New Chinese Solar Plant Could Become World’s Largest

China Technology Development Group Corp and privately held Qinghai New Energy Group announced Friday their plans to construct a solar power plant in northwestern China that could become the world’s largest photovoltaic solar project.

Shares of China Technology Development rose 29 percent to $2.61 on Nasdaq following the announcement.  Shares of most solar power companies were also up on the news, bolstered by higher oil prices and an upswing in the broader market.

Construction of the 30-megawatt solar power station in China’s Qaidam Basin will begin this year with an initial investment of $150 million, the joint statement said.

The project will combine thin-film and traditional silicon-based technologies that convert the sun’s rays into electricity.  While the companies did not disclose timelines for the project, they said the plant will eventually produce 1 gigawatt of power.

Pavel Molchanov, an analyst with Raymond James, said the largest photovoltaic solar project announced to date is the 550 MW  collaboration between thin-film company OptiSolar and PG&E Corp., a California utility.

“The initial phase of the project is … itself one of the largest solar farms ever announced in China,” wrote Molchanov in a client note.

The Chinese government is starting to offer additional incentives for solar power projects, he noted.

“While PV demand has been historically driven by a small number of key countries, the demand profile should become more geographically diverse over time.”

The news offered investors in solar companies a welcome reprieve.  Shares of such companies have been badly bruised in recent weeks due to a lack of funding for new projects, declining prices on solar panels and plunging oil prices, which have dampened appetite for investments in renewable energy.

Friday’s announcement ignited a rally across the entire solar power industry, with shares of U.S. solar equipment maker GT Solar International Inc. up 24.6 percent to $3.60, and shares of Chinese solar cell maker JA Solar Holdings Co Ltd up 12.6 percent to $4.92.  Shares of  U.S. cell maker SunPower Corp rose 12.8 percent to $41.74, while China’s Yingli Green Energy Holding Co Ltd was up 13.1 percent to $6.90.

A spike in the price of crude oil to over $46 a barrel, along with a 2 percent rise in Wall Street’s main indexes, also bolstered solar stocks, Molchanov told Reuters.

The rally came despite a downward revision of earnings estimates of Evergreen Solar Inc, GT Solar, Canadian Solar Inc, LDK Solar Co Ltd and Renesola Ltd. by Piper Jaffray analyst Jesse Pichel.

“We cautiously assume Q1 will be the industry shipment trough,” Pichel wrote. 

Shares of solar “stocks could trade higher in the next 12 months depending on credit and the extent renewables play in the Obama recovery package,” he added.

Image Caption: Solar array at Nellis Air Force Base. These panels track the sun in one axis. Courtesy USAF

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