20120507 rec bankability adb - mdaly - 05jun12

7/31/2019 20120507 REC Bankability ADB - Mdaly - 05Jun12

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RENEWABLE ENERGY CORPORATION

Selecting RECfor Financial Return

Matt Daly, General Manager

May 2012


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3 2011 REC All rights reserved. Confidential

About REC

Founded in Norway in 1996, REC is a leading

vertically integrated solar energy companyand employs more than 3,200 peopleworldwide

REC produces polysilicon, wafers, cells andmodules for the solar industry, and siliconmaterials for the semiconductor andelectronics industry

REC is also engaged in project developmentactivities in selected PV segments

2011 revenues close to USD $2.4 billion

REC is listed on the Oslo Stock Exchangeunder the ticker: REC

Over 200 patents pending or granted


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Agenda

Maximizing The Income Stream

Reducing Capital Expenditure

Risk Mitigation

Export Credit Financing


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Major contributing factors to PV project returns

IRR

COST OF FINANCE

- Interest rate- Term of loan

- Loan guarantor

- Timing of repayments

MAXIMISE REVENUE STREAM

- High yielding equipment

- Optimised design

- Ongoing maintenance

- Minimising degradation rates

REDUCE COSTS

- Reduce capital expenditureof equipment

- Maximise performance ratiovia equipment and design

- Efficient systems to limitoperating expenditure

- Incentives and subsidies

MITIGATION OF RISK

- Securing PPA

- Technology selection

- System durability

- Service & support


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Major contributing factors to PV project returns

IRR

COST OF FINANCE

- Interest rate- Term of loan

- Loan guarantor

- Timing of repayments

MAXIMISE REVENUE STREAM

- High yielding equipment

- Optimised design

- Ongoing maintenance

- Minimising degradation rates

REDUCE COSTS

- Reduce capital expenditureof equipment

- Maximise performance ratiovia equipment and design

- Efficient systems to limitoperating expenditure

- Incentives and subsidies

MITIGATION OF RISK

- Securing PPA

- Technology selection

- System durability

- Service & support


7/247 2011 REC All rights reserved. Confidential

REC panels installed in a power plant in Alicante, Spain.System size of 8 MW, powering 4 896 households

RIGHT HERE IN ALICANTE

Maximizing The

Income Stream



Average irradiance levels in APAC 300-600W/m2

The majority of Asia has average irradiance levels under 600W/m2 between

sunrise and sunset

If you are not sure of the low-light efficiency levels of a module, ask themanufacturer

A performance simulation used to underpin project finance should take thisfactor into account

Al-BSF + Al Sydney 408 W/m2

Dehli 500 W/m2Tokyo 320 W/m2

Manila 346 W/m2

Beijing 320 W/m2

Bangkok 403 W/m2

Jakarta 370 W/m2



2011: REC ranks as #1 in YEILD, kWh/kWp

Photon test 2011: most recognized test comparing module brands under reallife conditions, over several years

Generated more electricity than all its 45 competitors,6% more than test average

Average irradiance in this region is approx 230W/m2



Module part load efficiency is extremely important

Al-BSF + Al

Every module will have a different efficiency curve

REC maintains high performance through all levels of irradiance

Source: REC efficiencies generated from TUV Rheinland test reports, Tier-1 and Poor-Si irradiation numbers havebeen recreated form electrical data using the one-diode model

80%

82%

84%

86%

88%

90%

92%

94%

96%

98%

100%

102%

0 100 200 300 400 500 600 700 800 900 1000

RelativeEfficiency (%)

Irradiance (W/m2)

REC Tier 1 -Si Poor Si



Average irradiance levels highlight the STC deficiency

Al-BSF + Al

The STC nominal power rating is not the best indicator of expected performance

To make an appropriate assessment of a product special attention must be given to theefficiency level at the prevailing irradiance levels. Bangkok irradiance distribution showsthe importance of the curve



How yield impacts project return

Al-BSF + Al

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

Increases in yield can accelerate the project IRR in a non-linear fashion

Not all PV modules are made the same! They are NOT a commodity!

Project developers pay premium prices for higher yielding higher quality modules frombankable companies that have a proven strong warranty.

There are inherent technical features of REC modules that enable higher yieldgeneration throughout the modules life

-10%

-7%

-3%

0%

5%

8%

11%

-15%

-10%

-5%

0%

5%

10%

15%

-10% -5% 0% 5% 10%

IRR

Yield

Change In Yield

Linear Reference

8%

6%



REC is reducing module cost AND improving performance

2012 cost reductions;

Increased cell & module efficiency

Improved sourcing of materials

Improved operational performance, debottleneckingand higher equipment availability

Reduced fixed costs and economies of scale insupport functions

2012 Product Improvements;

-0.43%/C to -0.40%/C;

NOCT reduced from 47.9C to 45.7C;

PTC:STC ratio > 91.3%;

STC values have 3% tolerance reducingmismatch losses between modules;

RPS/RSS: CLAIMS: < 30PPM

-15%

Q412Q112

-39%

Q310

Module Cash Cost Reductions

target



REC Silicon

Volume Increase ~30kMT Best Cost Position Globally


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Residential home with 61 REC solar panels installed in Monterey, California.Annual capacity: 19 435 kWh 13.1 tons of CO2 saved annuallyRIGHT HERE IN CALIFORNIA

Reducing CapitalExpenditure


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How a module can reduce capital expenditure

Reducing system cost is more involved than simply

reducing the cost price of the module ($/W)

Modules can influence the developed cost in thefollowing ways:

Increasing efficiency reduces land and mounting structurecosts

Increased reverse current rating reduces the amount offusing

A high maximum system voltage that minimises the amountof 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 installationprocess

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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REC production plant, Tuas, SingaporeRIGHT HERE AT REC

Risk Mitigation for the

Revenue Stream


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Durability tests to gain comfort in long-term performance

Most PV modules are warranted for a period of 25

years but few have been in the field for that time. Thosethat have are a vastly constitution than they were

How REC guarantees the lifetime of their product:

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)

TUV Salt Mist Corrosion - Severity 6

TUV Ammonia Corrosion

Extended qualification beyond IEC (DHT, TC, HF)

Combined cycle testing


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Industry leading linear warranty for REC modules

Module bankability is key criteria for solar

REC holds a strong reputation with banksin our active markets

25 year linear performance warranty

10 year product warranty

Maximum degradation rate of 0.7%


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EXPORT CREDIT: Who is GIEK?

31 March 2012: Norways Sovereign Wealth Funds total value is

USD$613 bn, holding 1% of global equity markets.

GIEK is the Norwegian ECA (Export Credit Agency);

Guarantees for Norwegian exporters on behalf of the NorwegianGovernment

Buyer credit (export credit)

Supplier credit guarantees

Bond guarantees

Investment guarantees

GIEKs general guarantee framework EUR 15.5 bnGIEK manages a portfolio of around EUR 10 bn (80% in the offshore

and maritime sectors)


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What are Commercial and Political Risks

Commercial risk:

Loss due to debtor becoming insolvent / going bankrupt

GIEK covers up to 70 90%

Political risk:

Loss due to conditions in the importing country:Confiscation, expropriation, nationalization, war or other

agitation

GIEK covers up to 95 100 %


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RENEWABLE ENERGY CORPORATION

THANK YOU

The content of this presentation is strictly confidential. REC is the exclusive owner or licensee of the content, material, and information in this presentation. Any reproduction, publication or reprint, in whole or in part,is strictly prohibited. The information in this presentation may not be accurate, complete or up to date, and is provided without warranties or representations of any kind, either express or implied. REC, as well as its

directors, officers and employees, shall not be responsible for and disclaims any liability for any loss or damages, including without limitation, direct, indirect, incidental, consequential and special damages, alleged tohave been caused by or in connection with using and/or relying on the information contained in this presentation.

REC is the exclusive owner or licensee of the content, material, and information in this presentation. Any reproduction, publication or reprint, in whole or in part, is strictly prohibited. The information in thispresentation may not be accurate, complete or up to date, and is provided without warranties or representations of any k ind, either express or implied. REC, as well as its directors, officers and employees, shall not

be responsible for and disclaims any liability for any loss or damages, including without limitation, direct, indirect, incidental, consequential and special damages, alleged to have been caused by or in connection withusing and/or relying on the information contained in this presentation.

THANK YOU!Matt DalyGeneral [email protected]

More Energy per M

Robust andDurable Design

Easy to Install

Energy PaybackTime of One Year

Optimized for allSunlight Conditions

The 5 Unique Selling Points of REC Modules


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REC has a strong track record of proven performance

Pandit Deendayal Petroleum University in Gujarat, India

(7.61% Above Expectations)


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REC has a strong track record of proven performance

81.980.5

85.791.8

83.784.0

Freiburg582kW

Italy5.7MW

France5MW

Yield report

Actual

Actual Performance Ratio* Examples (%)

* 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.

20120507 rec bankability adb - mdaly - 05jun12

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