REC ASA - Invests NOK 13 billion in Singapore

Sandvika, June 17, 2008: Renewable Energy Corporation ASA (REC) has decided to invest close to NOK 13 billion in the first phase of an integrated manufacturing complex for production of wafers, cells and modules in Singapore. The investment is funded through debt financing and own cash flow. Production is expected to commence in the first quarter 2010, and reach full capacity of 740 MW of wafers, 550 MW of cells and 590 MW of modules before 2012. The annual consolidated revenues from these volumes are expected to be NOK 10-11 billion in 2012.
The investment decision covers the first (Phase I) of several planned development phases.
"This investment supports REC's position as a leading provider of highly competitive solar energy solutions, and in achieving our main corporate goals of reducing costs and securing profitable growth. The project cost levels should enable us to compete profitably at grid-parity prices in several markets, which is essential in building a robust business case", says Erik Thorsen, President & CEO of REC ASA
The company has carried out extensive value engineering over the past nine months, which has significantly reduced the capital expenditure for Phase I as well as secured the interdependency towards subsequent development. The investment decision for the next phase is expected in 2009.
"Our entry into Singapore ensures continued revenue growth beyond the significant growth to come from all the ongoing capacity expansions across all REC's business activities. Based on this expansion, REC should be producing ~2,400 MW of wafers, ~780 MW of cells and ~740 MW of modules in 2012, and this will secure a significant presence for REC in key solar markets," says Thorsen.
The solar plant will be based on multicrystalline technology, and the integrated business model secures volume off-take and margins as well as an in-house base for product development across the value chain. REC has already secured supply of polysilicon through its ongoing expansion in Moses Lake and Butte, and other necessary raw materials to facilitate the expected production levels.
The estimated capital expenditure of close to NOK 13 billion allows for contingencies and cost escalation due to inflation, and also includes a yet unallocated project reserve.
The investment will be funded through operating cash flow and existing and new credit facilities. REC has signed a mandate for a fully underwritten facility from ABN AMRO, BNP Paribas, DnBNOR, Nordea and SEB covering new loans and guarantees of NOK 10 billion at market terms.
Over the past year, REC has allocated 75 man-years to pre-engineering activities, which has resulted in significant improvements both in terms of flexibility and costs. A more compressed site optimizes land utilization and reduces pipe racks and distances between the factories, and this has in turn reduced the capital expenditure and the interdependency of the development phases. Agreements have already been reached for all construction permits.
REC has now assigned approximately 40 employees to work with the Singapore-project in Norway and on-site in Singapore, and expects that this number will increase significantly during the next few months. An on-site office was established in April.
REC has also signed Letters of Intent with all EPCM-partners, including costs and schedules as well as incentive structures. The investment decision today also triggers agreements securing procurement for the bulk of (90 percent) equipment supplies where cost and delivery schedules are determined. REC will immediately commence detailed engineering and early construction and piling, with the target of commencing ramp-up of production early 2010.
Please find more information about the project below, or contact;
Erik Thorsen, President & CEO; +47 907 56 685
Jon Andre L�kke, SVP & IRO; +47 907 44 949
About REC
REC is uniquely positioned as one of the most integrated company in the solar energy industry. REC Silicon and REC Wafer are the world's largest producers of polysilicon and wafers for solar applications. REC Solar produces solar cells and solar modules and engage in project development activities in selected segments of the PV market. REC Group had revenues in 2007 of NOK 6,642 million and an operating profit of NOK 2,588 million. Please also see
Additional information
REC's existing manufacturing sites for wafer, cell and module production are rapidly reaching full utilization as ongoing expansion plans are being executed. As a consequence, REC in late in 2006 initiated a project to develop new production concepts across the wafer/cell/module value chain. Early 2007 the initiative was followed by a thorough site selection project, which culminated with the decision to locate the new integrated solar complex in Singapore in October 2007.
The integrated solar complex - phase I
The selected 1 km2 green field site is located in Tuas View, approximately 30 minutes from the city centre in the western part of Singapore. REC holds a 30 year lease of the land from the land-owner Jurong Town Corporation. In the first phase, REC will utilize the North-Western area of the site.
The planned wafer capacity is estimated at approximately 740 MW in the first development phase, to be produced from two wafer plants which are modeled on the plants REC currently are constructing at Her�ya in Norway. The first of the plants is expected to be ramped-up from early 2010, with the second plant following later in the year. Manning at the wafer plants in Singapore is expected to reach approximately 360 people (Phase I), of which 320 in production and 40 in other functions. The wafer net conversion cost is estimated to be approximately 10 percent lower than at the best REC Wafer plant outside Singapore.
The planned cell capacity is estimated at approximately 550 MW from eight production lines in the first development phase. The production lines will be based on further development of the production lines currently under ramp-up in Narvik. Manning at the cell plant in Singapore is expected to reach approximately 280 people (Phase I), of which 230 in production and 50 in other functions. The cell conversion cost for the plants in Singapore is estimated to be approximately 45 percent lower than current industry average.
The planned module capacity is estimated at approximately 590 MW from four production lines in the first development phase. The production lines will be based on further development of the production lines currently under ramp-up in Glava in Sweden. Manning at the module plant in Singapore is expected to reach approximately 470 people (Phase I), of which 420 in production and 50 in other functions. The module conversion cost for the plants in Singapore is estimated to be approximately 35 percent lower than current industry average.