R E S E A R C H & INDEPENDENT EQUITY RESEARCH

Solaer Renewable energies – Update Report 04.04.2023 Resolar, a subsidiary controlled by the company, signed PPA, financing and investment agreements for solar projects; Intersol Energy, a subsidiary controlled by the company, established a construction guarantee framework for a 600 MW project; Solaer's Spanish companies sold electricity, secured financing and completed construction; Agua-Sol, a subsidiary owned by the company that deals in the field of energy and water desalination, signed MoU for Chilean project; revenues, net loss and cash increased; price target is updated

Solaer Renewable Energy (TASE: SOLR) was established in Israel in 2019. The company originated from 'Solaer Israel,' which was established in Israel in 2009 as a subsidy of the Spanish group 'Solaer,' which deals with renewable energies. The company initiates, develops, builds, operates, and maintains renewable energy projects in Israel and Europe.

In Q4 2022 and the recent months, the company announced the following:

C O N S U L T I N G L T D.

Acquired rights in a Chilean project under development that combines solar energy production, water extraction and transmission. The construction of the project is expected to cost approx. \$1.5 billion and will be financed a strategic partner from the water sector who will complete the required equity so that the company will not invest substantial amounts from its own sources. In relation to a full year of operation, the project should generate revenues of approx. \$225 million, EBITDA of approx. \$170 million and FFO of approx. \$120 million.
Raesolar, a company incorporated in Luxembourg and 47.4% held by the company and under its control, signed several memoranda of understanding.
Energy Intersol S.L entered into an agreement with a Spanish insurance company for the purpose of setting up a connection and construction guarantee framework.
Revenues increased by approx. 181.5% last year; Total loss decreased by approx. 31% and EBITDA increased by approx. 439% YoY to NIS 25 million; Cash and cash equivalents increased by approx. 43.4% per year.

Market and trends - Investments in the field of renewable energy reached a peak of USD 350 billion in 2020, of which approx. USD 290 billion was invested in the fields of solar energy and wind. We anticipate a decade of many investments in the field alongside increasing business viability.

The company's strategy is based on a development model for holding and includes: initiating longterm projects, preserving assets before the market reaches saturation, choosing opportunities selectively while analyzing all the risks and developing a significant project backlog. We updated our economic model with the company's projects progress and updating the discount rates that have been significantly changed over the last few months.

On the next page, we further elaborate on the main events in Q4 2022.

Year	Revenues* (000 NIS)	EBITDA* (000 NIS)
2021A	13,741	-36,408
2022A	38,694	-42,212
2023E	78,000	-21,000

*Represents 100% projects holdings

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Key events in Q4 2022 and recent months:

Resolar S.a.r.l., a company incorporated in Luxembourg and held at a rate of 47.4% by Solaer and under its control, signed multiple agreements related to their solar projects in Spain.
- o Power Purchase Agreement (PPA):
  - On November 17, Resolar and a European investment fund signed a memorandum of understanding with a leading international retail company for the sale of electricity produced from Resolar's Spanish projects for a 10-year period, starting from June 30, 2024. The electricity will be sold at a rate of EUR 45-50 per MW linked to the consumer price index in Spain, in relation to about 60% of the electricity produced in the projects.
- o Financing Agreements:
  - On November 23, Resolar signed a memorandum of understanding with a Spanish bank for financing of up to EUR 75 million for the construction of the Makinanza project in Spain, with a capacity of 125 MW, at an annual interest rate of between 2.5% and 2.75% above the EURIBOR interest rate for a period of 16-18 years.
  - On February 3, Resolar signed an agreement with a German investment fund for mezzanine financing of up to EUR 50 million to complete the equity required for the establishment of its European projects and repay an existing loan. The financing will carry a fixed annual interest rate of 6.9%, with a final repayment date of the sooner of 15 years from the signing date or 4 years from the end of the last PPA.
- o Investment Agreement:
  - On January 4, 2023, Resolar signed an investment agreement with a European energy and infrastructure fund for its solar projects in Spain. The investment fund will invest EUR 30-40 million, giving it a 49% stake in two Luxembourg-based companies that own 100% of the rights to two solar projects with a combined capacity of approximately 300 MW. Energy Intersol, which is 51% owned and controlled by Solaer, will serve as the construction contractor for all projects.
On October 2, Energy Intersol S.L., a company incorporated in Spain and 51% owned by the company and under its control entered into an agreement with a Spanish insurance company for the purpose of establishing a connection and construction guarantee framework, which is renewed every year, see the company project "El Savio 1-3" with an aggregate capacity of 600 MW in the amount of approx. EUR 20 million.
On February 12, Agua-Sol, a solar power production company 51% owned by Solaer, signed a nonbinding memorandum of understanding with a global infrastructure company for engineering and construction services for the Anafek project in Chile.
- o The project includes a solar field, water desalination, and transmission lines. The infrastructure company will advise on financing options and cost optimization. The parties will enter a period of legal, technical, and financial checks, and the infrastructure company will have exclusivity until June 30, 2023, to sign a binding agreement for construction.
- o The memorandum of understanding will terminate after 10 months or if no certificate is produced up to 90 business days from signing or if the EPC and O&M agreements are not signed until the end of phase one. The unnamed company is exploring engagement with a strategic partner and lending bank but will not invest significant amounts of its capital in the project.

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Key events in Q4 2022 and recent months (cont'd):

Connected systems in Israel, as of September 30, 2022:

				אקהרה
		נטו מונה	מערכות תעריפאת	הליך תחרותי	סה"ל
	טווח תעריפים ₪/לקוט"ש לשנת 2022 )1(	0.39-0.50	0.45	0.23-0.24
	31/12/2021	ਧੋ ਡੇ	46	29	123
משפר מערכות	31/12/2022	ਧੋ ਫੋ	28	61	177
	למועד פרסום הדוח (2)	ਧੋ ਡੇ	કરે	61	195
	31/12/2021	5,232	6,319	24,661	36,212
סך הספק מותקן (KWp) (100%)	31/12/2022	5,232	10,122	49,510	64,473
	למועד פרסום הדוח	5,232	10,538	54,489	70,259

Financial data:

Revenues increased by 181.5% to approximately NIS 38.7 million compared to the previous year. The significant increase in revenue is mainly due to an increase in electricity sales, mainly from the connection of the Alizarsan project in February 2022 and the connection of systems in Israel.
The total loss decreased by 31% to approx. NIS 18.5 million due to an increase in electricity sales, connection of projects, and evaluation of assets.
Cash and cash equivalents increased by approximately 43.4% to approximately NIS 69.6 million compared to the previous year, mainly as a result of issuing bonds in January 2022 and drawing a development loan in June 2022.

For additional information about the company and the valuation please read our initiation report.

Investment Thesis

Globally, the renewable energy sector is in growth momentum in most countries as a result of government decisions and organizations to reduce dependence on polluting fuels and reduce greenhouse gas emissions. Solaer has successful experience across all steps and stages of renewable energy projects, including initiation, development, financing, construction, management, operation, ownership, and sale of assets. It has developed over 120 projects with an operational capacity of 3.45GW¹ under various stages of development, construction, and operation.

The company changed its strategy from a develop-to-sell to a develop-to-hold model, aiming to secure longterm income for the company from the possession of assets. Yet, Solaer will continue to examine the sale of minority shares to monetize part of its development gains. In addition, the company's strategy includes: initiating long-term projects, securing assets before the market reaches saturation, selectively selecting opportunities while analyzing all the risks, and developing a significant projects pipeline.

Solaer'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.
Direct access to quality projects, along with growing projects pipeline.
Local presence in the markets in which the company operates in Europe.

¹ The total number of projects as of this date, the scope of projects in commercial operation, construction, and preparation, and the company's goals for connected projects, construction, and preparation in Spain and Italy by the end of 2021, which include data on projects in Spain and Italy that have not been expanded and/or actually purchased.

Experienced professional and management teams enable the company to effectively realize projects in record time, from planning to financial closing to grid connection.
Financial resilience and trust of financial institutions in Israel and around the world. Expertise in complex financial closing with Israeli and overseas financing organizations.
Develop-to-hold business model.
A pioneer in combining energy and water production.

The company's strategy is based on a develop-to-hold model and includes initiating long-term projects, securing assets before the market reaches saturation, selectively selecting opportunities while analyzing all the risks, and developing a significant projects pipeline.

We forecast that by 2022 Solaer's projects' (representing 100% holdings) will generate revenues of NIS 123.8 million, and by 2023, revenues would amount to NIS 251.4 million.

1. Company overview

Solaer Renewable Energy (TASE: SOLR) initiates, develops, builds, operates, and maintains renewable energy projects in Israel, and Europe. The company has successful experience across all steps and stages of renewable energy projects, including initiation, development, financing, construction, management, operation, ownership, and sale of assets. It has developed over 120 projects with an operational capacity of 3.45GW² under various stages of development, construction, and operation (total accumulated sharer of Solaer is approx. 2 GW). Below is a timeline of the company from its inception in 2010:

Source: Solaer

With a mission to be a key contributor to independent green energy supply by developing smart production, storage, and distribution solutions, Solaer has teamed up with key market players, and developed a diversified portfolio of assets in key European markets with high credit rating. Solaer is in the process of further expansion in the European continent besides its Israeli operations. Solaer aims to own a portfolio with an operational capacity of 4 GW by 2025.

Solaer focuses on Solar PV technology and Pumped-storage hydroelectricity. Besides, Solaer has been exploring expansion opportunities in Agrophotovoltaics and hybrid projects in Europe.

² The total number of projects as of this date, the scope of projects in commercial operation, construction, and preparation, and the company's goals for connected projects, construction, and preparation in Spain and Italy by the end of 2021, which include data on projects in Spain and Italy that have not been expanded and/or actually purchased.

Projects Pipeline*

Project Stage	Capacity (Based on 100% Share)
Connected, Under construction, Pre-construction	485 MW
Advanced Development	894 MW
Early Development	2,070 MW
Total	3,449 MW

*based on company's presentation, Q2 21

ISRAEL ACTIVITY

Solaer started its operations in Israel as a contractor for small-sized projects. It has since grown multifold, developing large-scale projects, with 467 MW in its project pipeline. It has created the biggest net-metering project in Israel in Ayit, a 250 MW Solar PV and pumped-storage hydroelectricity project aiming to serve the Arava / Eilat-Eilot region, turning it into an

LIST OF SOLAER'S PROJECTS IN ISRAEL
37.5 MW large scale project financed by Deutsche Bank
Renewable Energy supply to 75 Schools in Israel
3 MW Dimona PV & Construction project
45000 Sqm largest Rooftop PV project (EUR 8 million)
5 MW PV rooftop project (EUR 9 million)
Biggest Net metering project in Israel (EUR 3 million)

independent micro-grid. The project is estimated to cost approx. EUR 200 million, and the commercial operation is expected to begin in 2025.

EUROPE ACTIVITY

Solaer has actively participated in PV development projects in Spain (756 MW in project pipeline) and Italy (952 MW in project pipeline) and expanded into other markets. In November 2020, Solaer achieved financial close for their 50MW Alizarsun PV Project in Zaragoza, Spain. Solaer's activities are primarily concentrated in Spain and Italy, through the local presence of its subsidiary, a Spanish company controlled by Solaer. Its involvement in the development of a 50MW project bodes well for future market expansion.

2. Technology overview

Solaer, with over a decade of experience in Solar PV and pumped storage projects, is in a prime position to contribute to Israel's renewables goals.

SOLAR PV + PUMPED STORAGE

Combining Solar PV with Pumped storage ensures grid stability. Energy Storage in this system is in the form of water. Pumped storage hydropower (PSH) currently accounts for 94% of installed global energy storage capacity and nearly 96% of the energy stored in grid-scale applications. Pumped storage is a cost-effective storage technology when combined with other renewable sources like wind and solar PV to minimize the impact of variability in output on the grid.

AGROPHOTOVOLTAICS

Solaer is well set to capitalize on opportunities in Agrophotovoltaics. 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, which has led to an innovative solution that enables dual land-use systems to combine the production of food and energy using agro photovoltaic (APV) systems. APV, or 'dual-use' farming, uses arrays of elevated solar panels over crops to maximize land use and productivity. 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.

ENERGY + WATER

Solaer is in the feasibility phase for several projects incorporating water production into energy generation. Solar power can be harnessed to power mini drinking water supply systems and desalination plants. Combining PV plants with water supply optimizes the use of resources.

ENERGY MANAGEMENT

Solaer focuses on maximizing efficiency through smart energy management, novel engineering, and technological solutions in its PV and Storage projects and other renewable projects.

3. Markets overview

Global renewables market

Climate change is one of the greatest concerns for governments worldwide, and achieving de-carbonization in the power sector is 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. The key drivers over the next 9 years in the market are the growing concern for tackling global climate change, declining solar and wind generation costs and project costs accelerating new deployments, increased traction for hybrids in Variable Renewable Energy (VRE) offering horizontal integration and capability building opportunities, and increasing digitization across the renewable energy market. The key restraints in the same time span include the increasing competitive intensity, integration issues, and withdrawal of government subsidies and support lowering growth rates.

ISRAEL RENEWABLES MARKET – OVERVIEW AND OUTLOOK

The reduction of 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% from 17% in 2020. The target increment is combined with a commitment to phase out the use of coal for power generation by 2030. This measure is expected to decrease air pollution from the power sector by 93% and Green House Gas (GHG) emissions by 50%, according to Israel's Energy Minister. At an outlay of NIS 80 billion (USD 22 Billion), this plan aims to use solar installations to meet 80% 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 to meet renewable energy targets. Israel is committed to achieving its target of 30% of electricity production from renewable sources. Solar power is expected to contribute 90% and wind, biomass, and hydropower are expected to comprise the rest.

To support the transition to realize the 2030 vision, the government is putting major systems and regulations in place, including, among many, massive development of the electricity grid for the integration of solar

energy, promoting significant investment in R&D to upgrade energy storage, and implementing tools for developing a stable electrical system capable of handling sharp changes in production scale. Israel's cumulative Installed capacity of solar PV is projected to grow at a steady pace from 4.7 in 2021 to 15.7 in 2030. Further, to enhance grid reliability, a total storage of 6.5 GW is estimated to be installed by 2030³ .

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. 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.

European Solar PV Market

The EU adopted the Renewable Energy Directive (RED II) in December 2018 to achieve a collective, binding target of 32% renewable energy by 2030. There is now a proposal to increase to 38 – 40%. 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. The NEXT Generation EU's economic recovery plan has earmarked up to 37% (~ EUR 27-30 billion) of funding for investment related to climate change.

The EU's Regional Development and Cohesion Policy outlines five areas of investment priorities of which a cleaner and greener Europe are the top two objectives, accounting for 65 – 85% of the European Regional Development Fund (ERDF) and Cohesion Fund between 2021 and 2027. A further 6% is dedicated to sustainable urban development fueling the market for renewables.

Given that 90% of Europe's rooftop space is unused, solar PV's potential to contribute to the renewable targets is considerably higher than other technologies. Total solar PV installed capacity in Europe is projected to grow from 155.4 MW in 2021 to 318.7 MW in 2030. The countries with the highest amount of installed capacity in 2020 are Germany (54.6 MW), Italy (21.3 MW), Spain (13.3 MW), the U.K. (13.9 MW), and France (10.9 MW). In 2030, Frost & Sullivan estimates the following capacities: Germany with 93.1 MW, France with 40 MW, Italy with 48.5 MW, the U.K. with 36 MW, and Spain with 35.2 MW.

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

³ https://www.gov.il/BlobFolder/rfp/shim\_2030yaad/he/Files\_Shimuah\_yaad\_2030n\_work\_n.pdf

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. 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. They have also established a EUR 59 billion annual grid modernization package, including a focus on digitalization and cybersecurity. The proposed 'renovation wave' scheme aims at renovating 35 million buildings to reduce emissions by 60% by 2030.

SPAIN

Growth in corporate PPAs drove the solar PV market in Spain in 2020. Solar PV's share in total electricity demand peaked at 13.2% in May 2020. Like the other member states of the EU, Spain released its Integrated National Energy and Climate Action Plan in 2020 aimed at achieving decarburization, energy efficiency, energy security, and promoting innovation and competitiveness in the market. 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.

While Spain's baseline scenario pegs its solar PV installation achievements at 48.0% of its target of 39.1 GW, Frost & Sullivan estimates a conservative annual capacity addition of 2.2 GW. Its total solar PV installed capacity is projected to grow from 15.5 GW in 2021 to 35.2 GW in 2030.

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 annual capacity addition of at least 2.7 GW. Italy is one of the two largest solar power markets in Europe. Its total solar PV installed capacity is projected to grow from 24 MW in 2021 to 48.5 MW in 2030. Key regions within Italy are Apulia, Sardinia, Lombardy, Veneto, and Emilia-Romagna. 35.0% of capacity additions were through projects of 1MW or higher.

BULGARIA

It is believed that Bulgaria's target of 3.2 GW in solar PV by 2030 doesn't reflect its true solar potential, which is high in southern Bulgaria. At least 200 MW of annual capacity addition is expected to be deployed to achieve Bulgaria's low PV target over the next decade. Key hotspots in Bulgaria known for high solar irradiation are Blatets, Stambolovo and Drachevo, and Tsaratsovo. Its total solar PV installed capacity is projected to grow from 1.3 GW in 2021 to 2.9 GW in 2030.

POLAND

Poland added more than 1 GW in solar in 2020 and remains one of the high growth markets in Eastern Europe with an installed capacity of 3.6 GW in PV. It aims to meet 23.0% of electricity demand through renewables by 2030, which according to NECP, requires the installation of 7.3 GW in solar PV. Poland's low ambition for 2030 despite its high solar potential, low visibility with respect to its auctions, and barriers to PPAs, are the key challenges faced by market participants. Poland's total solar PV installed capacity is projected to grow from 3.9 GW in 2021 to 6.6 GW in 2030.

OPPORTUNITIES IN PUMPED STORAGE

The International Renewable Energy Agency (IRENA) and International Hydropower Association (IHA) have entered into a formal agreement in February 2021 to accelerate the financing and development of sustainable hydropower, which will involve initiatives aimed at promoting clean storage and investments between USD 22 billion – USD 55 billion per year up to 2030 which could primarily be achieved by combining VRE with pumped storage hydropower PSH. Experts comment that floating panels can increase the capacity factor of a hydropower plant by 50 – 100%, where the capacity factor is the ratio of actual power generated to the maximum generation capacity of the plant. Besides, floating panels can absorb 7%-14% more energy than land installations due to the cooling effect of water. Installed capacity of hydropower globally is projected to grow from 1,360 GW in 2021 to 1,576 GW in 2030. More than 600,000 sites globally have been identified by Australian Researchers as suitable for sustainable, closed-loop pumped-hydro energy storage projects across the globe. The IHA estimates clean energy storage capacity additions of 78GW by 2030, and Frost & Sullivan estimates the market to register a CAGR of 4.0%.

PSH Storage Capacity Additions – Projections

Clean PSH allows stability through frequency control, voltage regulation, and reserve power, providing a hedge against intermittency of variable renewable energy sources and reducing carbon emissions. PSH capacity addition is projected to grow from 174 GW in 2021 to 246 GW in 2030. There are currently numerous planned/announced projects throughout Europe, including in the U.K., Poland, Italy, and Morocco. The Ministry of Energy of Israel plans to procure 800 MW of pumped storage, out of which 640 MW are expected to be built in the coming years.

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. A total of 45 MWp has been tendered in France as part of an APV financial support scheme in 2017. 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 on animal farming.

EUROPE - WIND MARKET OUTLOOK

The cumulative installed capacity of wind energy stood at 220 GW with the addition of 14.7 GW in 2020. 80.0% of the wind installations were onshore. The Netherlands accounted for 13.0% of the new addition in 2020, with 1.5 GW of its 1.98 GW added capacity in offshore wind. Norway (1.5 GW), Germany (1.4 GW), Spain (1.4 GW), and France (1.3 GW) led the installation of onshore wind farms.

The European onshore market is expected to remain stable, with annual installations expected at a level of 12 -13 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. Frost & Sullivan expects the increase in offshore installations to continue with an annual average of 6 GW until 2030. Between 2020 and 2024, onshore installations are expected to reach 77.6 GW at an average 15.5 GW/Year rate. The European cumulative wind capacity is expected to reach ~414 GW by 2030. The European countries with the highest total onshore and offshore wind cumulative installed capacity in 2020 were Germany (62.6 GW), Spain (27.2 GW), and the U.K. (24.1 GW), followed by France and Italy. The top 5 countries in terms of wind installations account for 65.1% of total installations in Europe, with UK (10.4 GW) and Germany (7.7 GW) being the hotspots for offshore wind. Poland has about 6.6 GW of onshore wind installed. Key players in the

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

STORAGE SYSTEMS

One of the key outcomes of a decade of strong renewable investment has been high growth for energy storage solutions. Improved regulatory frameworks, incentive programs, declining projects costs, and revenue opportunities from auxiliary grid services have all contributed to market growth. With increasing growth in wind and solar, there is substantial business opportunity for battery storage solutions. Support from national governments and EU institutions should help shore up investor confidence. The larger European Energy Storage Systems market has witnessed remarkable growth in the last ten years. Projects with a storage capacity of 5.7 GW were announced in 2020 compared to a meager 9MW in 2010. About 1.7 GW is operational.

4. Competitive landscape

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. The last category is comprised of B2G players that dominate the large governmental projects arena and have significant portfolios. These prominent players include Solaer, Energix , and Enlight. 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, and Shikun & Binui Energy Ltd. International players in Israel include China National Technical Import and Export Corporation (China), Power China Resources (China), Solarpack (Spain), Cobra Instalaciones Y Servicios (Spain), and Scratec Solar (Norway).

COMPETITIVE LANDSCAPE IN EUROPE

Competitive intensity is much higher in Europe in all renewable technologies. 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.

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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 of 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 recommendations, 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 the 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 shall 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 and 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 that 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 forward-looking 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 unknown 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, competitors, 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 Analysis Scheme of the Tel Aviv Stock Exchange ("TASE") regarding the provision of analysis services on companies that participate in the analysis scheme (see details: 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 constitute 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. The 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 intellectual property; the business environment in which the Participant operates; the Participant's standing in such an environment including 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 which 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 views 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. © 2020 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.

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