China Industry: Aug. 25

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Aug. 25 – This is a regular series of relevant industry news from around China.

Solar power

Taiwanese uninterruptible power supplies maker Powercom plans to spend TWD250 million to build a solar power plant in Central Taiwan Science Park. The company’s chairman, Simon Chang, said that the power station will have an output of 1 MW and will span two hectares of land.

Chinese silicon ingots and photovoltaic (PV) products maker Solarfun Power Holdings reported a consolidated net loss of RMB320 million for the second quarter of 2009, against a net profit of RMB84 million a year earlier.

The company’s sales in the period declined by 36.8 percent in annual terms to RMB855 million. Still, the quarterly turnover is higher compared with a revenue of RMB684.2 million booked in the previous quarter of the year.

In the three months ended June 30, 2009, Solarfun made shipments of a total 64.3 MW, an increase from 43.1 MW registered last year. The shipments rose thanks to PV module deliveries and processing services. The company expects to ship over 100 MW in the next quarter of the year.

Solarfun posted a negative operating result of RMB122 million for the period, compared to an operating profit of RMB116.4 million in the second quarter last year.

Commenting on the results, Solarfun’s president Peter Xie remained pleased with the quarterly performance, which reflects the significant progress the company has made in reducing raw material costs.

The provided financial results were prepared under the U.S. generally accepted accounting principles.

Chinese ET Solar completes supplies to 4.2 MW solar projects in Italy
Chinese photovoltaic products maker ET Solar Group Corp said it shipped solar modules to three commercial-scale solar-power projects with a combined capacity of 4.2 MW in Italy.

The company said yesterday that the multi-crystalline PV modules will be installed both in ground and roof-mounted arrays.

The 1.9 MW Imola, the 1.3 MW Prato and the 1 MW Perugia solar systems are being developed in central Italy. The first two projects have already been brought on stream, while the third project is waiting for the grid connection to be completed next month. ET Solar added that two of the projects were funded by large European banks focused on the solar industry.

Chinese photovoltaic cells and modules maker Suntech Power Holdings said it has achieved a conversion efficiency of 15.6 percent on a commercial grade multi-crystalline silicon PV module. According to the company, this conversion efficiency beats the previous record of 15.5 percent (aperture area only) set 15 years ago by Sandia National Labs. The multi-crystalline module conversion efficiency was independently tested by the Fraunhofer Institute for Solar Energy Systems ISE in Germany.

Chinese photovoltaic maker Yingli Green Energy booked a net loss of RMB393.7 million for the second quarter of 2009, extending it from a loss of RMB141.6 million in the prior quarter. Against a year ago, the loss compares with a profit of RMB203.9 million.

Sales in the second quarter slipped to RMB1.5 million, from RMB999.9 million in the first quarter and RMB1.987 billion a year earlier. The company attributed the deterioration partly to RMB29.9 million losses on derivative liabilities and US$35.8 million to cover outstanding payments. Yingli reiterated its earlier PV module shipment target of 450 MW to 500 MW in 2009, a 59.9 percent to 77.6 percent increase on 2008.

CEO Liansheng Miao said new incentives rolled out by governments had helped perk up global markets in the second quarter. Last month the Chinese Ministry of Finance fleshed out plans to take up half of the cost of independent solar array installations and the construction of power transmission and distribution systems to grid-connect projects.

The government has vowed to announce by the end of the year measures to spur its renewable energy industry. It recently sweetened feed-in tariffs in an effort to bolster capacity to 100 GW by 2020. Clean energy should deliver 10 percent of China’s primary energy mix by 2010, rising to 15 percent by 2020.

Chinese solar products maker Renesola said today it had inked a letter of intent with the Taiyangshan Development Zone in Wuzhong to build a 150 MW grid-connected solar power plant. The project represents a total investment of RMB4.8 billion. It is still subject to a feasibility study and has to be cleared by the government.

The construction of the plant, to span four phases, is expected to begin in 2010. The company’s CEO, Xianshou Li, said that the Wuzhong solar project will boost Renesola’s project portfolio and will strengthen its position in the Chinese market.

Chinese telecoms equipment maker Huawei Technologies has inked a deal with Bangladesh cellular operator Grameenphone to supply solar-powered base stations in rural areas. No financial details about the agreement were available.

The hybrid technology involving solar power and backup diesel generators will lower the carrier’s carbon footprint and eliminate the need to hook the stations to the national grid, Grameenphone said.

Moreover, the operator will be able to provide uninterrupted telecoms services, avoiding the frequent blackouts hitting the grid mostly in the summer when supply is diverted to farms to drive irrigation processes.
Set up in 1995, Grameenphone, boasts some 21 million mobile phone customers and is a joint venture between Norway’s mobile phone operator Telenor and local carrier Grameen Telecom.

Earlier this month, Chinese operator China Mobile announced plans to install solar-powered base stations in Pakistan where it has 6.5 million subscribers but recurring power outages undermine its operations.

The Chinese solar energy market is unlikely to live up to expectations of burgeoning growth in 2009 as it will be a while before government moves to spur it on take off, Wuxi-based manufacturer Suntech Power predicted.

Speaking at a second-quarter conference call last week, chief executive Zhengrong Shi said the solar panel maker has lowered its full-year shipment forecast to 600 MW from 600-700 MW projected in May and the 800 MW guidance announced earlier in the year. The forecast excludes thin film panel shipment, which was initially anticipated at 50 MW of amorphous silicon panels.

China has committed itself to a target of bringing online 10 GW of new solar capacity by 2020. Analysts quoted by Reuters have said more than 2 GW could be up and running by 2011. The government has come up with two schemes to shore up the solar industry.

In March, it announced it would provide RMB20 per watt for rooftop or building-integrated projects of a bottom 50 kW. Moreover, last month it fleshed out plans to unwind a “Golden Sun” program to subsidize installations of at least 300 kW in a bid to install 500 MW of new capacity over the next two to three years. The initiative will cover half of the costs of building a solar power project and transmitting and distributing the output. Photovoltaic projects in remote areas with no grid connection will receive up to 70 percent subsidies.

By the end of the year, the government is due to launch a feed-in tariff that should range between RMB1.09 and RMB1.45 per kWh, according to Shi. The incentives have provided a much-needed shot in the arm for Chinese manufacturers, setting off a wave of project announcements. In May, Suntech submitted 179 MW of applications for the rooftop program.

Suntech closed the second quarter with US$321 million in revenue, up from US$315.7 million in the first quarter but down from US$480.2 million from a year earlier. Net income almost touched US$10 million versus US$1.8 million in the first quarter and US$52.2 million in the second quarter of 2008.

U.S. trichlorosilane (TCS) manufacturer SunSi Energies announced on Wednesday that its wholly owned Chinese subsidiary had agreed with a local sector player to set up a joint venture in Zibo, eastern China.

Under a definitive deal, SunSi Energies Hong Kong will own a 90 percent stake in the new entity, dubbed Zibo Boayun Chemical, which will hold all the assets and the entire labor force, as well as the management expertise of an attendant TCS production facility in Ziba.

Currently it manufactures TCS, a photovoltaic polysilicon feedstock, with a capacity of 25,000 tons per year. In line with the completed transaction, Sunsi Energies Hong Kong anticipates to double the output during the year.

Air transport

Cai Jianjiang, president of Air China said that the company would initiate regular flights between Taiwan and Chinese mainland, starting August 31. The air carrier will operate 27 cross-strait return flights a week on six routes, from Beijing, Shanghai, Chengdu, Chongqing, Hangzhou and Tianjin to Taipei Taoyuan Airport.

Air China and the conglomerate Swire Pacific intend to increase their shareholding in Cathay Pacific Airways by buying shares from Citic Pacific. Air China will spend HK$6.34 billion for a 12.5 percent stake thus boosting its ownership to 29.99 percent from 17.49 percent. Swire Pacific will pay HK$1.01 billion for a 2 percent stake increasing its shareholding to 41.97 percent.

The Civil Aviation Administration of China reported a 21.9 percent increase in the number of passengers carried by domestic airlines in July, compared to the same period in 2008, to 21 million. Cargo volume soared 3.2 percent to 359,900 tons. International cargo volume rose 1.1 percent.

Air China’s Hubei branch intends to purchase three new airplanes in 2009, according to a company official.

The Chinese and Sudanese governments have entered into an agreement, under the terms of which air carriers will be able to operate flights directly between Khartoum, Sudan, and Beijing. Chinese flight providers will also use Khartoum International airport as a hub for different destinations in Africa.

Shenzhen Airlines has donated TW$10 million to the Alishan area in Taiwan which was hit by the typhoon Morakot.

China Southern Airlines Company has adopted a new policy, according to which ill passengers will be able to cancel their flight and get a full refund for their ticket if they can present a doctor’s certificate.

Korean Air’s low-cost subsidiary Jin Air plans to start flying from Seoul to Bangkok and Macau in October 2009. The air carrier will also initiate routes to Osaka, Japan, and Weihai, China, in December and to Guam in January 2010.

China Eastern Airlines reported a 29.39 percent increase in its passenger volume on domestic flights in July compared to the same period in 2008, and a 19.27 percent rise from June 2009. Passenger volume on international flights in July 2009 decreased 1.94 percent year-on-year, but surged 27.8 percent from June 2009.

Singapore-headquartered budget air carrier Jetstar Asia said it hopes to initiate flights from Singapore to China and India by the end of 2009. CEO Chong Phit Lian said that these flights are pending regulatory approval.

Wind power

GE Drivetrain Technologies, a unit of GE Transportation, has joined hands with China-based Chongqing XinXing Fengneng Investment to produce large-diameter gears for wind turbines.

The joint venture will be majority-owned by the Chinese company and will make gears at a new production facility in Chongqing municipality. GE said the undertaking forms a major part of a broader strategy to increase wind drive train operations in China and the Asia Pacific region by integrating the company’s gear manufacturing supply chain.
The partnership will contribute to China’s target of lifting its wind energy output from 1 GW in 2005 to 100 GW by 2020.

This industry report brief is courtesy of Aii Data Processing.

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