#1ONREL NATIONAL RENEWABLE ENERGY LABORATORY Summer 2023 Solar Industry Update David Feldman, NREL Krysta Dummit, BGS Contractor for SETO Jarett Zuboy, NREL Robert Margolis, NREL August 3, 2023 Photo by Joe DelNero, NREL 79505#2Agenda 1 Global Solar Deployment 2 U.S. Policy Updates 3 U.S. PV Deployment 4 PV Pricing 5 Global Manufacturing 6 U.S. PV Imports 7 Virtual Power Plants NREL 2#3Executive Summary U.S. Photovoltaic (PV) Deployment • • • . In Q2 2023, the Internal Revenue Service (IRS) released initial guidance on several key provisions within the Inflation Reduction Act, including: labor rules, bonus credits (1,2,3), direct payment, and transferability of the Investment Tax Credit (ITC) and Property Tax Credit (PTC), as well as the Advanced Energy Project Credit (48C). At the end of 2022, more than 263,000 U.S. employees spent most of their time on solar. An additional 82,250 workers spent less than half their time on solar-related work. The United States installed 5.7 GWac (6.1 GW dc) of PV in Q1 2023—and the largest Q1 on record; a significant portion was in Texas, Florida, and California. 34% of U.S. utility-scale PV and ~21% of all U.S. PV systems built in 2022 used CdTe panels. The United States installed ~2.1 GWh (0.8 GWac) of energy storage onto the electric grid in Q1 2023. 89% of GWh of utility-scale battery storage installed in 2021 was co-located with an electric generation asset (or retired plant), however in 2022 that number dropped to 59%. PV System and Component Pricing Global polysilicon spot prices dropped about 70% from mid-April to mid-July, reaching the $8/kg level for the first time in 3 years. Global module prices reached their lowest-ever point at $0.17/W because of oversupply, competition, decreasing module commodity (e.g., silver, aluminum) and freight prices, and a decline in the value of the yuan vs. the dollar-despite continued strong demand for modules worldwide. In Q2 2023 (first 2 months), the average U.S. module price ($0.37/Wdc) was up 2% q/q with no change y/y and modules trading at a 76% premium over the global spot price for monofacial monocrystalline silicon modules. LevelTen reports that after several years of rising prices, solar power purchase agreement (PPA) prices in the U.S. showed signs of stabilization in Q2. From H1 2022 to H1 2023, distributed PV system prices generally increased in nominal dollars but were down when accounting for inflation. Global Manufacturing In Q1 2023, margins for most PV companies increased as demand increased, aided by a significant drop in polysilicon prices. Available data for 8 of the leading PV module suppliers found that Q1 2023 shipments were 61% higher than shipments from these companies in Q1 2022. Since the Inflation Reduction Act's (IRA's) passage, over 185 GW of U.S. manufacturing capacity has been announced across the solar supply chain, including 44 separate new manufacturing plants and 6 expansions. U.S. PV Imports 12.2 GWdc of PV modules were imported into the United States in Q1 2023, +17% q/q and +149% y/y. 790 MW dc of cells were imported in Q1 2023, up 13% q/q and 32% y/y. Despite the increase in PV cell imports in Q1 2023, as of May, PV cell imports are still on track to reach 2.5 GWdc of the Section 201 quota despite the quota being raised to 5.0 GWdc last year. NREL | 3 A list of acronyms and abbreviations is available at the end of the presentation.#4Agenda 1 Global Solar Deployment 2 U.S. Policy Updates 3 U.S. PV Deployment 4 PV Pricing 5 Global Manufacturing 6 U.S. PV Imports 7 Virtual Power Plants In 2022, after several years of stagnation caused by the COVID pandemic, a record 9.5 million off-grid solar products were sold in 2022. Collectively, they had a capacity of 94 MW. The first Spanish concentrated solar power (CSP) plant in a decade could be built this year after the central government approved the Environmental Impact Declaration. The 110 MW Solgest CSP plant is to be built along with 40 MW of PV. NREL 4#5• . . • CSP Update In June 2023, Chile published draft rules for its 2023 energy auction which SolarPaces believes will incentivize dispatchable CSP. The auction includes incentives for non-variable renewables like CSP, a splitting of the auction into three geographic zones, an increase in contract length to 20 years, and may allow the transfer of systemic costs caused by short-term market factors. In June 2023, Heliogen announced its first solar thermal hydrogen customer – the city of Lancaster, California. Heliogen's Proxima plant, located in Lancaster, will provide the hydrogen. The plants will contain 1,000-2,000 heliostats and a 1.8 GWe Bloom Energy electrolyzer. a The first Spanish CSP plant in a decade could be built this year after the central government approved the Environmental Impact Declaration. The 110 MW Solgest CSP plant is to be built along with 40 MW of PV. A Swiss team achieved a record solar-to-hydrogen device-level efficiency of greater than 20%, using a CSP parabolic dish. The device is already operational, and a start-up is commercializing the system to scale up the technology. NREL | 5#6Global Off-Grid Solar Market 10 Total IROW 9 Off-grid PV Product Shipped (millions of units) N 3 + 5 6 1 India Rest of Africa Rest of East Africa Kenya MW 100 90 80 80 70 60 60 50 50 40 40 30 20 10 10 off-grid PV Products Sales (MW) • Despite significant growth of off-grid PV in the first part of the last decade, sales started to stagnate in 2016 and then contracted from the COVID-19 pandemic. In 2022, these trends reversed, with the Global Off-Grid Lighting Association tracking a record 9.5 million off-grid solar products sold in 2022. Collectively, they had a capacity of 94 MW. - - The association attributed the gains to better programmatic support, and improved financial mechanisms. Most of the units sold were associated with lighting (particularly by volume portable lighting products), however preliminary data shows almost 2 million in products associated with appliances, including fans, TVs, radios, water pumps, and refrigerators. 0 +0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source: Global Off-Grid Lighting Association, "Global Off-Grid Solar Market Report Semi-Annual Sales and Impact Data." NREL | 6#7Agenda 1 Global Solar Deployment 2 U.S. Policy Updates 3 U.S. PV Deployment 4 PV Pricing 5 Global Manufacturing 6 U.S. PV Imports 7 Virtual Power Plants ⚫ In Q2 2023, the IRS released initial guidance on several key provisions within the Inflation Reduction Act, including: bonus credits, direct payment, and transferability of the ITC and PTC. On June 28th, the U.S. Environmental Protection Agency (EPA) released a Notice of Funding Opportunity for the $7 billion Solar for All grant program through the Greenhouse Gas Reduction Fund (GGRF). In Q2 2023, the California Independent System Operator approved a $7.3 billion plan to build transmission connecting 17+ GW of solar capacity. NREL 7#8States: Q2 2023 Updates Colorado created a million-dollar grant program to help local governments start using permitting and inspection software such as SolarAPP+. Washington Map shows locations (58) using SolarAPP+ as of July 14, 2023. Symbol sizes scale to capacity of PV approved using SolarAPP+ (23,600 permits, 142 MW total). Total kW Approved 0 10,000 20,000 34,001 After passing a 100% clean power law in Q1, Minnesota passed laws in Q2 including funding PV on public buildings, grid upgrades, energy storage, utility PV incentives, electrification, green banks, and PV recycling studies while expanding community solar, requiring utilities to procure distributed PV, and protecting residential PV customers from HOA restrictions. Montana North Dakota Minnesota South Dakota Oregon Idaho Wyoming Nebraska Nevada > Utah United States Colorado The California Independent System Operator approved a $7.3 billion plan to build transmission connecting 17+ GW of solar capacity and 9+ GW of wind and geothermal capacity by 2030, aiming to coordinate transmission and generator locations and reduce interconnection delays. Bail alifornia arnia lowa Kansas Missouri Wisconsin Michigan Ohio Illinois Indiana West Virginia Kentucky New York Pennsylvania North Carolina Tennessee South Carolina Okl Arkansas New Mexico Mississipp Alabama Georgia Texas Louisiana Chihuahua Coahuila de Zaragoza Nuevo León Baja California Sinaloa Durance Florida Texas passed a law requiring renewable energy projects to pay higher transmission fees and pay for "firming” requirements but avoiding strong restrictions on renewable energy permitting from the original bill. Sources: Canary Media (5/3/23, 5/11/23, 5/16/23, 5/22/23, 5/24/23), PV Magazine (5/2/23, 5/17/23, 5/25/23, 5/30/23), PV Tech (5/24/23), Reuters (6/23/23), SolarAPP+ (accessed 7/20/23), Solar Power World (4/18/23, 5/23/23) Virginia Vermont enacted a clean heat standard to reduce fossil heating. New York passed the first statewide ban on natural gas in new buildings and authorized publicly funded, constructed, and owned renewable energy projects. Maryland expanded and made permanent its community solar program, becoming the 23rd state to have a community solar framework without access limits. NREL 8#9Solar Tax Credit Summary and Status Tax Credit Value End Year Treasury Initial Guidance Advanced Manufacturing Production Tax Credit (MPTC, 45X) Varies by component 2032 [none yet] 30% Additional Guidance from Advanced Energy Project Credit (48C)* Production Tax Credit (PTC, 45(d)/45Y)* Investment Tax Credit (ITC, 48/48E)* Residential Clean Energy Credit (25D) *Values could be reduced by a factor of ас 5 for facilities ≥ 1 MW ac that fail to meet labor rules N/A ($10B total) IRS/MESC 2.75 €/kWh* + bonus 2035* Labor Rules Energy Communities Bonus Low-Income Community Bonus 30% + bonus 2035* Domestic Content Bonus 30% 2033 *Adjusted for inflation *could be extended FAQs on energy efficient home improvements and 25D Direct Pay and Transferability, including FAQs#10Advanced Energy Project Credit (48C) Newest Guidance On May 31st, Treasury and the IRS released further guidance on the 48C tax credit allocation process. Administered by the U.S. Department of Energy's (DOE's) Office of Manufacturing and Energy Supply Chains (MESC), 48C awards an upfront 30% tax credit (if labor requirements are met) for capital investments made to purchase and commission or upgrade an industrial, manufacturing, or recycling facility. MESC also held an informational webinar on June 27, 2023 As detailed in the initial guidance issued in February, selection will follow the standard DOE two-step funding opportunity announcement (FOA) process of concept papers which receive encourage/discourage letters, followed by review of a full application. The program will begin accepting concept papers on June 30, 2023 via eXCHANGE, for a first round of $4 billion in credits, with approximately $1.6 billion reserved for projects in eligible communities (see map). Concept papers will be due no later than July 31, 2023. Encourage/discourage letters are anticipated in the fall of 2023. The deadline for full applications has not yet been set. Decisions will be made by March 31, 2024. Projects will be evaluated first for compliance and eligibility and then evaluated based on the following 4 technical criteria: 1. Commercial viability (including shortest project timeline, lowest levelized cost of energy (LCOE), and risk mitigation strategies) 2. Net impact on greenhouse gas reduction (including direct, indirect, and lifecycle emissions) 3. Strengthening U.S. supply chains (Round 1 priority areas are: polysilicon, wafer, ingot/wafer production tools, and solar glass) 4. Workforce and community engagement (a plan for this must be included in both application stages) DOE will also rank the applications based on program policy factors such as portfolio diversity (size, technology, geography, etc.). Projects may not be placed in service prior to allocation. Once allocated, projects must be certified within 2 years and place in service within 2 years of certification. Taxpayers must inform DOE and the IRS of any significant change of plans.#11/15/2023 Energy Communities Bonus Newest Guidance Energy Communities Bonus Credit Program: a 10% increase to the Investment or Production Tax Credits (ITC/PTC) to brownfields, fossil fuel communities with high unemployment, and coal closure communities. Treasury released guidance on April 4th, including releasing a map hosted by the Interagency Working Group on Coal & Power Plant Communities & Economic Revitalization, DOE and IRS. They updated both map and guidance on June 15th, as well as adding an FAQs page. From 2024 on, the map should be updated each May. Seattle Washington Idaho Oregon Sacramento San Francisco Fresno Californ о Great Basin Uta Morna Rocky Mounta Salt Lake Las Vegas volorado Plateau Los Angeles San Diego Dakota South Dakota Minnesota Minneapolis Wisconsin Great Plains Iowa Nebraska Denver UNITED STATES Colorado Mexico Lake Superior Loke Huron Toronto Buffalo Milwaukee Detroit Chicago Cleveland Cal liinois Kansas City Indianapolis of Cincinnati St Lou Louisvill Kansas Missouri Nashvi Oklahoma. Oklahoma City Arkansas Memphis Arizon Phoenix Dal Tucson El Paso Texas Hermosillo Chihuahua Decidenter Appalachian Virginia o Charlotte Atlanta South Carolina Mississi Alabama Georgia Louislaba Houston New Orleans Florida San Antonio o Torreón Monterrey Gulf of Mexico Coastal Plain Jacksonville Tampa Miam Quebec Ne Bruns Ottawa Montreal Maine Appalachian Mountains New York Philadelphia Washington Richmond Norfolk *Grandfather clause: if a project starts construction on a site located in a fossil fuel community, it will still receive the credit if the status of the community changes in a later year. Providence Coal Closure Community Adjacent to a Coal Closure Community Metropolitan or Non-Metropolitan Statistical Areas that meet the Fossil Fuel Employment Threshold and the unemployment rate requirement Not depicted: Brownfields (EPA Brownfield Program Sites) Fossil fuel communities as determined based on tax revenue. Grandfather clause* only applies to facilities constructed in/after 2023.#12Direct Payment of Tax Credits Guidance Treasury and the IRS have issued FAQs, proposed, and temporary regulations on direct pay (also called "elective pay") of the ITC, PTC, 48C, and Manufacturing Production Tax Credit (MPTC). Comments were due to the IRS by August 14th. • 3 2 pre-filing registration registration # 5 tax forms + registration # + $ taxes Tax burden < full credit still receives full value $$ full value of tax credit 6 IR SE Step 1 - Pursue a qualifying project Step ②Determine the tax year Step 3 - Complete pre-filing registration with the IRS and get # Step ④Meet all requirements of qualifying project Step ⑤- File annual taxes using # Step 6 - Get refund Indian tribal governments The ITC, PTC, and 48C are eligible for direct pay only by: Tax-exempt organizations States and Territories (or political subdivisions thereof,⚫ including cities, counties, and instrumentalities like school districts) Alaska Native Corporations . The Tennessee Valley Authority Rural electric cooperatives. The MPTC is eligible for direct pay for five consecutive years (which may be postponed). Not all steps need be sequential, but ③ must precede 5 and ⑥.#13Direct Payment of Tax Credits Guidance Treasury and the IRS have issued FAQs, proposed, and temporary regulations on direct pay of the ITC, PTC, 48C, and MPTC. Comments were due to the IRS by August 14th. The FAQs for direct pay also clarified: Which entities were eligible for direct pay (including instrumentalities and agencies of States, cities, and counties like school districts, economic development agencies, or public hospitals) What ownership structures are allowed for direct pay under the ITC, PTC, or 48C (e.g., a tenancy-in-common arrangement is allowed, but a partnership, if even if all partners are eligible, is not) and the MPTC (partnerships and S corporations are allowed) How tax-exempt income affects the direct pay math (it can be included in the basis, but the total direct pay amount cannot exceed the [project cost - tax-exempt funds that were granted specifically for this project]) That transfer credits are ineligible for direct pay. As outlined on the previous slide, the FAQs also described the process of electing direct pay. More information about (electronic) pre-filing registration will be available when the process is launched later in 2023, including advice for filers without internet access. Registration is required every year (even for elections that last multiple years, such as the PTC) and for each applicable property but does not confirm eligibility. Direct pay can only be made on original, timely filed returns (including extensions), and payments occur after the return is processed. Elective payment is irrevocable for the ITC, PTC, and 48C. More guidance is still to come (including domestic content requirements of direct pay starting in 2024).#14Transferability of Tax Credits Guidance Treasury and the IRS have issued FAQs, proposed, and temporary regulations on the transferability of the MPTC, 48C, ITC and PTC. Comments were due to the IRS by August 14th. 3 (1 seller (2) (not eligible for direct pay) Tax burden too low to claim full credit 5 4 pre-filing registration registration # tax forms, registration #, ¢ taxes + transfer election statement registration # $ (cash) transfer election statement IR ES registration #, $ taxes, tax forms,+ transfer election statement $$ refund (if applicable) buyer (e.g., has a higher tax burden) Step ①- Pursue a qualifying project Step 2 Complete pre-filing. registration with the IRS and get # Step ③Meet all requirements of qualifying project to earn credit Step ④Arrange to transfer the credit to an unrelated buyer for cash Step ⑤- Provide the buyer the # Step ⑥- Complete the transfer election statement with the buyer Step ⑦- Both buyer and seller file annual taxes including the transfer election statement and registration number Not all steps need be sequential, but ② must precede ⑤- ⑦.#15Transferability of Tax Credits Guidance Treasury and the IRS have issued FAQs, proposed, and temporary regulations on the transferability of the MPTC, 48C, ITC and PTC. Comments were due to the IRS by August 14th. The FAQs for transferability also clarified that: . . A taxpayer cannot transfer just the bonus credit amount of a credit Credit from a single property can be sold to multiple (unrelated) buyers in the same tax year Buyers can incorporate transferred credits in their estimated taxes The buyer bears responsibility for recapture Depreciation benefits do not transfer Transfer credits are ineligible for direct pay. As outlined on the previous slide, the FAQs also described the transfer process. More information about (electronic) pre- filing registration will be available when the process is launched later in 2023. Registration is required every year and for each applicable property but does not confirm eligibility. If the credits from a single property have multiple buyers, the same registration # is used. Sellers attach the transfer election statement to the tax return in the year in which they become entitled to the credit. Buyers do so in the year in which they take the credit into account.#16Domestic Content Bonus Guidance Treasury and the IRS have issued initial guidance on the 10% domestic content bonus credit available for the ITC or PTC which will apply until 90 days after the date of publication of forthcoming proposed regulations. The guidance clarified relevant definitions and provided a non-exhaustive list of utility-scale solar PV products: Applicable Project Manufactured Products A set percentage of the total direct costs of all manufactured products must be U.S.-made. Steel and Iron Products All structural steel or iron products must be U.S.-made Module Components* Cells, Frame, Glass, Encapsulant, Junction Box, Backsheet, Edge Seals, Pottants, Bus Ribbons, Adhesives, Bypass Diodes Tracker *sourcing of subcomponents (e.g., wafers) is not constrained Inverter Racking Pile/ground screw Rebar Domestic Cost Percentage U.S. Manufactured Products Costs + Eligible U.S. Components Costs = 40% 2023-2024 2025 2026 45% 50% 2027+ 55% Total Manufactured Products Costs Taxpayers must attach a domestic content certification statement attesting they have met both requirements. + Direct costs include only direct labor and material. The direct labor of products manufactured in the U.S. is only considered domestic if all of the components of the product are of U.S. origin.#17Domestic Content Bonus Guidance There are two questions which determine how the costs of a manufactured product are included in the calculation of the Domestic Cost Percentage. Costs included Was it manufactured in the U.S.? No Yes only in the denominator Were 100% of its components manufactured in the U.S.? Yes No Costs of manufactured product included in the numerator and denominator Costs of manufactured product included in the denominator Costs of U.S.-made components included in the numerator Domestic Cost Percentage U.S. Manufactured Products Costs + Eligible U.S. Components Costs Total Manufactured Products Costs Example: Manufacturing location Total $10 Component 1 $3 Component 2 $4.50 20 x Module A Total $200 Component 1 $50 Component 2 $135 Tracker B Total $100 Component 1 $20 Component 2 $25 Inverter C All direct costs, but only direct costs are included in the computation (not prices!). + Direct costs include only direct labor and material.#18Domestic Content Bonus Guidance There are two questions which determine how the costs of a manufactured product are included in the calculation of the Domestic Cost Percentage. Example: Manufacturing location Was it manufactured in the U.S.? Total $10 Yes Component 1 $3 Were 100% of its components manufactured in the U.S.? Component 2 $4.50 20 x Module A Yes Total $200 Costs of manufactured product included in the numerator and denominator Component 1 $50 Component 2 $135 Tracker B $10 x 20 Domestic Cost Percentage $10 x 20 Total $100 Component 1 $20 Component 2 $25 Inverter C#19Domestic Content Bonus Guidance There are two questions which determine how the costs of a manufactured product are included in the calculation of the Domestic Cost Percentage. Manufacturing Example: location Was it manufactured in the U.S.? Total $10 Yes Component 1 $3 Were 100% of its components manufactured in the U.S.? Component 2 $4.50 20 x Module A No Domestic Cost Percentage II Costs of manufactured product included in the denominator Costs of U.S.-made components included in the numerator $10 x 20 + $50 $10 x 20+ $200 Total $200 Component 1 $50 Component 2 $135 Tracker B Total $100 Component 1 $20 Component 2 $25 Inverter C#20Domestic Content Bonus Guidance There are two questions which determine how the costs of a manufactured product are included in the calculation of the Domestic Cost Percentage. Costs included Was it manufactured in the U.S.? No only in the Domestic Cost Percentage II denominator Example: Manufacturing location Total $10 Component 1 $3 Component 2 $4.50 20 x Module A Total $200 Component 1 $50 Component 2 $135 Tracker B $10 x 20 + $50 $10 x 20+ $200 + $100 Inverter C Total $100 Component 1 $20 Component 2 $25 U.S.-made components do not change the computations for foreign-manufactured products#21Domestic Content Bonus Guidance There are two questions which determine how the costs of a manufactured product are included in the calculation of the Domestic Cost Percentage. Costs included Was it manufactured in the U.S.? No Yes only in the denominator Were 100% of its components manufactured in the U.S.? Yes No Costs of manufactured product included in the numerator and denominator Costs of manufactured product included in the denominator Costs of U.S.-made components included in the numerator Domestic Cost Percentage || Manufacturing Example: location Total $10 Component 1 $3 Component 2 $4.50 20 x Module A Total $200 Component 1 $50 Component 2 $135 Tracker B Total $100 $10 x 20 + $50 Component 1 $20 = - 50% $10 x 20+ $200 + $100 Component 2 $25 Inverter C#22Low-Income Communities Bonus Newest Guidance Low-Income Communities Bonus Credit Program (48(e)), awards an upfront 10% or 20% bonus tax credit for a maximum of 1.8 GW per year of solar projects < 5 MW ac in size. Treasury posted initial guidance in February and final regulations for 2023 awards in August, largely in line with Notice of Proposed Rulemaking released in June. ас dc 490 MW 700 MW 200 MW 1 2 10% credit low-income community as defined by the New Markets Tax Credit Indian Land 4 3 qualified low- 20% credit qualified low-income economic benefit project income residential building project HH Treasury and the IRS reserve the right to reallocate excess capacity to any oversubscribed categories and/or change initial category reservation capacities Treasury and the IRS clarified: how energy storage technology can be included*, how financial benefits for Category 3 & 4 projects would be calculated and distributed (including requiring Category 4 applicants provide at least a 20% bill credit discount rate for all low-income households), and how IRS intends to prevent circumvention of the rules (e.g., artificially dividing up projects; changing project size, location, ownership, or benefits distributions after allocation; placing a project in service prior to allocation). Due to anticipated applications, and to better serve households in low-income areas, 490 MW of Category 1 is being allocated to residential behind-the-meter facilities for 2023 allocations, with the remainder reserved for front of the meter facilities and non- residential behind the meter facilities. *Storage is not included in any project capacity limits; however, it must be owned by the same party, be on the same or contiguous land, and receive the same permitting and interconnection as the solar asset. Additionally, the owner must be able to provide that it is charged no less than 50 percent by the solar asset (a safe harbor applies if the power rating of the storage is less than 2 times the DC capacity of the solar facility).#23Low-Income Communities Bonus Newest Guidance Low-Income Communities Bonus Credit Program (48(e)), awards an upfront 10% or 20% bonus tax credit for a maximum of 1.8 GWdc per year of solar projects < 5 MW ac in size. Treasury posted initial guidance in February and final regulations for 2023 awards in August, largely in line with Notice of Proposed Rulemaking released in June. 700 MW 200 MW 1 2 10% credit low-income community as defined by the New Markets Tax Credit Indian Land 4 20% credit qualified low-income economic benefit project 3 qualified low- income residential building project Additional Selection Criteria apply 30-day application period in which all applicants receive the same time stamp. Then, a rolling process if under allocation, a lottery process if over allocation. Priority will be given to Additional Selection Criteria applications. Treasury has also decided on two Additional Selection Criteria. At least 50% of each category will be reserved to projects that meet at least one of the additional criteria (priority will be given to applications meeting both criteria): 1. Owned by a Tribal enterprise or Alaska Native Corporation, renewable energy cooperative (where 51% of owners are low-income households), qualified renewable energy company (an entity serving low-income communities and provides pathways for clean energy adoption for those households), or a tax-exempt entity (including states, tribes, and rural electric co-ops). 2. Located in a Persistent Poverty county (where more than 20% of the population have experienced high rates of poverty over the past 30 years) or census tracts designated in the Climate and Economic Justice Screening Tool (CEJST) as disadvantaged in terms of energy burden, PM2.5 exposure, and income.#24Low-Income Communities Bonus Newest Guidance Category Type All permits obtained All Details Applicant is in compliance with all laws (including consumer protection) Applicant has inspected site for suitability Attestation Consumer disclosures have been/will be provided to customers Applicant has appropriately sized the facility *Facility meets Geographic criteria (Category 2 is exempt) Ownership/facility changes since application or lack thereof Verification of site control (for FTM, only attestation is required) Executed interconnection agreement, if applicable. If not, other authorizations or affidavits required (for BTM ≤1 MW ac, not required) Document Executed contract to purchase or lease facility or an executed PPA (BTM) *Verification applicant meets Ownership criteria Permission to Operate (PTO) letter or commissioning report for off-grid Verification of as-built nameplate capacity 1+2 Attestation Facility location is eligible Proof residential building is eligible 3 Document Plan to ensure tenants receive financial benefits Benefits Sharing Agreement Attestation 4 Document Applicant will ensure 50% of financial benefits and 20% bill credit discount requirement is met Detailed final list of households or other entities served Spreadsheet demonstrating 20% bill credit discount requirement met *Only applies if applicant is applying under Additional Selection Criteria. FTM = front of the meter, BTM = behind the meter Treasury and the IRS described the application materials required and the materials required once a facility has been placed in service (italicized). The owner of the facility must be the one to apply. • • Post-allocation, a facility cannot: Change location Change size (to be ≥5 MW ac or by decreasing by the larger of 25% or 2 kW) Fail to meet "financial benefits" requirements Fail to meet ownership requirements, unless the original owner had the right of first refusal to purchase plant after the recapture period. A facility also cannot be placed in service prior to allocation.#25PV Annual Installations (GWdc) 70 50 40 262220 30 10 IRA-Induced Growth Projections 2022 Pre-IRA 2023P 2024P IImmediately Post-IRA 11 2025P I Current Post-IRA 2026P 2027P SFS (Decarb+E) Notes: P = projection. Colored bars represent average projections, and error bars represent high and low projections, line is the decarbonization with electrification scenario from the Solar Futures Study (SFS). Sources: BNEF, 2Q 2022 Global PV Market Outlook, 5/27/22; BNEF, 2Q 2023 Global PV Market Outlook, 8/26/22; BNEF 2Q 2023 Global PV Market Outlook, 5/23/23, Wood Mackenzie and SEIA, Q2 2022 US Solar Market Insight, 6/22; Wood Mackenzie and SEIA, Q3 2022 US Solar Market Insight, 9/22; Wood Mackenzie and SEIA, Q2 2023 US Solar Market Insight, 6/23. U.S. Department of Energy, Solar Futures Study, 9/21. Before IRA, according to projections by BloombergNEF and Wood Mackenzie/Solar Energy Industry Association (SEIA), annual PV installations were expected to increase to 33 GW in 2025 (~19% annual growth over three years) and then level off, reaching only 34 GW in 2027. dc Immediately after IRA, projections from those two sources increased by ~30% per year, reaching 47 GWd in 2027. dc Since then, projections have stayed approximately the same, as CA net energy metering (NEM) 3.0 and higher interest rates have downgraded residential solar projections and interconnection queue delays and decreases in the expected cost- competitiveness for solar against other technologies has impacted utility-scale solar projections. Increased clarity on various IRA regulations has not markedly increased or decreased projections. NREL | 25#26Greenhouse Gas Reduction Fund Notices of Funding Opportunities On June 28th, EPA released a Notice of Funding Opportunity for the $7 billion Solar for All grant program through the Greenhouse Gas Reduction Fund (GGRF). The program will award up to 60 grants to states, territories, Tribal governments, municipalities, and eligible non- profits to create and expand low-income solar programs that provide financing and technical assistance (including workforce development) to enable low-income and disadvantaged communities to deploy and benefit from residential solar. There are three program sizes: small ($25-$100 million), medium ($100-$250 million), and large ($250-$400 million). Applicants can submit separate applications to one or multiple of the three options. Coalitions led by an eligible applicant may apply. There are three award options: 1. State and Territory Programs 2. American Indian and Alaska Native Programs 3. Multi-state Programs for similar communities facing similar barriers to residential distributed solar deployment in multiple states All applicants are required to submit a Notice of Intent, the deadline for which varies by region: - - July 31, 2023 for states, the District of Columbia, and Puerto Rico August 14, 2023 for territories, municipalities, and eligible non-profits, August 28, 2023 for Tribal governments and Intertribal Consortia. The deadline to apply for the program is September 26, 2023. A public briefing was held on July 12th. The GGRF also saw the launches of the National Clean Investment Fund ($14 billion) and Clean Communities Investment Accelerator ($6 billion) on July 14th which will support 2-3 national non-profit clean financing institutions and 2-7 hub non-profits which will build the clean financing capacity of local community lenders working in low-income and disadvantaged communities, respectively.#27Agenda 1 Global Solar Deployment 2 U.S. Policy Updates • • 3 U.S. PV Deployment • 4 PV Pricing • 5 Global Manufacturing 6 U.S. PV Imports 7 Virtual Power Plants At the end of 2022, more than 263,000 U.S. employees spent most of their time on solar. An additional 82,250 workers spent less than half their time on solar-related work. The United States installed 5.7 GWac (6.1 GWdc) of PV in Q1 2023-and the largest Q1 on record; a significant portion was in Texas, Florida, and California. • 34% of U.S. utility-scale PV and ~21% of all U.S. PV systems built in 2022 used CdTe panels. The United States installed ~2.1 GWh (0.8 GW ac) of energy storage onto the electric grid in Q1 2023. 89% of GWh of utility-scale battery storage installed in 2021 was co-located with an electric generation asset (or retired plant), however in 2022 that number dropped to 59%. NREL | 27#28# of Workers (000s) U.S. Solar Workforce (IREC) At the end of 2022, more than 263,000 U.S. employees spent most of their time on solar. An additional 82,250 workers spent less than half their time on solar-related work. 300 All Others 250 200 150 100 Manufacturing □ O&M Sales & Distribution Installer & Developers 45 38 50 209 174 143 119 105 94 260 264 250 255 248 12 242 -231 33 17 ⚫ This represents an increase of 8,846 jobs, or 3.5% growth since 2021. - Nationwide, the utility-scale solar market lost about 6,000 jobs in 2022. In contrast, residential solar jobs grew by 11%, or about 9,500 jobs, balancing out the losses in utility-scale solar. •Solar jobs grew in 42 states and Puerto Rico in 2022. California added the most jobs in 2022 (+2,404 jobs), followed by New York (+988 jobs), Texas (+904 jobs), Florida (+506 jobs) and Massachusetts (+476 jobs). - 31 172 • However, 44% of solar industry employers said it was "very difficult" to find qualified applicants, a record high percentage. The proportion of women in the solar workforce increased from 27% in 2017 to 31% in 2022. Black people made up 9% of the solar workforce in 2022, considerably less than the proportion in the overall workforce (13%). 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Source. IREC, The National Solar Jobs Census 2022. July 2023.#29Solar Employees (000s) U.S. Solar Workforce (USEER) At the end of 2022, almost 350,000 U.S. employees spent some of their time on solar, mostly in the construction sector. 400 350 300 250 200 150 100 50 Total Other Services Professional Services Wholesale Trade Manufacturing Construction Utilities • This is a growth of 3.7% (12,256) over 2021 and 9% growth over 2019, rebounding to pre-pandemic levels of solar employment. The largest job growth came from the utilities industry (+4,041 new jobs) with the other categories gaining 1-2k jobs each. • Women are underrepresented within the solar workforce (31%) compared to the national workforce average (47%). • Approximately 11% of the workforce is represented by a union or collective bargaining agreement, compared to the national workforce average of 7%. • The solar workforce was more racially diverse than the national workforce average (26% of non-white workers versus 23%). Hispanic or Latino workers were relatively overrepresented while Black or African American workers were relatively underrepresented, compared to the national average workforce. 0 2016 2017 2018 2019 2020 2021 2022 Source. DOE, U.S. Energy & Employment Jobs Report. July 2023.#30U.S. Installation Breakdown Annual: EIA (GWac) According to EIA data, the United States installed 5.7 GWac of PV in the first quarter of 2023-up 44%, y/y and 6% q/q (representing the first increase in PV deployment between Q4 and Q1). Residential (1.9 GW) and C&I (0.7 GW) had their biggest quarters ever, while utility-scale PV (3.1 GW) had its biggest Q1 ever. In Q1 2023, Florida and California installed a combined 2 GW, or 35% of U.S. PV capacity. 8 7 Quarterly PV Installed (GW₁c) 0 3 S 6 U.S. PV Installations by Market Segment Utility-scale ■C&I ■Residential Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2017 2018 2019 2020 2021 2022 23 Q1'23 U.S. PV Installations by Region (5.7 GWac) Southwest 10% Florida 21% California Texas 5% 13% Other 3% Northeast Midwest 17% 20% Southeast 11% Note: EIA reports values in Wac which is standard for utilities. The solar industry has traditionally reported in Wdc. Installation growth in Q1 2023 in some states appears to be a result of EIA updating cumulative installation levels rather than installations during that period. Sources: EIA, "Electric Power Monthly," forms EIA Form 023, EIA Form 826, and EIA Form 861 (November 2022, February 2021, and February 2019). NREL 30#316 8 << 7 Quarterly PV Installed (GWdc) L 0 + 3 л 6 U.S. Installation Breakdown Annual: SEIA (GWdc) Unlike the previous slide, these values are in GW dc-not GW₂ ac' According to SEIA data, the United States installed 6.1 GW dc of PV in the first quarter of 2023-up 47% from the first quarter of 2022-and the largest Q1 on record. Residential PV (1.6 GWdc) had its second biggest quarter ever, up 30%, y/y, which would have been even higher but for heavy rains slowing some installations. Utility-scale PV (6.1 GW dc) had its largest 1st quarter ever, aided by delayed projects coming on-line. C&I PV (0.6 GW dc) was up 9% during this period, though Community Solar was down due to interconnection and siting challenges. SEIA reports that over half of U.S. PV capacity installed in Q1 2023 was in California, Texas, and Florida. U.S. PV Installations by Market Segment Q1 2023 U.S. PV Installations by Region (6.1 GWdc) ■Utility Nonresidential PV Residential PV Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1Q2 Q3 Q4Q1 2016 2017 2018 2019 2020 Note: SEIA reports values in Wdc which is standard for the solar industry. Sources: Wood Mackenzie/SEIA: U.S. Solar Market Insight: Q4 2022. 2021 Other 8% Southwest 9% Texas 13% California 16% Midwest 5% 2022 ||23| Northeast Southeast 14% 9% Florida 27% NREL 31#32>1 MWc U.S. PV System Size ac Distribution by Year 16 >250 MWac 14 150 MWac 250 MWac 12 12 10 75 MWac 150 MWac 20 MWac - 75 MWac 5 MWac - 20 MWac <5 MWac Annual Installations (GW ac) 8 9 + 2 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Note: Data is from an "early release" and is not final. Source: U.S. EIA, Form EIA-860 2022ER. ● Over the past 10 years, the growth in annual deployment of utility-scale PV has mostly come from systems greater than 20 MW, with the largest growth coming from those greater than 150 MW ac' Only 4% of the U.S. PV systems (greater than 1 MWac installed) installed in 2013 were above 150 MW compared to 41% of 2022 ac' installations. • NREL 32#33200 20 18 16 14 12 10 8 Annual Installations (GWdc) 9 = 2 0 >1 MWdc U.S. PV Technology Distribution by Year Not specified C-Si ■CdTe 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Though thin-film PV represented around 4% of global PV deployed from 2013 through 2022, it accounted for 27% of U.S. utility-scale PV deployments during this period. 34% of U.S. utility-scale PV and ~21% of all U.S. PV systems built in 2022 used CdTe panels. Note: Data is from an "early release" and is not final. "Not specified" also includes a small number of CIGS and a-Si modules. Source: U.S. EIA, Form EIA-860 2022ER. 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