Smart grids, wind farms need time to bear fruit
China's plan to build so-called 'smart power grids' and develop energy storage facilities to relieve the bottleneck of lagging power grid connections in wind farm development will take time to see results.
That is according to wind farm developer Hong Kong Energy (Holdings), which says enhancing one's bargaining power and building good relationships with local power grid operators are key to ensuring a high level of power output and sales.
To help achieve this, HKE is in talks with potential domestic and overseas strategic and financial investors to take stakes in the firm, to beef up its financial muscle and bargaining power, managing director Bruce Yung Pak-keung said.
'Our plan to grow gross generating capacity by 200 megawatts every year is already quite good, but this is still slower than our rivals',' he said. 'We need to seek inorganic [external] partnerships to grow faster.'
Although China's Renewable Energy Law stipulates that the two state grid giants must buy all renewable energy produced, Yung said the intention is good but the policy is difficult to implement.
Grid connections lag behind wind farm construction as wind power output is inherently unstable, which brings instability to power grids. Operators are subject to grid firms' annual allocation of power purchase volumes.
Yung suggests that buyers and sellers of clean energy enter into so-called 'take or pay' contracts that bind both sides to transaction volumes. Compensation must be paid if either side reneges.
He also said that the grid firms' plan to build 'smart grids' and energy storage facilities will take a relatively long time to bear fruit, and cannot help resolve the grid connection bottleneck in the short term.
Smart grids use technology to increase knowledge of power demand and supply, which can help grid firms absorb more renewable energy. Energy storage technology can also raise grid firms' capability to buy more renewable energy.
HKE plans to buy all of its mainland parent Hong Kong Construction's wind farm assets, preferably in one transaction, Yung said. The property developer is controlled by Indonesian businessman Eric Oei Kang.
HKE has a 10 per stake in a 200MW wind farm and a 30 per cent interest in a 100MW project in Hebei province. Its parent has total effective interest in 241.5MW of wind farms in Inner Mongolia, Heilongjiang, Hebei and Gansu provinces.
In the wind
HKE has a 10 per stake in a 200MW wind farm in Hebei province while its interest in a 100MW project is: 30%