Shunfeng’s profitable capacity fully occupied amid recovery

PUBLISHED : Friday, 05 September, 2014, 11:34am
UPDATED : Friday, 05 September, 2014, 11:34am


Shunfeng Photovoltaic International, a solar panels maker and solar farms developer that last year bought insolvent Wuxi Suntech, is fully running its “effective” production capacity amid rising demand.

Some 70 per cent of Suntech’s 2.5 giga-watt (GW) annual panel production capacity, or 1.75 GW is effective, or profitable, after accounting for labour and other costs, Luo Xin, Shunfeng’s executive director and Suntech’s chief executive, said in an interview.

“Our panel and parts manufacturing operations should see higher profit in the year’s second-half from the first-half, since we started booking Suntech’s contribution only on April 18,” said Shunfeng chairman Charles Zhang Yi.

Depending on market conditions, Luo said Suntech is targeting full-year output of 1.8 to 2 GW, of which 1.2 GWs are expected to be used in its own solar farms and 0.6 to 0.8 GWs by other project developers.

After a two-year downturn that saw industry-wide losses, the solar panel and parts industry returned to the black since last year’s second-half, thanks to government support policies that stimulated panel demand in the mainland, Japan, India and the United States, which in turn offset lower demand from Europe.

The global industry has some 70 GWs of panel capacity, but only 40 GWs were actively utilised last year, matching demand, with the rest idled, said Jenny Chase, head of solar analysis at data provider and consultancy Bloomberg New Energy Finance in May.

Industry consultancy NPD Solarbuzz estimated in July, global shipments of panel makers could reach 50 GWs this year. Shunfeng had posted a net profit of 563.6 million yuan for the year’s first six months, compared to a loss of 672.5 million yuan last year’s first-half.

With 0.89 GWs of power grid-connected installed capacity at the end of June, Zhang said it plans to increase this by 1 GWs by year-end, mostly in the fourth-quarter.

It plans to start construction on 2 GWs of new solar farms this year, well short of the 3 GWs it targeted early this year. Zhang said it was due to intensifying competition for power grid connections, adding the company would develop more off-grid projects mounted on roof-tops.

But development of roof-top projects nationwide has been slow due to financing difficulties, as banks have been reluctant to lend to the nascent business segment because of a lack of long term power sales and purchase agreements between project developers and the power users.

Beijing plans to support the segment by increasing power price subsidies, widening the application of subsidies to projects installed in farmland and fish farms, and seeking cooperation from grid-operators to assume the risk of being the power purchase guarantor for a fee.

Shunfeng, a Jiangsu province firm controlled by Cheng Kin-ming, who is known for picking up distressed assets at attractive prices, has announced seven acquisitions and cooperation deals involving around 1.2 billion yuan (HK$1.5 billion) of investment so far this year.

Besides buying an insolvent German firm that build and operates solar farms across Europe, Shunfeng bought into a producer of inverter, a solar farm electrical component, and a firm that makes solar farm monitoring systems.

It also bought minority stakes in a Shanghai developer of hydrogen energy generation and storage technology, a United States-based lithium-ion battery energy storage technology developer, and signed a deal to acquire from a Taiwanese firm a yet-commercialised technology that desalinates seawater and generates power.

Zhang dismissed concerns the firm is investing too much too quickly into downstream and overseas operations and some early-stage non-solar clean energy technology firms, saying they are part of its strategy to have a “fully-integrated” supply chain and to become a “global clean energy company.”

It will be renamed Shunfeng International Clean Energy, subject to shareholders’ approval.