MAC Solar Index "Solar Investment Case" presentation

1. The Investment Case for Solar
Tracking index for Invesco Solar ETF (NYSE ARCA: TAN)*
www.MACsolarindex.com

2. Long-term bullish factors for solar sector
• Impressive growth potential -- Solar has impressive growth potential with forecasts
for $3.4 trillion of solar spending through 2040, with solar representing 35% of all new
global electricity generation installs (Source: Bloomberg New Energy Finance). Solar
PV will generate 25% of all electricity globally by 2050, up from 3% today (BNEF).
• Low-cost electricity solution – Solar’s levelized electricity cost has already plunged
by 84% since 2010 (Lazard) due to dramatic technology advances and economies of
scale. Solar’s cost will plunge by another 71% by 2050 (BNEF), which would make it
the cheapest source of electricity by far. Solar has already reached grid-parity in many
areas of the world where its low cost now beats both coal and nuclear.
• Government support is only icing on the cake -- Solar has become a self-sustaining
industry due to the sharp drop in solar costs and no longer needs government subsidies
or mandates.
• Solar-plus-storage provides robust 24/7 energy solution -- Solar-plus-storage
systems provide a 24/7 source of electricity and solve solar’s intermittency problem.
Solar-plus-storage systems are already cost competitive and will become even more so
as battery costs plunge by another 52% through 2030 (BNEF).
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3. Solar – Long-term solution for sustainable electricity
Advantages
• Clean & Safe - Solar is a clean & safe electricity solution; unlike nuclear, coal, natural gas.
• Cost certainty - Solar has a fixed up-front electricity-generation cost with no fuel cost risk, unlike
coal and natural gas where generation costs depend on unknown future fuel costs.
• Falling costs - Solar costs are falling steadily due to technology improvements and manufacturing
scale. Also, solar has a near-zero marginal cost once installed unlike high marginal fuel
operating costs for coal and natural gas.
• Distributed Generation - Solar insulates electricity users from grid failures and protects against
future utility electricity price increases.
• Scalable - Solar can be large scale (utility) or smaller scale (residential, commercial buildings).
Disadvantages
• Day-Use Only – but matches peak electricity usage times and can be paired with battery storage.
• Variable solar intensity – but still economical in northern climes. 2

4. Current fossil-fuel-based energy system is massively
inefficient with two-thirds of energy wasted by heat loss
• Burning fossil fuels
wastes two-thirds
of potential energy
to heat loss
• Solar and wind, by
contrast, deliver
100% of electricity
generated with no
heat loss and no
pollution or CO2
emissions,
producing a cleaner
and much more
efficient world
energy system
For details, see “Universal Energy” by Benham at
www.dollarsperbbl.com/2018/07/22/universal-energy/
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5. Greenhouse gas emissions are clearly driving global
warming
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Source: Fourth National Climate Assessment (p 79)

6. U.S. Climate Change Indicators
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Source: Fourth National Climate Assessment (p 38)

7. CO2 emissions can drop sharply by 2040 if low-carbon
power generation rises to 85% of total generation
• IEA says carbon
intensity can drop
sharply if low-carbon
electricity rises to 85%
of total by 2040
(Sustainable
Development Scenario)
Source:International Energy Agency (IEA)
World Energy Outlook 2018
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8. Renewable energy will progressively displace
oil and coal over coming decades
• Renewables will grow rapidly
through 2040 and take market
share away from oil and coal
• Gas, nuclear, hydro show little
change in market shares
through 2040
Source: 2018 British Petroleum BP Energy
Outlook
Forecast of electricity generation
shares through 2040 (BP)
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9. Solar will be the largest source of electricity by 2032 with
long-term annual growth of 12% (BNEF)
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10. High Growth Industry: 21% Annual Growth Last 5 Years
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11. Leaders: China, India, U.S., Japan
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12. China leads by far on cumulative solar capacity
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13. Solar cell costs have plummeted by 99% since 1970s
Solar costs have
plummeted due to:
• Technology innovation
• Manufacturing
economies of scale
Solar follows technology
learning curve -- costs fall
sharply as production
rises
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14. Solar is a high-technology product where costs will
continue to fall due to the technology learning curve
Solar cell and module costs
have followed a technology
learning curve similar to that of
other technology products
such as semiconductor chips,
DRAM circuits, etc.
Solar PV learning curve is
known as “Swanson’s Law”
and follows the more general
“Wright’s Law”
Law states that solar module
prices fall at a constant rate
with a percentage increase in
production (double log scale)
Chart source:
commons.wikimedia.org/wiki/File:Swansons-law.png
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15. Extensive solar scientific research increases
cell efficiency and reduces solar costs
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16. Solar electricity costs have dropped dramatically
by -84% since 2010
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17. New Utility-Scale Solar PV plants are already
cheaper to build on average than nuclear and fossil fuel plants
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18. Utility-Scale Solar LCOE ranges beat or match fossil fuels and
nuclear
U.S. Levelized Cost of Electricity (unsubsidized) – Lazard LCOE 13.0, Nov 2019
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19. Solar Pricing – Polysilicon has rebounded
from record low due to two temporary factory closures
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20. Solar Pricing – Module prices down -84% over last 9 years
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21. Solar-plus-storage is taking off as a 24/7 solution
• Energy storage will surge in
coming years and aid solar in
becoming a 24/7 electricity
generation system.
• Storage will surge to 942 GW
of capacity by 2040 with $620
billion of sales (BNEF).
• Xcel Energy’s solicitation in
2018 for a Colorado solar-plus-
battery plant received median
bid of very low $36/MWh.
• BP-backed Lightsource says
all of its utility-solar proposals
in western U.S. now include
battery storage. 20

22. Renewable energy plus storage is the world’s long-term future;
Technology ultimately wins against burning fossil fuels
• Burning fossil fuels needs to be
phased out to preserve
sustainable human habitation on
earth
• Renewables plus storage
provide the long-term solution
• Technology learning curves for
renewables and storage will
continue to drive costs lower to
easily provide the lowest-cost
electricity
• Technology ultimately wins
against burning fossil fuels
• Solar and storage are only in the
second or third inning, with
decades of strong growth
Technology road-map to
2050 by International
Renewable Energy Agency:
• Renewable share to
increase to 85% from 24%
• Solar PV grows by 32x
from 2015 to 7,122 GW
• CO2 emissions drop by
85%
• Spending of $24.6 trillion
on power generation and
$18 trillion on storage and
grid
Source: IRENA Global Energy
Transformation: A Roadmap to 2050 21

23. MAC Global Solar Energy Stock Index - Methodology
• Global solar energy stock index of qualified solar stocks listed on
exchanges in developed countries.
• Passive index of qualified solar stocks – no stock picking.
• Modified market cap weighting.
• Liquidity minimums to add a stock: $150 million market cap and
$750,000 in average daily trading value.
• Exposure Factor 1.0 for pure-play solar stocks (solar revenue above
2/3); Exposure factor of 0.5 for medium-play stocks (1/3 to 2/3 solar
revenue).
• Quarterly index review on third Friday of March, June, Sep, Dec.
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24. Advantages of Index/ETF Over Individual Solar Stocks
• Diversification – across geography, technology, value chain
• Own the global solar sector in one trade – reduced transaction
costs
• Long track record – 12+ year history (launched in April 2008)
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25. Index Diversification Across Geography
By Company Headquarters:
• North America: 10 companies
• Asia: 11 companies
• Europe: 6 companies
By Stock Listing:
•North America: 15 companies
•Asia: 6 companies
•Europe: 6 companies
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As of Sep 2020

26. Index Diversification Across Solar Industry Value Chain
Integrated Solar Companies
• First Solar Inc (FSLR US)
• Sunpower (SPWR US)
• Canadian Solar (CSIQ US)
• JinkoSolar (JKS US)
• Maxeon Solar Technologies (MAXN US)
• Meyer Burger (MBTN SW)
Solar Polysilicon/Wafer Manufacturers
• Daqo New Energy (DQ US)
• GCL-Poly Energy Holdings (3800 HK)
Solar Panel Glass Manufacturers
• Xinyi Solar Holdings (968 HK)
• Flat Glass Group (6865 HK)
Solar Power DC-AC Electrical Inverters
• SolarEdge Technologies (SEDG US)
• Enphase Energy (ENPH US)
• SMA Solar Technology (S92 GY)
Solar Power Project Developers/Operators
• Scatec Solar (SSO NO)
• Xinyi Energy Holdings (3868 HK)
• Atlantica Sustainable Infrastructure (AY US)
• Clearway Energy (CWEN US)
• Encavis (CAP GR)
• Neoen SA (NEOEN FP)
• Solaria Energia (SLR SM)
• West Holdings (1407 JT)
• Azure Power (AZRE US)
• Renova Inc (9519 JT)
Residential Solar Power Installers
• SunRun (RUN US)
• Sunnova Energy Intl (NOVA US)
Solar Project Finance
• Hannon Armstrong Sustainable Infrastructure
(HASI US) 25
As of Sep 2020

27. For More Information
• Download solar sector research reports
at:
www.macsolarindex.com/solar-research/
• List of solar information sources at:
www.macsolarindex.com/resources/
*The MAC Global Solar Energy Index (SUNIDX) is licensed as the tracking index for the Invesco Solar ETF (NYSE ARCA: TAN). Index performance does not
reflect transaction costs, fees or expenses of TAN. This material is provided solely by MAC Global Solar Energy Index, not by Invesco which bears no
responsibility for the content or use of this material. Copyright. All rights reserved. MAC Solar Index. www.macsolarindex.com. The information contained herein
is not guaranteed as to its accuracy or completeness. No express or implied warranties nor guarantees are made. No responsibility is assumed for the use of this
material and those individuals acting on this information are responsible for their own actions. Any opinions expressed herein are subject to change without
notice. Nothing contained herein should be construed as an offer to buy or sell, or as a solicitation to buy or sell, any securities or derivative instruments. Security
and derivatives trading may not be suitable for all recipients of this information. Please consult with your investment advisor before investing.
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