Huaneng Power may buy more assets from parent company

Energy producer says it is not worried about industry structureand pricing reforms

PUBLISHED : Friday, 27 March, 2015, 12:23am
UPDATED : Friday, 27 March, 2015, 12:23am

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Huaneng Power International will target plants owned by its parent when buying assets in future, says a senior executive.

The firm is also not concerned about any short-term impact from impending industry structure and power pricing reforms.

The listed unit of the nation's largest power producer, China Huaneng Group, plans to raise its output by 17.2 per cent to 345 billion kWh this year, after last year's production fell 7.3 per cent.

"Some 10 per cent of the growth in output comes from the power plants we bought from our parent last year, and the rest comes from new plants commissioned in last year's second half," company president Liu Guoyue told reporters on Thursday. "Going forward, we will grow through new build and acquisitions of projects, and acquisitions will be focused on our parent's assets."

Huaneng expects its plants' average utilisation to fall 2.5 per cent this year to 4,460 hours, after it dropped 9.2 per cent last year amid slowing economic growth and power demand in coastal and central provinces, where most of its plants are located, and rising competition from clean energy and power imported from other regions to its main markets.

 

The parent had control over 150 GW of generating capacity at the end of last year, compared to Huaneng's capacity of 78.7 GW.

In October last year, Huaneng bought 10 assets from its parent, which raised its generating capacity by 10 per cent. It aims to grow its controlled capacity to over 80 GW this year.

Liu said impending industry reform was unlikely to have much impact on the firm in the short term, despite 88 per cent of its plants are coal-fired, which are vulnerable due to overcapacity, rising environmental protection compliance costs, lower dispatch priority to the power grids, and competition from renewable energy whose generation costs have been declining.

"The reform is only at an experimental stage. We have yet to see any time-table and details of complementary regulations that need to happen before full reform can be carried out," he said.

The State Council said this month power prices would be determined by market forces rather than by the government. No time-frame was given.

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