energy Archives ~ Business China : news for investors in China

China Finally Tackles Solar Support

By newsdoug on October 13, 2014

China to sharply lower solar tariffs by 2020

Lofty targets contained in a new report show that China intends to push ahead with ambitious plans to build up its renewable energy sector. But perhaps the most interesting thing about this new report is word that Beijing finally intends to sharply reduce the inflated state-set fees now paid for solar and wind-produced power, in one of the sharpest indicators that it expects the industry to stop depending on government support and become commercially viable on its own. Such state support through a wide array of measures, which also include export credits and low-interest loans, have become a huge sticking point that has led to a series of trade wars between China and the west. Read Full Post…

Solar Tariffs Round II Begins, Yingli In New JV

By newsdoug on January 3, 2014

The new year has just begun, and already we’re getting signals that 2014 will be full of new twists and surprises for the solar panel sector as it struggles to emerge from its downturn dating back nearly 3 years. A clash involving Chinese panel makers accused by western rivals of receiving unfair state support looks set to enter a new phase, based on an announcement of new action in the US by SolarWorld (Frankfurt: SWV), the German panel maker that has led the charge against the Chinese companies. Meantime, a separate new joint venture announcement from Yingli Green Energy (NYSE: YGE) looks smart, and reflects the new reality that China will become a major driver of solar plant construction in 2014. Read Full Post…

Canadian Solar, Report Lift Panel Makers

By newsdoug on May 3, 2013

Clouds finally lifting over solar sector?

Solar panel makers are finally seeing signs that the clouds could be lifting from their embattled sector, sparking a stock rally for their volatile shares. Canadian Solar (Nasdaq: CSIQ) led off the upbeat news, releasing preliminary results that included better-than-expected first-quarter sales and margins. But perhaps more importantly, other reports said the industry is seeing some of its first sustained price increases after more than 2 years of declines. Read Full Post…

China’s Solar Plan: Get Ready for Big New Spending

By newsdoug on August 2, 2011

China tries to rev up solar sector with new tariffs After months of talk, China has finally come out with some concrete details of how it plans to support its struggling solar panel makers, rolling out a new set of state-set electricity rates designed to make solar power generation economically attractive. Under the new rates announced earlier this week, solar power producers will be able to charge 1.15 yuan per kilowatt hour for their electricity, according to Chinese media reports. (Chinese article) Shares of major names like Trina Solar (NYSE: TSL), Suntech (NYSE: STP) and Yingli (NYSE: YGE) briefly surged on the news, but then gave back most of their gains after investors and industry watchers did some number crunching and realized the new rates were far from ground-breaking. One industry source told me that under the new rates, a relatively well-planned and managed power producer might expect to earn an annual return of 2-3 percent — not very exciting when other options are available at much lower risk levels. In order for this plan to work, local governments will have to step in and offer their own incentives for building new solar power plants — something that will probably happen on a much more piecemeal basis. Following the central government’s announcement, I would expect to see a string of announcements of new projects in the months ahead as local governments and big state-controlled power producers like Huaneng (HKEx: 902) fall into step with the central government’s policies. Industry leaders with strong government connections, such as Hong Kong-listed GCL Poly Energy (HKEx: 3800), could be some of the biggest beneficiaries of a new round of China construction that could see the nation install as much as 10 gigawatts of new capacity by 2015 and 50 gigawatts by 2020. (previous post) The new policy should also receive general public support because of its green nature, making it less prone to potential cuts under a likely new wave of cutbacks in major new government programs sparked by Beijing’s desire to cool the economy.

Bottom line: Beijing’s announcement of new tariffs for solar power projects presages a series of new solar power projects in the coming months to support the struggling solar panel sector.

CNOOC’s Latest M&A: A Shaky Oil Sand Castle 中海油收购加国油砂生产商或招来更多麻烦

By newsdoug on July 21, 2011

CNOOC’s (HKEx: 883; NYSE: CEO) $2.1 billion gamble on a bankrupt oil sands business in Canada rings of a recent Chinese M&A refrain, which has seen Chinese companies across all sectors swoop in and grab struggling overseas assets for what look like bargain prices but end up becoming major headaches. In this case, CNOOC’s purchase of OPTI Canada certainly looks good on paper. (company announcement; English article) Analysts estimate the cost of producing oil from OPTI’s main asset, an oil sands deposit in Canada, is well below the rate paid in another recent transaction and will add 5.3 percent to CNOOC’s reserves. But what the numbers don’t show is that CNOOC is making this purchase near the top of a frothy oil market, and also that it is probably acquiring more problems than it realizes with the purchase of bankrupt OPTI. Bankruptcies of this scale are never simple, and this particular one saw work on the oil sands project that OPTI was developing come to a halt due to lack of funds. Restarting the process may be harder than CNOOC realizes, as hoards of creditors will most likely have to be placated before work can resume — a process that could take months at best and years at worst. On a more macro economic basis, CNOOC has purchased this asset at the top of a heady oil market that has seen prices near or above the $100 mark per barrel for an extended period. There’s no guarantee that prices will stay that high for long, meaning any oil from this field, which will require an expensive process to produce, could ultimately be too expensive to develop if and when prices come down. Investors seem to sense all this, with CNOOC shares dipping 3 percent in Hong Kong and 4 percent in New York on Wednesday. Like many of China’s overseas M&As, this one will hardly be a simple one to execute well.

Bottom line: Despite a bargain price, CNOOC is getting a complicated deal with its purchase of a bankrupt Canadian oil sands producer, which could result in headaches for CNOOC down the road.

中海油<0883.HK> <CEO.N>以21亿美元收购一家加拿大油砂生产商OPTI，这是中国企业近年来进行海外并购的又一宗案例。表面看来这起收购确实不错。分析师预计从OPTI主要资产进行开采的成本远低於最近的另一项交易，并将使中海油储量增加5.3%。但财务数字没有体现出来的是，中海油是在油市高点进行这宗交易的，这家加拿大破产油砂企业的问题可能比中海油预计的要更多。如此规模的破产从来都不是容易的事，而这家企业正是因为缺乏资金而停掉了油砂项目。重启项目要比中海油所预料得要更难，因为重启项目需要先安抚好债权人，而这至少需要几个月的时间，最糟糕则要数年。从更加宏观的角度来看，中海油是在油市高点进行这笔交易的，原油每桶近100美元或更高已持续好一段时间了，没人能保证油价会一直这麽高。这意味着如果油价下降，从这里开采将会变得太昂贵。投资者可能已经意识到这点，周三中海油在香港和纽约股市的股价分别下跌了3%和4%。和中国很多其他海外并购案一样，这个并购案也不会容易操作。

一句话：尽管收购价格便宜，但中海油收购加拿大破产油砂企业可能会在未来令其遭遇更多难题。