By Joergen Frich and Wojciech Moskwa
OSLO (Reuters) - Norway's Renewable Energy Corp (REC.OL: Quote, Profile, Research, Stock Buzz), one of the world's biggest makers of solar energy equipment, said sharp cuts in production costs would for years keep margins fat in the fast-growing solar industry.
REC, a company worth $23 billion, plans to cut unit production costs in half by 2010, against 2005 levels, as it implements more efficient production technology and solar panels, which transform sunlight into electricity.
"The industry should be able to reduce prices substantially between now and 2010 to 2012 without distorting the margins picture in any dramatic way," Chief Executive Erik Thorsen told Reuters in an interview on Wednesday.
REC's shares have jumped by 150 percent over the past year as a shortage in global production of polysilicon, the input material for solar wafers, kept margins thick while growing public awareness of climate issues and subsidies boosted demand.
"To assume that this industry can sustain forever EBITDA (earnings before interest, taxes, depreciation and amortization) margins above 50 percent is probably a bit naive," he added.
"However, there will be players that will perform above average and hopefully REC will be one of them".
REC operates across the solar industry value chain from upstream production of polysilicon via wafers -- divisions that now earns most of REC's cash -- to the production of solar cells and modules in the so-called downstream segment.
"We would like to build as much (capacity) as we can downstream," Thorsen said, adding that REC was also interested in consolidating the still developing solar industry. Continued...
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