Chinese Dam Builder Expands Reach in Solar Modules

From New York Times

The solar panel industry may face severe overcapacity and collapsing prices this winter, but that has not stopped a Chinese hydroelectric dam-building company from buying two Western producers of an alternative solar technology.

Hanergy Holding Group, a privately held company based in Beijing, announced Wednesday that it had completed its acquisition of MiaSolé, a struggling, 100-employee manufacturer of thin-film solar modules based in Santa Clara, California.

The deal follows Hanergy’s completion in late September of its acquisition of the 400-employee thin-film solar unit of Q Cells, an insolvent German solar company. The two deals have allowed Hanergy to acquire at low cost an array of patents developed at the cost of hundreds of millions of dollars of venture capital investments.

Thin-film solar modules use more exotic materials than conventional solar panels, which are made from polycrystalline silicon and tend to be blue. Most thin-film modules are slightly less efficient at converting sunlight into electricity than conventional panels, but the thin-film versions are much lighter, which makes them easier to mount in locations that may not support the weight of conventional panels.

Supporters of thin-film technology also contend that it is newer and has the potential for considerable further efficiency gains that may not be possible for conventional panels, which have been heavily researched for decades.

Chinese regulators have begun discouraging the banks from making more large loans to the solar panel sector, after sometimes-frenzied investment over the past four years led to a 17-fold increase in Chinese solar manufacturing capacity. That led to a three-fourths drop in the price per watt and caused bankruptcy or severe production cuts at a dozen North American solar producers and a dozen European producers.

Li Hejun, the chairman of Hanergy, said at a news conference in Beijing that the company’s hydroelectric dams produce several hundred million dollars a year in free cash flow, so Hanergy can finance its own investments in solar, which already include six thin-film solar factories, plus three more under construction.

“Everyone knows about the overcapacity in solar energy industry in China, but for us industrial insiders, this overcapacity is but a relative one,” he said, adding that the overcapacity is “among those with no technology — for those who have technology, the situation is the opposite.”

John Carrington, the chief executive of MiaSolé, said in a telephone call that he believed there would still be demand for thin-film modules. “There is a lot of overcapacity, but I don’t know if there is overcapacity for really good, efficient technology.”

Hanergy actually reached its agreement to buy the Solibro subsidiary of Q Cells in June and signed its agreement to acquire MiaSolé in late September. After obtaining government approvals in China, Germany and the United States, Hanergy completed the Solibro deal at the end of September and the MiaSolé deal at the end of December, but delayed its news conference until this week in the hope that it would attract more attention, people involved in the deal said.

Hanergy reportedly agreed to pay just $30 million for MiaSolé, but Mr. Li said that this was only what Hanergy had repaid to MiaSolé’s creditors. Mr. Li did not indicate a price in his remarks in Chinese, but his translator unexpectedly added a phrase in English when translating his remarks, saying that the purchase price had been about one-tenth of the $1.2 billion that MiaSolé’s board initially sought for the company. The exact amount was complicated by Hanergy’s investments during the deal process to help keep MiaSolé running.

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