REC Extends Shutdown of Norway Production Capacity to Year-End

Renewable Energy Corp. ASA, a Norwegian maker of solar-power components, extended a shutdown of plants in Norway until the end of the year because demand for wafers and cells has failed to pick up.

The production halt, which represents about 45 percent of REC’s wafer output capacity in the country, includes the Heroeya, Glomfjord and Narvik factories, the Sandvika-based company said today in a statement.

“Market prices have stabilized but not recovered over the last few months,” the company said. REC’s silicon production in the U.S., and its wafer, cell and module output in Singapore, remain at full capacity, it said.

Solar companies in Europe have halted plants to cope with lower demand. Germany’s Conergy AG retracted its annual earnings forecast in June, saying it saw “no significant improvement in the solar markets.” Equipment maker Roth & Rau AG (R8R) said that month it may be a year before solar investments grow again as manufacturers struggle with overcapacity and tariff reductions.

REC’s decision to extend the shutdown is “in line with probably everyone’s expectations,” said Eirik Vegem Dahle, an analyst at Pareto Securities ASA in Oslo. “They are very, very high on the cost-curve on these old wafer assets in Norway. It’s unlikely they will ever come on-stream again.” Dahle has a “buy” rating on REC shares and a price estimate of 17 kroner.

Shares Gain

REC rose as much as 6.2 percent to 9.73 kroner in Oslo trading, and was at 9.31 kroner as of 12:04 p.m. local time, extending the stock’s three-day advance. The shares have dropped 48 percent this year.

Prices for wafers and cells would need to improve by 20 to 30 percent to allow REC to reopen its plants, Chief Executive Officer Ole Enger said July 19. Prices for 6-inch (15- centimeter) multicrystalline silicon wafers have lost 14 percent this quarter, while multicrystalline silicon cell prices are down 13 percent, according to Bloomberg New Energy Finance data.

To contact the reporter on this story: Stephen Treloar in Oslo at streloar1@bloomberg.net

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net.