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The three major photovoltaic giants officially announced their expansion into the Middle East on the same day, ushering in a new round of opportunities for the new energy industry!

On July 16, Sungrow Power Supply (300274.SZ) announced that it had signed a contract with Saudi Arabia's ALGIHAZ to jointly build the world's largest energy storage project. On the same day, JinkoSolar (688223.SH) and TCL Zhonghuan (002129.SZ) also announced major investment plans, both of which are located in Saudi Arabia.

Stimulated by the news, stocks such as JinkoSolar and TCL Zhonghuan opened sharply higher in the morning trading on the 17th. After the opening, Qingyuan Shares (603628.SH) quickly hit the daily limit, and King Kong Photovoltaic (300093.SZ) rose by more than 8%.

Photovoltaic enterprises collectively "go abroad" to the Middle East

The Middle East has become the "next stop" for China's photovoltaic industry to go overseas.

On July 16, Sungrow and Saudi Arabia's ALGIHAZ signed a contract to build the world's largest energy storage project with a capacity of up to 7.8GWh. The project is expected to start delivery in 2024 and be connected to the grid at full capacity in 2025. Sungrow said that the project will further improve the stability and reliability of Saudi Arabia's power grid and help realize Saudi Arabia's "Vision 2030".

After the market closed on the same day, JinkoSolar announced that its wholly-owned subsidiary JinkoSolar Middle East signed a "Shareholder Agreement" with RELC, a wholly-owned subsidiary of the Public Investment Fund (hereinafter referred to as "PIF") of the Kingdom of Saudi Arabia, and Vision Industries Company (hereinafter referred to as "VI") to establish a joint venture in Saudi Arabia. The joint venture will build and operate high-efficiency photovoltaic cell and component projects in Saudi Arabia, with a total investment of approximately US$985 million.

After the project is officially put into production, the annual production capacity of high-efficiency photovoltaic cells and modules is expected to reach 10GW respectively, which may become the largest overseas manufacturing base for China's photovoltaic cell and module industry.

It is worth noting that RELC and VI's investment plans present an integrated layout. The cooperation with JinkoSolar covers the battery and component links, while in the silicon wafer link, a joint venture was established with TCL Zhonghuan.

On the evening of July 16, TCL Zhonghuan also issued an announcement. The company signed a "Shareholder Agreement" with RELC and VI. The three parties plan to establish a joint venture to jointly build a 20GW photovoltaic crystal wafer project in Saudi Arabia with a total investment of approximately US$2.08 billion. In the announcement, TCL Zhonghuan listed the company's many technical advantages and manufacturing capabilities, and the company has become a party to the output of key technologies.

The Middle East market has huge development potential

Relevant data show that Saudi Arabia has become the sixth largest exporter of Chinese photovoltaic modules. In 2022, China's exports of photovoltaic modules to Saudi Arabia reached US$310 million, and this figure increased significantly to US$1.34 billion in 2023. In 2022 and 2023, my country's exports of photovoltaic modules to the Middle East and North Africa exceeded 10GW for consecutive years.

Huabao Securities analysts said that as one of the fastest growing economies in the world, Saudi Arabia's economic structure is constantly being optimized, and the demographic dividend continues to be released. In recent years, the Saudi market has become more attractive to global investors. Driven by the dual focus on diversified real industry investment and maintaining energy hubs, Middle Eastern countries are continuously increasing their investment in renewable energy.

In addition to Saudi Arabia, other Middle Eastern countries are also actively carrying out related investments. In June 2024, GCL-Polymer announced that the company's first overseas FBR granular silicon project will be located in the UAE and is expected to start construction in 2024. Junda Shares (002865.SZ) has also reached an investment intention with the Oman Investment Authority, and plans to invest in the construction of a TOPCon high-efficiency photovoltaic cell project with an annual output of 10GW in Oman, with a total investment of US$700 million. In addition, photovoltaic companies such as Trina Solar (688599.SH) and CHINT Solar (688408.SH) also have plans to build factories in the Middle East.

In a short period of time, a complete photovoltaic industry chain located in the Middle East is about to emerge, and its production capacity covers the upstream and downstream of polysilicon, as well as important auxiliary materials.

As for the reasons why photovoltaic enterprises are collectively going to the Middle East, industry analysts said that domestic photovoltaic enterprises now have the necessary conditions for global development, and the Middle East market has huge development potential. JinkoSolar said that entering the Middle East market will help enterprises optimize their global manufacturing and marketing layout and enhance their global competitiveness.

Haitong International Securities believes that with the help of the “Belt and Road” initiative and the Middle East’s energy transformation, the Middle East is expected to become an important market for overseas photovoltaic production capacity.

Risks and opportunities coexist

In recent years, in the context of responding to climate change and adhering to sustainable development, renewable energy has played a vital role in energy transformation.

As the pace of global energy transformation accelerates, China's cooperation with other countries in the world in the field of renewable energy is becoming increasingly close, and overseas markets have become an important part of China's renewable energy application market.

However, Chinese photovoltaic companies also need to face risks and challenges on their road to international development.

Analysts said that the United States, Europe and other countries continue to promote or are preparing a new round of trade barrier policies, and some overseas countries plan to build local supply chains, posing a potential challenge to China. Industry insiders suggest that photovoltaic companies should strengthen trade response and early warning work, consolidate and strengthen the competitiveness of China's photovoltaic industry, further deepen international trade cooperation, and strive to enhance the green competitiveness of China's photovoltaic products.