Singyes Solar shifts focus from north to south of the country
Frustrated by power grid bottlenecks and delays in subsidy payments, Guangdong firm to sell its northern projects and concentrate on those nearer home
China Singyes Solar Technologies, which produces curtain wall and solar power generation systems, is withdrawing from northern China because it is frustrated with bottlenecks in the region’s power grid and delays in subsidy payments, some of up to two years.
The Zhuhai, Guangdong province-based company now plans to sell all of its solar farms in the northwest, including those under construction when they are completed, financial controller Jimmy Yu Chon-man told South China Morning Post.
“We will no longer invest in solar farms in the northwest and will focus primarily on Guangdong,” he said in an interview, “which does not have any subsidy arrears or problems with grid bottlenecks.
“In the northwest, construction permits have become harder to obtain due to its grid congestion and arrears in subsidies.”
Only 48 per cent of all solar power produced in Xinjiang Uygur autonomous region was actually consumed in the first quarter due to low local demand and grid bottlenecks, and the figure rose to 61 per cent in Gansu province. The two regions accounted for 84 per cent of the country’s wasted solar power output.
Guangdong is a large power consuming province, but is still a modest producer of renewable energy, as its weather conditions are less favourable for solar and wind generation than the northwest.
It does, however, have a major surplus in its provincial renewables fund, which is designated to provide funding for wind and solar energy projects, and producers can charge higher tariffs for energy.
The fund, like many in China, is generated by a small surcharge on all electricity bills and offers generators payments calculated on the difference between the higher subsidised renewable power tariffs and local benchmarked coal-fired power tariffs.
Nationally, China’s renewables fund is in deficit to the tune of over 30 billion yuan, despite several increases to the surcharge imposed on bills.
Rapidly rising wind and solar power output and falling coal-fired power prices have meant subsidies per unit of power produced have been widening in recent years.
Yu said Singyes has found it difficult to secure land for its solar farm development in the south, and has attempted to get around the problem by focusing on less-populated regions in western Guangdong cities such as Zhanjiang and Yangjiang.
On Sunday the company announced the sale of two solar farms in Xinjiang and Gansu, with combined annual generating capacity of 100 mega-watt (MW), for HK$861 million, which will be paid in tranches until two years after completion.
The buyer is a firm owned by Hong Kong-listed China Solar Energy, which is under debt restructuring by provisional liquidators.
Yu expects the deal to be completed next year, and has no concerns the company will be paid as China Solar has a white knight investor and the sale agreement has been agreed with its liquidators.
In the northwest, Singyes operates various sizes of project, but mainly 110 MW grid-connected solar farms and 61.5 MW installed ones, that were expecting grid connection by the end of June.
In Guangdong it owns smaller 42 MW on-grid projects, but does have several 108 MW farms under construction, with further 20 MW projects planned.
It also runs 100 MW projects for clients, built on an engineering, procurement and construction basis.
Yu said Singyes plans to spend HK$300 million in the second half of this year completing various Guangdong projects.
Last week the company posted a 41.5 per cent rise in half-year net profit to 315.7 million yuan, thanks to a gain of around 100 million yuan from the sale of a 50 MW project. Without that boost, its performance would have been flat.
The firm said then it had received preliminary approval from Hong Kong’s bourse to separately list its seven-year-old “new materials” manufacturing operation, which was run as part of its curtain wall installation business.
The operation makes materials used in producing “smart glass”, which can change from translucent to transparent with the flip of a switch, as well as “smart projectors” that project images onto glass coated with the material, mainly used by the advertising industry.
The business posted a 47 per cent rise in interim revenue to 33.1 million yuan, as gross profit margin grew to 40.8 per cent from 29.3 per cent.