Last week, REC announced that the company will make further cuts to its solar wafer production in Norway, temporarily halting 50% of its capacity at the Glomfjord monocrystalline wafer plant during the first quarter of 2012.
In November last year, REC announced the temporary halt of 60% of the capacity at another multi crystalline wafer plant in Norway, and the firm now expects to produce only 105MW of multi- and monocrystalline wafers in Norway in the first quarter of 2012. Workforec is down by more than 50% in Norway and unfortunately, we believe Norwegian manufacturing will lose further position in the group.
More significantly, the CEO, Mr. Enger, announced that the latest price drops have led to a situation in which prices have to come back by 25% to enable profitability at REC. He nevertheless believe that cost reductions and the solid cost leadership position at its poly silicon works in the US will leave REC as a winner in the coming half year consolidation game.
We are not exited to hear that REC is a strong believer in itself. We won’t predict the future, but are pretty sure that the next 6 months will let us know if they survive. Its all a numbers game now and, as Enger says, solar PV companies with low cost positions and strong balance sheets and no need to refinance will come out alive.
For the survivors, the future will look brighter – as grid parity and new markets will boost demand a bit further into the future.