A $1 billion collaboration has been announced between a global solar panel leader and two regional firms to advance solar panel production in the Middle East.
Key Insights:
- A partnership involving JinkoSolar and two Saudi Arabian entities aims to establish a 10 GW solar cell and module production capacity.
- This move is part of a broader trend of Chinese solar firms expanding globally while Saudi Arabia seeks economic diversification.
Solar panel heavyweight JinkoSolar Holding Co. Ltd. is embracing a trend of Chinese companies expanding into the Middle East, specifically Saudi Arabia – a nation with vast wealth and ambitious clean energy goals.
The company recently declared the inception of a $1 billion joint venture with two Saudi partners, aiming to create state-of-the-art solar products. Among the partners are Renewable Energy Localization Co., deemed the country’s leading entity in renewable and green energy technologies, and Vision Industries Co., a firm concentrating on green energy technologies.
This joint venture serves mutual interests: JinkoSolar can bypass growing Western protectionism by adding to its global manufacturing footprint, while Saudi Arabia progresses towards its green energy targets and gains a foothold in the global solar market through JinkoSolar’s advanced N-type solar cell technology.
The venture emerges amid a challenging global solar market, marked by a price war and overcapacity, prompting Western nations to urge China to reduce state support for its solar sector. The US has responded with increased tariffs on Chinese solar cells, further complicating the industry’s dynamics.
The announcement had a positive but modest effect on JinkoSolar’s stock, which had been struggling due to market pressures and skepticism from analysts. Despite the company’s growth and expansion, its financial outlook remains cautious, with predictions of revenue decline and profit reductions due to prevailing market conditions.
Significant Expansion Plans
The proposed Saudi facility represents a major expansion, with a hefty $1 billion investment and an annual production target of 10 GW for both solar cells and modules. This aligns with JinkoSolar’s globalization strategy and will enhance its competitiveness, according to Chairman Li Xiande.
The plant is part of an increasing trend of Chinese solar manufacturers setting up operations abroad, with JinkoSolar leading the way into Saudi Arabia. The country has been leveraging its wealth to diversify its economy, attracting various Chinese manufacturers, including PC giant Lenovo.
While the joint venture is a positive development for JinkoSolar, it won’t significantly impact the company’s bottom line until production commences. Investors may find the company’s low valuation appealing, but a true business turnaround may require more time to materialize.
