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Shunfeng Talks to Banks With Aim to Become Solar Giant

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CHINA SOLAR POWER PV DEVELOPMENT
--FILE--Chinese workers examine solar panels at a photovoltaic (PV) power plant in Rizhao city, east Chinas Shandong province, 5 July 2014. China is the worlds top energy consumer, with the vast majority of its electricity coming from domestically-mined coal. But the Asian nation is cutting its dependence on coal, oil and natural gas and replacing it with solar at a breakneck pace. Between January and the end of June, China added 3.3 gigawatts of solar capacity, double the additions over the same period last year, and equivalent to the entire solar capacity of Australia?one of the sunniest places on earth. That brings Chinas total solar power supply up to 23 gigawatts, second only to Germanys 36 GW, and just 13 GW shy of the countrys goal of having 35 GW of solar installed by 2015. The main reason, of course, is environmental. Choking clouds of pollution from vehicles and fossil-fueled power plants are the norm for residents of many Chinese cities, and the situation is only getting worse. Earlier this month, the Chinese government announced that it would ban the use of coal in Beijing by the end of 2020--although coal power use outside the capital is expected to continue.

Sept. 2 (Bloomberg) -- Shunfeng Photovoltaic International Ltd., which plans to become one of the world’s biggest solar cell manufacturers this year, said it’s speaking with as many as five banks about finance for expanding installations.

Chairman Zhang Yi said he’s targeting installations of 3 gigawatts this year. The company expects capacity of 2.2 gigawatts for cell making and 2.4 gigawatts for finished panels. That would make Shunfeng competitive with the biggest cell manufacturers, JA Solar Holdings Co., Trina Solar Ltd. and Yingli Green Energy Holding Co.

The company with a market value of HK$22.6 billion ($2.92 billion) has increased its solar-power output and shipments of cells and panels in the first half as it took control of assets it bought from LDK Solar Co. and Suntech Power Holdings Co. Those were two of the biggest Chinese solar manufacturers that ran into difficulty as plunging prices for PV equipment gutted margins across the industry.

“The company is very positive about its future growth,” Zhang said at a briefing with reporters in Hong Kong today. “The Chinese government has made it clear clean energy will count for a significant share of China’s energy mix. Shunfeng, with its effective cost quality, improved quality and heavy investment in R&D, is in a good position to benefit.”

Zhang didn’t name the banks he’s speaking with or discuss exactly what the money will go for. Loans are crucial to the company’s expansion because they cover about 80 percent of the cost of solar projects that absorb solar cells and panels the company makes. Shunfeng’s own capital funds the rest.

Credit Line

Last month, the company obtained a credit line of as much as 20 billion yuan ($3.3 billion) from China Minsheng Banking Corp. It expects 200 million yuan of borrowing costs this year.

Shunfeng’s expansion also is taking it beyond PV manufacturing. It bought stakes in two energy storage companies earlier this year and said on Aug. 31 that it agreed to purchase the operations and assets of insolvent solar developer S.A.G. Solarstrom AG to expand in Europe.

The Chinese company will increase research in seawater power generation, Zhang said today. Shunfeng last month entered into a license agreement to use such battery technology from Taiwan Carbon Nanotube Technology Corp.

Shunfeng is controlled by Hong Kong real estate tycoon Zheng Jianming, who owns a 36 percent stake through his Peace Link Services Ltd. and has spent or pledged more than half a billion dollars to buy solar assets once valued at almost $20 billion.

Profit Returns

Last week, Shunfeng said it returned to profit in the first half. The Hong Kong-listed company, whose stock has gained 53 percent this year, had a profit of 502.5 million yuan in the six months ended June 30, compared with a net loss of 670.8 million yuan a year earlier.

It’s targeting investment of about 25 billion yuan ($4 billion) as part of a plan to build 10 gigawatts of solar facilities in the three years through 2016, Zhang said in January.

The company had 890 megawatts of grid-connected solar power capacity and another 876 megawatts of projects under construction as of June 30, Shunfeng said on Aug. 28.

Shunfeng also is expanding into energy storage and other forms of clean energy following its $480 million acquisition of Wuxi Suntech Power Co., a unit of Suntech, which until about two years ago was the world’s largest panel maker.

To contact Bloomberg News staff for this story: Feifei Shen in Beijing at fshen11@bloomberg.net; Aibing Guo in Hong Kong at aguo10@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Iain Wilson

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