Chinese solar power operators face more pressure than wind farms: Fitch

BEIJING -- Chinese solar power companies face more pressure than wind farms due to heavier financial burdens, according to a report by Fitch Ratings.

The 2018 financial results show that credit profiles of wind-power operators have been stabilising while those of solar farms have been weakening, said Fitch in a research note.

Three Chinese solar-farm operators, including Beijing Enterprises Clean Energy and Panda Green, reported combined net profit plunge of 41.8 percent in 2018, while their debt rose 17.6 percent, Fitch noted.

The rating agency attributed the profit decline to growing debt and rising funding costs as the solar-panel installation boom in recent years severely bloated balance sheets.

Meanwhile, delays in receiving subsidies also exacerbated renewable-power operators' cash flow pressure.

For wind farms, cash flow pressure is less severe as they rely on subsidies for a lower proportion of tariffs, the report said.

The five renewable subsidiaries of China's Big Five power-generation groups (which mainly invest in wind power), including Huaneng Renewables and China Power Clean Energy, reported combined net profit growth of 7.3 percent in 2018, commensurate with their 2.3 percent rise in debt, according to Fitch.

Due to the divergence in performance, Fitch expects some large wind-power operators to have already achieved positive free cash flow in 2018. However, some solar farms will likely have to opt for asset sales to raise liquidity as refinancing has become more difficult.