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SOL: Its Role As A Project Developer And Independent Solar Power Producer


The alphaDIRECT Insight

ReneSola was founded in 2005 and with its recent corporate restructuring, the Company is diversifying itself by being more focused in the downstream market with an emphasis on smaller scale projects in different jurisdictions, such as the China DG market as well as community solar in the United States. With overcapacity being an issue in the overall solar market, we believe that ReneSola has successfully repositioned itself and simplified its business model in order to provide higher returns and growth. The company has also successfully completed a spinoff transaction which should enhance ReneSola’s ability to cost-effectively fund more downstream solar projects and drive more recurring revenue and cash flow.

Shawn Severson: First, I would like to thank you Mr. Li for taking the time to speak with us today. Before we dig into the business, could you start by giving us a brief introduction of yourself and what brought you to ReneSola?

Mr. Li: Sure, Shawn. Compared with other competitors in the solar sector, ReneSola has a longer history than other companies in the industry. ReneSola was founded in 2005 and listed on the London AIM at first before we transferred to the New York Stock Exchange in 2008. We strategically evolved over time from a fully integrated solar company from polysilicon to modules and lately our company has simplified, and we are now considered a pure play downstream player.

Shawn Severson: Can you provide us with a general overview of your business and your growth plan, meaning how should investors think about ReneSola from a strategic standpoint?

Mr. Li:  We used to cover everything in the solar industry, which made investors think of us as a mixed company. We wanted to be more focused on what we believe are the most attractive areas of our business, which led to our spinoff transaction. After the spinoff, we were primarily focused on the downstream market and on smaller-scale solar projects in diversified jurisdictions, such as the China DG market as well as community solar in the US as opposed to participating in the large-scale utility projects. We believe that this is the future of the industry and we are positioning ourselves to take full advantage of this trend.

Shawn Severson: Is there something about the smaller scale market that is especially attractive relative to larger projects?

Mr. Li: Let’s take a look at Germany as an example when referring to the history of the solar power projects. In markets such as Germany, the UK and Italy, we used to see projects reach a certain scale before governments would cut the subsidies. We have witnessed similar trends in many other countries as well and have concluded that large scale projects would receive less support from government entities. On the other hand, when we see emerging markets such as Poland and Turkey, I believe that the governments in those countries will put a cap on the total size of the markets. For example, in Poland, the annual installation cap would be 100 megawatts, with each site not exceeding one megawatt. I expect this to be the government’s strategy in emerging markets such as Poland. This strategy obviously favors small scale solar power projects. As a result, we see these markets as attractive targets with installation growth at a rational level.

In addition, solar power has its advantages compared with other energy sources. For example, solar panels could be of a smaller size and built on rooftops without taking up land resources etc., which allows solar power to be transmitted to end users directly without transmission losses.