Since the second half of last year, China has introduced energy consumption dual control policies in many places, directly targeting high energy consuming industries. Among them, Yunnan Province has issued the notice on resolutely doing a good job in the work related to dual control of energy consumption, which requires strengthening the control of key industries. Among them, the power and production restriction order involves industrial silicon, yellow phosphorus and other enterprises.
On April 5, Longi Green Energy Technology Co.Ltd(601012) ( Longi Green Energy Technology Co.Ltd(601012) ) announced that the company had received the letter of Yunnan development and Reform Commission on clarifying Longi Green Energy Technology Co.Ltd(601012) relevant electricity prices, informing that according to the requirements of relevant national departments to clean up the preferential electricity price policies, the preferential electricity price policies and measures enjoyed by the company in Yunnan Province would be cancelled. From September 1, 2021, all electricity prices of the company would be formed through electricity market trading, Direct settlement with power grid enterprises.
Yunnan, Sichuan and other places are rich in hydropower resources, while the power consumption of industrial silicon, polysilicon, silicon wafer and other manufacturing links in the upstream of photovoltaic is large. Therefore, in the past, many upstream photovoltaic enterprises invested in this industry. From the perspective of Longi Green Energy Technology Co.Ltd(601012) ‘s industrial territory, Yunnan Province is also a major investment destination.
As early as March 2016, Longi Green Energy Technology Co.Ltd(601012) signed a strategic cooperation framework agreement with the Yunnan provincial government, and reached a strategic cooperation intention on the company’s investment in the construction of monocrystalline silicon rod silicon wafer, high-efficiency battery module and characteristic agricultural photovoltaic power station industrial chain in Yunnan Province, driving 100 billion single crystal photovoltaic industrial cluster and providing relevant preferential policy support to Yunnan Province.
Since 2016, Longi Green Energy Technology Co.Ltd(601012) has successively signed project investment agreements with Yunnan Provincial Development and Reform Commission, Energy Bureau, Baoshan Municipal government, Lijiang municipal government, Chuxiong Yi Autonomous Prefecture Government, Tengchong municipal government, Qujing municipal government and other places in Yunnan Province to promote the effective implementation of the above strategic agreements.
According to the data, by the end of 2021, Longi Green Energy Technology Co.Ltd(601012) has formed about 67gw of crystal drawing capacity and 57gw of slicing capacity in Yunnan Province. The construction project of Lijiang phase III with an annual output of 10GW monocrystalline silicon rod, Qujing phase II with an annual output of 20GW monocrystalline silicon rod and 30GW monocrystalline silicon wafer and Qujing with an annual output of 30GW monocrystalline battery have not been started or put into operation.
In addition, by the end of 2021, Longi Green Energy Technology Co.Ltd(601012) the slicing capacity put into operation in Yunnan accounted for about 54% of the company’s total capacity. The reporter consulted the Longi Green Energy Technology Co.Ltd(601012) 2021 interim report, which mentioned that the company’s monocrystalline silicon rod and silicon wafer production bases are mainly concentrated in Shaanxi (Xi’an), Ningxia (Yinchuan, Zhongning), Yunnan (Lijiang, Baoshan, Qujing, Chuxiong) and Malaysia (Kujin).
Longi Green Energy Technology Co.Ltd(601012) said that since the company’s investment projects in Yunnan Province can no longer implement the electricity price agreed by both parties in the original cooperation agreement, the production cost of investment enterprises in Yunnan Province will be increased to a certain extent. The electricity fee accounts for about 15% of the whole process processing cost of silicon wafers, which will have a certain adverse impact on the company’s profits.
The reporter did not find the specific data about the Longi Green Energy Technology Co.Ltd(601012) electricity price level before and after the adjustment from the public information, so it is difficult to clarify the specific impact of the adjustment on the company for the time being. However, it is clear that as far as the 2021 interim report is concerned, silicon rod and silicon chip subsidiaries such as Baoshan Longji and Chuxiong Longji in Yunnan Province are important profit sources for Longi Green Energy Technology Co.Ltd(601012) .
It is worth mentioning that Longi Green Energy Technology Co.Ltd(601012) specifically mentioned that the unfinished part of the above-mentioned companies’ investment projects in Yunnan has the risk of change. The reporter noted that last month, Longi Green Energy Technology Co.Ltd(601012) disclosed an investment plan in Inner Mongolia, involving multiple projects with an annual output of 20GW monocrystalline silicon rods and chips, with a total investment of about 19.5 billion yuan. Looking at the investment territory of Longi Green Energy Technology Co.Ltd(601012) before, there was little investment in Inner Mongolia.
