REC ASA - Scope change to further pursue silane...

Sandvika, September 24, 2008: REC has decided to change the scope  of
the new expansion project ("Plant  IV") initially announced in  April
2007.  The  decision  was  mainly  driven  by  the  favorable  market
conditions for silane gas and the internal need for silicon based  on
the final scope of the Singapore Phase I expansion. Additional silane
volume will enable REC  to potentially double  the allocation to  the
merchant market  by  adding around  2,300  MT annually,  while  still
securing all internal and external polysilicon commitments.

Over the last number of quarters, the improved attractiveness of  the
silane gas market has  become more evident.  From a market  primarily
driven  by  the  demand  from  integrated  circuits  and  flat  panel
displays, the market share of photovoltaics has increased fast and is
expected to set the pace for  future growth. In this segment,  silane
gas  has  historically  mainly  been   used  in  the  production   of
traditional  wafer-based  solar  cells,   but  will  in  the   future
increasingly be influenced  by the development  in crystalline  based
thin-film    market    (i.e.    amorphous-    and    tandem     micro
crystalline/amorphous-silicon).   Further   confirmation   of    this
development  was  made  in  June  2008  when  REC  secured  long-term
agreements for the  supply of  silane gas to  major gas  distributors
worth close to USD 1 billion (~NOK 5.5 billion), average sales  price
under these contracts was around 15% higher than current.

"This scope  change makes  a lot  of sense  - not  only from  a  pure
financial perspective, but also  ensures improved product hedging  as
well as  positions  REC  to  potentially  take  advantage  of  future
opportunities within thin-film, all while supporting a fast growth of
REC's silicon wafer  based technology platform",  says Erik  Thorsen,
President & CEO of REC.

The scope change will  allow an additional  2,300 MT availability  of
silane gas  per annum  that  can be  allocated  to the  fast  growing
merchant market for silane gas. On  the other hand, this change  will
reduce the polysilicon production from approximately 6,000 MT in  the
original investment case  to approximately  4,000 MT  per annum.  The
2,000 MT reductions  is justified  based on  the final  scope of  the
Singapore Phase I expansion announced in June 2008.

"We are  today,  and will  remain  for the  foreseeable  future,  the
largest producer  of silane  gas  in the  world. This  decision  will
additionally enable  us  to  maintain our  position  as  the  leading
marketer to the  merchant market  of silane gas",  says Erik  Thorsen
further.

The new  scope  and  expected  cost  increases  in  the  project  has
triggered additional investments of close  to USD 200 million,  which
includes additional  silane  loading  bays,  additional  intermediate
storage tanks for liquid silane and general utilities. An  additional
necessary  investment  decision  to  comply  with  new  and  stricter
environmental requirements will add investments of 50 MUSD. A project
reserve of 30 MUSD is included in the total amount.

As previously communicated, in conjunction with the first and  second
quarter release,  most  cost  elements  related  to  procurement  and
construction  of  Plant  IV  are  expected  to  face  similar   price
escalations as for  the ongoing expansion  project ("Plant III").  In
total, including  scope  changes, cost  escalations,  investments  to
comply with  new environmental  regulations  and a  project  reserve,
total investments will end at approximately USD 750 million  compared
with the original budget  of USD 485 million.  This is only  somewhat
higher than what is  already expected based  on the cost  escalations
announced earlier this year.

The estimated net present value of Plant IV has improved by around 20
percent  despite  the   higher  levels  of   investments.  The   main
contributor to  this development  has been  the improved  third-party
prices realized in  later periods compared  to the original  business
case, especially on silane gas. As the revised scope still will fully
support all expansions further downstream in REC Wafer and REC  Solar
with  the  necessary  raw  materials,  the  improved  returns   would
therefore  also  positively  affect   the  REC  Group  overall.   The
additional  investment  will   be  covered   by  existing   available
financing.

For more information, please contact;
Erik Thorsen, President & CEO; [phone]
Jon Andre Løkke, SVP & IRO; [phone]


About REC
REC is uniquely positioned as one of the most integrated companies 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 www.recgroup.com.