Solar

REC Silicon signs polysilicon offtake agreement to restart Moses Lake plant

REC Silicon signs polysilicon offtake agreement to restart Moses Lake plant
REC Silicon's Moses Lake, Washington facility (Courtesy: REC Silicon)

REC Silicon announced it is entering into a full-form supply agreement between its subsidiary REC Solar Grade Silicon LLC and Hanwha Q Cells Georgia, Inc., a wholly owned subsidiary of Hanwha Solutions for a 10-year take-or-pay supply agreement for high-purity FBR granular polysilicon produced from REC Silicon’s facility at Moses Lake, Washington.

To secure the supply agreement obligations and to support the restart of the Moses Lake facility, Hanwha will make sizeable prepayments at the time of the signing of the supply agreement and at first delivery. The process remains on schedule and budget for a re-start by November 1, 2023, with the expectation to reach full capacity utilization by 2025, according to REC Silicon CEO Kurt Levens.

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The supply agreement provides for the sale to Hanwha of 100% of the prime high-purity granular production from the facility and replaces the binding term sheet between the parties that was announced on January 31, 2023. Prepayments will be credited against purchases of polysilicon pursuant to a linear reimbursement schedule over the 10-year term. The estimated total value of the supply agreement for the duration of the arrangement will fluctuate depending on market prices, which are currently estimated to be approximately $3 billion.

The base price for the FBR granular polysilicon in the supply agreement will be determined by market indices (representative of markets outside and inside of China) adjusted for a premium for US-sourced low-carbon material. The high-purity FBR granular polysilicon will also benefit from the $3 per kilogram tax credit from the Inflation Reduction Act. For the first five years of the agreement, the base price is subject to both a price minimum and maximum that protects REC Silicon against potential low market prices in the near term. For the second five years of the agreement, there is no minimum or maximum price, which provides the Company with upside to benefit from higher polysilicon market prices in the future.