REC Solar closes 300 MW supply agreements as third quarter revenue drops

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Norway’s REC Solar ASA has closed two agreements with U.S. solar project developer Recurrent Energy for the supply of 300 MW of PV panels for utility-scale plants in California.

The deals with Recurrent Energy are the latest in REC’s recent string of major PV panel supply agreements for the U.S. market. REC has over the past months signed deals of 685 MW for the U.S. residential, commercial and utility-scale segments of which some 532 MW are expected to be delivered in 2015, representing 44% of REC’s expected 1.2 GW production next year.

"With our successful push into the U.S. market, we have been able to build up an order book that significantly exceeds our 300 MW panel manufacturing expansion in 2015,” said REC Group CEO Martin Cooper. “Our expanded order book will allow for greater planning visibility and assist in further stabilizing our financial performance.”

REC is supplying Recurrent Energy with its recently introduced Peak Energy 72 Series panels from the first quarter of 2015 until the second quarter of 2016 at a fixed price.

“With our new 72-cell product, we are seizing opportunities in the U.S. large commercial and utility markets and are demonstrating significant growth in line with our expectations," Cooper added.

The utility-scale segment accounts for the largest portion of solar installations in the U.S. market. IHS expects that new installations in the U.S. utility-scale segment will constitute 4.1 GW in 2015.

The news followed REC’s announcement of its third-quarter figures on Thursday. The company posted an after tax profit of $22.5 million in the third quarter, a 39% increase from the previous quarter.

The company’s revenue in the period fell 15% quarter on quarter to $149.1 million – nevertheless more than 7% higher compared to the third quarter of 2013.

Module sales accounted for the group’s total revenue of $149.1 million, with its system business contributing minimally to total turnover in the quarter. Module revenue was down 9.3% from the second quarter due mainly to the seasonal slowdown in Europe, the company said.

Earnings before interest, tax, depreciation and amortization (EBITDA) related to module sales reached $15.1 million — 10.1% of revenue and in line with the company’s expectations. Module EBITDA was 30% lower than the previous quarter due to the fact that the second quarter included “exceptional receipts.”

Module production, meanwhile, climbed 7.1% to 248 MW quarter on quarter.

In addition, REC signed several major long term contracts in the U.S. residential and utility market during from July to September.

"REC’s third quarter 2014 was impacted by a seasonal slowdown in Europe, softer market conditions in Japan and high activity level in the U.S. market,” Cooper said, adding that currency movements were increasingly impacting the relative attractiveness of REC’s key markets.

The chief exec said REC’s recent product launch of its Peak Energy 72 cell and Peak Energy Z-Link series had resulted in the closing of several major contracts in the United States, including deals with SolarCity and SunRun in addition to Recurrent Energy. The company has also launched its Twin Peak series, which is targeting the residential and commercial market.

Cooper added that REC’s furnace upgrade and module expansion was progressing according to plan and the company continued to focus on reducing its solar panel cash costs per Watt-peak.

REC’s solar panel cash cost fell about $0.01 per Watt-peak from the second quarter. The sales price for solar panels fell 2.2% from the second quarter.