INDEPENDENT EQUITY RESEARCH

Enlight – Update Report December 19, 2021

Enlight is positioning itself as an international company in the field of renewable energy with a significant acquisition in the U.S. market as part of an organized strategy; Financial improvement in the first 3 quarters of 2021; we are updating the price target to NIS 8.1

Enlight showed further growth in its operations in line with our expectations, along with growth in revenues and profits. Enlight ended the third quarter with revenues of approximately NIS 309 million and an EBITDA of NIS 211 million, according to non-GAAP data. Excluding a one-time expense for Clenera acquisition costs, the company presents EBITDA of NIS 234 million. The company showed an significant increase in its portfolio to approx. 17 GW, of which 2.3 GW are due (in development, under construction, or expected to start construction within 12 months).

It should be noted that in June 2021, the company completed the connection of the Picasso facility to the electrical grid, thereby increasing the ARR (annual recurring revenue) to approx. NIS 400 million. The company is expected to connect the Weeping Valley (109 MW), Selac (105 MW), and floating solar (17 MW) projects to the electrical grid later this year, thus further increasing the ARR to approx. NIS 620 million by the end of the year.

Acquisition in the U.S. – Enlight paid USD 158 million upon the completion of the transaction and will pay up to USD 232 million in a success-based mechanism of realizing the projects in the portfolio. Among its various projects around the world, Apex Solar, the first project, began construction, and 2 additional projects with a capacity of 216 MW will begin construction in Q1 2022.

Other significant events in the quarter:

Start of partial commercial operation in the Kosovan project (Selac) 105 MW
Commencement of commercial operation of a floating solar project in the Golan Heights with a capacity of 17 MW
Acquisition of a 490 MW solar development portfolio in Spain
Agreements for hedging the price of electricity in Spain and Sweden for a period of 5 quarters at significantly higher prices in relation to the company's financial model at the time of entering the projects
Winning the first dual-use tender in Israel with a capacity of 40 MWdc
Raising funds of approx. NIS 700 million in two bond series, one of which is the conversion series.

Recall that global growth potential is far from saturated. Investments in renewable energy reached a peak of USD 350 billion in 2020, of which solar energy and wind energy accounted for USD 290 billion.

We are updating the economic model with the three US new projects; updating company's progress in other portfolio projects and updating non operational assessts and liabilities at the solo level. Thus, we increase price taget to NIS 8.1. EBITDA multiple is EV/EBITDA 17.8, similar to industry average

Lead Analyst Dr. Tiran Rothman [email protected] Tel.: +972-9-9502888

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December 19, 2021

Enlight

Key events in the third quarter and the passing months of 2021:

Enlight announced a deal signed to hedge electricity prices in the Gecama wind project in Spain with a capacity of approx. 329 MW. The transaction was carried out at a weighted average of EUR 75.5 per MW hour over the transaction period (until the end of 2023).
- o It is important to note that Enlight hedged 50% of the project for a period of 5 quarters with an additional profit of EUR 15.5 million compared to the financial model at the time of entering the project.

https://www.enr.co m/articles/52814 srps-largest-solarpower-plant-willdeliver-power-toarizona-in-2024

Enlight signed a deal to hedge electricity prices in the Picasso project in Sweden with a capacity of 113 MW. The transaction was carried out at a weighted average price of EUR 63. According to Enlight's estimate, the increase in revenue and profit before taxes will be approx. EUR 4 million.
Enlight announced the signing of an agreement with Navits Petroleum for the initiation, development, financing, construction, and operation of the Offshore Wind project. Enlight will lead the initiation and development processes and will hold 60% of the joint activity.
On November 11, Enlight announced that it gained a cumulative capacity of 30.3 MWac as part of Competitive Procedure No. 1 to set a tariff for the construction of PV power plants in dual-use facilities connected to high and low voltage facilities. This capacity will enable Enlight to establish an array of facilities with an estimated capacity of approx. 40 MWdc.
The company began operating a floating solar system in the Golan Heights with a capacity of 17 MW. The first reservoir will open commercially in November and the second is expected by the end of 2021.

Updates on projects in the US:

321 MW are ready for construction (expected to begin Q1/22)

	Babacomari
Project	Apex Solar	North	Coggon	Total
Capacity, MWdc	105	96	120	321
PPA	Signed	Signed	Signed
State	Montana	Arizona	Iowa
% holding*	90%	90%	90%
Beginning construction	Q4/21	Q1/22	Q1/22
Beginning commercial operation	Q4/22	Q1/23	Q1/23
Expected revenue	\$10-11 M	\$8-9 M	\$10-11 M	\$28-31 M

Key events in the third quarter and the passing months of 2021 (cont'd.):

Project	Rustic Hills 1	Rustic Hills 2	Atrisco	Faraday A	Gemstone	Co bar A	Co bar SRP	Total
Capacity,
MWdc	120	125	360	63	180	96	480	1424
Storage
capacity,
MWh	-	-	600	105		-	-	705
				Under				1,361
PPA	Signed	Signed	Signed	negotiation	Signed	Signed	Signed	signed
			New
State	Indiana	Indiana	Mexico	Utah	Michigan	Arizona	Arizona
% Holding*	90%	90%	90%	90%	90%	90%	90%
Beginning
construction	Q4/22	Q4/22	Q1/23	Q1/23	Q1/23	Q2/23	Q2/23
Commercial
operation	Q4/23	Q4/23	Q1/24	Q1/24	Q1/24	Q4/24	Q4/24

Approx. 1,400 MW are expected to begin construction within the next 2 years

Capacity and revenue expectations by 2023

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Executive Summary

Investment Thesis

Globally, the renewable energy sector is in a growth momentum in most countries as a result of government decisions and organizations to reduce dependence on polluting fuels and reduce greenhouse gas emissions, which are reflected in governments' actions to meet renewable energy targets they are committed to according to the Paris 2015 agreement. Hungary's state secretary reinforced the Nation's commitment to diversify to nuclear power and renewable energy to achieve energy independence, partly spurred by its recent energy shortages, and aims to turn carbon-neutral by 2050 by deploying more of nuclear and solar power.

The implementation of government decisions translates into policies, regulations and licensing processes of companies that build renewable energy electricity generating facilities that are supposed to provide electricity over many years in a reliable, safe and economical manner.

Enlight is well respected in its industry, both locally and globally. Their reputation extends across the renewable energy value and supply chains, as well as within their specific business ecosystem. This is demonstrated by the list of Enlight's institutional investors, financing partners and equipment suppliers.

The company has a record of success across all steps and stages of renewable energy projects, including initiation, development, financing, construction, management, operation, ownership and sale of assets.

The company aims to continue creating value by leveraging its proven expertise and experience in identifying, quickly evaluating and exploiting 'under the radar' market opportunities, both through "Greenfield" development in Israel and co-development in international markets. The company's strategy is to select and operate in markets that demonstrate a combination of factors with specific emphasis on; supportive policy, regulations, favorable natural resources, an opportunity to optimize the development, and market size that supports future growth. In international markets the company partners with local entities that provide advantages in the initial early stages of development.

Below is the strategic landscape the company operates in:

Source: Frost & Sullivan

Value proposition to investors, partners and suppliers include:

Experience in evaluating projects and uncovering upside opportunities.
Focus on markets that are mature or maturing in terms of renewable energy policy and regulation, and such markets where renewable energy sources provide competitive electricity prices without the need for subsidies.
Identify opportunities to optimize projects' capacity or timetables immediately and/or in the long term.
High likelihood to secure financing due to corporate reputation and industry relations.
Leveraging experience to generate margins from optimization, development and construction.

We already identify a significant growth rate in the field of storage, especially in the United States, Germany and East Asia.

The following is the scope of the company's expected pipeline portfolio as of November 2021:

Source: Company investor presentation from November 2021.

Company overview

Scientists have demonstrated that to mitigate the climate crisis and protect life on Earth, we must limit global warming to 1.5°C above pre-industrial levels. To stay within this 1.5°C limit through 2100, humanity must reduce greenhouse gas (GHG) emissions to net-zero by 2050 at the latest. Because power needs account for so many of our emissions, renewable energies that do not emit GHGs are key to tackling the climate emergency. Enlight Renewable Energy (TASE: ENLT) is a leader in the field of green energy, creating value through its energy and infrastructure initiatives. The company specializes in the initiation, development, financing, construction, management, and operation of projects involving the generation of electricity from renewable energy sources.

The different technologies used by the company to produce renewable energy utiize natural resources without detracting or destroying them.

Solar: Photovoltaic technology (PV) is the chief method by which solar energy is converted into electrical energy, using solar panels.
Wind: Wind turbines work by using the wind's kinetic energy to turn a gear that spins an electric generator, which can then be transferred through wires and connected to the grid.
Storage: Storage solutions, mainly in the form of batteries, can offset short-term fluctuations in power supply.

Projects

Each of Enlight's power plants goes through four distinct stages:

1. Origination
2. a. Identify market opportunities
3. b. Site identification
4. c. Deasibility studies
5. d. Secure land rights
1. Development
2. a. Engage stakeholders
3. b. Environmental studies
4. c. Site deisgn
5. d. Zoning & Permitting
6. e. Offtake (PPA)
7. f. EPC contracting
8. g. Financing
1. Construction & Operation
2. a. Construction work
3. b. EPC management & supervision
4. c. Commissioning & commercialization
d. Electricity sale
e. Operation and maintenance
f. Performance optimization
1. Decommissioning & Restoration
2. a. End-of-life management
3. b. Reuse and recycle
4. c. Dispose waste

The company has operations in Israel and Europe with a diversified portfolio of income-generating projects. The company's total portfolio is 16,974 MWdc of installed capacity and 12,200 MWh of energy storage in stages ranging from in development, advanced development (construction to begin within 24 months), mature projects, pre-construction (to begin within 12 months), in construction, and yielding.

Mature Projects
Country	Project	Tech	Activation year	Capacity (MW)	% holdings	Electricity receipts (TTM)	EBITDA (TTM)	FFO (TTM)
Israel	Halutziot	Solar	2015	55	90%	74	64	58
	Sunlight1	Solar	2018-2019	53	75%	19	14	9
	Sunlight2	Solar	2019-2020	21	50-100%	8	6	5
	Mivtachim	Solar	2013	10	100%	31	28	25
	Talmei Bilu	Solar	2013	10	100%	23	20	17
	Cramim	Solar	2013	5	100%	9	8	7
	Idan	Solar	2013	3	100%	6	5	4
	Peirot Golan, Sde Nechemia, Barbur	Solar	2015	2.6	51-100%	2	2	1
	Zayit Yarok	Solar	2012-2013	0.5	100%	1	1	1
Sweden	Picasso	Wind	2021	113	69%	50	39	31
Serbia	Blacksmith	Wind	2019	105	50.1%	102	90	73
Hungary	Attila	Solar	2019	57	50.1%	25	21	13
Croatia	Lukovac	Wind	2018	49	50.1%	45	38	29
Ireland	Tullynamoyle	Wind	2017	13.6	50.1%	8	5	3

Projects in construction and nearing construction
				Electricity	Exp. date of
			%	generation	commercial	revenues (NIS
Country	Project name	Capacity	holding	technology	operation	millions)
Israel	Emek Habacha	109MW	40.8%	Wind	Q4/2021	105-120
Kosovo	Selac	105MW	60%	Wind	Q4/2021	90-100
Spain	Gecama	329MW	72%	Wind	Q2/2022	180-200
Sweden	Björnberget	372MW	56%	Wind	Q4/2022	110-120
US	Apex Solar	105MW	90%	PV	Q4/2022	29-32

Hungary	Hungary 2	25MW	100%	PV	Q4/2022	6
Israel	Beresheet	189MW	60%	Wind	H1/2023	140-160
Israel	Solar + Storage 1	120MW	85%	PV+Storage	Q1/2023	45-55
US	Babacomari N.	96MW	90%	PV	Q1/2023	15-17
US	Coggon	120MW	90%	PV	Q1/2023	19-23
Israel	Yatir	36MW	50%	Wind	Q2/2023	15-25
Israel	Solar + storage 2	195MW	60%	PV+storage	Q3/2023	65-85

Projects in advanced development
		Power	Storage
		generation	Capacity		Power supply with
Global region	Country	(MW)	(MWh)	Tech	signed agreements
Western Europe	Spain (11 projects)	740	-	Solar
	Italy (4 projects)	200	-	Solar
United States		1,424	705	Soalr + Storage	1,361
Israel – Wind		40	-	Wind
Israel – Solar + Storage		330	530	Solar + Storage	40

Projects in development
		Power	Storage		Power supply
		generation	Capacity		with signed
Global region	Country	(MW)	(MWh)	Tech	agreements
Western Europe	Spain (3 projects)	550	-	Solar/Wind	0
United States		10,255	4,795	Solar + Storage	23
Israel – Wind		260	-	Wind	0
Israel – Solar + Storage		530	850	Solar + Storage	0
Center/Eastern Europe	Hungary	300	-	Solar	0
Israel – Storage	Israel	-	4,800	Storage	0

Sustainability

Sustainability drives Enlight to make the world cleaner and less reliant on fossil fuels. Enlight is a company that nurtures its stakeholder capital by aligning interests of all stakeholders and considering its full impact: from its workforce and supply chain, to our shareholders and customers, as well as the communities and ecosystems impacted by its projects.

Impact model

Enlight supports all the United Nations Sustainable Development Goals (SDGs) and aims to contribute to the achievement of nine of them through its core business and other sustainable business practices. Enlight's impact model consists of three main pillars:

1. Environmental impact
2. a. Building low-carbon energy systems
3. b. Furthering the shift towards net-zero impact
4. c. Strengthening the green economy
5. d. Preserving the environment
1. Social impact
2. a. Partnering with neighboring communities
3. b. Creating local jobs and opportunities
4. c. Building infrastructure and community resilience
5. d. Improving social mobility of youth
6. e. Raising climate awareness
1. Organizational impact
2. a. Corporate governance
3. b. Ethical and transparent business culture
4. c. Health and safety
5. d. Cultivating a happy workplace

Global Renewable Market Introduction

The recent COP26 UN climate conference functioned as a reminder for nations to accelerate their decarbonisation efforts with a sense of urgency in order to achieve their 2030 targets agreed upon during the Paris Agreement. Globally, it estimated that USD 100 billion will be spent on climate finance annually to support such initiatives.

Historically, global power generation was dominated by centralized energy sources such as coal, nuclear, oil, and large hydropower plants. These plants were usually state-owned, and the electricity generated would be transmitted across the country via a centralized grid. There was a minimal competition within the market, and the environmental impact was hardly considered. This situation has gradually changed over the past two decades, mainly driven by market decentralization and favorable regulatory frameworks (which boosted competition), concerns over the impact of climate change, and supportive renewable incentive programs.

Driven by the transformation across the energy sector, renewable energy sources (RES), primarily wind energy and solar energy, have become well established low-carbon energy sources to meet global energy demand because of their widespread availability, cost-effective nature, and flexibility compared to other RES. An increase in the adoption of wind and solar energy technologies would significantly mitigate and alleviate issues associated with energy security, climate change, unemployment, etc. and help in reducing global CO2 emissions by more than 50% between now and 2050.

The impact of the renewable revolution has been felt in many global markets, but European nations and the US have been at the forefront, later joined by China. Although the incentives schemes for renewable energy in many markets have gradually become less generous, this has largely been offset by consistent declines in renewable energy technology and project costs, construction and service innovation, and the continuation of favorable regulatory frameworks that ensure renewables have priority access to the grid. Once a wind or solar plant is online it is basic common sense anyway to ensure that the power generated is given priority, as the fuel cost is zero.

Wind power and solar PV dominate global renewable investment (large hydropower, which is still a significant technology in a number of markets, is not considered truly renewable because of the potential environmental damage to the river networks). Global investments in renewable energies accounted for \$282 billion in 2019, with wind and solar energies accounting for ~97% of non-hydro renewable investment in 2019. A total of ~\$3

trillion is forecast to be invested across the next decade in renewable energy sources, with annual renewable energy investment exceeding ~\$300 billion in 2030. Further cost reductions mean that both technologies will reach grid parity (a situation where it is as cheap to build a solar plant as it is a coal plant) in an increasing number of markets over the coming decade, further supporting the business case for investing in renewables.

Figure: Annual Global Investments in Renewable Energies (Billion USD)

Continued Decline in Wind and Solar Technology and Project Costs

The decline in renewable energy project costs started around 2010, with solar PV leading the way. Solar module costs have declined by around 82% across the course of the decade (modules account between 35% and 45% of total project costs). Wind technology cost declines started later, but have also been substantial – the global average price per MW for an onshore wind has declined by 39% and offshore wind by 29% between 2010 and 2019.

Continued cost reductions are forecast for both wind and solar, through a combination of lower core technology costs (larger turbines and taller hub heights are a significant factor for wind projects); a reduction in total project costs (greater efficiencies in construction and commissioning), and lower servicing costs.

Larger and Larger Turbines

For wind projects, the average total size of wind projects is generally increasing, but the most significant factor is turbine size. In recent years, the average size of wind turbines has been increasing. These larger size turbines with increased hub heights can better react to wind speeds, resulting in higher efficiency rates and increased power generation, making the overall wind project more competitive.

Global Solar PV Market

Global Solar PV installed capacity is expected to grow from 907.3GW in 2021 to 3048.4 GW in 2030. Besides having the advantage of being the most affordable clean energy source requiring lower resource usage compared to other renwable technologies, National targets for renewables deployment, falling costs, and continued policy support are the factors fueling the growth of Solar PV.

North America is estimated to have an installed PV capacity of 384 GW by 2030, while Europe is estimated to add 322 GW between 2022 and 2030 to achieve a total PV installed capacity of 512 GW by 2030.

USA PV Market

Falling prices and supportive policies like Tax credits have led to the rapid growth of the solar industry in the USA. About 18 GW of additional PV capacity is estimated to have been added in 2021, making it the largest contributor to total electricity capacity additions in the year.

Solar PV will continue to be an attractive renewable option for the US in the coming decade. Frost & Sullivan expects that a combination of lower project costs, renewable mandates for state utilities like the Renewable Portfolio Standards(RPS), and corporate PPAs will drive new investment. Annual installations are forecast to increase to ~35 GW by 2030.

Figure: Forecast of Total Solar PV Installed Capacity in the USA (in GW) 2020-2030 Source: Frost & Sullivan analysis

European Solar PV Market

EU adopted the Renewable Energy Directive (RED II) in December 2018 to achieve a collective, binding target of 32.0% renewable energy by 2030. There is now a proposal to increase to 38.0%-40.0%. These EU-level targets, declining project costs, and national targets are all driving investment growth. Solar PV average annual addition of 35.9 GW in Europe is projected by Frost & Sullivan based on the National Energy and Climate Plans (NECPs) for the next decade to meet 2030 EU targets.

Besides declining project costs, further policy support has ensured the dominance of Solar PV among renewables. The NEXT Generation EU's economic recovery plan has earmarked up to 37.0 %( ~EUR27-30 billion) of funding for investment related to climate change.

The EU's Regional Development and Cohesion Policy outlines five areas of investment priorities. One of the top two objectives is a cleaner and greener Europe and is expected to account for 65.0%-85% of the European Regional Development Fund (ERDF) and Cohesion Fund between 2021 and 2027. A further 6.0% is dedicated to sustainable urban development fuelling the market for renewables.

Given that 90.0% of Europe's rooftop space is unused, solar PV's potential to contribute to the renewable targets is considerably higher than other technologies.

Figure: Forecast of Total Solar PV Installed Capacity in EU-27 (in GW) 2020-2030 Source: Frost & Sullivan

Table: Top 10 Countries in terms of annual solar PV capacity addition in EU-27& UK (in GW) 2020-2030

Top 10 Countries	2020 Total Capacity	2030 NECP Target	F&S Estimates by 2030
Germany	54.6	98.0	137.2
France	10.9	40.0	58.8
Italy	21.3	51.0	78.2
Spain	13.3	39.1	54.7
Netherlands	9.2	27.0	35.1
Portugal	1.4	9.0	10.8
Austria	2.0	9.7	11.6
Denmark	1.7	7.8	10.9
Belgium	5.4	8.0	10.4
Greece	3.4	7.6	10.6

UK 13.9 40 56.0

Source: Frost & Sullivan analysis

Lower project costs primarily drive PV growth in the European Market, corporate PPAs, high electricity costs – a key part of the commercial and industrial (C&I) use case, net metering, and the need to replace aging coalfired capacity.

The UK's legally binding net zero target for 2050 will require significant policy support. According to the Solar Trade Association of the UK, while the UK has demonstrated abilities to deploy up to 4 GW per annum, there are significant difficulties to contend with both from a regulatory and operational perspective. Frost & Sullivan's conservative estimate is at 2.2 GW per annum – still a considerable increase.

Policy Support for Solar PV Adoption

The EU proposes introducing the 'Fit for 55' package in June 2021, wherein GHG emission reduction targets are proposed to increase to 55.0% from 40.0%. It further aims to simplify administrative procedures for utility-scale PV by introducing universal guidelines for the region and scrapping construction permits for rooftop PV installations. Incentivizing C&I PV installations is also on the agenda.
The proposed revision of the Emission Trading Scheme (ETS) to maintain stringency and hold carbon prices at higher levels would further improve the business case for renewables.
The rapid growth in decentralized solar energy generation has tested grid capacities in pockets of accelerated growth in the region (grid's inability to handle additional capacities- for instance, surplus sent to the grid). Tackling this is one element of a EUR 59 billion annual grid modernization package, focusing on digitalization and cybersecurity.
The proposed 'renovation wave' scheme aims at renovating 35 million buildings to reduce emissions by 60% by 2030. Minimum renewable energy requirements for buildings are expected to be a part of the revised RED. Pilot Building Integrated PV projects to promote sustainable design are expected to be launched as a part of the New European Bauhaus Scheme.
The sustainability and circularity of solar energy generation systems are being reviewed and encourage Eco design and recycling to ensure solar is entirely sustainable, creating a market for sustainable PV design.

SWEDEN

Swedish energy supply is dominated by biofuels and nuclear power. While wind accounted for 3.6% of the Total energy supply in 2019, Solar PV is only picked up between 2019 and 2020, with number of grid connected solar PV systems growing by over 50% at 65,819 systems with a capacity of ~1.2 GW.
Sweden aims to source 100% of its electricity consumption from renewable sources by 2040. The growth of Solar PV in Sweden has been fueled by the residential and commercial installations. The rebate programme that supported the growth has now been extended to municipalities.

Figure: Forecast of Total Solar PV Installed Capacity in Sweden (in GW) 2020-2030 Source: Frost & Sullivan analysis

SPAIN

Like the other member states of the EU, Spain released its Integrated National Energy and Climate Action Plan in 2020. The plan is focused on achieving decarburization, energy efficiency, energy security, and promoting innovation and competitiveness in the market.

Along with other member states, Spain aims to become carbon neutral by 2050 and aims to increase the share of renewables by 42% in energy end-use by 2030 and increase energy efficiency by 39.5%. The plan foresees solar PV installed capacity of 39GW by 2030, contributing 25.7% of the renewables mix. It has also set a new target for storage development at 6GW with 2.5GW in battery storage.

The key identified challenge in the renewables space has been the lack of access to land for PV developers. It is being addressed by Royal Decree-Law 23/2020, although a clearer framework is expected.

Figure: Renewables Mix expected in 2030 in Spain (in GW) 2030 Source: NECP

While Spain's baseline scenario pegs its solar PV installation achievements at 48.0% of its target of 39.1 GW, Frost & Sullivan estimates Spain has the potential to achieve an installed capacity of 54.7 GW by 2030

Figure: Forecast of Total Solar PV Installed Capacity in Spain (in GW) 2020-2030 Source: Frost & Sullivan analysis

ITALY

Italy aims to harness 55.0% of its total electricity demand from solar energy by 2030. Solar power is gaining share as a percentage of total renewable installed capacity in a market that had been dominated by hydropower in the past. With its current solar PV installed capacity of 26.1 GW (2021e), an added capacity of 41 GW is expected over the next decade with an annual capacity addition of at least 2.7 GW. Italy is one of the two largest solar power markets in Europe.

The growth is being primarily fuelled by PPAs and the accelerating demand for agrophotovoltaics. As a part of the Euro 220 billion COVID-19 recovery package, the Italian government has announced investments of Euro 1.1 billion in agrivoltaics to install around 2GW of APV. It plans to invest EUR 5.9 billion in renewable energy and an additional EUR 5.27 billion in circular economy and sustainable agriculture.

Italy's commitment to achieving its target is witnessed in its comprehensive NECP which details its auctions process, including schedules, volume and design, financing schemes, and prosumer (producer consumers) promotion schemes.

The key challenge in the market has been the cumbersome administrative procedures that increase the complexity of projects. This is due to the involvement of local authorities in the permit process. The NECP has, however, addressed this issue, and implementation will ease this challenge.

Figure: Forecast of Total Solar PV Installed Capacity in Italy (in GW) 2020-2030 Source: Frost & Sullivan analysis

Key regions within Italy are Apulia, Sardinia, Lombardy, Veneto, and Emilia-Romagna. 35.0% of capacity additions were through projects of 1MW or higher.

Figure: Solar PV Capacity Addition Breakdown in Italy, 2019 Source: NECP

Israel Renewables Ecosystem

The growth engine behind renewables in Israel is the government's vision to utilize "natural gas or renewables only" for the production of energy by 2030. In order to realize this vision the government is putting major systems and regulations in place in order to completely replace the energy produced from coal with energy produced from solar sources. This transition is projected to produce a 6 fold increase in renewables and a 10 fold increase in energy storage capacity.

The four major drivers of the renewable energy market in Israel as stated in the Ministry of Energy's economic plan are: 1) the decreasing cost of solar technology 2) the global shift to electric vehicles 3) energy security 4) pollution regulations

These trends propel Israel into a reality that requires a heavy transition to renewable energy sources and therefore promotes the need for energy storage solutions.

Israel is exceptional in its high population growth rate as well as its high electricity consumption. Today, solar power is almost exclusively the country's renewable energy source and this will be true through 2030.

By 2030 Israel aims to increase its solar energy dependency to 26% of energy produced by the country. By 2030, during the noon hours, 80% of the electricity generated in Israel will come from solar sources and this solar energy will surpass consumption demands during certain hours of the day.

Israel's Energy Source Composition

As of 2021, Israel is self-sufficient in terms of energy production. Nevertheless, the current 3%-4% increase in the size of the installed power base is expected to be insufficient given the expected population growth from 9 million in 2019 to 13 million in 2030. The current installed capacity of 17.7GW (2019) will have to grow by 3.2x to 58.1 GW by 2030 to meet the growing demand and to meet renewable energy targets.

Israel is commited to achieving its target of 30.0% of electricity production from renewable sources. Solar power is expected to contribute 90.0% and wind, biomass, and hydropower are expected to collectively contribute to the rest of the target.

To support the transition to realize the 2030 vision, the government is putting major systems and regulations in place:

Massive development of the electricity grid for the integration of solar energy.
Promoting significant investment in R&D to upgrade energy storage.
Implementing tools for developing a stable electrical system capable of handling sharp changes in production scale.
Obligating any public building with an area exceeding 750 square meters to establish a solar system on at least half of the roof area.
Establishment of a fund for the construction of renewable energy sources for buildings owned by subsidized entities.
Joint venture with the Israeli Lottery to build 1200 PV systems on public roof tops.
Providing exemptions from having to obtain non-ionizing radiation permits for small rooftop PV facilities.
Removing land allocation barriers and promoting land use for the establishment of renewable energy facilities.
Establishing charging stations for electric vehicles. The ministry of energy targets one-quarter of the cars sold in 2025 to be electric cars. Consequently, the number of public and private charging stations required to cater to this demand will be 13,000 and 150,000, respectively.

Figure: Forecast of Israel's Cumulative Installed Solar PV (GW) 2020-2030 Source: Frost & Sullivan Analysis

This proposed increase to meet renewables target by 2030 presents vast opportunities for

Players in PV and wind technology equipment
Transmission equipment suppliers

IPPs to build and operate renewable energy plants.

Further, to enhance grid reliability, a total storage of 6.5 GW is estimated to be installed by 2030¹ .

We also believe that Israel's partnership with Jordan to import power from Jordan's PV power plants is likely to impact the local PV market growth.

Figure: Proposed Investments in Electricity Infrastructure (in NIS Millions) 2020-2030 Source: Frost & Sullivan

Contracts for solar PV and storage capacity of 609 MW were awarded to seven bidders across 33 projects which are expected to deliver power to the Israeli grid by July 2023. In 2021, 11 bidders were shortlisted for the development of a 300MW solar plus storage plant also expected to become operational by 2023.

1 https://www.gov.il/BlobFolder/rfp/shim\_2030yaad/he/Files\_Shimuah\_yaad\_2030n\_work\_n.pdf

Global Wind Energy Market

Introduction

The global cumulative installed wind-generation capacity (onshore and offshore) has increased by a factor of almost 75 in the past two decades, jumping from 7.5 gigawatts (GW) in 1997 to 758 GW by the beginning of 2021. China will continue to dominate the global wind market and will do so for the foreseeable future. Europe has more than 90% of the world's total installed offshore wind capacity, and will continue to dominate the offshore wind market for years to come. It is estimated that ~1070 GW of wind capacity will be added globally by 2030.

Figure: Global Cumulative Wind Capacity (GW) by Region from 2020-2030 Source: Frost & Sullivan Analysis

Figure: Global Cumulative Offshore Installed Wind Capacity (GW) from 2020-2030 Source: Frost & Sullivan Analysis

The world's top five markets are China, the US, the United Kingdom, India and Spain – those five markets together make up 70% of global wind capacity installations. In terms of cumulative installed capacity, the top two markets as of the end of 2021 are APAC and Europe, which combined account for 76% of the world's total wind capacity installation.

Growth in offshore wind capacity is being witnessed over the last five years. This trend will continue with massive projects coming online in Europe, Asia-Pacific, and North America during the forecast period.

Europe has an enormous onshore wind potential, with many sites still awaiting development. With a lot of conventional power plants reaching the end of their lifetime, we can expect the development in onshore wind power to strengthen Europe's energy security. The European onshore market is expected to remain stable with annual installations of atleast 12-13 GW until 2030, with Spain, France and Germany key markets. Onshore annual installations could increase if governments develop clear and ambitious National and Energy and Climate Goals and resolve issues related to land and environmental impacts. Many European countries are currently upgrading their transmission grid systems to efficiently integrate the increasing share of electricity generation from renewables, primarily wind energy. Increasing interconnections between the

Western and Eastern Europe will help these countries to meet their power demand and will also boost onshore wind deployments across East European countries as well. Onshore growth from Germany, France and Spain, Netherlands, Sweden, Norway, Turkey will drive annual capacity additions, while UK, France, Netherlands and Belgium will drive offshore growth.

Amongst the Nordic/Baltic countries, Sweden witnessed the highest growth adding ~2.7GW in 2021. It is estimated that its cumulative installed capacity will reach 17GW by 2024.

Figure: Growth of wind energy market in Sweden, 2010-2024 Source: Swedish Wind Energy Association

Figure: Growth share of Nordic/Baltic Countries, Wind, 2021 Source: Swedish Wind Energy Association Israel is actively looking to expand its wind portfolio in its northern region and \$72 million approved has been approved by the Ministry of Defense (MOD).

EUROPE - WIND MARKET OUTLOOK

The cumulative installed capacity of wind energy is estimated to be 244 GW. 89.0% of the wind installations were onshore.

P a g e | 27 The European market is expected to remain stable, with annual installations expected at a level of 25 GW until 2030. The annual onshore installations could go up if governments adopt clear and ambitious National and Energy, and Climate Goals and resolve issues related to land and environmental impacts. Spain, Sweden, France, and Norway are currently leading the onshore wind energy growth in Europe. Onshore growth in Germany has slowed down due to unclear government policies and looks uncertain over the next five years. Currently, offshore wind installations are increasing at a higher rate than onshore. Frost & Sullivan expects the increase in offshore installations to continue with an annual average of 10 GW until 2030. The increase is expected to come from countries such as the Netherlands, France, and the UK as governments continue to execute their auctions and tenders. The UK is expected to continue to dominate offshore wind installations until 2030. The European cumulative wind capacity is expected to reach ~488 GW by 2030. Swedish wind

market recorded an annual addition of 2.7 GW in 2021. Wind capacity in Sweden is expected to grow to 17 GW by 2024.

Key players in the European wind market include Enercon, Enel, EDF Renewables, Vestas, RWE, Windbud, Windpower Poland, QAir Polska and OX2.

The problem of intermittency in VRE is partially solved in combining solar and wind sources, and large solarwind hybrid projects have been commissioned across Europe. With careful weather analysis, efficiencies can be achieved using hybrid solar-wind projects supported by storage. Offshore solar-wind hybrid opportunities also exist. For instance, the North Sea is estimated to host around 100 MW of floating PV by 2030, with 1 MW complementary to each offshore wind turbine in the North Sea.

STORAGE SOLUTIONS

Electricity storage plays a crucial role in the transition to clean, renewable sources, encouraging the shift otherwise marred by storage woes, thereby contributing to rapid decarbonization.

The growth of Variable Renewable Energy (VRE) is highly dependent on storage solutions primarily for stability in supply – requiring storage over days, weeks, or months – and to allow for ample flexibility, a major factor influencing renewable adoption.

As VRE penetration increases, frequency regulation, voltage support, capacity reserve, and spinning reserve will gain significance. For instance, some applications require high power for short durations (requiring frequency regulation, while others require power over a long duration. Uniform charge/discharge cycles would ensure reliability and continuity in supply.

Figure: Positioning of various battery storage technologies in terms of discharge time and capacity

Of the 1698 storage projects recorded by the US Department of Energy's global energy storage database with a storage capacity of 190 GW, 95.7% is pumped hydro storage, thermal storage accounts for less than 3.5 GW, and Li-ion batteries account for 1.58% or a little over 3 GW.

Appendices

Financial statements for Q3 2021

Non-Gaap Profit and Loss Report (in thousands of shekels)

לשנה שהסתיימה	לתקופה של שלושה חודשים שהסתיימה ביום:		לתקופה של תשעה חודשים שהסתיימה ביום:
ביום 31.12.2020	30.9.2020	30.9.2021	30.9.2020	30.9.2021	מיליוני שייח
349	100	109	270	309	הכנסות
(53)	(16)	(16)	(39)	(46)	עלות המכר
(92)	(23)	(29)	(୧୧)	(74)	פחת והפחתות (1)
204	61	64	165	189	רווח גולמי
(29)	(9)	(14)	(23)	(30)	הוצאות תפעוליות
		(12)		(23)	עלויות עסקה בגין עסקת ארהב
		1		1	הכנסות אחרות
(9)	(3)	(2)	(7)	(7)	פחת והפחתות (1)
166	49	37	135	130	רווח מפעולות רגילות
	(2)	(12)	(2)	(32)	הוצאות מימון (8)
(1)	7	(4)	1	(6)	הפרשי שער
(111)	(29)	(20)	(83)	(55)	הוצאות ריבית (3)
7	6	4	4	12	הכנסות מימון
61	31	5	ਵਟ	49	רווח לפני מס ולפני עמלות פירעון מוקדם
(232)	(9)		(9)		עמלת פירעון מוקדם (9)
(171)	22	5	વે રે	49	רווח (הפסד) לפני מס
267	75	88	208	211	חברה (2) EBITDA

Source: Enlight's financial report, Q3 2021.

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