North America Alternative Energy: Solar & Storage EPC Market Share Update

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North America Alternative Energy: Solar & Storage EPC Market Share Update

Valuation Method and Risk Statement

Our valuation methodology for the Alternative Energy space is based on a variety of metrics

including P/BV, EV/EBITDA, P/E, and retained equity value per share. Our target multiples are

derived from historical group averages with adjustments for expected growth rates, leverage,

and earnings growth confidence. We identify the following risks for the sector: Demand for

new renewable installations has historically been volatile around changes in state and federal

policy, and we expect this volatility to continue. In addition, margins for product

manufacturers can be impacted by swings in raw materials pricing and the overall level of

energy prices.

We value SOLV based on EV/EBITDA. Potential risks to SOLV's business include rising interest

rates, increased tariffs, and changes to energy policies leading to less attractive project

economics and lower solar and storage installations. Additionally, potential project delays and

cost overruns could be caused by labor constraints, supply chain issues, or failure to receive

appropriate regulatory approvals for individual projects. Increasingly large project sizes could

also lead to greater volatility in quarterly financial performance in the event of significant

delays.

We value FSLR based on P/E. Solar demand can be volatile and broadly we expect demand

volatility to continue around inflections points in solar demand growth. In addition, swings in

commodity prices can dramatically impact profitability if manufacturers of solar modules are

not able to pass the increased costs on to consumers. In addition, our earnings estimates are

heavily dependent on FSLR execution on our expected manufacturing capacity ramp and