Chinese solar giant takes controlling share of Connecticut-based STR

A partnership between a leading Chinese developer of photovoltaic power stations and a Connecticut-based supplier of encapsulants will provide both a strategic ally in the global solar module manufacturing market, according to company executives.

Joe Radziewicz, vice-president and CFO of STR, said in a Wednesday interview with China Daily that one of the key benefits of this partnership for STR is the fact that Zhenfa has "significant relationships" with a number of well-established Chinese solar module manufacturers.

"While Zhenfa has many import relationships in China to leverage, we think our research and development here in Connecticut, combined with the solar knowledge we've accumulated over the last 40 years, will provide strong support for increased sales," he said.

STR Holdings Inc and Zhenfa Energy Group Co announced on Tuesday that Zhenfa has agreed to invest $21.7 million in STR in exchange for more than 27 million newly issued shares. Zhenfa's stake in STR at the completion of the deal will be about equal to 51 percent, but STR's senior management team and day-to-day operations will remain in the US, the press release said.

Zhenfa, founded in 2012 and based in Chongqing municipality in Southwest China, is a leading Chinese developer of solar PV power stations. It holds ownership shares in upward of 40 solar power installations, including projects in more than 10 Chinese provinces.

STR, founded in 1944 and based in East Windsor, Connecticut, is a global provider of encapsulants to the PV industry. China is the largest market for STR's products, according to company data.

PV is the method of generating electricity by converting solar radiation into direct electric currents and encapsulants are component products in the solar module industry that coat and seal surfaces of equipment to protect their function during use.

Robert S Yorgensen, president and CEO of STR, said an alliance with Zhenfa would help create new opportunities for STR with many top-tier firms in "the world's largest solar module manufacturing market".

"Zhenfa is a very highly regarded, vertically integrated enterprise in the burgeoning solar utility systems market," Yorgensen said in a statement on Tuesday. "Zhenfa recognizes that a module is only as good as the encapsulant within and that STR products offer exceptional performance and service life."

Zha Zhengfa, chairman of Zhenfa, said that his company wants the modules for its long-term projects to be "STR Protected".

"STR has an excellent reputation for quality in China," Zha said. "We believe the adoption of solar energy will accelerate in China, as well as in other emerging markets, and consequently Zhenfa believes that our investments in solar power stations will benefit from the inclusion of STR encapsulants."

Radziewicz said that STR's deal with Zhenfa "signifies the long-term stability that our encapsulant provides".

"We produce a raw material, or a component, that goes into solar modules, but [encapsulant] is one of the most mission critical components of a solar panel," Radziewicz said. "The key here is [Zhenfa] wants to ensure that the panels they're buying are using STR encapsulant in order to maximize long-term performance and provide the highest possible return on their investment in solar systems."

Under the agreement, Zhenfa has agreed to help STR advance its operations in the world's second-largest economy, including: developing sales and distribution channels, helping the company staff its overseas workforce, and providing a rent-free manufacturing facility in China for five years.

STR and Zhenfa expect the deal to close during the fourth quarter of 2014.

Mike Barker, a senior analyst with NPD Solarbuzz, an online-based solar market research and analysis firm, said: "The entire PV industry is intertwined in terms of modules, materials, components, and the quality of understanding for what goes into the end product."

"Having a local partner in such a huge market is a great value [for STR] because it gives them some leverage in terms of working with module manufacturers in the Chinese environment," he said in an interview with China Daily. "The real challenge will be integrating these two types of businesses."

jackfreifelder@chinadailyusa.com

(China Daily USA 08/14/2014 page2)