties, including statements regarding SolarCity s business strategies; our operational growth and expansion opportunities; our international expansion plans, including our expectations as to lower global module pricing and labor costs outside the United States; the deployment and installation of megawatts, including estimated Q and 2016 megawatt installations; future bookings; financial strategies for cash generation and increasing shareholder value; forecasted cash flows from existing Energy Contracts, including related assumptions as to energy production future operations and maintenance expenses, cancellation rates, renewal rates, default rates, amounts of performance based incentives and other identified assumptions; our projections related to decreases in cost per Watt, including our plans to decrease our sales cost per Watt by eliminating higher cost channels, utilizing more efficient channels, and other initiatives, the impact of proprietary technology in decreasing our installation costs, our expectations regarding future hardware pricing, our expectations regarding the maturing efficiency of our operations centers, and our plans to vertically integrate our commercial product offerings along with related projections regarding installation efficiencies and cost savings; our plans to achieve manufacturing economies of scale and associated manufacturing cost reductions; our expectations regarding the Riverbend agreement and the development and construction of the Riverbend facility, including our projection that the facility will be completed and ready to commence operations by Q2 2016, our expectations regarding capital and operating expenses and the performance of our manufacturing operations; our expectations as to future regulatory and policy outcomes affecting our industry, including our belief as to the likelihood of an extension of the Federal Investment Tax Credit and the continued adoption and extension of net-energy metering programs; our projections regarding hypothetical cash flows and tax equity transactions following the schedule step-down in the Federal Investment Tax Credit; our projections regarding the future pricing of utility-generated electricity and customer savings; our liquidity and forecasted access to capital, including assumptions related to the terms of future financing (including risk premiums and interest rates), the sufficiency of committed available financing, the terms and frequency of future securities offerings (including securitization offerings and our expectation that the risk premium of future securitized offerings will decrease consistent with that of mortgages) and our expectations regarding the refinancing of existing debt obligations, including our short-term Solar Bonds; the amount of megawatts that can be installed and deployed based on committed available financing; the success of our product development efforts and customer preferences, including the potential and performance of residential and commercial energy storage products and other new product offerings; and assumptions relating to the foregoing. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved, if at all. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. In order to meet our projections, we will need to expand our workforce and increase the efficiency of our sales and installation operations relative to what we have achieved to date. Additional key risks and uncertainties include the effect of electric utility industry regulations, net metering and related policies; the availability and amount of rebates, tax credits and other financial incentives; the level of demand for our solar energy systems; the availability of a sufficient, timely, and cost-effective supply of solar panels and balance of system components in each of our geographies; our ability to successfully integrate acquired businesses, operations and personnel; our ability to achieve manufacturing economies of scale and associated cost reductions, our expectations regarding the Riverbend agreement and the development and construction of the Riverbend facility, including expected capital and operating expenses and the performance of our manufacturing operations; the effects of existing and future tariffs and other trade barriers; changes in federal tax treatment; the availability and amount of financing from fund investors; the retail price of utility-generated electricity or the availability of alternative energy sources; risks associated with SolarCity s rapid growth; risks associated with international expansion; the success of our product development efforts and customer preferences; risks that consumers who have executed energy contracts may seek to cancel those contracts; assumptions as to the value under energy contracts and contract renewal rates and terms, including applicable net present values, performance-based incentives, and other rebates, credits and expenses; SolarCity s limited operating history, particularly as a new public company; changes in strategic planning decisions by management or reallocation of internal resources; and general market, political, economic and business conditions. You should read the section entitled Risk Factors in our most recent Quarterly Report on Form 10-Q and subsequent Current Reports on Form 8-K, which have been filed with the Securities and Exchange Commission, which identify certain of these and additional risks and uncertainties. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as otherwise required by law. 2

3 BUSINESS DRIVERS & METRICS LEADERSHIP OF A GROWING OPPORTUNITY VALUE OF ASSETS MONETIZATION OF ENERGY CONTRACTS VELOCITY AND CONSISTENCY OF DEPLOYMENTS PROPRIETARY ORIGINATION AT LOWER ACQUISITION COSTS OPERATING COST EXCELLENCE INVESTMENT IN BEST-IN-CLASS TECHNOLOGY GUIDANCE AND CONCLUSION 3

4 Strategy Update Organic origination of long-term Energy Contracts at lower acquisition costs Best-in-class installation costs through proprietary technology Monetization of a higher portion of the value of our Energy Contracts through low-cost, long duration financing Exploring monetization of the full value of some Energy Contracts Be a catalyst in de-carbonizing the energy infrastructure 4

5 Introduction: Business Drivers and Metrics Metric Unit Q1 Q2 Q3 Q4 Q1 Q2 Q3 U.S. Power Capacity: U.S. Installed Generating Capacity GW-AC 1,161 1,169 1,172 1,177 1,182 1,171 1,176 Distributed Solar as % of U.S. Generating Capacity % 0.6% 0.6% 0.7% 0.7% 0.8% 0.9% 0.9% U.S. Installed Distributed Solar Capacity GW-DC New U.S. Installed Distributed Solar Capacity MW-DC SCTY Units: SCTY % of New U.S. Distributed Solar Capacity % 17% 19% 25% 25% 22% 27% 32% MW Installed MW MW Deployed MW MW PTO'd MW Leadership of a Growing Opportunity Energy Contract Pricing of New Deployments (Yr. 1) $/kwh $0.12 $0.12 $0.12 $0.12 $0.13 $0.13 $0.13 Annual Escalator % 1.7% 1.9% 1.9% 1.9% 2.1% 2.1% 2.2% SREC (5-Yr. Portfolio Average) $/kwh $0.01 $0.01 $0.02 $0.02 $0.02 $0.02 $0.02 Energy Harvest (Yr. 1) kwh/kw 1,425 1,416 1,406 1,402 1,404 1,379 1,352 Value Generation and Monetization: Asset Financing in Period (including rebates)* $/W $2.69 $2.04 $2.62 $2.28 $2.35 $2.33 $3.20 Monetization of Energy Contracts and Creation of Asset Value Contracted Value of MW Deployed in Period $/W $3.68 $3.55 $3.37 $3.24 $3.44 $3.49 $3.50 Renewal Value of MW Deployed in Period $/W $0.38 $0.40 $0.38 $0.34 $0.33 $0.34 $0.36 Total Value of MW Deployed in Period $/W $4.06 $3.95 $3.74 $3.58 $3.77 $3.83 $3.86 Cost per Watt**: Sales $/W $0.51 $0.47 $0.49 $0.57 $0.59 $0.53 $0.64 Installation $/W $2.44 $2.28 $2.19 $2.09 $2.09 $2.13 $1.92 G&A $/W $0.30 $0.26 $0.21 $0.20 $0.27 $0.24 $0.27 Total Cost per Watt $/W $3.25 $3.01 $2.89 $2.86 $2.95 $2.91 $2.84 R&D Expenses $M ($1.9) ($3.0) ($4.2) ($10.0) ($12.1) ($12.4) ($17.7) Capital Expenditures $M ($4.7) ($2.9) ($5.8) ($9.5) ($30.5) ($71.6) ($45.7) Change in Working Capital Q/Q $M $28.3 $22.7 $37.0 ($38.1) ($72.3) ($31.7) ($41.7) Proprietary Origination at Lower Cost Operating Cost Excellence Investment in Best-in Class Technology Debt and Cash: Debt - Recourse $M ($176.6) ($349.8) ($165.2) ($149.7) ($290.6) ($419.2) ($518.2) Debt - Convertible $M ($230.0) ($230.0) ($730.0) ($796.0) ($796.0) ($796.0) ($796.0) Cash & Short-Term Investments $M $526.2 $429.6 $756.8 $663.6 $586.2 $497.6 $438.7 Current Portfolio Value Unlevered Pre-Tax NPV Remaining of Cumulative MW Deployed (1.5 GW) $M $2,708 Debt Non-Recourse $M ($995) Net NPV of Cumulative MW Deployed $M $1,713 * Weighted average of Q1-Q Asset Financing is $2.68 ** Cost per Watt is based on our quarterly cost calculation methodology we detail on our website Updated since original report 5

6 BUSINESS DRIVERS & METRICS LEADERSHIP OF A GROWING OPPORTUNITY VALUE OF ASSETS MONETIZATION OF ENERGY CONTRACTS VELOCITY AND CONSISTENCY OF DEPLOYMENTS PROPRIETARY ORIGINATION AT LOWER ACQUISITION COSTS OPERATING COST EXCELLENCE INVESTMENT IN BEST-IN-CLASS TECHNOLOGY GUIDANCE AND CONCLUSION 6

7 Solar Represents a Plurality of New U.S. Power Capacity Total U.S. Installed Generating Capacity is ~1,170 GW with GW/Yr. of New Gross Capacity since 2010 Distributed Solar Accounted for 22% of New-Build U.S. Generating Capacity in 1H15 with Utility-Scale at 23% New-Build Capacity (GW) GW of New U.S. Generating Capacity per Year ,180 1,170 1,160 1,150 1,140 1,130 1,120 1,110 Total Installed Capacity (GW) % of New-Build U.S. Generating Capacity 50% 40% 30% 20% 10% 0% 1% 3% >20% of New U.S. Capacity was Distributed Solar in 1H15 2 3% 6% 5% 5% 17% 21% 11% 12% 23% 22% H15 GW Installed U.S. Distributed Solar Grew at a 40% CAGR 2010 to H15 New Build U.S. Generating Capacity U.S. Total Installed Capacity Distributed Utility-Scale Solar 7

8 Solar is Competitive in a Significant Portion of the U.S. Avg. U.S. Retail Electricity Price Is ~$0.13/kWh with 583 TWh Consumed at that Price or Higher 4 Total U.S. Residential and Commercial Electricity Sales $0.13/kWh Exceeded $90 Billion in U.S. Residential and Commercial Electricity Consumption (TWh) < $0.08 < $0.09 < $0.10 < $0.11 < $0.12 < $0.13 < $0.14 < $0.16 < $0.18 < $0.20 > $0.20 Average Retail Utility Price ($/kwh) Non-SolarCity Service States SolarCity Service States NC FL GA AZ PA NY CA HI TX MD MA CT 8

9 Retail Utility Rates Are Rising on Infrastructure Spending Retail Utility Rates Have Increased despite Lower Energy Prices Due to Infrastructure Capex CA Rate Reform is Increasing Investor-Owned Utilities Baseline Tier 1 Residential Rates Initially to >$0.17/kWh in 2017 $0.18 Utility Rates in SolarCity Geographies Are Up 49% since $0 New CA Rate Reform Increasing Tier One Rates 6 Avg. Residential Utility Rate ($/kwh) $0.16 $0.14 $0.12 $0.10 $ % CAGR 3.4% CAGR Residential Utility Rates ($/kwh) $0 $0 $0 $0 $0.25 $0.23 $0.20 $0.20$0.21 $0.17 $0.15 $0.16 $0.17 $ $0 SCE PG&E SDG&E Avg. in Our 19 States U.S. Avg. Old Tier One (1H15) Tier One (2017)* Tier One (2019)* * Assumes 3% Additional Annual Rate Inflation 9

10 Cleaner, Lower Cost Energy Solar PPAs, Leases, and Loans Lower Customers Energy Bills for No Initial Investment SOLARCITY EXAMPLE OF A CALIFORNIA PPA WITH NO DOWN PAYMENT Old Avg. Bill ~$2,256 /Yr. New Avg. Bill ~$1,848 /Yr. $0.15/kWh Avg. Annual Year-1 Savings Of > $400 in California SolarCity Bill No upfront cost for installation required Solar energy paid for monthly at a lower $/kwh price than charged by the local utility Our solar contracts typically generate 50-90% of a customer s annual electricity needs Customers able to generate savings of up to 20% from Day One $0.19/kWh $ /kWh* New Utility Bill * Because of tiered pricing based on usage in California, the output from solar energy systems also lowers the rate charged by the utility 10

11 Despite Continued Growth, Solar Penetration Remains Low U.S. Solar Penetration of Both Residential and Commercial Buildings Is Below 1% Residential Solar Is Installed on Only 1.7% of Single Family Homes in SolarCity s U.S. Service Territories SolarCity U.S. Service Territories Total U.S. Total U.S. Residential Solar Installations at the End of Q M 0.73M / Total U.S. Single Family Housing Units M 92.2M Over 733k residential solar homes in the United States as of the end of Q with ~190k new residential installations in k new single-family home permits across the Country in 2014, expanding the opportunity. 9 Less than 1% solar penetration of the 5.6M commercial buildings in the U.S. 10 = Distributed Solar Penetration of U.S. Single-Family Homes 1.7% 0.8% 11

12 The Clear Leader in U.S. Distributed Solar Installations SolarCity is the Largest U.S. Residential and Commercial Solar Installer Installed 28% of Distributed Solar, 15% of Total Solar, and 7% of New Gross Power Capacity in the U.S. 1Q-3Q15 % of U.S. Distributed Solar Installed 11 3% 7% 8% 6% 6% 11% 5% 17% 7% 25% 22% 7% 33% 32% 22% 37% 11% 10% Q15 SCTY 3Q15 Resi Blended Commercial Residential Installer No. 2 3Q15 Resi Installer No. 3 SolarCity accounted for more than 1% of all solar installed globally this year 12

13 Potential to Expand SolarCity s Core Expertise Globally SOLARCITY IS NOW A LEADING C&I INSTALLER IN MEXICO EXPLORING MORE FOREIGN OPPORTUNITIES 12 Example Countries Australia Chile Italy Kenya Residential Utility Rates ($/kwh) $0.23 $0.15 $0.26 $0.24 Commercial Utility Rates ($/kwh) $0.16 $0.09 $0.19 $0.10 Solar Insolation (kwh/kw) ~1,500 ~1,800 ~1,200 ~1,400 Acquired ILIOSS for $10M in Aug Strong track record with major Mexican corporations International opportunities expected to benefit from lower global module pricing and lower labor costs outside the United States Exploring partnerships with potential long-term asset owners 13

14 Regulatory Update STATE NET ENERGY METERING (NEM) POLICIES The California Public Utilities Commission s forthcoming decision on NEM 2.0 is expected to not significantly affect economics for new customers, as state law requires that the new tariff ensure that customer-sited DG continues to grow sustainably New York removed its NEM cap through 12/31/16 while a comprehensive docket called Reforming the Energy Vision (REV) seeks to appropriately value distributed solar/clean energy Though Hawaii s public utilities commission capped the state s NEM program at existing levels, Hawaii is a unique state that (a) already has double-digit rooftop solar penetration and (b) has a very high cost of energy with wholesale rates above the cost of distributed solar In Arizona, utility SRP s implementation of anti-solar rate design changes for new installations is being challenged in Arizona federal court FEDERAL INVESTMENT TAX CREDIT (ITC) Extension growing increasingly likely as we approach the step-down in the ITC from 30% to 10% on 1/1/17 Nevertheless, we are approaching our business assuming no extension 14

15 Regulators Are Continuing Net Energy Metering Regulators Tend to View Distributed Solar Positively Because Its Benefits Outweigh Its Costs State-developed mandatory rules for certain utilities No uniform or statewide mandatory rules but some utilities allow No net energy metering State-developed net energy metering rules ended for new customers 15

16 BUSINESS DRIVERS & METRICS LEADERSHIP OF A GROWING OPPORTUNITY VALUE OF ASSETS MONETIZATION OF ENERGY CONTRACTS VELOCITY AND CONSISTENCY OF DEPLOYMENTS PROPRIETARY ORIGINATION AT LOWER ACQUISITION COSTS OPERATING COST EXCELLENCE INVESTMENT IN BEST-IN-CLASS TECHNOLOGY GUIDANCE AND CONCLUSION 16

17 Project Cash Flow Driven by Units, Production, and Pricing Solar Insolation Annual hours of sunshine on the panels adjusted for tilt and azimuth X System Size = Capacity (kw or MW) 1,332 Hours * Annual Energy Production X Estimated kilowatt-hours (kwh) of solar energy produced in year one 260W x 26 Panels = 6.8kW 9,004 kwh $0.13/kWh ( Energy Contract Price + + $0.035/kWh SREC Price ) Portfolio average, e.g., $0 in California = = All the energy produced by the solar system is sold to the customer at an established $/kwh price with an annual escalator (includes performance-based incentives) Certain states require non-renewable energy generators to purchase Solar Renewable Energy Certificates to meet state renewable energy portfolio standards 751 Avg. FICO Investment-grade off-taker BILL SREC $1,486 (or $0.22/W) *Average of 3Q15 Lease/PPA Deployed; Q315 average including MyPower is 1,352 hours Energy Contract Revenue Annual revenue is the customer bill plus payments for SRECs. Customers contract for 20 years and we expect to provide energy to the home for at least 30 years 17

18 Gross Project Cash Flows (Pre-ITC) Valued at $2.56/W NPV The Foundation of Our Value Creation Rests Upon the Cash Flow Stream of the Underlying Assets Q NPV of Lease/PPA Gross Project Cash Flows before the Investment Tax Credit/Depreciation Was $2.56/W at a 6% Discount Rate $/W UNIT ECONOMICS FOR THE 172 MW OF LEASES/PPAS DEPLOYED IN Q3 2015: Year * Energy Production kwh/kw 1,332 1,325 1,319 1,312 1,306 1,299 1,293 1,286 1,280 1,273 1,267 1,261 1,254 1,248 1,242 1,236 1,229 1,223 1,217 1,211 Annual Degradation (0.5%) Contract (+PBI) Price $/kwh $0.13 $0.13 $0.13 $0.14 $0.14 $0.14 $0.14 $0.15 $0.15 $0.15 $0.16 $0.16 $0.17 $0.17 $0.18 $0.18 $0.18 $0.19 $0.19 $0.20 Annual Escalator 2.2% SREC $/kwh $0.04 $0.03 $0.03 $0.02 $0.01 Rebates/Prepayments $/W $0.10 Project Revenue $/W $0.22 $0.21 $0.21 $0.20 $0.20 $0.18 $0.19 $0.19 $0.19 $0.20 $0.20 $0.20 $0.21 $0.21 $0.22 $0.22 $0.23 $0.23 $0.24 $0.24 O&M Expenses $/W ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.18) ($0.02) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) Gross Project Cash Flow $/W $0.10 $0.20 $0.19 $0.19 $0.18 $0.17 $0.16 $0.16 $0.17 $0.17 $0.17 $0.02 $0.18 $0.18 $0.19 $0.19 $0.20 $0.20 $0.20 $0.21 $0.21 Year 21* ** Energy Production 1,205 1,199 1,193 1,187 1,181 1,175 1,169 1,163 1,158 1,152 Annual Degradation Contract (+PBI) Price $0.18 $0.19 $0.19 $0.20 $0.20 $0.21 $0.21 $0.22 $0.23 $0.23 Annual Escalator SREC Project Revenue $0.22 $0.22 $0.23 $0.23 $0.24 $0.25 $0.25 $0.26 $0.26 $0.27 O&M Expenses ($0.15) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.03) ($0.04) ($0.04) ($0.04) Gross Project Cash Flow $0.07 $0.19 $0.20 $0.20 $0.21 $0.21 $0.22 $0.22 $0.23 $0.23 In aggregate, the lease/ppa MW Deployed in Q are expected to generate unlevered Gross Project Cash Flow (pre-tax equity distributions) of ~$34M in Year One (172 MW x $0.20/W) Excludes MyPower MW Deployed (See Appendix A) 30-Year NPV: $2.56/W Rebates/Prepayments: $0.10/W (upfront) Contracted NPV: $2.02/W (discounted at 6%) Renewal NPV: $0.44/W (discounted at 6%) * Inverter replacement assumed in Year 11 at a cost of $0.15/W and in Year 21 at a Cost of $0.12/W ** Renewal assumes SolarCity continues to provide energy to the home at a 10% discount to the utility price at the time of renewal Note: Excludes default rates 18

19 Tax Equity Primer HISTORY The Investment Tax Credit (ITC) available under Section 48 of the IRC currently includes a 30% tax credit for solar systems on residential and commercial properties, which is scheduled to be reduced to 10% after December 31, While the current ITC focuses primarily on renewable energy property, various iterations of the ITC have existed since 1962, and over its history the ITC has been used by Congress to spur investment in a multitude of industries. ITC is part of broader General Business Credit under Section 38 that provides tax credits to various asset types, including low income housing, new markets, carbon sequestration, marginal oil wells, and dozens of other industries. PARTNERSHIP STRUCTURE Partnership with SolarCity as 1% Member and Tax Equity as 99% Member Investment structured with projected flip and tenor 6.5 years Tax Equity partner receives the ITC, accelerated depreciation benefits and a share of cash flow After Tax Equity partner reaches a target IRR, their partnership interest flips down to 5% and SolarCity can exercise a buyout of the Tax Equity s interest % Benefit to Tax Equity Partner Pre-Flip Post-Flip ECONOMICS After-tax IRR 7% to 12%; pre-tax cash IRR 2% to 5% Tax Equity partner funds $ / W ($4.55 Fair Market Value * 30% ITC * 1.28 funding multiple) Return is comprised of 65% ITC, 14% depreciation, 22% cash flow $/W $/W % of Return Cash Investment in Project ($1.77) Investment Tax Credit offsetting income tax $ % Depreciation offsetting income tax over life of partnership $ % Cash Flow from project $ % Total Nominal Return $ % INVESTOR BASE Pool of sophisticated investors comprised of leading financial institutions and corporates investing for an attractive risk adjusted return Investor base continues to expand as asset class matures SELECT TAX EQUITY INVESTORS ITC / Depreciation 99% 0% Cash Flow 30-40% 5-10% 19

20 Unlevered Cash Flow After-Tax Equity Valued at $3.87/W*** In Addition, Tax Equity Enables the Monetization of the Investment Tax Credit (ITC) in Year One Tax Equity Invests $ /W in Return for a Portion of Gross Project Cash Flow and Most of the 30% ITC/Depreciation UNLEVERED PROJECT CASH FLOW OF LEASES/PPAS WITH A 30% ITC Tax Equity Share of Cash Flows: Pre-Flip: 30-40% Post-Flip: 5-10% Year * Gross Project Cash Flow $0.10 $0.20 $0.19 $0.19 $0.18 $0.17 $0.16 $0.16 $0.17 $0.17 $0.17 $0.02 $0.18 $0.18 $0.19 $0.19 Tax Equity Investment $1.77 Tax Equity Distributions ($0.07) ($0.07) ($0.07) ($0.06) ($0.06) ($0.06) ($0.05) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) Unlevered Project Cash Flow to SCTY $1.87 $0.13 $0.12 $0.12 $0.12 $0.11 $0.10 $0.11 $0.15 $0.16 $0.16 $0.01 $0.17 $0.17 $0.17 $0.18 SCTY Share of Cash Flow 65% 65% 65% 65% 65% 65% 67% 92% 92% 92% 51% 93% 93% 93% 93% Tax Equity Share of Cash Flow 35% 35% 35% 35% 35% 35% 33% 8% 8% 8% 49% 7% 7% 7% 7% Year * ** Gross Project Cash Flow $0.20 $0.20 $0.20 $0.21 $0.21 $0.07 $0.19 $0.20 $0.20 $0.21 $0.21 $0.22 $0.22 $0.23 $0.23 Tax Equity Distributions ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) ($0.02) ($0.02) ($0.02) ($0.02) Unlevered Project Cash Flow to SCTY $0.18 $0.19 $0.19 $0.19 $0.20 $0.06 $0.18 $0.18 $0.19 $0.19 $0.20 $0.20 $0.21 $0.21 $0.22 SCTY Share of Cash Flow 93% 93% 93% 93% 93% 82% 93% 93% 93% 93% 93% 93% 93% 93% 93% Tax Equity Share of Cash Flow 7% 7% 7% 7% 7% 18% 7% 7% 7% 7% 7% 7% 7% 7% 7% 30-Year Unlevered Pre-Tax NPV: $3.87/W Tax equity investment: $1.77/W (upfront) Rebates/Customer prepayments: $0.10/W (upfront) Contracted Unlevered NPV: $1.59/W (discounted at 6%) Renewal Unlevered NPV: $0.41/W (discounted at 6%) * Inverter replacement assumed in Year 11 at a cost of $0.15/W and in Year 21 at a Cost of $0.12/W ** Renewal assumes SolarCity continues to provide energy to the home at a 10% discount to the price at the time of renewal *** Unlevered Cash Flow Value of $3.87/W on this slide only includes Leases/PPAs; the $3.86/W reference on Slide 5 is a blend including MyPower Note: Excludes default rates 20

21 Levering Cash Flows Yields $2.76 upfront Non-Recourse Project Debt Is Used to Help Fund the Upfront Investment and Target Day One Cash Aggregation Facility Debt Currently Funds $ /W and Is Expected to Be Refinanced with Long-Term ABS Debt LEVERED PROJECT CASH FLOW WITH A 30% ITC $/W * Unlevered Project Cash Flow $1.87 $0.13 $0.12 $0.12 $0.12 $0.11 $0.10 $0.11 $0.15 $0.16 $0.16 $0.01 $0.17 $0.17 $0.17 Aggregation Facility Proceeds/Paydown** $0.89 ($0.05) ($0.84) Aggregation Facility Debt Service** 2.75% ($0.02) ($0.02) Expected ABS Debt Proceeds*** $0.97 ABS Debt Service*** 4.50% ($0.08) ($0.08) ($0.08) ($0.07) ($0.07) ($0.10) ($0.10) ($0.11) ($0.11) ($0.11) ($0.11) ($0.10) Levered Project Cash Flow $2.76 $0.05 $0.24 $0.04 $0.04 $0.04 $0.03 $0.04 $0.05 $0.05 $0.05 ($0.10) $0.06 $0.06 $0.07 $/W * Unlevered Project Cash Flow $0.18 $0.18 $0.19 $0.19 $0.19 $0.20 $0.06 $0.18 $0.18 $0.19 $0.19 $0.20 $0.20 $0.21 $0.21 $0.22 Aggregation Facility Proceeds/Paydown** Aggregation Facility Debt Service** Expected ABS Debt Proceeds*** ABS Debt Service*** ($0.11) ($0.11) ($0.10) ($0.03) Levered Project Cash Flow $0.07 $0.08 $0.08 $0.16 $0.19 $0.20 $0.06 $0.18 $0.18 $0.19 $0.19 $0.20 $0.20 $0.21 $0.21 $ Year Pre-Tax NPV: $3.87/W Tax equity investment: $1.77/W (upfront) Rebates/Customer prepayments: $0.10/W (upfront) Debt monetization: $0.89/W (upfront) Contracted Levered NPV: $0.70/W Renewal Levered NPV: $0.41/W * Inverter replacement assumed in Year 11 at a cost of $0.15/W and in Year 21 at a Cost of $0.12/W ** Aggregation Facility debt assumes the terms of current aggregation facilities (2-yr. maturity) *** Assumes ABS debt is issued to refinance the aggregation facility debt after two years, an 18-year amortization period, and the average interest rate of our first 4 ABS issuances of 4.5% (the most recent LMC-4 issuance was at 4.4% including fees) Note: Excludes default rates 21

22 >50% of Value Is Monetized Upfront and the Rest Retained $ per Watt $4.00 $3.50 $3.00 $2.50 $2.00 $3.87/W Renewal: $0.41/W Contracted Post-Tax Equity: $1.59/W* 6% Discount rate $2.76/W Debt Monetization: $0.89/W** Renewal: $0.41/W Retention of Contract $0.70/W Renewal: $0.41/W Retention of approximately 1/3 of contract value and 100% of renewal Unlevered Sale of Contract $0.55/W >50% of total value and 56% of contracted value monetized upfront at %, and ultimately 66% in securitizations at % 6% Discount rate $1.50 $1.00 $0.50 Tax Equity Investment Plus Rebates/ Prepayments: $1.87/W Tax Equity Investment Plus Rebates/ Prepayments: $1.87/W $0.00 Total Value of MW Deployed Upfront Cash Remaining Value not Monetized Upfront * Unlevered contracted cash flow net of operations and maintenance expenses and tax equity distributions ** Non-recourse aggregation facility debt issuance at a 56% advance rate and a % interest rate with the potential to subsequently term out through ABS debt at a 66% advance rate and a % interest rate 22

23 Hypothetical Unlevered Cash Flow with a 10% ITC of ~$3.32/W With a 10% ITC, Tax Equity Investment Could Fall to $ /W and Pre-Flip Distributions to ~10% Offsetting the Decline in the ITC from 30% to 10%, We Expect Contract Pricing to Be Higher By ~$0.02/kWh by 2017 HYPOTHETICAL UNLEVERED PROJECT CASH FLOW OF LEASES/PPAS WITH A 10% ITC Year * Gross Project Cash Flow $0.22 $0.22 $0.21 $0.21 $0.20 $0.19 $0.19 $0.20 $0.20 $0.20 $0.06 $0.21 $0.22 $0.22 $0.23 Customer Preyaments/State Rebates $0.10 Tax Equity Investment $0.48 Tax Equity Distributions ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.02) ($0.00) ($0.00) ($0.00) ($0.00) ($0.00) ($0.00) ($0.00) ($0.00) Unlevered Project Cash Flow $0.58 $0.20 $0.20 $0.19 $0.19 $0.18 $0.17 $0.18 $0.19 $0.20 $0.20 $0.05 $0.21 $0.21 $0.22 $0.22 SCTY Share of Cash Flow 90% 90% 90% 90% 90% 90% 91% 98% 98% 98% 93% 98% 98% 98% Tax Equity Share of Cash Flow 10% 10% 10% 10% 10% 10% 9% 2% 2% 2% 7% 2% 2% 2% 2% Year * ** Gross Project Cash Flow $0.23 $0.24 $0.24 $0.25 $0.25 $0.11 $0.23 $0.23 $0.24 $0.25 $0.25 $0.26 $0.26 $0.27 $0.27 Tax Equity Distributions ($0.00) ($0.00) ($0.00) ($0.00) ($0.01) ($0.00) ($0.00) ($0.00) ($0.00) ($0.00) ($0.01) ($0.01) ($0.01) ($0.01) ($0.01) Unlevered Project Cash Flow $0.23 $0.23 $0.24 $0.24 $0.25 $0.10 $0.23 $0.23 $0.24 $0.24 $0.25 $0.26 $0.26 $0.26 $0.27 SCTY Share of Cash Flow 98% 98% 98% 98% 98% 96% 98% 98% 98% 98% 98% 98% 98% 98% 98% Tax Equity Share of Cash Flow 2% 2% 2% 2% 2% 4% 2% 2% 2% 2% 2% 2% 2% 2% 2% 30-Year Unlevered Pre-Tax NPV: $3.32/W Tax equity investment: $0.48/W (upfront) Rebates/Customer prepayments: $0.10/W (upfront) Contract NPV: $2.23/W (discounted at 6%) Renewal NPV: $0.52/W (discounted at 6%) * Inverter replacement assumed in Year 11 at a cost of $0.15/W and in Year 21 at a Cost of $0.12/W ** Renewal assumes SolarCity continues to provide energy to the home at a 10% discount to the price at the time of renewal Note: Excludes default rates 23

24 Multiple Options to Monetize Unlevered Cash Flows CURRENT STRATEGY IS TO MAXIMIZE UPFRONT MONETIZATION $/W 30% ITC 10% ITC Upfront Asset Financing: Tax Equity Investment $1.77/W $0.48/W Rebates & Prepayments $0.10/W $0.10/W Aggregation Facility Debt $0.89/W $1.26/W Total Upfront Asset Financing $2.76/W $1.84/W Remaining Value: $1.20/W $1.60/W Contracted Levered NPV** $0.70/W $0.95/W Renewal Levered NPV $0.41/W $0.52/W Value of MW Deployed $3.87/W $3.32/W EQUITY INVESTMENTS FROM 3RD PARTY FINANCIAL BUYERS ALSO POSSIBLE $/W 30% ITC 10% ITC Upfront Asset Financing: Tax Equity Investment $1.77/W $0.48/W Rebates & Prepayments $0.10/W $0.10/W Equity Investment at 7% unlevered IRR* $1.46/W $2.05/W Total Upfront Asset Financing $3.33/W $2.63/W Remaining Value: Renewal Value Yrs $0.41/W $0.52/W Value of MW Deployed $3.74/W $3.15/W Dividend Yields (2016 Consensus) 5.5% COMPARABLE YIELDCOS 6.9% 7.4% 7.7% 8.9% NEP Comparable YieldCo Average CAFD NYLD Unlevered Year 1 Yield of Contracted Sale at 7% IRR* *Illustrative example; equity investment in contracted cashflows at 8% unlevered IRR would yield $1.34/W and total asset monetization of $3.21 ** Additional ability to monetize another $0.10 through securitization 24

25 NPV of Portfolio s Levered Project Cash Flows of $1.7B*(excluding SRECs) The NPV of Unlevered Project Cash Flows to SolarCity is $2.7 Billion; Project Non-Recourse Debt is $1.0 billion Power Co Portfolio as of 9/30/15 Cumulative Deployments under an Energy Contract 1.5 GW** Cash flows generated by Energy Contracts Annual Energy Harvest (2016) 1, Average Contract Price (2016) Tax Equity % of net cashflow (2016) $0.126/kWh 43% Project Debt ($M) $995 Blended Cost of Debt (%) 4.5% O&M Cash to Tax Equity Debt Service Levered Cashflows to SC * Excludes SRECs ** Cumulative Deployments under an Energy Contract of 1.5GW excludes 0.1 GW of System Sales 25

26 Strong Asset Quality with Predictable Performance Underlying Asset is Contracted Cash Flow that Represents Customers Monthly Energy Bills Low Delinquency Rates and the Predictability of Solar Irradiation Provide High Visibility into Cash Payment Stream 180+ Day Delinquency Rates are Low and Holding Steady kwh Production is Coming in Largely within Forecast Delinquencies as % of Billings 0.8% 0.6% 0.4% 0.2% 0.0% 0.6% 0.6% 0.6% 0.6% Oct 14 Nov 14 Dec 14 Jan % Feb % Mar % 0.5% 0.4% 0.4% 0.4% 0.5% 0.4% Apr 15 May 15 Jun 15 Jul 15 Aug 15 Sep 15 Oct 15 Actual/Underwritten % 100% 80% 60% 40% 20% 0% Sep 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15 Mar 15 Apr 15 May 15 Jun 15 Jul 15 Aug , ,000 50,000 0 Energy (MWh) Actual Energy (MWh) Underwritten Estimate (MWh) Actual/Underwritten % Average FICO score of residential portfolio was >750 as of 9/30/15 Commercial customers largely consist of municipalities and investment grade corporations 26

27 BUSINESS KEY DRIVERS & METRICS LEADERSHIP OF A GROWING OPPORTUNITY VALUE OF ASSETS MONETIZATION OF ENERGY CONTRACTS VELOCITY AND CONSISTENCY OF DEPLOYMENTS PROPRIETARY ORIGINATION AT LOWER ACQUISITION COSTS OPERATING COST EXCELLENCE INVESTMENT IN BEST-IN-CLASS TECHNOLOGY GUIDANCE AND CONCLUSION 27

28 Strategy Targets Lower Cost, Longer Term Financing Development and Construction Financing (DevCo) Asset Ownership (PowerCo) Solar Bonds Corporate Revolver Tax Equity Non-Recourse Aggregation Facilities Non-Recourse Term Financing $334m Facility at 3.25% + LIBOR $650M Facility at 2.75% + LIBOR $240M Facility at 3.25% + LIBOR Long-Term Debt Securitization at 4.3%-4.8% and Rated A and BBB+ 0-1 Year 0-5 Year Years 28

29 Strong Track Record and Visibility into Financing STRONG FINANCING TRACK RECORD $1.4B IN COMMITTED/UNDRAWN FUNDING AS OF 9/30/15 Issued first asset-backed securitization (ABS) of distributed solar assets in Q Four ABS transactions to date raised $450 million in non-recourse debt collateralized by 317 MW of distributed solar Total Tax Equity Financing Raised: $4.4B Tax equity capacity: $929M Aggregation facility capacity: $398M MyPower conduit capacity: $77M (increased by $40M in Q4 2015) Revolver capacity: $19M (increased by $65M in Q4 2015) Cash and short-term investments: $439M New Committed Project Financing ($B) $2.6 $1.7 $0.8 $0.1 $0.3 $0.4 $ Q-Q3 29

30 Debt Outstanding as of the End of Q PowerCo Debt DevCo Debt Terms (Yrs.) Underlying MW $M Outstanding at End of 3Q15 Pre-Tax Cost Recourse Payment Schedule Investment-Grade ABS Debt $425M 4-5% Non-Rec. Amortizing Aggregation/ MyPower Facilities $570M 3-4% Non-Rec. Amortizing Revolver and Other* <1 $308M 3-4% Recourse Term Solar Bonds 1-15 $211M 1-6% Recourse Term Convertible Debt 5 $796M 2-3% Recourse Term $123M LMC4 Issued at 4.4% WACC and Rated A Weighted- Average 2.2% interest rate and 1.3 Yrs. Remaining Term MW Inspected - No Back Leverage MW Inspected Fully monetized * Includes revolver debt of $295 and other debt of $13M 30

31 Short Term Maturities Extended to 2017 Revolving Debt Facility Maturity Extended and Capacity Increased Revolving Aggregation Facilities Enable the Recycling of Assets and Are Expected to Be Upsized and Renewed Outstanding (9/30/15) Revolver $295M Prior Maturity: Dec New Maturity: Dec Solar Bonds $211M $176M Due: Sept Expected to Be Rolled Over MyPower Facilities $123M Jan Strategy to term out in longer duration ABS Aggregation Facilities $447M Option for one yr. extension on Dec maturity Strategy to term out in longer duration ABS 31

32 BUSINESS KEY DRIVERS & METRICS LEADERSHIP OF A GROWING OPPORTUNITY VALUE OF ASSETS MONETIZATION OF ENERGY CONTRACTS VELOCITY AND CONSISTENCY OF DEPLOYMENTS PROPRIETARY ORIGINATION AT LOWER ACQUISITION COSTS OPERATING COST EXCELLENCE INVESTMENT IN BEST-IN-CLASS TECHNOLOGY GUIDANCE AND CONCLUSION 32

33 Installation Process for Customers Includes Six Steps Sale Survey Design Permit Install PTO

34 Improving Customer Wait Times MEDIAN DAYS FROM BOOKING TO INSTALL HAS FALLEN ~50% SINCE JANUARY Days from Booking to Install 34 Median Days from Booking to Install Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Q Installations

35 Our Process Results in High Customer Satisfaction 90% NPS Score % 80% 70% 60% Q Q Q * Net promoter score is based on a scale of 1-10 in which the percentage of 0-6 scores is subtracted from 9-10 scores 35

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50 BUSINESS DRIVERS & METRICS LEADERSHIP OF A GROWING OPPORTUNITY VALUE OF ASSETS MONETIZATION OF ENERGY CONTRACTS VELOCITY AND CONSISTENCY OF DEPLOYMENTS PROPRIETARY ORIGINATION AT LOWER ACQUISITION COSTS OPERATING COST EXCELLENCE INVESTMENT IN BEST-IN-CLASS TECHNOLOGY GUIDANCE AND CONCLUSION 50

51 Proprietary Origination at Scale MW Booked Grew at a Compounded Annual Rate of 95% from Q to Q As We Continued to Drive Higher Growth, Sales Unit Costs Increased over the Last 2 Years from $0.40/W to $0.64/W MW Booked in Period Sales Cost ($/W) $0.40 $0.43 $0.51 $0.47 $0.49 $0.57 $0.59 $0.53 $0.64 $0.61 $0.59 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 SCTY 3Q15 3Q15 Comp AComp B 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 SCTY 3Q15 3Q15 Comp A Comp B 51

52 Diversified residential sales channels Mall Cart The Home Depot Lead generation Performance Marketing Retail partners Home Builder partners Malls Events Canvassing Ambassadors Referrals Close In-home consultation Phone consultation Online Digital Ad 52

53 Formulaic Growth in Commercial Sales Commercial Sales Reps by Category Commercial MW Booked YTD Public Sector National Accounts Agriculture/Water Mexico MW Booked 53

54 Reallocating Resources to Lower Cost Sales Channels Sales Costs Vary Significantly by Channel SolarCity Already has Channels Operating at Goal Cost Structures Sales Cost by Channel ($/W) Avg. $0.64 MW Installed by Channel Note: We will not be disclosing this level of granularity on a regular basis 54

55 Achieving Our Sales Cost Goal of $0.40/W Goal Is to Reallocate Resources and Drive Productivity to Improve Cost of Acquisition $0.60 $0.14 Sales Cost ($/W) $0.50 $0.40 $0.30 $0.64 $0.10 $0.20 $0.40 $0.10 $0.00 Sales Cost 3Q15 Channel Mix Effect Initiatives incl. Productivity Improvement Sales Cost Goal 55

56 BUSINESS DRIVERS & METRICS LEADERSHIP OF A GROWING OPPORTUNITY VALUE OF ASSETS MONETIZATION OF ENERGY CONTRACTS VELOCITY AND CONSISTENCY OF DEPLOYMENTS PROPRIETARY ORIGINATION AT LOWER ACQUISITION COSTS OPERATING COST EXCELLENCE INVESTMENT IN BEST-IN-CLASS TECHNOLOGY GUIDANCE AND CONCLUSION 56

57 Best-in-Class Operations Lead the Way in Volumes and Costs MW Installed Have Grown 80% per Year since 2013 to Annualized Pace of >1 GW Installation Cost/Watt of <$2.00/W is the Lowest Among Publicly-Reported Companies MWs Installed in Period Installation Cost ($/W) $2.75 $2.50 $2.25 $2.00 $1.75 $1.50 $1.25 $ Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 $2.65 $2.49 $2.44 Commercial Residential $2.28 $2.19 $2.09 $2.09 $2.13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 3Q15 SCTY Comp. A * * Installation cost is based on MW Deployed and tranched in period, which was a higher mix of lower cost residential installation in Q $ $ $ Q15 Comp. B 57

58 Safety and Quality Have Improved with Growth TRAINING PROGRAM QUALITY: FAILURE RATES HOLDING STEADY WITH VOLUMES 4 training academies All installers go through rigorous employment training before setting foot on a job site Follow up with continued education online and in person General leadership training at SolarCity headquarters Dedicated training team Cumulative Installations Jobs in Fleet Inverter Failure Rate Installer Error Rate Failure Rate Month of failure case creation FEWER INCIDENTS AND LOST DAYS THAN COMPARABLE INDUSTRIES SCTY vs. OSHA Incidence Rates 13 Recordable Rate Lost Days SolarCity Construction (All) Specialty Trade For every 100 employees, SolarCity experiences 1.8 recordable injuries/ illnesses (incl. non-serious) in a given year (vs. 3.6 for the construction industry). 0.3 of these incidents have lead to missed days (vs. 1.3 for construction). 58

59 SolarCity Product Quality SolarCity partners with select Tier-1 suppliers and requires them to meet our standards for product and manufacturing excellence, with rigorous third party testing on an ongoing basis China-based SolarCity quality team (8 staff) and third party auditing firms visit supplier factories on regular basis to ensure our products are built to specification SolarCity believes that the Useful Life of the Solar modules used in our installations exceeds 35 years. 59

60 Infrastructure in Place to Serve Key U.S. Solar Geographies With 81 Operations Centers, We Are within 30 Minutes of 90% of the Population in Our Geographies 14 Our Differentiated Logistics Network Enables Low Costs and Faster Customer Response Time Operations Centers New Q15 Opened Cumulative Cumulative 60

61 Zep Offers Proprietary Means to Lower Unit Labor Costs Zep Has Enabled Installation Crews to Double Productivity Installation Hours per kw Installed Zep Non-Zep* Single mounting system offers efficiencies in training, quality, safety, and maintenance * Small sample size 61

62 Certain Operations Centers and Commercial Projects Already Performing Above Goals RESIDENTIAL COMMERCIAL New Offices Offices Focused On Being Optimized Mature Offices at Operational Excellence Carports Ground-Mount and Rooftop Q Installation Cost ($/W) Average Q Installation Cost ($//W) Average 81 Operations Centers Q Commercial Installations * Some Q installation costs will flow through Q cost per watt as MW are deployed and tranched Note: We will not be disclosing this level of granularity on a regular basis 62

63 Reducing Installation Cost Goal to $1.50/W Lower Hardware Prices and Soft Costs Are Each Expected to Drive ~50% of Cost Reductions Average Total Cost per Watt $2.00 $1.75 $1.50 $1.25 $1.00 $0.75 $0.50 $0.25 $1.92 Soft Costs $0.90 Hardware Costs $1.02 $0.22 $0.10 $0.10 $1.50 $0.00 Installation Cost 3Q15 Hardware Price Reductions Normalizing Higher Cost Operations Centers to Avg and Lower Mix of Higher Cost Carports* Other Initiatives Installation Cost Goal * Current economics in some states support carports but lower revenue numbers will reduce carport projects that generate enough returns 63

64 BUSINESS DRIVERS & METRICS LEADERSHIP OF A GROWING OPPORTUNITY VALUE OF ASSETS MONETIZATION OF ENERGY CONTRACTS VELOCITY AND CONSISTENCY OF DEPLOYMENTS PROPRIETARY ORIGINATION AT LOWER ACQUISITION COSTS OPERATING COST EXCELLENCE INVESTMENT IN BEST-IN-CLASS TECHNOLOGY GUIDANCE AND CONCLUSION 64

65 Broad Technology Portfolio SOLAR MODULES Silevo Tunneling Junction High efficiency / low cost World record module efficiency of >22% certified by Renewable Energy Test Center MOUNTING HARDWARE & BALANCE OF SYSTEM Fast installation, lower cycle time Superior aesthetics SOFTWARE System design automation Energy production forecasting Logistics and resource management Utility rate tariff database Energy usage evaluations Customer account management Customer applications GRID CONTROL SYSTEMS Real-time energy monitoring Voltage control Energy storage integration 65

66 Integrated Module Production Offers New Cost Advantage Vertical Integration into Module Manufacturing to Provide Competitive Edge in Costs and Aesthetics 2017 Goal Is to Produce Modules at a Lower Cost of $0.55/W at a Higher Module Efficiency of 21-22% WORLD RECORD MODULE Traditional Silicon Modules Silevo Module Panel Wattage (60-cell) Module Efficiency (Cell Efficiency) ~15% (~18%) 21-22% (24%) Additional Energy Harvest - >5% Manufacturing cost goal ($/W) ~$0.55/W Balance of system (BoS) cost reduction - >$0.10/W Silevo s 350-Watt module is significantly above original 310-W at the time of acquisition due to breakthrough in shingling technology Module Efficiency of >22% Certified by Renewable Energy Test Center Silevo cell is bi-facial, which allows for additional energy harvest in commercial and utility-scale installations 66

67 Higher Efficiency Enables Lower Labor and BoS Costs Silevo s 350-W Module Utilizes 33% Fewer Panels than Traditional Modules on a Typical House Standard installation Silevo installation Additional mounting planes required 24 panels 260 Watts per panel = 6 kw System Size 16 panels 350 Watts per panel = 6 kw System Size Higher Efficiency: Enables fewer balance of system components and lower labor costs Increases available energy generation in roof-constrained environments 67

68 Largest Solar Panel Factory in the Western Hemisphere Construction at Buffalo is underway with winter weather incorporated into the schedule Targeting construction completion and initial equipment installation by Q Silevo s high-volume manufactured product has been validated by Tier 1 financial solutions; installations underway with manufacturing in China and our Fremont facility SolarCity will be operating the facility but does not own it, which will be our strategic approach towards manufacturing 68

69 Zep Enables Better Aesthetics and More Panels on a Roof Competitor with Traditional Mounting Hardware SolarCity with Zep Note: Competitor image is rendered 69

70 Proprietary Residential Mounting Hardware Requires Fewer Steps Our Zep Mounting Hardware Simplifies Installation and Eliminates the Need for Rails and Clips Zep Enables Lower Installation Costs by Requiring Fewer Components and Less Labor Hours CORE COMPONENTS Leveling Foot Interlock Ground Zep Combiner box DC Wire Grip Grip Array Skirt End Cap Tools 70

71 Continued Investment in Productivity through Simplification Current Part Count New Part Count 71

72 Commercial Mounting Hardware Offers Unique Solution CORE COMPONENTS Conduit Assembly Bridge Assembly Tube Connector Valley Base Peak Base Ground Zero Snap Bushing DC Wire Clip ADDITIONAL COMPONENTS Ballast Pan Positive Attachment Zep Tool 72

73 Storage Enables Energy Independence Market Segment Product Storage Enables Solar Energy at Night Commercial & Industrial DemandLogic reduces peak demand charges Residential Cleaner, more affordable back-up power Remote Communities and the Developing World Utilities Microgrids protect against outages and provide more affordable energy Capacity and power quality services 73

74 Building Firm, Dispatchable Power 74

75 Cleaner, More Affordable, More Resilient Grid A Network of Distributed Solar and Storage Systems Enables a Lower Cost, More Reliable Grid Distributed Energy Resource Aggregation Can Provide Low-Cost Grid Services such as Peak Shaving and Voltage Support 75

76 BUSINESS DRIVERS & METRICS LEADERSHIP OF A GROWING OPPORTUNITY VALUE OF ASSETS MONETIZATION OF ENERGY CONTRACTS VELOCITY AND CONSISTENCY OF DEPLOYMENTS PROPRIETARY ORIGINATION AT LOWER ACQUISITION COSTS OPERATING COST EXCELLENCE INVESTMENT IN BEST-IN-CLASS TECHNOLOGY GUIDANCE AND CONCLUSION 76

77 Conclusion Originating new solar installations at an annualized rate of >1 GW New Energy Contracts generating value of ~$3.86 per Watt today with a 30% ITC (and an estimated $3.32 per Watt with a 10% ITC) Building solar assets at the best cost of publicly-traded peers of ~$2.84/W with a path to $2.25/W in 2017 and ultimately $2.00/W Deployed and retained portfolio of 1.5 GW generating $135M in annual unlevered and $55M in annual levered cash flow on average over the next five years and a total 30-Yr. NPV of $1.7 billion (excluding SRECs) Currently monetizing upfront ~2/3 of the value generated, and exploring options to monetize more of the cash flow in year one Investing in technology to widen our relative cost advantage and enable greater renewable capacity on existing grid infrastructure - Goal of not owning manufacturing assets on balance sheet 77

78 Guidance Implies MW Installed Growth of 43% in 2016 vs ,250 1,000 MWs Installed in Period , E* 2016E* * Based on Q guidance of MW Installed 78

79 Long-Term Guidance Metric Unit Q1 Q2 Q3 Q4 Q1 Q2 Q3 U.S. Power Capacity: U.S. Installed Generating Capacity GW-AC 1,161 1,169 1,172 1,177 1,182 1,171 1,176 Distributed Solar as % of U.S. Generating Capacity % 0.6% 0.6% 0.7% 0.7% 0.8% 0.9% 0.9% Continued increase in U.S. Installed Distributed Solar Capacity GW-DC Distributed solar generation penetration New U.S. Installed Distributed Solar Capacity MW-DC SCTY Units: SCTY % of New U.S. Distributed Solar Capacity % 17% 19% 25% 25% 22% 27% 32% MW Installed MW One Million Customer Goal MW Deployed MW MW PTO'd MW Energy Contract Pricing of New Deployments (Yr. 1) $/kwh $0.12 $0.12 $0.12 $0.12 $0.13 $0.13 $0.13 Increase in Pricing Annual Escalator % 1.7% 1.9% 1.9% 1.9% 2.1% 2.1% 2.2% SREC (5-Yr. Portfolio Average) $/kwh $0.01 $0.01 $0.02 $0.02 $0.02 $0.02 $0.02 Energy Harvest (Yr. 1) kwh/kw 1,425 1,416 1,406 1,402 1,404 1,379 1,352 Value Generation and Monetization: Asset Financing in Period (including rebates)* $/W $2.69 $2.04 $2.62 $2.28 $2.35 $2.33 $3.20 Seeking to monetize a higher % of value upfront Contracted Value of MW Deployed in Period $/W $3.68 $3.55 $3.37 $3.24 $3.44 $3.49 $3.50 Renewal Value of MW Deployed in Period $/W $0.38 $0.40 $0.38 $0.34 $0.33 $0.34 $0.36 Total Value of MW Deployed in Period $/W $4.06 $3.95 $3.74 $3.58 $3.77 $3.83 $3.86 Cost per Watt**: Sales $/W $0.51 $0.47 $0.49 $0.57 $0.59 $0.53 $0.64 Installation $/W $2.44 $2.28 $2.19 $2.09 $2.09 $2.13 $1.92 G&A $/W $0.30 $0.26 $0.21 $0.20 $0.27 $0.24 $0.27 Total Cost per Watt $/W $3.25 $3.01 $2.89 $2.86 $2.95 $2.91 $2.84 $2.25 $2.00 R&D Expenses $M ($1.9) ($3.0) ($4.2) ($10.0) ($12.1) ($12.4) ($17.7) Capital Expenditures $M ($4.7) ($2.9) ($5.8) ($9.5) ($30.5) ($71.6) ($45.7) Change in Working Capital Q/Q $M $28.3 $22.7 $37.0 ($38.1) ($72.3) ($31.7) ($41.7) Debt and Cash: Debt - Recourse $M ($176.6) ($349.8) ($165.2) ($149.7) ($290.6) ($419.2) ($518.2) Debt - Convertible $M ($230.0) ($230.0) ($730.0) ($796.0) ($796.0) ($796.0) ($796.0) Cash & Short-Term Investments $M $526.2 $429.6 $756.8 $663.6 $586.2 $497.6 $438.7 Value creation Unlevered Pre-Tax NPV Remaining of Cumulative MW Deployed (1.5) $M $2,708 Debt Non-Recourse $M ($995) Net NPV of Cumulative MW Deployed $M $1,713 * Weighted average of Q1-Q Asset Financing is $2.68 ** Cost per Watt is based on our quarterly cost calculation methodology we detail on our website Updated since original report 79