Lai See
PUBLISHED : Tuesday, 01 October, 2013, 12:00am
UPDATED : Tuesday, 01 October, 2013, 3:02am

Typhoon Usagi's message for Hong Kong's wind farms

BIO

Howard Winn has been with the South China Morning Post for two and half years after previous stints as business editor and deputy editor of The Standard, and business editor of Asia Times. His writing has also been published in the Far Eastern Economic Review, the Wall Street Journal, and the International Herald Tribune. He writes the Lai See column which focuses on the lighter side of business.
 

One of the effects of Typhoon Usagi, which received little attention, was its impact on the Honghaiwan wind farm in Shanwei, eastern Guangdong, about 130 kilometres northeast of Hong Kong. The onshore wind farm comprises 25 imported Vestas V47 600KW turbines. The website Windpower Intelligence reports that eight of the turbines were blown down by the typhoon, while the blades of another eight turbines were blown off, and the blades of the remaining turbines are being examined to see if they can operate normally.

Our picture is from CCTV2's website, which reported that 70 per cent of the wind farm had been knocked out. Windpower Intelligence reports that one of the managers says the typhoon has led to 100 million yuan in losses for the wind farm. This is the second time the wind farm has suffered typhoon damage. The farm was hit in 2003 with damage to 13 out of 25 turbines, causing losses of 10 million yuan.

The recent damage may have caused some unease within the government and possibly within Hongkong Electric and CLP, the two companies planning wind farms in Hong Kong waters. CLP, Hong Kong's largest power company, plans to build what will be one of the biggest offshore wind farms in the world off Sai Kung - generating 200 megawatts a year - at a cost of almost HK$7 billion. Hongkong Electric is to build a HK$3 billion wind farm between Lamma Island and Cheung Chau that would generate 100MW of power - enough for 50,000 households.

Since Shanwei is fairly close to Hong Kong, it is frequently used as a reference for winds in Hong Kong. "This is another indication of how ill-advised these Hong Kong wind projects are," Ng Young, the chairman of Hong Kong's Association for Geoconservation, told Lai See.

The companies are still involved in testing work, and construction has yet to begin. At best the two wind farms might produce about 1.5 per cent of Hong Kong's total electricity production, and reduce its output of carbon dioxide by about 2 per cent. This miniscule contribution comes at a cost of HK$10 billion. Regardless of how useless these wind farms are, the government can point to them as its contribution to reducing Hong Kong's carbon footprint and take its place in the world's effort to limit the production of carbon dioxide, and thereby global warming, or so they would have us believe. As for the power companies, the farms are a wonderful opportunity for them to increase their net assets at a time when returns from the scheme of control, which governs them, have been reduced from 13.5 per cent to 15 per cent under the previous scheme, which ended in 2009, to 9.99 per cent under the current scheme. But they will get 11 per cent on their wind farm assets since they are a form of renewable energy. Meanwhile, the public picks up the bill in the form of higher electricity prices. Higher fuel costs are inevitable, but better to spend this on efficient clean energy like gas.

Ng says the wind farms are unsightly and kill birds, and are an unreliable source of energy. He makes the point that the Shanwei wind farm operates at an average of 17 per cent to 18 per cent efficiency: "The government is silly to support this project - building this white elephant just for the sake of appearing to do something green, when in fact it is damaging the environment, and costing the community a lot of money in terms of higher fuel bills and higher costs to business. The only beneficiaries are the power companies."

 

New Noble venture

Hong Kong's Noble Group, together with TPG, are each investing US$500 million in a new mining venture, X2 Resources, which is being established by former executives who set up Xstrata. Former Xstrata chief executive Mick Davis, former chief financial officer Trevor Reid and other executives who left Xstrata when it was taken over by Glencore, intend to create a new mid-tier diversified mining and metals firm by "leveraging the extensive track record of the X2 team in identifying and acquiring assets and businesses at an opportune time in the cycle and applying their proven approach to integration and value enhancement to the resulting portfolio of operations", Noble said in a statement. The Hong Kong company will be X2 Resources' preferred marketer and provider of supply chain management and investments around the world.

 

Have you got any stories that Lai See should know about? E-mail them to howard.winn@scmp.com

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