* EBITDA down 75 percent to $35.7 million, lags forecast
* Upbeat on U.S. plant technology, Singapore on track
* Keeps "challenging" 2009 polysilicon output target
* Sees signs of returning demand, upbeat on installations
* Share jump 10 percent, lift peers
(Recasts with quotes from news conference, shares)
By Wojciech Moskwa and Joergen Frich
OSLO, Aug 11 (Reuters) - Norwegian solar energy company Renewable Energy Corporation ASA (REC) voiced optimism about its two biggest expansion projects on Tuesday, lifting its shares despite weak second quarter results and tough markets ahead.
REC, one of the world's biggest makers of solar energy equipment, says once its high-tech silicon plants in Moses Lake, Washington, and Singapore hit full capacity it will produce polysilicon some 20 to 25 percent cheaper than rivals.
Shares in REC jumped more than 10 percent early on Tuesday and were up 9.6 percent to 49.50 crowns at 0822 GMT, lifting peers Q-cells and SolarWorld by 5.7 and 4.1 percent respectively. Oslo's index was up 2.3 percent.
REC shares remain well below a peak of 267.21 crowns seen in late 2007, since when the solar sector has fallen victim to a crisis of tight credits and oversupply, though solar subsidy schemes introduced in the United States and China could help an industry revival.
REC said solar markets will remain tough in the second half of 2009 and it expected no pick up in prices of solar modules, which have fallen by some 35 percent from 2008 levels.
The company said, however, it has noticed some signs of improving demand for solar modules already in the third quarter.
"It's still a tough market and it will be difficult in the second half of 2009 too, but they ... seem very confident that they will get Singapore up and that the Moses Lake (U.S.) plant is operating well," said analyst Haakon Levy at Fondsfinans.
REC said construction of its Singapore plant was on schedule and was 75 percent complete, while its troubled Moses Lake, Washington, Silicon III factory was ramping up commercial production from the start of the third quarter. The ramp up has been delayed by months due to problems with technology.
"Fortunately, we now have found the solution and I am confident that the Moses Lake technology will work even though it will be challenging to ramp-up to full production," REC Chief Executive Ole Enger told a news conference. REC affirmed its 2009 polysilicon production target of 9,000 tonnes but warned "certain interruptions should be expected in the ramp-up phase" of Moses Lake which could challenge the full-year production target.
ONE-OFFS HURT Q2
REC's earnings before interest, tax, depreciation and amortisation (EBITDA) fell to 218 million crowns ($35.7 million) in April-June from 889 million a year ago, missing an average forecast of 252 million in a Reuters poll of 18 analysts.
Analysts said without one-off provisions for repairs to junction boxes on solar modules, REC earnings would be basically in line with analysts forecasts.
REC said low levels of solar installations so far this year meant that producers built up inventories, which pressured prices and forced cutbacks in production.
"Availability of financing for new large solar energy investment projects is limited and the demand for solar modules remains weak compared to last year," REC said in a statement.
REC said global Photovoltaics (PV) installations, converting sunlight into electricity, would drop to some 5.0 to 5.5 gigawatts in 2009 from 7 gigawatts last year, due to the economic crisis and reductions in incentives by Spain.
But new subsidy schemes, including one by the United States, could help push up installations to 7 to 8 GW in 2009, REC said.
"The long-term fundamentals of the PV industry remain intact and the return on equity for investments in PV systems is historically high across all markets and segments," REC said.
REC said its module production would return to full capacity in late August but may be "temporarily reduced also during the second half of the year, depending on the market situation."
Challenging markets and its ambitious investment plans had forced REC to slash production of wafers by 35 percent, restructure debt and issue new equity during the second quarter. (Additional reporting by Ole Petter Skonord; Editing by John Stonestreet and David Holmes)