BEIJING, Aug. 1 (Xinhua) -- In recent years, China's photovoltaic (PV) enterprises have been intensively going global, with examples including JinkoSolar's decision to build a factory in Saudi Arabia and Hainan Drinda New Energy Technology (Drinda)'s plan to invest and build a battery production base in the Sohar Free Zone in the Sultanate of Oman, aiming to help promote the development of local new energy industry.
Taking JinkoSolar as an example, its vice president, Qian Jing, recently said in an interview with China Securities Journal that "the Middle East is a new blue ocean for PV. Against this backdrop, JinkoSolar has decided to build a factory in Saudi Arabia and plans to establish part of the industrial chain locally in the future. JinkoSolar hopes to go global with domestic material suppliers and grow together."
Industry insiders believe that as the new energy develops fast globally, many countries and regions including the Middle East have strong demand for PV products.
This photo taken on April 29, 2024 shows the solar PV plant built by China's Dongfang Electric Corporation in Samarkand, Uzbekistan. (Dongfang Electric Corporation/Handout via Xinhua)
China has a complete PV industry chain, which can help upgrade and develop the new energy industry in overseas market, which will also open up a vast market for Chinese PV enterprises, they say.
-- Initiating a New Globalization Model
JinkoSolar recently announced that its wholly-owned subsidiary, JinkoSolar Middle East DMCC (Jinko Middle East), has entered into an agreement with Renewable Energy Localization Company (RELC), a wholly-owned subsidiary of the Public Investment Fund of Saudi Arabia (PIF) and Vision Industries Company (VI), to establish a joint venture in Saudi Arabia which will build a 10GW high-efficiency battery and component project.
The project is expected to have a total investment of approximately 3.693 billion Saudi riyals (about 985 million U.S. dollars), equivalent to approximately 7.158 billion yuan.
When asked why JinkoSolar chose to build a factory in Saudi Arabia, Qian Jing said that the Middle East is a new blue ocean for PV. On one hand, there is strong demand for PV products in Saudi Arabia; on the other hand, JinkoSolar already has a foundation in the local market, occupying 70 percent of the market share, so it has a clear first-mover advantage.
Meanwhile, Middle Eastern customers have higher requirements for technical solutions and products, and tend to choose leading PV enterprises with extensive experience and a global marketing network, Qian added.
In Qian's view, the previous strategy of going global was about "selling" PV products, while the current strategy is about "manufacturing", as proposed by the company's chairman Li Xiande, shifting from "global marketing" to "global manufacturing".
When it comes to the supply chain of the Saudi Arabian factory, Qian Jing mentioned that at the beginning, they need to purchase domestically, but in the future, JinkoSolar plans to build part of the industrial chain locally. JinkoSolar hopes to go global with domestic material suppliers and grow together in the overseas market.
--Targeting Middle East Market
With the decreasing cost of electricity generation, the competitiveness of Chinese PV enterprises has been increasing on the global stage. In recent years, overseas PV market demand has been growing rapidly, providing opportunities for Chinese enterprises to go global.
On July 25, 2024, Drinda announced its plan to invest in the construction of a 5GW high-efficiency battery production base in the Sohar Free Zone in the Sultanate of Oman, with an estimated total investment of 280 million U.S. dollars (approximately 2 billion yuan), which is expected to be completed and put into operation in 2025.
According to the announcement, Drinda had been targeting overseas markets and expanding its customer base in Asia, Europe, and other regions in 2023 and raised the proportion of overseas sales from 0.29 percent to 4.69 percent. In the first quarter of 2024, Drinda achieved overseas sales of 431 million yuan, and the proportion of overseas sales increased significantly to 11.62 percent.
On July 25, 2024, Power Construction Corporation of China (PowerChina) announced that a consortium formed by PowerChina's Abu Dhabi branch and its subsidiary Huadong Engineering Corporation Limited (HDEC) signed an EPC contract with Al Ajban Solar PV Holdings.
The contract involves about 755 million U.S. dollars, or about 5.384 billion yuan. PowerChina stated that Middle Eastern countries are committed to promoting diversified energy production to reduce carbon emissions while promoting economic development.
On July 16, 2024, enterprises including TCL Zhonghuan and Sungrow announced big business deals or joint investments in solar PV energy storage projects in Saudi Arabia.
Ping An Securities believes that the Middle East's PV market has huge potential. The Middle East has abundant solar resources and is one of the best regions for PV resources globally. At the same time, major countries in the Middle East have a strong awareness of energy transition, good economic foundation, and strong policy support.
-- Achieving Win-Win Results
At a recent seminar on the review of the development of the PV industry in the first half of 2024 and the outlook for the second half, the chairmen of several China's leading PV enterprises reached a consensus on the issue of going global: in the future, PV enterprises will continue to invest in building factories overseas to support the development of local new energy industries.
Chen Gang, Chairman of Shanghai Aiko Solar Energy Co., Ltd. (AIKO), introduced that AIKO has established a research institute in Europe and maintains communication with local European companies, hoping to achieve a win-win situation with European counterparts.
"JinkoSolar's construction of a factory in Saudi Arabia initiates a new model regarding global cooperation on innovation. In the future, JinkoSolar will replicate this cooperation model in other parts of the world," Qian Jing said.
Wang Bohua, Honorary Chairman of the China Photovoltaic Industry Association, said at this seminar that in order to promote the long-term high-quality development of the industry, Chinese PV enterprises should cooperate in going global, while selectively diversifying their investments through joint ventures and technology or brand licensing.
(Edited by Gao Jingyan with Xinhua Silk Road, gaojingyan@xinhua.org)
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