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Solar energy lights the path for growth
FOR millions of years, the blazing red ball of fire in the sky has been the ultimate source of energy here, powering all forms of life on earth. For one company, which has managed to harness the immeasurable potential of solar energy, the sun has also been a source of growth for its revenue and profit for the better part of the past two decades.
REC Solar, which develops and manufactures solar photovoltaic (PV) modules, also called solar panels in layman terms, was formed in 1996 in Norway. In 2006, the company decided to expand its production capacity and chose Singapore as a key base of operations in 2008. It sank S$2.53 billion into Singapore, the largest ever clean tech investment made here and made Singapore its global headquarters.
The investment has since paid off. The company has manufactured some 15 million solar panels in its state-of-the-art Singapore plant since inception. Just last year, the firm produced 4.5 million solar panels here, which is enough to cover all the HDB rooftop space in Singapore, said REC's chief executive officer, Steve O'Neil.
Its main products are multi-crystalline solar photovoltaic modules but it also is involved in the engineering, procurement and construction of components of the solar business. The company's main products serve all segments of the market, from residential to industrial and utilities. About half of its products are shipped to the United States, while the other half is exported to countries in the Asia-Pacific, Europe and the Middle East and Africa.
The solar energy manufacturer is now eyeing far bigger things and has laid out ambitious plans for global expansion. So far, it has remained firmly on track to continue its growth path, reporting solid positive numbers across its financial metrics.
Since 2012, REC's production capacity has grown 66 per cent from 722 megawatts in 2012 to 1,200 megawatts last year. During this same period, REC recorded 11 consecutive quarters of strong profitable business performance, said Mr O'Neil. Revenue growth topped 11 per cent last year which was more than double the growth rate of about 5 per cent in 2014, he added.
The company's investment here has benefited Singaporeans by providing them with good jobs. Some 96 per cent of its 2,000 global workforce are based here. Its stellar financial performance was recognised when it was given the Profit and Growth Excellence in Manufacturing under the Singapore 1000 awards.
But it is not content with its rapid ascent over the past decade and has its sights set on becoming one of the biggest solar panel manufacturers in the world. "REC's longer term growth strategy is to become one of the world's top 10 solar module suppliers by 2020," he said.
"To achieve this, we will continue to expand its capacity and technology with sustainable, reliable and high performing products."
For a start, the company is merging with Elkem Solar, after the Chinese-owned, Norway-based Elkem bought over REC in a US$640 million deal last year. Mr O'Neil noted that Elkem uses just 25 per cent of conventional energy processes, as it utilises environmentally friendly hydroelectric power.
"This helps to reduce our carbon footprint, improve energy payback and reduce costs," he said. It is also focused on research and development and is keeping innovation at the top of its priorities. To keep ahead of the competition, the company just last year launched a new high-performance high-power 120 cell module called TwinPeak, which helps transform more sunlight into electricity compared to older technology.
REC was the first firm to master the technology for mass production of the TwinPeak and was awarded the Intersolar 2015 award in the photovoltaics category for this breakthrough. The future remains bright for the industry, with demand likely to continue rising as companies and individuals search for clean energy sources to battle global warming.
The International Energy Agency (IEA) forecast last year that renewable energy will represent the largest single source of electricity growth over the next five years, driven by falling costs and aggressive expansion in emerging economies.
"Renewables are poised to seize the crucial top spot in global power supply growth, but this is hardly time for complacency," said IEA executive director Fatih Birol. The IEA said in a report that the share of renewable energy in global power generation will rise to 26 per cent by 2020, from 22 per cent in 2013, a growth rate that IEA calls a "remarkable shift in a very limited period of time".
By 2020, the amount of global electricity generation coming from renewable energy will be higher than today's combined electricity demand from China, India and Brazil.
For REC, the company believes that it can play an important role in helping to make the world a cleaner and better place. "Globally, renewable energy is viewed as a key solution to mitigating climate change, reducing pollution and enhancing energy security," said Mr O'Neil.
"In particular, solar energy has become a key energy source, underpinned by its increasing cost competitiveness due to economies of scale, improvements in technology and scaling up of financing."
Simply put, solar energy is lighting the growth path ahead for the company. While other manufacturers continue to face falling demand in the midst of an economic slowdown, REC's problems are the opposite - it is receiving more orders than it can fulfil.
"REC's biggest challenge has been a unique one: insufficient capacity to meet customer demand. We are already ramping up our production capabilities to include onshore and offshore manufacturing options with the same high quality REC modules that customers have come to associate our brand with," said Mr O'Neil.