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Disclaimer
This Presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this Presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for REC ASA and REC ASAs (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as expects, believes, estimates or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for RECs businesses, energy prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the Presentation. Although REC ASA believes that its expectations and the Presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the Presentation. REC ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither REC ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.
This presentation was prepared for Clean Power Asia 2012 held on May 15, 2012. Information contained within will not be updated. The following slides should be read and considered in connection with the information given orally during the presentation. The REC shares have not been registered under the U.S. Securities Act of 1933, as amended (the "Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Act.
About REC
Founded in Norway in 1996, REC is a leading
vertically integrated solar energy company and employs more than 3,200 people worldwide
REC produces polysilicon, wafers, cells and
modules for the solar industry, and silicon materials for the electronics industry
REC is also engaged in project development
2011
REC is listed on the Oslo Stock Exchange
Industry pioneer with commitment to PV Presence throughout the entire value chain World-class manufacturing facilities
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2011 REC All rights reserved. Confidential
partners
Oslo, Norway Moses Lake, WA, USA Foster City, CA, USA (R&D) San Luis Obispo, CA, USA Munich, Germany Milan, Italy Tokyo, Japan Shanghai, China Taipei, Taiwan
Paris, France
Barcelona, Spain
Singapore
REC headquarters REC production facilities REC R&D units REC sales offices REC representative office / sales support
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2011 REC All rights reserved. Confidential
Agenda
Maximizing The Income Stream Reducing Capital Expenditure Risk Mitigation For The Revenue Stream Loan Guarantor GIEK
Design layout,
Set up SPV and develop debt and equity , tax and insurance structure
Identify equity sponsors and start sales process Build streamlined financing processes
Organize tender process for EPC sub contractors and negotiate contracts
Manage project , supervise site and commission project
- High yielding equipment - Optimised design - Ongoing maintenance - Minimising degradation rates
IRR
capital expenditure of equipment - Maximise performance ratio via equipment and design - Efficient systems to limit operating expenditure - Incentives and subsidies
COST OF FINANCE
MITIGATION OF RISK
- Securing PPA
- Technology selection - System durability - Service and support
- High yielding equipment - Optimised design - Ongoing maintenance - Minimising degradation rates
IRR
capital expenditure of equipment - Maximise performance ratio via equipment and design - Efficient systems to limit operating expenditure - Incentives and subsidies
COST OF FINANCE
MITIGATION OF RISK
- Securing PPA
- Technology selection - System durability - Service and support
REC panels installed in a power plant in Alicante, Spain. System size of 8 MW, powering 4 896 households
15% 10%
IRR 11% 8%
5% 6% 5% Yield
8%
-10%
-5%
10%
Assumptions: Site location in Perth, Australia with a Base yield of 1650kWh/m2/yr, Debt:Equity ratio of 70/30, WACC of 11%, FiT of US$0.11/kWh and a CAPEX of US$2.70/W
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2011 REC All rights reserved. Confidential
REC
Tier 1 -Si
Poor Si
Al-BSF + Al
600 700 800 900 1000
Irradiance (W/m2)
Source: REC efficiencies generated from TUV Rheinland test reports, Tier-1 and Poor-Si irradiation numbers have been recreated form electrical data using the one-diode model
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2011 REC All rights reserved. Confidential
efficiency level at the prevailing irradiance levels. Bangkok irradiance distribution shows the importance of the curve <600W/m2
Relative Efficiency (%)
102% 100% 98% 96% 94% 92% 90% 88% 86% 84% 82% 80% 0 100 200 300 400 500 600 700 800 900 1000 600 500 400 300 200 Irradiation Frequency Tier 1 -Si REC Poor Si
Hours/ Year
800 700
Al-BSF + Al
100 0 1100
Irradiance (W/m2)
Source: Global Horizontal Irradiance of Bangkok. Meteonorm file extracted from Pvsyst v5.55
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2011 REC All rights reserved. Confidential
manufacturer
A performance simulation used to underpin project finance should take this
Al-BSF + Al
14
15
Residential home with 61 REC solar panels installed in Monterey, California. Annual capacity: 19 435 kWh 13.1 tons of CO2 saved annually
following ways:
Increasing efficiency reduces land and mounting structure costs Increased reverse current rating reduces the amount of fusing A high maximum system voltage that minimises the amount of strings and protection devices Cable length that minimises additional string cables Innovative frame design that allows for rapid installation rates Equipment accessories that streamline the installation process Packaging that reduces waste or simplifies transportation By-pass diodes used to minimise yield loss from shading Antireflection coatings to maximise sunlight transmission Availability to finance via ECA
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2011 REC All rights reserved. Confidential
Q1 2012 costs;
March run rate at 90 Eurocents/Watt
-39% 127
Q310
Q112
Q412 target
Costs include SG&A, amortization, R&D, silicon at market price, cash production costs and excludes depreciation
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1,191
1,191
1,154 1,154 1,143
Kyocera
Sharp 1,080
1,160
1,180
1,200
pattern is that REC maintains a yield advantage that has translated to higher ASPs
Warranty, bankability and quality advantages will further extend the premium
Sanyo HIT REC $0.00 $0.05
-$0.07
-$0.07 -$0.09 -$0.11 -$0.11 -$0.11 -$0.12 -$0.10 -$0.08 -$0.06 -$0.04 -$0.02
Yingli SunTech JA Solar Trina Kyocera Sharp $0.00 $0.02 $0.04 $0.06
Assumptions: Debt:Equity ratio of 70/30, Cost of Debt 2%, cost of equity 9%, FiT of JPY38/kWh and a project lifetime of 25 years. System specific capital costs based on module efficiency and equivalent BoS costs
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2011 REC All rights reserved. Confidential
been in the field for that time. How REC guarantees the lifetime of its module:
Highly automated production facility Complete quality control (machine, man, method & material) ISO 9001, ISO14001 & OHSAS18001 Certified in Singapore Optional loading up to 5400Pa under IEC61215 (551kg/m2)
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Module bankability is key criteria for solar REC holds a strong reputation with banks
in our active markets 25 year linear performance warranty 10 year product warranty Maximum degradation rate of 0.7%
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2011 REC All rights reserved. Confidential
performance of a PV plant
Faults can occur at periodic times throughout the life of a plant. Remoteness
and lack of access to adequately trained personnel can cause systems to have downtimes of weeks or months.
One bad module can affect the performance of an entire string of sub-array
250 PPM 200 Claim PPM Acc PPM 2011 Target
0 Jan
24
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
25
Section 2
4.3%
Section 3
7.3%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
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France 5MW
Italy 5.7MW
Freiburg 582kW
* The performance ratio (PR) describes the relationship between the actual and theoretical energy outputs of the PV plant. Low conversion losses (glass reflection, temperature losses, transformer losses ...) are leading to a high PR.
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2011 REC All rights reserved. Confidential
Easy to Install
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Loan Guarantor
- Garanti-instituttet for eksportkreditt (GIEK)
Who is GIEK?
GIEK is the Norwegian ECA (Export Credit Agency) Guarantees for Norwegian exporters on behalf of the Norwegian
Government
Buyer credit (export credit)
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Political risk:
Loss due to conditions in the importing country: Confiscation, expropriation,
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Technical risk
Operation and maintenance risk Legal due diligence of the underlying contracts, permits, licences, PPA
etc
Political risk Securities Environmental impact / CSR
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Courtesy of GIEK
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2011 REC All rights reserved. Confidential
THANK YOU
Contact: Matt Daly General Manager matt.daly@recgroup.com
The contentthe this presentation is strictly confidential. REC is material, and owner or licensee ofpresentation. material, and information in thisor reprint, in whole or in part, is strictly prohibited. The information in this REC is of exclusive owner or licensee of the content, the exclusive information in this the content, Any reproduction, publication presentation. Any reproduction, publication or reprint, in whole or in part, is strictly prohibited. The information incomplete or up to may not be accurate, complete or up to date, and is provided without warranties or representationsREC, askind, either directors, officers and employees, shall not presentation may not be accurate, this presentation date, and is provided without warranties or representations of any kind, either express or implied. of any well as its express or implied. REC, as well as its directors, officers and and disclaims anynot be responsible for and disclaims any liability forlimitation, or damages, including without limitation, direct, indirect, incidental, consequential and caused by or in connection with be responsible for employees, shall liability for any loss or damages, including without any loss direct, indirect, incidental, consequential and special damages, alleged to have been special damages, alleged to have been caused by or in the information contained in this presentation. using and/or relying on connection with using and/or relying on the information contained in this presentation.