LONGi warns of profit hit after Yunnan province rows back on power price deal

Apr 6, 2022 02:01 PM ET
  • LONGi Solar has warned of lowered profits after Yunnan Province, where a considerable portion of its production output stays, terminated a previously-struck power rates agreement.
LONGi warns of profit hit after Yunnan province rows back on power price deal
Image: LONGi Solar

In a statement to the Shanghai Stock Exchange released earlier today, LONGi stated that it had actually been informed by authorities in Yunnan previously this month that the province could no longer honour a special power pricing agreement struck between the two parties in 2016.

Consequently, LONGi will certainly instead pay standard market-based prices for its power usage, leading to a material unfavorable effect on the manufacturer's profits. LONGi kept in mind that electrical power expenses account for around 15% of the complete manufacturing expense of wafering.

LONGi further advised that capacity growth projects that are still recurring in Yunnan could be modified as a result of the power price alteration.

In between 2016 as well as the end of 2021, LONGi has deployed around 67GW of silicon drawing capacity as well as 57GW of wafering capacity in Yunnan, the latter of that makes up majority (54%) of LONGi's overall wafering capacity since the end of last year.

Furthermore, several capacity growth projects had actually been set aside for Yunnan, consisting of a 30GW cell manufacturing facility slated for construction in Qujing. These facilities have not yet begun construction, and also greater than anticipated power prices currently casts question over these growths.

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