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 Løkke, 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 www.recgroup.com
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.
Wafers
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
Herøya 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.
Cells
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.
Modules
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.
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