Solar Energy Business Developments

Tatsumi Maeda

September 18, 2008

Director & Senior Managing Executive Officer General Manager of Corporate Solar Energy Group KYOCERA CORPORATION

Forward-Looking Statements Certain of the statements made in this document are forward-looking statements (within the meaning of Section 21E of the U.S. Securities and Exchange Act of 1934), which are based on our current assumptions and beliefs in light of the information currently available to us. These forward-looking statements involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors include, but are not limited to: general economic conditions in our markets, which are primarily Japan, North America, Europe and Asia, particularly China; unexpected changes in economic, political and legal conditions in China; our ability to develop, launch and produce innovative products, including meeting quality and delivery standards, and our ability to otherwise meet the advancing technological requirements of our customers, particularly in the highly competitive markets for ceramics, semiconductor parts and electronic components; manufacturing delays or defects resulting from outsourcing or internal manufacturing processes which may adversely affect our production yields and operating results; factors that may affect our exports, including a strong yen, political and economic instability, difficulties in collection of accounts receivable, decrease in cost competitiveness of our products, increases in shipping and handling costs, difficulty in staffing and managing international operations and inadequate protection of our intellectual property; changes in exchange rates, particularly between the yen and the U.S. dollar and euro, respectively, in which we make significant sales; inability to secure skilled employees, particularly engineering and technical personnel; insufficient protection of our trade secrets and patents; our continuing to hold licenses to manufacture and sell certain of our products; the possibility that future initiatives and inprocess research and development may not produce the desired results; the possibility that companies or assets acquired by us may require more cost than expected for integration, and may not produce the returns or benefits, or bring in business opportunities, which we expect; events that may impact negatively on our markets or supply chain, including terrorist acts and outbreaks of disease; the occurrence of natural disasters, such as earthquakes, in locations where our manufacturing and other key business facilities are located; the possibility of future tightening of environmental laws and regulations in Japan and other countries which may increase our environmental liability and compliance obligations; fluctuations in the value of, and impairment losses on, securities and other assets held by us; and changes in accounting principles. Such risks, uncertainties and other factors may cause our actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forwardlooking statements included in this document.

1

PV Global Market Trend

2

Contribution of Subsidies to Expansion of European and U.S. Markets Europe USA Feed-in Tariff

Incentives

Net Metering

RPS

Feed-in Tariff + Net Metering

Incentives + RPS

Spreading Feed-in Tariffs ⇒ 22 countries Please refer to accompanying note on page 1.

Growing Incentives ⇒ 38 states RPS: Renewables Portfolio Standard

3

Toward the Realization of Low-Carbon Society of Japan

Photovoltaics Ｍｋｌ

14 12 10

Public & Industrial 300MW

to VS. 2005:

10×

Public & Industrial 3,000MW

40× 13 53.1GW

Residential

3,200k homes

Around for PV

Equivalent to 70% of new houses

8

Residential

320k homes

14.3GW

Around for PV

6 4

6.69

3.5

1.42GW

Around for PV

1.4

2

0.35 0 Output conversion CF: 4kW/kl

CY 2005

Please refer to accompanying note on page 1.

CY 2020 Current

Ongoing effort

CY 2030 Best scenario

Forecast

Long term perspective for growth in use of photovoltaic energy / Estimate by Kyocera Corp.

4

EU

3.6×

Principal Market Outlook Japan 0.9GW 4.5×

4.7GW

3.6

3.2

0.5

GW

2.3

0.2

10.4× 2.6GW

0.4

1.8

GW

0.3

2.4

USA

0.2

GW

0.2

2.0

1.4

1.3

FY08

FY09

FY11

FY13

FY3/08 09(E) 11(E) 13(E)

FY08 FY09 FY3/08 09(E)

FY11 11(E)

FY13 13(E)

1.0

0.4

India Korea 0.9GW 0.25 30× 8.3×

0.35

0.25

0.7

GW

GW

FY08 FY09 FY3/08 09(E)

11(E)

FY11

FY13 13(E)

0.5 0.4

0.13

Left: Policy driven Right: Conservative

FY08 FY3/08

0.15

0.05

0.03

0.03 FY09

09(E)

11(E)

FY11

0.1

FY08 FY09 FY11 09(E) 11(E) 13(E) FY3/08

FY13

FY13 13(E)

3.3×

7.0GW

World Market Size Estimate by Kyocera Corp.

2.2×

5.2 3.6

2.9

3.7

4.7GW

5.2× 10.9GW

3.4× 7.2GW

8.7 5.8

2.1

FY3/08

Please refer to accompanying note on page 1.

FY09 Forecast

FY10

FY11

FY12

FY13

5

Kton

Comparison between Expansion Plans of Material Manufacturers and Market Requirements

200

Required Amount of Material for Semiconductors + Solar Products Requirement for Solar Products

150 GRAY

New material manufacturers

100

Requirement for Semiconductors

Material 原料不足 Shortage 50

YELLOW

Existing material manufactures

0 FY3/05 FY05 06

07

Estimate by Kyocera Corp.

08

09

10

11

12

13

14

15

16

17

18

Forecast

Please refer to accompanying note on page 1.

6

Demand Forecast in Four Principal Markets GW 25 Large Power Plants

20

15 Public & Industrial

10 Residential

5 Stand Alone

0 FY07 FY3/07

08

09

10

11

12

13

14

15

16

17

Forecast Estimate by Kyocera Corp. Please refer to accompanying note on page 1.

7

Overseas Solar Photovoltaic (PV) System Manufacturers Cell / Module Maker ●

Major ★ New ●

Solon

★ ★ ● ★ Q-Cells ●★★★ ★★ ★ ★★★★●● Conergy ★★ ● ★ ★★ ★★ ★●★EverQ ★★★ Ersol●★ ★★ ★★● ★ ★ ★★● ★ ★

★

★

★

●

★ ●★

SCHOTT

★●

Wurth

★

★● ● ★ ★

SolarWorld

★

Wacker

★★●

★

★ ★ ★★★

★ ★ ★ ★★●★ ★★ ★ ★★ ★★★ ● ★ ★

●

● ★ ★ ●

★

★ ★★★ ● ● ★★ ★ ● ★★ ★ ●

★

Please refer to accompanying note on page 1.

8

Market Conditions: Overview Expansion of subsidy policies ＋ Increase in production of material ＝ Rapid increase in number of manufacturers

Europe, US, Korea, etc. ⇒ Continuous market growth Increase in production volume by existing manufacturers + new entrants ⇒ Stabilization of supply and price ＞ 300 Companies

EEG* in Germany: reexamination of buyback price of feed-in tariff

annual decrease rate 5% ⇒ 8～10% *EEG= Erneuerbare-Energien-Gesetz

Beginning Beginning of of "intense "intense competition competition era" era" Gain Gain comprehensive comprehensive competitive competitive advantages: advantages: "cost "cost competitiveness, competitiveness, technologies technologies for for development development and and quality" quality" Please refer to accompanying note on page 1.

9

About KYOCERA Solar

10

Technology Market Trend GW

Multi c-Si (kyocera)

12 GW

16

10

14

14.1%

C

company

8.5% B company 8.6% 10 8.3%

10.9GW

Kyocera

70%

6

H company 10.4%

5.2

1.1

1.5

5.1%

5.4%

1.6 6.9%

2.2 10.0%

80%

8.7

D company 9.6%

E company 8.1%

4

100% 90%

F company G company 10.9% 11.0%

8

2

CdTe

Current Module Efficiency (%)

12 A company 8

CIGS

T/F Si

3.6

7.0

e k r Ma

pa x tE

n o i ns

60% 50% 40%

28.0% 30% 20%

Thin Film Production Share

10% 0%

0 FY3/05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

Forecast

Multi c-Si or Thin-film ? Total cost, long-tern reliability・・・ Please refer to accompanying note on page 1.

SOURCE： PV News, Lux Research

11

Influence of conversion efficiency on Solar System Costs

14%

8% construction cost

Up significantly

100%

Construction cost 80%

Rack, etc.

Mounting racks approx. 1.7 times

Inverter

Inverter

Solar cells

No. of cells approx. 1.7 times

60%

40%

20%

0%

Residential

Multi c-Si Film 勝者は？ トータルコスト、長期信頼性・・・ Multior c-SiThin or Thin -film ? Total cost, long-tern reliability・・・ Please refer to accompanying note on page 1.

SOURCE： PV News, Lux Research

12

Improvement of conversion efficiencies Cost competitiveness: Improvement of conversion efficiencies

Silicon

Casting

○ Improvement of conversion efficiencies

Improvement of crystalline quality Impurity contamination measures

Wafer slicing

Cutting

○

Solar cells

○

Optimization of slicing conditions

Passivation

Thinner wafers

Reactive Ion Etching (RIE) technology

Improvement in quality of sliced material

Solar modules

○ Optimization of material Optimization of fabrication process

High sheet resistance emitters Improvement of contact metal

Vertical integration ⇒ Aims to maximize conversion efficiencies with optimization in all production phases Please refer to accompanying note on page 1.

13

Productivity Cost competitiveness: Productivity 1. Higher cell efficiencies Back

FY3/05

15.7%

16.5%

3.67W/cell

3.86W/cell

Conversion efficiencies Power output

Technologies

Contact

Current: ３BB

２BB

2BB

3BB

Cell

Approx. 17% improvement from current power output

FY10

FY09

17.5%

Target 18.5%

4.26W/cell Back Contact

4.50W/cell Higher efficiencies for Back Contact

16.5% 4.06W/cell Lager Cell (156mm square)

2. Thinner cells FY3/05

06

07

240 / 200μｍ Productivity improvement of approx. 40% compared to FY3/05 Please refer to accompanying note on page 1.

08

09・・・

180μｍ

Further advancement of thinner cells

100% achievement

14

Development of Differential Products Snow resistance Building unifiable

Snow resistance Design oriented Design oriented

High temperature resistance

High temperature resistance

Compact stand-alone power source

Black Back sheets

Compact stand-alone power source

Snow resistance / weighting durability High temperature resistance / heat durability Design oriented / black back sheets Building unifiable / frame-less Compact stand-alone power source / small size

High temperature resistance

Frame-less

Compact stand-alone power source

Annual average temperature map

Compact stand-alone power source Please refer to accompanying note on page 2.

15

PV Modules for 5400Pa Objective: Snow resistance (5400Pa) Challenges: Frame strength Module durability Snow load analysis Direction Direction of of short short frame frame

Fall away

Test example using real products

Direction Direction of of long longframe frame

Black Modules Objective: Better appearance Challenges: High temperature resistance

TEMP. Analysis

Frameless Modules Objective: Compatibility for various installation methods Challenges: Metal fitting reliability Without frame

Please refer to accompanying note on page 1.

16

Development of Solar Modules FY10

FY09

FY3/05 ・・・・・

Target

Cell

15.7%

16.5%

2BB

3BB

180μm

Larger

17.5%

16.5% Cell

Back Contact 156mm×156mm

175W

200W

210W High power output

220W

Module Black Module

Frame less

Snow resistance (5400Pa) Please refer to accompanying note on page 1.

17

No.1 Quality Evaluation in Germany **in 15 Makers

(Best: 1.0, Worst: 6.0) Output

Evaluation Items

Durability Reliability Installation

Quality is True “DIFFERENTIATION” Please refer to accompanying note on page 1.

KYOCERA with THE QUALITY 18

Major Characteristics Required of Solar Cells ・ Reduce total system cost, including installation cost ・ Stable long term output (high reliability)

1. Costs Factor with biggest impact on costs, ⇒ Kyocera’s back contact cells: 18.5%

Conversion efficiency VS thin-film 8~11%

2. Long-term reliability Kyocera’s multi-crystalline cells: Over 20 years of testing and evaluation

VS thin-film ??

Multi-crystalline solar cells or thin-film solar cells ? Please refer to accompanying note on page 1.

19

Kyocera's Production Expansion Plan of PV Systems 700

650MW

600

550MW

Back Back Contact Contact Cell Cell

500MW

High High Efficiency Efficiency

500

18.5% 18.5%

400

400MW California Solar Initiatives

300

Amendment to EEG in Germany

200 100

300MW

EEG in Germany

Residential subsidies in Japan (until FY06)

0 FY 3/92 93

94

95

96

97

Please refer to accompanying note on page 1.

98

99

00

01

02

03

04

05

06

07

08

09

Forecast

10

11

12

20

Germany

China

Singapore

South Korea

Japan

Australia

network built on long-term 8 sales bases worldwide “Salesrelationships of trust” Germany “Anticipating customer needs” Beijing USA Czech Republic S-Korea Kyocera Mexico Tianjin Japan Mexico 240MW/yr Ise 150MW/yr Plant construction completed Singapore Plant construction completed

USA

Brazil

4 production bases worldwide

Brazil Australia “Production where markets are” “Market-oriented module design” "Quick delivery”

Czech Republic Please refer to accompanying note on page 1.

China

Japan / Ise

Yohkaichi

Mexico 21