Yingli Green Energy (YGE), a vertically integrated solar products manufacturer, has contracted with a county government in Beijing for a 10 megawatt plant. The agreement is subject to further negotiation and government approval, but AmTech’s John Hardy believes this development is very significant for both YGE and the Chinese market as a whole:
This would be YGE’s most significant install to date at ~$60-$70M in revenue. We currently model China as a very small percentage of total global demand (sub 100 megawatts beyond 2011). If China becomes a significant portion of global demand this would be very bullish for the industry considering the level of energy consumption in China relative to the rest of the world married with growth rates (EIA historical 25 year CAGR on installed GW in China is ~8% and accelerating). While electricity in China is currently very cheap compared to the rest of the world, we have seen 2 rate increases in a relatively short period of time helping solar towards grid parity (5% hike this week 8/19).
So are Chinese solar subsidies on the way? It’s possible, but don’t get your hopes up:
China currently produces a significant percentage of worldwide cell and module supply and it would seem to make sense for them to subsidise the industry to a certain extent. The case-by-case FIT [feed-in-tariff] system we have been witnessing in China is difficult to account for and likely too early to get overly excited about, but is a trend to monitor closely
AmTech maintains BUY on Yingli Green Energy (YGE).
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Yingli Green Energy Holding Company Limited (NYSE: YGE) (“Yingli Green Energy” or the “Company”), one of the world’s leading vertically integrated photovoltaic (“PV”) product manufacturers, today announced that it has entered into a framework agreement with the local government of a county in Beijing regarding the proposed construction of a 10 MW solar power plant.
Under the framework agreement, a wholly-owned subsidiary of Yingli Green Energy and an entity controlled by the county government would establish a new company to construct the plant. Subject to further negotiations, the construction of the project would be expected to begin in the second half of 2009. In addition to further negotiations, governmental approvals relating to, among other things, project planning, connection to the electricity transmission grid and the feed-in tariff are expected to be required and therefore no assurance can be given that the project will proceed as currently contemplated or at all.
“We are excited about this opportunity to construct an on-grid solar power plant in Beijing , which would be the first solar power plant we construct and operate,” commented Mr. Liansheng Miao, Chairman and Chief Executive Officer of Yingli Green Energy. “We believe our participation in this project is in line with our strategy of expanding into downstream applications of PV technology and will further strengthen our vertical integration business model.”
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