Two more Chinese solar energy companies, LDK Solar and Yingli Green Energy, are preparing to join the NYSE in the coming weeks.
The IPO of LDK Solar has been waiting in the wings for over six months but the advisors have clearly decided that the time is now ripe to milk US investors' current enthusiasm for all things green.
LDK Solar makes the wafers that are assembled into the solar panels that turn sunlight into electricity. The company, based in Jiangxi province, has a yearly production of 100MW and plans to increase that to 1,000 MW by the end of the decade. It has alliances with western solar giants like BP Solar and GE.
The other Chinese player is Yingli Green Energy, which claims to be the largest vertically integrated manufacturer in China, meaning it manufactures the wafers and also assemble them into panels. Click here to view and hear the Yingli roadshow. It plans to raise $350m to increase capacity to 400MW by the end of 2008.
China is emerging as a key player in the solar power industry because of its lower cost base. Other Chinese solar power plays quoted on US markets include Suntech Power, JA Solar, Trina Solar and Solarfun Power holdings.
According to a recent ENF report, there are around 37 Chinese manufacturers of solar wafers and 90 manufacturers of solar panels. If many more of them decide to list in the US, investors will have a tough time telling them apart. That's not to mention the US-based solar pure plays like Evergreen Solar. Go here for a list of solar IPOs in 2006.
The expansion of the industry with new Chinese solar manufacturers is good news for equipment suppliers like GT Solar, which recently opened a wholly-owned foreign enterprise in Shanghai to get closer to this fast-growing market.
But with so many companies entering the solar market, the chronic shortage of photovoltaic-grade silicon that has long dampened this industry's development seems set to continue. Yingli, not surprisingly, downplays the threat and quotes independent research saying that the situation should ease in 2008 or 2009.
I'm not so sure. Jim Rogers, the investment guru, argues that commodities are in a long-term bull market, due to China's insatiable demand for everything from corn to copper. I think he should add silicon to the list.
More on the silicon shortage in this story on Renesola, a London-quoted Chinese solar play, which gets round the shortage of raw material by recycling silicon wafers. Canadian Solar , another recent IPO, has a similar recycling strategy and does its manufacturing in China, where it has just opened a new 250MW facility in Changsu.