Wind farms operator China Longyuan steps up overseas expansion, follows Belt and Road
Company president says new projects under way in Poland, Serbia, Kazakhstan, Canada and the United States
China Longyuan Power Group Corporation, Asia’s largest wind farms developer, is expanding further overseas with projects in Poland, Serbia, Kazakhstan, Canada and the United States, following the successful start of a wind farm in South Africa, China’s first in the continent.
The company, a unit of the world’s largest power producer China Energy Investment Corporation, is taking a cautious approach abroad, aware of the risks it will encounter, president Li Enyi told reporters on Tuesday, a day after the firm posted an 8.4 per cent rise in net profit to 3.85 billion yuan (US$608 million) for last year.
“Our new overseas projects are in early stages of development and are mostly in nations covered by China’s ‘Belt and Road Initiative’,” he said, referring to Beijing’s plan to link countries around the world in a trading network.
“We are focused on countries that are geopolitically stable, have a sound legal environment and a well established market-based economy.”
Li would not say how large the projects were or whether some of them would be completed this year or next, saying only that the company is taking a “stringent and detailed” approach to risk management.
Last December Longyuan commissioned a 244.5 megawatt (MW) project in South Africa, which was China’s first greenfield wind farm investment in the continent.
Its first overseas wind farm started operating four years ago in Canada with 99MW of capacity, which was also built from scratch after Longyuan acquired the development rights. The company plans to install 1,000MW to 1,200MW of wind farm capacity this year, of which 300MW would be in offshore farms in the sea. Its total installed capacity stood at 18,390MW as of the end of last year.
Li said the firm has made breakthroughs in construction techniques that solved some challenges it faced in construction work in intertidal areas and shortened building time.
In China, Longyuan’s curtailment rate, or the proportion of power it generated that was not sent to the country’s national grid due to transmission capacity constraints and demand-supply mismatch, fell to 10.4 per cent last year from 15.8 per cent in 2016, Li said.
This came about after the government ordered local grid operators to absorb more renewable power, and Li expected the trend to continue.
“Our target is 7 per cent this year,” he said.
Longyuan’s average wind farm plant utilisation grew 7 per cent to 2,035 hours last year from 2016, helping lift its operating profit from wind power by 20 per cent to 7.9 billion yuan. The rise was partially offset however by the halving of its operating profit from coal-fired generation to 450 million yuan as a result of surging coal costs.
Li sidestepped a question on whether Longyuan would acquire the wind farms of its parent, China Energy Investment Corporation, and sell its coal-fired plants to China Energy’s coal-fired power unit GD Power to enhance the efficiency of the entire group’s operations.
Longyuan shares closed 3.2 per cent higher on Tuesday at HK$5.56.