Longyuan Power plans big increase in offshore wind farms
December 20, 2012 Category Alternative energy, Environment
China Longyuan Power, Asia’s largest developer of wind farms, aims to raise its offshore generating capacity fivefold by 2015, despite technical challenges and the large capital required. The development of projects offshore is part of the industry’s effort to shift focus away from the windy northern regions which suffer from power transmission bottlenecks due to overly rapid development of wind farms there, to coastal provinces that are close to consumption centers and do not require long-distance transmission infrastructure. Beijing-based Longyuan, a unit of China Guodian Group – one of five state-owned power generation groups – aimed to increase offshore capacity to 1,000 megawatt (MW) in three years from 182 MW currently, Secretary Jia Nansong said. Based on an average investment cost per MW of around CNY15.5 million on a 150 MW project, completing projects to meet the goal will require CNY12.7 billion of investment. Chinese power projects are typically 20% equity capital-financed and 80% bank loan-funded, implying some CNY2.5 billion of equity capital will be required. Longyuan had a total wind farm capacity of 8,994 MW at the end of June and plans to add 1,600 MW this year and 2,000 MW in each of the next few years, of which most will be onshore projects. For onshore projects, based on last year’s average construction cost of CNY7.9 million per MW, the company may need some CNY41 billion of investment in the next three years, of which CNY8.2 billion would be equity capital. Longyuan had CNY3.9 billion of cash on hand at the end of June, with a net debt-to-equity ratio of 198%. To keep its debt ratio at a comfortable level, it planned to issue new shares that could raise HKD3.94 billion, the South China Morning Post reports.
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