Prime Energy P.E. Ltd.

Investor Presentation • Sep 13, 2021

INDEPENDENT EQUIT Y RESEARCH

PRIME ENERGY LTD INITIATION OF COVERAGE

13.09.2021

Prime Energy (TASE: PRIM) was established in Israel in 2013. The company initiates, develops, builds, operates, and maintains renewable energy projects in Israel and Europe. It has successful experience across all stages of renewable energy projects. It developed the first dual-use solar system in Israel. The company currently has 680 megawatts projects in various stages of development and a storage capacity of 1,000 MW in Israel. The company aims to guarantee the production of 4,000 MW worldwide by 2030.

Market and trends – Globally, investment in renewable energy hit a high of \$350 billion in 2020, with solar PV and wind power accounting for \$290 billion of the total. A decade of high investment is expected as the case for renewable energy becomes ever stronger.

Strategy - Prime Energy seeks to increase its installed capacity, develop new partnerships in diverse global markets, and use advanced technology to improve its operating margins.

Our valuation encompasses 21 identified clusters of projects. We calculated the NPV for each project based on the probability of the projects and Prime Energy's holdings percentage. Furthermore, we calculated other assets and liabilities the company has, as we will elaborate on later in our report.

Based on all parameters, we evaluate the company's equity value at NIS 565.9 million; the price target is to be in the range of NIS 18.3 to NIS 20.4 with a mean of NIS 19.3.

Year	Revenues* (000 NIS)	EBITDA* (000 NIS)	MW connected*	Yield in percent
2021E	8,800	7,100	37.0
2022E	42,666	32,815	86.9
2023E	137,664	103,982	667

*Expected annual revenues/EBITDArate from projects (representing 100% holdings in projects assuming a full year of operation), not including management fees and additional income at the corporation level; includingprojects abroad.

Investment Thesis	1-4
1. Company Overview	5-9
2. Technology Overview	10-15
3. Market Overview	10-30
4. Competitive landscape	31-32
5. Company Financial Analysis & Valuation	33-38
Appendix #.1: Capitalization Rate (WACC)	39
Appendix #.2: About Frost & Sullivan	40
Appendix #.3: Team biographies	41
Disclaimers, disclosures, and insights for more responsible investment decisions 412

Investment Thesis

Climate change is one of the most significant concerns facing governments worldwide, and achieving decarbonization in the power sector is the key to tackling the issue. While hydropower has been a major source of energy generation for decades, solar and wind energy have been gaining momentum, with the Paris Agreement of 2015 propelling the growth further. Globally, investment in renewable energy hit a high of \$350 billion in 2020, with solar PV and wind power accounting for \$290 billion of the total. A decade of high investment is expected as the case for renewable energy becomes ever stronger.

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.

Prime Energy (TASE: PRIM) has experience across all steps and stages of renewable energy projects. The company has initiated and successfully erected PV projects in Israel with approx. 100 MW capacity, which exemplifies Prime Energy's high capabilities in developing projects from early stages. Overall, it has a projects portfolio with an operational capacity of approx. 1.4 GW under various stages of development, construction, and operation (Prime Energy's total accumulated share is approx. 1.3 GW).

Prime Energy's strategy is to increase its installed capacity by acquiring new facilities (at various initiation and development stages) and making bids on tenders and competitive procedures. In addition, the company seeks to develop new partnerships in diverse global markets to promote new projects worldwide (focusing on the United States and Europe) while combining its core capabilities in planning and development with local capabilities required by the local developers. As the company is tech-agnostic, it also examines the viability of investing in other projects besides PV, such as storage, wind, and more.

Lastly, the company plans to use advanced robotic solar panel cleaners to maximize energy production and operational efficiencies to improve its operating margins.

Prime Energy's value proposition to investors, partners, and suppliers include:

• Proven ability to develop complex and novel projects through all stages: initiation, financial closure, construction, and ongoing maintenance.

• Diversified projects pipeline, characterized by high holding rates.

• Experienced professional and management teams in the solar field.

• An experienced EPC and O&M arm ("Solar Town").
• A lean and efficient organizational structure.
• A pioneer in the field of dual-use.

Valuation Summary

Pipeline Valuation

Prime Energy has disclosed information about 21 clusters of projects, some large-scale and others encompassing numerous standalone projects with medium to low power range, totaling approximately 1,380 MW. These projects are in operation or various stages of development in three countries (Israel, Italy, and Romania) and in key areas of renewable energy – primarily solar PV and energy storage. To evaluate each project's NPV, we used the procedure described in the Company Financial Analysis & Valuation chapter.

As of today, all of Prime Energy's revenues are generated from its Israeli facilities. In accordance with the company strategy to expand its operations in Italy and Romania, the EU will become a significant revenuegenerating market, as we show in the figure below. We assume that by 2026, total revenues will total NIS 422 million. On the chart below, we display the estimated increase in revenues during the forecast period:

Prime Energy's Annual Revenue Rate* Forecast, 2022-2026, by Geographies (NIS million)

**Expected annual revenues/ebitda rate from projects (representing 100% holdings in projects assuming a full year of operation ), not including management fees and additional income at the corporation level.

We forecast that Prime Energy projects' (representing 100% holdings) will generate annual revenue at a rate of NIS 42.6 million by the end of 2022 and NIS 241 million by the end of 2024.

Based on the above parameters, we evaluate the company's pipeline at NIS 580.2 million as we present below:

#	Projects grouped by country	NPV NIS (000)
1	Israel	436,707
2	EU	143,573
	Total pipeline value	580,280

1 NPV calculation is based on: a) considering company holdings; b) probability parameters.

Equity Value

We evaluated Prime Energy's equity value based on 21 clusters of projects within the company's pipeline that the company has identified and disclosed. To the sum of the different projects NPV, we added EPC fees that the company is entitled to receive in any project that completes the financial closing.

On the expenses side, Prime Energy has general and administrative (G&A) expenses. We consider the baseline G&A expenses reported in the company's financial reports, assuming an annual increase of NIS 1 million per year until 2024. We then assumed a 3% annual increase as the company will need to support its progress.

According to the company's financial statement, as of June 30, 2021, the company's share in cash was NIS 48.2 million. On August 12, the company issued convertible bonds in the amount of NIS 79.1 million. We added these as non-operational assets/liabilities. Below is our equity value breakdown:

Parameter	NIS (000)
Total Pipeline (NPV + EPC)	580,280
G&A expenses	(60,738)
EV	519,542
Non-operating assets/liabilities
Cash + Convertible Bond Proceeds	125,471
Loans	(79,150)
Total non-operating	46,321
Equity Value	565,863

Based on the above parameters, we evaluate the company's equity value at NIS 565.9 million. This valuation encompasses an identified project totaling 1,380 MW.

Sensitivity Analysis

The table below presents Prime Energy's share price target concerning the capitalization rate. We set a range of 0.5% change from our WACC model (see Appendix 1). The company has 29.3 million shares as of September 13, 2021.

Cap rate	Price target
4.54%	20.4
5.04%	19.3
5.54%	18.3

We estimate the price target to be in the range of NIS 18.3 to NIS 20.4 with a mean of NIS 19.3.

1. Company Overview

General

Prime Energy (TASE: PRIM) develops, implements, and maintains sustainable projects to create pure and renewable energy. Below is a timeline of the company, from conception until today:

Prime Energy focuses on initiating, developing, licensing, managing, managing financing procedures, setting up, maintaining, and operating electricity generation projects in Israel, using photovoltaic technology-based (PV) systems, including cells for converting solar radiation into electricity. They are in a mutual Promotion Agreement with a local partner in Italy and have a signed term sheet for investment in Romania.

Prime Energy is an Israeli engineering pioneer in the dual-use and application of systems in the field. Prime Energy maintains advanced contacts to enter the field of production and installation of wind turbines alongside innovative developments in improving efficiency and managing the storage of the energy produced for future uses in both industries and households.

Prime Energy has the experience and a reputation in the field of photovoltaics in a variety of aspects – initiation, construction, and operation. The company currently has 680 megawatts projects in various developmentstages and a storage capacity of 1000 MW in Israel. The company aims to guarantee the production of 4000MW worldwide by 2030. Domestically, the company's goal is to produce 1855 MW with

1080 MW of storage. Abroad, their goal is to produce 2000 MW, focusing mainly on Italy and Romania, with plans to expand to other geographies in the next few years.

Company Strategy

Prime Energy seeks to increase its installed capacity by acquiring new facilities (at various stages of initiation and development), making bids on tenders and competitive procedures, and collaborating with partners abroad. The company is actively seeking to expand internationally, focusing on the United States and European countries other than those that it is already working with – Italy and Romania. The two main focuses of the company are (i) the generation and storage of photovoltaic (PV) energy, for which demand has grown significantly in recent years, and (ii) examining the viability of investing in wind energy.

Prime Energy focuses on the initiation and development of projects, leading to their erection and commercial operation. Activities at these stages necessitate diverse knowledge and expertise and involve uncertainty regarding the chances of realization of the projects.

Prime Energy has initiated and successfully erected PV projects in Israel with approx. 100 MW capacity, which exemplifies Prime Energy's high capabilities in developing projects from early stages. Prime Energy also seeks to develop new partnerships in diverse global markets to promote new projects worldwide while combining its core planning and development capabilities with local developers' capabilities.

Projects Pipeline

Project Stage	Capacity (Based on 100% Share)
Commercial Operation Phase	18 MW
Construction Phase	80 MW
Licensing Process Phase	150 MW
Development Phase	430 MW
Development Phase - EU	700 MW
Total	~1,380 MW

Source: https://prime-nergy.com/wp-content/uploads/2021/06/Prime-Energy-Presentation-6-2021.pdf

ISRAEL ACTIVITY

Prime Energy started its operations in Israel as a contractor for small-sized projects. It has since grown multifold, developing large-scale projects and achieving several 'firsts' in the Israeli renewable industry. It developed the first dual-use solar system in Israel.

Kadesh Barnea Project

One of Prime Energy's most significant Israeli projects was constructing a solar plant in Moshav Kadesh Barnea, in which the company invested ILS 55 million, which started its full operation in May 2021. This field is expected to be used for 23 years with the guide and maintenance of Prime Energy's top experts while producing an estimated annual income of ILS 4.7 million.

One of the innovative features used in this project, for the first time in Israel, is Dual-use technology. This method of energy production refers to agricultural production and electricity production from solar photovoltaic (PV) panels occurring together on the same piece of land. This unique technology produces maximum efficiency from a given area, using it concurrently for agricultural purposes and green and sustainable energy production.

The Israeli company's projects

Status	Project	Operating Term (expected)	MW capacity (DC)	Maintenance rate	Tariff per kWh	Annual operating income
Commercial	Competitive procedure no. 1: 5 facilities	Q2 2019 – 2020	18*	70%	₪0.2018	₪6 million
operation	30 first arrangement facilities	2011 – 2012	1.5	100%	₪1.75 (average)	₪5.2 million
	Competitive procedure no. 4: Land	2022	21	100%	₪0.1798	₪6.4 million
Establishing	Competitive procedure no. 3: Roofs	2021	15	100%	₪0.1818	₪4.6 million
& licensing	Tariff systems	2022	14.5	100%	₪0.45	₪11.1 million
	2021 regulation tariff systems	2022	27.5	100%	₪0.225	₪10.5 million

	-	2022 – 2024	150	100%	₪0.195	₪51.2 million
Investment	-	2023 – 2030	430	95%	-	-
Totals			677.5			₪95 million

* Prime Energy holds all necessary approvals to connect an additional 3.5MW Source: https://maya.tase.co.il/reports/details/1384224/2/0

INTERNATIONAL ACTIVITY – IN DEVELOPMENT

Prime Energy is developing partnerships initiating photovoltaic facilities in Europe through KWP Solar, a wholly-owned subsidiary, focusing on Italy and Romania. This includes initiation, planning, licensing, financing, construction, operation, and maintenance of photovoltaic systems. The company is also considering investment opportunities in other European countries and North America.

Italy Project

There is significant growth and supportive legislation in the renewable energy market. Renewable energy accounts for over 17% of the country's electricity production, with goals of reaching 30% by 2030. Due to the strong solar radiation in the region, there would be a high utilization of facilities. The following graph shows the history and forecasts of energy sources in Italy:

Prime Energy has signed a joint venture agreement with a local partner amounting to 402 MW. Both partners agreed to establish a joint company for the projects' development, construction, financing, and operation, not selling shares until all projects enter commercial operation. The cost of setting up these projects is estimated at EUR 250 million and, assuming the projects are built and connected to the electricity grid, is expected to yield an annual income for the joint company of EUR 30 million. Prime Energy will provide equity loans in the amount needed to establish each project at an annual interest rate specified in the agreement. Upon bringing a project to the stage of Ready-to-Build (RTB), developers will receive an initiation fee from the joint company.

Romania Project

Romania's electricity is still produced from over 70% of pollutant sources (coal, oil, gas). The government has set a goal to end the use of coal for energy production by 2032, shifting to hydro, wind, and photovoltaic sources, which are projected to reach 32% by that date. Romania's historical sources of energy consumption are depicted below:

In June 2021, Prime Energy and a Romanian landowner and project developer signed a memorandum of understanding for the promotion, development, construction, and operation of PV facilities, amounting to 300 MW, on the developer's land. The memorandum regulates the lease of the land,the scope of services the developer will provide until the facilities reach the RTB phase, and the possibility for the developer to invest equity up to 20% of the costs of each facility. The cost of setting up the project is estimated at EUR 165 million, with projected annual revenue of about EUR 20 million in 2023.

2. Technology Overview

Photovoltaic devices generate electricity from sunlight using semiconductors. The energy thus harnessed is sent to an electric circuit then used to power devices, sent to a grid, or stored.

A typical panel consists of solar cells made from silicon, boron, and phosphorous. The boron layer is the positive charge, the silicon layer is the semiconductor, and the phosphorus layer carries the negative charge. When the photons (sunlight) strike the cells, the electrons split from the semiconductor due to the photovoltaic effect and then flow into the electric field generated by the solar cells. The number of solar cells in each panel could range between 60 and 90.

TYPES OF PANELS

Panels can be mono-crystalline, Polycrystalline, Passivated emitter and rear cell panels (PERC), or thin-film panels.

Mono-crystalline panels are made from single pure silicon cells, while polycrystalline cells are made from multiple fragmented silicon cells that are melted and shaped into a square mold, which makes them costeffective.

PERC solar panels are an improvisation of mono-crystalline panels that are characterized by enhanced efficiency. Light waves over 1.180 mm cannot be absorbed by silicon wafers and usually pass through without being absorbed by the semiconductor layer, thereby heating the backs sheet of the panel and reducing the efficiency of the panel. The Passivated layer of the PERC panels allows lights of higher wavelength to be deflected,stopping them from heating the back sheet.

Thin-film solar panels, on the other hand, use cells made from other materials like Cadmium Telluride (CdTe), Amorphous Silicon (a-Si), or Copper Indium Gallium Selenide (CIGS).

Cadmium cells have the same advantages as polycrystalline cells and leave the lowest carbon footprint in their manufacturing process; however the toxicity of Cadmium makes recycling expensive.

The combination of Copper, Indium, Gallium, and Selenide in CIGS panels makes them the most efficient amongst the thin-film panels, although not as efficient as the mono-crystalline panels.

The solar PV industry has been putting in continuous efforts in improving efficiency and, as a result, has been able to increase module output from 250W up to 550-600W over the past decade.

Perovskite Solar cells (PSCs) are an emerging technology promising efficiency of 25.2%. However, the presence of lead could be a concern for commercialization.

Trackers and bifacial modules are outcomes of such efficiency improvement efforts too. Trackers follow the sun path throughout the day, maximizing the output, unlike fixed-tilt ground mount systems. Trackers can be single-axis trackers (tracking either vertical axis (east-west axis) or horizontal axis) or dual-axis trackers (both east-west axis and north-south axis). Dual-axis trackers generate 40.0% more energy than single-axis trackers, but could cost up to 100% more.

Bifacial modules¹ optimize the energy production from single-axis trackers by increasing yield by 35%. Costs outweigh the benefits of dual-axis trackers with similar configurations.

Table: Solar panel types compared

	PERC	Mono-crystalline	Polycrystalline	Thin-film
Cost	Highest	High	Middle	Highest to lowest: CIGS CdTe a-Si
Efficiency	Highest (5% more than mono crystalline)	20% and up	15-17%	CIGS: 13-15% CdTe: 9-11% a-Si: 6-8%
Advantages	 Requires least space  Most efficient  Highest power capacity	 Less expensive alternative to PERC panels without the passivating layer	 Middle option in terms of cost, efficiency, and power capacity	 Lowest cost; Easier to install
Disadvantages	 Most expensive  Some earlier panels suffered from light and elevated temperature induced degradation	 High initial cost  Low yield in the manufacturing process	 Low heat tolerance, not suitable in hot environments	 Shorter lifespan than crystalline panels requires more space  Least efficient

¹ Bifacial Modules have solar cells on both sides of the panel.

AGROPHOTOVOLTAICS (DUAL-USE PHOTOVOLTAICS)

Increased demand for power generation due to population growth across the globe has resulted in land-use competition. Traditional PV systems require land management and associated acquisition costs, leading to an innovative solution that enables dual land-use systems to combine food and energy production using agro photovoltaic (APV) systems. According to research studies, APVs improve land productivity by up to 70%, and in arid climates, they improve water usage efficiency by providing additional shading leading to higher crop yields.² According to one of the leading institutes in this space, a wide range of crops including potato, grapes, fruits, spinach, ginseng, beans and legumes, onions, cucumber, and zucchini are suitable for APV installations. Besides, farm animals can be sheltered under APV installations.

APV is still at an early stage of development and still under technological and quality improvements. A good APV design combines agricultural productivity with clean energy production and optimizes land and water use.

Figure: Agrophotovoltaics design

Image source: International Journal of innovation technology and exploring engineering

Solar PV modules are fixed at a height of 8 meters above the ground on structures fixed 18 meters apart to leave sufficient space for agricultural machinery to operate. Optimum shading can be obtained using trackers.

Image source: International Journal of innovation technology and exploring engineering

BENEFITS OF APV

² Weselek, A., Ehmann, A., Zikeli, S. et al. Agrophotovoltaic systems: applications, challenges, and opportunities. A review. Agron. Sustain. Dev. 39, 35 (2019).

Besides its overall benefit of contribution to CO2 emissions reduction through additional renewable energy production, some additional advantages are:

• Protection of crops from extreme weather
• Water consumption reduction by 20% -30% through shading
• Increase in agricultural yields by 70%
• Protection of livestock from radiation exposure
• A long-term secondary source of income for farmers.
• Optimized dual land use
• Increased moisture retention during summer and prevention of soil erosion during heavy rainfall

Some key points to consider in APV installations are the suitability of crops, increased infrastructure and maintenance costs, and the ability of the structure to withstand extreme weather events.

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

LITHIUM-ION BATTERIES

Li-ion batteries exchange lithium ions between cathode and anode. Li-ion batteries usually have Lithium metal oxide cathodes and graphite anodes.

The advantages of Li-ion batteries over other stationary battery systems used for a power range of less than 1 MW include:

• Low self-discharge rate
• High power discharge capability and excellent round trip efficiency
• Relatively long lifespan

Energy densities (energy storage per unit of volume) range between 200 watt-hours per liter to 735 watthours per liter. Costs of installation range between USD 473 /kWh and 1260 /KWh for Lithium Titanate based systems and USD 200-840/KWh for other systems. Round trip efficiency (the ratio of output (KWh) to input of

storage system during one cycle in Direct Current to Direct Current terms for battery systems) for Li-ion batteries range between 92%-96%, and this range is a key advantage.³

Figure: Comparison of Li-ion battery systems

Depending on the cell design and operating conditions, the life span of Li-ion batteries ranges between 500- 20,000 cycles, and the best lifetime temperatures are achieved in installations where the temperature ranges between 20⁰ C to 30⁰ C , making cooling essential in hot climates.

Technology Outlook

Falling installation costs and performance improvements are expected to improve the market for Li-ion batteries. Cost advantages can be achieved through economies of scale and either reducing material use or using highly efficient material. Utilities scale costs are expected to fall further within a range of 54% -61% by 2030. Round trip efficiencies are expected to increase between 94%-98% by 2030 as Li-ion batteries become more competitive.⁴

Prime energy leverages advanced technology in solar energy production, storage, and maintenance of solar assets. The company plans to use advanced robotic solar panel cleaners to maximize energy production and operational efficienciesto improve its operating margins.

3 Electricity Storage and Renewables : Costs and Markets to 2030, IRENA, 2017 4 Ibid

3. Market Overview

Global renewables market

Climate change is one of the greatest concerns for governments worldwide, and achieving decarbonization in the power sector is the key to tackling the issue. While hydropower has been a major source of energy generation for decades, solar and wind energy have been gaining momentum, and the Paris agreement has propelled the growth further. Investment in renewable energy globally hit a high of \$350 billion in 2020, with solar PV and wind power accounting for \$290 billion of the total. A decade of high investment is forecasted as the business case for renewables becomes ever stronger.

Renewable Energy Market – Market Drivers & Restraints

Drivers	1–2 Years	3–4 Years	5–9 Years
Growing concern for tackling global climate change
Declining solar and wind generation costs and project costs
accelerate new deployments
Declining battery Energy Storage Systems (ESS )costs
Increased traction for hybrids in Variable Renewable Energy
(VRE( offers horizontal integration and capacity building
opportunities
Need to replace aging power plants
Increasing digitization across the renewable energy market

Restraints	1–2 Years	3–4 Years	5–9 Years
Need to tackle grid integration issues
Withdrawal of government subsidies and support could lower
growth rates
Increase in competitive intensity

Impact Ratings: =High, =Medium, =Low

AGRO-PHOTOVOLTAICS

A total of 2,200 APV plants are estimated to be under operation worldwide, with a total capacity of 2.8 GWp. Research shows southern Mediterranean region in Europe is the most suited in the region for APV installations.

France, Italy, Spain, and Germany are pioneers in APV installations in Europe. Japan, South Korea, China, France, and Massachusetts (USA), have introduced policies supporting APV implementation. In an attempt to boost agrivoltaics, the Israeli Ministry of Energy and Ministry of Agriculture have jointly invested over USD 1 million in six different studies researching efficiencies that can be attained by combining agriculture and Solar PV power generation.

France was the first country in the EU to introduce an APV financial support scheme in 2017. A total of 45 MWp has been tendered. Sun'Agri has been at the forefront in agrivoltaics in France – the 84 KW test project is located at Piolenc in South-Eastern France. Total Quadron and InVivo have announced a deal to deploy 500MW of agrivoltaic plants in France by 2025. Vines are the crops most affected by climate change, and Italy, France, and Spain have immense potential in agrivoltaics. Similarly, the implementation of APV systems in sweet pepper crops in the Negev desert in Israel resulted in increased yields and plant heights. Several research projects are ongoing in Southern Europe (Greece, Spain, and Italy) to assess the potential of APV in improving yields of various crops and animal farming.

Romania is the seventh largest agricultural producer in the EU. Its main crops are Maize, wheat, rye, barley, and vegetables. With over 9.9 million hectares of permanent crops and arable land, it is a particularly suitable candidate for APV installations. There is increased interest in implementing advanced IoT in APV in Romania with research studies underway by the University of Agriculture and Veterinary Medicine, in collaboration with Solarvibes Berlin (coordinator of consortium and partner), Institute Fraunhofer for Reliability and Micro-integration IZM of Munich (partner)

In the USA, a study by Oregon State University found that converting just 1% of the USA's farmland into agrivoltaics would significantly boost the country's ability to meet the National Renewable Energy targets. The National Renewable Energy Laboratory (NREL) is now conducting an in-depth study on dual-use PV, including studying pollinator habitats across 30 sites in the country, the largest being Jack's Solar Garden in Boulder, Colorado, at 1.2 MW.

BayWa Re, Netherlands	In partnership with its Dutch Subsidiary GroenLeven, a pilot project in Gelderland, Netherlands has been
	expanded to include 4500 modules with a generating capacity of 1.2 MWp
Enel Green Power, Southern Europe	Enel Green Power has launched a research program in Greece, Spain, and Italy to identify farming activities that can be carried out alongside large-scale PV parks with minimal additional cost outlay.

Table: Key Projects in Agrophotovoltaics, 2021 Source: Enel; BayWa Re;

STORAGE SOLUTIONS

Improved regulatory frameworks, incentive programs, declining project costs, and auxiliary grid services revenue opportunities have contributed to market growth. Most investment for grid-based storage solutions has been for battery storage systems, specifically those based on lithium-ion, which have declined by 40% since 2016. These storage systems are either pure-hybrid systems – where a renewable energy source and a storage system are combined in the same project – or standalone projects connected to the wider grid.

Source: Frost & Sullivan analysis

Going forward, regulatory mandates and incentives for storage are likely to increase, further driving new investment. As the penetration of renewables moves ever higher, storage will play a pivotal role in ensuring grid stability and maximizing revenue opportunities from renewables – either through increased selfconsumption to avoid high electricity costs and demand charges or through selling electricity back to the grid at times of peak consumption. System costs are also forecast to decline by a further 60% between 2020 and 2030. Higher market volumes will bring economies of scale, but there is still significant potential for further technological innovation.

Global Li-ion Market Outlook

While safety concerns still plague the Li-ion batteries market, it is estimated to grow at a healthy Compounded Annual Growth rate of 17.9%.

Figure: Forecast of Total Solar PV Installed Capacity in the USA (in GW) 2020-2030

Source: Frost & Sullivan analysis

Incentives and supportive policies for deploying storage systems to improve reliability and resiliency of the grid are driving the market for Li-ion batteries. Besides, the growth in micro-grids and smart grids is driving the Li-ion market's growth. The EU Horizon 2020 program incentivizes energy storage research, and similarly, the USA incentivizes Solar PV plus Storage projects through their tax credit program.

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. Given the cost advantages of Li-ion batteries, easy portability, and efficiencies provided, and further technological advancements, the global Li-ion battery market for grid and energy storage, is set to grow at a healthy CAGR of 21.9% and reach USD 53.68 billion in 2030.

ISRAEL RENEWABLES MARKET – OVERVIEW AND OUTLOOK

Reducing carbon emissions and promoting renewable sources has been one of the primary goals of Israel's Ministry of Energy, in tandem with global goals, and the official target of renewable sources of energy by 2030 was increased to 30.0% from 17.0% in 2020. The target increment is combined with a commitment to phase out the use of coal for power generation by 2030. According to Israel's Energy Minister, this measure is expected to decrease air pollution from the power sector by 93.0% and Green House Gas (GHG) emissions by 50.0%, helping Israel adhere to its Paris Agreement commitments.

At an outlay of NIS 80 billion (\$22 Billion), this plan aims to use solar installations to meet 80.0% of peak energy demand in Israel, with the forecast of 15GW of solar added in the next decade.

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 renewable energy targets. Israel aims to reach 30.0% of electricity production from renewables, of which solar is expected to contribute 90%, and wind, biomass, hydropower, and other renewables are expected to chip in 10.0%.

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 rooftops.
• 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 2030⁵ .

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

Yield can be maximized by installing floating PV on pumped storage facilities. Israel's first floating solar PV with a capacity of 480 KW began operating in 2020. Floating solar arrays were installed on a reservoir near the Mishmar HaEmek kibbutz. Further floating PV and agro-photovoltaics retrofitting opportunities can be explored in the country.

Contracts for solar PV and storage capacity of 609 MW were awarded to seven bidders across 33 projects that are expected to deliver power to the Israeli grid by July 2023.

⁵ https://www.gov.il/BlobFolder/rfp/shim\_2030yaad/he/Files\_Shimuah\_yaad\_2030n\_work\_n.pdf

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 capacity witnessed 11% growth Y-o-Y during the pandemic in the region, with 18.2 GW installed. An average annual addition of 18.5 GW in the EU 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

Top 10 Countries	2020 Total Capacity	2030 NECP Target	F&S Estimates by 2030	Estimated Annual Capacity Addition
Germany	54.6	98.0	93.1	3.9
France	10.9	40.0	40.0	2.9
Italy	21.3	51.0	48.5	2.7
Spain	13.3	39.1	35.2	2.2
Netherlands	9.2	27.0	27.0	1.8
Portugal	1.4	9.0	9.0	0.8
Austria	2.0	9.7	8.7	0.7
Denmark	1.7	7.8	7.8	0.6
Belgium	5.4	8.0	7.6	0.2
Greece	3.4	7.6	6.8	0.3

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

UK 13.9	40	36	2.2
------------	----	----	-----

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.

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 21.3 GW, an added capacity of 31 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

ROMANIA

Romania aims for an installed capacity of 5.1 GW in solar PV by 2030, which is more than double the current installed capacity of 1.4 GW. It is believed that the target doesn't truly reflect its actual potential.

Source: South Eastern Europe Transnational Cooperation Programme

With an irradiance level between 1200-1250 KWh/m² , the best places for solar power generation are the Dobrogea region, Black Sea Coast, and Danube Delta. Other regions that can be explored are Romanian Plains, West Plains, Banat Plains, Transylvanian Region, and Moldovian Regions.

The average annual estimated solar PV potential is about 1200 GWh. ⁶

To achieve its target of 3.7 GW in additional PV installed capacity, Romania is set to actively promote residential, industrial, and agricultural prosumers to adopt renewable energy sources. Romania also plans to establish solar parks in less productive lands.

Its Law No. 184/2018 allows prosumers with an installed capacity of not more than 27KW to sell electricity to the grid and not pay excise duties on the energy consumed or sold to encourage renewable energy production and consumption and promote the concept of prosumers.

⁶ Romania National Report, South Eastern Europe Transnational Cooperation Programme.

In addition, several smart cities proposals are under development in Bucharest and Cluj-Napoca. Its energy efficiency improvement initiative, the Long Term Renovation Strategy (LTRS) aims to promote the renovation of buildings to adopt renewable energy (PV/heat pumps) to achieve national targets.

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

USA

Falling prices and supportive policies like Tax credits have led to the rapid growth of the solar industry in the USA. About 19.2 GW of additional PV capacity was added in 2020, 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, and corporate PPAs will drive new investment. Annual installations are forecast to increase from 16.2GW in 2020 to 21.9GW in 2030. The cumulative solar PV installed capacity is expected to increase from 93 GW in 2020 to 287.1 GW in 2030.

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

4. Competitive Landscape

ISRAEL

There is a whole slew of players involved in the Israeli renewables infrastructure ecosystem. The first category is comprised of B2C players involved in institutional and private home installations such as Solaredge. The second category is comprised of B2B or B2G players with small to medium-sized portfolios such as Solpower, Arava Power Company, El-Mor, Ellomay Capital, and Meshek Energy (that primarily deals with kibbutz cooperatives projects and is a partner to Doral). The last category is comprised of B2G players that dominate the large governmental projects arena and have significant portfolios. These prominent players include Doral, Energix (which, like Doral, has a presence in Europe and the US), and Enlight (which has a strong presence in Europe). Prime Energy is highly distinguished by its relatively high percentage of projects' holdings compared to its competitors.

Company	Market cap NIS million	Total Portfolio Size (project development phases vary)	% of holdings
Prime Energy	449	1,380 MW	95%
Solaer	527	3,450 MW	50%
Meshek Energy	550	2,460 MW	76%
Solegreen	800	1,082 MW	44%
Doral	1,903	6,565 MW	53%
Enlight	6,351	17,000 MW	N/A
Energix	6,437	5,400 MW	N/A

Table: Top competitors in Solar and Wind Market in Israel, September 5, 2021 Source: Frost & Sullivan

Other key players who were recently awarded projects in Israel are SoleGreen, Ellomay Capital, EDF Energies Nouvelles Israel Ltd, Meshakim & Partners, Invenergy Israel LLC, OPC Energy LLC, Edelcom Ltd, Edeltech Ltd, Energia, Menora Mivtachim Energy, Solnet roofs, Greentops Neto Ltd, and Shikun & Binui Energy Ltd

Bidding for projects through partnerships with local real estate developers by International players is common. Several companies incorporated in China have been showing interest in entering the market through consortiums.

International Players in Israel

• China National Technical Import and Export Corporation (CNTIC) (China)
• Power China Resources (China)
• Solarpack (Spain)
• Cobra Instalaciones Y Servicios (Spain)
• Scatec Solar (Norway)

ITALY, ROMANIA, AND THE USA

Intelligent design, yield efficiency, and add-on services, combined with cost competitiveness, are the key differentiating factors for market participants.

Key winners of large scale solar and wind contracts in Europe are Engie (France), Juwi (Denmark), EDF Energy Nouvelles (France), Scatec Solar (Norway), Neoen (France), Enerparc (Denmark), X-Elio (Spain), and Abengoa Solar (Spain) apart from local players.

Active Renewables Developers in Key European Markets

Table: Top competitors in Solar Market in Italy, Romania, and the USA, 2021

ITALY	ROMANIA	USA
Trisol 81	Krone Solar	First Solar Inc
Enel Green Power	Egnatia Romania	Next Era Energy Resources
Eni	Solaico	Cypress Creek Renewables
Solar Power IX	Sunshine Solar Energy	Recurrent Energy
Sonnedix	Steag solar energy solutions	Sempra US Gas & Power, LLC
		Sun Edison LLC
		NRG Energy
		8minuteenergy
		Strata Solar
		sPower (Sustainable Power Group)

5. Company Financial Analysis & Valuation

Valuation method & approach

As part of a discounted cash flow (DCF), the accepted method used in financial valuations, several modifications to a company's valuation are made. In general, there are three primary methods within the DCF method:

• 1. Real Options valuation method designated for programs/companies where the assessment is binary during the initial phases and based upon science-regulatory assessment only (binomial model with certain adjustments).
• 1. Pipeline assessment valuation method used for programs/companies before the market stage. The company's value is the total discounted cash flow, plus allocated costs and assessment of the future technological basis. The assessment of the future technological basis is established based on the company's ability to "produce" new projects and their feed rate potential.
• 1. DCF valuation similar to companies not operating in the life sciences field, this method applies to companies with products that have a positive cash flow from operations.

Prime Energy initiates and develops projects which operate and yield revenue in the long term. Therefore, it can be viewed as property development and holding company with a pipeline of current and future projects. As such, we evaluate Prime Energy based on an NPV of its current projects and possible future projects, including a probability factor using the "pipeline assessment."

Company Financial Overview

Prime Energy's total revenue for H1/2021 amounted to approximately NIS 3.5 million, slightly exceeding the company's total revenue in 2020, which amounted to approximately NIS 3.2 million. This increase in revenue is due to the fact that the systems in the Kadesh Barnea project started operating only in May 2020. In addition, starting the fourth quarter of 2020, the company consolidates the results of its subsidiary KWP.

As of June 30, 2021, the company had 18 MWp installed capacity of PV, 78 MWp of capacity in construction and preparation for construction, 150 MW in advanced development (various licensing stages), plus an extra ~1,204 MWp of additional projects (in different initiation stages) in the company pipeline.

According to its financial report, as of June 30, 2021, Prime Energy's equity was NIS 77.8 million; the company had NIS 48.2 million in cash and loans totaling NIS 50.8 million. On August 12, the company issued convertible bonds in the amount of NIS 79.1 million.

On February 26, 2021, the company issued an IPO prospectus. The company first issued 5,721,020 shares via non-uniform offer to institutional investors, and its shares were listed for trading on the Tel Aviv Stock Exchange, thus raising a total of NIS 57.6 million net. The company issued about 19.5% of its share capital, according to a company value of about NIS 310.7 million. Since its IPO, the company's shares have been added to the stock exchange indices: TA Tech-Elite, TA BlueTech Global, TA Technology, TA-Energy Utilities, TA-Cleantech, TA-Growth, TA-All-Share, TA-Rimon.

Pipeline Valuation

Pipeline Overview

Prime Energy has disclosed information about 21 clusters of projects, some large-scale and others encompassing numerous standalone projects with medium to low power range, totaling approximately 1,380 MW. These projects are in operations or various stages of development, in three countries (Israel, Italy, and Romania) and in main areas of renewable energy – mostly Solar PV and energy storage. Below is the full scope of Prime Energy's identified and disclosed projects based on information received from the company and based on our analysis:

Status	Country	Type	MWp	Holdings* %
Project in operation	Israel	PV	19.55	72.3%
Project in construction	Israel	PV	80.8	99.3%
Projects under license	Israel	PV	150	100.0%
Projects Under Development	Israel	PV	430	100.0%
Projects in initiation - abroad	Romania	PV	300	100.0%
Projects in initiation - abroad	Italy	PV	400	77.5%
Total capacity			1380.4

*Holding % was calculated as a weighted average, using projects capacity as weights.

Methodology & Revenues Forecast

To evaluate each project's NPV, we used the following procedure and parameters:

• Calculated the revenues generated by each project based on:
  • o Its electricity production capacity.
  • o The number of operating years.
  • o Electricity contract price per MW.
  • o Hours of electricity production based on similar projects and information received from the company's management.
  • o Engineering, procurement, and construction (EPC) fees.
  • o Employ PV degradation of the solar panel in an annual decrease of 0.5%.
  • o We added additional operating years (five years over the contract period), assuming much lower electricity prices.
• Assigned financing expenses for each project.
• Subtracted operating expenses per project based on data from the company and our estimations.
• Applied straight depreciation model for each project.
• Added tax rates for each project based on its legal structure.

• Implemented different success rates for the projects based on stages of operation and financial closing.

• Calculated NPV per project, based on Prime Energy's % of holdings in the project (all cost and revenues were allocated based on % of holdings).

• We calculated Prime Energy's WACC to be 5.04% (see Appendix 1).

We estimate revenues from PV projects will dramatically increase over the coming years as the company will engage in additional large projects. We forecast that Prime Energy's annual revenue rate* by the end of 2022 will be NIS 42.6 million.

As of today, all of Prime Energy's revenues are generated through Israeli facilities. Per the company strategy to expand its operations in Italy and Romania, the EU will become a significant revenue-generating market, as shown in the figure below. We assume that by 2026 total revenues will total NIS 422 million. On the chart below, we display the estimated increase in revenues during the forecast period:

Prime Energy's Annual Revenue Rate* Forecast, 2022-2026, by Geographies (NIS million)

*Representing 100% of projects holdings

Based on the above parameters, we evaluate the company's pipeline at NIS 580.3 million as we present below:

#	Projects grouped by country	NPV NIS (000)
1	Israel	436,707
2	EU	143,573
	Total pipeline value	580,280

1 NPV calculation is based on: a) considering company holdings; b) probability parameters.

The pipeline valuation takes into consideration the different stages of each project. Thus, we evaluate Prime Energy's pipeline while accounting for the different stages for each project and based on the grid connection forecasted year.

According to our analysis, we value projects which are in commercial operation at NIS 20.3 million, additional projects that are in construction and/or are due within 1-2 years at NIS 130.9 million, and projects that are due in 3-5 are at NIS 429.1 million, as we show below:

Prime Energy's Project Pipeline Valuation (NPV breakdown; NIS 000s)

Non-pipeline projects

As mentioned, we identified 21 clusters of projects totaling 1,380 MW that are already operating or will commence operation from 2021 to 2026. However, in our view, the company would continue to develop its pipeline further and increase it considerably. We did not consider these projects as they are still in the early stage of development. Thus, we assume an upside to our valuation.

Equity Value

We evaluated Prime Energy's equity value based on 21 clusters of projects within the company's pipeline that the company has identified and disclosed. To the sum of the different projects NPV, we added EPC fees that the company is entitled to receive in any project that completes the financial closing.

On the expenses side, Prime Energy has general and administrative (G&A) expenses. We consider the baseline G&A expenses reported in the company financial reports, assuming an annual increase of NIS 1 million per year until 2024. Them we assumed a 3% annual increase as the company will need to support its progress.

According to the company's financial statement, as of June 30, 2021, the company's share in cash was NIS 48.2 million. On August 12, the company issued convertible bonds in the amount of NIS 79.1 million. We added these as non-operational assets/liabilities. Below is our equity value breakdown:

Parameter	NIS (000)
Total Pipeline (NPV + EPC)	580,280
G&A expenses	(60,738)
EV	519,542
Non-operating assets/liabilities
Cash + Convertible Bond Proceeds	125,471
Loans	(79,150)
Total non-operating	46,321

Based on the above parameters, we evaluate the company's equity value at NIS 565.9 million. This valuation encompasses an identified project totaling 1,380 MW.

Sensitivity Analysis

The table below presents Prime Energy's share price target concerning the capitalization rate. We set a range of 0.5% change from our WACC model (see Appendix 1). The company has 29.3 million shares as of September 12, 2021.

Cap rate	Price target
4.54%	20.4
5.04%	19.3
5.54%	18.3

We estimate the price target to be in the range of NIS 18.3 to NIS 20.4 with a mean of NIS 19.3.

Appendix #.1: Capitalization Rate (WACC)

Cost of equity capital (ke) represents the return required by investors. The capitalization rate is calculated using the CAPM (Capital Asset Pricing Model). It is based on a long-term 30-year T-bond with a market risk premium and Professor Aswath Damodaran's (NYU) commonly used sample (www.damodaran.com). As of January 8, 2021, the Israeli market risk is estimated at 5.4%.

A three-year market regression Beta is 0.67, according to a sample of 25 companies (at various stages), representing the renewable energy sector (www.damodaran.com). We also add specific risk premiums to the company as a major part of its projects are outside of Israel with different regulatory risks.

Weighted average cost of capital model (WACC) is estimated as follows:

WACC = Rd(1-t)*(D/D+E)+Ke(E/D+E) + ArP {Ke = R(f)+βe*(R(m) R(f))}

The company's financial structure, based on the WACC model, is as follows:

WACC	Parameter	Data	Source
Long-term (10 years) T
bond	R(f)	2.18%	Rf - Israel treasury bonds - 30 years, as of 05/09/2021
Market risk primium	R(m)- R(f)	5.40%	based on Damodaran (8/1/2021) - Israel
			Beta sample - Green & Renewable Energy (Demodaran, 2021),
Beta	βe	0.67	25 firms
Cost of Capital	Ke	5.79%
Debt, rate	Rd	3.0%	Weighted average
Debt, Net	D	79,150	Prime Energy investors presentation, July 2021
Equity	E	77,800	Prime Energy investors presentation, July 2021
Debt + Equity	D+E	156,950
Debt (%)	D/(D+E)	50.43%	Q4 20 financial data
Equity(%)	E/(D+E)	49.57%	Q4 20 financial data
Tax	t	23.00%
Additional Risk Premium	ArP	1.00%
WACC= Rd(1-
t)*(D/D+E)+Ke(E/D+E)+ArP+Sp		5.04%

We therefore estimate the company`s WACC to be 5.04%.

Appendix #.2: About Frost & Sullivan

Frost & Sullivan* is a leading global consulting, and market & technology research firm that employs a staff of 1,800, which includes analysts, experts, and growth strategy consultants at approximately 50 branches across six continents, including in Herzliya Pituach, Israel. Frost & Sullivan's equity research utilizes the experience and know-how accumulated over the course of 55 years in medical technologies, life sciences, technology, energy, and other industrial fields, including the publication of tens of thousands of market and technology research reports, economic analyses and valuations. For additional information on Frost & Sullivan's capabilities, visit: www.frost.com. For access to our reports and further information on our Independent Equity Research program visit: www.frost.com/equityresearch.

*Frost & Sullivan Research and Consulting Ltd., a wholly owned subsidiary of Frost & Sullivan, is registered and licensed in Israel to practice as an investment adviser.

What is Independent Equity Research?

Nearly all equity research is nowadays performed by stockbrokers, investment banks, and other entities which have a financial interest in the stock being analyzed. On the other hand, Independent Equity Research is a boutique service offered by only a few firms worldwide. The aim of such research is to provide an unbiased opinion on the state of the company and potential forthcoming changes, including in their share price. The analysis does not constitute investment advice, and analysts are prohibited from trading any securities being analyzed. Furthermore, a company like Frost & Sullivan conducting Independent Equity Research services is reimbursed by a third party entity and not the company directly. Compensation is received upfront to further secure the independence of the coverage.

Analysis Program with the Tel Aviv Stock Exchange (TASE)

Frost & Sullivan is delighted to have been selected to participate in the Analysis Program initiated by the Tel Aviv Stock Exchange Analysis (TASE). Within the framework of the program, Frost & Sullivan produces equity research reports on Technology and Biomed (Healthcare) companies that are listed on the TASE, and disseminates them on exchange message boards and through leading business media channels. Key goals of the program are to enhance global awareness of these companies and to enable more informed investment decisions by investors that are interested in "hot" Israeli Hi-Tech and Healthcare companies. The terms of the program are governed by the agreement that we signed with the TASE and the Israel Securities Authority (ISA) regulations.

For further inquiries, please contact our lead analyst:

Dr. Tiran Rothman T: +972 (0) 9 950 2888 E: equity.research@frost.com

Appendix #.3: Team biographies

Dr. Tiran Rothman is the head of Frost & Sullivan Research & Consulting Ltd., a subsidiary of Frost & Sullivan in Israel. He has over ten years of experience in research and economic analysis of capital and private markets, obtained through positions at a boutique office for economic valuations, chief economist at the AMPAL group, and co-founder and analyst at Bioassociate Biotech Consulting. Dr. Rothman also serves as the Economics & Management School Head at Wizo Academic College (Haifa). Tiran holds a Ph.D. (Economics), MBA (Finance), and was a visiting scholar at Stern Business School, NYU.

Almog Josef Sokolik is a Consultant and Analyst at Frost & Sullivan Research & Consulting Ltd., a subsidiary of Frost & Sullivan in Israel. He has experience in the valuation of public and private firms, research and market analysis obtained through positions at the Ministry of Finance - Department of the Chief Economist, and Ben-Gurion University - Laboratory for Judgment & Decision Making as a research analyst. Almog holds a BA in Economics & Psychology.

Disclaimers, disclosures, and insights for more responsible investment decisions

Definitions: "Frost & Sullivan" –A company registered in California, USA with branches and subsidiaries in other regions, including in Israel, and including any other relevant Frost & Sullivan entities, such as Frost & Sullivan Research & Consulting Ltd. ("FSRC"), a wholly owned subsidiary o f Frost & Sullivan that is registered in Israel – as applicable. "The Company" or "Participant" – The company that is analyzed in a report and participates in the TASE Scheme; "Report", "Research Note" or "Analysis" – The content, or any part thereof where applicable, contained in a document such as a Research Note and/or any other previous or later document authored by "Frost & Sullivan", regardless if it has been authored in the frame of the "Analysis Program", if included in the database at www.frost.com and regardless of the Analysis format-online, a digital file or hard copy; "Invest", "Investment" or "Investment decision" – Any decision and/or a recommendation to Buy, Hold or Sell any security of The Company. The purpose of the Report is to enable a more informed investment decision. Yet, nothing in a Report shall constitute a recommendation or solicitation to make any Investment Decision, so Frost & Sullivan takes no responsibility and shall not be deemed responsible for any specific decision, including an Investment Decision, and will not be liable for any actual, consequential, or punitive damages directly or indirectly related to The Report. Without derogating from the generality of the above, you shall consider the following clarifications, disclosure recommendati ons, and disclaimers. The Report does not include any personal or personalized advice as it cannot consider the particular investment criteria, needs, preferences, priorities, limitations, financial situation, risk aversion, and any other particular circumstances and factors that shall impact an investment decision. Nevertheless, according to the Israeli law, this report can serve as a raison d'etre off which an individual/entity may make an investment decision.

Frost & Sullivan makes no warranty nor representation, expressed or implied, as to the completeness and accuracy of the Report at the time of any investment decision, and no liability shall attach thereto, considering the following among other reasons: The Report may not include th e most updated and relevant information from all relevant sources, including later Reports, if any, at the time of the investment decision, so any investment decision sha ll consider these; The Analysis considers data, information and assessments provided by the company and from sources that were published by third parties (however, even reliable sources contain unknown errors from time to time); the methodology focused on major known products, activities and target markets of the company that may have a significant impact on its performance as per our discretion, but it may ignore other elements; the company was not allowed to share any insider information; any investment decision must be based on a clear understanding of the technologies, products, business environments, and any other drivers a nd restraints of the company's performance, regardless if such information is mentioned in the Report or not; an investment decision shall consider any relevant updated information, such as the company's website and reports on Magna; information and assessments contained in the Report are obtained from sources believed by us to be reliable (however, any source may contain unknown errors. All expressions of opinions, forecasts or estimates reflect the judgment at the time of writing, based on the company's latest financial report, and some additional information (they are subject to change without any notice). You shall consider the entire analysis contained in the Reports. No specific part of a Report, including any summary that is provided for convenience only, shall serve per se as a basis for any investment decision. In case you perceive a contradiction between any parts of the Report, you shall avoid any investment decision before such contradiction is resolved. Frost and Sullivan only produces research that falls under the non-monetary minor benefit group in MiFID II. As we do not seek payment from the asset management community and do not have any execution function, you are able to continue receiving our research under the new MiFiD II regime. This applies to all forms of transmission, including email, website and financial platforms such as Bloomberg and Thomson.

Risks, valuation, and projections: Any stock price or equity value referred to in The Report may fluctuate. Past performance is not indicative of future performance, future returns are not guaranteed, and a loss of original capital may occur. Nothing contained in the Report is or should be relied on as, a promise or representation as to the future. The projected financial information is prepared expressly for use herein and is based upon the stated assumptions and Frost & Sullivan's analysis of information available at the time that this Report was prepared. There is no representation, warranty, or other assurance tha t any of the projections will be realized. The Report contains forward-looking statements, such as "anticipate", "continue", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions. Undue reliance should not be placed on the forward-looking statements because there is no assurance that they will prove to be correct. Since forwardlooking statements address future events and conditions, they involve inherent risks and uncertainties. Forward-looking information or statements contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and un known risks, uncertainties and other factors which may cause the actual results to be materially different from current projections. Macro level factors that are not directly analyzed in the Report, such as interest rates and exchange rates, any events related to the ecosystem, clients, suppliers, c ompetitors, regulators, and others may fluctuate at any time. An investment decision must consider the Risks described in the Report and any other relevant Reports, if any, including the latest financial reports of the company. R&D activities shall be considered as high risk, even if such risks are not specifically discussed in the Report. Any investment decision shall consider the impact of negative and even worst case scenarios. Any relevant forward-looking statements as defined in Section 27A of the Securities Act of 1933 and Section 21E the Securities Exchange Act of 1934 (as amended) are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. TASE Analysis Scheme: The Report is authored by Frost & Sullivan Research & Consulting Ltd. within the framework of the Analy sis Scheme of the Tel Aviv Stock Exchange ("TASE") regarding the provision of analysis services on companies that participate in the analysis scheme (see deta ils:

www.tase.co.il/LPages/TechAnalysis/Tase_Analysis_Site/index.html, www.tase.co.il/LPages/InvestorRelations/english/tase-analysis-program.html), an agreement that the company has signed with TASE ("The Agreement") and the regulation and supervision of the Israel Security Authority (ISA). FSRC and its lead analyst are licensed by the ISA as investment advisors. Accordingly, the following implications and disclosure requirements shall apply. The agreement with the Tel -Aviv Stock Exchange Ltd. regarding participation in the scheme for research analysis of public companies does not and shall not constitu te an agreement on the part of the Tel-Aviv Stock Exchange Ltd. or the Israel Securities Authority to the content of the Equity Research Notes or to the recommendations contained therein. As per the Agreement and/or ISA regulations: A summary of the Report shall also be published in Hebrew. In the event of any contradiction, inconsistency, discrepancy, ambiguity or variance between the English Report and the Hebrew summary of said Report, the English version shall prevail. Th e Report shall include a description of the Participant and its business activities, which shall inter alia relate to matters such as: shareholders; management; products; relevant intel lectual property; the business environment in which the Participant operates; the Participant's standing in such an environment inc luding current and forecasted trends; a description of past and current financial positions of the Participant; and a forecast regarding future developments and any other matter wh ich in the professional view of Frost & Sullivan (as defined below) should be addressed in a research Report (of the nature published) and which may affect the decision of a reasonable investor contemplating an investment in the Participant's securities. An equity research abstract shall accompany each Equity Research Report, describing the main points addressed. A thorough analysis and discussion will be included in Reports where the investment case has materially changed. Short update notes, in which the investment case has not materially changed, will include a summary valuation discussion. Subject to the agreement, Frost & Sullivan Research & Consulting Ltd. is entitled to an annual fee to be paid directly by the TASE. Each participant shall pay fees for its participation in the Scheme directly to the TASE. The named lead analyst and analysts responsible for this Report certify that the views expressed in the Report accurately reflect their personal v iews about the company and its securities and that no part of their compensation was, is, or will be directly or indirectly related to the specific recommendation or view contained in the Report. Neither said analysts nor Frost & Sullivan trade or directly own any securities in the company. The lead analyst has a limited investment advisor license for analysis only.

© 2021 All rights reserved to Frost & Sullivan and Frost & Sullivan Research & Consulting Ltd. Any content, including any documents, may not be published, lent, reproduced, quoted or resold without the written permission of the companies.