China Resources Power to Spend $970 Million a Year on Wind Farms

China Resources Power Holdings Co., the Hong Kong-listed mainland electricity producer, said it may spend 4.8 billion to 6.4 billion yuan ($970 million) adding 800 megawatts of wind power capacity every year.

The planned spending on wind projects is for the “forseeable future,” Liu Rixin, deputy general manager of China Resources Power’s new energy unit, said at a press briefing in Shantou in the southern province of Guangdong today.

China, the world’s biggest polluter, plans to more than double the generating capacity of power produced by wind to about 100 gigawatts by the end of the decade. About 5 percent of the electricity generated by China Resources Power was produced by wind, gas-fired units and hydro, the company said last year.

The utility is considering funding the expansion through bonds, loans and operating cash flow, Chief Financial Officer Wang Xiaobin said at the briefing. “There’s still tremendous growth potential in the wind sector in China. We can offer our investors good returns on investment,” she said.

Wind power projects must have a return on investment of at least 12 percent, the company said in a release today.

The country’s wind power capacity may rise to 150 gigawatts by 2020, China Resources Power said in the release. The company may get 16 percent of its total capacity from clean energy sources, including wind power, nuclear plants, gas units and hydro power projects, by 2020, Wang said.

China Resources Power had 15 wind farms with a capacity of 642 megawatts in operation at the end of last year and is building 13 more with a combined 631 megawatts, according to the release.

Increased Generation

The utility said in August that about 1 gigawatt of its electricity would be produced by wind by the end of last year. The power producer planned to spend 6 billion yuan to buy wind farms, Wang said in March last year.

First-half profit rose 8.5 percent from a year earlier to HK$2.46 billion ($316 million) after the electricity producer increased generation by 41 percent to help meet demand in the world’s fastest-growing major economy.

A 51 percent gain in first-half sales was partly offset by higher fuel costs as coal prices climbed 20 percent, the utility said in its earnings statement. Coal is burned at 80 percent of China’s power plants.

The company has economically mineable coal reserves in the northern province of Shanxi of about 426.3 million metric tons and plans to increase the total reserves it holds in China to 2 billion tons, according to the earnings statement.

Operational generating capacity was 18.9 gigawatts, the company said in the first-half report last year.

The shares declined 7.4 percent in the past 12 months, mirroring declines by other Chinese utilities listed in Hong Kong, including Datang International Power Generation Co. China Resources Power dropped 0.9 percent to close at HK$13.58 today.

To contact the reporter on this story: John Duce in Hong Kong at jduce1@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

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