Solar Cost Trends. Harry Stansell September 20, 2016

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1 Solar Cost Trends Harry Stansell September 20, 2016

2 DTE Energy is a national energy company with deep Michigan roots Our Businesses DTE Electric DTE Gas Headquarters DTE Energy is a Fortune 300 company Market cap ~$16 billion Two utilities serving Michigan DTE Electric (founded 1886) DTE Gas (founded 1849) Non-utility businesses with operations in nearly 20 states Our Michigan Presence Approximately 10,000 employees DTE is one of the top contributors to Michigan s economy Committed to procure $5 billion in Michigan products and services over the next five years 2

3 Michigan s Public Act 295 was signed in to law in 2008, requiring electric providers to achieve a 10% Renewable Portfolio Standard (RPS) PA 295, known as the Clean, Renewable and Efficient Energy Act, established an RPS for the State of Michigan The RPS requires Michigan electric providers to achieve a retail supply portfolio that includes ten percent renewable energy by 2015 DTE Electric s renewable energy plan runs for a 20 year period, starting from the MPSC approval of DTE Electric s initial renewable energy plan in 2009 Compliance is achieved through the annual retirement of Renewable Energy Credits (RECs) PA295 also established Michigan s Net Metering Program 3

4 DTE Energy has added nearly 1,000 MW of renewable capacity to its portfolio since 2009 DTE has driven investments of over $2 billion in renewable resources since the passage of PA295 in 2008 We have installed or contracted for nearly 1,000 megawatts of renewable electric generating capacity since that s enough to power ~400,000 homes Wind energy is the primary renewable source for achieving the RPS requirement, due to favorable economics over other renewable technologies DTE s Renewable Energy Portfolio 93% Wind 3% Solar 3% Biomass 1% Landfill Gas 4

5 DTE implemented the SolarCurrents program in 2010 Huron Utility-Owned Program 28 DTE Energy-owned solar sites in Michigan with a generating capacity of ~16 MW Projects installed between , ranging between 60 kw 1.9 MW in size Customer-Owned Program Offered incentives to customers who installed solar systems at their home or small business DTE purchases the RECs generated from the customer-owned systems Nearly 7 MW in generation capacity at 831 customer-owned sites Bay Tuscola Saginaw Genesee Lapeer Shiawassee Oakland Livingston Washtenaw Wayne Monroe Lenawee Sanilac Macomb St. Clair DTE Energy - owned Solar Sites 5

6 SolarCurrents Project Blue Cross Blue Shield - Detroit, MI 220 kw Roof-Mount Ballasted-System Array, commissioned August,

7 SolarCurrents Project GM Assembly Plant- Hamtramck, MI 500 kw Ground-mount Ballasted-System Array, commissioned September,

8 SolarCurrents Project McPhail Properties - Wixom, MI 800 kw Ground-mount Array, commissioned June, 2014 Located off of I-96 expressway 8

9 SolarCurrents Project Ford World Headquarters Dearborn, MI 1 MW Carport Array, commissioned April,

10 SolarCurrents Project DTE Greenwood Energy Center - Avoca, MI 1.9 MW Ground-mount Array, commissioned January,

11 SolarCurrents Customer-Owned Project 2.5 kw Rooftop Array 11

12 Installed cost ($/W-DC) of utility-owned solar projects have declined over time The decreases are attributable to technology and installation improvements $7.00 $6.00 $ average is skewed high due to Ford WHQ Carport design and high permitting costs at Domino s Farms The 1.9MW Greenwood project was completed in late 2015 for $2.30/W The large-scale utility solar project reflects further decreases due to scale economies $5.00 $4.00 $3.00 $2.00 $1.00 $- $5.21 $4.71 $4.08 SolarCurrents Program 1 $ MW Greenwood $2.30/W $1.60 Large- Scale COD Avg. System Size (MWDC) < 1 < 1 < 1 < 1 < 1 60 Net Capacity Factor 2 13% 13% 13% 13% 13% 17% 1. DTE s SolarCurrents program is comprised of 28 separate utility-owned solar projects 2. Capacity factors shown are calculated based on DC nameplate capacity. AC capacity factors would be slightly higher 12

13 Demille Solar Array - Lapeer, MI Aerial Photo taken 8/19/2016 (28 MW on 140 acres) 13

14 Solar costs continue to decline, with utility projects costing less than residential rooftop projects $9 DTE Energy Solar Costs ($/Watt) $7 $5 DTE Residential PV Systems (<20kW) $3 $1 DTE Utility-Owned PV Systems (<2 MW) 1 National Utility-Scale PV Systems (>5 MW) Costs shown reflect standard ground-mount installations. Excludes ballasted and carport installations Source: GTM/SEIA Solar Market Insight; Data is the average of quarterly data for each year

15 Net Metering customers in Michigan should expect a simple payback of their investment in ~15 years Residential Net Metering Customer Cash Flow Current Net Metering at Full Retail Rate (7 kw System, 8000 kwh) Year 1 Year 25 Upfront investment 1 : $17,000 Simple Payback: 15 years IRR: 7% $-17,000 Currently, rooftop solar installed costs are ~$3.50/W, which equates to a $17,000 upfront cost for a 7kW system (net of 30% federal tax credit) A typical rooftop solar array will need the inverter to be replaced (~$2,000) after years Roof replacement 2 may be necessary prior to installation or during project life (cost not reflected in graph) 1. 7 kw system at $3.50/W, net of 30% investment tax credit. System assumes $2k inverter replacement in year HomeAdvisor.com national average roof replacement estimate is $6,600 updated October 7,

16 DTE Electric Net Metering Customer Additions (As of 9/15/2016) Category 1 (1-20 kw) 1,349 Category 1 Net Metering Cap: 0.5% of In-State Peak Load 2015 Cap: 53.3 MW Actual: 9.8 MW % of Cap: 18.4% Total (YTD) Category 2 (>20kW 150kW) (YTD) 25 Total Category 2 Net Metering Cap: 0.25% of In-State Peak Load 2015 Cap: 26.7 MW Actual: 1.3 MW % of Cap: 5.0% Note: 831 net metering customers are part of DTE s SolarCurrents program DTE Electric does not have any Category 3 net metering customers (Methane Digester, 150kW 550kW) 16