Solar — Investor Presentation 2014

Oct 23, 2014

THIRDQUARTER 2014

23 October 2014

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 Solar ASA and REC Solar ASA's (including subsidiaries and affiliates) lines of business These expectations estimates and projections are gener business. expectations, generally identifiable by statements containing words such as statements words "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 Solar ASA'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 Solar 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 Solar ASA is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither REC Solar ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

The presentation was prepared for third quarter 2014 result pr presentation esentation on October 23, 2014. Information contained within contained will not be updated. The following slides should be read and considered in connection with the information given orally during the presentation.

The REC Solar ASA 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 Act.

• REC has signed several major long term contracts in the US residential and utility market
• Financial performance in line with company expectations
• Module revenues of USD 149mof
• Module EBITDA of USD 15.2m
  • – Total EBITDA of USD 15.0m
• Module revenues impacted by seasonal EBITDA (USD m) slowdown in Europe and softer market conditions in Japan
• Solar panel cash cost down USD ~1 cents /Wp from Q2 2014 (excl exceptional ^{21 22} (excl. items)
• 248 MW module production, up 7.1%
• Sales price for solar panels down 2 2% price 2.2%from Q2 2014

Revenues (USD m)

Annual Module Installations (GW)

Source: IHS Integrated Market Tracker Q3 2014

Global solar panel spot prices (USD /Wp)

• Annual global module installations are 50 in 2014

• Strong demand in China, US and UK expected to lead to global installations of 15 GW in Q4 2014 according to IHS

• Average global solar panel spot prices fell by 4.6 % from Q2 to Q3 2014

• Trade cases and foreign currency movements increasingly influencing pricing and supplier landscape

Source: PV Insight

REC is responding to the market dynamics and increasing its sales to the US market

REC Industry 6%7%16% 20%17%5% 8% 8% 7% 12%6%4%32%33% 37% 25% 22% 20%15%12% 23%39%56% 53% 60% 53% 29% 26% 23%Q3 13 2016E Q4 13 Q1 14 Q2 14 Q3 14 2014E Europe China Japan Americas Other

Geographical sales split (MW)

• The ongoing trade case* between US and China is impacting the supply landscape.
• REC solar panels are tradecompliant both in Europe and the US
• Currency movements are impacting the relative attractiveness of REC's main markets
• The US market is gaining importance. REC's 300 MW capacity expansion will facilitate significant increase in REC's 24% REC s shipments to the US market

Source: IHS Integrated Market Tracker Q3 2014, REC *Determination of the anti-dumping and countervailing (AD/CVD) investigation in certain crystalline silicon PV products from China and Taiwan

REC has recently secured several major long term supply contracts in the US

* Includes figures for "off grid" Residential: < 10 kW, Commercial: 10 kW – 5MW , Utility: > 5MW

REC sales development in US (MW)

Source: IHS Integrated Market Tracker Q3 2014, REC

The US market is expected to increase ith 26% CAGR f 2013 t 2016 ithwith from to 2016 withthe strongest growth in the residential / commercial sector

• REC strengthened its position in the US and has secured ~685 MW in orders for the US market, amon gst others;
• SunRun contract 50 MW
• SolarCity contract 220 MW
• US utility contract 85 MW
• Recurrent Energy contract 300 MW Recurrent300
• REC started shipping its REC Peak Energy Z-link panels in late Q3 2014

High activity in the UK market has partly offset the seasonal slowdown in Europe in Q3 2014

* Includes figures for "off grid" Residential: < 10 kW, Commercial: 10 kW – 5MW , Utility: > 5MW

REC sales development in Europe (MW)

• Activity level in Europe expected to increase in Q4 2014 due to strong demand in the UK

• ROC scheme in UK end on 1st April 2015 (for projects > 5 MW)

• UK and Germany were the most important markets for REC in Europe in Q3 2014

• REC volumes up 40% versus Q3 2013 mainly due to the high activity level in the UK market

Market development in Japan(GW)

• Increased uncertainty regarding market development in Japan
• Several Japanese utility companies have announced recently that they will restrict access of PV projects to the grid and review how much new capacity can be added

REC sales development in Japan (MW)

• Increased competition and unfavorable currency development has led to lower REC l t th J k tJapanese mar et
• REC will focus on the residential and commercial market segments

C R E P k E e a n e r g y i S i Z L k n e r e s -	C ( ) R E 's d d 6 0 l l l 2 6 0 W i h b k f f t t s a n a r -c e p a n e p e s p o e r a m e o r  w S C l i 's Z i t t t o a r e p m o n n g s s e m y u y Z i b l d i l l ² t t t e p c o m p a e m o r e p o w e r p e r m a n e a s y o n s a  , M W d i h S l C i 2 2 0 t t t t c o n r a c s e c u r e w o a r y
C R E P k E e a n e r g y S S 2 2 i i 7 e r e s	R E C 's l l l ( l l, W ) i d f 7 2 2 9 5 3 1 5 t t t  a r g e s s o a r p a n e c e p s a r g e e o r – S l i l i k i h U f f i i i l l i t t t t t t a r g e p a r s n e o e r n g s a n g c o s s o n n s a a o n u y v , f M ² d d b l t t o r e p o e r p e r m m a n r e c e s a a n c e o s s e m c o s s  w u y M W d i h R E d 3 8 5 t t t t c o n r a c s e c u r e w e c u r r e n n e r g y a n U S E P C c o m p a n y
R E C T i P k n e a w S i e r e s	( ) P i l l 6 0 l l, 2 7 5 W d i h i h r e m u m s o a r p a n e c e p p r o u c n g g e r e n e r g y • i l d i h i d i l / i l k t t t t t y e s a r g e n g e r e s e n a c o m m e r c a m a r e M h i h i l d d d ², t t o r e p o e r o p p e r m m g e r e n e r g e s a n r e c e s • w u u y y u , b l f t t a a n c e o s s e m c o s s y

Annual Module Production (MW)

• Year end 2014 manufacturing capacities
• First phase of furnace upgrade expected to be completed in 2014. Wafer: 880 MW
• –Cells: 770 MW
• – Module debottleneckin g project to gp j increase capacity completed in Q3 2014. Modules: 1.0 GW
• 2015 it i t k
• – Second phase of furnace upgrade to increase wafer capacity to 950 MW by 2H 2015 on track
• Expansion of module plant with two new – plant with lines to increase module production capacity to 1.3 GW by 2H 2015 on track

Solar panel cash cost/watt expected to come down to ~ USD 61 cents/Wp in Q4 2014

• Q3 2014 solar panel cash cost, ex exceptional items, down USD 1 cents cents/Wp
• REC expects to achieve cash cost of USD 61 cents/Wp in Q4 2014 (target fS / of USD 60 cents/Wp in December 2014)
• REC will continue its cost reductions in ²⁰¹⁵ through; ⁴⁸
• Increased furnace and module output
• Cell efficiency improvements
• Continued OMC reductions and operational improvements

Financial development EBITDA margins have "stabilized" around 10%

f ig Ke y ur es	Q 2 4 1	Q 3 1 1	2 Q 3 1	3 Q 3 1	Q 3 4 1	Q 1 1 4	2 Q 1 4	3 Q 1 4
( ) E B I T D A U S Dm	‐1 8	‐7	1 5	1 1	2 1	1 6	2 2	1 5
in ( % ) E B I T D A m ar g	% ‐1 3. 0	% ‐5 7	% 9. 4	% 7. 2	% 1 1. 7	% 9. 4	% 1 3. 1	% 1 0. 1
d. du ( ) M io M W t o p ro c n	1 9 1	1 7 0	1 9 9	2 2 3	2 2 8	2 1 6	2 3 2	2 4 8
/ ( ) Co W U S Dc ts t s p en	0. 7 1	0. 6 9	0. 6 8	0. 6 5	0. 6 4	* 0. 6 4	* 0. 6 4	* 0. 6 2
						4 % -

* Excluding exceptional cash cost items

CONSOLIDATED STATEMENT OF INCOMEREC

		J 1 2 0 1 4 3 0 t a n o
( U S D I N M I L L I O N )	Q 3 2 0 1 4	Q 2 2 0 1 4	S 2 0 1 4 e p
R e e n e s v u	1 4 9. 1	1 7 5. 8	5 0 0. 2
M d l B i o e s n e s s r e e n e u u v u	1 4 9. 1	1 6 4. 3	4 8 3. 1
S B i t y s e m u s n e s s r e v e n u e	0. 0	1 1. 5	1 1 7.
T l f i l t t t o a c o s o m a e r a s	-7 8. 2	1 1 0. 5 -	2 9 3. 6 -
O i t p e r a n g e x p e n s e s	9 -5 5.	4 4. 2 -	1 4. 3 5 -
E B I T D A	1 5. 0	2 1. 1	5 2. 3
M d l B i E B I T D A o e s n e s s u u	1 5. 1	2 1. 6	5 2. 6
S B i E B I T D A t y s e m u s n e s s	-0 1	0. 5 -	0. 4 -
/ / D i i t. t e p r a m o r m p a r m e n	-4 8	0 5. -	1 4 5. -
E B I T	1 0. 2	1 6. 1	3 6. 9
S h f f i / l f i t t a r e o p r o o s s o e q a c c. u y	3. 8	0. 2	3. 8
N f i i l i t t e n a n c a e m s	9. 8	1. 1	1 1. 7
P f i / / l b b f t t t t r o o o s s s s e e o o r e e a a x	2 3 8.	1 4 7.	2. 3 5
I / b f i t t n c o m e a x e x p e n s e e n e	-1 2	1. 1 -	2. 6 -
f i / P l t r o o s s	2 2. 5	1 6. 2	4 9. 7
S E i h ( I U D ) a r n n g s p e r s a r e n
F l i t t t r o m o a o p e r a o n s
-b i a s c	0. 5 6	0. 4 1	1. 2 4
-d i l d t u e	0. 5 6	0. 4 1	1. 2 4

• Decrease in module revenues mainly due to lower sales volume (7.1%) due to seasonal slowdown in Europe and softer market conditions in Japan in Q3 2014
• Average sales price fell by 2.2% from Q2 2014
• Net financials include USD 7.8m in unrealized gain from FX contracts

REC foreign currency exposure

Production costs ⁺ SG&A Revenues EUR

• REC is "long" EURO and "short" SGD" and"USD"
• REC is "hedging" approximately 50% of its EURO receipts

Illustration of REC currency exposure EUR/USD currency development

USD SGD Other EUR/SGD currency development

( S O ) U D I N M I L L I N	S 3 0 E P 2 0 1 4	3 0 J U N 2 0 1 4	
S S S A E T
F i d A t x e s s e s	8 4. 5	8 3. 4	
I i b l A t t n a n g e s s e s	1 5. 3	1 7. 5
O C h N A t t t e r o n- u r r e n s s e	2 2. 5	3 0. 0
C h a s	7 3. 2	9 7. 1
O C h A t t t e r u r r e n s s e	2 6 2. 8	2 3 0. 7	
S S S T O T A L A E T	4 5 8. 3	4 5 8. 6
Q S E U I T Y A N D L I A B I L I T I E
S i h h l d ' t a r e o e r s e q u y
P i d- i i l t a n c a p a	1 3 1. 4	1 3 1. 4
O O C C h h i i h h i i i i t t e r e q u y, o m p r e e n s v e n c o m e			
d i d i t a n r e a n e e a r n n g s	8 7. 3	1 0 6. 4
f f P i d l h i d t t r o a n o s s o r e p e r o	4 9. 7	2 7. 2
	2 6 8. 4	2 6 5. 0
L i b i l i i t a e s
C P i i N t r o v s o n s o n- u r r e n	9 2. 4	9 6. 1
O T d P b l d h L i b i l i i t t r a e a y a e s a n e r a e s	9 0. 9	9 3. 2
O C h L i b i l i i t t t e r u r r e n a e s	6. 6	4. 4
	1 8 9. 9	1 9 3. 7
Q S T O T A L E U I T Y A N D L I A B I L I T I E	4 5 8. 3	4 5 8. 7

• Cash position of USD 73.2m
• Equity ratio of 59%, no interest qy , bearing debt
• Net working capital of USD 156m
  • – Operating working capital of USD 117m
  • – Non operating working capital of USD 39m

• Inventory levels increased by USD 13m from Q2 2014

• Current status:

• – Portfolio consists of 3 projects in US, UK, Italy and Romania and one fund participation in Italy
• –Remaining projects in Italy and Romania expected to be sold within the next 12 months
• Proceeds from already sold projects expected to return around ~USD 2m in Q4 2014 and ~USD 7m in 2015USD

P j i t r o e c o v e r v e w	S i z e	S t t a u s
U S j t p r o e c	M W 8 0 p	S l d i Q R i d f d 1 2 0 1 3 8 0 % o n e c e v e o p r o c e e s
I l j 1 t t a p r o e c y	4 M W 5 p	S Q f l d i 2 2 0 1 4 R i d 0 % d 5 o n e c e e o p r o c e e s v
R i j t o m a n a p r o e c	M W 8 3 p	S l d l d d l i d t t a e e a e e o r e g a o r s s e s a n y u u y u i i d i l t t t o r s e n n g e c o n o m c s e o r e r o a c e w u v y i d d t t m p o s e a e s x
I l j 2 t t a p r o e c y	2 0 % i 1 3 6 M W f d n p n s u	D i l d d i i t e a e s c s s o n s u

^* Peer group include Canadian Solar, Hanwha, JA Solar, Jinko Solar, Renesola, Trina Solar,Yingli Solar, First Solar, Sunpower Source: Share prices as of 20/10/14, Ecowin, Swedbank, REC Solar

Market outlook

• Industry analysts are expecting a strong pick up in global demand in Q4 2014, especially in China and the US
• REC expect attractive market conditions in US and UK in Q4 2014
• Global average solar panel prices fell by 4.6% from Q2 to Q3 2014. g pp y Solar panel price development in Q4 expected to be influenced by foreign currency development

Capex and manufacturing outlook

• REC expects to achieve a cash cost of USD 61 cents/Wp in Q4 2014 (60 USD cents/Wp in December 2014)
• Module production of ~255 MW in Q4 2014 and ~950 MW in 2014 p
• Manufacturing capacity at year end 2014; Module capacity at ~1.0 GW, wafer capacity at ~880 MW and cell capacity at ~770 MW
• Q4 2014 capex of USD ^~ 22m whereof USD 10m for the 300 MW for module capacity expansion