Renesola, a Chinese start-up that makes wafers for solar cells, has recently been attracting a lot of intention from western investors — its share price has doubled in the last month.
The company, which listed on London's Aim market this summer, recycles scrap silicon wafers for use in photovoltaic cells, a market where demand currently exceeds supply and is likely to stay that way –see this EngagingChina story.
Shanghai-based Renesola says demand for solar cells is doubling every two years,and it has just announced plans (pdf) to significantly increase production of silicon wafers next year based on the letters of intent it has received, mostly from existing customers.
Unlike other producers, Renesola does not have to stand in line for new solar-grade silicon to make its wafers. Instead, it recycles the sub-standard wafers that the semiconductor has traditionally discarded — see photo.
Each year, the industry rejects around 3,000 and 5,000 tons of wafers. In addition, there are many more tons of scrap wafer from previous years in storage and land-fill facilities. Renesola melts down the discarded wafers into silicon ingots, which are then sawn into new wafers.
But the cleverest aspect of Renesola's business model is that it gets its customers to supply most of its raw material — the scrap wafers — so reducing its capital requirements and risk.
The share price has recently soared after a series of investor roadshows and, most recently, on rumours that a leading investment bank is about to start coverage with an aggressive price target. EngagingChina does not tip shares, so we are not going to argue whether the recent price rise is justified or not.
Nevertheless, the company appears to have found a relatively risk-free and low-cost way to benefit from the growing commercial interest in solar power in China and elsewhere.
Thanks to SovGEM, a China-focussed finance house and investor in Renesola, which visited the company last month and supplied the photos.