Further Capacity Expansion For Meyer Burger

• Meyer Burger is to build a new solar cell manufacturing facility in the US with an initial 2 GW annual capacity
• It will be located in Colorado Springs to exclusively supply cells to its 2 GW Arizona fab
• Management said it is already exploring opportunities to further add solar cell and module production capacity in the US
• Addition of solar cell production capacity in the US is made possible by diverting equipment for planned expansion in Germany's Thalheim
• Anticipating difficult market predictability for H2/2023, management has decided not to provide EBITDA guidance for 2023

Meyer Burger Technology AG will invest in a US solar cell manufacturing facility in Colorado, US with an initial capacity of 2 GW to exclusively supply to its 2 GW module production fab in the country's Arizona region.

The Colorado Springs solar cell fab will be housed in a former semiconductor fabrication plant for which Meyer Burger has already entered into a long-term lease agreement.

It explained that the production equipment originally intended for previously announced 2 GW cell expansion at the Thalheim site in Bitterfeld-Wolfen, Germany is now being redirected to the Colorado site, making the accelerated manufacturing schedule in the US possible.

Meyer Burger's decision to expand in the US is backed by the additional 10% bonus investment tax credit (ITC) for US solar projects under the Inflation Reduction Act (IRA) for using domestic content.

Financial incentives the company expects with this 2 GW cell fab are as follows:

• Tax credits of up to $1.4 billion from the start of production in 2024, until the end of 2032.
• Close to $90 million in tax credits, direct support and discounted electricity and water rates from the City of Colorado Springs and the State of Colorado.
• More than $300 million in prepayments from module off-takers and a loan from the US Department of Energy (DOE).

Meyer Burger has already announced US made module supply contracts with BayWa, Ingka Group, and DESRI earlier this year (see Meyer Burger Bags 4-Year Module Supply Contract).

"Meyer Burger is currently working on additional multi-gigawatt offtake agreements in the US with new customers," said CEO Gunter Erfurt. "We are already exploring opportunities to add further solar cell and module production capacity in the country."

As for the multi-GW expansion in Thalheim, the management said it is planned at a later stage as part of the company's win in the 3^rd EU Innovation Fund while demanding 'favorable market conditions by ensuring a fair level playing field for European solar manufacturers' (see EU Innovation Fund Swiss Winner's Growth Plans).

Meyer Burger plans to also participate in the German government's expression of interest call for 10 GW solar manufacturing capacity (see Germany Launches Big Solar PV Industry Tender).

Business forecast

During H1/2023, Meyer Burger produced close to 300 MW solar modules according to its preliminary financial results. In comparison, it produced 321 MW in 2022 (see Meyer Burger Achieves Revised Module Production Guidance).

However, the management expects to report unaudited EBITDA of around -CHF 42 million for the reporting period, blaming it on ramp-up efforts for its 3^rd solar cell and module production line in Germany, as well as price pressure due to Chinese oversupply to its markets, especially to the 'non-regulated market' of the European Union (EU). It believes foreseeable wafer price reductions are likely to take effect from Q3/2023.

Things are not looking bright going forward as the management expects a 'challenging market situation' and 'continued difficult market predictability' for H2/2023, due to which it has decided not to provide EBITDA guidance for 2023.