Zhejiang Energy Group, trapped by Zhonglai and Aiko...

(This article was written by China Energy Net and published by TMTPost with authorization)

By华夏Energy Network

On June 26, Lin Jianwei likely felt relieved after transferring 40 million yuan to Zheneng Power (SH: 600023). Although this was a performance compensation payment, it brought him one step closer to successfully cashing out and completely severing ties with Zhonglai Shares (SZ: 300393).

Eighteen years ago, Lin Jianwei co-founded Zhonglai with his wife Zhang Yuzheng. After multiple attempts to sell Zhonglai, he finally found Zheneng Power as a buyer in 2022. Today, Lin has walked away with a substantial cash payout, while Zheneng Power is firmly stuck—the acquisition price was 17.18 yuan per share, but Zhonglai’s current share price is just over 6 yuan (having once dropped as low as 4.62 yuan per share).

Zheneng Power is a listed subsidiary of Zheneng Group. As a leading provincial-level energy conglomerate in China, Zheneng Group boasts formidable strength, with total assets amounting to 350 billion yuan. In recent years, the group has accelerated its transition toward new energy, acquiring or investing in numerous renewable energy companies.

Unfortunately, Zheneng has repeatedly made poor investment choices. Among the new energy companies it acquired or invested in, Zhonglai Shares is not the only one facing trouble—others include Aiko Science & Technology, Guokang New Energy, Volta Technology, and Longyan Energy. These firms all enjoyed past success but approached Zheneng for a bailout during their decline. Now, they have become a series of messy situations that Zheneng must clean up.

Zhonglai was established in March 2008 and became China’s first listed photovoltaic (PV) backsheet company in 2014. The company is the global leader in PV backsheets, holding a 30% global market share. It also ranks among the Global Top 500 New Energy Enterprises, is designated as a National Torch Program Key High-Tech Enterprise, a National Green Factory, and a national-level ‘Little Giant’ enterprise specializing in niche, high-precision sectors.

However, Lin Jianwei never intended to build Zhonglai into a century-old enterprise. Due to disorderly expansion and sharply rising risks, the company saw a steep drop in profitability and a significant increase in debt and liabilities. Lin tried every possible means to sell the company. Zhonglai announced plans to transfer control three times, but all three attempts failed.

In 2022, Lin Jianwei approached Zheneng. Coincidentally, Zheneng was seeking to expand its new energy business and showed interest in Zhonglai’s PV manufacturing capabilities. To secure the deal, Lin personally guaranteed that Zhonglai would achieve cumulative net profits of no less than RMB 1.6 billion over three years; otherwise, he would compensate Zheneng from his own pocket.

Under the performance compensation commitment, Lin Jianwei’s fourth attempt to sell the company has finally succeeded. Zhejiang Electric Power paid RMB 1.817 billion to acquire a 9.70% stake in Zhonglai Shares and simultaneously obtained voting rights equivalent to Lin Jianwei’s 10% stake, thereby gaining control of Zhonglai. The two parties completed the equity transfer in February 2023.

Following the acquisition, Zhonglai initially appeared to perform well, reporting net profits of RMB 401 million in 2022 and RMB 527 million in 2023. However, in 2024, the situation deteriorated sharply, resulting in a full-year loss of RMB 8.56 billion. As a result, Zhonglai’s cumulative net profit over the three-year period amounted to only RMB 71.54 million—just 4.47% of the promised RMB 1.6 billion target, falling short by approximately RMB 1.5 billion.

Zhonglai Shares' attributable net profit, 2022–Q1 2026

As agreed, Lin Jianwei is required to provide Zheneng Electric Power with a cash compensation of RMB 148 million. Although this requires actual cash outlay, it is relatively insignificant compared to the RMB 1.817 billion acquisition price. More importantly, no longer being the actual controller allows Lin Jianwei to freely sell his shares and cash out. From March to May this year, Lin Jianwei reduced his holdings by more than 32.67 million shares, realizing proceeds exceeding RMB 300 million.

Now, the mess has been left to Zheneng. In 2025, Zhonglai Shares’ losses further widened to RMB 13.72 billion, followed by an additional loss of RMB 2.74 billion in the first quarter of 2026. According to the company's 2025 Board of Directors Work Report, some existing orders are expected to incur substantial losses, resulting in a provision for estimated liabilities of RMB 6.05 billion.

Zheneng Electric Power’s annual report shows that, within its 2025 impairment losses, the portion related to Zhonglai Shares alone amounted to RMB 3.67 billion, comprising RMB 2.01 billion in asset impairment losses and RMB 1.66 billion in credit impairment losses.

In addition to taking over Zhonglai Shares, Zheneng Electric Power also expressed interest in another photovoltaic-listed company, Aikang Technology (formerly stock code 002610, now delisted). In August 2021, Zheneng Electric Power made a strategic investment of RMB 300 million to subscribe to newly issued shares of Aikang Technology’s subsidiary, Zhejiang Aikang Optoelectronics, acquiring a 20% equity stake.

Zhejiang Aikang Optoelectronics primarily produces high-efficiency heterojunction (HJT) photovoltaic cells and modules. Due to consecutive years of losses, significant idle capacity, and severe cash flow constraints, it was petitioned for bankruptcy reorganization by creditors in July 2024. In April 2026, Zheneng Electric Power announced that, as a result of Zhejiang Aikang Optoelectronics’ bankruptcy, its remaining equity investment of RMB 6.85 million was fully written down to zero, with a full impairment loss recognized.

To expand its clean energy footprint through transformation, Zheneng Group has also developed the Zhejiang Zheneng Smart Energy Technology Industrial Park in Meishan Town, Changxing County, Huzhou City, Zhejiang Province. The park covers a planned area of approximately 2,000 mu (about 330 acres) and focuses primarily on manufacturing equipment for photovoltaics and hydrogen energy.

The park has attracted numerous new energy manufacturing projects, including Aikang Technology’s next-generation high-efficiency solar cell project, which claimed a total investment of RMB 10.6 billion. With Aikang Technology’s delisting and subsequent bankruptcy, the project was halted, and the project company filed for bankruptcy in November 2024, citing inability to repay maturing debts.

Beyond the 'Aikang group,' the industrial park hosts other troubled projects as well, such as GuoKang New Energy. The company, which specializes in TOPCon photovoltaic modules, was petitioned for bankruptcy liquidation by creditors in December 2024, and the court has since ruled to proceed with liquidation.

In the energy storage sector, Zheneng Photovoltaic—a flagship project in the industrial park once highly anticipated by the Zheneng Group—has similarly run into difficulties.

Zheneng Photovoltaic primarily engages in lithium battery manufacturing. The project rolled out its first products in October 2024, with an annual production capacity of 0.1 GWh of lithium batteries and 500 metric tons of anode materials. However, it took only about one and a half years from production launch to falling into crisis. In March 2026, its parent company, Zhejiang Photovoltaic Technology Co., Ltd., initiated pre-reorganization proceedings; on April 27 of the same year, Zheneng Photovoltaic itself was placed under court-supervised pre-reorganization, followed by a public solicitation for potential restructuring investors. By October 2025, the industrial park had already auctioned off Zheneng Photovoltaic’s related obsolete equipment and inventory.

In addition to the four companies mentioned above that have entered bankruptcy or pre-reorganization proceedings, there is another new energy joint venture project within the park drawing external attention.

In 2018, Zheneng Group invested in Hangzhou Longyan Energy, which specializes in cadmium telluride thin-film solar cells. In 2019, the two parties jointly established Zhejiang Zheneng Longyan Energy, registered within the industrial park with a registered capital of RMB 160 million, in which the park holds a 20% stake.

The project was intended to industrialize Hangzhou Longyan Energy’s thin-film technology within the park. However, according to the latest business registration data, the company’s operational status was listed as 'inactive' in 2025, with zero employees enrolled in social insurance (see figure below). This indicates that the company never achieved large-scale commercial operations over the years and has essentially been a long-term 'shell' project occupying industrial space without real activity.

Among local energy groups, Zheneng Group ranks among the strongest and has long been in the top tier. As of the end of 2025, the group’s total assets reached RMB 352.27 billion. Yet even such a well-established enterprise has paid substantial 'tuition fees' in its new energy transition, highlighting how challenging this path truly is.

Nevertheless, transitioning into new energy is a necessary path for Zheneng Group. First, it faces dual pressures from China’s national 'dual carbon' goals and Zhejiang’s status as a province with limited energy resources but high energy demand. Second, the group’s traditional core businesses have been severely squeezed by coal price volatility and electricity pricing policies, creating an urgent need to develop clean energy to optimize its generation portfolio and hedge against cyclical risks. These challenges are common across other provincial-level energy groups as well.

Zheneng Group’s missteps in its new energy transition are objectively tied to the cyclical volatility of the photovoltaic industry, but subjectively stem from imprecise timing in its investment decisions.

Many of Zheneng’s investments were made at peak market enthusiasm. Its acquisition of Zhonglai Shares occurred in November 2022, when the PV sector was at a cyclical high; its strategic investment in Aikang Technology took place in August 2021, also during a period of intense market interest in heterojunction technology.

Shortly after Zheneng entered these ventures, the industry entered a deep adjustment phase, with module prices falling from around RMB 1.8 per watt in early 2023 to approximately RMB 0.6 per watt by the end of 2025. For state-owned energy groups known for their conservative approach, making large-scale investments at the peak of an industry cycle inevitably leads to higher investment risk and longer payback periods.

Compared with other provincial energy groups, Zhejiang Energy Group has moved swiftly in its transformation and has shown willingness to invest substantial capital in exploration—a courage that deserves recognition. The key to whether it can truly achieve a green transition lies in how it can enhance the precision of investment decisions amid cyclical industry fluctuations and how it can foster synergy between its traditional energy business and new energy ventures. This is a challenge facing Zhejiang Energy Group—and indeed a question all provincial energy groups must answer.

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