China Renewable Energy Industry Report: May 27

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May 27 – This is a regular series of relevant industry news from around China.

•State-run power utility China Guodian Corp seeks partners in Brazil and Argentina for the construction of wind turbines and solar panels, the vice president of Guodian’s subsidiary, Guodian Technology and Environment Group, Zhang Binquan, told Reuters last week.

The plans of Guodian, which is in the top five state-owned power firms in China, are part of its efforts to start electricity generation in Latin America.

Guodian is doing very initial feasibility studies and seeks partners who can provide information that could save the company a lot of time, Binquan said without revealing financial details on any potential deal. In the last two years, Guodian invested some US$3 billion annually to expand in the wind power market.

China’s five biggest state-run power firms are reportedly trying to gain ground on the renewable energy market, troubled by large debts and high fuel prices.

•Waste-to-energy solutions provider China Recycling Energy Corp on May 17 said its first-quarter revenue grew 14.2 percent on the year to US$11.6 million, driven by a rise in system sales.

The revenue included US$11.3 million in sales of systems, increasing from US$10.1 million a year ago, and US$290,000 in contingent rental income. Operating profit rose 52.1 percent to US$8.3 million mainly on the back of a 66.3 percent growth in interest income from sales-type leases of systems to US$5.1 million. Net profit more than doubled to US$4.6 million from US$2.2 million.

The company said it finished and sold its third 9 megawatt power station under the Erdos Phase II project during the quarter. The Erdos Phase III, which includes a 25 megawatt waste heat power system, is now under construction and is slated for completion in the third quarter, bringing the company’s total capacity to 146 megawatts.

•U.S. original equipment manufacturer Powin Corp last week said it had agreed with Chinese lithium batteries maker Shandong RealForce Enterprises Co Ltd to jointly make products for the green energy sector.

The joint venture, RealForce-Powin, to be based in the U.S. state of Oregon, will develop and produce lithium-ion batteries, storage batteries, energy storage power plants, solar cells and related energy products in China.

Powin will distribute the products in the United States, Canada, Mexico and South Africa.

•Chinese silicon wafer maker GCL-Poly Energy Holdings earlier this week officially launched its 500-megawatt monosilicon rod project in the province of Henan. When the monosilicon facility reaches full capacity it will be able to annually produce 3,500 tons of the raw material, used for wafer making, GCL-Poly said.

The project is in line with the company’s capacity expansion strategy for the coming two years. It also corresponds to Henan’s decision to support strategic and emerging industries and is seen as a major step for the development of the renewable energy sector in central China.

GCL-Poly plans to bolster its polysilicon capacity to 46,000 tons by end-2011 and to 65,000 tons by the end of June 2012. Wafer capacity is seen to expand to 6.5 gigawatts by the end of the current year.

•Chinese solar energy firm Yingli Green Energy Holding Co Ltd on May 20 booked a first-quarter net profit of US$56.7 million, soaring 93 percent on the year, as sales grew.

Diluted earnings per share rose 84.7 percent to US$0.352. On an adjusted basis, net profit increased 63.5 percent to US$61.97 million, and diluted earnings per share went up 56.9 percent to US$0.385.

Gross margin stood at 27.3 percent, in line with the company’s last guidance revised from the earlier expected 30 percent – 32.9 percent due to regulatory uncertainty in Italy’s feed-in tariff policy change. Gross margin for the year-ago period was 33 percent. Operating profit rose 6 percent to US$87.24 million.

The company expects a more than 30 percent growth in shipments for the second quarter and reaffirms its full-year shipments outlook of 1.7 gigawatts to 1.75 gigawatts for 2011, rising 60.1 percent to 64.8 percent on the year.

•Solar product maker China Sunergy on Monday said its first-quarter net profit halved to US$3.5 million from US$7.1 million a year ago.

The result included US$5.7 million in charges related to derivative fair value changes, compared to gains of US$1.4 million for the same period last year. Operating profit declined to US$8 million from US$10.3 million as total operating costs rose to US$9.8 million from US$6.6 million.

China Sunergy said the net and operating profit figures were hampered by lower-than-expected sales in Italy. The results also mirrored the company’s business shift from solar cells to solar module sales to end users.

•State-run power utility China Guodian Corp plans to spend US$3 billion on wind, biomass and hydropower projects in the municipality of Chongqing through 2015.

The company, the controlling shareholder of local utility GD Power Development Co Ltd., also plans to reorganize its hydroelectric assets in the southern Chinese city and cooperate with Chongqing Water Conservancy Investment Group on activities related to electricity production and clean energy.

•Chinese wind turbine maker Xinjiang Goldwind Science & Technology said on Monday it had agreed to buy as much as US$15 million worth of stock in Huaneng Renewables. The exact price of the shares will be set during Huaneng’s initial public offering in Hong Kong, seen to be completed in June.

Huaneng Renewables, a unit of China Huaneng Group, is among China’s leading wind farm operators in terms of capacity. Its installed, under-construction, and pipeline wind farm projects cover 19 of China’s provinces and autonomous regions.

Goldwind hopes that its investment in the wind power plant developer will bring investment returns and improve the cooperation between the two parties. Huaneng is among Goldwind’s major customers.

•U.S. photovoltaic equipment provider GT Solar International Inc. has lifted its outlook for fiscal 2011/12 to April 2, after improving its performance in fiscal 2010/11. Now the company guides for US$1 billion-US$1.1 billion in revenue, compared to the previously expected US$850 million-US$1 billion.

Diluted earnings per share are seen at US$ 1.55-US$1.85, up from the previous forecast of US$1.25-US$1.50. Gross margins are expected at 42 percent to 44 percent.

The company’s order backlog as of April 2 stood at US$1.19 billion, including US$536.7 million in the polysilicon division, US$468.1 million in the photovoltaic unit and US$184.2 million in the sapphire segment. The backlog included also US$445.5 million of deferred revenue.

•The Asian Development Bank (ADB) on Monday said it would allocate US$60 million to set up three clean and sustainable technology venture capital funds focused on China and India.

The move is aimed at helping Asian countries adapt to the effects of climate change, according to Philip Erquiaga, director general of ADB’s private sector operations department.

The funds, Aloe Environment Fund III, Keytone Ventures II and VenturEast Life Fund III, will each get US$20 million from the ADB and are expected to attract an additional US$600 million-US$700 million via private sector investment.

The funds will invest in early-stage technology firms engaged in climate change mitigation and adaptation or environmental protection.

Aloe Fund will invest in transferring clean technology and know-how, targeting some eight to ten investments of US$28.2 million each. Keytone Fund will focus on firms in the light-emitting diodes, industrial energy efficiency, electric vehicle and power batteries and waste management sectors, aiming to make 15 investments of US$10 million-US$15 million each. VenturEast Fund will invest some US$200 million in Indian companies seeking to apply proven healthcare, sustainable agriculture and clean environment technologies from other regions.

•China WindPower Group Ltd has agreed to sell 51 percent of its stake in Gansu Guazhou Century Concord Wind Power to local utilities Jilin Power Share and Jilin Xiehe for US$76 million.

As part of the deal, Jilin Power will acquire a 46 percent interest in the company for US$68.56 million. The rest will go to Jilin Xiehe, a 49/51 joint venture of China WindPower and Jilin Power.

As of February 28, 2011 Guazhou Century, a developer of wind power projects, had net assets of some US$151.32 million. The company posted a net loss of US$39,480 for 2010 and a loss of US$46,240 for 2009.

After the transaction is completed, Guazhou Century will no longer be a wholly-owned subsidiary of China WindPower, but will be accounted for as a jointly controlled entity.

•German photovoltaic technology firm Roth & Rau said on Tuesday it had acquired the Shenzhen production site of German industrial holding Possehl Group. The move is part of Roth & Rau’s internationalization strategy and will increase the company’s presence in Asia.

Apart from the production facilities and their equipment, Roth & Rau is also taking over 145 employees, the company said. The companies agreed not to disclose the purchase price.

A strong local presence is a must for a profitable after-sales business in Asia, Roth & Rau’s CEO Dietmar Roth said.

•German wind turbine maker Nordex SE announced on Tuesday it had received an order for the delivery of 33 wind turbines from Chinese energy supplier Ningxia Electric Power.

The S82/1500 wind turbines are intended for the Niushoushan I and Niushoushan II wind parks in China’s northeastern region of Ningxia. The turbines will have an annual output of 130 GWh. Deliveries will be made in the summer of 2011, the company said.

•U.S. bearings maker Timken Company on Monday said it has agreed to team up with Chinese Xinjiang Goldwind Science & Technology Company on the development and supply of advanced wind power products.

The two companies have signed a three-year memorandum of understanding for a long-term strategic partnership on technical services, products and aftermarket support for advanced wind turbine components and systems.

Under the agreement, Timken will provide original equipment and design services. It will conduct testing at its U.S. wind energy research and development center, which is expected to open in 2012. The company will supply bearings and power transmission components and optimize wind turbine installations. It will also provide field services and aftermarket support for Goldwind’s installations, as well as integrated supply chain management and wind farm sustainability services.

Timken added it would expand its production capacity in China and at its other wind energy technology plants.

This industry report brief is courtesy of AII Data Processing.