Saturday, July 10, 2010

Yingli Secures $5 Billion Loan from Development Bank

China may double the world’s capacity for making solar panels by loaning Yingli Green Energy Holding Co. 36 billion yuan ($5.3 billion) to expand production, a Bloomberg New Energy Finance analyst said.

The funds from the state-run China Development Bank Corp. follow an agreement to lend as much as 50 billion yuan to Suntech Power Holdings Co. in April. Some 30 billion yuan was also loaned to Trina Solar Ltd. by the bank in the same month, according to New Energy Finance. The three New York-traded companies are China’s biggest solar firms by market value.

“The loans are enough to increase the world’s solar wafer and cell capacity by 100 percent,” said Jenny Chase, head of solar-energy analysis for New Energy Finance in London. “It will allow the Chinese companies to deliver unprecedented economies of scale.”

The money will allow China to strengthen its position as the world’s largest maker of solar panels used to generate electricity from the sun’s rays. Yingli and its Chinese competitors shipped 43 percent of the world’s solar panels last year, according to the London-based research group owned by Bloomberg LP.

Yingli will use the funds to finance both domestic development and boost its overseas business, the Baoding-based company said in a statement on its website. The company didn’t provide further details or disclose terms of the loan.

China Development Bank also extended an eight-year loan of $70 million to Yingli in December 2008 to fund expansion. The company said in a separate statement it has started production on a solar panel factory able to make 400 megawatts of generation capacity a year.

Capacity Expansion

Yingli expects its newest production lines to reach full capacity by the end of the third quarter, raising its total output capacity to 1 gigawatt. The China Development Bank loan may be enough to raise Yingli’s production capacity to as much as 5 gigawatts, Chase said.

The 50 billion yuan loan agreement with Suntech may be used to help expand output capacity, said spokesman Rory Macpherson.

“The strategic agreement signifies China Development Bank’s confidence in the ongoing growth of Suntech and the solar industry,” he said. “The use of the funds was not specified though could potentially be used for capacity expansion.”

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