Yingli, GCL-Poly in 'strategic' pact

Yingli Green Energy and GCL-Poly – the world’s largest suppliers of PV modules and polysilicon, respectively – have inked a non-binding strategic framework agreement with potentially significant consequences for the sector.

The deal will initially see Hebei-based Yingli buying more polysilicon and wafers from GCL-Poly, while Hong Kong-based GCL-Poly will employ more Yingli modules in its downstream projects business.

In future, however, the arrangement may be expanded to include research and development and manufacturing, the companies say.

“Through this win-win co-operation, I hope Yingli Green Energy and GCL-Poly will fully leverage our advantages to continue to enhance product quality, reduce manufacturing cost and promote a broader application of solar PV in the world,” says Yingli chief executive Liansheng Miao.

Superficially, there would appear to be some supply-chain tension within the deal – particularly for wafers. Yingli boasts nearly 2.5GW of integrated wafer, cell and module capacity, while GCL-Poly produced 3GW of wafers during the first-half of 2012 alone.

But Yingli has said it intends to ship as much as 3.3GW of modules next year – up from about 2.3GW last year – meaning that it may rely on GCL-Poly for the extra wafers. 

On polysilicon and modules, the arrangement makes more obvious sense.

In 2009, amid an industry-wide shortage of PV-grade polysilicon, Yingli purchased China-based Fine Silicon. Since then, however, Yingli has struggled to ramp up production – slated for an initial 3,000 metric tonnes per year – as the bottom fell out of the polysilicon market.

Yingli has swallowed significant write-downs on the acquisition, and may be content to let its polysilicon ambitions fade into the background.

The ongoing global PV trade war, which may result in China imposing tariffs on imported polysilicon, may also factor into Yingli's thinking.

GCL, meanwhile, which boasts 40,000 metric tonnes of competitive polysilicon capacity, continues to intensify its ambitions as a global PV developer and engineering, procurement and construction (EPC) contractor.

Last autumn GCL got the nod to build nearly 350MW of capacity – both ground-mounted and rooftop – in Shanxi province, and recently sold 48MW of completed capacity in California to an unnamed investor.  

Despite each losing more than $400m last year, Yingli and GCL are seen as safe bets to continue playing significant roles beyond the global PV industry’s current downturn.