Management Case Analysis

SMU845

This case was written by Professor GENG Xuesong and Lipika Bhattacharya at the Singapore Management University. The case was prepared solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. Copyright © 2019, Singapore Management University Version: 2019-02-11

REC SOLAR: STRATEGISING ON A SOLAR COASTER

I keep a list on my desk; I have to keep reminding myself, that there are over 450 solar companies

that have failed, and gone bankrupt. There’re many stories of companies that have made the

wrong technology bet or invested in a technology before it’s time. You have to pick the right

technology, at the right time, and it’s a very serious decision because you are, really are, betting

the company on those decisions.

- Steve O’Neil, Chief Executive Officer, REC Solar

On a sunny afternoon in May 2017, Steve O’Neil, CEO of REC Solar (REC), a leading company in

the solar industry with operational headquarters in Singapore, pondered over the looming crisis in

the solar panel industry. He was worried about the future of REC. A competitor of REC, Solar World,

had just filed for bankruptcy. A few weeks earlier, two other renowned solar panel companies, Suniva

and Sun Edison, had also filed for bankruptcy.

The solar industry was sailing on choppy seas yet again. The industry had been in constant turmoil

over the past several years globally, due to fluctuating material prices, falling solar panel prices,

industry overcapacity, aggressive competition, and demand unpredictability. As O’Neil called it, the

industry was truly a “solar coaster”. More than a decade earlier in 2005, the shortage of silicon supply

had forced many solar companies to close down or opt for consolidations. In 2008, solar companies

suffered badly from the aftermath of the global financial crisis. The industry gradually picked up

pace in 2013, gaining momentum from rapid customer adoption and new renewable energy

programmes. High profitability and growth motivated many companies to expand capacity

substantially. But in late 2016, the solar industry began riding the downslope of the “solar coaster”

again, as solar panel prices fell suddenly. 2017 looked to be a tough year financially for REC.

O’Neil and his top management team had to respond quickly to the market changes. Could REC offer

a price cut on its products to stay competitive? Or could it diversify its product scope and geographic

scope to minimise the market uncertainty? The firm also needed to examine whether its long-term

strategy remained viable for sustaining a competitive advantage in the ever-changing market. Should

REC focus on developing advantages in manufacturing, technology or service? Should it scale up its

investment in new but uncertain technologies?

In spite of the turbulence in the market, O’Neil firmly believed that the solar industry was on the

cusp of tremendous growth. The growth potential of the market was so huge that REC could

potentially double its market share, while still being selective in choosing its customers. Nevertheless,

the question of how REC’s current strategy could be changed weighed heavily on his mind.

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Solar Market

Solar technology, also known as the photovoltaic (PV) effect, dated back to the 1880s and was based

on the science of converting sunlight into electricity using crystalline silicon. High costs and low

conversion efficiency had prevented its commercial use until technological advances in the late 1990s

made solar power more affordable. Ever decreasing costs coupled with growing energy demand,

concerns about the dwindling sources of traditional energy and their environmental impact, as well

as various forms of governmental subsidies, finally led to exploding global demand for solar power

energy after 2008.1

Solar energy became the fastest growing renewable energy source by 2016. Globally, solar panel

installation grew from less than 1 gigawatts (GW) in 1990 to over 23GW in 2009 and then soared to

70GW in 2016. It was projected to grow to 250GW annually by 2040 at the average compound annual growth rate (CAGR) of 5 to 7%. Solar power was estimated to account for around 15% of

world electricity generation by 2040, up from about 1% in 2016.2

The cost of solar power had dropped from US$ 2/kWh (per kilowatt hour) in the late 1970s to around

US¢ 7/kWh in 2016.3 As a comparison, the cost for hydropower was about US¢ 0.85/kWh, US¢

1.7/kWh for nuclear, US¢ 2.13/kWh for fossil fuel, and US¢ 3.4/kWh for natural gas.4 It was

estimated that solar power cost would further decrease to around US¢ 4/kWh by 2040.5

The development of the solar industry had been primarily policy-driven.6 Germany had taken the

lead by providing generous subsidies to solar panel manufacturers in the early 2000s. Spain, Italy,

and France had followed with similar measures. By 2010, Europe alone had accounted for 74% of

the global demand for solar modules.7 However, after the 2008 global financial crisis, these countries

dramatically curtailed their solar energy programme subsidies. Asia replaced Europe as a substantial

solar market and reached 65% of the total global demand by 2017.

Japan became an important market in the mid-2000s with its ambitious plans for using solar power

for large scale electricity generation.8 In 2003, Japan introduced laws which made it mandatory for

electric companies to use a specified amount of electricity from renewable energy sources such as

solar and wind. In China, the government identified the solar industry as one of their focus areas and

offered export credits and R&D support to boost solar products manufacturing since 2000.9 China

had taken the lead over Germany as the largest solar panel manufacturer in the world in 2013 and

became the dominant solar player of the decade. The solar market in the U.S. also picked up

substantially since 2010. With government incentivisation schemes, the demand for solar products

in the US continued to grow exponentially from 2013 with the state of California dominating the U.S.

1 Gil Knier, “How Do Photovoltaics Work?”, NASA, 6 August, 2008, https://science.nasa.gov/science-news/science-at-

nasa/2002/solarcells, accessed May 2017.

2 Bloomberg New Energy Finance, New Energy Outlook 2016, https://about.bnef.com/blog/new-energy-outlook-2016-watch-the-story- unfold/, accessed May 2017.

3 Jeff Siegel, Chris Nelder “Investing in Renewable Energy: Making Money on Green Chip Stocks”, John Wiley & Son’s., Inc, 2008,

accessed May 2017. 4 Wisconsin Valley Improvement Company, Hydroplants, Facts About Hydropower, Energy,

http://www.wvic.com/Content/Facts_About_Hydropower.cfm , accessed February 2018.

5 Bloomberg, New Energy Outlook, https://www.bloomberg.com/company/new-energy-outlook/, accessed May 2017. 6 World Energy Council, Solar, https://www.worldenergy.org/wp-content/uploads/2017/03/WEResources_Solar_2016.pdf, accessed

May 2017. 7 National Renewable Energy Department, U.S. Department of Energy, 2010 Solar Technologies Market Report, https://www.nrel.gov/docs/fy12osti/51847.pdf, accessed May 2017. 8 David Cyranoski, “Japan Goes for the Sun”, Nature.com, April 29, 2009,

http://www.nature.com/news/2009/090429/full/4581084a.html, accessed May 2017. 9 He Nuoshu, “Can Brazil Replicate China’s Success in Solar?”, China Dialogue, 20June, 2017,

https://www.chinadialogue.net/article/show/single/en/9865-Can-Brazil-replicate-China-s-success-in-solar-, accessed May 2017.

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market demand.10

The newly installed solar capacity in 2016 globally was around 34GW in China, 7.7GW in the U.S,

and 7GW in Europe.11 China, Europe, and the U.S. were expected to dominate solar PV installation

volumes through 2020, but market growth was expected to be particularly higher in Asia.12 The

Japanese government had continued to support the solar industry with the ambition of increasing its

installed capacity multi-fold by 2020.13 14 It was also forecasted that India would quickly overtake

Japan as the third largest market of solar panels (refer to Exhibit 1 for Global Solar demand monitor

Q1 2017). Countries like Mexico, France, and Australia were also expected to see strengthening

demand over the next few years. 15

Solar Value Chain

The solar market had a long value chain with various firms of different sizes dispersed along the

chain. The value chain in the solar industry ranged from raw material production (like silicon) to

solar panel production, to installation and service for end-consumers (refer to Exhibit 2: Solar Value

Chain).

The first stage in solar panel manufacturing was the production of solar grade silicon wherein

metallurgical grade silicon was converted into high purity polysilicon. The next stage was to cast the

polysilicon into ingots and wafers – the key components used in the production of solar cells. An

array of solar cells was then assembled into a solar panel (also referred to as solar module) and

encapsulated within a protective glass. The final stage involved installation of the solar panels with

a power converter (called inverter) and a rack system that could hold the PV panels in place for

residential, commercial, or utility customers.

The cost in each of the stages in the value chain had continued to be driven down by technological

enhancements. Polysilicon costs had reduced from US$0.43/Wp (Watt peak 16 ) in 2010 to

US$0.18/Wp in 2015.17 Historically, polysilicon had constituted half of the price of a finished solar

module until the 1980s. However, after the fall in prices of polysilicon in the 90s and then drastically

after 2008, this component cost constituted only about 30% of the total module cost.18

The production cost for ingot/wafer and solar cells also dropped continuously as a result of

technology enhancement that reduced silicon consumption. The average silicon consumption for

manufacturing solar cells was expected to drop by 25%, from 4.8 grammes per watt (g/W) in 2016

10 Daniel Wood, “Watch 30 Years of U.S. Solar Industry Growth”, Energy.gov, US Department of Energy, January 30, 2015,

https://energy.gov/articles/map-watch-30-years-us-solar-industry-growth, accessed May 2017.

11 Bloomberg New Energy Finance, New Energy Outlook 2016, https://about.bnef.com/new-energy-outlook/, accessed May 2017. 12 Brian Publicover, “APVIA Sees Steady Q1 Growth in Asian PV”, PV Magazine, May 26, 2017, https://www.pv-

magazine.com/2017/05/26/apvia-sees-steady-q1-growth-in-asian-pv/, accessed May 2017. 13 Newsletter, Japanfs, “The spread of Solar Power Generation in Japan”, June 30, 2008, https://www.japanfs.org/en/news/archives/news_id027851.html, accessed May 2017.

14 IEE Power and Energy Magazine, Ingram Publishing, First Solar, Feb 20 2013,

http://web.mit.edu/12.000/www/m2018/pdfs/japan/solar.pdf, accessed May 2017. 15 Julia Pyper, “Global Solar Market to hit 85 GW in 2017”, Green Tech Media, April 11, 2017,

https://www.greentechmedia.com/articles/read/global-solar-market-forecast-to-hit-85gw-in-2017-with-surge-in-china, accessed May

2017. 16 Wp stood for Watt peak which referred to the peak power value or the maximum output power achieved by a solar module under full

solar radiation (under set Standard Test Conditions).

17 Polysilicon Spot price, Energy trend, Price quote, http://pv.energytrend.com/pricequotes.html, accessed May 2017. 18 Eric Wesoff, Solar Power Year in Review, “Greentechmedia”, December 23, 2011,

https://www.greentechmedia.com/articles/read/solar-power-year-in-review-2011, accessed May 2017.

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to 3.6 g/W in 2020. 19 Assembling cells into solar panels was one of the simplest processing steps

with the labor cost minimised due to automation. But the assembly process consumed an extensive

list of commodity materials like glass, sealant, and aluminum, etc.20 In the final installation stage,

the Balance of System (BOS) components, such as mounting structures, cabling, electrical

components (inverter, meters, surge protection, etc.), labour and overhead costs, represented more

than half of the costs for the total solar system. Among them, the inverter costs embodied the largest

component of BOS, accounting for about 10% of the total cost of the PV system.21

Besides raw materials, the cost of a solar panel was significantly influenced by technology and

scale.22 The solar cell efficiency (i.e., the percentage of solar radiation converted into electricity, or

the electrical power generated per unit surface area) was expected to play the largest role in solar

panel cost reduction. An efficiency increase of 1% could result in a reduction of up to 10% of the

total system´s cost per Wp.23,24 Moreover, economies of scale were crucial for the industry as it

required high fixed cost investment in equipment, overhead and managerial costs. To remain

competitive in the industry, at least 1 GW of the scale was required. The learning curve in the industry

was phenomenal as well, because of the required experience in installation, maintenance, and process

optimisation, which could reduce costs significantly. As a result, the entire solar industry had

struggled to stay on the steep learning curve. In 1976, solar panels sold for US$72 a watt, which then

fell to US$3/W in 2008, and then to US$0.5/W in 2016 and fell another 30% in just six months.

Several hundred companies operated across the value chain in the global solar industry. Other than

polysilicon manufacturing, which was dominated by only a handful of firms, each part of the value

chain had anywhere from 50 to 75 companies making up to 90% of industry activity.25 Among all

the manufacturing stages of the value chain, solar cell manufacturing was the most fragmented. The

solar panel market was fragmented too, with no panel manufacturer having more than 10 % of market

share. In the final installation stage, some integrated manufacturers provided downstream services

like designing, financing and project management services to customers. But most of them relied on

numerous small installers (especially in the residential market) to provide downstream services.

The customers of solar panels could be residential, commercial (e.g., retail and industrial buildings

requiring rooftop installations) or utility (e.g., power plants). The residential consumers were

fragmented, and most were one-time buyers, making switching costs irrelevant, and the barrier to

entry for the installers minimal.26 The commercial and utility market was much less fragmented.

These consumers had much larger power generation need; the solar panels they required were

typically much larger and more expensive than residential ones. However, the appearance factor of

solar panels in terms of colour and look was not as important for commercial or utility buyers. The

installation design differed because commercial buildings typically had flat roofs, as opposed to

19 Irena, Solar PV Cost Analysis, https://www.irena.org/DocumentDownloads/Publications/RE_Technologies_Cost_Analysis-

SOLAR_PV.pdf, accessed May 2017. 20 Greenrhinoenergy, Solar Industry, PV Modules, http://www.greenrhinoenergy.com/solar/industry/ind_04_pv_modules.php, accessed

May 2017.

21 “Balance of System (BOS) to Module Pricing Ratio Opens up from 50:50 in 2011 to 68:32 This Year”, Greentechmedia, November 15, 2012, https://www.greentechmedia.com/articles/read/solar-balance-of-system-accounts-for-68-of-pv-system-pricing-new-gtm-repo,

accessed May 2017.

22 Irena, RE Technologies, Cost Analysis, Solar Photovoltaics, June 2012, https://www.irena.org/DocumentDownloads/Publications/RE_Technologies_Cost_Analysis-SOLAR_PV.pdf, accessed May 2017. 23 Solarmango, Watt Peak, Definition, http://www.solarmango.com/dictionary/watt-peak, accessed May 2017.

24 Mercom Capital Group, Mercom Solar Intelligence Report, April 11, 2011, http://mercomcapital.com/news-analysis, accessed May 2017.

25 Finlay Colville, “Consolidation in the Solar Industry, Think Again”, PV Tech, Feb 15, 2017, https://www.pv-tech.org/editors-

blog/45880, accessed May 2017. 26 Lucas Davis, “A Deeper Look into the Fragmented Residential Solar Market”, Energy Institute at Haas, June 8, 2016,

https://energyathaas.wordpress.com/2015/06/08/a-deeper-look-into-the-fragmented-residential-solar-market/, accessed May 2017.

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slanted roofs in most residential houses.27

Though the demand for residential and commercial solar panels was much lower than the demand

from the utility sector (9%, 29%, and 62% respectively in 2016), all segments in the industry had

continued to see substantial growth year over year.28 29 (Refer to Exhibit 3 for US Solar PV

Installations). REC catered mostly to the residential and commercial market, but it had dabbled in

utility projects as well.

REC

REC was founded as a hand-washed wafer producing unit in Norway in 1996. Over the years the

company had grown to become a leading integrated solar panel manufacturing company, and the

largest European supplier of solar panels, producing more than 30 million solar panels as at end

2017.30 Its solar panels had generated 10 GWh of electricity for more than 12 million people around

the world. REC had established itself as a reputable, quality-focused solar panel manufacturer over

the past two decades and was acclaimed for its product quality, advanced technology, and customer

service.

Moving to Singapore

Until 2010, REC had developed production capacities in wafers, solar cells and solar panels in both

Norway and Sweden. The major market for the company was Europe. When the solar market shifted

gear with growing demand emanating from Asia and dwindling demand from Europe, REC decided

to expand its operations into Asia. The management team in the company was entrusted with the task

of finding an alternative headquarters that would facilitate coordinating its operations and activities

across the globe. Singapore was chosen as the operational headquarters after assessing many

locations. Explaining the factors that influenced the choice, O’Neil said,

We looked at over two hundred locations around the world, before choosing Singapore. We had

a very detailed matrix with various criteria, including the cost of labour, cost of utilities, cost of

materials, cost of logistics, and favourable climate for using chemicals. We chose Singapore

primarily because of the ready availability of human talent here, especially in the semiconductor

area, which is very similar to the chemical solar cell manufacturing process. The location of the

city as a major port, its logistics excellence, and proximity to materials were important factors

as well. Moreover, Singapore is a trade-friendly country, and the government is very supportive.

We work closely with the Singapore Economic Development Board (EDB). Singapore is also a

good location for doing research, due to the availability of human talent in our research study

area.

The Singapore government had geared towards adopting an integrated approach to sustainable energy

across power generation, transmission, distribution, and consumption. For example, it had initiated

a collaborative programme involving REC providing new hybrid electricity solutions comprising

27 Alan Goodrich, Ted James, and Michael Woodhouse, “Residential, Commercial, and Utility-Scale Photovoltaic (PV) System Prices

in the United States: Current Drivers and Cost-Reduction Opportunities”, p. 6-11, http://www.nrel.gov/docs/fy12osti/53347.pdf, accessed May 2017.

28 Christian Roselund, “The U.S. solar market nearly doubled in 2016 to 14.6 GW”, PV Magazine US, February 15, 2017,

https://www.pv-magazine.com/2017/02/15/the-u-s-solar-market-nearly-doubled-in-2016-to-14-6-gw/, accessed May 2017. 29 Bloomberg New Energy Finance, New energy Outlook, https://about.bnef.com/new-energy-outlook/, accessed May 2017.

30 REC, Company History, http://www.recgroup.com/en/company-history, accessed May 2017.

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solar energy and natural gas sources. With such government-backed initiatives to go solar, Singapore

served as a perfect backdrop as operations and manufacturing headquarter for REC.31

REC set up its new large-scale integrated solar manufacturing facility in Singapore in 2010 with an

investment of about US$ 2.5 billion for the first phase.32 The new plant in Tuas was equipped with

automated and integrated facilities to manufacture wafers, cells, and panels in a state-of-the-art

factory with a multi-fold increase of its original production capacity. The company also partnered

with Solar Research Energy Institute of Singapore (SERIS), a research institute at the National

University of Singapore (NUS), to research latest technologies in solar products and co-create

advanced innovative products.

Overcapacity issues in the market

In 2012, the solar panel industry faced overcapacity with sharply declining prices over the following

years. Many manufacturers could no longer cover costs or remain competitive and had to opt for

consolidations or report bankruptcy.

To cope with the downturn, the management team at REC had quickly closed down its multi-

crystalline wafer plants at Herøya and Glomfjord and its solar cell plant in Narvik to reduce capacity

and cost.33

Change of Ownership

In 2015, REC joined forces with the Elkem Group, a Norwegian conglomerate which was a leading

global player in the supply of silicones and silicon solutions.34 The same year, REC was rated as the

most reliable, dependable and bankable solar company by New Energy in the Altman-Z score.35

Debt/Equity

Interestingly, many solar companies relied on huge amounts of credit due to the long gestation

periods for investments involved in running a solar business. The downside of choosing products of

such companies was that consumers would then have to purchase third-party warranties to cover the

risk that such solar companies were unable to fulfill as part of their product warranty obligations, and

even then there was the risk of claims not being met due to caps and deductibles imposed under the

third-party warranties.36

REC tried to control its debt to ensure a healthy debt/equity ratio. In a study of the major solar

companies, REC had the lowest debt and lowest debt/equity ratio (refer to Exhibit 4 for REC

debt/equity ratio).

31 Ministry of Trade and Industry Singapore, Solar Nova Project, https://www.mti.gov.sg/MTIInsights/SiteAssets/Pages/Budget-

2014/SolarNova.pdf, accessed May 2017.

32 New $2.5b solar facility opens in S’pore, Eco-Business, November 3, 2010, https://www.eco-business.com/news/new-25b-solar- facility-opens-spore/, accessed December 2017.

33 REC, REC Annual Report 2008, http://www.recgroup.com/sites/default/files/documents/rec_annual_report_2008_0.pdf, accessed

May 2017. 34REC, REC Factsheet, http://www.recgroup.com/sites/default/files/documents/rec_factsheet_elkem_en_web_20150618.pdf, accessed

May 2017.

35 The Altman Z-Score is a statistical tool used to measure the likelihood that a company will go bankrupt. 36 REC, Files, Documents, Fact Sheet, Altman Z Score, 2016,

http://www.recgroup.com/sites/default/files/documents/rec_factsheet_financial_strength_2016_en_web.pdf, accessed May, 2017.

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Products and Technology

Products

REC’s major products included REC Peak Energy (60 multi-crystalline cells with an energy output

of up to 265 Wp) and REC Peak Energy 72 (72 multi-crystalline cells with an energy output of up to

320 Wp), as well as some variations of these two core products. In 2015, these products were

upgraded to their new product lines of REC TwinPeak (120 half-cut multi-crystalline cells, with an

energy output of up to 275Wp) and REC TwinPeak 72 (144 half-cut multi-crystalline cells, with an

energy output of up to 335Wp). The TwinPeak series’ panels boasted a 17% energy efficiency and

increased power output of about 10 Wp per panel, achieving a 275 W per panel performance.37

For both the product lines, the panels’ throughput of electricity generated could overcome the general

limitations of solar panel technology, including reduced performance in high heat, restrictive usage

in a warm climate, and light-induced degradation leading to lower efficiency and throughput. The

architecture of the panels sought to maximise the amount of sunlight absorbed. The unique half-cut

cell architecture provided the solar panels with unparalleled performance in shaded areas or areas

that received less sunlight. 38 REC’s solar panels were also 100% free from potential induced

degradation (PID) and had low light-induced degradation (LID).39 As a result, the panels reported a

much lower power loss (1.5%) due to LID when compared to industry averages (5%). 40 41

Additionally, the panels had a guaranteed performance of 25 years. They also had the lowest warranty

claims rate in the industry (refer to Exhibit 5 for REC Warranty claims).

Typically, solar panels installed on single-axis trackers could track the sun from the East to the West

from 10 am to 4 pm. The architecture of REC’s TwinPeak modules allowed a backtracking function

which tracked the sun before 10 am and after 4 pm, resulting in improved yield.42 In addition to

capturing sunlight that hit the panels’ surface, the panels could also harness the light that passed

through the surface with the help of reflective material at the rear of the solar cell. This material

reflected the light back into the solar cell to be converted into electricity.

From a design perspective, REC solar modules were typically thinner and lighter with shorter cables

and could accommodate more cells per panel, compared to the average industry products. Thinner

frames of solar panels allowed for greater packing density and reduced shipping and storage costs. It

also allowed more modules to be stored onsite and in remote setup areas due to less space

consumption. Also, the installation of lighter modules was faster than conventional modules, which,

coupled with shorter cables that did not require cable ties, reduced the number of man-hours required

for module installation while also improving safety.

Technology

37 REC, Twin peak, http://www.recgroup.com/sites/default/files/documents/im_rec_twinpeak_series_ul_rev_f.2_eng.pdf, accessed May, 2017. 38 Dricus, “Half Cut Solar Cells: New Standard in Product Differentiation?”, Sino Voltaics, 18 April 2016,

http://sinovoltaics.com/solar-cells/half-cut-solar-cells-the-new-standard/, accessed May 2017. 39 Sebastian Pingel, O. Frank, M. Winkler, S. Daryan, Torsten Geipel, H. Hoehne, and Juliane Berghold, , “Potential Induced

Degradation of Solar Cells and Panels”, 2010, accessed May 2017. URL NEEDED 40 National Renewable Energy Laboratory, Documents, Understanding Light-Induced Degradation of c-Si Solar Cells, http://www.nrel.gov/docs/fy12osti/54200.pdf, accessed May, 2017. 41 REC, Documents, http://www.recgroup.com/sites/default/files/documents/assessing_the_impact_of_degradation_0.pdf, accessed

May 2017. 42 REC, Videos, How Solar Works, https://www.youtube.com/watch?v=pMU6QCTVbWU&index=3&list=PLE499AE76F77E0032,

accessed May, 2017.

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REC tried to maintain a market image of being a leader in launching new technology. The company

had been the first-mover in launching multi-crystalline technology - its multi-crystalline products

reported high cell efficiency of 17.7%; following which the company launched its half-cut cell

technology which was reported to be two to three years ahead of competition. The half-cut PERC

cell technology had taken REC several years to lab test and pilot before its mass production in 2015.43

Focus on improving technology and product quality enabled the company to win several prestigious

performance awards (refer to Exhibit 6 for REC Awards and Accolades).44

The process of commercialising new technology developed at REC was carefully streamlined. A

long-term strategic technology roadmap was developed and a pipeline of new technologies to be

adopted at different stages of product development was identified. The research team worked closely

with the production team in the organisation to ensure that the new product design met mass

manufacturing criteria’s. Once a technology had been fully researched, developed and tested, it

would be adopted in the production process on a larger scale (refer to Exhibit 7 for solar panel

technology variances). O’Neil shared,

R&D in this industry has to be very close to manufacturing. To do otherwise is a mistake many

of our competitors have made. You can’t do it in a laboratory. It’s all about “can you do it at an

industrial scale”. So it’s really important for the research and development to be very close to

the manufacturing plants.

To manage a change, like assessing new technology or assessing a new focus geographic market,

REC assigned a team to start with RBS (REC Business System). Typically, the team would define

the questions and key requirements, formulate the working assumptions and then develop the

hypotheses and tests accordingly. While the decision on technology adoption was primarily a

financial decision that revolved around the estimated cost-benefit analysis and risk assessment – it

could, however, be a strategic decision when a certain technology was not financially feasible but

could provide a first-mover advantage.

Target Consumers

REC’s products catered to the residential, commercial and utility markets. Its residential clients

ranged from farm owners in the U.K. to homeowners in California. Its commercial projects included

IKEA in Germany, Dubai International Airport in the United Arab Emirates, Heineken Wieckse

Brewery in the Netherlands, and the Sports Hub in Singapore. The utility clients included Phoenix

power plant in Italy and BMD solar power plant in India. Because the utility segment had the lowest

prices for the solar modules and was the most competitive, REC focused more on the residential and

commercial segment but without completely withdrawing from the utility sector because it was an

‘important segment for the company in the long run’, as O’Neil stated.

Geographic Outreach

REC products were sold primarily in US, Asia Pacific (India, Japan, Australia, and Southeast Asian

countries), Europe (Germany, France, Spain, Italy, Belgium, The Netherlands, UK), and the Middle-

East. In the third quarter of 2016, around half of REC’s sales came from the US. In the US, the

43 REC, REC Twin Peak, http://www.recgroup.com/sites/default/files/documents/ds_rec_twinpeak_2_series_rev_e_eng.pdf, accessed

May 2017. 44 REC, Japan Media, News Archive, 2011, http://portals.recgroup.com/ja/media/jpn_news_archive/REC-Solar-Modules-ranked-as-a-

Top-Performer-in-Independent-Photon-Field-Performance-Test-/, accessed May, 2017.

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company enjoyed strong cost advantages vis-à-vis Chinese suppliers who had to pay higher import

duties.

By 2016, REC had become the number one supplier to the residential market in California. It had

also been ranked as the top module supplier in Germany and had been able to improve shipments to

Europe, the Middle East and Africa (EMEA) by 24% year-over-year45 (refer to Exhibit 8 for REC

Module Shipments by Region).

High-Value Customers

Solar systems typically needed a lot of customisation depending on weather, location, and power

utilisation patterns. They also required regular monitoring and maintenance. Although the upfront

installation costs could be steep, it could be even more expensive and inconvenient for individual

consumers if their solar systems failed after a few years and they had to replace the panels. Moreover,

it was not feasible to use panels from multiple suppliers because that could reduce the efficiency of

the entire system and prove troublesome on occasions that the customer had to replace only the part

of the system that had failed. Therefore, consumers paid more consideration to long-term costs than

the upfront costs in installation.

O’Neil had observed that customers over time often realised that the maintenance, service, and

replacement of cheaper but low-quality products could be a headache in the long-run. Many times,

customers returned to REC after poor low-quality product experiences. Because REC wanted to build

long-term relationship with its clients, it was very selective in choosing its consumers and focused

more on smaller consumers with whom mutual trust was easier to build. Additionally, the company’s

objective was to serve its high value customers (customers who valued new technology, quality, and

reliability of its product) at scale with REC products sold at a premium.

Sustainability Edge

The focus was on those consumers who were environmentally conscious and looking for products

that were truly environmentally friendly. The production of solar cells was very energy intensive.

For example, to melt quartz, the temperature had to be extremely high. The energy consumption in

producing solar panels could outweigh the energy savings produced by panel usage.

REC had a leading low carbon footprint in the industry that acted in its favour by attracting “green”

consumers. The company had developed a unique process that required only 25% of the industry

average energy consumption and used 100% hydroelectric power in Norway to reduce the carbon

footprint in its production process.

The energy payback time of REC solar panels were 1.2 years. In other words, after just over one year,

REC panels could generate an equivalent amount of energy to what was required to produce them.

Sustainable manufacturing principles also helped the company reduce consumption of raw materials

and water, and minimise waste. However, because of these factors, REC had maintained a

comparatively slower drop in its price with respect to the price drop of other players in the market,

making its price premium even higher relative to the competition over time.

Manufacturing and Sales

45 REC, News and Media, Solar Market Insight Report Q1 2017, http://www.recgroup.com/en/rec%E2%80%99s-q1-2017-solar-

market-insight-report-new-world-record-setting-products-serving-enlarged, accessed May 2017.

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Manufacturing facilities at REC were fully integrated. The operation facility in Singapore had 1.3GW

of production capacity in 2016, including a wafer plant (two wafer factories), a cell plant (eight cell

lines), a module plant (six module lines) and a utilities support office. 46 It manufactured

approximately 15,000 solar panels a day and could operate 24x7. The scale was crucial for REC to

compete in the scale-based industry. As O’Neil emphasised,

If you look at the economies of scale (curve) in the solar industry, when you get up to over one

gigawatt, you are still medium-scale. But you are as competitive as the big guys that are at about

8 gigawatts of scale because you are way down the flat part of the economies of scale curve. And

then you get so large that it gets harder to manage costs in some cases where you have very large

sprawling operations. So we think that we are at a nice point on that curve. We would still like to

grow and certainly double our capacity, in fact, we’ll be announcing soon in Singapore about

our expansion plans on production.

Production

Product Efficiency Production costs in the firm were controlled through several quality-focused manufacturing practices.

To ensure production efficiency and product quality, the manufacturing units in REC had

implemented many innovative automated processes in its facility. For example, to limit the impurities

present in its silicon mix, REC sourced only the highest quality silicon available in the market. It also

used its own unique coating technology (an automated process) that coated the crucibles used to melt

silicon with silicon nitrate to protect the melt from any contamination and improve the quality of the

wafers. In addition, the company had implemented a stringent product quality and management

system, a production monitoring system, and a product qualification system.

Product Uniformity To enable continuous improvement in cost control, process improvement, and adoption of new low-

cost process technologies, systems based on lean six sigma approach like the REC Business Systems

(RBS) and REC Product Development Model (RPDM) were implemented thus optimising the value

chain at every step (refer to Exhibit 9 for RPDM and Exhibit 10 for the RBS system).47 The high

level of control over production assured product uniformity.48 49

Integrated Production Vertical integration of production helped administer a tight control of quality at every stage of

production. It also made the company less vulnerable to market fluctuations of critical component’

prices and suppliers. Reiterating the importance of scale in the industry, O’Neil summarised,

In the solar industry, having scale is important for a company as price competition among

manufacturers is cut-throat. REC is relatively smaller in scale compared to some large-scale

solar companies, but through integration and automation of our production capabilities, we are

able to achieve the cost advantage that is normally associated with scale.

Although integrated production ensured adequate control over the production process, it was

complex to manage. In REC, there were more than 120 steps in making a solar panel. Different

46 The capability to produce all the components of solar panel and the final product is referred to as vertical integration of production in

the rest of the case

47 SolarWorld, Solar Energy 101, “How We Make Solar Panels”, https://www.solarworld-usa.com/solar-101/making-solar-panels, accessed May 2017.

48 Jan Schmidt, “Light-induced Degradation in Crystalline Silicon Solar Cells”, Solid State Phenomena Vols. 95-96 (2004) pp. 187-

196, accessed May 2017. 49 REC, Videos, REC Automated Production plant, https://www.youtube.com/watch?v=Zw0uAQvfn3g&list=PLE499AE76F77E0032,

accessed May, 2017.

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skillsets were required for the various stages in the solar panel production process. Wafer production

was very much a chemical process, but cell production was a semiconductor process, and assembly

was a mechanical engineering process. The integrated production facilities necessitated all

employees to work together with a high level of coordination such that they could align themselves

efficiently with the integrated manufacturing processes.

Sales and Service

Delivery Service quality and timely delivery were also emphasised. The average turnaround time from order

confirmation to delivery was about one day for local consignments and approximately seven days

for international container shipments. This on-time delivery performance was universal across all

projects and regions.

Customer focus Being selective in choosing customers was important for REC as it had limited production capacity.

A narrower customer focus resulted in tighter customer relationships and consistent service. Another

benefit of building long-term customer relationships was to allow the company to follow its

customers when they entered new markets. The company worked closely with high-value customers,

who valued performance and a long-term relationship and were willing to pay a premium for a better

product and service. Customer’ preferences and demands could be vary between different regions.

For every geographical segment, the company would try to figure out unmet user demands and

special requirements specific to the region.

Sales support A dedicated market intelligence team was employed in the firm to constantly compare and

benchmark REC with its competitors. The company also employed engineers and service personnel

in the field who constantly monitored its customers’ systems, and often were the first to identify any

pertinent problems for its customers. For example, if a drop in panel performance was discovered,

they would immediately investigate the cause and call the customer to provide a solution for it. Such

additional proactive services, although coming at a cost, helped enhance the brand reputation of REC

amongst its customers.

Installers as partners

The REC solar panels were not directly sold to end-users. The company partnered with third-party

installers and ensured that the racking, invertors, electrical fittings provided by the installers were of

high quality and matched REC standards of product quality. The REC Solar Professional Programme

helped in educating installers on how best to install and sell REC solar panels. Installers were

provided exclusive access to REC tools and services, as well as re-certification programmes to ensure

that they were properly trained to continuously meet the delivery quality standards. REC treated

installers as partners and would jointly market its products with them. In Singapore, the company

had partnered with Phoenix Solar to install solar systems at Changi Airport, Singapore Sports Hub,

the National Stadium and Tiger Brewery.

In 2015, the company ventured into downstream installation activities by setting up a separate unit

called REC Solutions, which provided consumers with a full range of services including site

identification, permit management, due diligence, investment structuring, facility design, project and

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site management, monitoring and maintenance and a host of other services. 50 , 51 However, the

company quickly realised that an installation business could potentially shift its focus from the core

manufacturing business. As a result, instead of competing with the installers, the company withdrew

from this downstream business and built a more cooperative relationship with its installers. REC had

recently also ventured into providing financial analytics services to help its consumers evaluate the

financial benefits and feasibility of installing solar systems.

Organisation Structure, Vision and Values

Sustainability was a key part of REC’s organisational values. The company had a leading low carbon

footprint in the solar industry.52 REC tried to demonstrate its green mind-set in every aspect of the

company operations in accordance with its mission of helping ‘every person to benefit from

electricity directly from the sun.’ REC also applied its sustainability principles in choosing suppliers,

selecting those that shared similar objectives.

The company values focussed on being “responsible, experienced, collaborative and

straightforward”. This culture of collaboration and integrity helped REC attract and retain human

resource talent. It also helped the company to be a reliable partner for its customers and installers.

The key focus for the company was operational excellence and its motto was to try new technologies

and processes, and if things didn’t work, fail fast, learn and change. O’Neil shared,

Ours is a culture of hard work, discipline, and understanding your role in the team. When you

are lean, everybody has to perform their role very well because you can’t afford to have someone

not performing. And so that means that you have to have a lot of trust in the team. So, we work

very hard to make sure we are communicating effectively throughout the organisation and that

we all understand what we are trying to do, that the mission is clear, and everybody knows how

they are contributing to that mission. If you talk to any of our 2000 employees here and ask them

what they are working on, they can relate that to our goals for the year and our longer-term

mission. They’ll say “I’m working on this particular process and this is going to improve the

efficiency of this cell by 0.1% and therefore this would give us a premium in the marketplace.

This would help us to achieve our goal of higher power products.” They can relate their project

to a bigger goal, which makes it very meaningful.

As of 2017, there were over 2000 employees working at REC, with the majority of them based in

Singapore. The organisational structure was simple and relatively flat. The Board of Directors were

at the top followed by an unusually small management team consisting of the Chief Executive Officer,

the Chief Operations Officer, the Chief Financial Officer, Chief Legal Officer and the heads of

Technology, Human Resource and Global Marketing. According to O’Neil, this lean structure helped

create a very open and candid organisational culture and promoted efficient and fast decision-making

enabling the company to stay adaptive to market change. The culture had proved to be conducive in

enhancing the loyalty of the employees as well. Attrition rate in the company was very low, and in

cases when employees left, they often became the customers and partners of the company.

Employee surveys at REC had found that most employees thought the company was a great place to

work because of its culture of collaboration and trust. People would rather trade off with less salary

50 REC, Systems Solutions,

http://www.recgroup.com/sites/default/files/documents/rec_brochure_systems_solutions_web_20150710.pdf, accessed May 2017. 51 Elkem, News, REC Acquisition, https://www.elkem.com/news/The-REC-acquisition-A-good-agreement-for-all-parties/, accessed

May 2017. 52 REC Silicon, Corporate Sustainability report, https://www.recsilicon.com/RECSilicon/media/RECSilicon/corporate/sustainability%20reports/lca_brochure_020911_web-

1.pdf?ext=.pdf%7C, accessed May 2017.

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than leave the company. Employees also liked to work for REC because it was a global company and

staff valued the experience gained from working for a company which focused on high product

standards and advanced technologies.

Market Competition

Over many years, the globally available capacity of solar products had exceeded installations.

According to a 2017 research estimate, solar panel capacities were likely to exceed installations by

45% that year, putting downward pressure on price. Across the value chain, the excess capacity was

lowest for solar cells and highest for modules.53

Market competition for REC was tough, and it faced severe competition from several other large and

leading solar panel companies like Trina, Jinko, Canadian Solar, Hanwha, JA Solar, and a few others.

Trina Solar, a Chinese company with several branches across the US, Europe, and Asia, was a

vertically integrated company producing a range of products from ingots to modules, implementing

both mono- and multi-crystalline technologies.54

Jinko Solar, another Chinese company, had reported very impressive growth in 2016. The company

had partnered with Enphase Energy to provide a bundled service that consisted of a Jinko Solar

module, an Enphase micro inverter and a supported service programme called Enphase energy

services (EES). The bundled service claimed to maximise project revenue for customers by providing

higher system availability, reduced installation time, and easier system design.55 Jinko Solar had its

manufacturing base in China and Malaysia with 70% of its sales revenues coming from China and

US markets. The company emphasised using improved technology to increase manufacturing

efficiency. Although it focused on multi-crystalline technology, its mono-crystalline product lines

had managed to achieve similar efficiency levels to PERC lines produced by its competitors.

Canadian Solar was third in the global rankings of leading solar PV companies. Headquartered in

Canada with factories in China and Ontario, it was a vertically integrated company, providing ingots,

wafers, solar cells, solar modules, solar power systems, and specialised solar products. Its 60-cell

format products were geared toward the residential market, whereas the 72-cell formats were geared

toward the commercial/utility market.56 The company had a manufacturing presence in Brazil,

Canada, China, Indonesia, and Vietnam, and its targeted markets were China, the US, and Japan. The

company also owned and operated commercial solar power plants valued at US$2 billion with a

combined capacity of 1420MWP.57

First Solar was based in the US, and had restructured itself as a solar module and power systems

focused manufacturer. The firm had boasted a steady reduction in operational expenses per watt and

had managed to thrive amidst huge competition. The company focused on thin-film technologies and

continuous innovation to make installations faster and easier. In 2015, First Solar had migrated its

manufacturing facilities in Asia and thereafter expanded quickly in Malaysia and Vietnam. The

company had plans to double its capacity in Asia between 2018 to 2019.58

53 R. Sree Ram, “How Excess Capacities are Fuelling the Solar Boom”, Livemint, July12, 2017, http://www.livemint.com/Money/10VXsohhF2A7f3hzMQme8K/How-excess-capacities-are-fuelling-the-solar-boom.html, accessed

May 2017.

54 Trisolar, Products, http://www.trinasolar.com/us/product, accessed May 2017. 55 JinkoSolar, Press Coverage, http://www.jinkosolar.com/press_detail_1089.html?lan=en JinkoSolar Offers Bundle with Enphase

Energy for Commercial Customers, accessed May 2017. 56 Canadian Solar, Solar Panels, http://www.canadiansolar.com/solar-panels/standard.html, accessed May 2017. 57 Canadian Solar Annual Report 2016; Canadian Solar Investor Presentation Q3 2017

58 First Solar Annual Report 2017; First Solar website; First Solar Investor Overview 2017

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Hanwha Q CELLS was another large player in the solar industry. Headquartered in Seoul, South

Korea, it had diverse international manufacturing facilities across South Korea, Malaysia, and China.

It offered a full spectrum of photovoltaic products ranging from applications and solutions to modules,

kits, systems and catered to large scale power plants as well. Hanwha’s large cell production capacity

of 6.8 GW made it one of the biggest solar module manufacturers in the world. It had manufacturing

facilities in China, Malaysia, and Korea. More than 50% of its net revenues came from the US market,

followed by Japan (11.7%), India (9.6%) and Turkey (7.4%).59

JA Solar Holdings was another top-tier solar development company based in Shanghai, China. The

company designed, developed, manufactured and sold solar cell and solar module products. It sold

its products primarily through a team of sales and marketing personnel to solar module manufacturers,

who assembled and integrated the solar cells into modules and systems. JA Solar also manufactured

a variety of standard and specialty solar modules. Its manufacturing facilities were located in China,

Malaysia, and Vietnam. More than 50% of its net revenues came from China, with about 40% from

the Asia Pacific and Japan.60

Several upstream manufacturers were also moving into downstream manufacturing to compete with

companies like REC. GCL and Longi, who were long considered to be solely ingot and wafer

manufacturers, had expressed strong intentions to move downstream in 2016. GCL was using multi-

crystalline module technology while Longi had adopted mono-crystalline module technology. These

companies had the ability to be very cost competitive due to their very large scale and fully integrated

manufacturing capabilities.

The Ongoing Crisis

Prospects for the solar panel industry had started to look particularly gloomy from late 2016 due to

a sudden fall in the price of solar panel products.61 This was triggered by a panic sale by Chinese

solar panel manufacturers amidst changing regulations and reduced power plant contracting activity.

Since 2009, the Chinese government had used substantial subsidies to drive the growth in the solar

manufacturing industry in China, leading to significant overcapacity that had plagued the global

industry with cut-throat prices. The high trade tariffs in the US and EU for Chinese solar products

had led to further price cuts. The Chinese government had withdrawn subsidies for the solar industry,

and debt-plagued Chinese manufacturing companies began a sell-out by liquidating their inventory.

Greentechmedia (GTM) Research had forecasted a sharp decline of as much as 40% in the demand

of solar panels in China by late 2017.62 Many of the smaller Chinese manufacturers simply dumped

their inventory for whatever price they could get. In the last quarter of 2016 and early 2017, the price

of solar panels had declined by roughly 30% in the international markets. In the U.S., the price fall

was even steeper.63,64,65 Stock prices of major solar companies had fallen significantly. MAC Global

Solar Energy Stock Index (an exchange-traded fund (ETF) that was traded on the New York Stock

59 Hanwha Q CELLS, Introduction, https://www.hanwha-qcells.com/qcells-office/about/introduction, accessed May 2017.

60 JA solar Holdings Annual Report 2016; JA Solar Cells website 61 pvEurope, Markets-Money, http://www.pveurope.eu/News/Markets-Money/Solar-panel-price-Further-drop-expected-in-2017, accessed May 2017.

62 Julia Pyper, “Global Solar Market to Hit 85 GW in 2017 with surge in China”, Greentech Media, April 11, 2017,

https://www.greentechmedia.com/articles/read/global-solar-market-forecast-to-hit-85gw-in-2017-with-surge-in-china, accessed May 2017. 63 Trefis Team, “What to Expect from the Solar Industry in 2017”, Forbes December 7, 2016,

https://www.forbes.com/sites/greatspeculations/2016/12/07/what-to-expect-from-the-solar-industry-in-2017/, accessed May 2017. 64 Ibid. 65 U.S. Department of Energy, History of Solar, https://www1.eere.energy.gov/solar/pdfs/solar_timeline.pdf, accessed May 2017.

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Exchange) had dropped by 45% in 2016, projecting a difficult period in the following years for the

solar industry.66

REC management recognised that they had to deal with the current crisis quickly and cautiously, and

were in a dilemma. Given the current situation of overcapacity and price war, what could be the right

strategy? Would cutting down capacity be a solution to stop the bleeding responsively?

On the other hand, scaling-up was crucial for the company because there was speculation that the

industry would most likely go through a period of consolidation and smaller firms would become

vulnerable. In fact, REC was carrying out a plan to expand capacity, so as to expand further in the

US and the Southeast Asian markets. O’Neil knew that there wasn’t much room left for further

cutting of already strained manufacturing costs. In terms of the company’s pricing strategy, REC had

been historically resistant to price cutting. But with such a significant price plunge in the market,

would it be feasible for REC to follow the market and cut prices to maintain competitiveness?

Moving Forward

REC had an aspirational strategy of “10 by 20” – to be one of the top 10 global companies in the

industry by 2020. Therefore, O’Neil and his management team had to consider strategic issues

beyond the current crisis. First, given the price-cutting pressure, in the long-run, was it still feasible

to remain focused as a premium module manufacturer serving only high-value consumers? Or could

the company expand its consumer scope, and if so, how? REC did not have a sales presence in the

rapidly growing emerging solar markets of Mexico, South Korea, and Brazil. Would exploring

emerging markets be a more viable option rather than focusing on its current market? Moreover,

would offering customers more customisation to justify the premium price be feasible?

Although integrated production facilities had helped REC withstand the fluctuation of raw material

and component costs, the recent sharp decline in component costs had given its competitors, who

procured cell and wafers from open markets, an upper hand in the cost advantage. Would REC need

to modify its operational scope to deal with component price fluctuation?

Bundling of services was another value-added service that REC was looking at to further enhance its

market positioning. For example, power storage was increasingly getting bundled with solar services,

and customers growingly wanted battery solutions with their solar products. REC was experimenting

with this technology and often worked very closely with third-party companies for providing its

customers such bundled solutions.

Although the company was a leader in multi-crystalline technology, REC had to deal with emerging

mono-crystalline technology. It needed to extend the life of its multi-crystalline products while

researching on the new mono-crystalline technology simultaneously. While the industry was moving

towards P-Mono crystalline technology, REC could potentially strategically skip a generation and

move to N-Mono crystalline technology, considering its reputation of focusing on avant-garde

technology development. However, because of the huge investments involved in designing and

developing such solar products, this could be a high-stakes decision, and REC’s future could depend

on it. The challenge for REC was to pick the right technology at the right time. O’Neil shared,

We work very hard to stay focused. There are many temptations in this industry when it’s growing

so fast, there are so many technologies, so many markets, and we’re a very lean team. So, if we

66 MAC Solar Index, Ticker SUNDIX, http://www.macsolarindex.com/, accessed May 2017.

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try to do too many experiments we very quickly get defocused. So we’re pretty ruthless in saying,

as a management team, that we are going to do only one experiment at a time.

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EXHIBIT 1: GLOBAL SOLAR DEMAND MONITOR

Source: Global solar market forecast, GTM Research, Global Solar Demand Monitor,

https://www.greentechmedia.com/articles/read/global-solar-market-forecast-to-hit-85gw-in-2017-with-surge-in-

china, accessed May, 2017.

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EXHIBIT 2: THE SOLAR VALUE CHAIN

Source: Greenrhinoenergy, Solar Industry, The Solar Value Chain, Value Chain Segment & Activities,

http://www.greenrhinoenergy.com/solar/industry/ind_valuechain.php, accessed May 2017.

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EXHIBIT 3: US SOLAR PV INSTALLATIONS

Source: US Solar Market Insight Report, GTM Research, US Solar PV Installations,

http://www.seia.org/research-resources/us-solar-market-insight, accessed May, 2017.

EXHIBIT 4: REC DEBT EQUITY RATIO, Q3 2016

Source: Company data

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EXHIBIT 5: REC WARRANTY CLAIMS 2016

Source: Company Data

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EXHIBIT 6: REC AWARDS AND ACCLODES

Source: Company Data

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EXHIBIT 7: SOLAR PANEL TECHNOLOGY VARIANCES

Solar panel technologies were categorised by the type of silicon used, which could be mono-

crystalline, multi-crystalline, or thin-film. Mono-crystalline solar cells were made out of

cylindrical shaped silicon ingots which were made of two types of semiconductors, called

p-type and n-type silicon. As such, there were three major architectures of crystalline

technology: Multi crystalline, P-Mono crystalline, and N-Mono crystalline. N-Mono

crystalline technology was considered as the leading next generation platform after multi-

crystalline due to higher power efficiency as well as higher bi-facility. Besides the main

stream of N-Mono technology, other new technologies were competing in the market,

including passivated emitter and rear contact (PERC), passivated emitter and rear totally

diffused (PERT), and passivated emitter and rear locally diffused (PERL), just to name a

few.

Source: Company Data

EXHIBIT 8: REC MODULE SHIPMENT BY REGION

Source: News, PV Tech, REC shifts module sales to APAC, https://www.pv-tech.org/news/rec-shifts-module-sales-

to-apac-region-on-continued-us-decline, accessed May 2017.

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EXHIBIT 9: REC RELIABILITY AND DURABILITY (RAD) MODEL

Source: Solar Electric Supply, Media, REC Quality Beyond Expectations,

https://www.solarelectricsupply.com/media/custom/upload/REC-Quality-Beyond-Expectations_1.pdf, accessed

May 2017.

EXHIBIT 10: REC BUSINESS SYSTEMS (RBS) MODEL

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Source: Solar Electric Supply, Media, REC Quality Beyond Expectations,

https://www.solarelectricsupply.com/media/custom/upload/REC-Quality-Beyond-Expectations_1.pdf, accessed

May 2017.

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