Coverage Initiation United States, Spain, and Report Green Energy – Solar EPC

March 16, 2010 Premier Power Renewable En. (PPRW – OTC:BB)

Brian R. Connell, CFA Exceptionally Strong European Sales and New “Project Senior Research Analyst Owner” Model Suggest Extremely Bright Future and Stock Buy [email protected] Price Appreciation.

Recent Price: US$2.50 Summary and Investment Opportunity

Market Data (closing prices, March 16, 2010) • The Solar Industry is Beginning to Recover - Finally Market Capitalization (mln) 78.3 After a multi-year boom in , largely led by Germany, we saw an extreme Enterprise Value (mln) 109.3 downturn in solar energy demand beginning in late 2008. The downturn was caused by a Basic Shares Outstanding (mln) 26.1 combination of factors that included much lower oil prices, regulatory changes, and other Fully Diluted Shares (mln) 31.3 Avg. Volume (90 day, approx.) 16,306 factors. This downturn caused all industry participants to see dramatically lower sales Institutional Ownership (approx.) 22% growth and in most cases negative earnings. However, we are finally seeing signs that the Insider Ownership 46% industry has turned, and that global demand growth is likely to resume. We do foresee Exchange OTC:BB consistently lower unit pricing, however, keeping downward pressure on the manufacturing sector, although not necessarily on other related sectors. Balance Sheet Data (as of December 31, 2009) • Premier Power is More than Just Engineering, Procurement, and Construction Shareholders’ Equity (mln) 12,158 The Company has successfully matured from a traditional solar EPC firm to a full-service Price/Book Value 3.5x project firm, in some cases (i.e. in Italy) serving as the actual project developer. This shift in Cash (000s) 3,792 its business gives the Company better pricing power and a sustainable long-term advantage. Net Working Capital (000s) 5,297 Long-Term Debt (000s) 548 • Fall 2009 ARCO Acquisition Puts PPRW in a Very Good Position for Growth Total Debt to Equity Capital .045 PPRW is a high-growth story, and that story is the emerging growth markets that the Company has demonstrated an ability to quickly penetrate, such as Italy and Spain. The Company’s now-integrated ARCO acquisition gives it a solid local base in the Italian Company Overview market, which is high growth but also plagued by a large and inefficient governmental Premier Power develops, bureaucracy. This means that the Company now has a sustainable long-term advantage in designs, installs, and supports this market – an advantage that is difficult for would-be competitors to replicate. systems for residential and commercial customers in the United States, Spain, and Furthermore, the Company now has a relationship with a financial buyer that has agreed to Italy. Most recently it has focused on the purchase all projects that the Company can complete and connect. Gross margins on these creation of utility-class power plants that it projects are at 20% or better. permits and builds and then resells to investors, primarily in Southern Italy. The • Extremely High Growth and Multiple Expansion Potential Drive Valuation Company is based in El Dorado Hills, CA, and Given the Company’s project pipeline, we believe it will have an extremely successful year trades on the over-the-counter bulletin board in 2010, assuming it can continue to attract sufficient financing to construct its projects. under the symbol PPRW. Over the next two years, we see PPRW growing sales at a CAGR of over 200% while expanding gross and operating margins, which warrants a premium multiple. We are therefore setting our 12-month price target at $5.03/share, representing 15x our 2011 fully-diluted EPS estimate of $0.335. We are initiating coverage of PPRW shares with a Buy rating, and see upside to both our rating and estimates when there is adequate capital to Company Contact Information fund the Company, given their expanded given their run rate. Mr. Frank Sansone Q1 Q2 Q3 Q4 Chief Financial Officer P&L (000s) FY’08A FY’09A ‘10E ’10E ’10E ‘10E FY’10E FY’11E Premier Power Renewable Energy, Inc. Revenues 44,238 30,750 14,600 23,600 34,100 42,300 114,600 178,500 4961 Windplay Drive, Suite 100 El Dorado Hills, CA 95762 Rev CAGR 165% -30.5% 204% 473% 442% 194% 287% 55.8% Ph: (916) 939-0400 Gr. Margin 12.5% 14.5% 18.6% 17.9% 18.4% 19.1% 18.6% 18.8% www.premierpower.com Op. Income 798 (4,260) 477 1,865 3,836 5,572 11,751 23,013 Op. Margin 1.8% -13.9% 3.3% 7.9% 11.2% 13.2% 10.3% 12.9% Net Income 569 3,570 286 1,119 2,302 3,343 7,051 13,808 Net Margin 1.3% 11.6% 2.0% 4.7% 6.7% 7.9% 6.2% 7.7% Diluted EPS 0.02 0.11 0.01 0.03 0.06 0.08 0.18 0.33 Diluted Shrs. 23,750 31,317 31,229 41,229 41,229 41,229 41,229 41,229

Please see analyst certification and required disclosures on page 10 of this report.

Premier Power Renewable Energy (PPRW – OTC:BB) March 16, 2010

Industry Background

Solar Power Basics Solar power is one of the leading green technologies, and is used by a wide variety of individuals, companies, and utilities in much of the developed world. The solar power industry can be broadly categorized by the producers/manufacturers of solar cells and other equipment, the distributors and installers of solar systems, and the entities that use solar systems to generate power on an ongoing basis. The consuming entities can be thought of in terms of residential users, commercial users, and electric utilities.

Solar cell manufacturers typically specialize in either thin-film (newer) or (older) technology, and are based in many manufacturing centers around the globe, especially in China. These companies had been operating in a boom-type environment until late 2008, after which time the industry suffered through a severe price and volume contraction, due to ebbing global demand. The hardware manufacturing environment is now in recovery mode, although overall strength has not yet returned to pre-correction levels.

Solar projects vary in scope from the very small, which typically power a single residential home, to the very large, which generate power for electric utilities and very large corporate consumers. Within this range mid- sized projects are most common, and include commercial projects meant to power schools and corporations, as well as medium-sized projects designed specifically for financial owners that provide “feed-in” electricity to the power grid.

Historically, most residential and commercial projects have been built and managed by mom-and-pop distribution and installation firms, although some of the larger projects have been run by larger engineering, procurement, and construction (EPC) companies with a specialization in solar energy. Over the last 12-18 months, however, we have seen a marked shift in both the types of projects being built and in the types of firms building them. Average project sizes are growing quite rapidly, and in most markets many of the mom-and-pop providers are being acquired, leaving only the larger EPC firms to bid for the newer, larger projects. We expect industry consolidation in the installation and distribution businesses to proceed fairly rapidly in most markets, as the smaller providers simply cannot handle the more rigorous demands of larger more complicated solar projects. However, we do believe that smaller providers will still have a place in the residential markets, where “micro projects” are likely to remain the norm for the foreseeable future.

Solar Power in the United States In the United States, solar power costs exceed those of other power sources (such as coal, oil, hydroelectric, and nuclear) by a wide margin, making solar power inherently uneconomical in the U.S. at this time. However, given solar energy’s status as a non-polluting, renewable energy source, the Federal government provides tax and other incentives to reward those who build and deploy solar power solutions; these incentives are often augmented further by the more environmentally focused state and local governments.

Because state and local incentives vary widely by region, solar power is far more viable in some states than it is in others. Traditionally, the largest incentives (and hence best markets) for solar have been in Western states such as California and Oregon, although some Eastern states (notably New Jersey) have in recent years launched very competitive incentive programs. In those states where incentives are strong, the combination of federal and local incentives typically make solar power competitive with other power generation technologies, leading to relatively robust solar markets. Because of the wide disparity in states’ tax incentive programs, the United States really consists of 51 distinct solar markets, each of which is as different as are the markets of countries in Europe. However, all U.S. markets are driven by tax incentives, whereas in Europe higher grid costs make solar power an inherently more competitive alternative.

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Solar Power in Spain Over the last few years, Spain has been one of the best markets for solar power in the world, perhaps second only to the mega-market of Germany. Spain is more southerly than all other European countries (along with Italy and Greece), and its arid climate means it is sunny for much of the year. This combination of southern latitude and arid climate has made Spain an ideal location for solar power generation, and both its residential and commercial markets have reflected this. In recent years, the residential market in Spain has been growing at a CAGR of nearly 100%, and many financial institutions and EPC firms have been involved in large-scale solar farms that provide utility-class power generation to entire communities.

However, in what was a surprise move to many industry participants, in September of 2008 the Spanish government enacted sweeping changes to the regulation of its solar industry. First of all, it instituted a nation- wide cap on solar farming, limiting new capacity on an annual basis to 500MWh of generation capacity – about 50% rooftop and 50% ground-based in 2009, and less and less ground-based in 2010 and 2011. These policies all but terminated the ground-based solar farming industry, which had installed 2.5GWs in 2008 and could now by law only install 10% of this going forward; many Spanish EPC firms did not survive this change.

Premier Power, on the other hand, had previously made a strategic decision to focus on rooftop solar, rather than on large-scale ground-based solar farming. And while the new law did increase permitting times from one to six months for rooftop installations, they did not effectively curtail the overall volume and in-fact gave rooftop solar a big boost in demand. This bodes very well for Premier Power’s ability to grow its Spanish operations in the near future – and given its Barcelona office and its proximity to France, perhaps French business as well.

Note that these reforms came at the same time as the German market underwent a severe contraction – the combined effect of these two markets were largely responsible for the global slowdown in the manufacturing market.

Solar Power in Italy Interestingly, the Italian market is emerging as one of the highest growth markets in Europe. It shares Spain’s status as a southern European country with a high frequency of sunny days, especially in its southern provinces, and its extremely high grid-cost of electricity (the highest in Western Europe at US$0.27/kWh) makes solar power inherently competitive there. Also, at least historically, the complex and inefficient regulatory environment in Italy has prevented the runaway growth of solar that we saw in Spain over the last few years. In fact, Italy has myriad fully-constructed solar projects that are currently sitting idle because their owners have been unable to get grid-connection permits. Overall, we expect Italy’s regulatory and permitting environment to remain complex and inefficient, creating a high barrier to entry for any foreign firms that lack true local market expertise and government relationships.

Conclusion Solar power is an up-and-coming green energy technology that is rapidly growing in parts of Europe and the United States. However, producers of solar cells and the creators and managers of solar generation projects face widely differing local pricing and regulatory environments, creating a high degree of market uncertainty and numerous financial and operational challenges. Overall, we expect solar power to be a high-growth industry for many years to come, although we do not believe that this growth will be geographically homogenous nor consistent over time, except perhaps in certain markets.

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Premier Power Renewable Energy (PPRW – OTC:BB) March 16, 2010

Company Analysis Corporate History and Overview Premier Power Renewable Energy is a leading integrator of solar power generation systems for commercial, utility, and residential customers. Historically, the Company has derived the majority of its sales from a mix of residential and commercial projects in the United States and Spain, although we expect this mix to skew towards Italian sales in 2010 and beyond. Like most solar companies, Premier Power saw a contraction in its business in 2009, although it has recently seen returning strength in both the U.S. and Spanish markets. More importantly, the Company is experiencing extremely strong business conditions in Italy, where high feed-in tariffs and favorable government conditions are creating a veritable market boom.

The Company was founded in 2001, and was spun off from CA-based green home builder Premier Homes in 2003. The Company subsequently went public through a reverse merger in 2008, and now trades on the over- the-counter bulletin board under the symbol PPRW.

Products and Services Historically, Premier Power has provided engineering, procurement, and construction services to various classes of customers in the solar power generation industry, primarily in the United States, more recently in Spain, and most recently in Italy. In recent quarters the Company has been moving up the value chain in the solar industry, progressing from simply competitively bidding on projects to actually owning and developing those projects. This shift has been particularly evident in the Company’s newest (Italian) projects, which the Company owns and resells to financial buyers at relatively high gross margins. Overall we view this shift up the value chain as being highly beneficial to the Company, as it facilitates margin expansion and increased control over the business.

Residential / Commercial Rooftop Solar This segment of the market constitutes the low-end of the EPC solar industry, and as such is characterized by low margins and a high level of commoditization and competition. Although these types of installations are not the focus of the Company, they continue to provide a steady base of cash flow and are slowly growing on an organic basis. The typical rooftop customer is either residential or commercial and is essentially seeking to generate power instead of drawing it from the grid. As a result of this, demand is typically driven primarily by cost benefits, so in most countries demand is highly dependent on subsidies and tax benefits. Note that a portion of these projects are actually ground-based rather than rooftop-based, but are in all other aspects identical.

Residential Rooftop Solar Array Commercial Rooftop Solar Plant

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Middle-Market Utility Class Solar This class of project, which typically generates between 1MW and 5MWs of power, is typical of larger commercial enterprises as well as electric utilities. Depending on the specifics of the customer and the market, these projects are ground-based fixed-array solar farms that use a mix of thin-film and crystalline technologies. These types of projects constitute the “sweet spot” of the market for Premier Power, as they allow them to operate with a competitive advantage over smaller, less-sophisticated firms. These projects constitute the bulk of the Company’s sales in both the United States and in Italy, although the dynamics of the projects in these two countries are entirely different.

Unlike the Company’s middle-market projects in the United States, which are more traditional in nature, Premier Power’s Italian business is somewhat unique, and at this point is crucial to the Company’s long-term growth and success. In the Fall of 2009, Premier Power acquired ARCO Energy, an Italian EPC firm. This firm came with a nice pipeline of potential business, but more importantly, it came with professionals who possess an intimate familiarity with the Italian market, and possess all of the key relationships that allow them to navigate the highly complex regulatory (bureaucratic) environment. Although ARCO’s pipeline of business initially proved difficult to execute upon, the Company now seems well-integrated and is hitting on all cylinders.

In Italy, the Company’s sole focus is on developing middle-market projects from start to finish. The key elements of this process are as follows:

1. Identify, negotiate for, and purchase a good site for constructing a solar power plant 2. Secure permits for building and grid connection (often done concurrently with step 1) 3. Design and build power plant 4. Submit for feed-in tariff and electricity sale rates with local utility (guaranteed at US$0.60/kW for 20 years) 5. Sell completed site to financial buyer (such as private investment partnership, or “hedge fund”) 6. Repeat process (often for the same financial buyer, pursuant to a framework agreement)

The Company has already completed several of these projects – each of which typically generates US$5M in revenue – and they have over 25 more of these projects in their 2010 pipeline. Each project carries gross margins in excess of 20% (sometimes significantly higher) and yet still delivers an after-tax IRR of over 15% per year to the projects’ financial buyers.

Ground-based Fixed Array Ground-based Tracking Array

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Premier Power Renewable Energy (PPRW – OTC:BB) March 16, 2010

Growth Plan Premier Power’s Management has developed a multi-faceted growth plan that should allow the Company to make significant progress in each of its current markets (United States, Spain, Italy) over the next few quarters. In addition, the Company plans to enter additional markets (such as France and the Eastern European markets) during this time. However, perhaps the most important aspect of the Company’s growth plan is its planned financing, which it hopes to complete by May of 2010. In addition to its use of debt and vendor financing, the Company plans to raise additional equity capital in 2010, and its ability to hit its growth targets is highly depending on its success in this regard.

Italy We forecast that PPRW’s Italian business will comprise 74.6% of its overall revenues during 2010, making it by far the most important market in which the Company currently operates. Due to its 2009 acquisition of ARCO Energy, Premier Power has an important mix of local expertise and municipal contacts that allow it to operate in Italy with a significant competitive advantage. Furthermore, the Company believes it can sell all of its Italian power plant projects to one or more financing buyers under a financial framework agreement – it has already completed 3MWs of such projects. Since Premier Power handles all aspects of the permitting and construction process, and submits for the feed-in tariff and electricity sale contracts that carry 20-year price guarantee by the Italian government, these projects carry very little risk to the Company’s fund investor. Based on the economics the Company outlined to us, we believe that demand for completed projects (which offer investors a 15% after- tax IRR) is likely to remain robust for the foreseeable future, from its existing customers and from prospective new customers as well.

The Company has recently completed 3MWs of power project in Italy and is working on 35MWs more at this time. Given this pipeline, the only real constraint the Company currently faces is financing. Each project entails approximately US$4M in costs to Premier Power, although they have been successful in securing 50% of this financing from their solar equipment vendors, and yields approximately $5M in revenue. So Premier Power has to tie up $2M in net capital in each project, which limits its ability to parallelize its project development beyond a certain point, at least until its planned financing is complete. Once this is done, however, the Company plans to aggressively build out its current portfolio of projects in Italy while also working to develop a large number of additional projects.

United States In the United States, the Company’s key objectives are to continue to “move up the food chain” in terms of the utility-class projects it pursues, which includes developing better financing structures for such projects and taking part as project developer for them, while also remaining competitive in the residential and commercial markets. While the United States is and will remain a relatively important market for the Company, its smaller relative size (16.4% of our 2010 revenue forecast) and lower gross margins make it much less important than Europe to the success and future valuation of the Company.

Spain Premier Power now finds itself in a rather enviable position in its Spanish operations. While many of the players in the solar market were focusing on building a brand in the solar farming space, Premier Power made a contrarian strategic choice and focused on rooftop commercial installations. Then, when the regulatory environment changed, Premier Power quickly emerged as one of the best-positioned companies in the Spanish market – one of the leaders in commercial rooftop. Although they did suffer an interim contraction as the increase of permitting times flowed through their sales pipeline, they now have excellent sales visibility and solid growth prospects. The Company plans to continue to develop its Spanish business in the commercial markets over the next few years, building on its now-leading brand and market position. We believe these factors should allow the Company to grow sales in Spain at a CAGR of over 30% for at least the next two years.

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Premier Power Renewable Energy (PPRW – OTC:BB) March 16, 2010

Other Markets The Company is currently working towards a play in the French market and in several of the Eastern European markets at this time. While business from these markets does not factor into our current revenue and earnings forecasts, we do believe that success in these markets could provide further upside to our forecasts in late 2010 and 2011.

Key Management Dean R. Marks, President and Chief Executive Officer As President, Dean plays a vital role in the company's sustained growth and increased market share. Dean has been involved in the solar industry since the early 1980s, when he was a key factor in the growth of Servamatic Solar Systems, one of the largest solar companies in the United States. During his time at Servamatic, the Company grew to 2,200 employees and 20 offices, as it engineered and installed solar thermal systems for space and water heating across the sunbelt. Dean has extensive training and experience in Total Quality Management and Problem Solving Principles. He has lived totally off-grid for 7 years, in a home utilizing 100% renewable energy, and he has also co-authored several preeminent papers promoting renewable energy. Dean is an Eagle Scout and holds a Bachelor of Science from Auburn University, with special emphasis in Environmental Science.

Miguel de Anquin, Chief Operating Officer As Premier Power’s Chief Operating Officer, Miguel has achieved several milestones relating to sales growth and profits. An accomplished corporate strategist and marketer, his vision and expertise in business performance have driven notable enterprise growth in the solar energy sector. His strategic approach to building a business is reflected in his work as Director of Marketing for Nordic Information System and Next Information System. Prior to this, he was a technology advisor for General Electric and IBM, and developed the data security auditing system for Bank of America. Miguel has increased Premier Power's profitability through brand revitalization that included major shifts in brand strategy, operations, marketing communications, and sales tactics. Miguel has an MBA from UC Davis and a BS in Computer Science from the Universidad de Belgrano.

Frank Sansone, Chief Financial Officer Frank brings over 15 years of experience in financial management and compliance to Premier Power, and has extensive experience working for both public and private companies. Most recently, he served as Chief Financial Officer at LiveOffice, LLC, where he oversaw the company’s financial planning and analysis. Prior to this, he served as Chief Financial Officer at Guidance Software (NASDAQ: GUID), where he oversaw the company’s worldwide financial planning and analysis, accounting, treasury, investor relations, and tax functions. Frank helped lead the company through a successful initial public offering and organic revenue growth (from 2002 to 2008) at a compound annual growth rate of 44%. Prior to his time at Guidance Software, Frank was a Director and Vice President of Finance for Aspen Technology (NASDAQ: AZPN), where he led the revenue department and played a key role in the company’s Mergers and Acquisitions group. He also served as Petrolsoft Corporation's Vice President of Finance, building an organization that was ultimately acquired by Aspen Technology. Before joining Petrolsoft, Frank directed services for Fortune 500 and middle-market companies as a manager at PricewaterhouseCoopers and developed extensive experience in SEC reporting, initial public offerings, and mergers and acquisitions. Mr. Sansone earned a Bachelor of Science in Accounting from the University of La Verne, and is a certified public accountant.

Competition Premier Power is at its core an engineering, procurement, and construction firm with an expertise in the solar power plant industry. As such, it faces intense competitive pressure in each of its markets and business segments – this pressure keeps margins relatively low and the requirement to grow and innovate relatively high. If the Company makes poor strategic choices and/or fails to execute on its plan to move up the food chain in regards to larger projects, then this competitive environment is likely to lead to sub-optimal results and much lower valuations for the Company’s shares. However, we do not believe this is a likely risk event, for two

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Premier Power Renewable Energy (PPRW – OTC:BB) March 16, 2010 primary reasons. First of all, the Company has experienced management that has already demonstrated its understanding of and ability to profitably operate in this competitive environment, which bodes well for the future. Secondly, and perhaps even more importantly, the Company’s Italian operations are insulated from the competitive pressures it faces in the U.S. and Spain, largely due to the complexity of the Italian market and the presence of a large financial buyer for each of the Company’s projects. Overall, we believe that the competitive risks to the Company are quite manageable, and in general should remain a minor issue going forward.

Other Risks Without a doubt, the most significant risk the Company is facing pertains to its ability to raise sufficient capital from the U.S. equity markets, or from alternative funding sources such as vendors and strategic partners. Although the Company doesn’t “need” the capital in that it wouldn’t survive without it, it does need the capital to parallelize its Italian build-out and reach our revenue and earnings estimates. We do, however, believe that the Company will be able to raise this capital on a timely basis, as long as the current funding environment does not deteriorate too much from its current state.

Valuation and Investment Opinion By historical measures, Premier Power is currently trading at the high end of what we believe would be a fair value range. However, historical results are not the driver of our thinking regarding the value of this Company – that thinking is driven by the extremely attractive situation in which the Company now finds itself in regards to its current operations. With adequate capital and a pre-arranged buyer for all projects, the Company should be able to rapidly scale up global operations, and as a co-investor in those projects, should be able to expand gross margins to well above 20%. Therefore, given that we believe Premier Power’s revenues will grow at over 200% CAGR over the next two years, we believe that Premier Power shares warrant a premium multiple.

Perhaps the best comparable that we have been able to identify for the Company is First Solar, which is both an EPC firm and project developer, as well as a manufacturer of thin-film solar cells. First Solar has growth rates comparable to those we are forecasting for the Company, and hence serves as a good guideline for how the market values more mature high-growth companies in this space. Other seemingly good comparables such as Akeena Solar actually have business initiatives wholly unlike those of the Company, and hence market multiples we believe to be much less relevant.

The consensus estimates for First Solar put 2011 sales at US$3.39B and earnings at US$626M, or US$7.34 per share; based on these estimates, First Solar is currently trading at 15.6x 2011 estimated earnings, and 2.9x estimated 2011 sales. Given its lower margins, we do not believe PPRW should trade at such a high price-to- sales ratio, but we do believe that given its growth rate and potential for margin expansion it should trade at a slightly higher forward P/E multiple than First Solar. Therefore, we are setting our 12-month price target at $5.03, which represents a multiple of 15x our 2011 estimated earnings per share of $0.335.

Peer Group Analysis – Premier Power (PPRW – OTC:BB) Price P/E Est. Price/Sales Market- Company Name and Symbol per Forward Revenue Estimate Capitalization* Share* 12 months Growth (2011)* Premier Power (PPRW – OTC:BB) 2.50 78.3 11.1 200%+ 0.44 First Solar (FSLR – NasdaqGS) 115.00 9,820 15.7 50%+ 2.91 Akeena Solar (AKNS - OTC:BB) 1.04 35.6 N/A 40% 1.70 Real Goods Solar (RSOL - OTC:BB) 3.42 62.53 21.38 30% 0.55 *Market Data as of market close, 3/16/10; Per-share data for PPRW computed from diluted common shares outstanding

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Premier Power Renewable Energy (PPRW – OTC:BB) March 16, 2010

Conclusion Premier Power is an EPC firm that has been consistently able to accomplish two key goals: to continue to grow its value proposition in its key markets, and to successfully understand and enter new key markets. These attributes have allowed it to cement its competitive position in all of its markets and to become a true project developer in the high-growth markets worldwide. Especially given its Italian operations, we believe the Company deserves a premium multiple on our forecasted 2011 earnings per fully-diluted share of $0.33. We therefore are initiating coverage of PPRW shares with a Buy rating, and a 12-month price target of $5.03 per share. Furthermore, we believe upside to our target and rating is possible, once the Company is successful in completing its planned financing.

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Premier Power Renewable Energy (PPRW – OTC:BB) March 16, 2010

Our Rating System We rate enrolled companies based on the appreciation potential we believe their shares represent. The performance of those companies rated “Speculative Buy” or “Strong Speculative Buy” are often highly dependent on some future event, such as FDA drug approval or the development of a new key technology.

Explanation of Ratings Issued by Harbinger Research

STRONG BUY We believe the enrolled company will appreciate more than 20% relative to the general market for U.S. equities during the next 12 to 24 months. BUY We believe the enrolled company will appreciate more than 10% relative to the general market for U.S. equities during the next 12 to 24 months. STRONG We believe the enrolled company could appreciate more than 20% relative to the general SPECULATIVE BUY market for U.S. equities during the next 12 to 24 months, if certain assumptions about the future prove to be correct. SPECULATIVE BUY We believe the enrolled company could appreciate more than 10% relative to the general market for U.S. equities during the next 12 to 24 months, if certain assumptions about the future prove to be correct. NEUTRAL We expect the enrolled company to trade between -10% and +10% relative to the general market for U.S. equities during the following 12 to 24 months. SELL We expect the enrolled company to underperform the general market for U.S. equities by more than 10% during the following 12 to 24 months.

Analyst Certification I, Brian R. Connell, CFA, hereby certify that the views expressed in this research report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report.

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Premier Power Renewable Energy (PPRW – OTC:BB) March 16, 2010

Disclaimer This report was prepared for informational purposes only. Harbinger Research, LLC (“Harbinger”) was paid in the amount of US$7,500 for the preparation and distribution of this research report. All information contained in this report was provided by Premier Power Renewable Energy (“Company”). To ensure complete independence and editorial control over its research, Harbinger has developed various compliance procedures and business practices including but not limited to the following: (1) Fees from covered companies are due and payable prior to the commencement of research; (2) Harbinger, as a contractual right, retains complete editorial control over the research; (3) Analysts are compensated on a per-company basis and not on the basis of his/her recommendations; (4) Analysts are not permitted to accept fees or other consideration from the companies they cover for Harbinger except for the payments they receive from Harbinger; (5) Harbinger will not conduct investment banking or other financial advisory, consulting or merchant banking services for the covered companies.

Harbinger did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company is relying solely upon information provided by the companies for the accuracy and completeness of all such information. The information provided in the Report may become inaccurate upon the occurrence of material changes, which affect the Company and its business. Neither the Company nor Harbinger is under any obligation to update this report or ensure the ongoing accuracy of the information contained herein. This report does not constitute a recommendation or a solicitation to purchase or sell any security, nor does it constitute investment advice. This report does not take into account the investment objectives, financial situation or particular needs of any particular person. This report does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Information about past performance of an investment is not necessarily a guide to, indicator of, or assurance of, future performance. Harbinger cannot and does not assess, verify or guarantee the adequacy, accuracy, or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. Harbinger and its clients, affiliates and employees, may, from time to time, have long or short positions in, buy or sell, and provide investment advice with respect to, the securities and derivatives (including options) thereof, of companies mentioned in this report and may increase or decrease those positions or change such investment advice at any time. Harbinger is not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission or with any state securities regulatory authority.

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Premier Power Renewable Energy (PPRW – OTC:BB) March 16, 2010

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Analyst Highlight

Brian R. Connell, CFA Senior Research Analyst Mr. Connell has over 15 years’ experience in the securities industry, as an equity analyst and portfolio manager, and as the founder and CEO of StreetFusion (acquired by CCBN/StreetEvents), a software company serving the institutional investment community. On the sell-side, Mr. Connell served as the technology analyst for Neovest, an Atlanta-based boutique, and as a Senior Analyst - Internet for Preferred Capital Markets, an investment bank based in San Francisco. Mr. Connell has also held the position of Executive Director of Marquis Capital Management, a technology-focused investment management organization.

Mr. Connell holds degrees in Economics and Psychology from Duke University, and is a CFA Charterholder.

Mr. Connell is also associated with StreetCapital, an Atlanta-based broker-dealer. By written policy, Harbinger Research does not work with StreetCapital clients in any capacity, and StreetCapital does not work with Harbinger Research clients in any capacity.

Copyright © Harbinger Research, LLC, 2010 Page 12 of 12

Premier Power (OTC:BB) Profit and Loss Model (In thousands, United States Dollars) 2007A 2008A FY 2009A Mar '10E Jun '10E Sep '10E Dec '10E FY 2010E FY 2011E Revenues Total Revenues 16,686 44,238 30,750 14,600 23,600 34,100 42,300 114,600 178,500 Year‐over‐year growth rate 165.1% ‐30.5% 204.6% 473.6% 442.6% 171.9% 272.7% 55.8% Gross Costs Cost of sales 12,441 38,711 26,292 11,879 19,378 27,813 34,239 93,309 144,955 Gross Profit 4,245 5,527 4,458 2,721 4,222 6,287 8,061 21,291 33,545 Gross Margin 25.4% 12.5% 14.5% 18.6% 17.9% 18.4% 19.1% 18.6% 18.8% Selling and marketing 1,494 2,224 2,910 1,129 1,272 1,366 1,404 5,171 5,891 S&M expense margin 9% 5% 9% 8% 5% 4% 3% 5% 3% General and administrative 1,878 2,505 5,809 1,115 1,085 1,085 1,085 4,369 4,641 G&A expense margin 11% 6% 19% 8% 5% 3% 3% 4% 3% Total SG&A expense 3,372 4,730 8,719 2,244 2,357 2,451 2,489 9,540 10,532 Operating Income 873 798 (4,260) 477 1,865 3,836 5,572 11,751 23,013 Operating Margin 5.2% 1.8% ‐13.9% 3.3% 7.9% 11.2% 13.2% 10.3% 12.9% Interest expense (26) (82) (89) 0 Other income 23 Change in fin instruments' fair value 6,485 Interest income 20 37 44 0 Total other income (expense) (6) (45) 6,464 0000 00

Income before income taxes 867 752 2,203 477 1,865 3,836 5,572 11,751 23,013 Provision for income taxes 40 (41) (1,452) 191 746 1,534 2,229 4,700 9,205 Implied Tax Rate 5% ‐5% ‐66% 40% 40% 40% 40% 40% 40% Net income (loss) 827 793 3,655 286 1,119 2,302 3,343 7,051 13,808 Less income attributable to minority interest (17) 224 85 Net income 844 569 3,570 286 1,119 2,302 3,343 7,051 13,808 Net Margin 5.1% 1.3% 11.6% 2.0% 4.7% 6.7% 7.9% 6.2% 7.7% Net income year‐over‐year growth rate Net income per common share, basic 0.04 0.03 0.14 0.01 0.03 0.06 0.09 0.21 0.38 Net income per common share, diluted 0.04 0.02 0.11 0.01 0.03 0.06 0.08 0.18 0.335 Weighted average basic shares outstanding 21,159 22,666 26,050 26,054 36,054 36,054 36,054 33,554 36,054 Weighted average diluted shares outstanding 21,159 23,750 31,317 31,229 41,229 41,229 41,229 38,729 41,229