China dispatch: Momentum building behind yieldcos

Solar yieldcos continue to grow in importance in the global PV landscape, with Chinese companies the latest to move. Forming yieldcos, to then take to IPO on either domestic Chinese or foreign stock exchanges. The move frees up funds currently tied up in project development and delivers ongoing project demand.

The PV power plant development business of CSI already comprises a large part of its total revenues, with it accounting for 35.9% in Q1 2015. Furthermore, in February the company purchased independent power plant developer Recurrent Energy LLC from Sharp, which had a number of projects in development. In order to finish construction of these projects before end of 2016, when the U.S. government is scheduled to step down the investment tax credit for solar investments, CSI said it is considering seriously forming a yieldco to take to IPO.

A number of challenges exist to realizing such a strategy in China. Developers are reporting a range of problems such as power plant quality issues, grid constrains, high-levels of accounts receivable, and even insufficient and unpaid subsidies. These factors may cause lower market valuations for projects in China.

Despite these disadvantages, Chinese PV players are continue to pursue yieldcos as an efficient method for funding of PV in the country and abroad, especially PV power plants, in light of the currently booming market.