(Bloomberg) -- Two major Chinese solar manufacturers will build plants worth $3 billion in Saudi Arabia, highlighting efforts to globalize their production bases as they face margin pressures at home.
Shares in Jinko Solar Co. and TCL Zhonghuan Renewable Energy Technology Co. rose as much as 5% in Shanghai on the announcement, which also gave a boost to others in the beleaguered industry, including Tongwei Co. and LONGi Green Energy Technology Co.
Chinese solar manufacturers are drowning in a supply glut that has forced many to sell under production costs and rack up massive losses. The overcapacity, expected to persist for months, has prompted the government to issue rules limiting domestic expansion and redundant investment.
The projects in Saudi Arabia mark a major step forward for China’s clean energy industry, which is also facing worsening trade tensions with the US and its allies.
Jinko Solar agreed to set up a joint venture worth about $985 million with Public Investment Fund, the Saudi sovereign wealth fund, according to an exchange filing in Shanghai. The project will have an annual photovoltaic cell and module capacity of 10 gigawatts. Vision Industries, a privately owned renewable-energy manufacturing company, will also be a shareholder in the JV.
TCL Zhonghuan said it would partner with the PIF and Vision Industries on a $2.08 billion plant. The project, which will have an annual production capacity of 20 gigawatts, will be the largest overseas wafer factory, according to a separate exchange filing made in Shenzhen.
The deals come after a meeting between Chinese Vice Premier He Lifeng and PIF governor Yasir Al Rumayyan last week. During the meeting, He said the two countries should expand cooperation in emerging sectors such as renewable energy and high tech, according to Xinhua News Agency.
Separately solar equipment giant Sungrow Power Supply Co. signed a deal with Saudi investment company Algihaz Holding for a storage project, also underscoring the oil-rich kingdom’s campaign to boost renewable power production.
--With assistance from Dan Murtaugh.
(Updates with share price moves in paragraph 2, context throughout.)
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