The Solar Industry

The Solar Industry

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Description: Solar energy development forecast. Cost competitiveness of PV electricity. Energy price development triggers strong demand for solar energy.

polysilicon production process, steps in value chain, Deposition Technology, & cost roadmap. Silicon Technologies. Additional capacity extensions in progress.

 
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Domain:  Green Tech Category: Photovoltaics/Solar Subcategory: Connectors 
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Contents:
Silicon Materials

Renewable Energy Corporation

Analyst silicon field trip March 28, 2007

Renewable Energy Corporation

Wafers

Cells

Modules

Disclaimer

Field trip March 27-29, 27 29 2007

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 expectations, 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 g p 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 connection with the field trip March 28, 2007. Information contained within will not be updated The following slides should be read and considered in connection with the information updated. 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.

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� Copyright 2007 Renewable Energy Corporation ASA

The Th world's most i t ld' t integrated solar energy company t d l
Silicon Materials Wafers Cells Modules

Field trip March 27-29, 27 29 2007

Chemical process

Casting and cutting

Surface treatment

Assembly

Installation and operation

3

� Copyright 2007 Renewable Energy Corporation ASA

Full-year Full year 2006 performance
Divisions

Field trip March 27-29, 27 29 2007

2006 Production

5 600 MT polysilicon 8 000 MT monosilane

275 MW multicrystalline 31 MW monocrystalline

37 MW cells 33 MW modules

2006 vs. 2005

+6%

+37%

+100%

2006: Revenues: EBITDA:
2007 target production

NOK 2 128 mill NOK 1 063 mill
~6 000 MT polysilicon ~9 000 MT monosilane

NOK 2 456 mill NOK 825 mill

NOK 873 mill NOK 194 mill
~50 MW cells ~45 MW modules

~465 MW multicrystalline ~35 MW monocrystalline

4

� Copyright 2007 Renewable Energy Corporation ASA

Renewable Energy Corporation p

The Solar Industry

Solar energy development forecast
Oil Coal Gas Nuclear Hydro Bio Wind PV Solar - other Other

Field trip March 27-29, 27 29 2007

1 800 1 600 1 400 1 200 (EJ/Year) 1 000 800 600 400 200 0 2000

Unlimited renewable source of supply Increasingly cost competitive Decentralized power source Peak power at peak time of usage

2010

2020

2030

2040

2050

2060

2070

2080

2090

2100

Environmentally friendly

Source: solarwirtschaft.de

Declining stock of fossil fuels, climate changes and increasing competitiveness of PV systems will boost usage of solar energy over the next century
6 � Copyright 2007 Renewable Energy Corporation ASA

Cost competitiveness of PV electricity
1.0 0.8
1 800 hrs/year: ~0.25 ~0 25 /kWh 900 hrs/year: ~0.50 /kWh

Field trip March 27-29, 27 29 2007

( (/kWh)

0.6 0.4 0.2 0.0 1990

2000
Photovoltaic Ph t lt i

2010e
Utility Utilit peak cost k t

2020e

2030e
Bulk B lk cost t

2040e

Source: REC, based on EC Vision Report 2005 (EPIA: Towards an Effective Industrial policy for PV (RWE Schott Solar))
7 � Copyright 2007 Renewable Energy Corporation ASA

Energy price d E i development t i l t triggers strong d t demand f solar energy d for l
Average electricity prices for retail customers (/kwh)
JPN ITA GER CAL
0,35

Field trip March 27-29, 27 29 2007

CA residential electricity price (/kwh) and demand
Residential el. price Million households in 2001

0,25

~0.25 /kWh
0,23 0,21 0,19
0,20 0,30

3,80
0,25

3,50
~0.25 /kWh

0,17 0 17
0,15

2,00 1,80

0,15
0,10

0,13 0,11 0,09 2000 2002 2004 2006 2008 2010
0,05

1,25

0,00 Tier 1 Tier 2 Tier 3 Tier 4 Tier 5

Source: Respective national energy departments, REC estimates

Source: PGE, CEC

8

� Copyright 2007 Renewable Energy Corporation ASA

Renewable Energy Corporation

REC Group

Our ambition is to generate strong and profitable growth, at least in line with the high-growth photovoltaic solar market. REC hi h th h t lt i l k t aims to achieve this by further expanding capacity and introducing new technologies across all our businesses

Field trip March 27-29, 27 29 2007

Renewable Energy Corporation

Three main focus areas...

10

� Copyright 2007 Renewable Energy Corporation ASA

1. 1 Aggressive growth ambitions - view of ~2010 2010

Field trip March 27-29, 27 29 2007

Polysilicon New capacity in progress

Wafers

Cells

Modules

6 500 MT (~865 MW) Granular material

~650 MW expansion 650 Her�ya III & IV

~500 MW opportunity 500 t it ~180 MW

~100 MW productivity gains ~100 MW 1 000 MT (~135 MW) ~200 MW ~580 MW ~280 MW 6 000 MT (~800 ( 800 MW)

~45 MW

~55 MW ~45 MW

~550 MW allocated to cell customers

1 450 MT allocated to EverQ expansion (33.3% owned) < 2 000 MT allocated to electronics customers

Additional revenue and profit growth contributed by increased silane gas sales
11 � Copyright 2007 Renewable Energy Corporation ASA

2. 2 On track with the targeted cost program
REC 2010 cost road map
Figures in %

Field trip March 27-29, 27 29 2007

100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0% World Class 1 2005 REC 2010 2 Ambition Module Cell Wafer Polysilicon

REC Silicon targets ~60 percent reduction in polysilicon cost input
� Main benefits will be derived from the FBR-plant and lower consumption

REC Wafer targets ~50 percent reduction in wafer conversion cost
� Achieved ~15 percent in 2006 � Further advanced technologies to be implemented in new production lines

REC Solar targets significant reduction in cell and module cost input
� Achieved ~10 percent in cell and ~5 percent in module in 2006 � Further advanced technologies to be implemented in new production lines

Source: REC

Note 1: Cost structure as cost per watt of modules, based on world class production 2005 Note 2: Cost structure as cost per watt of modules, relative to 2005 level
12 � Copyright 2007 Renewable Energy Corporation ASA

3. 3 REC Group organization development

Field trip 4th quarter March presentation 27-29, 27 29 2007

REC Solar Grade Silicon REC Advanced Silicon Materials

REC S ScanWafer W f REC SiTech

REC S ScanCell C ll REC ScanModule

BU focus and organization build up in each division to ensure autonomy and growth

13

� Copyright 2007 Renewable Energy Corporation ASA

REC Group outlook � 2007 targets
Continued focus on cost improvements Execution of expansion programs
� REC Silicon: Construction of FBR-plant; debottlenecking program at Butte � REC Wafer: Continue ramp-up of the new 200 MW plant; begin construction of the two new plants of 650 MW � REC Solar: Ramp-up first phase of 180 MW cell expansion in Narvik and 55 MW module expansion i Gl i in Glava � EverQ: Complete ramp-up of additional 60 MW expansion
2007 production growth in percent
70

Field trip March 27-29, 27 29 2007

60

~500 MW

50

40
~50 MW

~45 MW

30

20

Pricing outlook on a full year basis
� REC Silicon � increase of above 15 percent � REC Wafer � increase of above 10 percent � REC Solar � reduction of up to 5 percent
10
~6 000 MT

0 y Polysilicon Wafers Cells Modules

Note: Polysilicon production measured in MT. Wafers, cells and modules in MW

14

� Copyright 2007 Renewable Energy Corporation ASA

Field trip March 27-29, 27 29 2007

REC Silicon

Renewable Energy E Corporation

� Copyright 2006 REC Silicon Inc, All Rights Reserved August 15 21, 2006

REC Silicon Sili
REC Silicon REC Wafer
Cells

Field trip March 27-29, 27 29 2007

REC Solar
Modules

Chemical process (purification)

Casting and cutting

Surface treatment

Assembly

REC Silicon produces silicon materials for the electronics and the photovoltaic markets REC Silicon is a large player in the global silicon materials industry
� # 1 producer of polysilicon for photovoltaic applications � # 1 in monosilane gas production � # 3 in overall polysilicon p p y production

16

� Copyright 2007 Renewable Energy Corporation ASA

REC Silicon � organization
G�ran Bye

Field trip Field trip March 27-29, 27 29 2007

President Chief Executive Officer Senior Vice President Expansions

Tor Hartmann

Senior Vice President Finance

Terie Ellis

Bruno Ceccaroli
Director Research & Development

Vice President Technology & Quality

Ron Reis

Dave Seburn
Vice President Operations

Vice President Sales, Marketing & Business Development

Kurt Levens

Dean Martinez
Director Administration

Director Health, Safety & Environmental Affairs

Kent Stephens

Production Plant Moses Lake

Production Plant Butte

Sales Office Tokyo

Sales Office Shanghai

Employees 2006 ~500 500 2007 ~600

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REC Silicon � history
1983 to 1984 Construction of Moses Lake Plant by Union Carbide Corp. 1990
Moses Lake Plant purchased by Komatsu Ltd., creating Advanced Silicon Materials Inc. (ASiMI)

Field trip Field trip March 27-29, 27 29 2007

1996 to 1998 Construction of Butte Plant 2002 2005 2006 2007
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Moses Lake plant becomes Solar Grade Silicon LLC p via Joint Venture between Komatsu and REC ASiMI purchased by REC, creating REC Silicon REC Silicon breaks ground on third polysilicon plant, Moses Lake, USD 600 million, and decides to invest USD 50 million in Butte plant REC Silicon decides to invest USD 50 million in long lead items for further expansion

� Copyright 2007 Renewable Energy Corporation ASA

Current polysilicon production process

Field trip March 27-29, 27 29 2007

1: 2: 2 3: 4:
19

Mg Si Mg-Si

Silane

Silane sold to PV, LCD, thin film

Most silane used for polysilicon

5: 6: 6 7: 8:

Siemens process at high temperature hi h t t

Rods

Rod pieces

Loaded ingot crucible

� Copyright 2007 Renewable Energy Corporation ASA

Value creation at REC Silicon
Electronic semiconductor manufacturers Gas distri ibutors LCD panel manufacturers Ingot & wafer manufacturers

Field trip March 27-29, 27 29 2007

Silane gas refinery
Metallurgical Grade Silicon 98 to 99% pure SiH4

Thin-film cell manufacturers Crystalline silicon cells manufacturers

Polycrystalline silicon 99.9999999% pure

Ingot & wafer manufacturers f t

Monosilane gas (SiH4)

Siemens reactor based polycrystalline silicon deposition process
20 � Copyright 2007 Renewable Energy Corporation ASA

Growth & cost initiatives: New granular polysilicon plant
Plant capacity ~ 9,000MT Silane and ~ 6,500 MT granular polysilicon Project is on plan
� Ground-breaking in August 2006, construction commenced in 2007 � Online in second half 2008

Field trip March 27-29, 27 29 2007

Expansion site p

REC S l G d Sili Solar Grade Silicon LLC, LLC Moses Lake, Washington

21

� Copyright 2007 Renewable Energy Corporation ASA

Growth & cost initiatives: New granular polysilicon plant

Field trip March 27-29, 27 29 2007

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� Copyright 2007 Renewable Energy Corporation ASA

Growth & cost initiatives: De-bottlenecking De bottlenecking in the Butte plant
Increasing peak capacity and reliability of the silane unit Modifying around 1/3 of the poly deposition reactors (Siemens)
� Increased polysilicon deposition rate through rebuild of gas circulation th h b ild f i l ti

Field trip March 27-29, 27 29 2007

Investment: USD 50 million Additional 2,000 MT of silane gas
� ~1/3 dedicated t th merchant market 1/3 d di t d to the h t k t

~1,000 MT additional polysilicon Reducing cost significantly
� Up to 50% lower electricity consumption in the polysilicon deposition � Close to 20% reduction on total cost

Full effect from the end of Q2 2008

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� Copyright 2007 Renewable Energy Corporation ASA

Polysilicon cost roadmap 2005 - 2010
New plant with granular and scaled-up silane processes will almost halve the (full) cost Thinner wafer, thinner wire and higher cell , g efficiency contribute further Status
� FBR plant currently being built � Group's silicon consumption per Wp rapidly declining � P t ti l beyond "2010 roadmap" id tifi d Potential b d d " identified
Reduction in Polysilicon cost/Wattp
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Silicon cost 2005 Less $/g Less g/W

Field trip March 27-29, 27 29 2007

Silicon cost 2010

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� Copyright 2007 Renewable Energy Corporation ASA

Large savings in both silane and FBR process
Silane costs declining due to scale g and optimization Granular energy consumption is 8090 % below typical Siemens process
� Hot wall design versus cold wall which draws off energy � Granular cost saving is increasing with i ith increasing electricity prices i l t i it i
Reduction in polysilicon cost per kg
100% 90% 80% 70% 60% 50% 40% 30%

Field trip March 27-29, 27 29 2007

World class 2005

Capital and labor cost reduced due to continuous processes p

20% 10% 0% Silicon cost 2005 Silane Deposition Silicon cost 2010

25

� Copyright 2007 Renewable Energy Corporation ASA

Result of the growth strategy
Polysilicon production
MT/Year 18,000

Field trip March 27-29, 27 29 2007

De-bottlenecking and construction g will continue 2007 � 2009 Impact on performance
� Start-up and ramp-up cost p p p � `Unusual' timing of smaller production shut-downs to accommodate tie-ins and implementation of new technology � Difficult to guide on exact timing

16,000

14,000

12,000

10,000

8,000

6,000

4,000

Additional capacity extensions in progress
� � � � Ordered long lead items (USD 50m) Additional silane gas production Further modification of Siemens Rxs Exploit demonstrated increased productivity and yield in FB Rxs

2,000

0 2005 2006 2007 2008 2009 Planned addition 2010

Siemens process

Fluidized Bed process

26

� Copyright 2007 Renewable Energy Corporation ASA

Field trip March 27-29, 27 29 2007

Renewable Energy Corporation

Silicon Technologies

� Copyright 2006 Renewable Energy Corporation ASA. All Rights 27 Reserved 22 November 2006

Silicon Technologies
Several technologies are in play today for producing PV wafers/cells
� Upgraded MGS
� Elkem, Dow Corning, JFE, Nippon Steel, Becancour, Ferro Atlantica, Scheuten, Solar Value...

Field trip March 27-29, 27 29 2007

� Siemens:
� Silane: REC Silicon � Trichlorosilane: Hemlock, Wacker, Tokuyama, MEMC, numerous new entrants

� Fluid Bed:
� Silane: MEMC, REC Silicon � Trichlorosilane: Hemlock, Wacker � in production / building full scale plant � status is uncertain

� Thin Films
� � � � Silane based: Applied Materials, Oerlikon, UniSolar, Kaneka, Mitsubishi Heavy Industries, CSG Solar... Copper Indium Gallium diSelenide based: Nanosolar, Heliovolt... Cadmium Telluride based: First Solar... Organic: in development

28

� Copyright 2007 Renewable Energy Corporation ASA

Silicon Technologies
Upgraded MGS
� Cost Projection: � Quality Projection: � Global Capacity Projection: Slag Refining 500 trained, knowledgable employees

38

� Copyright 2007 Renewable Energy Corporation ASA

Silane requires careful handling
Safety issues:
� Silane is an pyrophoric gas gas. � Chlorosilane intermediaries (TCS; DCS; MCS) are corrosive and flammable

Field trip March 27-29, 27 29 2007

Safety focus :
� 25 years of experience, including some very difficult lessons in the hazards of this business � Full compliance with US government regulations for chemical manufacturing: Process Safety Management (PSM) � On going research into materials characteristics, fundamentals of reactivity and product safety � Provide support services to all customers on silane safety and product handling � Proprietary knowledge in equipment design and operation for silane and polysilicon manufacturing are being incorporated into REC Silicon III plant � Awarded 2006 Air Liquide Global Supplier of the Year for Safety
39 � Copyright 2007 Renewable Energy Corporation ASA

Indirect sales channel for Silane

Field trip March 27-29, 27 29 2007

REC Silicon's silane sales i a small part of th gas companies' overall b i Sili ' il l is ll t f the i ' ll business but a healthy 10-20% of their specialty gas trade
� The silane gas is sold in bulk (3-6 MT) to the specialty gas operations of major gas companies, which trans-fill the gas to smaller containers (1-250 Kg) � S Silane and other specialty gases, chemicals and services are sold to end-users as a " "package" "

Pricing strategies have encouraged gas companies to buy from REC Silicon while entry barriers have discouraged new competitors from entering
� Unique competitive advantages: Scale and delivery ability, precision and technical support

40

� Copyright 2007 Renewable Energy Corporation ASA

Polysilicon Deposition Technology
Fluid Bed energy consumption is significantly less than Siemens g y process:
� Continuous process versus batch processing � Hot Wall design versus cold wall which draws off energy
Silicon Return X Exhaust H2,unreacted silane and elutriated fine nano-silicon

Field trip March 27-29, 27 29 2007

Demonstrated pilot unit, qualified by PV customers REC has invested over 10 years of research in silane based fluid bed deposition, culminating in a successful process.
Silane Heated H2

Silicon granules
41 � Copyright 2007 Renewable Energy Corporation ASA

X

Fluidized Bed Reactor less favorable with TCS
Silane is a preferred choice for fluidized bed polysilicon deposition reaction
� Readily decomposes with low energy demand to silicon and hydrogen only No competing counter reactions such as can be found with TCS: hydrochloric acid gas resulting from TCS decomposition can attack formed silicon, lowering total silicon yields

Field trip March 27-29, 27 29 2007



Granular polysilicon quality can be very pure, even acceptable for semiconductor purposes

42

� Copyright 2007 Renewable Energy Corporation ASA

Critical success factors - fluidized bed development
Success factors Approach Impact

Field trip March 27-29, 27 29 2007

Control powder formation to avoid plugging

Nozzles optimized and patented

Productivity

Control powder formation to maximise yield

Nozzles optimized and patented

Yield

Pure, Pure low cost seeding of small granules

Self seeding Self-seeding technology developing. developing

Cost and product purity

Long production runs

Continuous optimisation

Productivity and yield

Purity

Careful material choices & procedures

Product purity

43

� Copyright 2007 Renewable Energy Corporation ASA

Silane based FBR : World lowest energy consumption
Energy costs are major factor in polysilicon deposition technologies Fluid Bed technology reduces this cost by approximately a factor of 10, because:
� No need for traditional Siemens "cold wall" design which draws energy out g gy of the process and results in inefficiencies � Continuous process versus batch which more efficiently utilizes input energy
Fluid bed technology cost comparison (kwh/kg)
140

Field trip March 27-29, 27 29 2007

120

70-120 kwh/kg
100

70-120 kwh/kg

80

60

40

20

10 10+ kwh/kg

0 TCS based Siemens Process Silane based Siemens process Silane based FBR process

44

� Copyright 2007 Renewable Energy Corporation ASA

FBR Technology at REC Silicon
REC Silicon continues to run granular test production

Field trip March 27-29, 27 29 2007

� More process experience gained while producing qualifying material through 2007 � Final verification of product quality achieved with very good results � Maintaining development program to improve this core technology

Construction of the new plant is progressing on schedule
� The plant will have a capacity of ~ 9,000MT Silane and ~ 6,500 MT polysilicon � The plant will come online in 2008 Q3 with six to nine months of ramp-up p p p

REC Silicon and its predecessor have worked on developing the technology since mid 1990's
� It is a proven technology � REC is already working on next generation FBR

45

� Copyright 2007 Renewable Energy Corporation ASA

Silicon Materials

Renewable Energy Corporation

Silicon Materials � the supply side

Renewable Energy Corporation

Wafers

Cells

Modules

Announced, planned and rumored supply of silicon materials until 2011
Polysilicon supply by type of product
Metric Tons

Field trip Field trip March 27-29, 27 29 2007

Polysilicon supply by industrial player
Metric Tons

250,000

250,000

200,000

200,000

150,000

150,000

100,000

100,000

50,000

50,000

0
2006 2007 2008 2009 2010 2011

0
2006 2007 2008 2009 2010 2011

FZ capable CZ solar capable

CZ electronic capable uMGS

Tier Three - wildcards Tier Two - players with metals, chemicals or silicon experience i Tier One - incumbent polyproducers

47

Silicon materials fungibility
Multi Cast uMGS Mono Multi emc Ribbon Spheral Cells Thick Films

Field trip March 27-29, 27 29 2007

Thin Films

YES YES

? YES YES
(replenish)

? yes

no no

Yes no

no no

no no

Silane TCS REC Silicon Silane (TCS?) Silane Silane

Chunk Poly Granular Poly Powder as gas

yes no no no

YES yes no no

YES yes no no

yes yes no no

yes YES yes yes

no no YES no

no no no

TCS/DCS as gas

48

� Copyright 2007 Renewable Energy Corporation ASA

Silicon materials demand development
Strongest driver will continue to be the growth of PV
� � � Long term growth dependent on solar power becoming competitive

Field trip March 27-29, 27 29 2007

Potentially very large demand for silicon materials even though Si g/Wp will continue to decrease Relationship between short term PV-growth and demand for silicon materials will be "non-linear" due to value chain inefficiencies
� � � Large underutilized downstream capacity Close to non-existent silicon inventories Contracted volumes versus actual timing of new production and financial viability of purchasers

But don t forget the electronic segment don't
� � Prognosticators say electronics demand will be higher than earlier expected Accelerated blurring of the borders between electronics and PV

Increasing importance of materials purity
� The quest for higher efficiency cells and modules will trickle down to silicon purity

Silicon value chain as well as silicon "form factor" likely to evolve
� Polysilicon chunk versus particulate silicon versus silicon gases

49

� Copyright 2007 Renewable Energy Corporation ASA

Competitive advantages in silicon materials
The best positioned suppliers will be characterized by:
� � � � � Cost of production Quality of customers and relationships Contract structure State of technology and IPR Fungibility of the silicon products

Field trip March 27-29, 27 29 2007

50

� Copyright 2007 Renewable Energy Corporation ASA

Thank you

Field trip March 27-29, 27 29 2007

� Copyright 2006 REC Silicon Inc, All Rights Reserved August 51 21, 2006

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