REC ASA - Update on polysilicon expansion (&quo...

Sandvika, December 15,  2008: REC  has, in  early December,  formally
accepted and taken control over  the entire FBR-area and all  related
equipment  at  the  new  plant  under  construction  in  Moses  Lake,
Washington. The  first  reactor  test  runs  have  been  successfully
completed. However, during final stages  of the commissioning in  the
silane gas  production  area,  REC encountered  quality  issues  with
certain standard prefabricated carbon  steel pipes. Control  measures
and  repairs  were   initiated  immediately.  Based   on  the   final
conclusions of  the analysis  undertaken during  the last  few  days,
start-up of the silane production will be delayed until late  January
2009. This will negatively affect  production of polysilicon and,  to
some extent, wafers and solar cells in 2008 and early 2009.

Although the FBR-area has  been accepted and taken  over by REC,  the
company's mechanical  integrity  inspections  have  revealed  quality
concerns relating to  prefabricated carbon  steel pipe  welds in  the
silane gas  section. The  level  of weld  defects is  above  industry
standard, and  the  quality  falls outside  the  guaranteed  standard
delivery specifications for these  "off-the-shelf" pipes. All  defect
pipes have been supplied by one particular pipe fabricator with "seal
of approval". The supplier has now taken full responsibility and  has
accepted to cover costs related to necessary weld repairs to ensure a
safe startup.

Further, REC has, together with  Fluor and a third party  engineering
firm, spent the last few days finalizing the analysis related to  the
total extent of the issue. Based on current weld repair rate and  the
conclusion of  the analysis,  start up  of commercial  production  is
moved to the  end of  January 2009. With  the exception  of the  weld
repairs, the construction of the plant is currently complete.

"As a responsible  producer we have  a rigorous mechanical  integrity
program which allowed us to  discover the defective workmanship.  The
delay is  obviously  very  unfortunate given  our  tight  polysilicon
situation, and we are working hard to mitigate and limit consequences
as much as possible," says Erik Thorsen, President & CEO of REC.

Simultaneously, start-up activities  continue in the  FBR section  of
the plant. Last week,  the first two reactors  were started on  inert
gas. This confirms that  control systems and reactor  characteristics
are working  in line  with expectations.  Next week,  REC intends  to
start running  full tests  of the  FBR reactors  on silane  gas  from
existing plants.

"As we have taken over the FBR-section of the plant, we will continue
to prepare  for  startup  of commercial  production  and  the  coming
ramp-up period in parallel with  the ongoing weld repairs. We  remain
comfortable with FBR from a  technology perspective and its low  cost
and high quality capabilities. However, there is always risks related
to starting up new technology", says Erik Thorsen.

Plant III  was  previously scheduled  to  produce  up to  400  MT  of
polysilicon by  the  end  of  2008. Given  an  expected  start-up  of
commercial  production  towards   the  end  of   January  2009,   the
2008-production will be reduced to only minor test volumes. For 2009,
the production is expected to be approximately 5,000 MT. The plant is
designed for an annual production capacity of 6,500 MT.

REC will host an analyst Q&A conference call today at 15:00 CET. Dial
inn details will be distributed during the morning.

For more information, please contact;
Erik Thorsen, President & CEO; [phone]
Jon Andre Løkke, SVP & IRO; [phone]


About REC
REC is uniquely positioned as one of the most integrated companies in
the solar energy industry. REC Silicon and REC Wafer are the  world's
largest producers of polysilicon  and wafers for solar  applications.
REC Solar  produces  solar cells  and  solar modules  and  engage  in
project development activities in selected segments of the PV market.
REC Group had revenues in 2007 of NOK 6,642 million and an  operating
profit of NOK 2,588 million. Please also see www.recgroup.com.


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