GCL-Poly Energy Holdings, the mainland's largest producer of polysilicon, the raw material for solar power panels, is seeking to cut its electricity bill through direct purchase deals with power generators to combat declining margins amid industry oversupply.
With electricity charges accounting for one-third of its operating costs in the second quarter, cutting power expenses is key to the cost reduction effort of the Jiangsu-based company.
Chairman Zhu Gongshan (right) said the provincial government had applied to the central government for approval to introduce direct power deals between major end-users and generators, with the grid companies receiving a fixed fee for their investment and return.
Such deals allow generators to give bulk purchase discounts to the users, which is not possible under the current regime where wholesale and retail prices are set by the government.
They were seen as a move to help power-hungry sectors hit hard by the financial crisis and being part of the regulators' efforts to introduce more market competition in power tariffs.
Zhu would not disclose the potential discount the company may receive.