Suntech to invest $1bn in 500MW China solar project

Suntech Power Holdings, one of the world's largest photovoltaic module makers, yesterday announced it is to invest $1bn (£611m) in a 500MW on-grid PV project in China's south central city of Panzhihua, located in Sichuan province.

The company said it would shortly begin work on the three-phase solar power plant, although the New York Stock Exchange-listed firm failed to provide details on the nature of the project, adding only that it would be similar to its agreement with the government of Qinghai province.

Last month, Suntech said it would construct a 500MW ground-mounted, on-grid PV power project in Qinghai – located in north west China – between 2010 and 2012, in addition to a silicon production facility. It did not disclose the cost of the plan.

In other Suntech news, the company earlier this week secured a $50m loan from the International Finance Corp (IFC) to help develop its cost-cutting Pluto technology.

The Pluto technology, which is patent-pending, is designed to increase the surface area of photovoltaic cells that are exposed to the sun's rays.

Developed in conjunction with Australia's University of New South Wales, it is being touted as a means of improving power output for crystalline silicon solar cells by up to 12 per cent compared to conventional manufacturing methods. Suntech also claims Pluto-based panels can be produced at lower cost and with higher yields.

The company said the funding from IFC, the private investment arm of the World Bank, will be used to implement Pluto technology in Suntech's production lines.

The convertible loan will also go towards debt financing. Suntech had $255.8m of principal outstanding as of 31 March 2009.

Suntech will pay five per cent annual interest on the loan, which is repayable by 2016. If it is not repaid, the debt will be converted to Suntech stock at a price of $18 per depositary share, which is close to the stock's closing price yesterday of $18.37.