(Bloomberg) -- Top clean energy equipment manufacturer Longi Green Energy Technology Co. is planning to invest 45.2 billion yuan ($6.7 billion) to build the world’s largest solar manufacturing base.
The company signed a letter of intent with local governments in China’s Shaanxi province for an expansion project that would allow it to build manufacturing capabilities to produce 100 gigawatts of solar wafers and 50 gigawatts of solar cells per year, according to a filing to the Shanghai Stock Exchange.
The new plants will effectively double Longi’s existing capacity, and the company said in a press release the hub would be the largest solar manufacturing base in the world. The projects, located near the company’s headquarters in Xi’an, are expected to go into operation in the third quarter of 2024, the filing said.
Wafers are thin squares of polysilicon that are wired into cells and then pieced together into the solar panels that generate electricity from rooftops and giant fields. Longi is the largest wafer maker in the world, with about 105 gigawatts of capacity as of last year, according to BloombergNEF. It also had about 35 gigawatts of cell manufacturing capacity.
The world is racing to fight climate change, but accessing solar panels has been a challenge in some markets including the US, as manufacturers were hamstrung in 2021 and 2022 by a rare stretch of increasing material costs for polysilicon — a key material for most panels. A surge in production of solar equipment could help countries reduce their dependence on fossil fuels and potentially lower power prices.
Prices for wafers and polysilicon have cratered in recent weeks, cutting into producers’ profit margins. Longi is trying to extend its dominance by using new advanced capacity to reduce costs and consolidate the market, said Dennis Ip, an analyst with Daiwa Capital Markets.
Longi’s shares rose as much as 2.8% in trading Wednesday. The stock had fallen 33% since June 30.
(Updates throughout with company press release and share move.)
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