Both the companies have formed a joint venture (JV), in which Hainan Yingli will own a 40% stake.
The JV will be responsible for the development of the production facility, which will see an investment of around $19m.
Demeter Corporation CEO Apichet Bhusry said: "Thailand’s favorable business climate, coupled with it generous tax incentive scheme, world class infrastructure, and continued government support for the expanding solar power industry make Thailand a perfect place for our new joint venture with Yingli."
Expected to become operational in the second half of this year, the factory will be capable of producing multicrystalline PV panels, which will be sold by Yingli under the Yingli Solar brand name.
Yingli Green Energy chairman and CEO Liansheng Miao said: "We are proud to establish our first overseas manufacturing operations in partnership with Demeter Power, and we hope to expand the new factory’s production capacity across the PV value chain in the future.
"Manufacturing PV panels in Thailand will enable the company to operate more competitively in overseas markets as well as in the emerging markets of Southeast Asia."
Headquartered in China, Yingli Green Energy has more than 30 regional subsidiaries and branch offices. It has distributed more than 14GW solar panels to customers worldwide.
In September last year, Yingli Green Energy supplied 130MW of solar Panels for projects in China, as part of an agreement with Qingdao New Energy Solutions.
Under the agreed terms, Yingli delivered more than 500,000 multicrystalline YGE 60 Cell Series solar panels to Qingdao New Energy.