Electricity Price Policy Changed in Yunnan Province to Influence LONGi’s Profit and Projects

PVTIME – On April 5, LONGi Green Energy Technology Co.,Ltd.(601012.SH) released an announcement on the impacts on its profits due to a new policy issued by the Development and Reform Commission of Yunnan Province, who will cancel the preferential electricity price and measures enjoyed agreement signed with LONGi, according to the requirements of the relevant state departments to clean up the preferential electricity price policy. Then the electricity prices used by LONGi will be decided by the electricity market, and will be transacted directly to the power grid companies. 

LONGi stated that the production cost will increase as the electricity price accounting about 15% of the processing cost of silicon wafers if Yunnan Province can no longer enact the electricity price agreed by both sides in the original cooperation agreement. And the unfinished part of the PV investment projects in Yunnan Province are under the risk of changing regarding to dramatically increased costs result from the new policy. 

According to the announcement, LONGi signed a strategic cooperation framework agreement with the People’s Government of Yunnan Province on March 10, 2016, on the investment in monocrystalline silicon rods and wafers, high-efficiency solar cells and modules, and agricultural photovoltaic power plants in Yunnan Province under relevant preferential policy. These projects were planned to set up 100 billion-level monocrystalline photovoltaic industry cluster in Yunnan Province.

In the duration of 2016 to 2021, silicon pulling project with annual output capacity of 67GW and silicon slicing project with annual output capacity of 57GW has been put into opeartion by LONGi in Yunnan Province. The Phase III of monocrystalline silicon wafer (Lijiang) project with annual output of 30GW, Phase II of 20GW monocrystalline silicon rod and 30GW monocrystalline silicon wafer (Qujing) project, and 30GW monocrystalline solar cell (Qujing) project are under plan or not yet completed. The silicon slicing capacity in Yunnan Province accounted for about 54% of LONGi’s total capacity by the end of 2021.