* Says wafer prices have nearly halved over last six months
* Uncertainty in financial markets affecting solar market
* Economic uncertainty in Italy also a factor
* Some 700 employees may lose jobs
* Shares down 5 pct
By Henrik Stolen
OSLO, Sept 28 Renewable Energy Corp
plans to permanently close some output capacity in Norway due to
weak market conditions, the Nordic solar firm said on Wednesday.
Over the summer, REC temporarily suspended some 45 percent
of its wafer-producing capacity across three plants in Norway
due to tumbling prices. Wafers are thin slices of semiconductor
material used in the building of solar panels.
"The situation has been difficult for most of 2011, with
wafer prices falling close to 50 percent in the course of the
last six months," Mikkel Toerud, head of investor relations at
REC, told Reuters.
"We shut this capacity over the summer due to the market
situation ... When we saw market developments had also been
difficult since the summer, we had to initiate this process of
permanently closing down production."
Wafer prices would have to rise at least 20 to 30 percent
before Norwegian output could resume, REC's chief executive told
Reuters in July.
REC will enter talks with unions over the possible permanent
closure of the production capacity, which could affect some 700
employees at REC's plants at Heroeya, Glomfjord and Narvik.
"It was expected," said Nordea Markets analyst Andre
Adolfsen. "It is not competitive so there are no reasons to
continue with these plants."
Shares in REC were down 5.35 percent to 6.19 Norwegian
crowns ($1.082) at 0803 GMT while the Oslo benchmark index was
down 1.1 percent.
UNCERTAINTY IN ITALY
The wafer market has stabilised somewhat after a drastic
fall in recent months, REC's chief operating officer said.
"There is no doubt that the solar market is closely tied to
the state of the financial markets," John Andersen told Reuters.
"The projects that our products eventually go into depend on
financing, both for equity and debt capital."
Economic uncertainty in Italy -- the world's second-largest
solar market after Germany -- and a debate over its large
government subsidies also played a part, Andersen said.
"We see that investors and bankers are more hesitant on
projects," said Andersen. "It is not just because of the turmoil
on the financial markets. There have been big discussions over
the summer about the (solar) regime in Italy."
"They have done an audit about the incentives regarding
photovoltaic installations and that has shaped a lot of
REC's wafer production capacity in Norway could be
permanently reduced by some 45 percent, equivalent to some 775
megawatts (MW), the firm said. Solar production capacity of some
180 MW could also be cut for good.
Some production would continue at Heroeya and Glomfjord
after the closures, REC said.
($1 = 5.720 Norwegian Kroner)
(Editing by Helen Massy-Beresford)