Investor darling REC laying off 700

The pride of Norway's industrial green energy effort, Renewable Energy Corp., has decided to shut down three Norwegian factories, or nearly half its local production, as a world glut in solar cell production forces the company's hand.

Investor darling REC laying off 700
Photo: REC

About 700 people will be laid off, a message to shareholders on Tuesday said. Third-quarter revenues of 3 billion kroner ($543 million) were not enough to stave off closures, and management used the occasion of its quarterly earnings release to deliver the bad news.

The company had been curbing Norwegian production of solar cells in line with a world surplus, but faced an uphill battle against labour costs and the shortage of lending to its European customers.

With just its newest Norway plant surviving the cuts, investors turned on the company and its stock fell nearly six percent in morning trading to 5.96 kroner.

REC’s 775-megawatt-a-year solar wafer plants at Herøya and Glomfjord and its solar cell plant at Narvik (180 MW) will be shut down. Contract earnings are expected to cancel out the cost of shutting down the plants.

Though partly expected, the news of a complete shutdown for three plants comes as a shock after the company had trimmed a 6.2-billion-kroner loss from this time last year down to 445 million kroner.

The layoffs mean REC production in Norway is cut in half, although in an online presentation, company president and chief executive Ole Enger warned it might not be the end of Norway cuts.

“It’s regrettable, but a necessary measure in today’s market situation,” Enger said, adding, “We’re working now to regain our competitive power at the remaining Norwegian plants.

Once one of the largest solar players, REC’s enterprise value had fallen to fifth place behind Wacker, First Solar, GCL Poly and MEMC. Much of that value was debt, and those four rivals are now nearly debt free in a lending-tight world.

The cuts followed earlier layoffs in Glava, Sweden, although the company’s prized Asian plants are not expected to declare redundancies.

The Norwegian cuts mean a loss of 45 percent of REC’s wafer capacity.

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Norwegian PM ‘sceptical’ on gas price cap

Norway, which has replaced Russia as Europe's leading supplier of natural gas, said Monday it was 'sceptical' about a gas price cap proposed by a majority of EU members.

Norwegian PM 'sceptical' on gas price cap

“We approach discussions in an open spirit, but we are sceptical of a maximum gas price”, Prime Minister Jonas Gahr Store said in a statement following a phone call with European Commission President Ursula von der Leyen.

“A maximum price does not change the fundamental issue that there is a gas shortage in Europe”, he said.

European energy ministers who met Friday in Brussels said they were in favour of a series of measures aimed at combatting soaring gas and electricity prices, with some calling for a cap on the price of gas imports in the EU.

While the European Commission has proposed a price ceiling on gas imported from Russia, several member states, including Italy, called for a price ceiling on all gas bought by EU states, including liquified natural gas (LNG).

Non-EU member Norway, which has benefitted from soaring prices following Russia’s invasion of Ukraine, has until now kept a low profile on the issue, preferring instead to leave it up to oil and gas companies to negotiate their own contracts.

The Scandinavian country recently replaced Russia as Europe’s leading gas supplier, due to plunging Russian deliveries and an eight percent increase of its own deliveries.

Last week, Norwegian Prime Minister Jonas Gahr Støre told the Financial Times that the country would potentially be open to a price cap and long-term gas agreement to help its European partners.

“I fully understand that Europe now has a profound debate about how energy markets work, how they can secure more affordable prices for citizens, families, industries, and how this shortfall of gas after Putin’s aggression can be handled,” Prime Minister of Norway, Jonas Gahr Støre, told the newspaper.

“Norway is not closing doors to any such discussion,” he added.

However, this weekend he reiterated that it is not the Norwegian government that can directly offer Europe a capped price on gas. He has also moved to clarify that he is open to assessing all the solutions that the EU puts forward, not just price caps and price agreements.

“I tell my European colleagues that it is not me who sells the gas. Licenses are given to companies that pay a high tax, and then they are the ones who sell it,” he told Norwegian newspaper VG this weekend.

READ MORE: What is Norway doing to help ease the European energy crisis?