Yingli Green Forms Fund for Chinese Solar Projects - Analyst Blog

Yingli Green Holding Co. YGE inked an agreement with a Shanghai based private firm, Sailing Capital Management Co. Ltd, to create a $161 million (RMB 1 billion) fund aimed at investment in solar energy projects in China.

The agreement will allow Yingli Green to expand its foothold in the Chinese renewable market as a solar developer. Under the agreement, the solar panel manufacturer will contribute 51% of the total capital via several installments and both firms will play an active role in the management of the fund.

The fund will be exploited primarily for the development of solar projects. The initial focus will be on investments in solar power plants and distributed solar power generation system.

The strategic partnership marks a crucial step in Yingli Green's steady transition from a photovoltaic ("PV") manufacturer to a renewable solutions provider. Besides Sailing Capital, the company recently struck a deal with United Photovoltaic Group Limited for purchase of solar PV plants to be constructed and developed by Yingli Green.  

In the near future, China is clearly expected to lead the renewable energy race replacing Europe, which is already facing dwindling investments and reduction in feed-in-tariffs for renewable programs. In 2013, China alone attracted $54 billion in investments of the $100 billion worth renewable industry in Asia.

Yingli Green's switch to the downstream solar market reflects its intention to fully capitalize on the bullish solar prospects. In addition, declining technological cost for solar production resulting in competitive pricing will act as a catalyst to core solar players like Yingli Green.

As per media report, the fresh policy changes by China which targets a 14 Gigawatt of solar capacity additions in 2014 will also offer a boost to the company's growth initiatives.

Currently, Yingli Green carries a Zacks Rank #3 (Hold). Other better-placed solar players include JinkoSolar Holding Co., Ltd. JKS, Trina Solar Ltd. TSL and ReneSola Ltd. SOL, all of which hold a Zacks Rank #2 (Buy).