United States

United States

AES Chinese investment deal falls through amid US uncertainty

US: A major investment by a Chinese investment fund into the wind division of American power giant AES has been dropped over uncertainty in the future of the wind power market in the US.

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In November of 2009, China Investment Corporation (CIC) paid $1.58billion for 125.5 million shares of AES stock to acquire 15% of the company.

At the time, CIC also signed a non-binding letter of intent in to pay $571 million to acquire a further 35% stake in AES Wind Generation, AES’s wind division.

CIC allowed the wind deal to expire at the end of June 2010 because of "a lack of certainty around a national renewable energy standard in the US market," said an AES spokewoman.

A national renewable energy standard (RES) would require all US utilities to source a rising percentage of their power from renewables. Currently, over 30 states have their own RES laws. The US wind lobby has been working hard to get a national RES policy for all states but the prospect for passage this year is uncertain.

AES said the CIC wind deal falling through had nothing to do with its business in China. It operates both conventional generation and wind power generation in China --mostly through joint venture deals with Chinese companies.

The company has equity ownership in 98MW of Chinese wind projects and expects an additional 50MW of wind generation capacity projected to come on-line in China by the end of 2010.

AES’s Chinese investments were largely an effort to familiarize itself with Chinese-made wind turbines in the event a US export market developed. Mary Crotty, the former head of AES Wind Generation in early 2008, said this experience would allow AES to make a better turbine purchase decision.

Overall, AES Wind Generation has approximately 1.7GW of wind in operation globally, with the majority of projects in the US and Europe.

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