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Sharp Electronics

In The Boardroom With...

Marc Cortez
Director of Marketing
Sharp Electronics Solar Energy Solutions Group Thank you for joining us today, Marc. Please tell us your role at Sharp Solar.

Marc Cortez: I am the Director of Marketing for Sharp Electronics Solar Energy Solutions Group. Please give us a brief history of Sharp Solar.

Marc Cortez: Sharp Solar is the largest solar cell manufacturer in the world, with an overall capacity of 600 megawatts. We started the development of solar cells in 1959 and began mass production in 1963. Sharp is also the U.S. market leader and began solar assembly operations at its Memphis production facility in October 2003 to meet the increasing domestic demand for solar energy. With an annual production capacity of 60 MW, the Memphis manufacturing facility today assembles a variety of solar panels for residential and commercial installations, including integrated solar roof modules. As a corporation, Sharp is committed to achieving zero global warming impact by 2010, part of its long term commitment to solar and to the environment. You can find further information on Sharp’s commitment to solar energy and its solar product line online at Sharp Electronics Corporation is the U.S. subsidiary of Sharp Corporation, Osaka, Japan. Congratulations on your recent announcement regarding Sharp's supply of solar modules to the largest privately owned solar installation in Northern California. Can you tell us about this project?

Marc Cortez: The installation you refer to is Tony’s Fine Foods in West Sacramento. A family-owned business, Tony’s Fine Foods provides fresh and frozen foods to the retail grocery and food services industry throughout the West Coast. Sharp’s Solar Group provided the solar modules for the 1.2 megawatt (MW) roof-top and ground-mounted solar electric system, which powers the company’s large frozen and refrigerated food distribution warehouse in West Sacramento.

Powered by 5,782 Sharp 208 watt solar modules, the solar system is both a statement for clean, renewable energy and a smart financial decision. It is expected to generate 1.5 million kilowatt hours annually, accounting for more than 40% of Tony’s Fine Foods energy needs and reducing the company’s electric bills by $22,000 per month. With a rebate sponsored by PG&E, the initial cost of the system was reduced by half.

The solar electric system covers an area the size of three football fields, and is the result of a collaboration between multiple partners, including the Sharp Solar Energy Solutions Group; Solar Development Inc, which designed and installed the system; Sun Link, manufacturer of the mounting system; SatCon, supplier of the inverters; and Team Solar, a Sacramento-based electrical contractor that managed construction. What are the major market drivers for solar energy at this time? Is the Green Movement part of it?

Marc Cortez: The solar market is being driven by a number of factors. First, as you mentioned, the consumer Green Movement is absolutely a driver of market growth. In a recent poll Sharp conducted, it was found that eight out of ten Americans believe that homebuilders should offer solar power as an option for all new home construction, and two-thirds of Americans would be willing to pay a premium for homes that have solar installed. We believe that part of the reason for this increased support is because of the attention that energy is getting in the national media these days.

Another part of the huge growth is certainly driven by the progressive legislative environments in the state and federal governments. California’s Million Solar Roofs Initiative gave multi-year funding to the state solar program, which provides market stability to manufacturers like Sharp who need to invest in plants and resources to satisfy the market. In turn, the federal government offers tax incentives to those who install solar, which helps further public awareness and acceptance.

Still another part of market growth – and certainly the one that gets a lot of attention from the venture capital community – is the progression of technology. While silicon is still the primary component used in manufacturing solar cells, most manufacturers are finding new and better ways to use silicon to maximize their yields. Also, because of the recent shortages in this raw material (silicon), the market is rapidly developing alternate technologies that either use much less silicon (like thin-film) or other, non-silicon based materials. We assume that with oil in $60 - $70 range and, in the opinion of many analysts, spiking higher from time to time, solar is becoming more cost effective. Do we have that right? Please also give us an overview of the Government incentives currently available at the Federal and State level.

Marc Cortez: We’re always quite cautious in comparing conventional energy sources with solar, simply because the comparisons are rarely equal. All energy sources are subsidized by the government in one form or another – oil especially so – and yet those subsidized costs are not usually included in the cost comparisons against solar. What is the real, unsubsidized cost of a gallon of gas, for example, or the unsubsidized cost of a kilowatt-hour available from the utility? So because these costs have already been internalized by the American public – and solar’s number, because it’s so new has yet to be equally understood – the comparison is often apples to oranges.

But, as a general rule, conventional sources of energy are increasing in price while at the same time the cost of solar is decreasing. At some point these cost lines will intersect, and solar will achieve parity with the grid. At that point and thereafter, solar will be simply a more cost effective source of energy. And because solar uses equipment with no moving parts and therefore is virtually maintenance free, and it uses a clean, renewable energy source, it will continue to be cost effective while at the same time providing energy in a way that is better for the environment.

Right now, the IRS awards a federal tax credit of 30% of the cost of a solar system, without limit to commercial installations and capped at $2,000 for home installations. In addition, many local utilities offer rebates per watt installed. For example, Southern California Edison provides a rebate to homeowners of $2.60 per watt, or $2,600 per kilowatt. I should note that these tax credits and rebate programs are not permanent. Some will expire at a certain date or after a pool of allotted funds are depleted. We, and others in the solar industry, are urging lawmakers to extend these credits and rebates. We understand that there are 3 major markets for solar right now: residential, commercial and utility. Please give our audience an overview of these 3 markets. How do you reach these markets? Which market is growing the fastest?

Marc Cortez: In terms of sales volume, the residential market and commercial markets are about equal, while the utility market is an emerging – but potentially huge – market. The residential market includes existing homes that add solar panels to the roof (termed “retrofit”) as well as new home construction where solar panels might be included as a standard feature,. Sharp recently launched a new racking system into this segment, called the Solar Racking System (SRS) that was designed to save time during rooftop installations and offer customers a better rooftop aesthetic. We view the residential market as a foundation of the solar market and will continue to offer new and better solutions.

The commercial market is growing quickly and consists of commercial entities such as Google’s offices in Mountain View, California; FedEx's facility in Oakland, California; Patagonia's headquarters in Ventura, California; Tony’s Fine Foods in West Sacramento, California; and Sharp’s own Kameyama #2 plant in Japan, the largest rooftop solar system in the world. As you might imagine, commercial system owners are concerned about solar’s bottom line - saving money on their electric bills, giving themselves a hedge against rate increases, ensuring surety of electric costs – and are increasingly viewing solar as a way to manage their costs. Of course, installing solar on a commercial building generates a lot of positive buzz about a company and their public image, so that’s a factor as well.

The utility market is emerging rapidly as a way to get the benefits of solar to as many people as possible with the least amount of cost. These installations typically consist of large solar fields: solar panels mounted on movable tracks that rotate the panels in order to directly face and capture the rays of the sun throughout the day. We are working on a new concentrator technology for utility applications where devices concentrate sunlight to a factor of 700X on a single cell, which then produces electricity at intensified levels. Of course, solar fields can use standard solar panels as well, and so we’re finding more and more interest from the utility segment in developing multiple-use-solar sites.

As for reaching these markets, we do a considerable amount of business-to-business outreach from our headquarters in Huntington Beach, California. As the market leader we view it as both an honor and a responsibility to educate the public about the numerous benefits of solar; and so we are stepping up our promotions to both the consumer and trades. Our new business-to-business campaign, highlighted by the slogan “It’s On,” is reaching out to our current installer base and helping them understand the benefits of the new systems and tools we’re creating to make it easier for them to conduct their businesses. And our new “Hello Sunshine” consumer campaign will both educate the public about solar and show people how easy and cost effective it is now to add solar to their homes. What about the international market? Germany and Japan seem to be 2 of the largest international markets for solar energy. Why?

Marc Cortez: The top three worldwide solar markets are Germany, Japan, and the United States, in that order. One of the most interesting facets of the solar industry is that the best markets for solar are not necessarily the best places for sun – Germany, Japan and the San Francisco Bay Area are not exactly known for their sun, and yet they are the most vibrant solar markets in the world. This is because the best solar markets are driven by aggressive government tariffs and rebates. Germany and Japan have “feed-in tariffs,” where solar owners are paid for the amount of solar electricity they create; in Germany, for example, it’s often more lucrative to cover a field with solar than it is to cover it in crops. The U.S. solar market is currently driven by sales rebates, where solar owners are given a rebate at the time of purchase to offset the costs of installing solar.

In the United States, we see the political winds changing as governmental support is both increasing in value and spreading in numbers of federal and state incentive programs. For example, Governor Schwarzenegger recently signed into law the “million solar roofs initiative,” setting aggressive goals for installing solar systems throughout the state of California. It’s interesting to note that California is the third largest user of solar worldwide. What are the product advantages Sharp offers vs. other solar companies, and what is your niche in the marketplace?

Marc Cortez: Since we’ve been in the solar business so long (since 1959), our 25-year module warranty has a wealth of data and experience behind it. We’re able to say that we’ve had modules in the field for as long as our warranty covers; and that brings with it a sense of consumer trust. And so our long history, our innovative leadership, and the 25-year warranty we offer on our solar panels make us a trusted supplier of solar energy to commercial and individual consumers alike. These comprise our foundation.

We also continue to innovate and develop not only new products but new ways of conducting business. Last year we introduced a roof-integrated solar module, one that replaces five (5) standard concrete tiles and integrates seamlessly onto a rooftop. Last month we launched our new Solar Racking System (SRS), which is designed to streamline installation and give homeowners a better rooftop aesthetic. And we also continually refine our module offerings to ensure they’re meeting the ever-changing expectations of our dynamic market segments. On the business front, we recently announced a new arrangement with a nationwide bank to offer tax-advantaged home equity financing for homeowners installing solar systems anywhere in the United States. Are there 2 or 3 success stories you would like to talk about?

Marc Cortez: The thing we’re most proud of is how many people we’ve been able to touch with the benefits of solar. Our solar cells are installed on literally thousands of homes and businesses, and that number is growing daily. On the commercial end, our work at FedEx’s Oakland Airport Distribution Center highlighted how a 900+ kilowatt array can help a progressive company save thousands of dollars in operations costs and help them manage their business. We’ve been successful in the new home market as well, putting solar on a 300-home development in Bakersfield, CA with Blu S.K.Y Developments and a 400-home Centex development in Florida. And on the consumer side, we’re proud of sponsoring the San Francisco Giants through a center field signage and stadium display kiosk that helps communicate the benefits of solar to nearly 3 million visitors per year.