China Longyuan Power Group Corp, the Hong Kong-listed new energy arm of China Guodian Group and the largest wind farm operator in Asia, is buying wind turbines in the United States, General Manager Xie Changjun told China Daily without disclosing further details.
"Lots of domestic players are competing for wind power assets in the US," Xie said.
Michael Niederberger, Asia head of technology and renewable energy at the Royal Bank of Scotland (RBS), said: "Mergers and acquisitions (M&As) in the green sector have tripled during the past 12 months. More and more Chinese wind turbine manufactures are looking into investment in overseas markets."
China’s State-owned wind power companies are internationally competitive and they have a clear ambition to expand globally, Niederberger added.
However, certain components are still sourced overseas, a factor in encouraging Chinese companies to buy technology through partnerships or M&As, according to a research by RBS.
Chinese companies are testing the water in the overseas wind power industry. Scottish marine energy developer SeaEnergy Renewables and Chinese offshore wind energy company Nantong COSCO Ship Steel Structure Company signed an agreement in July to develop and market steel structures for the offshore wind industry as well as push deepwater wind technology.
A-Power Energy Generation Systems Ltd, based in Liaoning province, is entering the US wind energy market by supplying wind turbines to a joint venture that has plans to build a $1.5 billion wind farm in Texas.
China’s leading wind turbine manufacturer, Xinjiang Goldwind Science and Technology Company, is to raise funds through an initial public listing in Hong Kong and said it would spend a quarter of the proceeds on overseas expansion, primarily in the US, Australia and Europe, by purchasing or developing production plants.
"The challenges these Chinese buyers face are the lack of presence in overseas markets and having no track record of direct overseas investment or successful M&As," Niederberger said.
Robert Todd, director of renewable energy resources and energy group of HSBC, said: "That represents great opportunities for us to provide financial advice and to finance projects."
HSBC worked with the Bank of Communications to finance the Baicheng wind farm project in northeast China’s Jilin province. The Hong Kong-based bank also helped one of China’s power producers to bid for one of Britain’s offshore wind farms.
Last year, China Datang International Power Group was one of the bidders for a stake in the world’s largest wind farm at the time that belonged to Centrica plc.
It is estimated China’s wind power market alone will be worth 1.5 trillion yuan ($223.05 million) by 2020 when the installed wind capacity should be 150 million to 200 million kW, according to Wang Zhongying, deputy director-general of the Energy Research Institute of the National Development and Reform Commission.
"That much investment will definitely lead to huge financial requirements," said Todd.
Peter Corne, managing director of Evershed’s Shanghai office, said: "Traditionally, we had lots of SOEs (State-owned enterprises) in the renewable energy sector expanding into overseas markets and buying technologies there. But we see more and more private companies directly going abroad to buy assets partly because the domestic market is preferred by SOEs."
Goldwind gets $6b credit line to fuel its int’l drive
Xinjiang Goldwind Science & Technology Co, the world’s fifth largest wind power equipment maker, has secured a credit line of $6 billion yuan from China Development Bank to support its overseas market expansion, China Securities Journal reported Friday.
Chief Financial Officer Sun Liang said Goldwind plans to boost its income from the overseas market to 30 percent of the company’s total sales revenue by 2012.
Goldwind and China Development Bank signed a strategic cooperation agreement in Beijing on Thursday.
According to the agreement, the loans will mainly fund Goldwind’s efforts in expanding its overseas sales, investing into wind power projects abroad, carrying out industrial restructuring, and offering financial leasing services, including providing credit for potential buyers on targeted overseas markets.
Separately, Goldwind had a listing hearing at the Hong Kong Exchanges and Clearing on Thursday, the paper said.
The company may raise $1.5 billion by floating up to 455 million shares in Hong Kong in the first half of this year, according to the report.
On May 17, Goldwind announced that its Hong Kong IPO plan had been approved by the China Securities Regulatory Commission, China’s top securities regulator.
China Longyuan to spend $13b to lead wind power league
China Longyuan Power Group Corp plans to spend about 92 billion yuan ($13 billion) over the next five years to become the world’s No 1 wind-power producer as global demand for clean energy increases.
The Hong Kong-listed company aims to install at least 16,000 megawatts of wind turbines in China and overseas by 2015, President Xie Changjun said in an interview after a climate conference in Beijing today.
The expansion plan comes as the Chinese government encourages the use of renewable energy to cut reliance on more polluting coal. The Beijing-based company in December raised a net HK$16.7 billion ($2.2 billion) from the sale of 2.14 billion shares in Hong Kong in the world’s third-biggest IPO by an alternative energy company.
"China so far has used only about 1 percent of its total estimated wind power resources and there is vast potential for future growth," Xie said. "We are also looking at opportunities overseas, including in South Africa, the US, Australia and Europe," he said.
Global investment in renewable energy surged 31 percent in the first quarter from a year earlier, driven by wind power and demand in China, Bloomberg New Energy Finance said on April 12.
China Longyuan ranks fifth globally by wind-power capacity and plans to be third by 2012, according to Xie. The company had 4,503 megawatts of capacity last year and may have 6,500 megawatts by the end of this year, it said in March.
China Longyuan’s shares fell 0.6 percent to HK$7.81 in Hong Kong trading on May 7, the stock’s lowest level since listing. It has dropped 13 percent since its Dec 10 debut, compared with an 8.2 percent decline in the benchmark Hang Seng Index.
Increased profit
China Longyuan may issue bonds in the domestic market to raise funds, Xie said without elaborating. The wind-farm operator’s profit more than double last year to 894 million yuan from 337 million yuan as it expanded capacity, it said on March 30.
China’s domestic wind-power developers may see increased profit because of lower turbine installation costs and government-set fixed tariffs, Xie said. The cost to China Longyuan to erect each kilowatt of wind turbines may fall about 10 percent to 8,000 yuan this year because of "intense competition" in the manufacturing sector, he said.
China, the world’s biggest polluter, burns coal to produce about 80 percent of its electricity and wants at least 15 percent of its energy to come from renewable sources by 2020.
Overseas rivals
China Longyuan purchases turbines from domestic suppliers whose prices are about 20 percent less than those of their overseas rivals, according to Xie. Xinjiang Goldwind Science & Technology Co and Sinovel Wind Group Co are among the largest suppliers to China Longyuan, Xie said.
"If foreign manufacturers want to boost their market share in China, they need to cut costs and reduce prices," Xie said.
The company hopes to see carbon markets set up in China after 2012 to boost renewable energy development, he said.
The Chinese government is considering establishing exchanges for carbon trading in selected areas, as a nationwide market looks unlikely for the moment, Gao Guangsheng, director of the National Coordination Committee Office on Climate Change under the National Development and Reform Commission, said at the conference today. The plans aren’t completed yet, Gao said, without giving details.
The lack of industry professionals may be a challenge for China’s domestic wind-power developers, the executive said today, without providing specifics.
China on target to achieve green goals
China needs to cut its energy consumption per unit of GDP by 5 percent this year and the target is "within reach", China’s top climate official said on Monday.
As part of Beijing’s efforts to tackle climate change, the 11th Five-Year Plan (2006-2010) set the goal of reducing energy consumption per unit of GDP by 20 percent in 2010 compared to 2005.
"We only achieved a cut of 15.6 percent by the end of 2009, so we have to cut the remaining 5 percent this year to reach our target," Xie Zhenhua, deputy director of the National Development and Reform Commission, said at a press conference during the ongoing United Nations Climate Change Conference in Tianjin.
"It’s very challenging to further cut energy use and reach the set goal," Xie said.
Eighteen municipalities, provinces and autonomous regions are on track to meet the target, while six to seven other provincial-level administrative areas have encountered obstacles, he said.
"It’s a legally binding target. To meet it, we have to adopt active measures, including phasing out obsolete equipment and upgrading facilities," he added.
State Councilor Dai Bingguo said at the opening session of the Tianjin conference that China will adopt further policies to make its contribution to the fight against global climate change.
Dai said China will achieve its goal by restructuring the economy, conserving energy and improving the efficiency of its use. He also pledged that the country will develop renewable energy and increase carbon sinks in forests.
In November 2009, China announced that it would reduce carbon intensity – carbon emissions per unit of GDP – by 40 to 45 percent by 2020 from its level in 2005.
Apart from energy consumption per unit of GDP, China has already met or exceeded targets set in its 11th Five-Year Plan to raise the share of non-fossil fuels in primary energy consumption along with increased forest coverage, according to Xie.
"China is in the process of mapping its 12th Five-Year Plan (2011-2015), which will include concrete action. We expect new domestic measures and financial input during the next five years," said Yang Ailun, climate and energy campaign manager for Greenpeace China.
While China is producing more greenhouse gas emissions in the world, it is one of the most proactive countries in terms of supporting green growth, said Stanley So, manager of Oxfam Hong Kong’s Economic Justice Campaign.
China was the world leader in green investment in 2009, with one-third of the country’s economic stimulus package ($221 billion) spent on infrastructure in an effort to improve energy efficiency, he added.
By Liu Yiyu, Lan Lan and Li Jing, www.chinadaily.com.cn
