Longyuan piles on billions to target top three

CHINA: China's largest wind farm developer is investing billions of dollars in a bid to break into the world's top three wind farm operators within three years.

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China Longyuan Group is already the fifth-largest wind developer in the world. Its investment of CNY 51 billion ($7.5 billion) will boost its installed wind capacity to more than 10GW by the end of 2012, says group general manager Xie Changjun. This year it will ask the country's energy authority to approve 60 wind farms, with a total installed capacity of 3.5GW, with at least 2GW approved for the year.

In 2009, Longyuan put 41 wind farms totalling 2GW into operation, putting its gross installed capacity in excess of 6GW. Longyuan's wind farms generated 6.211 billion kWh of electric power in 2009, up almost 70% on 2008.

Longyuan, a solely funded company of China Guodian Group, was established in January 1993. The Fu'ao Wind Farm, with 15 200KW turbines from Denmark's NordTank, put into operation in 1995 by Longyuan, was China's first commercial wind farm.

Since 2005, Longyuan has almost doubled its installed wind power capacity each year and it is now focusing on offshore projects. Board secretary Jia Nansong says that, in May, the company participated in China's first round of public tenders for offshore wind farms - two 300MW offshore projects and two 200MW intertidal wind farms - in east China's Jiangsu Province.

Last October, Longyuan connected two pilot intertidal 1.5MW turbines, made by Guangdong Mingyang, into the Jiangsu local power grid. It invested CNY 500 million ($73 million) in the pilot intertidal wind farm, comprising 16 1.5MW turbines, in Rudong, Jiangsu Province.

Carbon offset scheme

Longyuan has benefited from the UN's carbon offset-scheme, the Clean Development Mechanism (CDM). By the end of 2009, the company had developed 116 CDM projects, with 79 approved by China's National Development and Reform Commission and 25 registered with the executive board of CDM.

In 2009 Longyuan received CNY 197 million ($29 million) from the CDM projects, up 82% on 2008. Xie estimates that Longyuan income from CDM projects will amount to around CNY 400 million ($56 million) this year.

Longyuan is also looking at overseas markets. Jia believes that overseas projects will yield more than 15% returns, against roughly 12% from projects in China. He says: "We will pay more attention to investing in wind farms than purchasing wind farms." Longyuan is considering investment in wind farms in the US, eastern Europe and South Africa, he adds.

The South Africa project will be the company's first overseas wind farm project. It signed a memo in September with China-Africa Development Fund and South Africa Mulilu Renewable Energy. The South African government will extend preferential policies on wind power prices.

Jia expects Longyuan to sign a power purchase agreement with independent generating companies in South Africa in the third quarter of this year and that the project will be completed before the end of next year.

Nuclear giant muscles in

While Longyuan is aiming higher in wind power development, China Guangdong Nuclear (CGN), a leading nuclear power developer in the country, is diversifying its product mix and also investing in wind. CGN entered the industry in 2003 and set up a wind power development company in 2007. Its latest move took place in early May, when it announced an agreement with Yuxi Municipal Government for joint construction of a wind farm in Yunnan Province, south-west China.

Under the agreement, CGN will invest CNY 3 billion ($440 million) to construct the first stage of wind farm projects, 300MW, in the next three years. The plan is to invest a total of CNY 8 billion ($1.2 billion) to construct 800MW of wind farms in the counties and districts under Yuxi administration. In late April, CGN signed a CNY 1 billion ($146 million) agreement with Goldwind to install 100 1.5MW direct-drive turbines in CGN wind farms in Aletai, Tacheng and Dabancheng, of Xinjiang. The first 50MW will be installed and connected to the power grid at the end of this year.

CGN, which owns 66% of China's nuclear power generating units under construction, is now in the top five wind power developers in the country. By 2009 it had 1.3GW installed capacity, with another 1.7GW under construction.

It is also making early preparations for 2.7GW of wind farms across the country. Deputy general manager Shi Bing says its wind power development objective for 2020 is 20-30GW, compared with 60GW from nuclear power.

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