China Power arm raises target

PUBLISHED : Monday, 19 May, 2008, 12:00am
UPDATED : Monday, 19 May, 2008, 12:00am

China Power New Energy Development, the renewable energy arm of the mainland's fifth-largest power company, has raised its 2010 power generation capacity target by 50 per cent amid rising demand for clean energy, according to executive director and chief executive Liu Genyu.

The sister company of China Power International Development has raised the target to 1,500 megawatts of capacity in operation by 2010, 1,500 MW being built and 1,500 MW in preparation, compared with 1,000 MW each set a year earlier when state-owned parent China Power Investment Corp bought a stake in the company, formerly Oriental Investment Corp.

To achieve the company's 2010 capacity target, capital commitment may reach 4.8 billion yuan (HK$5.36 billion) or about 20 per cent to 30 per cent of the investment involved, Mr Liu said last week.

He said the target was still a conservative one as China Power New Energy already had 941 MW of capacity in operation, including wind power, hydropower, biomass, waste-to-energy, natural gas and thermal power in provinces including Gansu, Jiangsu, Fujian and Guangdong.

He said the company would boost capacity by building new plants and buying assets from its parent company or independent third parties.

The company is now looking at projects in Heilongjiang, Anhui and Hainan.

There were many investment opportunities as Beijing was offering incentives such as higher tariffs and guaranteed power purchases for companies investing in renewable or alternative energy, Mr Liu said.

'We also have expertise and other cost advantages such as lower construction cost compared with rivals,' he added.

The usual industry cost for building a renewable energy power plant was about 8,000 yuan per kilowatt, but China Power New Energy only needed 6,500 to 7,000 yuan per kilowatt as it could save money through bulk purchases with its parent.

Mr Liu said the firm had no plans to raise capital this year but might need to do so in the future when more projects came on stream.

He said wind power and medium-to-small hydropower projects would be the company's focus and account for about 80 per cent of installed capacity.

Mr Liu said the company would continue to look into the development of other kinds of energy including solar power.

China Power Investment is the largest shareholder of China Power New Energy and China Power International.

China Power Investment has 28.44 per cent stake in China Power New Energy. China National Offshore Oil Corp has a 12.78 per cent stake in the firm.