Friday, September 11, 2015

PV industry financing needs of over 500 billion yuan asset-backed lending model

Photo: CFP

"Always looking ahead, has been very difficult" the common feature of the new energy industry, photovoltaic industry is one example. Problems facing the photovoltaic industry, supply and demand imbalances, product quality is not high, the construction process not standardized, and so on, but most PV enterprises "burning brain" and financing difficulties.

On September 7 on the photovoltaic plant investment forum held in Beijing, China, China PV Industry Association Secretary-General Wang Bohua said the major domestic banks on the PV industry, especially cautious about upstream investment in manufacturing, financial institutions are struggling to identify photovoltaic companies to increase capacity with a simple expansion of production capacity, high bank loan interest rate, PV cash flows are affected.

Chinese Red Wei, Deputy Director of the Institute of energy economics said interface journalists, PV enterprises ' financing difficulties, which is the current mortgage credit used assets as the primary means of risk control, Chinese enterprises more than 95% of the investment and financing is obtained through asset-backed.

In particular, the performance of this model in the real credit, total financing requires integration into the enterprise must have not less than 20% of cash and collateral value greater than 80%. Hong Wei believes that this traditional model has nearly enough to meet the financing requirements of PV industry growth.

Although the "Thirteen-Five" plan are still being worked out, but by 2020 China PV power plant construction has identified more than 100GW in. In April, the national development and Reform Commission's Energy Research Institute and energy fund released 2050 China high proportion of renewable energy sources development scenarios and paths of research, by 2050 China PV power plant construction is 2700GW, which is currently 1 time times the size of China's various power stations have been built.

By contrast, the first half of this year, China had built only 35GW PV scale. Energy Research Institute, national development and Reform Commission renewable energy Center said Shi 璟li, this scale was significantly lower than that of a development policy and all sectors of the industry, such as expected.

If calculated both goals respectively, China PV power stations are about average annual increase 30GW 75GW. Hong Wei said, according to the current construction of PV plants average per watt cost 7 calculation, under the above two objectives, total financing amount needed each year 210 billion and 525 billion yuan, respectively.

"Traditional financial model cannot meet the financing needs of the photovoltaic industry, mainly due to asset size is not supported. "Hong-Wei said.

On one hand, China solar products can be the absolute value of mortgaged assets limited. As of September 8 closed interface journalists combed the flush plate PV concepts with total market value of 518.8 billion yuan, including 60 listed companies. This number is not large relative to the demand for this kind of financing.

The other hand, the growth of the photovoltaic industry collateral lags far behind the growing financing needs. Hong Wei said the limited current PV growth in assets, faster-growing longi shares (601012. SH), 2013, total assets at the end of 4.68 billion yuan, by the end of 2014 to 6.44 billion yuan, increased by 37%. Hareon solar over the same period (600401. SH) increased by 15.5%. By contrast, photovoltaic power plant construction 100% increase in growth rates over the past year, future shall not be less than 50%.

Hong Wei believes that PV power stations payback period of 10 years, photovoltaic industry development of ultra high-speed, PV enterprises mortgaged asset growth lagging will endure.

Hong Wei suggested that to solve the PV industry investment and financing needs, on the one hand to control changes to asset-backed credit market risk thinking, attention to project future earnings power as a starting point, on the financial innovation and capital, should accelerate the innovation of network financial products and equity-type financing products.

In fact, domestic financial sector has some company in the Internet to explore. In early 2014, combined photovoltaic (00686. HK) launched 10 million Yuan to PV for the investment direction of "chip" products, is considered to be the first raise precedent for economies of scale. In January this year, Peng Xiaofeng helm SPI launched "green treasure" series, the main kind of the Internet combined with new energy finance leasing market.

In addition, Canadian solar, Crystal energy, Li Xiexin enterprises is also exploring or trying to launch asset-backed securities (ABS), Yield Co and other innovative financial products and financing models. PV industry financing needs of over 500 billion yuan asset-backed lending model needs to be changed

Energy Chief Internet analyst with Cinda securities Cao Yin believes that PV advantage of ABS is that risks can be controlled, for plants, financing costs are relatively low, while volatility and liquidity is good.

In fact, banks and other financial institutions interested in the photovoltaic industry is not only concerns.

Shanghai silicon, Chairman of new energy technology journalist Wu Xiexiang told interface, an important reason to PV enterprises ' financing difficulties is the lack of an objective standard of evaluation, financial institutions are unable to accurately predict power stations future cash flows, financing both sides of asymmetric information, you need third party for evaluation and rating agencies, business in China has just started in this area.

The end of July this year, China officially declared vision energy service provider of Internet technology, has launched the first photovoltaic plant's risk rating "Apollo", which is a free and open software.

Wu Xiexiang also expect financial institutions to have more professionals to know PV, "Although it will be a long process, but it will help eliminate the problem of asymmetric information between, to understand what kind of projects are worth the investment. "He said.

Wang Bohua said China PV industry association has done for PV companies and financial institutions Conference, but "was not very ideal."

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