(Yicai) June 26 -- Deye Technology said it will invest at least CNY1.2 billion (USD181 million) in the second phase of a 16 gigawatt-hours production base for energy storage systems in Cixi, a city in China’s eastern Zhejiang province.

Deye Energy Storage Technology, a subsidiary, signed an agreement with the management committee of the Cizi Binhai Economic Development Zone to build a 9 GWh per-year production line for commercial and industrial ESS, its Ningbo-based parent firm announced on June 24.

In April last year, Deye unveiled plans to build a 16 GWh production base in the zone. The first phase, with an annual capacity of 7 GWh, has completed preparation procedures, including the acquisition of a 61-acre plot of land. Under that agreement, once production begins tax revenue must be no less than CNY500,000 (USD73,450) per 0.16 acre, and research and development investment must account for at least 3.8 percent of revenue.

Given the strong overseas demand for commercial and industrial ESS, Deye decided to go ahead with the second phase early to support future sales growth, the company noted.

The project is expected to have a positive impact on the company’s future operating performance, and will not have a major adverse impact on performance this year, it added.

Deye started out by making plastic molds and injection molding parts, initially producing heat exchangers and injection molding parts for air conditioner manufacturers such as Midea Group and Aux Electric. In 2016, it got into the photovoltaic inverter business. The firm’s main products are now energy storage inverters, solar inverters, and energy storage battery packs.

The company’s shares [SHA: 605117] closed 2.9 percent lower at CNY96.49 (USD14.19) apiece today amid a 2.3 percent drop in the wider Shanghai stock market. Deye has climbed 56 percent since the end of last year.

Editor: Futura Costaglione