Hong Kong Energy and parent to grow capacity
Hong Kong Energy (Holdings) and its parent, HKC (Holdings), plan to more than double their combined wind power generating capacity over the next five years, banking on the mainland's ambition to cut pollution by expanding clean energy.
Hong Kong Energy and HKC together have 660 megawatts of wind power projects. They fully own just over 300 MW directly and are joint-venture partners in the rest, although only 67 MW are in commercial operation.
The companies plan to add wind power plants capable of generating about 1,000 MW in the next five years, most of which will be built by Hong Kong Energy, according to managing director Bruce Yung Pak-keung.
Hong Kong Energy will become HKC's primary renewable-energy unit. It planned to acquire HKC's wind energy projects and build new ones, Yung said.
Any acquisition from HKC can only take place next April at the earliest, when a two-year ban on asset injection under listing regulations expires.
Hong Kong Energy is 78 per cent-held by mainland property developer HKC, which is 46 per cent-controlled by Southeast Asian businessman Eric Oei Kang.
Formerly a software developer until taken over by HKC in April last year, Hong Kong Energy is building a 950.8 million yuan (HK$1.08 billion) wind farm with a capacity of 100.5 MW with state-owned China Energy Conservation Investment Corp (CECI). Hong Kong Energy holds a 30 per cent stake in the wind farm, located in Lunaobao in Hebei. It is expected to start commercial operation next year.
CECI engages in environmental protection and clean-energy projects.
Hong Kong Energy is also seeking final government approval to build a 480.5 million yuan, 49.5 MW, wholly owned project in Siziwang Qi in Inner Mongolia.
This is the second-phase expansion of the 49.5 MW development targeted for commercial operation next year. The company said the development potential of Siziwang Qi, over many phases, could be 1,000 MW.
In addition, HKC has an 86 per cent stake in a 60 MW project in Heilongjiang province.
It also has a 200 MW wind project in Hebei province due to start up late next year, a 201 MW wind project in Gansu province slated for completion late this year and a 25 MW waste-to-power project in Shandong province. All three are 40 per cent-held joint ventures with CECI.
Yung would not divulge the utilisation rate of the Heilongjiang plant, but said the Hebei plant that began operating in March saw 'significantly' higher utilisation than forecast. These are HKC's only operating wind power plants.
Yung, who joined Hong Kong Energy two months ago, has previously worked at BP's China operations, US power generation major Entergy's China operation and at British Gas.
Low utilisation has been cited by the mainland's State Electricity Regulatory Commission as a problem plaguing some mainland projects owing to insufficient wind, inadequate power grid connections and poor wind turbine layout.
To help ensure grid connections to its facilities and fund more projects, Yung said Hong Kong Energy would consider selling stakes in its wholly owned projects to strategic partners.
A roughly 10 per cent decline in the cost of wind turbines and towers in the past 15 months - as well as Beijing's plan to guarantee wind power tariffs of 51 to 61 fen per kilowatt-hour - had helped raise project returns, he added. But he declined to give figures.
The State Council has repeatedly warned that the wind power equipment sector is overcrowded and over-invested.
The number of suppliers has surged from a handful a few years ago to over 70.
Beijing is expected to soon raise its official installed wind power capacity goal for 2020 to 100,000 MW from 30,000 MW.
Capacity stood at 12,200 MW at the end of last year, or 1.5 per cent of the national power generation capacity.