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Cleaning up on green energy investment

Cleaning up on green energy investment

Cleaning up on green energy investment

Stock markets go into freefall, banks totter on the verge of insolvency, governments open their vaults in a bid to bail out the world's financial system.

Hardly the optimum time to venture into a new category of high-risk emerging industries, one might think. Or is it?

Wind power, solar energy, and nuclear power, now the environmentally-friendly investments battlefields in China, have taken a battering that even outstrips that meted out to the conventional energy industries.

SDIC Electric Power Co, a fully owned subsidiary of SDIC and one of the nation's major power investors, sees clean energy providers as the next target sector for its continued expansion, even if something of a contentious one.

Over the last two years, the company has striven to develop low carbon-emission energy investments, particularly in the wind power, solar energy, and nuclear power sector, as key emerging industries in China.

Wang Huisheng, president of the State Development and Investment Corp (SDIC), the parent company of SDIC Electric Power Co, remains a keen advocate: "As China's economy grows, it will need all the energy it can secure, including wind, solar, and nuclear. This clean technology is at the top of our priorities as our next substantial investment initiative."

As Wang maintains, although the price of conventional fuels fell earlier this year, in the anticipation of the economic slump, the issues of global warming and China's dependence on oil and coal have not gone away.

He says: "China needs to shift toward a low-carbon economy development model. Companies that can find innovative ways to manage and conserve carbon will thrive."

Solar energy

In the dark days of the global economic recession, SDIC is striving to bring a little into China through riding on the coattails of the emerging solar photovoltaic (PV) industry.

On May 5 the SDIC Electric Power Co signed a deal with Northwest China's Qinghai province to develop a solar PV energy project with a 200 Megawatt (MW) capacity and, subsequently, feed the generated solar power into China's national grid.

The solar PV project will be built on the city of Golmud in Qinghai, a plateaued area that boasts the nation's richest sunshine resources. The first phase of its construction aims to generate some 100MW.

In late March of this year, the SDIC's first nuclear power project came online. The company secured a 10 per cent stake in the Xudabao Nuclear Power station. The facility, set in Huludao, a small coastal city in the northeastern Liaoning province, involves total investment capital of more than 90 billion yuan. It will begin construction later this year and is scheduled to commence operations by 2014.

Wind power

With wind power now widely tipped to deliver a major blow to the conventional energy industries, SDIC is committed to capitalizing on its potential within China.

In January SDIC's investment in its latest wind turbine project received the nod from the National Development and Reform Commission. This has seen it emerge as a key backer of the Kangbao Wind Power Farm's second phase of construction. Set in the city of Zhangjiakou, in Hebei province, the company sees the development as a key move in its bid to emerge as a major force within the wind power industry.

This approval was secured following the success of SDIC's first wind turbine farm, the Jiancaitang Wind Power Farm. Operated by the SDIC Baiyin Wind Power Company, it went into operation last December, having secured a total investment estimated at around 436 million yuan.

When fully operational, it will boast a total capacity of 45MW, with 99.32 million kilowatt hours (kwh) of annual output. Occupying 16.3 sq km and with an installation of 30 1.5MW generation units and a 110KV booster substation, the facility is the first wind power project in northwest China's Gansu province.

SDIC's third wind power investment, the Dongfeng Wind Power farm, located in Jiuquan, Gansu province, attracted a total investment of 499 million yuan. It completed site construction last November and is expected to go into operation this year. Its total installed capacity will be maintained at 49.5 MW. It features 33 1.5 MW generation units and an 110KV booster substation.

The SDIC Huajing Power Holdings Co Ltd, the listing unit of the SDIC Electric Power Co which floated on the Shanghai Stock Exchange, suffered a 77.53 percent year-on-year plunge in its net profit to 124 million yuan in 2008. The operating income from its core business totaled 6.55 billion, showing a slight decline of 1.07 percent year-on-year.

The company sees last year's slight profit decline as a direct consequence of the surge in coal prices, leading to higher operating costs for its thermal power division.

As of the end of 2008, SDIC Huajing Power had a total installed capacity of 6.792 million kw.

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