ReneSola and JinkoSolar Push Back on Impact of Chinese Subsidy Cuts
The announcements by the two solar power companies came after Beijing unexpectedly cut subsidies to the industry, sending their stocks plummeting Monday.
A day after being pummeled by reports that Chinese regulators were cutting back their support for solar panels, ReneSola Ltd. (NYSE: SOL) raised its guidance for the first quarter, saying it is expecting revenue in the range of $40 million to $45 million compared with the $30 million to $35 million it previously anticipated.
The announcement came after the Chinese regulators said Friday they were unexpectedly suspending construction of new solar panel farms and cut subsidies to the industry, sending solar energy companies' stocks plummeting Monday.
Shanghai-based ReneSola develops and operates solar power projects in China and globally, including in the United States, the United Kingdom, France, Spain, Turkey, Poland, Japan, and Thailand.
The company said today that its revenue in the first three months would be at least 29 percent higher than anticipated. It also said that its existing projects would continue to receive certain subsidies, while future projects were expected to benefit from an anticipated decline of costs for equipment and construction, signaling to its shareholders that the new regulations would not significantly affect its business.
"We believe the lower equipment cost and stable electrical rates will enable us to find unsubsidized net-metered and self-consumption projects at grid parity with reasonable rates of return," the chief executive officer of ReneSola, Xianshou Li, said in a statement today. "We anticipate significant declines in module prices that will benefit our overseas projects by increasing returns and thus project values," he added.
ReneSola said it expects to announce its quarterly results on June 20.
"ReneSola has steadily built business momentum since the divestiture of the manufacturing business, and we are confident growth can continue," Li said.
Another company affected by Beijing's new Solar Management Plan, JinkoSolar Holding Co. Ltd. (NYSE: JKS), attempted to reassure its shareholders with the announcement of a continuing partnership with Sustainable Power Group. Based in Salt Lake City, sPower is the largest private owner of operating solar assets in the U.S., where it manages more than 150 projects.
Under the agreement, a subsidiary of the Chinese maker of solar panels, JinkoSolar (U.S.) Inc., would continue to supply modules to sPower for three years, the company said in a statement today.
"The agreement includes significant down payments, which will help Jinko expand manufacturing capacity in the United States and Asia," the company said in its statement today.
The stock of JinkoSolar closed at $12.95 per share, down nearly 6 cents before rising 4 cents in after-hours trading.
ReneSola closed at $2.32 per share, down 1 cent on the day.
ReneSola and JinkoSolar each fell significantly in New York trading after the new regulations by Beijing.
(Source: Thomson Reuters Eikon)