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China Development Bank bets on Yingli as a solar survivor

April 23, 2013
Obsession
Energy Shocks
April 23, 2013

China’s solar panel manufacturers are in trouble, and not all will survive the shakeout. But China Development Bank, the country’s biggest state-run policy bank, seems to be placing a bet on the outcome. Yingli Green Energy announced today that it had secured a $165 million loan from the bank to “to complement its working capital needs and support the procurement of raw material.”

The company, which supplanted Suntech last year as the world’s biggest solar manufacturer, was carrying $2.5 billion in debt at the end of 2012. And while it reported a net loss of $492 million for 2012, it remains in better shape than most of its Chinese competitors and had a market cap of $340 million as of this morning. That may not sound impressive but it’s nearly three times the market cap of Suntech, LDK Solar and other Chinese photovoltaic manufacturers.

More importantly, Yingli’s US subsidiary has been winning contracts to supply solar panels for massive photovoltaic power plants, a market other Chinese manufacturers have had a hard time breaking into—and one dominated by America companies First Solar and SunPower.

“We’re working on a number of projects of different sizes in the US and 2013 is looking very strong,” Robert Petrina, managing director for Yingli’s US subsidiary, told Quartz recently.

For example, in November, Fluor selected Yingli to provide 200 megawatts (MW) of solar panels for a power plant it is building for LS Power Group in the desert outside San Diego. Last week, solar developer NextEra Energy Resources filed documents with California regulators indicating it was considering Yingli, along with First Solar, to supply solar panels for a planned 485 MW photovoltaic power plant.

Such deals will help soak up Yingli’s manufacturing capacity. The company said solar panel shipments in the fourth quarter of 2012 jumped nearly 41% from the previous quarter and it expects shipments to grow between 39.4% and 43.7% in 2013 to 3,200 MW to 3,300 MW.

That should be reassuring to CDB, whose other loans to Chinese solar manufacturers haven’t worked out so well. For instance, the bank extended a €493 million ($644 million) credit line to Suntech that turned out to be secured by non-existent German bonds. China’s banks last month forced Suntech’s Chinese operations into bankruptcy after the company defaulted on $541 million in bonds.

In 2010, China Development Bank gave LDK Solar a credit line of up to $8.9 billion. LDK, which last week partially defaulted on $24 million in bonds, faces a $295 million payment to the bank in June.

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