WRAPUP 1-China looks to provinces to prop up its solar industry

Wed Sep 26, 2012 3:38pm EDT

* Two China solar cos reject EC charges of illegal subsidies

* EU ProSun: China govt aids cos via very low interest rates

* JA Solar, Jinko Solar set deals with China power producers

* Plans by provinces due by Oct. 15

SHANGHAI/LOS ANGELES, Sept 26 (Reuters) - China on Wednesday advanced plans to prop up its once high-flying solar industry by asking provinces to provide blueprints for how they will increase solar in their power mix by 2015.

The country's export-focused solar panel industry has been hit hard by excess manufacturing capacity and waning foreign demand as European na tions c ut back subsidies for green power. C o mpanies have slashed prices 30 percent this year as stockpiles grow, virt ually erasing the industry's profits.

Chinese producers are increasingly turning to their home market, which has become one of the world's biggest for solar energy development. Overseas, they battle not only a weak market environment, but anti-dumping tariffs in the United States. Europe, also, could impose import duties.

On Wednesday, Chinese panel makers JA Solar Holdings Co Ltd and Jinko Solar Holding Co Ltd announced new supply deals with Chinese power producers.

JA Solar will supply up to 160 megawatts of solar panels to China Power Investment Corp and China Guangdong Nuclear Solar Energy Development Co Ltd. Jinko Solar will supply 40 MW of panels to China Power International New Energy Corp.

The China Securities Journal reported on Wednesday that the National Energy Administration had asked all provinces to l ay out b y Oct. 15 their plans for implementing a scheme to supply electricity via small solar panel power generators by 2015.

Beijing, Shanghai, Tianjin, eastern and coastal regions will be the first few regions to implement the solar panel power generation pilot program, the paper said.

China plans to develop 21 gigawatts of solar capacity between 2011 and 2015, HSBC said in a report on Wednesday.

"Filtering that national target down to the provincial level is important, as it is the only way solar farm operators will actually get their projects built and connected to the grid," said Charles Yonts, a solar analyst with brokerage CLSA.

"If anybody doubted Beijing's seriousness about hitting the 2015 target, this would serve to assuage those doubts."

Many small Chinese solar companies are believed to have closed, and analysts say remaining firms will be able to stay open only if government lenders keep lines of credit open despite gloomy forecasts.

Policymakers in Beijing said last year they wanted to see a healthier industry develop, with a smaller number of large, strong players, but Yonts said there have yet to be any meaningful moves toward major consolidation.

The paper reported on Tuesday that the China Development Bank Corp, a policy bank that lends at Beijing's behest, would give priority to loans to 12 top solar companies.

The bank declined to comment and the National Energy Administration could not be reached for a comment.

Beijing has already provided billions of dollars in credit lines and other support to its solar industry through state-run banks, prompting the U.S. government to impose import duties this year after some U.S. manufacturers filed a trade complaint.

The European Commission this month launched an anti-dumping investigation into Chinese panel exports.

But two of China's largest solar equipment makers, Yingli Green Energy Holding Co Ltd and Trina Solar Ltd, on Wednesday rejected allegations by a group of European solar companies that their Chinese rivals are benefiting from illegal subsidies.

In a complaint to the European Commission on Tuesday, the EU ProSun group said Chinese solar companies benefited from very low interest rates thanks to government policy.

"We receive financing at the usual market rates and act according to international accounting standards and norms," Yingli said.

LDK Solar Co Ltd, which cut 5,000 jobs earlier this year, received help in July when the government of Xinyu city, in Jiangxi province, said it would use taxpayer funds to repay the company's loans.

U.S.-listed Chinese solar stocks, including Trina, Yingli and LDK, were broadly lower on Wednesday. Their market capitalizations have nose-dived in the last two years, and most trade for well under $5 a share.

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