Chinese solar companies, some already heavily indebted, will need to raise many billions of dollars this year to fund a big expansion in capacity, a major test of investor confidence in a sector hit hard by the global financial crisis.
Beijing last month announced a solar installation target of 17.8 gigawatts (GWs) for 2015, up 70 percent on the previous year, to boost the use of renewable energy and prop up China's solar panel industry, the world's largest.
Industry experts say that will entail total investment from big state-owned enterprises and debt-laden private businesses of over $23 billion, most of it from state banks, and the domestic debt and equity capital markets.
Chinese banks, however, remain wary after writing off billions of dollars via a wave of defaults and plant closures in the sector when European demand for Chinese solar products collapsed during the euro zone debt crisis.
"We will only provide limited support to the sector," said a top executive of a northern provincial branch of Industrial and Commercial Bank of China (ICBC).
Many of this year's installations may be small-scale solar projects such as rooftop generators, experts say, which would make financing more tricky than for utility-scale solar farms.
Even so, solar industry executives say bankers and investors are showing signs of growing interest in the industry.
There is, after all, huge potential, as Beijing is talking about boosting solar capacity to 100 GWs by 2020, up from 26.52 GW of grid-connected solar power at end-2014.
"We have noticed a significant improvement in the financing environment for solar this year," Eric Luo, chief executive of Shunfeng International, a private major Chinese solar panel maker and plant developer, told Reuters.
Shunfeng, which is doubling its domestic solar generating capacity to 3 GWs this year, signed a framework agreement in February with the ICBC on a potential credit line of 20 billion yuan ($3.23 billion) for solar development.
PHOTO: Workers walk among newly installed solar panels at a solar power plant in Zhouquan township of Tongxiang, Zhejiang province December 18, 2014.
CREDIT: REUTERS/STRINGER.