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Renesola expects steep drop in solar panel prices after China cuts development

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Renesola expects steep drop in solar panel prices after China cuts development

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Under China's new policies, the country is likely to install between 32,000 MW and 42,000 MW of new solar projects in 2018 compared to 53,000 MW in 2017, according to Yvonne Liu, an analyst with Bloomberg New Energy Finance.
Source: Associated Press

Power plant developer ReneSola Ltd. expects "significant declines" in solar module prices after China said it is taking steps to slow down construction in the world's biggest market for solar.

By curtailing development, Beijing could swamp global markets in excess solar panel capacity and increase pressure on manufacturers already plagued by thin margins. China government agencies said the moves are designed to rein in runaway growth and create a "healthy and sustainable" national solar industry.

"We anticipate significant declines in module prices that will benefit our overseas projects by increasing returns and thus project values," Renesola CEO Xianshou Li said June 5 in a news release. Lower equipment prices, along with relatively high electricity rates in China's eastern provinces, could also create opportunities to build unsubsidized distributed generation projects that are competitive with grid-supplied electricity, Li said.

Under China's new policies, the country is likely to install between 32,000 MW and 42,000 MW of new solar projects in 2018 compared to 53,000 MW in 2017, according to Yvonne Liu, an analyst with Bloomberg New Energy Finance. Paula Mints, chief research analyst at SPV Market Research, said resulting price declines would push bids by project developers to new lows, reinforcing the industry's "margin death spiral."

Renesola began focusing exclusively on building and operating solar projects after selling its manufacturing business to Li in September 2017. The deal, which was proposed as a way for Renesola to shed the vast majority of its debt, came together in the months after the company said a 2016 market glut drove down solar cell and panel prices, contributing to a 27% decline in revenues.

Overcapacity has been a recurring issue in the solar industry and factored into a recent trade case that resulted in President Donald Trump imposing tariffs on imported solar cells and panels made from crystalline silicon.

Citing an expected drop in module prices and progress the company has made building up its project development business, Renesola raised first-quarter revenue guidance June 5 to between $40 million and $45 million from an earlier range of $30 million to $35 million. The company plans to report first-quarter financial results on June 20.

At the end of 2017, Renesola owned 212 MW of solar projects and had a late-stage pipeline totaling 546 MW, including 125 MW in China. The company's shares were up 3% at $2.40 in midday trading June 5.