Solar — Investor Presentation 2014

Jul 24, 2014

SECONDQUARTER 2014

24 July 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 second quarter 2014 result pr presentation esentation on July 24, 2014. 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 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.

Q gg 2 2014 Highlights

Market and Operations Update

Financials

• Financial performance
• Revenues of USD 175.8m
• Module EBITDA of USD 21.6 m, including USD 7.4 million in property tax reimbursement
  • – Total EBITDA of USD 21.1 m
• Solar panel cash cost in Q2 2014 is in line with Q1 2014 (excluding exceptional items) ²³² MW of module production EBITDA (USD m)
• Sales price for solar panels for Q2 2014 down 1.5% from Q1 2014
• Agreement with SolarCity to supply
• Product scope is expanding to strengthen US market position

Revenues (USD m)

Q gg 2 2014 Highlights

Market and Operations Update

Financials

Global solar panel demand has been weak in 1H 2014 and prices have fallen with 4.5% during Q2 2014

Annual Module Installations (GW)

Solar Panel Spot Prices (USD/W)

• Global demand expected to pick up in with an estimated 20 GW installed

• Annual global module installations are expected to reach between 43 – 49 GW in 2014

• Global solar panel spot prices fell by 4.5% during Q2 2014 and have continued to decline at the start of Q3 2014

• Trade cases increasingly influencing pricin g and supplier landsca p ep g pp

Increased demand for REC modules in Europe supported by strong market conditions in the UK

Geographical sales split (MW)

• Europe remains an important market for REC with demand in the UK UKpicking up for a weakening German market
• Softer market conditions experienced competition, seasonal effects and reduction in FiT rates
• The US market expected to become becomean increasingly important market for REC Solar

Source: IHS Integrated Market Tracker Q2 2014, REC

REC is expanding it's product range and strengthening it's market presence in the growing US market

* Includes figures for "off grid"

8

Source: IHS Integrated Market Tracker Q2 2014, REC

• The US market is expected to increase with 27% CAGR from 2013 to 2016
• REC has entered into a supply agreement under which SolarCity will purchase a minimum of 100 MW and up to 240 MW commencing in Q4 2014 MW, over a 12 months period
• REC is in contract discussions with other potential clients re gardin g lon g ^{p g} ggterm module supply agreements
• REC is expected to start shipment of the 72 cell modules in Q3 2014 to i th t t l dd bl k tet
• The ongoing solar trade dispute between the U.S. and China may influence the supply landscape

Annual Module Production (MW)

• Capacity expansion plans on track
• Module debottleneckin g project to increase capacity by to ~1.0 GW by Q3 2014
• Furnace upgrade to increase wafer capacity to 800 MW by end 2014
• Expansion of module plant with two new lines to increase module production capacity to 1.3 GW by 2H 2015

Solar panel cash cost reductions expected to pick up in 2H 2014

* Reclassification of historical SG&A and cash. conv. costs

• 2014 Q2 solar panel cash cost down from 67 to 65 USD cents/W
• The cash costs are impacted by ongoing module debottlenecking, the furnace upgrade in the wafer plant, increase in silicon costs and the fire in costs at the cell plant in Q1 2014
• REC has targeted 8 – 12% reduction 2013 to Q4 2014, but there are risk related to changing product mix and material cost development
• Cost reductions to be achieved through;
  • Increased furnace capacity
  • Increased module output
  • C ll ffi i i ell efficiency improvements

Q gg 2 2014 Highlights

Market and Operations Update

Financials

Financial development EBITDA margins have "stabilized" around 10%

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

* Including exceptional cash cost items - 6.6%

CONSOLIDATED STATEMENT OF INCOMEREC

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

• Decrease in module revenues mainly due to lower non-panel sales
• Module sales volumes increased by 1.2% while module ASP fell by 1.5%
• System Business revenues increase due to sale of Italian roof top project
• Operating expenses reduced in part due to property tax reimbursement of USD 7.4m and focus on cost control
• The annual property tax expense is expected to be d d ith USD 1 7 i reduced with 1.7m going forward after an agreement with the Singapore authorities

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

• Cash position of USD 97m
• Equity ratio of 58%, no interest qy , bearing debt

• Net working capital of USD 134m

  • – Operating working capital of USD 95m
  • – Non operating working capital of USD 39m

• Current status:

• – Portfolio consists of 4 projects in US, UK, Italy and Romania and one fund participation in Italy
• –Remaining projects in Italy and Romania expeced to be sold within the next 12 months
• Proceeds from already sold projects expected to return around ~USD 10m in 2H 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 6 0 % o n e c e v e o p r o c e e s
U K j t p r o e c	1 8 M W p	S Q f l d i 1 2 0 1 4 R i d 8 % d 5 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 l d i 2 2 0 1 4 R i d 0 % f 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 i d l d d t a e s p r o c e s s o n g o n g e a y e u e o , l i d i i t r e g u a o r y s s u e s a n w o r s e n n g e c o n o m c s d i l i d t t t t e o r e r o a c e m p p o s e a e s u v y y x
I l j 2 t t a y p r o e c	i M W F d 2 0 % 1 3 6 n p u n s	I i i l d i i t n a s c u s s o n s

Share price development for REC Solar in 2014

* Peer group include Canadian Solar, Hanwha, JA Solar, Jinko Solar, Renesola, Trina Solar,Yingli Solar, First Solar, Sunpower Source: Ecowin, Swedbank, REC Solar

	D d i i b i l i i b l b i d l t t t t t t  e m a n v s y c o n n u e s o e o w u n u s r y a n a y s s a r e , i i k i l b l d d i H i l l i 2 2 0 1 4 t e x p e c n g a p c u p n g o a e m a n n e s p e c a y n , C h i d h U S t n a a n e
M k l k t t a r e o o o u	C Q R E f k d i i i E d J i 3 t t t t  e p e c s o e r m a r e c o n o n s n r o p e a n a p a n n x u 2 0 1 4
	G l b l l l i f l l i h i Q d h 4 4 5 5 % % 2 2 2 0 0 1 1 4 4 t  o a s o a r p a n e p r c e s e w n a n a v e i d l i d f Q S l l i 3 2 0 1 4 t t t t t c o n n e o s e a s a r o o a r p a n e p r c e u d l i l l b i f l d b h d d i t t t t t e e o p m e n e n e n c e e o c o m e r a e s p e s v w u y u u
	C R E h d d i i l l h f 8 1 2 % t t t t  a s a r g e e r e c o n n s o a r p a n e c a s c o s s r o m u - Q Q O i i j i l l d l i 4 2 0 1 3 4 2 0 1 4 t t t t o r o n g o n g n e s m e n p r o e c s e e r u v w v

manufacturing outlook

however may make it challenging to achieve our cost target Capex and Module production of ~240 MW in Q3 2014 and ~950 MW in 2014

however, it

cost reductions in 2H 2014. Increase in some raw material prices,

USD ~ 70m capex program in year 2014 to increase module it t 1 0 GW b Q3 2014 1 3 GW b 2H 2015 d f capacity to ~1.0 by 2014, ~1.3 by 2015 andwafer capacity to ~ 800 MW by end 2014

Q gg 2 2014 Highlights

Market and Operations Update

Financials