REC Webinar - Engineering Modules for Financial Return

RENEWABLE ENERGY CORPORATION

Engineering Modules
For Financial Return
REC Webinar
September 18, 2012

Nick Rose, APAC Technical Manager

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 ASA’s (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 REC’s 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 in May 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.

2 © 2012 REC All rights reserved.

About REC

 Founded in Norway in 1996, REC is a leading
vertically integrated solar energy company
and employs more than 3,100 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
activities in selected PV segments

 REC had revenues close to USD 2.4 billion
(EUR 1.7 billion) in 2011

 REC is listed on the Oslo Stock Exchange
under the ticker: REC

 Over 200 patents pending or granted


Agenda

 Maximizing The Income Stream

 Reducing Capital Expenditure

 Risk Mitigation For The Revenue Stream


Major contributing factors to PV project returns

REDUCE COSTS
- Reduce capital expenditure
MAXIMISE REVENUE STREAM
of equipment
- High yielding equipment
- Maximise performance ratio
- Optimised design via equipment and design
- Ongoing maintenance IRR - Efficient systems to limit
- Minimising degradation rates operating expenditure
- Incentives and subsidies

MITIGATION OF RISK
COST OF FINANCE
- Securing PPA
- Interest rate
- Technology selection
- Term of loan
- System durability
- Loan guarantor
- Service & support
- Timing of repayments


Maximizing The
Income Stream

RIGHT HERE IN GERMANY Commercial rooftop with REC AE modules

How yield impacts project return

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

 PV modules are not a commodity! Project developers are prepared to pay a premium
for higher yielding modules
 There are inherent technical features of REC modules that enable higher yield
generation throughout the modules life 15%
Δ IRR
11%
10%
8%
5% 5% ↑8%
→6%
0% 0%
-10% -5% 0% 5% 10%
-3%
-5% Δ Yield
-7%

-10% -10% Change In Yield
Al-BSF + Al
Linear Reference
-15%

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


Why watts don’t equate to yield
 Watts are a measure of power (W), which is an instantaneous measure of performance

 Developers and investors are interested in energy (Wh), which is the unit electricity is
sold and the indicator which ultimately determines a projects value

Standard Test
Parameter Relevance
Conditions
Close to maximum possible irradiance; not
Sunlight
1000W/m2 representative of average expected sunlight
Irradiance levels

Normally modules sit around 25 degrees
Module
25OC above ambient, far greater temperatures than
Temperature 25OC

The light spectrum cannot be fixed as it
Light Spectrum Air Mass1.5 changes from time of day/year and many
localised effects

For non-tracking systems the sun is not at
Angle of Normal
normal incidences to the array for most of the
Measurement Incidence energy production hours

Module part load efficiency is extremely important

 Every module will have a different efficiency curve

 REC maintains high performance through all levels of irradiance

Relative
Efficiency (%) REC Tier 1 -Si Poor Si

102%
100%
98%
96%
94%
92%
90%
88%
86%
84%
82% Al-BSF + Al
80%
0 100 200 300 400 500 600 700 800 900 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


Average irradiance levels highlight the STC deficiency

 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 the
efficiency level at the prevailing irradiance levels. Bangkok irradiance distribution shows
the importance of the curve <600W/m2
Relative Irradiation Frequency REC Hours/
Efficiency (%) Year
Tier 1 -Si Poor Si
102% 800
100%
700
98%
96% 600
94% 500
92%
400
90%
88% 300
86% 200
84% Al-BSF + Al
100
82%
80% 0
0 100 200 300 400 500 600 700 800 900 1000 1100

Irradiance (W/m2)
Source: Global Horizontal Irradiance of Bangkok. Meteonorm file extracted from Pvsyst v5.55


Average irradiance levels in Europe and APAC

 The majority of Asia
and Europe have
average irradiance
levels under 600W/m2
between sunrise and
sunset
 If you are not sure of
London
the low-light efficiency
220 W/m2
levels of a module, ask Munich 264 W/m2
the manufacturer Madrid Napoli 399 W/m2 Beijing 320 W/m2
383 W/m2 Tokyo 320 W/m2
 A performance Delhi 500 W/m2
simulation used to
underpin project
Bangkok Manila 346 W/m2
finance should take 403 W/m2
this factor
into account Jakarta 370 W/m2

Sydney 408 W/m2


The excess energy gain from anti-reflection coatings

 Under STC conditions module power is measured at normal incidence, but…

 The energy yield advantages of the anti-reflection coating are measured at 30+ degrees

Light
Transmission
REC Reflection Profile

Module Without AR Glass 99%

97%

95%

93%

91%

89%

87%

85%
0-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 80-90
Angle of Incidence
Source: REC reflection characteristics as measured by Solar Energy Research Institute of Singapore. Standard glass
reflection profile as generated by Pvsyst using the ASHRAE model using a b0 value of 0.05

Sunlight falls from all different angles

 The angle of light is rarely normal to the surface of the module

 In Bangkok the energy captured at 0-10 degrees represents only 4% of annual total

Energy Energy/Year Light
(kWh/kWp/yr) Transmission
REC Reflection Profile
350
Module Without AR Glass 99%
300
97%
250
95%
1.2% more
200 energy 93%
150 captured
91%
100 89%

50 87%

0 85%
0-10 10-20 20-30 30-40 40-50 50-60 60-70 70-80 80-90
Angle of Incidence
Source: Bangkok angle of incidences generated using vector analysis for sun positioning based on the Meteonorm
climate file for Bangkok extracted from Pvsyst v5.55. Assumes an array facing due South tilted at 10 degrees

Changes in light spectrum affect real-world performance
 The universal spectrum used to classify module power at Standard Test Conditions is
called the Air Mass 1.5 spectrum
 Modules efficiency will vary depending on the consistency of the light spectrum they are
exposed to.
 What is the spectrum most appropriate to the project site? Depends on altitude, cloud
cover, humidity, pollution and more
REC’s New Peak Energy Plus Module
CONVENTIONAL CELL CELL WITH BACKSIDE
PASSIVATION

Light is absorbed Reflected light will
generate additional current

The blue line is the Air Mass 1.5 standard spectrum. The red line A cell with backside passivation will generate more current due to reflection of
indicates the wavelengths of light that can contribute to electricity light at the backside of the cell. Backside passivation increases the sensitivity of
generation in a silicon solar cell the cell to red light in the wavelength range between 1000 to1180 nm
Source: Entropy Production

Spectrums change from location to location

 Equatorial regions, such as most of Asia, generally have lower Air Mass levels due to
higher sun altitudes
 However, differences in atmospheric particulates and humidity make the spectrums
between locations highly variable
Energy
(kWh/kWp/yr)
350

300

250

200 Bangkok, Thailand

150 Munich, Germany

100

50

-

Air Mass

REC ranks as number 1 in yield

 Photon test 2011: most recognized test comparing module brands under real
life 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


Increasing yield performance reduces CAPEX
 REC is known for its high performing yield throughout the world

 As simulated in PVsyst, in Asia Pacific the advantage still exists, which
translates to real value
REC 1,191

Sanyo HIT 1,191

Yingli 1,154

SunTech 1,154

JA Solar 1,143

Trina 1,124

Kyocera 1,124

Sharp 1,120

1,080 1,100 1,120 1,140 1,160 1,180 1,200
Annual Yield (kWh/kWp)

Assumptions: Yield numbers generated in Pvsyst v5.51. Site location in Tokyo with a tilt of 28 degrees oriented due
South. Sunny Tripower 10000TL inverters and module specific values for NOCT, mismatch and module quality loss.

REC can command a $/W premium based on yield alone
 Translating the yield numbers into a project IRR calculation the premium REC can justify
against the major competitors is evident
 This premium will change depending on climatic and financial factors, however the clear
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 $0.05

REC $0.00

-$0.07 Yingli

-$0.07 SunTech

-$0.09 JA Solar

-$0.11 Trina

-$0.11 Kyocera

-$0.11 Sharp

-$0.12 -$0.10 -$0.08 -$0.06 -$0.04 -$0.02 $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

Reducing Capital
Expenditure

RIGHT HERE IN ITALY Powerplant with REC Peak Energy modules

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 the
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


REC is reducing module cost at a high rate

Singapore module cash cost
Eurocents/watt Q1 2012 costs;
 March run rate at 90 Eurocents/Watt

-39% 2012 cost reductions;
127  Increased average cell efficiency

 Improved sourcing of materials
-27%
78  Improved operational
performance, debottlenecking and
57 higher equipment availability
 Reduced fixed costs and economies of
scale in support functions

Q3’10 Q1’12 Q4’12
target
Costs include SG&A, amortization, R&D, silicon at
market price, cash production costs and excludes
depreciation


Risk Mitigation for the
Revenue Stream

RIGHT HERE AT REC REC production plant, Tuas, Singapore

Durability tests to ensure long-term performance

 Most PV modules are warranted for a period of 25 years but few have been in
the field for that time. Those that have are a vastly constitution than they were.
 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)
– TUV Salt Mist Corrosion - Severity 6
– TUV Ammonia Corrosion
– Extended qualification beyond IEC (DHT, TC, HF)
– Combined cycle testing

TCT 200 cycles 400 cycles

DHT 1000 hrs 2000 hrs

HF 10 cycles 40 cycles

Combined cycle - (DH, TC, HF) X2

Extended Qualification Testing: 2X IEC Standards

 Even at 2x IEC test REC modules are still performing within the standards

REC Extended Qualification Test Results

TC400 DH2000 HF40 2X more than required
% Power loss

REC module test laboratory

IEC Pass Criteria


Industry leading linear warranty for REC modules

 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%


Low customer claims provide evidence of quality
 Reduced module power or plant downtime will adversely affect the financial
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
Claim PPM Acc PPM 2011 Target

200

150

110
98 97
100 90
79 79
72 57
49
50 35 33 34

0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec


REC has a strong track record of proven performance
Pandit Deendayal Petroleum University in Gujarat, India
(7.61% Above Expectations)



100kW REC Factory Rooftop, Tuas, Singapore

Energy Yield Compared to PVsyst
Prediction

Section 1 4.7%

Section 2 4.3%

Section 3 7.3%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
Predicted



REC Systems’ Performance Ratio* Examples (%)
91,8
85,7
84,0 81,9 83,7
80,5

Yield report
Actual

France Italy Freiburg
5MW 5.7MW 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.



LUXEL Project with 9 different locations in France (Jan-Dec 2011)
(9% Above Expectations)
MWh %
1,000 120
900
100
800
700
80
600
500 60
400
40
300
200
20
100
0 0
Barats Peyrohitto Les Clottes Puginier St Paulet La Pomarède Fontanelles Larnier Pouzols
269 kWp 572 kWp 572 kWp 572 kWp 572 kWp 572 kWp 602 kWp 572 kWp 572 kWp

% of Expected Yield Actual Solar Production Expected Solar Production


The 5 Unique Selling Points of REC Modules

More energy
per ft²
Provides more energy per square feet

Robust and
durable design
Ensures long lasting quality

Easy to install
Reduces installation time

Optimized for all sunlight conditions
Provides reliable power output and high performance

Energy payback time of one year
Made with an industry leading carbon footprint and EPBT


RENEWABLE ENERGY CORPORATION

THANK YOU

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 to have been caused by or in connection with
using and/or relying on the information contained in this presentation.

REC Webinar - Engineering Modules for Financial Return

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